Superior Court of Justice

Court File No.: CV-22-00000072
Date: 2025-04-16
Location: Ontario
Judge: Wendy L. Healey

Parties

Between:
Brighton Breeze Ltd., Plaintiff/Defendant by Counterclaim
— and —
Noel Property Management Ltd., Defendant/Plaintiff by Counterclaim

Appearances:
Graeme R. Oddy, for the Plaintiff/Defendant by Counterclaim
Michael Hochberg, for the Defendant/Plaintiff by Counterclaim

Heard: January 24, 2025

Overview

[1] The parties entered into an Agreement of Purchase and Sale (“APS”) dated March 3, 2021, with Noel Property Management Ltd. (“Noel”) as the vendor and Sivanandarajah Sivarajan as the purchaser for the property municipally known as 101 Harbour Street, Brighton, Ontario. Sivarajan is the sole officer and director of the plaintiff, Brighton Breeze Ltd., who assigned the APS to Brighton Breeze Ltd. (“Brighton”).

[2] The APS provided for a purchase price of $950,000, and Sivarajan paid an initial deposit of $100,000. The closing of the transaction was initially scheduled for October 1, 2021, and then amended to February 28, 2022.

[3] The APS contained an annulment clause, which, in the event of a valid objection to title, put Brighton to the election of either waiving any objection to the title problem and closing the APS or treating the APS at an end.

[4] The transaction was never completed, primarily because of a notice registered on title pursuant to s. 71 of the Land Titles Act, RSO 1990, c L.5 (the “s. 71 Notice”). The s. 71 Notice was registered by Noel’s neighbour, Northumberland Standard Condominium Corporation No. 48 (“NSCC48”). Noel refused to discharge the s. 71 Notice, and put Brighton to its election to either waive its objection and close the deal or receive the return of its deposit.

[5] Brighton commenced this action on May 13, 2022, alleging that Noel rescinded the APS as it was unable and unwilling to remove the s. 71 Notice, and that Noel’s failure to transfer clear title to it on the date of closing amounted to a breach of the APS. Noel denies that it ever rescinded the agreement, and states that it remained ready and willing to close the transaction if Brighton had elected to do so. If Brighton sought to treat the APS at an end under the annulment clause, Noel was willing to return its deposit. Since Brighton was unwilling to waive its objection to title, Noel took the position that the APS was at an end and offered to return the deposit.

[6] On April 29, 2022, Noel entered into an APS with Decent Homes Capital Inc. for the sale of the Property for $1,500,000, the closing of which was scheduled to take place in July 2022.

[7] Brighton commenced this claim after being advised by Noel about the pending sale to Decent Homes. In its claim, Brighton seeks specific performance of the APS, or in the alternative, a declaration that it is entitled to treat the APS as at an end and is entitled to a return of its deposit with interest, plus damages. Brighton also seeks punitive damages in the amount of $1M, damages for misrepresentation and breach of contract, and a Certificate of Pending Litigation (“CPL”).

[8] By counterclaim, Noel seeks damages for the loss of the Decent Homes APS in the amount of $1.6M, and aggravated and punitive damages in the amount of $100,000 arising out of a variety of tortious conduct on the part of Brighton.

[9] In May 2022, Brighton moved for leave to register a CPL, without notice to Noel. On June 2, 2022, Brighton was granted leave to issue a CPL against title to the property, which was registered on June 15, 2022.

Nature of the Motions

[10] Each party has filed a motion. Brighton moves under Rule 20.04 of the Rules of Civil Procedure, RRO 1990, Reg 194, for an order for specific performance of the APS, and a declaration that it has a proprietary interest in the property.

[11] Noel seeks an order deleting the CPL. If Brighton’s action is to continue in whole or part, Noel also seeks relief pursuant to Rule 56.01(1), requiring Brighton to post security for costs.

[12] Noel asks that the CPL be deleted for any of the following reasons: the annulment clause should be able to be relied on by Noel to bring the APS to an end, and therefore Brighton’s claim for specific performance should be dismissed; Brighton is not entitled to specific performance of the APS because it has claimed damages and does not have a reasonable interest in the property; the equities favour discharging the CPL; and Brighton failed to make full and frank disclosure at its ex parte motion.

Issues

[13] The issues to be decided on this motion are:

1. Whether Noel is entitled to rely on the annulment clause;
2. Whether the CPL should be discharged, which includes a determination of whether Brighton is entitled to specific performance;
3. Whether the matter is appropriate for summary judgment;
4. Whether Brighton should be required to post security for costs.

Evidence

[14] The evidence provided on these motions is given through the principals for each party: Sivanandarajah Sivarajan for Brighton and Paul Gauthier for Noel. The evidence is extensive and only those parts necessary for a determination of these motions will be discussed.

The Condominium Development and Marina

[15] Noel was the Declarant of NSCC48 under the Condominium Act, 1998, SO 1998, c 19. The condominium development is built on waterfront property and has a municipal address of 101 Harbour Street, Brighton, Ontario (the “Property”).

[16] Initially, it was planned to be constructed in four phases, but the last two phases of the project were never completed. Noel still owns the northern part of the Property on which the last two phases were to have been built (the “Noel Property”). NSCC48 is situated on the southern portion of the Property (the “NSCC48 Property”).

[17] Since 1997, Noel has operated a marina, the Presqui’ile Landing Marina, that provided seasonal dock slip rentals from the Noel Property. Some of the neighbours of the Noel Property occupy a portion of the Noel Property water lot with docks they have installed themselves in accordance with historic and informal verbal agreements with Noel. Also, a restaurant adjacent to the Property was granted the use of a portion of the Noel Property water lot for the purpose of installing two customer docks.

[18] In 2005, Noel issued a Disclosure Statement that advised prospective purchasers about the condominium development plan, which addressed the availability of parking. It stated that parking for owners would be allowed “on the common elements”, without specifying exactly where it would be permitted. A Site Plan was appended to the Disclosure Statement, which showed 36 parking spaces distributed around the condominium’s common elements. The Site Plan does not identify any of the parking spaces as being specifically designated for either owners or visitors.

[19] After Phase 2 had been constructed, the Site Plan showing the boundaries of NSCC48 showed a private roadway running down the middle of the land labelled “Part 2”, now named Dockside Lane. The Noel Property acquired an easement over Parts 2 and 6 for ingress and egress and provision of services, and the NSCC48 Property acquired similar easements over Parts 3 and 5 on the Noel Property.

[20] In 2009, concerns were expressed by NSCC48 through its counsel about the number of parking spaces. These concerns were never pursued by NSCC48 until the summer of 2021, when Noel became involved in discussions about selling the Noel Property to Brighton, which planned to develop it to include a twelve-unit freehold townhouse project with adjoining dock slips.

The APS Between Sivarajan and Noel

[21] The details of the APS dated March 3, 2021 are not in dispute. The APS was conditional on Brighton having 120 days from the date of acceptance to conduct its due diligence about all aspects of the Noel Property. The closing date was to be 30 days following waiver of the due diligence condition.

[22] Section 10 of the APS contains an annulment clause which, in the event of any valid objection to title, puts the purchaser to an election of either waiving the objection and closing the APS or treating the APS at an end and receiving the return of the deposit. The relevant portion of s. 10 reads as follows:

TITLE: …If… any valid objection to title… is made in writing to Seller and which Seller is unable or unwilling to remove, remedy or satisfy… and which Buyer will not waive, this Agreement, notwithstanding any intermediate acts or negotiations in respect of such objections, shall be at an end and all monies paid shall be returned without interest or deduction and Seller… shall not be liable for any costs or damages.

A similar clause is found in Schedule “A” of the APS.

Brighton’s Due Diligence

[23] On April 19, 2021, Sivarajan sent Gauthier an inquiry about two things: parking on NSCC48 Property and the docks. He wanted to know about the arrangements in place, advising that in order to qualify for mortgage financing, he had to be able to demonstrate that no docks and parking spots were assigned to others who could claim ownership of them. He asked for permission to contact the neighbours with boat slips on the Noel Property for more information.

[24] Gauthier responded, indicating that Noel would contact the neighbours with boat slips on the Noel Property with a letter outlining Sivarajan’s intentions for the Noel Property, attaching for Sivarajan’s review and comment a copy of the letter that Gauthier proposed to deliver to those neighbours.

[25] After hearing back from Sivarajan, Gauthier advised him that he had mailed the proposed letter and referred to past discussions that the two men had had about hosting an open forum with the NSCC48 owners once a site plan and renderings for Sivarajan’s proposed development were completed, and asked whether Sivarajan was considering carrying through with that approach.

[26] Despite knowing that Gauthier had already initiated contact with the neighbours with boat slips, on April 21, 2021, Sivarajan sent correspondence directly to property management for NSCC48, asking about the arrangements relating to parking for NSCC48 residents and their visitors on NSCC48 Property. Two days later, he sent further correspondence to property management to advise that his only concern was the existence of any “collateral agreements”.

[27] In summary, the issues that were a concern for Sivarajan were whether Brighton would be assuming any leases or licence agreements regarding the docks extending onto the Noel Property. He was also concerned with the use of Dockside Lane by NSCC48 residents and guests for the parking of vehicles or otherwise creating obstructions through the placement of items such as a garbage disposal bin and bicycle rack. As things developed further, Sivarajan would eventually take the position that Part 2, as a right-of-way, was to remain free of all obstructions, including parked vehicles.

[28] The evidence supplied by Sivarajan supports his assertion that, at least in the very early stages, Gauthier did not object to Sivarajan having direct communication with the NSCC48’s property management company. However, the contemporaneous emails show that Gauthier was attempting to understand the concerns that Sivarajan was telling him were being raised by NSCC48, and asked that the Board put the concerns in writing so that the two men could find a solution. In contrast, even as early as April 2021, Sivarajan’s approach was to request that Noel involve its lawyer in demanding removal of all obstructions (including parking spots) from Part 2, with a compliance date to be confirmed in writing and to take place within 60 days. Such correspondence was to detail the legal ramifications of non-compliance.

[29] On April 26, 2021, Gauthier wrote to Sivarajan to reiterate that, as he had mentioned earlier in their negotiations, he had granted verbal agreements to some homeowners to install a dock. With respect to the restaurant, he advised that at one point there had been a written agreement, which he could no longer locate, that included the right of the restaurant to install two floating docks to be used for restaurant guests for short-term use only. There was no fee associated with the permission given to the homeowners or restaurant to install their docks.

[30] On that same day, he again wrote to Sivarajan to advise that NSCC48’s property management had reached out to request a copy of the Site Plan, which Gauthier had provided.

[31] The following day, Sivarajan wrote to Gauthier enclosing a copy of a letter dated December 30, 2009, authored by Noel’s lawyer during the time that Noel and NSCC48 had been discussing issues related to parking and other matters (the “2009 Letter”). He wanted reassurance from Gauthier that no representations had been made to NSCC48 that might constitute an agreement with respect to parking on the Noel Property.

[32] Gauthier responded the same day to advise that nothing in the 2009 Letter or Noel’s response waived Noel’s right of access provided for in the Declaration.

[33] On April 28, 2021, Sivarajan responded to clarify that he was referring not only to the 2009 Letter but to any correspondence exchanged between Gauthier and NSCC48, and that he would wait until Gauthier completed the resolution process with NSCC48 before starting any other due diligence work, which he would not begin until the issues were 100% resolved.

[34] On April 30, 2021, Sivarajan advised Gauthier that in his view a legal proceeding would be necessary to resolve the parking concerns.

[35] On May 4, 2021, Gauthier responded to advise that he had sent two emails to NSCC48 property management to ask the condo Board to confirm that it would respect the easements granted to Noel in the Declaration (the “Noel Easements”), but the Board had been unresponsive. He also advised Sivarajan that he had notified property management that due to the time-sensitive nature of the inquiry, he was unable to delay involving Noel’s lawyer.

[36] On May 5, 2021, Gauthier wrote to Sivarajan to advise that he had received legal advice that the right-of-way issue is outside the scope of the sale transaction, and that the APS does not require that Noel enforce the Noel Easements. He noted that the APS instead states that Noel agrees and confirms that Noel reserved rights of access to the NSCC48 Property under Schedule “A” and “AA” of the Declaration. He indicated that he was not prepared to incur legal costs to enforce the Noel Easements on behalf of Brighton, and that this was a matter that Sivarajan would need to deal with should he choose to move forward with the purchase of the Noel Property.

[37] Sivarajan responded the same day to advise that he did not get the help he was expecting regarding the use of docks by various homeowners and the restaurant located on the Property. He also advised that he would be happy to sign a release with no further delay, provided Gauthier would reimburse him for some expenses that he had incurred in conducting his due diligence to date. Later that day he sent further correspondence advising that he would prepare a list of expenses and provide them to Gauthier with receipts, and he specified:

As for the survey I have only paid $1,500 and I will hold off. If you need the survey, you may pay the balance $1,800 tax [sic] included and and [sic] get it. Other expenses are legal (will obtain an invoice from my lawyer tomorrow), some money paid for consulting. I have spent a great deal of time incurring some incidental expenses for which I will be fair to add a bit or I can opt not to do so.

[38] Gauthier responded on May 6, 2021, expressing that he understood Sivarajan’s reluctance to proceed with the purchase of the Noel Property. He also noted in that correspondence that obtaining formal water lot lease agreements or enforcing the Noel Easements was not part of Noel’s responsibilities under the APS and went on to say:

… Despite this I spent a great deal of time trying to assist you in addressing these issues. I went so far as to allow you to try and impose water lot lease agreements and enforce the right of access prior to you acquiring ownership of the property. This appears to have resulted in heightened tensions among our neighbours. A situation I very much wanted to avoid.

I am surprised by your request that I pay for your due diligence cost to date. It was anticipated that you would incur due diligence expenses with no guarantee the results would result in the completion of our agreement. In fact, you used this to negotiate a reduction in the sale price of the property. My paying your due diligence cost was not part of our agreement and I respectfully decline your request.

When you provide a release I will instruct my lawyer to return your $100,000.00 deposit as per the terms of our agreement.

[39] Sivarajan decided to move forward with the APS thereafter. On May 19, 2021, through counsel, Brighton wrote to Noel to advise that as part of its due diligence, Sivarajan would like to speak to the parties who are using the docks on Part 11 of the Noel Property. The correspondence further advised that Sivarajan would like to speak to the property management for NSCC48 because it appears that NSCC48 permits parking on Dockside Lane, which is a right-of-way that he alleged should remain clear of vehicles. Brighton’s counsel went on to ask, “can you ascertain from your client whether he has any objection to [Sivarajan] contacting the said parties”.

[40] Noel responded the next day through counsel to specifically advise that the request to contact the involved individuals was respectfully denied. Counsel for Noel added: “we kindly ask that you elaborate on your client’s concerns, particularly what they are seeking from the neighbouring property owners. Upon receipt of a concise overview we can review with the relevant neighbours and hopefully address the Buyer’s concerns”.

[41] Brighton’s counsel responded the same day outlining his client’s concern that he may be bound by agreements regarding the use of docks and that Part 2 was being used to park vehicles.

[42] On June 7, 2021, Noel’s counsel provided much of the same information that had been imparted to Sivarajan by Gauthier earlier: there was a lease for the restaurant’s use of the land to install its docks and Noel was attempting to locate a copy; the other docks were the subject of verbal agreements and upon acquisition, Brighton could deal with those owners as it wished; and nothing would be done or provided before closing with respect to the right-of-way over Part 2.

Assignment of the APS and the VTB Mortgage

[43] On July 2, 2021, Sivarajan inquired, for the second time, about Noel’s willingness to take a vendor take back mortgage (“VTB”) to facilitate the financing of his purchase. A few days later, he reached out to inquire about assigning the APS to a corporation, stating that his preference was to do this at the same time that he waived conditions under the APS. Gauthier responded the same day to advise that because the VTB mortgage would be in the name of a corporation, he would require a personal guarantee from Sivarajan. After some back-and-forth, Sivarajan agreed to provide a personal guarantee of the VTB mortgage.

[44] On July 21, 2021, NSCC48, through counsel, wrote to both Noel and Brighton advising that the proposed change in plans for the property by Brighton created some concerns for NSCC48, which they hoped could be resolved by way of dialogue, and requesting a meeting to discuss those concerns. The concerns included various issues related to parking and the boat docks, among others.

[45] Later that same day, Sivarajan sent correspondence to Gauthier asking whether there is a pending legal issue that will affect the APS transaction or become an issue for him in the future. Gauthier responded the same day, expressing that his understanding was that the correspondence from NSCC48’s counsel presented only a list of concerns, not a claim of breach of contract. He recommended that Sivarajan provide his lawyer with a copy and get his advice on the matter.

[46] On August 3, 2021, Noel and Sivarajan entered into an amending agreement (the “August 3 Amendment”) pursuant to which the APS was amended as follows:

(a) Brighton was substituted for Sivarajan as the purchaser;
(b) Brighton and Sivarajan waived the due diligence condition; and
(c) a VTB mortgage was included on certain terms and conditions, as outlined in the document.

[47] Subsequently, Sivarajan wrote to inquire about transferring part of the Noel Property to another entity after closing. Gauthier’s response indicated three options for discharging the VTB mortgage in whole or part before conveyance to another company.

Sivarajan Sabotages his Relationship with Gauthier

[48] At that point, the previously cordial relationship between Sivarajan and Gauthier took a dramatic downward turn, which I find was caused entirely by Sivarajan. Sivarajan’s response to Gauthier’s suggestions for discharging the VTB mortgage was bizarre, beginning with “[n]ow I can see that there is nothing legal and illegal [sic] but you are just being paranoid?”.

[49] Gauthier provided a measured response:

Hi Raj,

I must have missed something. I thought you had asked me about conveying ownership of part of the [Noel] property from one corporation to another corporation. This is what I went to the time and expense of getting legal advice on.

I think it is best if we focus on completing the sale based on the terms of the agreement we have in place now.

[50] Later that day, Gauthier followed up to note, as a point of clarification, that he was offering to hold a first mortgage subject to standard terms and conditions.

[51] There was further back-and-forth between Gauthier and Sivarajan, with Sivarajan becoming increasingly belligerent and hostile and Gauthier remaining polite. Reading between the lines, it appears that Sivarajan somehow expected Gauthier to facilitate Sivarajan’s development plans by compromising Noel’s best interests, using language such as “you have extensive knowledge and experience in this area and therefore I expected you to be an enabler rather than causing hindrance”.

[52] The closing date, which should have been September 2, 2021, was moved by mutual agreement to October 1, 2021. This was so that the leases involved in the marina operation could, in the normal course, terminate on September 30 and avoid the need to adjust rent in the statement of adjustments. On August 17, 2021, the parties signed an amending agreement changing the closing date to October 1, 2021.

Sivarajan Sabotages Brighton’s Relationship with NSCC48

[53] On September 13, 2021, counsel for NSCC48 wrote to Noel, requesting a meeting to discuss unresolved concerns and to have Noel address its obligation to provide parking, a bicycle rack, and an appropriate garbage dumpster, along with other concerns.

[54] That same day, Sivarajan responded to the July 21, 2021 correspondence from NSCC48’s counsel, at which time he alleged that NSCC48 was being dishonest. Addressing the parking, he suggested that there were serious parking issues that required resolution, alleging that the easement applying to Part 2 does not permit parking.

[55] On September 17, 2021, Noel also responded to NSCC48’s correspondence from July 21, 2021. Noel did not take the position, as Sivarajan had, that the Noel Easements do not permit parking by NSCC48 unit owners on Part 2. The email attempted to address issues of Noel’s use of the boat ramp, parking, the dumpster, and bicycle rack. It concluded by stating that all of the remaining items claimed as concerns by NSCC48 were not a part of Phase 1 and 2, but rather “all part of proposed subsequent phases that were planned but not guaranteed… 15 years later NSCC48 has decided to pursue claims against Noel in order to remedy problems of their own making”.

[56] Because NSCC48 had copied the Municipality on its correspondence, characterized by Gauthier as an attempt to prejudice the municipal staff’s perception of Brighton’s proposed development, Gauthier declined any meeting. Sivarajan believes that Gauthier’s refusal to meet or substantially address this correspondence was one of the main reasons that NSCC48 registered the s. 71 Notice.

[57] On September 17, 2021, Brighton delivered a highly provocative and threatening letter to NSCC48’s counsel, on which Noel was not copied. However, the letter was specifically drafted to indicate that it was sent from both Brighton and Presqu’ile Landing Marina, which was false. This step is particularly egregious given that the marina business was not included as part of the APS. The letter insisted that NSCC48 unit owners and their visitors stop trespassing on the Noel Property, including to access the boat launch ramp, and that security monitoring and patrolling would be invoked as of October 1, 2021. It threatened the removal of all obstacles on Part 2, including parked vehicles.

[58] On September 27, 2021, NSCC48 caused the s. 71 Notice to be registered, claiming an unregistered interest in the Noel Property. On October 7, 2021, NSCC48 commenced an application against Noel and Brighton in the Superior Court of Justice in Cobourg (the “Application”).

[59] On September 28, 2021, counsel for NSCC48 sent a detailed letter to both Sivarajan and Gauthier explaining why her client had instructed her to register the s. 71 Notice, which included statements made by both Gauthier and Sivarajan over the preceding few weeks denying her client’s rights and which threatened to take steps contrary to those rights. She summarized their statements in Schedule “A” to her letter. She referred to the contents of Gauthier’s email of September 17, 2021, and to five separate communications sent by Sivarajan between September 13, 2021 and September 25, 2021.

[60] On September 28, 2021, Brighton’s lawyers notified Noel’s lawyers that it required an application by Noel to delete the s. 71 Notice from title on or before the closing date.

[61] Noel’s counsel responded the next day to advise he was reviewing an extension of the closing with Gauthier and reiterated, not for the first time, that Brighton cease all communication with NSCC48 or its counsel, as former communication had resulted in the s. 71 Notice being registered.

[62] September 30, 2021, brought a particularly baseless and abusive tirade from Sivarajan to Gauthier, including accusing him of “intentional scamming”, that he had been declining to resolve NSCC48’s concerns, that the entire neighbourhood hates him, that his lawyer is lacking in professional judgment, and that he is selfish and greedy.

[63] The closing date was pushed back to October 13, 2021 to allow time for NSCC48 to respond to Noel’s demand to remove the s. 71 Notice from title to the property. This is inaccurately characterized by Sivarajan in his affidavit; he indicates that it was to give Noel time to remove the Notice.

[64] The closing date of the transaction was subsequently moved back by further amendment to February 28, 2022, so that the Application could proceed.

Settlement Negotiations in Advance of the Application

[65] On October 26, 2021, Noel extended a without prejudice settlement offer to NSCC48. The offer contained various provisions for resolving the parking, to be governed by a shared facilities agreement and to be subject to a registered easement in favor of NSCC48 in perpetuity, foregoing Noel’s use of the boat launch, and for use and ownership of the docks to be in the discretion of Noel or its successors, along with other provisions relating to the garbage dumpsters and bike rack.

[66] The offer was also sent to Sivarajan’s counsel, who responded:

It is unlikely at this point that any agreement will be made with the condominium corporation. My client is asking your client to withdraw the proposal forwarded to [NSCC48’s lawyer]. My client is asking that your client commence an application to have the s.71 notice deleted from title and an order having the court Notice of Application dismissed. NSCC 48 does not have the rights which it is purporting to advance.

[67] Noel withdrew the settlement offer to NSCC48 but requested that Brighton allow it to preview any proposed settlement from Brighton before it was presented to NSCC48. Nonetheless, at a virtual settlement meeting between the three parties on January 19, 2022, Brighton extended a settlement offer to NSCC48 without consulting Noel in advance.

[68] In addition to requiring that all costs related to the Application be borne by NSCC48 and/or Noel, the offer extended by Brighton proposed severance of Part 2 into five separate parts, which would have the result of it acquiring additional land belonging to NSCC48. The initial response from NSCC48 was an expression of some interest; however, their counsel emphasized that NSCC48 must be fully indemnified in relation to all costs of the Application, and that costs associated with severance and construction costs had to be paid by Brighton or Noel. Additionally, Brighton or Noel would have to pay for the additional land it was proposing to acquire.

[69] It was Gauthier’s assessment that Brighton was seeking to extract benefits it had not bargained for in the APS, all at Noel’s expense.

The Application

[70] Because the planned sale of the Noel Property did not close before the Application was heard, Brighton was released from the Application.

[71] The Application was heard by Dawe J. (as he then was) on June 27, 2022. He found that Brighton’s position as set out in its September 17, 2021 correspondence to NSCC48 was incorrect, and that Part 2 formed part of NSCC48’s common elements. He also found that Brighton’s claim that the easement over Part 2 would have allowed it to ban NSCC48’s unit owners from parking anywhere on Part 2 was not reasonable, and that Brighton was wrong in concluding that the Noel Easements would have allowed it to prohibit all parking on Part 2 at all times.

[72] At paragraphs 54 and 55, Dawe J. wrote:

Noel and any successor owner of the northern property are entitled to use Part 2 to enter and leave their land in a reasonably convenient way. I agree that when deciding what is a reasonable use of the right-of-way, any future development of the northern property will need to be taken into account. I also agree with Noel that this could in future require NSCC 48 to relocate the garbage bin and bicycle rack and/or change the current parking layout at the north end of Part 2.

In summary, both sides in this dispute are required to act reasonably. Noel and any successor owners of the northern property cannot make unreasonable demands about how NSCC 48 uses its own land. At the same time, NSCC 48 does not have the right to use Part 2 in a way that substantially interferes with the easements benefiting the northern property.

[73] The court also found that NSCC48 was out of time to make any further complaint about the adequacy of the available parking, as it would have been aware more than 10 years ago that the road and parking facilities that had been built by the end of Phase 2 fell short of what had been shown on the Site Plan. NSCC48’s claims were now statute barred.

[74] Dawe J. also noted that development of the Noel Property in the future could, depending on how that development was done, impact the rights and obligations of NSCC48 and the owner of the Noel Property in respect of parking and the placement of the garbage dumpster. However, he declined to provide any further determinations in the absence of evidence of how any development would impact on these issues.

[75] In his costs endorsement released on October 26, 2022, Dawe J. made several findings that are important to this motion:

(a) The issue of the right of NSCC48 owners and residents and their guests to park on Part 2 of NSCC48’s own property was “the issue of most importance to NSCC48”.

(b) Noel did not contest the one issue on which NSCC48 prevailed, concerning the rights of NSCC48 residents to park on NSCC48’s own property;

(c) NSCC48 had good reason to think that its right to park on NSCC48’s own property was under attack. When the Application was commenced, Noel had agreed to sell the property to Brighton, which asserted that once it took ownership, it would have the right to forbid all parking on Part 2 of NSCC48’s Property, and that it planned to exercise the supposed right;

(d) By the time that the Application was heard, the sale to Brighton had fallen through and Brighton had been released from the litigation. However, while Noel had never claimed that it had the right to forbid NSCC48 residents and guests from parking anywhere on Part 2, it was only at the hearing that Noel expressly acknowledged that it was not asserting any such right.

(e) When the s. 71 Notice was registered, the sale of the Noel Property to Brighton was imminent. Brighton was asserting that once it acquired ownership of Noel’s land, it would be able to forbid all parking on Part 2 as part of its easement rights. If Brighton had purchased the Noel Property, followed through with this threat, and been successful in establishing its right to ban all parking on Part 2, this may well have led to NSCC48 also being successful in asserting its own claims regarding its owners’ rights to park on what is now the Noel Property.

(f) It was not necessary to decide that issue given his rejection of Brighton’s expansive view of the easement rights it would have acquired if its purchase of the Noel Property had been completed. “However, I think NSCC48’s tactical decision to register the s. 71 Notice must be viewed in this context”.

(g) This litigation arose out of the acrimonious dispute that began between Brighton and NSCC48 shortly before Brighton’s purchase was scheduled to close. “Noel had the misfortune of being caught in the crossfire”.

[76] Gauthier explains that it is possible that Dawe J. was unaware that Noel did not expressly acknowledge that it was not asserting a right to forbid NSCC48 residents and guests from parking anywhere on Part 2 until the hearing of the Application because that was the first occasion on which Gauthier learned that Brighton had so threatened NSCC48. Noel had not been copied on the letter of September 17, 2021, delivered by Brighton to NSCC48’s counsel. It was only at that hearing that Gauthier learned of the letter and that Presqu’ile Landing Marina’s name had been used on that correspondence.

[77] Following the disposition of the Application, NSCC48 agreed to remove the s. 71 Notice from title to the Noel Property, which it did on November 24, 2022. By that date, the extended closing date for the APS of February 28, 2022 had passed.

The APS Fails

[78] On February 25, 2022, Noel’s lawyers advised that Noel was unwilling or unable to delete the s. 71 Notice from title to the Noel Property on or before the closing date.

[79] At no time before then did Noel advise Brighton that it was rescinding the APS. On the closing date, Noel’s lawyers specifically advised Brighton that Noel was not seeking to rescind the APS and was ready, willing and able to close. They tendered closing documents and requested that Brighton make its election under s. 10 of the APS.

[80] Instead of making its election, Brighton responded through its lawyers, stating that Noel was in breach of the APS and that Brighton would not close unless Noel discharged the s. 71 Notice. Brighton also threatened to commence this litigation as a result of Noel’s alleged breach of the APS.

[81] Noel’s lawyers responded later on the closing date to advise that because Brighton was unwilling to waive its objection to title, the APS was at an end and the deposit would be returned. They later requested a direction re funds from Brighton and banking information for Brighton’s lawyer’s trust account.

[82] Rather than satisfying those requests, on March 28, 2021, Brighton responded through its lawyer to advise that it remained ready, willing and able to close the transaction upon Noel’s discharge of the s. 71 Notice.

The Decent Homes APS

[83] On April 29, 2022, Noel entered into an APS with Decent Homes Capital Inc. for the sale of the Noel Property for $1,500,000. The closing was scheduled to take place on July 28, 2022. As a sign of good faith to Brighton, Noel advised Brighton of the Decent Homes APS and supplied a copy as part of without prejudice correspondence. Noel also advised that if Brighton wished to proceed to purchase the Noel Property on similar terms to those contained in the Decent Homes APS, Noel would consider same.

Brighton Obtains a CPL Without Notice

[84] On May 13, 2022, Brighton commenced this action seeking, among other things, damages, as well as a Certificate of Pending Litigation (“CPL”) against title to the Noel Property.

[85] The claim was served on Noel on May 17, 2022, and immediately provided to its litigation lawyers. Brighton’s lawyers were immediately requested to provide notice to Noel’s lawyers if and when Brighton intended to move for an order for leave to register a CPL so that Noel might prepare responding material.

[86] Brighton’s litigation lawyers responded the same day to advise that they had already submitted motion material for an order for leave to register a CPL on title. The motion was made without notice even though Brighton’s lawyers had maintained constant correspondence with Noel’s lawyers since March 3, 2021. Noel’s lawyers requested a copy of the motion materials, which were not provided to them until after Brighton’s motion was heard in writing.

[87] On June 2, 2022, Gunsolus J. granted Brighton leave to issue a CPL against title to the Noel property, which was registered on title on or around June 15, 2022.

[88] Gauthier alleges that the registration of both the s. 71 Notice and the CPL ultimately prevented the Decent Homes APS transaction from closing, resulting in the loss to Noel of the expected sale proceeds. There is a dispute in the evidence about this; Brighton provided evidence from an officer of Decent Homes that it was not aware of the CPL as no title search had been conducted, and had been unable to proceed with the deal due to other unrelated planning issues.

[89] There is no affidavit from the individual who imparted that information, Vishal Valsadia, and so no examination was able to be conducted on that point. If Valsadia’s evidence is true, which I have no reason to disbelieve, at the same time it also remains true that any s. 71 Notice or CPL still registered on title would prevent a sale to another party until those encumbrances were removed.

Full and Frank Disclosure

[90] In Brighton’s motion material filed for the CPL, I find that information was missing, misleading, or false. These shortcomings include the following, although there are more:

a) advising the court that NSCC48 caused the s. 71 Notice to be registered because they learned of the APS. Sivarajan failed to disclose Brighton’s correspondence of September 17, 2021 containing insults and threats.

b) advising the court that Noel was rescinding the APS because it was unable and unwilling to remove the s. 71 Notice. There is no evidence that Noel rescinded the APS, and Sivarajan failed to disclose the specific wording in Noel’s lawyer’s letter stating that Noel was not rescinding and was ready, willing and able to close.

c) failing to specifically draw the court’s attention to the annulment clause in the APS;

d) advising the court that the CPL was needed because of Brighton’s substantial deposit, without advising that Noel was willing to return the deposit in accordance with the annulment clause, and that Brighton was unwilling to accept it;

e) advising the court that Brighton acted in good faith, while omitting all material facts in relation to the threats made to NSCC48, and on letterhead referencing an entity from which Sivarajan had no authority to hold out as being associated with the position set out in the correspondence of September 17, 2021, failing to disclose the acrimonious nature of Sivarajan’s communications with NSCC48’s management company or lawyer, and failing to reference any of the insulting and unprofessional communications that Sivarajan sent to Gauthier;

f) advising the court that Noel’s intention was not to close the APS transaction, while failing to include or refer to any of the correspondence from Noel’s solicitors that enclosed the documentation prepared in anticipation of closing the transaction;

g) failing to advise the court that the relief sought by NSCC48 in its Application related to the items raised in Brighton’s threatening correspondence of September 17, 2021;

h) advising the court that Noel threatened that it had other interested buyers for the Noel property and that it would continue to negotiate the sale to third parties if Brighton did not accede to its demands. This is a mischaracterization of why Noel disclosed the Decent Homes APS to Brighton; and

i) failing to bring to the court’s attention that there was no urgency to the matter given that the s. 71 Notice remained registered on title.

Evidence in Support of Specific Performance

[91] Sivarajan asserts that the Noel Property is a highly unique waterfront property and that he has personally invested a great deal of time, money, and effort into the property, as detailed in his affidavit.

[92] Brighton’s factum contains a list of qualities and characteristics that make the property unique. There is no evidence supporting most of the assertions made in the factum, including that “its shape and dimensions relative to the waterfront do not exist anywhere else and allow for a large amount of water access”, “the Property is within walking distance from downtown Brighton”, and “most of the waterfront in Brighton is already built up”.

[93] The only evidence supporting Brighton’s argument is the efforts and cost that Brighton, as a developer, put into its due diligence. This evidence has been challenged by Noel both through its own evidence and submissions of counsel.

ANALYSIS

Reliance on the Annulment Clause

[94] If Noel’s reliance on the annulment clause is reasonable in the circumstances, the APS came to an end when Brighton failed to make its election on the scheduled closing date of February 28, 2022.

[95] In Mason v. Freedman, [1958] S.C.R. 483, at p. 487, the Supreme Court of Canada considered the effect in an agreement of purchase and sale of a clause providing for requisitions on title and for the right of the vendor to declare the contract null and void if requisitions that he is “unable or unwilling” to remove are made within the stated time. The wording of the clause is similar to that in the APS in this case:

… The Purchaser is to be allowed 15 days from the date of acceptance hereof to examine the title at his own expense. If within that time any valid objection to title is made in writing to the Vendor which the Vendor shall be unable or unwilling to remove and which the Purchaser will not waive this agreement shall, notwithstanding any intermediate acts or negotiations in respect of such objections, be null and void and the deposit shall be returned by the Vendor without interest and he and the Agent shall not be liable for any costs or damages….

[96] At page 486, the Court noted that this provision does not apply to enable a person to repudiate a contract for cause which he himself has brought about. The principle articulated by the Court is that a vendor who seeks to take advantage of such a clause must exercise his right reasonably and in good faith, and not in a capricious or arbitrary manner: at p. 487.

[97] At page 488, the Court cited two cases in which the vendor’s right to rescind was upheld: Louch v. Pape Avenue Land Company Limited, [1928] S.C.R. 518, where the vendor was found to display no bad faith, and Ashburner v. Sewell, [1891] 3 Ch. 405, in which the existence of a latent right-of-way, unknown to the vendor, justified recission.

[98] There is a distinction in the case law between a title defect that existed, with the vendor’s knowledge, at the time that the APS was entered into, and one that is discovered thereafter. Rescission will not be readily available to a vendor who entered into an agreement recklessly and with full knowledge of their inability to remove the defect in title: Business Development Insurance Ltd. v. Caledon Mayfield Estates Inc., 2015 ONSC 1978, at para. 68.

[99] The law does not require a vendor to engage in litigation to remove an objection to title: Mitz v. Wiseman, 22 D.L.R. (3d) 513 (Ont. H.C.), at p. 521; Business Development, at para. 74.

[100] Brighton’s whole argument rests on its assertion that Noel “had actual knowledge of the underlying issues eventually giving rise to the s. 71 Notice since 2009, when the easement, parking and boat ramp access issues were first raised” by NSCC48’s counsel, and so was reckless in entering into the APS.

[101] Sivarajan repeats throughout his material that he believes that Noel made representations and warranties in the APS that it knew, or ought to have known, were false, incomplete and/or misleading. He believes that it was Noel’s misrepresentations with respect to parking and other items that gave rise to the s. 71 Notice.

[102] This argument cannot succeed. The main issue, the parking issue, had lain dormant since 2009, as had all of the other issues. As found by Dawe J., any claims that NSCC48 now wished to assert in respect of parking on Noel’s lands were statute barred, other than its easement rights. I find that it was Sivarajan’s approach, not actual title issues, that led to the s. 71 Notice being registered.

[103] There is no evidence to support a finding that any issues connected to the Declaration were ever raised by NSCC48 between the last exchange of correspondence in 2009 and the time that Sivarajan began his own communications with NSCC48 in the spring of 2021.

[104] Brighton correctly points out that Dawe J. noted several issues that remain unresolved for a future developer. These all have to do with the easement rights over Part 2, which he stated would call upon each neighbour to act reasonably in the future in respect to the other’s rights. He declined, however, to pronounce on what the future may hold in the absence of any evidence, as does this court.

[105] This does not equate to any ongoing title defect. What was known to Noel at the time that it entered into the APS was that NSCC48 had made no complaints that would amount to a title issue in the intervening decade. It was the s. 71 Notice, not anything else, which was the title defect. I find that Noel was acting reasonably at the time that the APS was entered into, as it had no knowledge of any title problem.

[106] The evidence is clear that Brighton did not provide a waiver of the s. 71 Notice. Noel was, I find, acting reasonably and in good faith when it treated the APS at an end. Noel was also acting in good faith when it entered into the Decent Homes APS. I reject the argument that this was done to extract a better deal from Brighton. By the time that the Decent Homes APS was created, Brighton had no further interest in the litigation that it had instigated and had left Noel to deal with the result. I also find that Noel was under no obligation to notify Brighton of that sale, but that Noel did so is further evidence of its good faith efforts.

[107] In its factum, Noel cites Gu v. Nothdurft, 2023 ONCA 480, a case in which the vendor was found to be unable to rely on an annulment clause. Noel seeks to distinguish this case in several important respects from Gu, a position which this court adopts.

[108] In Gu, the purchasers’ solicitor requisitioned the removal of writs of execution that had been registered on title before the APS was made. The vendors’ solicitor advised that the vendors were unable to remove the writs and were treating the transaction as over. The vendors did not provide an explanation for why the writs of execution could not have been satisfied from the sale proceeds. In the result, the vendors were found to have not made reasonable efforts to exercise their rights under the annulment clause.

[109] In this case, the s. 71 Notice was, I find, registered predominantly because of the nature and tone of the communications sent by Sivarajan to NSCC48, particularly in its correspondence of September 13 and 17, 2021. The latter correspondence was sent without Noel’s knowledge and certainly contributed to NSCC48 feeling under attack. In reaching this finding, I do not discount the information sent by counsel for NSCC48 on September 28, 2021, attributing part of the reason for the registration to include Gauthier’s email of September 17, 2021. However, there were five such communications sent by Sivarajan in September 2021 before the s. 71 Notice went on title. As the findings of Dawe J. demonstrate, the parking issue was of greatest importance to NSCC48, and was not under attack by Noel. It was Brighton who initially raised and then pressed the issue, incorrectly claiming that it had the right to prevent NSCC48 residents and guests from parking on the Noel easement. Sivarajan’s communications with NSCC48 were, as they were with Gauthier, unreasonably inciteful. In a situation calling for diplomacy and collaboration, Sivarajan communicated no desire for either. It does not assist Brighton to attempt to argue that it was Gauthier’s disinterest in meeting with NSCC48’s Board that was at the root of the s. 71 Notice.

[110] As of the scheduled closing date, the hearing date for the Application had yet to occur and there was nothing that Noel could do to convince NSCC48 to remove it from title. Noel made good faith efforts to deal with the registration by advancing a settlement offer, which Brighton requested be withdrawn. Further, the settlement negotiations that Brighton engaged in with NSCC48 would not result in a negotiated settlement that Noel could reasonably live with, because it expanded the scope of the APS and sought to foist all costs onto Noel. It was reasonable for Noel to allow the Application to be determined.

[111] There is no evidence that Brighton requested an extension to the APS before the Application was heard. At the closing date, the s. 71 Notice remained on title through no fault of Noel, who at that point was powerless to remove it. The s. 71 Notice was at that point a title defect, rather than an encumbrance, as Noel could not compel or rely on any legal right to discharge it. It was an objection to title that allowed Noel to rely on the annulment clause: Business Development, at paras. 75, 85.

[112] Unlike in Gu, Noel did not simply treat the APS at an end after it concluded that it could not discharge the notice. As required by the APS, it put Brighton to its election and offered, as it was contractually required to do, to return the deposit in full. It took all steps necessary to put Brighton in a position to waive its demand by tendering the closing documents, showing that it was ready and able to complete the transaction. When the closing date came and went without Brighton making its election, Noel rightly treated the transaction at an end.

[113] I find that Noel at all times acted reasonably toward Brighton before relying on the annulment clause. Its efforts to sell this property to Brighton are amply supported by the contemporaneous correspondence, including its willingness to enter into the Amended APS that included the VTB. Its efforts to attempt to resolve the Application were likewise reasonable.

[114] I find that Noel can reasonably rely on the Annulment clause to declare the agreement null and void.

[115] The APS terminated on February 28, 2023 by operation of its own terms pursuant to the contract that bound these parties. In the result, Brighton cannot maintain an action for specific performance or damages for breach of contract; the action is doomed to fail. As argued by Noel’s counsel, relying on Graham v. Toronto (City), 2022 ONCA 149, this is an appropriate case in which to order Brighton’s claim be dismissed pursuant to r. 20.04, even though this relief was not formally requested in Noel’s notice of motion.

[116] In the result, Brighton has no interest in the land and therefore has no right to a CPL. It is entitled only to its deposit, subject to any claim for costs that may be awarded for these motions.

[117] Accordingly, the CPL must be discharged, and Brighton’s claim must be dismissed.

[118] If I am incorrect in these conclusions, I would still find on the evidence that Brighton has not met the test for specific performance, that the CPL should be discharged on the basis of misleading, material non-disclosure of significant facts that would have affected the motion judge’s view of the merits, and that in all of the circumstances, discharging the CPL is the equitable result.

Order

[119] This court orders:

1. Brighton’s motion for specific performance of the APS is dismissed;
2. The CPL shall be discharged, the Registrar of Titles for the Municipality of Brighton being directed to amend the registry and delete the CPL registered on June 15, 2022 as Instrument Number ND236373;
3. Summary judgment is granted dismissing Brighton’s claim; and
4. Costs shall be determined following receipt of written submissions.

Costs

[120] Noel is presumptively entitled to its costs of these motions, as the successful party.

[121] If the parties are unable to agree upon the issue of costs within 15 working days from the date of release of these Reasons, they may make submissions in writing. Noel’s submissions are due on May 15, 2025, Brighton’s on May 22, 2025 and any reply, if necessary, on May 27, 2025.

[122] Written submissions are limited to 5 double-spaced pages, plus a Bill of Costs and any offers to settle. All authorities relied on are to be hyperlinked in the document or uploaded to Case Center with a tabbed (i.e., hyperlinked) index. The submissions are to be filed with the court, with a copy emailed to my judicial assistant at BarrieSCJJudAssistants@ontario.ca, in addition to being uploaded to Case Center.

Released: April 16, 2025