Trayanov and Icetrading Inc., 2024 ONSC 5930

COURT FILE NO.: CV-Ottawa-18-78306 DATE: 2024/10/25

ONTARIO SUPERIOR COURT OF JUSTICE

BETWEEN:

Vasil Trayanov and Olia Stantcheva Plaintiffs – and – Icetrading Inc. and Daeja Bjork Kjartandottir for the estate of Volundur Thorbjornsson Defendants

Counsel: Sheldon McRae, for the Plaintiffs Taayo Simmonds, for the Defendants

HEARD: September 25, 2024 by Zoom

Leroy, J.

REASONS on motion for summary judgment

[1] This is the defendants’ motion for summary judgment. The Notice of Motion was constituted on July 28, 2020. The written agreement at the center of their substantive dispute is dated September 21, 2016. The parties have been at an impasse on substantive contractual matters between them since September 2018.

[2] The litigation concerns the rights and responsibilities of the parties in connection with a commercial property in Carleton Place, Ontario. The property is owned by Icetrading Inc. Volundur Thorbjornsson (Wally) was the sole shareholder of the corporation. He died on May 14, 2021. The respondents, Vasil Trayanov and Olia Stantcheva, have operated a granite business in a free-standing building on a lot area depicted as Parcel 6 on a sketch of the property since 2016.

[3] Icetrading purchased the property, known to the municipality as the Post Yard, on September 30, 2016, for $425,000, with the intention of developing a vacant land condominium involving seven commercial units.

[4] More or less concurrently, by agreement dated September 21, 2016 (the “Agreement”), Icetrading agreed to sell one proposed lot depicted as Parcel 6 with an existing building to the respondents for $275,000. The Plaintiffs paid an initial deposit of $75,000. They agreed that this advance was a loan to finance purchase of the Post Yard.

The Written Agreement

[5] The agreement dated September 21, 2016, comprises 4 main sections:

1. Recitals
2. Definitions
3. The Investment
4. Condominium Development

[6] The definition section defined:

Closing date as September 30, 2016.

Condominium shall mean the proposed condominium corporation.

Defaulting event included the following occurrences:

1. A party is in default under their obligations made under this agreement.
2. Not applicable
3. A party is in material breach of a representation, warranty or covenant made under this agreement.
4. The Corporation fails to complete the conversion of the property to the Condominium within two years from the date of the purchase of the property.

[7] The parcel 6 agreement was defined to mean the APS for a commercial condominium entered into between the Corporation as seller and the Plaintiffs as buyers, the terms of which were incorporated into this agreement and where inconsistent with the terms of this agreement, the terms of this agreement prevailed. The stand-alone APS was never constituted.

[8] The investment section of the agreement also incorporated the financial aspects of the purchase and sale of part 6.

[9] Rather than try to reliably paraphrase this part of the agreement it is repeated here.

1. The plaintiffs shall provide the Corporation with a down payment of $75K – herein referred to as the “initial deposit” for purchasing Parcel 6 with the existing building situated thereon for a total consideration of $275K.
2. The total price of $275K shall be inclusive of the following: (a) all labour and materials required to install a septic system for the building on Parcel 6 with an anticipated completion date of spring 2017 – (done); and (b) connection of the building situated on parcel 6 to a central natural gas system (e.g. Enbridge) at the same time as such connection is made for the other units of the condominium. All costs associated with or incurred with respect to the above installations shall be exclusively the responsibility of Icetrading Inc.
3. The initial deposit shall be recorded in the financial books of the Corporation as a loan from the plaintiffs to the Corporation and shall be used by the Corporation for purchasing and holding title to the property for the purchase price of $425K with an objective and intention of developing the property as a vacant land condominium industrial park comprising 7 units and common elements as illustrated in the sketch attached to the Agreement.
4. The initial deposit is given by the plaintiffs to the Corporation as an interest free loan provided the conversion of the property to a condominium takes no longer than 2 years and there is no defaulting event.
5. In the event the Corporation fails to convert the property into a condominium by the end of the second year after the closing date of the property purchase, or on the occurrence of a defaulting event the plaintiffs shall be entitled to demand repayment of their loan and the Corporation hereby agrees to pay on demand the sum of $75K to the plaintiffs should they elect to demand payment. The loan shall become due and payable by the Corporation within 30 days from date of demand for repayment. Interest at the Prime rate set by the Royal Bank of Canada from time to time + 5% per annum shall be applicable and the Corporation shall be responsible for payment of the principal and interest if repayment is not made within the 30-day period.
6. In the event demand for repayment being made, the Plaintiffs shall receive no further compensation for any costs or improvements to Parcel 6 or refund of their payments made as rent, described in this agreement and shall vacate Parcel 6 in 30 days.
7. Wally shall provide the plaintiffs with a personal guarantee in respect to the initial deposit and the repayment thereof to the plaintiffs on the occurrence of a defaulting event.
8. In addition to the Initial Deposit the plaintiffs agree to make monthly payments in the amount of $1,333 for a period of one year or until the conversion to a Condominium and transfer to them of Parcel #6, whichever comes first.
9. The monthly payment of $1,333 is 8% interest of the rest of the total price for Parcel 6 ($200K). They will be made as postdated cheques to the defendants and given to him on the closing date of the Property purchase. These payments are to be used by the Corporation towards the monthly payment on the first mortgage.
10. The payments of $1,333 for the first year shall be deemed to be rent for the use and occupation of the building and grounds and shall not be credited against the purchase price on the transfer of the unit to the plaintiffs. In consideration of paying rent the plaintiffs shall have the right to exclusive possession of parcel 6 together with the building situated thereon.
11. The plaintiffs agree to continue making monthly payments of $1,333 one year after the closing date of the Property purchase; however, any amounts after the first anniversary of the closing date of the Property purchase shall be credited to the plaintiffs in respect of their purchase of Parcel 6 and shall be in addition not the credit of their deposit referred to above.
12. Pending the declaration of the Condominium and transfer of Parcel 6, the plaintiffs shall be entitled to exclusive use and occupation of the land and building located on Parcel 6 as indicated on the attached sketch together with the grounds adjacent thereto and shall be responsible for one-third (33%) of the Common Expense Charges only in relation to the entire property.

[10] The agreement alludes to the extent of the defendants’ obligations in relation to achieving the condominium conversion necessary to complete the purchase and sale of part 6:

13. On completion of the purchase of the property (Post yard) by the corporation, the Corporation shall “ proceed expeditiously” with an application to convert the property into a Condominium comprising 7 units and common elements as illustrated in the sketch attached hereto. All costs associated or incurred with the conversion into condominium units shall be the responsibility of the Vendor only.
14. Upon registration of the Condominium, the parties shall set a completion date for the Parcel 6 Agreement and the Corporation shall transfer to the plaintiffs Parcel 6 for the consideration set out in the Parcel 6 Agreement.
15. On transfer of Parcel 6 from the Corporation to the Plaintiffs, the Initial Deposit of $75K and all payments of $1,333 made after the first year, if any shall be credited against the total purchase price of Parcel 6 of $275K in favour of the Plaintiffs.

The Litigation

[11] The property was not converted into a condominium. The respondents did not demand a return of their deposit. Instead, on September 19, 2018, they registered a Notice of Option to Purchase on title to the property, and on November 1, 2018, commenced an action in the Superior Court (the “Action”). The statement of claim, which was served on the appellants on November 9, 2018, claims an equitable lien over the property or in the alternative $300,000 for breach of contract or breach of trust, $100,000 in general damages, a certificate of pending litigation (“CPL”), and other relief.”

[12] The plaintiffs continued in possession making monthly remittances of $1333 after the two-year limit. Rather than remitting to the defendants this account by court order from February 2020 is paid into court pending further court order. The accumulation to date is in the range of $75,000.

[13] The plaintiffs’ position is that the summary judgment process is inappropriate.

[14] The plaintiffs cite the following evidentiary issues that they submit render summary judgment inappropriate as genuine issues requiring a trial:

(a) Whether the Defendants extended the timeframe for the approval of the condominium development contemplated by the Agreement by continuing to pursue the development into 2019, despite their contention that “[t]he Agreement became null and void in 2018, following the defaulting event” (b) The veracity of the statements by Ms. Zander regarding planning proposal submitted by the Defendants on March 11, 2019, namely that the township would “would prefer to see a plan of subdivision or condominium rather than individual severances.” (c) The basis for the opinion evidence proffered by the Ms. Savage that the cost of developing the condominium development was not feasible as the cost “would be prohibitively high and potentially well in excess of $1 million dollars”; (d) Whether any requirements for severance that were deemed to be prohibitively expensive were appealed to an appropriate tribunal; (e) Whether the Defendants ever contemplated the submission of a revised plan or formal application to the Township that complied with various requests from the Township Planning Committee and Planning Administrator; (f) Whether Mr. Trayonov knew and appreciated the alleged conditions precedent outlined in the Agreement; (g) Whether Mr. Trayonov had an honest belief that that Agreement entitled him to ownership of Parcel 6 contemplated by the Agreement; (h) What qualities of the Property make it unique in the view of Mr.Trayonov; and (i) Whether the amounts claimed as “fair market rent” in the affidavit of Ms. Savage are accurate;

[15] The defendants’ position is this is a case for summary judgment, the contact between the parties was subject to a condition precedent in respect to approval and registration of a condominium over the subject lands by September 30, 2018, that did not happen, the unit – lot 6 on the draft plan does not exist and the contract is terminated. The implications flowing from that ruling would be that the defendants are entitled to commercial rent from the plaintiff for use of the Post Yard over the last six years, the money in court, discharge of the CPL and notice of option to purchase.

[16] For the reasons following the summary judgment/not summary judgment is tabled to later in these deliberations.

[17] In the final analysis, the essence of the disagreement between the parties lies in an equitable loss allocation in accordance with the agreement. What were their reasonable expectations?

[18] The starting point for interpreting a contract is the words of the Agreement. They should be given their ordinary meaning, and the factual matrix or circumstances in which the Agreement was negotiated and entered into should be taken into account. This was a commercial document and the meaning to be accorded to it should be consistent with good business sense and avoiding commercial absurdity Dodge/Magma infra.

[19] This is another in a long line of Planning Act cases.

[20] A vendor in Ontario cannot transfer a part lot without regulatory approval. The plaintiff in paragraph 8 of his affidavit deposed April 2, 2024, erroneously declares that the agreement was not conditional on anything.

[21] Planning Act: subsection 50(21) Conveyance, etc., contrary to section not to create or convey interest in land

(21) An agreement, conveyance, mortgage or charge made, or a power of appointment granted, assigned or exercised in contravention of this section or a predecessor thereof does not create or convey any interest in land, but this section does not affect an agreement entered into subject to the express condition contained therein that such agreement is to be effective only if the provisions of this section are complied with. R.S.O. 1990, c. P.13, s. 50 (21).

[22] Paragraph 13 of the agreement is a variation from the standard OREA clause.

13. On completion of the purchase of the property by the corporation, the Corporation shall “ proceed expeditiously ” with an application to convert the property into a Condominium comprising 7 units and common elements as illustrated in the sketch attached hereto. All costs associated or incurred with the conversion into condominium units shall be the responsibility of the Vendor only.

[23] By comparison, paragraph 14 of the standard OREA APS provides:

Planning Act: This Agreement shall be effective to create an interest in the property only if Vendor complies with the subdivision control provisions of the Planning Act by completion and Vendor covenants to “ proceed diligently ” at his expense to obtain any necessary consent by completion.

[24] The provisions of s. 50(21) of the Planning Act were not complied with. As such, the plaintiff does not have a legal interest in the lands in question.

[25] What then were the vendor’s obligations under this contract?

[26] It is a fact that the parties had the benefit of independent legal advice in the negotiation and finalization of the agreement. The reporting correspondence from counsel to their respective clients is not part of the record.

[27] In furtherance of their contractual obligations, the defendants paid to clear land - $51,000, installed a septic bed - $38,700, drilled a well for potable water - $7,500 to accommodate the plaintiffs use of the property.

[28] By this agreement, the plaintiffs became lenders. The deal at its core set out the financing terms between the parties. Either the defendants registered the condominium, or it did not. If not, the plaintiffs had the defendants’ promise to repay the face value of the loan without interest and Wally’s personal guarantee. The defendants had interest free use of the plaintiffs’ funds without security for two years while Wally negotiated with the municipality for the conversion.

[29] As regards the financing aspect of the agreement, the agreement treated a failure to achieve the condominium conversion of the property as a defaulting event that triggered repayment of the plaintiffs’ advance, if demanded.

[30] In return for the use of the plaintiffs’ deposit without interest for the two years the defendant undertook to proceed expeditiously at its expense with the application to convert the Pole Yard lands into the vacant land condominium conversion and bring the transaction into compliance with the Planning Act, subsection 50(21).

[31] The plaintiffs entered into the agreement as opportunity to acquire ownership of a condominium unit as home to their granite retail business. That there are significant qualitative differences between ownership of a lot in a plan of subdivision that is in compliance with all municipal planning and zoning regulations and ownership of a condominium unit with the fallout from the zoning and Official Plan deficiencies was not addressed.

[32] Mr. Trayanov preferred mortgage payments to rental payments. The agreement gave them exclusive possession of the land area depicted as parcel 6 on the sketch. It also provided that if the conversion failed, they would at their option vacate with their $75K without interest and without accounting for improvements made to the property over the two years contemplated by the agreement.

[33] The plaintiffs went all in on improvements to the block building on the part 6 area of the property in 2016 - 2018. They paid $172,500 for general contract work, $4,000 for propane lines and a further $17,000 in materials they installed themselves (totalling 193,500). They estimate out of pockets of approximately $50,000 if they are required to vacate and locate elsewhere. They have carried on their business from this location since.

[34] The starting principle is that the defendants were not in this context promising to obtain planning permission for severance as planning permission is out of the control of the parties and is a condition precedent to fulfillment of the agreement. No one can waive this requirement. It benefits both parties. Neither can waive this requirement as Part 6 does not exist. The actual decision is out of their hands and rests solely with a third party.

[35] That said, where both parties were aware that planning consent was required, but the agreement was silent as to whether the vendor or the purchaser would obtain this approval, the Supreme Court implied a promise on the part of the vendor to act in good faith and take all reasonable steps to complete the sale. Dynamic Transport Ltd. v. O.K. Detailing Ltd., 1978 SCC 215, [1978] 2 S.C.R. 1072, 85 D.L.R. (3d) 19, at p. 1084.

[36] Justice Dickson noted at pp. 1082-1083:

“The existence of a condition precedent does not preclude the possibility of some provision of a contract being operative before the condition is fulfilled, as for example a provision obligating one party to take steps to bring about the event constituting the condition precedent.”

[37] While the Court is unable to order specific performance without Planning Act approval, the Court can order compliance with the terms of the agreement.

[38] Whether the defendants honoured their obligation to act in good faith and take all reasonable steps with an application or not and if not how to equitably apportion the losses suffered is the issue.

[39] The plaintiffs’ claim for indemnity having invested in improvements to property they do not own is problematic.

[40] What is encompassed by that promise in light of the factual matrix in September 2016?

[41] In the Dodge/Magma case (cited as John E. Dodge Holdings Ltd. v. 805062 Ontario Ltd., 2003 ONCA 52131, 63 O.R. (3d) 304, [2003] O.J. No. 350) para. 14 of the APS specifically imposed an obligation on the vendor to "proceed diligently at his expense to obtain any necessary severance consent". The dictionary definition of diligence as contained in Webster's Encyclopedic Unabridged Dictionary of the English Language is "constant and earnest effort to accomplish what is undertaken". One synonym given for diligence is perseverance.

[42] This issue was discussed by Megarry J. in Wroth v. Tyler at p. 50, as follows:

The matter is perhaps summed up as well as is possible by Lord Redesdale L.C. in Costican v. Hastier (1804), 2 Sch. &Lef. 160, 166:

“When a person undertakes to do a thing which he can himself do, or has the means of making others do the court compels him to do it, or procure it to be done, unless the circumstances of the case make it highly unreasonable to do so.”

[43] In Hogg v. Wilken et. al. (1975), 1974 ONSC 500, 5 O.R. (2d) 759, Mr. Justice Lerner was asked to rule of the vendors’ obligations under an APS conditional on Planning Act approval for a severance. The pertinent clause was: This offer is conditional upon the vendor being able to obtain a severance of two acres the house and shed from the above-mentioned lots on or before May 15, 1974. The facts were that the vendors had commenced the requisite application but withdrew it when told that certain members of the land division committee were not in favour.

[44] Justice Lerner determined that the vendors were obligated under the contract not only to make application for approval but to continue the application in good faith until it was dealt with on its merit and could not rely on their own failure to avoid that obligation.

[45] Justice Lerner determined that the vendors did not proceed in good faith on the facts before him. They were unable to identify the members of the committee who were not in favour of the application or their grounds. The only way to test the application was to push it though for a vote notwithstanding.

[46] The facts in Dodge/Magma were that Magma obtained severance consent but did not like the conditions – namely construction of a road extension. They were sophisticated parties with experienced inhouse legal services. Neither Magna nor Dodge had need for the road extension and building it would have been solely for the benefit of the property to the north.

[47] The outcome, as in Hogg turned largely on the facts. The Court of Appeal’s first question was: What (as matter of fact) was the intention of the parties at the time the Agreement was signed?

[48] It was found as fact that Magma intended to bear responsibility for achieving PA approval – they had experienced in-house land development counsel and had many opportunities to amend the condition precedent clause but did not.

[49] It was also found as fact that Magma intended to build the road extension when they signed the contract. As such, it was not commercially unreasonable for it to assume the burden of building the extension as that is precisely what it had intended to do at that time. It was not intending to build services only to the Caldari Road stub.

[50] Magna's next submission was that the extent of its obligation in law, pursuant to para. 14, is to act in good faith and to use best efforts to meet its obligation to obtain a severance. It submits that it fulfilled this requirement and ought not have been obliged to appeal the decision of the Committee to the OMB.

[51] In the context of the obligation to proceed diligently, the Court of Appeal determined that the statutory scheme provided by the Planning Act does not end with the decision by the Committee. If the vendor is of the opinion that the imposition of a condition by the Committee is unreasonable, or otherwise not well-founded, it has the right to appeal to the Ontario Municipal Board and a further right to have this decision reviewed by the Divisional Court. There is no need to read a requirement into para. 14 that any condition imposed by the Committee must be "reasonable" because reasonableness is provided for through the existing process under the Planning Act and related legislation that functions as a complete code. Hence, it is appropriate that the process under the Planning Act be the arbiter of the reasonable conditions for a severance, not the vendor. The vendor cannot take advantage of its failure to invoke the remedies available to it to terminate the Agreement.

[52] Further at paragraph 28, in deciding the extent of the vendor's obligation under para. 14, the sole consideration cannot be the fact that the particular circumstances under which the Agreement of Purchase and Sale was entered into have changed so that the imposition of the conditions of severance have become more onerous. Requiring compliance with the law is not unreasonable. Paragraph 14 creates a clear obligation on Magna's part to comply with the conditions of severance. Magna, however, submits it is still entitled to terminate the Agreement on three distinct grounds.

[53] Magna asserted the right to terminate the Agreement based on unreasonableness, frustration or commercial absurdity. The ONCA ruled against Magma based on the finding of fact that when Magma signed the contract it intended to build the road.

[54] As to unreasonableness, the Court concluded that contemplated factoring in the circumstances existing when the agreement was signed and perhaps circumstances that arise afterwards. The trial judge found that the obligation to build the road extension was not unreasonable either at the time the agreement was signed – Magma intended to construct the road when they signed and notwithstanding road construction Magma would not lose money on the deal. Magma lost on facts.

[55] Frustration – the Court in Dodge Magma discussed the doctrine of frustration and its application.

[56] In Naylor Group Inc. v. Ellis-Don Construction Ltd., 2001 SCC 58, [2001] 2 S.C.R. 943, 204 D.L.R. (4th) 513, Binnie J. at paras. 53-56 of his reasons:

Frustration occurs when a situation has arisen for which the parties made no provision in the contract and performance of the contract becomes "a thing radically different from that which was undertaken by the contract": Peter Kiewit Sons' Co. v. Eakins Construction Ltd., 1960 SCC 37, [1960] S.C.R. 361, per Judson J., at p. 368, quoting Davis Contractors Ltd. v. Fareham Urban District Council, [1956] A.C. 696 (H.L.), at p. 729.

[57] In Dodge/Magma, the parties made provision in the contract for what was to happen. Magna undertook to obtain Planning Act Approval for the proposed transfer, at its expense. The possibility that Magna might be required to build an extension of Caldari Road was a foreseeable event at the time that it entered into the Agreement with Dodge. Hence, the decision of the Committee did not create a radical change in Magna's obligation. There was no sufficient supervening event as required for the application of the doctrine of frustration.

[58] In the case at bar, the supervening event would have had to alter the nature of the appellant's obligation to contract with the respondent to such an extent that to compel performance despite the new and changed circumstances would be to order the appellant to do something radically different from what the parties agreed to under the contract.

Commercial Absurdity

[59] The Court in Dodge/Magma adopted the hearing judge’s reasoning on this issue at paragraph 35:

[35] In response to Magna's argument that the Committee of Adjustment's requirement to extend Caldari Road resulted in a commercial absurdity, the court of appeal adopted the conclusions of Lax J. (Court of first instance) at para. 43 of her reasons:

It seems to me that the commercial absurdity here is not the purchaser's interpretation of the vendor's obligation under the Planning Act provision. It is one thing to imply a good faith obligation on a vendor to use best efforts when the agreement is silent [as in Dynamic Transport, supra]. The vendor's covenant here is express and unqualified. [ Magna] assumed the risks of obtaining compliance with the Planning Act. These risks included the cost of dedicating and constructing the road. There is nothing commercially absurd about requiring the vendor to pay for this, as this is the agreement that the parties made. This is particularly so where the vendor not only contemplated for some time that it will be required to do this, but was prepared to do this at the time the Agreement of Purchase and Sale was signed. That the vendor later changed its mind can in no way affect its covenant. [page317]

[60] On the other hand, in a case where the Court found that the vendor had vigorously and persistently pursued the requisite regulatory approval which was denied, the Court of Appeal determined the contract to be frustrated – Focal Properties Limited v. George Wimpey Canada Limited (1976), 1975 ONCA 49, 14 O.R. (2nd) 295 (C.A.).

[61] It is fact in the case at bar that the defendants assumed the risk of pursuing a vacant land conversion. It is also fact that a full-fledged plan of subdivision is a much more complicated and expensive undertaking than the condominium conversion they hoped for.

Expeditious

[62] The dictionary meaning of expeditious as contained in the Oxford English Dictionary, 11th edition, is quick and efficient. The parties had the benefit of independent legal advice when the agreement was crafted.

[63] Given that the agreement was drafted with legal advice, the parties intended a lower standard of application by the vendor defendant than diligence and perseverance; something closer to the to duty to act in good faith and take all reasonable steps to complete the sale.

[64] What did the defendants do in furtherance of the condominium conversion Application?

[65] Wally attended the Beckwith Planning Committee meeting on October 11, 2016. The minutes revealed Wally’s plan to develop a 7-lot industrial park. The Planning Administrator’s summary was made in the context of a pre-consultation. It was not promising. He noted the Applicant’s wish to develop a condominium park but recommended that the applicant proceed by way of subdivision. That process involved in an industrial subdivision involved public consultation with rights to appeal to the OMB in accordance with the Official Plan as well as studies in the public interest that might include hydrogeological review, viability of a communal system and the need for security, stormwater and drainage management plans, a market analysis to demonstrate there was need for this development in the municipality, traffic analysis to the MTO to illustrate sight lines traffic movement on the provincial highway, noise study and others as needed.

[66] The administrator noted zoning deficiencies in the proposal that included inadequate lot sizes, inadequate setbacks for front and side yards, inadequate road allowance, observations that parking and loading requirements were not included in the plan and that input from the fire department was required.

[67] The municipal administrator recommended that Wally submit an industrial plan of subdivision in compliance with lot size and setback requirements and a roadway to be constructed to municipal standards with view to eventual assumptions by the municipality.

[68] The devil is in the details. Wally went to the municipality within two weeks of closing the purchase. If his intentions were to impress the Pole Yard with the condominium sketch attached to the written agreement with the plaintiffs, those intentions were crushed. The municipality quite correctly declined to approve the creation of a development within its boundaries that was so much in contravention of its Official Plan and land use zoning by-laws.

[69] As amateurish as the proposal was, it put on full display Wally’s land development intentions. He never intended to incur the expenditure in either time or money involved in application for a plan of subdivision. Aside from the significantly greater cost involved in construction of a road to municipal standards complete with the usual services, the additional 35 feet of road width required for dedication to the township had to be at the expense of lot areas and setbacks.

[70] In a better world, Wally would have alerted the plaintiffs to this turn of events on October 12, 2016 – next day. According to the plaintiffs, Wally reassured the plaintiffs that the condominium conversion plan remained viable when it was not.

[71] Wally re-attended before the Beckwith Planning Committee on January 14, 2019. The plan was unchanged. The Planning Administrator confirmed that a vacant land condominium could be used to reduce the width of the road allowance but that the condominium units would have to be zoning compliant and the Township would expect the same reports, application fees and review procedure as it would with a plan of subdivision.

[72] The matter was tabled to the next meeting On February 11, 2019. The committee indicated they would be open to the concept of an industrial plan of subdivision.

[73] The upshot is that the condominium concept for this eleven-acre corner lot conceived by the defendants was untenable. Wally’s proposal for approval of a development scheme entailed inadequate lot sizes, inadequate setbacks for front and side yards, inadequate road allowance, inadequate parking and loading allowances, non-compliance with MTO site lines without the standard studies and public consultations epitomized the value of municipal planning administration.

[74] Wally did spend $4,000 to secure a topographical map of the Post Yard.

[75] The municipal planner wrote to the defendants on November 26, 2019, to confirm that Wally went before the council and planning staff with various options – October 16, 2016, April 9, 2018, January 14, 2019, and February 11, 2019. If anything, he understated the difficulties facing the project when he wrote “the Township has not issued support for any of these plans for this property as more revision to the plans would be required.”

[76] Undeterred, Wally was able to bring contiguous landowners together in March 2019 to propose industrial development of 67 acres across four properties. This would have included Wally’s Post Yard acreage and three others and superseded Wally’s condominium proposal. This proposal involved a paved road with access points to two highways intended to be conveyed to the municipality. Again, the prospect of a plan of subdivision was rejected as the up-front investment was prohibitively expensive. Rather than a plan of subdivision Wally proposed to create lots by a series of severances.

[77] Faced with prospects for necessary official plan and zoning amendments and the expense of the paved road construction to municipal standards, again all up-front spending, Wally realized he was in over his head and this initiative went no further than pre-consultation.

Specific Performance

[78] The context is that the plaintiffs in the event of breach of contract can accept the breach and take damages or reject the breach and pursue performance.

[79] It is commercially absurd to compel the defendants by an order for specific performance to honour the Agreement and file the requisite material for an application in support of a vacant land condominium conversion of the Pole Yard. That application, as contemplated by the litigants in September 2016 is bound to be rejected, is a waste of time, money and resources.

[80] Further, as noted earlier, a plan of subdivision is qualitatively different from a condominium conversion that was contemplated when the agreement was drawn, which was why Wally preferred the latter. An order compelling the defendants to undertake the subdivision process as it was outlined by the municipal planner in October 2016 is a re-write of the Agreement between the parties and is contra-indicated. The plaintiffs who had independent legal representation did not contract for a plan of subdivision with all the accoutrements.

[81] The complexities and process for subdivision approval is manifestly more multi-faceted that for a severance application – as in Dodge Magma and Hogg. An order compelling the defendants to do something qualitatively different than they contracted to do is more than specific performance.

[82] All things being equal, specific performance will be granted only if the plaintiff can demonstrate that the subject property is unique. In order to show that a property is unique, the party seeking specific performance must show that the property has a quality that cannot be readily duplicated elsewhere. This quality should relate to the proposed use of the property and be a quality that makes it particularly suitable for the purpose for which it was intended. The time when a determination is to be made as to whether a property is unique is the date when an actionable act takes place, and the wronged party must decide whether to keep the agreement alive by seeking specific performance or accept the breach and sue for damages.

[83] The degree of uniqueness of the property to the plaintiffs in 2018 sufficient to meet the test for specific performance is made out and if the court had the authority to order the transfer the order would issue.

[84] As Justice Lerner observed in Hogg, specific performance is not open to the plaintiffs because of subsection 50(21). The plaintiff is seeking the property and damages in the alternative. On the facts Justice Lerner had, he determined that they were entitled to test their right to same. On a claim for damages, they would have to prove that the defendants were legally capable of conveyancing, and they could not prove that without a determination by land division committee. On the other hand, he determined that the vendors could not rely on s. 50 of the Planning Act until they had completed a bona fide application for consent.

Discussion

[85] The agreement contemplated condominium conversion of title. Wally hoped to thereby circumvent municipal official plan and zoning requirements. He had eleven acres. Minimum lot size for the applicable zoning for this property entailed .8 hectare (1.5 acres) lots. The required road allowance, necessary for severances, width is 20 meters (60 feet). The sketch provided road width of 25 feet. Fire fighting considerations alone denuded this proposal of merit. The required road allowance at the least entailed a reduction in the number of lots from seven to 6 or maybe 5.

[86] Of course, the municipality was not going to approve the plan. Planning committee asked for a plan of subdivision in compliance with the township OP and zoning. The plaintiffs were represented by legal counsel when the deal was hatched. They would have been advised of the difference in effect between a compliant municipal road and an access trail co-owned through a condominium corporation with the other properties.

[87] Part 6 on the sketch is not easily severable. Severance approval requires among other things frontage on a municipal road for access of which there is none.

What Remedy?

[88] Wally did what he said he would do – he proposed the conversion of the land to a vacant land condominium complex based on the sketch attached to the agreement between the parties. What he failed to do was to notify the plaintiffs in timely fashion that the proposal in the agreement would never achieve municipal approval and that appal to the Ontario Land Tribunal given the Official Plan, zoning deficiencies and other regulatory deficits was futile.

[89] Could Wally have done more? Yes. He knew the plaintiffs advanced the $75K without interest solely with the view to ownership. He could have at least completed a cost benefit analysis of the instruction received from the municipality. He did not. For that he breached the Agreement and exposed the defendants to liability.

[90] On the other hand, the plaintiffs went all in on a property they did not own hoping for the best. As counsel for the defendants noted, they are to some extent authors of their own situation and ought not to expect full indemnity.

Appropriateness of Summary Judgment Process

[91] As the suitability of the summary judgment motion procedure is contested, it is an issue requiring attention.

[92] At paragraph 30 of the ruling, Justice of Appeal Van Rensburg noted:

The parties indicated that if the appeal were granted, they would be ready to proceed with a motion for summary judgment, and they are encouraged to do so without further delay.

Incumbent Counsel for the plaintiffs became unavailable close in time to the motion return. Counsel, on the motion advanced the position for the first time in the plaintiffs’ factum that the file as constituted is unsuited for summary judgment.

The plaintiffs’ position on the motion is that this is not a case for summary judgment; that if it is then the plaintiffs are entitled to an order for specific performance of their contract, or in the alternative damages in the range of $300K

Suitability of summary judgment process on the facts before this Court

[93] The procedure for summary judgment is found in Rule 20.04(2)(a) of the Rules of Civil Procedure, which permits summary judgment to be granted if the Court “is satisfied that there is no genuine issue requiring a trial with respect to a claim or defence”

“There will be no genuine issue requiring trial when the judge is able to reach a fair and just determination on the merits on a motion for summary judgment. This will be the case when the process

1. allows the judge to make the necessary findings of fact,
2. allows the judge to apply the law to the facts, and
3. is a proportionate, more expeditious and less expensive means to achieve a just result.”

[94] The Supreme Court in Hyrniak articulated the two-step approach a motions judge should take in deciding whether to grant a motion for summary judgment:

(a) First, the motion judge must determine if there is a genuine issue requiring a trial based on the written record and without resorting to its new powers under Rule 20.04(2.1) or 20.04(2.2); and (b) If there appears to be a genuine issue requiring a trial, the motion judge must then determine if the need for a trial can be avoided by using the new powers under Rule 20.04(2.1) or 20.04(2.2) and it would not be contrary to interest of justice to do so.29

[95] The Supreme Court’s admonition instructing a change in culture is tempered by independence of the judiciary principles. The obligation of ensuring that a case is a suitable one for the summary judgment process rests with the Motion Court judge. We are required to apply the Hyrniak analytical process to the evidentiary record in order to assess suitability. There will always be the concern that in effort to dispose of a case in summary fashion the proper analysis of the evidence is compromised.

[96] I have no difficulty concluding this matter is appropriated for summary judgment on the issues. With respect, the pertinent facts are not in dispute. I am able to apply the principles in the caselaw to the facts. The issues the plaintiffs raise in opposition to the summary judgment process are collateral to the main and with respect merge into the ruling.

[97] The plaintiffs’ investment in the property enhanced the value of the block building. The defendants assert that the building in its present condition should attract rent income of $4K per month. Wally let the plaintiffs incur those improvements knowing he could not honour the commitment to transfer ownership.

[98] For a plaintiff to successfully bring a claim against a defendant for unjust enrichment, the plaintiff has to prove three things: (a) the defendant has been enriched or received a benefit, (b) there has been a “corresponding deprivation” of the plaintiff, and (c) there is no “juristic reason” for the enrichment.

[99] In my view it would be inequitable for the defendants to receive the benefit without fair compensation.

[100] On the other side, the plaintiffs with the benefit of legal representation went ahead with improvements to property they did not own. Further, the improvements will have been largely written down against income as capital cost allowance over the six to eight years since the improvements were made. I’ve applied a 10% discount to their out-of-pocket claim.

[101] For the defendants this order is a cost of doing business. For the plaintiffs the order to relocate is accepted as life altering.

[102] Judgment to issue:

1. The plaintiffs shall have judgment against the defendants in the sum of $285,000 inclusive of all claims including repayment of the deposit money of $75K, payable forthwith (calculated as $193,500 out-of-pockets plus $40,000 relocation costs minus 10% discount plus $75,000 deposit = $285,000);
2. The money in court to the credit of this action pursuant to the order of Justice Labrosse dated February 10, 2020 is to be paid out of court to the defendants forthwith;
3. The order of Justice Labrosse is rescinded;
4. The plaintiffs shall deliver vacant possession of the area they occupy on the Pole Yard lot within 60 days of satisfaction of the judgment against the defendants;
5. In default, Writ of Possession to issue against the plaintiffs sixty-one days after satisfaction of the judgment against the defendants;
6. The notice of option registered by the plaintiffs against the Pole Yard title shall be struck at the plaintiffs’ expense;
7. The Certificate of Pending Litigation registered against the Pole Yard title shall be struck at the plaintiffs’ expense;
8. Counsel are to deliver written submissions regarding costs within thirty days.

The Honourable Mr. Justice Rick Leroy Released: October 25, 2024

COURT FILE NO.: CV-Ottawa-18-78306 DATE: 2024/10/25 ONTARIO SUPERIOR COURT OF JUSTICE BETWEEN: Vasil Trayanov and Olia Stantcheva Plaintiffs – and – Icetrading Inc. and Daeja Bjork Kjartandottir for the estate of Volundur Thorbjornsson Defendants REASONS on motion for summary judgment The Honourable Mr. Justice Rick Leroy Released : October 25, 2024