2025 ONSC 1822
Court File No.: CV-22-00000006-0000
Date: 2025-03-26
Ontario Superior Court of Justice
Parties
Between:
Willy Van Paassen Farms Limited, Plaintiff
— and —
P. & S. VanBerlo Limited
— and —
Royal Bank of Canada, Defendants
And Between:
P. & S. VanBerlo Limited, Plaintiff by Counterclaim
— and —
Willy Van Paassen Farms Limited, Defendant to Counterclaim
Appearances:
D. Bowyer, Counsel for the Plaintiff
D. Touesnard, Counsel for the Defendant
D. Touesnard, Counsel for the Plaintiff by Counterclaim
D. Bowyer, Counsel for the Defendant to the Counterclaim
Heard: September 19, 20, and 23, 24, 2024
Reasons for Judgement
S. Antoniani
Overview
[1] The Plaintiff, Willy Van Paassen Farms Limited, is named after its principal, Willy Van Paassen (“Willy”). All of the evidence for the Plaintiff was provided by Willy.
[2] The Defendant, P. & S. VanBerlo Limited, is operated by Peter VanBerlo (“Peter”). Peter provided the majority of the evidence on behalf of the Defendant.
[3] The Plaintiff asks this court to rescind the Agreement of Purchase and Sale (the “Agreement”) for the real property of 2009 Vittoria Road, Simcoe, Ontario (the “Property”), sold and transferred to the Defendant on August 17, 2018. The Property consisted of about 70 acres of farmable land (the “Farmable Land”) and a residence with surrounding buildings and structures (the “House”).
[4] At the time of signing the Agreement, the parties’ general intention was that the Defendant, a large-scale commercial farming operation, would purchase and take title to the Property. The Defendant was to apply to sever the House as “surplus” to its large-scale farming needs, which would result in the Property being divided into two parcels. Upon receiving consent to sever, the Defendant was to transfer the House back to the Plaintiff, while retaining title to the Farmable Land. In the interim, while the parties waited on the severance application, Willy and his wife would continue to occupy the House as their home, rent free.
[5] At the time the Agreement was signed, Willy and his wife resided in the House, which had been in his family for many decades. Willy built the House himself, and retaining the House was an important factor to Willy in negotiating this Agreement.
[6] The purchase price was $780,000 for the land, and, in the event that a severance could not be obtained, the Defendant agreed to pay an additional $300,000 to the Plaintiff, and to provide a rent free lease, so that Willy could continue to reside in his House, for up to 21 years.
[7] The Plaintiff alleges that the Defendant breached a fundamental condition of the Agreement, when the Defendant obtained the severance but then failed to register it, and instead allowed the Consent to Severance to lapse. At the time of the trial, the severance had lapsed, and the transfer of title in the House to the Plaintiff is not presently possible.
[8] The Defendant counterclaims, alleging that the Plaintiff was in breach of the Agreement, having caused the severance to become more complicated than that which the parties had agreed to, and then refusing to pay for the additional costs related to obtaining the more complex severance. Further, the Defendant alleges that the Plaintiff refused to pay property taxes related to the House that Willy and his wife occupied, rent free. The Defendant claims that the payment of those taxes by the Plaintiff was an implicit term of the Agreement.
Issues
[9] The parties disagree on many facts, and raised a number of issues to be determined on this trial:
- Did the Agreement contemplate that the parties would only apply for and share the cost of a “simple severance”, and thus any additional costs incurred, if the scope of the application was more complicated than a “simple” severance, would be the sole responsibility of the Plaintiff?
- Should the Agreement be interpreted such that the Plaintiff was responsible for the residential component of the property taxes after the sale to the Defendant, while Willy and his wife were residing in the House rent free?
- Were the terms providing for shared costs of the severance, and for property taxes (if such term is found to exist), warranties, conditions, or intermediate terms of the Agreement?
- Was the term requiring the registration of the severance, if obtained, a fundamental condition of the Agreement, or was it simply a warranty or an intermediate term?
- Were either of the Plaintiff, the Defendant, or both, in breach of the Agreement? Or was the Agreement so lacking in terms, and inconsistent, as to have been void ab initio?
- If either of the Plaintiff or the Defendant was in breach of the Agreement, was the breach of a fundamental condition of the Agreement, or was it of a warranty or a lesser important term? What are the remedies in the event of any breach?
New Severance Application
[10] At the conclusion of the trial, the parties jointly asked that my decision be structured to first permit the Defendant to re-apply for the same severance of the House and related structures, such that it could be transferred to the Plaintiff. A fresh consent to severance would resolve the most significant issue between the parties.
[11] Even in the event that a fresh severance is obtained, other lesser issues remain outstanding. The parties seek a determination as to who is responsible to pay the costs of both the original and new severance applications, and who is responsible to pay the residential portion of the property taxes while Willy resides as a tenant in the House.
Decision
[12] For the reasons that follow, I accede to the request of the parties and direct that a fresh severance application be made. I order the Defendant to re-apply for the same severance which had received consent in 2019, amended only as necessary to account for changes in the legislative scheme, or as agreed by the parties. Terms for the new severance application are provided in some detail below.
[13] On the other issues in dispute at trial, and in the event that the severance is not granted, I find that:
- The Agreement was not void ab initio. The Agreement reasonably set out the necessary conditions. The fact that the Agreement was silent on some minor terms does not void it.
- The Agreement contemplates that the parties would share the costs of a severance application/zoning change application, if applicable. There is nothing in either the wording of the Agreement or the communications between the parties which I find restricts the contemplated application to a “simple severance”. I find that all the costs related to the obtaining of the original severance are to be shared equally by the parties. I find therefore that the Plaintiff was not in breach of the Agreement when it refused to pay what the Defendant has referred to as the “additional costs” of the severance. In any event, I find that the term of the Agreement which referenced share of the severance application costs was a warranty, and not a fundamental condition of the Agreement.
- The Agreement contemplates that Willy and his wife would continue to reside in the House, rent free, while the severance application was outstanding. On a balance of probabilities, I find that the Defendant, as the new owner of the Property, was responsible to pay for property taxes. There is no evidence available on the record that I accept, which leads to a conclusion that the parties intended that the Plaintiff would continue to be responsible for the residential portion of the property taxes once title in the Property transferred to the Defendant.
- I find that the registration of the severance, upon a consent to severance being obtained, was a fundamental condition of the Agreement, and not simply a warranty. I find that the Defendant breached a fundamental condition of the Agreement when he failed to register the severance.
- I find that the Plaintiff was not in breach of any term of the Agreement.
- I find that, in the event that the Defendant is not able to obtain a new severance, and to transfer title in the House to the Plaintiff, that the Plaintiff is entitled to the equitable remedy of recission.
Legal Principles
The Concepts of Rescission and Repudiation
[14] In Guarantee Co. of North America v. Gordon Capital Corp., [1999] 3 S.C.R. 423, the Supreme Court explained the difference between rescission and repudiation:
39 A fundamental confusion seems to exist over the meaning of the terms "rescission" and "repudiation." This confusion is not a new one, as it has plagued common law jurisdictions for years. Rescission is a remedy available to the representee, inter alia, when the other party has made a false or misleading representation. A useful definition of rescission comes from Lord Atkinson in Abram Steamship Co. v. Westville Shipping Co., [1923] A.C. 773 (U.K. H.L.) at p. 781:
Where one party to a contract expresses by word or act in an unequivocal manner that by reason of fraud or essential error of a material kind inducing him to enter into the contract he has resolved to rescind it, and refuses to be bound by it, the expression of his election, if justified by the facts, terminates the contract, puts the parties in status quo ante and restores things, as between them, to the position in which they stood before the contract was entered into.
40 Repudiation, by contrast, occurs "by words or conduct evincing an intention not to be bound by the contract. It was held by the Privy Council in Clausen v. Canada Timber & Lands, Ltd. [1923] 4 D.L.R. 751 (UK JCPC), that such an intention may be evinced by a refusal to perform, even though the party refusing mistakenly thinks that he is exercising a contractual right” (S.M. Waddams, The Law of Contracts (4th ed. 1999), at para. 620).
[15] The distinction between these two concepts is crucial, as the available remedies differ. As Guarantee Co. explains at para. 39 above, rescission is an act undertaken by the innocent party following a misrepresentation (or other essential error) made by the ‘non-innocent party’. Further, where the ‘act’ is carried out properly (i.e., unequivocally) and such is based on a proper vitiating event, the contract is rescinded, or void ab initio: see Guarantee Co. at paras. 41 and 47. No further election is required. The process surrounding repudiation is different: see Brown v. Belleville (City), 2013 ONCA 148, 114 O.R. (3d) 561. It requires the innocent party to elect whether to accept the breaching party’s repudiation/intention not to be bound: see Brown, at para. 53. Only upon election is the contract either terminated or upheld.
[16] As explained in Guarantee Co., at para. 42, where the court deems a party to have alleged rescission in place of a proper claim for repudiation, and vice versa, the court has the power to remedy such irregularity:
[42] [M]erely clarifying the distinction between rescission and an accepted repudiation does not end the discussion. Since “rescission” has frequently been used to describe an accepted repudiation, courts must be sensitive to the potential for misuse. To that end, courts must analyse the entire context of the contract and give effect, where possible, to the intent of the parties. If they intended “rescission” to mean “an accepted repudiation”, then the contract should be interpreted as such.
[17] The Ontario Court of Appeal has explained that rescission is an equitable remedy that is meant to put the contracting parties back in the positions they were in before entering into the contract (restitutio in integrum): see Urban Mechanical Contracting Ltd. v. Zurich Insurance Company Ltd., 2022 ONCA 589, 163 O.R. (3d) 652, at para. 35.
[18] Although the goal of restitutio in integrum is to restore the parties to their pre-contractual positions, the court has the ability to fashion remedies and make adjustments where complete restoration is not possible: Remedies and the Sale of Land, 2nd ed. (Toronto: Butterworths, 1998), P. Perrell (as he then was) and B. Engell.
[19] As Justice Centa stated in 1000425140 Ontario Inc. v. 1000176653 Ontario Inc., 2023 ONSC 6688, at para. 157:
Recission has both legal and equitable elements. Perfect restoration is not required, but the parties should be substantially returned to their pre-contractual state. Even where the parties cannot be restored precisely to the state they were in before the contract was signed, courts may still grant and tailor the recission remedy because it is an equitable remedy focussed on practical justice, not rigid technicalities [Footnotes omitted.]
[20] In (Attorney General) v. Collins Family Trust, 2022 SCC 26, [2022] 1 SCR 747, at para 58, the court considered recission:
Finally, rescission is a remedy of “last resort”: even if a party meets the test for rescission, it can be granted only if no alternative remedies are available;
However, the court qualified this comment at para 59:
The court must, in exercising its discretion, ask whether the alternative remedy is practical or adequate.
[21] And in its earlier decision in Redican v. Nesbitt, [1924] S.C.R. 135, at p. 153, the court stated:
[T]he practice has always been for a Court of Equity to give relief by way of rescission whenever by the exercise of its powers it can do what is practically just, though it cannot restore the parties precisely to the state they were in before the contract. [Emphasis added.]
Severance
[22] In Dynamic Transport Ltd. v. O.K. Detailing Ltd., [1978] 2 S.C.R. 1072, the Defendant had agreed to apply for severance of a four-acre parcel of land, from its 5.42 acre parcel, and to convey the severed four acre parcel to the Plaintiff. Upon making the agreement, the parties did not appreciate the fact that a parcel of four acres would cut through the middle of a warehouse on the land, which the Defendant wanted to keep. The Defendant argued that the agreement was null and void as it was too uncertain to be enforceable. Justice Dickson disagreed, and found that the only reasonable construction was that the four acre parcel was intended to be sold to encompass the warehouse. Further, on the issue of certainty of description of the land, Dickson J noted that courts have gone a long way in finding a memorandum in writing sufficient to satisfy the Statute of Frauds; judges have consistently attempted to ascertain and effectuate the wishes of the parties, undeterred by lacunas in the language in which those wishes have been expressed: see Dynamic Transport, at p. 1078.
[23] Further, the court may have regard not only to the language of the agreement, but to the surrounding facts of the case; in seeking to determine whether there is difficulty with respect to land description, it is open to the court to consider the conduct of the parties: see Dynamic, at p. 1081.
[24] In Dynamic, as here, the obtaining of the severance, which was outside the control of the parties, was found to be a condition precedent to the Defendant/vendor having to sell the severed parcel. However, the court found that there was an obligation on the Defendant to bring about the event which constituted the condition precedent, stating at p. 1084: “the court will readily imply a promise on the part of each party to do all that is necessary to secure performance of the contract”. The Defendant was ordered to make the severance application, and the court provided for an outcome in damages, in the event that the severance application was unsuccessful.
The Duty of Good Faith and Honest Performance
[25] As contracting parties, the Plaintiff and Defendant are bound by the duty of good faith and honest performance. There is an organizing principle of good faith that parties generally must perform their contractual duties honestly and reasonably and not capriciously or arbitrarily: Bhasin v. Hrynew, 2014 SCC 71, [2014] 3 S.C.R. 494, at para. 63. In Bhasin, the Supreme Court recognized that there similarly existed a duty of honest performance and this too applies as a general doctrine of contract law, rather than requiring a specific term within a contract.
[26] The decision in Bhasin does not require one contracting party to subrogate its own interests to those of the other party, but it does require a minimum standard of honesty in relation to performing the contract. At para. 86, the court states:
[86] “The duty of honest performance that I propose should not be confused with a duty of disclosure or of fiduciary loyalty. A party to a contract has no general duty to subordinate his or her interest to that of the other party. However, contracting parties must be able to rely on a minimum standard of honesty from their contracting partner in relation to performing the contract as a reassurance that if the contract does not work out, they will have a fair opportunity to protect their interests.”
Analysis
[27] Peter and Willy have known one another for their entire lives. It was understood that the intended outcome was to sell the farm, and have the Defendant retain the Farmable Land and return the House, which Willy had built himself, and which the family hoped to reside in for their remaining years, to the Plaintiff. I accept Willy’s evidence that he was told that there would be little risk that the severance would not be granted, but he understood that there was a possibility.
[28] The Defendant’s principal Peter identified himself as the biggest sweet potato farmer in Canada. The Defendant owns large tracts of farmable land and Peter testified to having over 100 people employed by the company. Peter has lawyers and consultants at his disposal, and made it clear during his evidence that his extensive holdings keep him busy, such that he pays little attention to the details of matters where he has hired experts to work on his behalf or for his company.
[29] I find that the documentation relating to the Agreement was prepared by lawyers acting on the Defendant’s instructions.
[30] The Agreement contained terms relating to the severance. Specifically, if the severance could be achieved, the Defendant would then transfer title in the House back to the Plaintiff. If the severance could not be achieved, the Defendant would keep the House, pay the Plaintiff an additional $300,000, and give the Plaintiff a 21-year rent free residential lease to continue to reside in the House. The implied goal was to keep the Plaintiff resident in his own home for most of the rest of his natural life.
[31] The Agreement was negotiated, and the Property was sold. The $780,000 was paid to the Plaintiff, and the Defendant filed the severance application. The Defendant hired a planning consultant, David Roe (“Roe”), to act for him in preparing the severance application and in negotiating the severance with the committee of adjustments. The severance of a house from farmable land as “surplus” is a common application in Simcoe, Ontario (the location where the parties reside and where the Property is located). Large scale farmers have an interest in acquiring more farmable land, but they have no need for multiple residences. As such, any house on the property is surplus to that purchaser’s needs.
[32] Roe prepared the severance application, and, by September 2019, the Committee of Adjustments had consented to the necessary minor variance and permitted the requested severance, subject to the fulfillment of conditions. The granting of a severance is accompanied by a Certificate of Official (the “Certificate”), which allows for the severance to be registered within two years of the receipt of consent. If the severance is not registered, the consent lapses and the Property remains unsevered, subject to a new application.
[33] In the two years following the sale and transfer of the Property to the Defendant, disagreements arose between the parties in relation to two main issues: 1) how the costs of the severance application should be divided, and 2) who was responsible to pay the residential portion of the property taxes during the time that the Plaintiff lived in the house, rent free.
[34] Although the severance was granted, the Defendant refused to register the severance and transfer title to the Plaintiff, until the issues relating to costs of the application and the residential portion of the property taxes were resolved. Payment was demanded of the Plaintiff, and the Plaintiff did not pay.
[35] The issues were not resolved, and the Defendant allowed the severance to lapse without registering it.
The “Simple Severance”
[36] The Defendant’s case rests largely on the contention that the parties had only agreed to share the costs of a “simple severance” of the property, and that the Plaintiff made demands which resulted in increased costs. The Defendant defined a simple severance as a severance that would have contemplated one acre of land or less and would not have involved any minor variance. One-acre severances are the most common surplus home severances and attract the least resistance from municipal councils.
[37] I reject the Defendant’s position as to the interpretation of the Agreement on this issue. The phrase “simple severance” does not appear in the Agreement, nor does it appear in any communication between the parties. It is a phrase that was used repeatedly at trial, by the Defendant, but it does not appear in the Agreement, and it was not supported by the Defendant’s own witness on this issue, as discussed below.
[38] I find that the position of the Defendant is at odds with the terms of the Agreement in several ways. At the time of signing, the parties agreed that the severance would be one acre or less, and that the Plaintiff would receive back title to the House, the shop (a kiln and barn), the septic system and the well servicing the House.
[39] After signing the Agreement, it was soon discovered that due to the realities of the Property, the Plaintiff would end up with about 1.7 acres in order to include the various agreed upon buildings and features, and to have ingress and egress from the parcel. At trial, the Defendant agreed that the additional land was not an issue for him, as it is not farmable land. The Defendant’s sole issue with the 1.7-acre parcel is that it required an additional appearance before the town council, along with negotiation and modifications to the original severance application, thereby increasing the severance costs by several thousand dollars.
[40] The parties agree that they never discussed the particulars of the severance application with one another at the time they negotiated the Agreement, or ever. They agree that neither ever measured the parcel of land that surrounded the House. They did agree that the parcel would be about one acre and that the House, the well, the septic system, and the Plaintiff’s shop would all be included in the severed surplus parcel.
[41] The items specifically included in the Agreement made the one acre size impossible. The shop which was intended to be part of the severed parcel was too large to be left on a severed residential property, and on its own it would have required either modification of the building, or a minor variance to be included in the application. It is obvious that the parties did not turn their minds to these details at the time that they entered the Agreement. In my view, it is equally obvious that the details were generally of little concern to the Defendant.
[42] The Defendant was the applicant for the severance. Roe, the Defendant’s consultant looking after the severance application, testified at trial. He gave evidence that the 1.7-acre parcel selected was the only reasonable way to carve out the buildings and features that were agreed upon, as well as having ingress and egress to the property. Roe testified that any parcel over one acre was bound to be met with some resistance from council and would involve some negotiations.
[43] The Agreement contemplates that the parties shall share the cost of a severance and/or rezoning as may be required. There is nothing in the wording that limits the severance to whatever severance would meet the least resistance.
[44] Roe also testified that he provided the Defendant with copies of the severance application documents. He stated that he reviewed the application with the Defendant, and that he went over the committee’s initial objections and that he then reviewed with the Defendant the details of the revised application he intended to propose. The Plaintiff was not Roe’s client, only the Defendant was, and Roe was clear that he did not take instructions from the Plaintiff.
[45] Peter testified on behalf of the Defendant, indicating that he was not aware of the particulars of the severance application. He believed that it was a “simple severance” with no issues. I find that Peter was either untruthful or willfully careless, or forgot, what his agent Roe explained to him. Peter admitted that he did not look closely at the details of the severance application, while maintaining that he was misled by the Plaintiff. I reject the position that the Plaintiff misled the Defendant as to the particulars of the severance application and the size of the parcel to be severed. I find that the Defendant simply did not give the details of the application much attention.
[46] During his testimony at trial, Peter responded “I don’t know, I am busy” and “I have no idea at this point what I am signing” in response to questions which intended to illicit his understanding of the particulars of the severance application. I impute the knowledge of the Defendant’s legal and planning consultant agents to the Defendant. I accept Roe’s evidence and I find that the Defendant was either actually aware that the application would necessarily involve some minor issues to negotiate, or elected not to concern itself with them.
[47] I rely on the evidence of Roe to find that the severance application, in this case, was neither simple nor particularly complicated. When the committee made objections to the initial application, Roe adjourned the meeting. Roe advised Peter with respect to what he felt were the most modest changes that could be made to the application in order for it to succeed. Roe’s assessment was correct, and the amended application was later resubmitted and accepted. Roe indicated that adjourning a hearing to amend and resubmit an application is not unusual in his experience.
[48] I find that the Defendant’s professional consultants were largely responsible for the Agreement and for the severance application. The Agreement did not limit the severance application to a “simple severance”, and I accept the evidence of David Roe that the application that was ultimately successful was not particularly complicated. I reject the Defendant’s position that the Plaintiff was responsible to pay anything other than a 50% share of the entire cost of the severance application.
[49] The Defendant argued at trial that the Plaintiff was in breach of the Agreement as Willy misled the Defendant about the size of the parcel, and that the Plaintiff was not entitled to more than one acre of land. The trial record includes a reporting letter to the Defendant from David Roe, dated October 23, 2018, which attached a survey sketch of the lands to be subject to the severance, and clearly shows the parcel to be 1.7 acres. The letter attached two sketches – one of the entire property and another with a section titled “severed lands”. If the Defendant was not aware that his application for severance was for a 1.7-acre parcel, it was because Peter chose not to avail himself of information that was provided to him by his own consultants.
[50] Moreover, I find that the issue of the size of the severed parcel was not relevant to anything in dispute between the parties at trial. Peter testified repeatedly that he was not concerned with the actual size of the parcel that the Plaintiff would retain. Peter well understood that the area around the House was not farmable and therefore, of no significant value to him.
The Property Taxes
[51] The Agreement signed by the parties says that Willy and his wife shall remain in the House “rent free”. It is silent on the issue of property taxes. Willy has continued to reside in the House since title in the Property was transferred to the Defendant. The Plaintiff maintains the House and pays for the utilities but has steadfastly insisted that a residential tenant does not pay property taxes.
[52] Neither party presented evidence or law on this issue. On a balance of probabilities, with the Agreement as drafted being silent, and on the basis that the parties agree that the issue of payment of property taxes was not discussed between them before they signed the Agreement, I find there was no term that required the Plaintiff, as a residential tenant, to pay the property taxes once title was transferred to the Defendant. I find that the property taxes are payable by the registered owner, the Defendant.
Failure to Register the Severance
[53] By the time the severance was granted, the Defendant took the position that the Plaintiff owed him approximately $20,000 total, in order to cover its share of the severance application costs, plus the “extra” severance costs, plus the costs to cover the residential portion of the property taxes. The Plaintiff disagreed and refused to pay any of these amounts.
[54] After the severance was approved, the Plaintiff made several inquiries with the Defendant about when the registration of the severance would occur. The Defendant demanded payment of the outstanding amounts and did not register the severance, instead allowing the Certificate and therefore the consent to the severance, to expire. This made it impossible to transfer title in the House back to the Plaintiff.
[55] I find that the Plaintiff was not in breach of the Agreement for any other reason. I find the Defendant’s actions in refusing to register the severance represented a breach of a fundamental condition of the Agreement, without any justification. I find that the severance condition was very significant to the Plaintiff, and his belief that the severance would almost certainly succeed made the whole Agreement, including sale price and terms, appealing to him.
[56] In failing to register the severance, the Defendant failed to meet his duty of honest performance. His belief that the Plaintiff owed him about $20,000 did not entitle him to breach a fundamental condition of the Agreement. He made this decision without considering the relative importance of the perceived debt, against the importance of the severance to the Plaintiff, and to the Agreement.
[57] I find that, on a balance of probabilities, the Plaintiff did not owe the Defendant any money. Further, I find that even if the Plaintiff had owed the Defendant as much as $20,000, this would have been the result of breaches of minor warranties within the Agreement, and not breaches of fundamental conditions. Breaches of minor warranties would not have justified the Defendant’s action in failing to register the severance and would not justify a failure to perform a fundamental condition of the Agreement.
[58] I find that the Defendant understood the Plaintiff’s significant interest in maintaining his family home – the home that he and his wife had built. I accept the Plaintiff’s evidence that he was advised that there was a very low risk that the severance would not be obtained. But for that interest in keeping the House, the Agreement would have been a simple sale. I find that when the Agreement was initially signed, it suited the Defendant to save the $300,000 on a residence that was surplus to his needs, by obtaining a severance and returning the House. For reasons unknown, it seems that the severance suited him less two years later, or he simply declined to perform because he believed he was owed money.
[59] The Defendant had other options which were far less drastic than allowing the severance to lapse. For example, it could have registered the severance and held the severed parcel in trust in the name of a third party, pending a determination of its grievances. Both parcels belonged to the Defendant, and he was entitled to direct what happened with them. The Defendant did not purport to walk away from or repudiate the Agreement. Rather, it elected to enforce the conditions that suited it, and ignore the conditions that did not.
Was the Severance Obtained “Out of Time”?
[60] The Defendant argued in the alternative, that there was no legal obligation for it to register the severance because the severance was not obtained pursuant to the timeline specified in the Agreement. I reject the Defendant’s position that the consent was out of time. The final document required to obtain a severance of land is a document called a Certificate of Official – a signed certificate from the town administration, which evidences the consent to sever. The Certificate of Official is not itself the consent. It may only be prepared after the consent has been given. The Planning Act, R.S.O. 1990, c. P.13, s. 53(42) states:
Certificate
(42) When a consent has been given under this section, the clerk of the municipality or the Minister, as the case may be, shall give a certificate to the applicant stating that the consent has been given and the certificate is conclusive evidence that the consent was given and that the provisions of this Act leading to the consent have been complied with and that, despite any other provision of this Act, the council or the Minister had jurisdiction to grant the consent and after the certificate has been given no action may be maintained to question the validity of the consent. [emphasis added]
[61] The Certificate of Official granted in relation to the Property states, “I certify that the consent of the Committee of Adjustment of the Corporation of Norfolk County was given on August 21, 2019 to a conveyance of the [land relevant to the Property].” The certificate of official is dated August 26, 2020.
[62] Clause 7 of Schedule A to the Agreement reads as follows:
The Buyer and the Seller agree that the Seller [correction: Buyer] is to be allowed until the 17th day of August 2020 to obtain the Committee of Adjustments Consent to sever the surplus dwelling together kiln, a barn the septic system and the well servicing the house and the hydro and gas easements and if successful the Buyer agrees to convey the severed parcel of land to the Seller for nominal consideration of $2.00 with the closing to take place within thirty days of the completion of the severance conditions and the Buyer agrees to convey the severed parcel back to the Seller free of any Mortgages or liens or encumbrances. [Emphasis added.]
[63] In my view, the plain meaning of this condition directs that only the consent to sever need be obtained by August 17, 2020. Then, if the consent to sever is obtained, the severed parcel is to be conveyed within thirty days of the completion of the severance conditions.
[64] The Defendant argues that the relevant date to consider is August 26, 2020, the date that the Certificate of Official was signed, and, as such, the severance was obtained 9 days too late. I disagree. I find that the plain meaning of clause 7 only contemplates that “committee of adjustment consent to sever” be obtained by August 17, 2020, not the issuance of the Certificate. Further, on all of the evidence, I find that the conditions of severance were met by May 2020.
[65] On a balance of probabilities, I find that the evidence shows that the Committee of Adjustments consent to sever was obtained on August 21, 2019, and that all of the conditions were filled by May 2020. As such, the timelines were well within those specified in clause 7 of the Agreement, and the Defendant was bound to convey the severed parcel back to the Plaintiff.
Situation of the Parties since 2018
[66] Peter’s evidence at trial was clear: he intended to register the severance, but only after Willy paid him for the additional severance costs and the residential portion of the property taxes. He understood that the deadline to register the severance was August 26, 2022 (two years after issuance of the Certificate of Official).
[67] Although Peter consistently referred to the House as Willy’s house, the House he intended to see the Plaintiff regain, the Defendant offered no explanation as to its intention regarding how to address the failure to transfer title to the House after it allowed the severance to lapse. The Defendant did not suggest that the failure to register the severance was inadvertent.
[68] The Plaintiff sent written requests to the Defendant, asking that title in the severed parcel be transferred to it, the first one on December 17, 2020. Again, by letter of May 6, 2021, the Plaintiff’s counsel urged the Defendant to register the severance prior to a lapse of the Certificate.
[69] I have found that the Defendant breached a fundamental condition of the Agreement when it declined to register the severance, an act which was in its exclusive ability to do. I have found these actions were without regard for the fact that Willy, the lifelong acquaintance of Mr. VanBerlo, would lose ownership of his home, and without regard for the bargain it made, and to the importance of the condition.
[70] I have considered the position of the parties today, relative to six years ago when they entered into the Agreement. Willy and his wife have continued to reside in the House. They have maintained the House, paid for utilities, and have lived rent free since 2018. Given this, the Plaintiff’s situation, in financial terms, but for legal fees incurred, has not been significantly negatively impacted by the intervening years. Willy testified as to the unique nature of the property and of the personal value it has to him. He testified that some of the modifications have been to the benefit of the Defendant, but were made at a cost to the Property, such as the removal of trees.
[71] The Defendant’s evidence is that it spends about $100,000 per annum to prepare the farmable land on the Property for cultivation, and that it earns about $10,000 per each of the 70 acres on the harvest. On that basis, the Defendant has had the use of the land, has farmed it, and has earned significant revenue since 2018.
[72] The Defendant is a commercial farm operation. The Defendant oversees more than 100 employees on multiple tracts of land. There is no evidence before me to indicate that this Property is exceptional to the Defendant, or that it plays a special role in the Defendant’s operations. The Defendant has now had a period of over six years during which to amortize capital expenses related to this property.
[73] The Defendant argues that some of the capital expenses are now considered inextricable from the land and not otherwise useful in the Defendant’s other land holdings, such as the irrigation system, if it cannot in fact be moved. If this is an issue, it may be addressed by an accounting. There were no issues presented which I find could not be addressed adequately in an accounting.
[74] Ordering the payment of $300,000 now, after trial, as proposed by the Defendant, simply puts the Defendant in the position it chose for itself. That amount was due in the event that the severance could not be obtained. That is not the factual situation here. The Defendant will have breached one of two most fundamental conditions of the Agreement, without consequence to it, and to the serious detriment of the Plaintiff. The Defendant did not walk away from the Agreement. Rather, it chose which terms it wanted to comply with, and which to disregard.
[75] The Plaintiff wishes me to grant it the extraordinary remedy of a recission of the Agreement, effectively restoring the parties to their pre-sale positions. The Plaintiff argues that a payment of $300,000 does not put him in the position that he was entitled to be in. While not within either party’s control, the granting of the severance was the expected outcome, and was in fact the outcome. The Plaintiff should have had title to his home.
[76] I understand that it is extraordinary to grant recission in circumstances of a sale of land, and in particular where the sale was transacted years ago. The circumstances of this case are unique, in that the vendor continues to occupy the property, while the purchaser also occupies it.
[77] Taking into account all of the circumstances here, I find that the exceptional equitable remedy of recission is the only remedy which will represent a just outcome for the Plaintiff, unless the Defendant is able to apply for and obtain the severance that the parties first bargained for. The situation the parties find themselves in is entirely the making of the Defendant, and the obligation to repair the situation, and the related costs are entirely the Defendant’s to bear. In walking away from his obligation to register the severance, and in taking no steps to mitigate the situation, the Defendant failed in his duty of honest performance.
[78] I reject the Defendant’s argument that restitutio ad integrum is no longer possible. Although it will not be exactly perfect, I find that the balance of the equities is such that it remains appropriate, and that the parties can be returned to an approximation of their pre-Agreement positions. I find that any alternate remedies do not adequately address the circumstances.
Fence Removal
[79] Although less pressing than some other issues at trial, the parties had yet to resolve the issue of who should pay for the removal of a fence on the Property. The Plaintiff admits via admissions 10 and 11 that, pursuant to the Agreement, it was responsible for the removal of the fence. As the Plaintiff failed to remove the fence, the Defendant removed it, and spent $2,634.80. The Plaintiff offered no evidence to challenge the amount claimed. The Defendant is entitled to be reimbursed by the Plaintiff in the amount of $2,634.80.
The Royal Bank Mortgage
[80] Finally, I was advised that notwithstanding that it is named as a party to these proceedings, the Royal Bank has not been asked to file a defence, and it has not participated in the trial. There is a $300,000 mortgage on the Property in favour of the Royal Bank. Neither party made submissions as to how the mortgage might be best addressed in the event of an order for recission, or whether it need be addressed at all. In the event that the new severance application fails, or is not pursued, the parties are directed to schedule an appearance before me to address this issue, if they cannot otherwise agree.
Order
i. All costs of the original severance should be shared equally between the parties. If the parties are not able to agree as to the calculation, each may submit to me, within 15 days of the receipt of these reasons, up to two pages double spaced, which will include their accounting based on evidence introduced at trial only;
ii. The Plaintiff shall pay to the Defendant the amount of $2,634.80 for the removal of a fence;
iii. The Defendant, P. & S. Van Berlo Limited, shall have 60 days from the date of the release of these reasons in which to commence an appropriate application for the severance of the lands described as Part 2 on Plan 37R-11121, Norfolk County. The application shall be upon the same terms and/or conditions as contained in the application described as BNPL2018318, unless the parties agree otherwise, in writing;
iv. In the event that the said Defendant elects to make the application, it shall have 24 months, or such longer period of time as agreed to by the Plaintiff, in writing, from the date of these reasons to obtain the necessary consent to sever, and it shall upon fulfillment of any conditions, forthwith thereafter transfer the severed parcel containing the residence with surrounding buildings and structures to the Plaintiff, Willy Van Paassen Farms Limited.
v. The Plaintiff shall fully cooperate with the severance application and registration process as may be necessary;
vi. All fees and costs associated with this new severance application and its registration shall be at the sole expense of the Defendant;
vii. Until such time as such transfer is registered, the Plaintiff shall continue to have a lease over the House, and those lands described as Part 3 or Plan 37R-11121, Norfolk County, and buildings thereon upon the following terms:
- The lease shall continue rent free and the Plaintiff shall be responsible for maintenance and all utilities.
- The Plaintiff shall not erect any structure or remove any structure from the lands without the written consent of the Defendant.
viii. In the event that the Defendant, P. & S. Van Berlo Limited shall elect not to make the contemplated severance application within 60 days or, in the event that the application is not granted within the period allowed herein, or in the event that the transfer is not completed as specified above:
a) The Director of Lands Titles for the Province of Ontario shall delete from title and the Parcel Register, being Property Identification Number 50209-0160, for Norfolk County, Instruments Number NK112695 and NK112696, being a transfer from the Plaintiff to the Defendant, P. & S. VanBerlo Limited, and a mortgage from the said Defendant to the Plaintiff; those lands being more particularly described as: Part Lot 3, Concession Gore, Woodhouse, designated as Parts 1,2,3,4 and 5 on Plan 37R-11121, Norfolk County (hereinafter the “land”)
b) The lands, being legally described as Parts 1,2,3,4 and 5 on Plan 37R-11121, Norfolk County, shall be vested solely in the name of Willy Van Paassen Farms Limited;
c) The Plaintiff shall pay to the Defendant, P. & S. VanBerlo Limited, the sum of seven hundred and eighty thousand dollars ($780,000.00), within 90 days of the deletion of the Instruments set out above;
d) The Plaintiff shall not encumber the property in any way prior to paying the $780,000 to the Defendant, except to obtain a mortgage for the payment under this order.
ix. The parties are given leave to bring such motion before me as may be necessary to obtain further directions from the Court and to address the Royal Bank Mortgage, and to address any further matters necessary to give effect to this Order;
Costs
[1] I would urge the parties to agree on costs. If the parties are unable to agree, then costs submissions may be made as follows:
a. Within 15 calendar days of the distribution of these reasons to counsel, the Plaintiff shall serve and file their written costs submissions, not to exceed three pages, double-spaced in 12pt font, together with a draft bill of costs and copies of any pertinent offers;
b. The Defendant shall serve and file its responding costs submissions of no more than three pages, double-spaced in 12pt font, together with a draft bill of costs and copies of any pertinent offers, within 25 calendar days of the distribution of these reasons;
c. The Plaintiff’s reply submissions, if any, are to be served and filed within 30 calendar days of the distribution of these reasons, and are not to exceed two pages;
d. If no submissions are received within the times allocated by either party, said party shall be deemed to have no submissions; and
e. If no submissions are received by either party, the parties will be deemed to have resolved the issue of the costs, and costs will not be determined by me.
S. Antoniani
Released: March 26, 2025