



COURT OF APPEAL FOR ONTARIO

CITATION: Alkin Corporation v. 3D Imaging
    Partners Inc., 2020 ONCA 441

DATE: 20200703

DOCKET: C67847

Rouleau, Hoy and Hourigan JJ.A.

BETWEEN

Alkin Corporation

Plaintiff (Appellant)

and

3D Imaging Partners Inc.

Defendant (Respondent)

John B. Brennan and Jacob R. W. Damstra,
    for the appellant

Jack Masterman, for the respondent

Heard and released orally:
    June 29, 2020 by videoconference

On appeal from the judgment of Justice Thomas
    A. Heeney of the Superior Court of Justice dated December 3, 2019.

REASONS FOR DECISION

[1]

The appellant appeals from the summary judgment
    of the Superior Court of Justice dismissing its motion to enforce an agreement
    with the respondent for the purchase of shares. The principal of the appellant
    corporation, Robert Siskind, entered into discussions with the principal of the
    respondent corporation, Lionel Lenkinski, to sell the appellants 125,000
    shares in the respondent corporation.

[2]

The parties negotiated a $100,000 purchase price
    for those shares. The respondent sent an unexecuted share purchase agreement
    (the SPA) to the appellant. The appellant executed and returned the draft SPA
    but the respondent never executed it.

[3]

On the motion, the parties disagreed as to
    whether the purchase was contingent on the completion of a pending investment
    deal involving the respondent and an outside investor. In addition, the
    respondent maintained that no legally enforceable contract was created as it
    had not executed the formal contract.

[4]

For its part, the appellant argued that an
    agreement had been reached and the purchase of the shares was not contingent on
    the completion of the pending investment deal. The agreement was binding and
    ought to be in force despite the respondents failure to execute the SPA.

[5]

The motion judge found that the SPA was not
    binding. The SPA contained an Enurement provision, which provided that the
    SPA would only become effective when executed by both parties. In an affidavit,
    the appellants representative who negotiated the sale of the shares, Mr.
    Siskind, confirmed that the written SPA as drafted by the respondent fully and
    accurately outlined the terms upon which the appellants shares were to be
    purchased. Relying on this courts holding in
Bawitko Investments Ltd. v.
    Kernels Popcorn Ltd.
, the motion judge determined that the parties clearly
    intended that their legal obligation be deferred until a formal contract was
    executed: (1991) 79 D.L.R. (4th) 97 (Ont. C.A.), at pp. 103-4. Since the
    respondent never executed the SPA, the SPA was therefore not binding.

[6]

Having concluded that the parties had not
    entered into a binding agreement, the motion judge found it to be irrelevant
    whether the respondent had advised the appellant that the SPA was conditional
    on the investment deal going through.

[7]

On appeal, the appellant argues that the motion
    judge erred in failing to consider whether an enforceable oral agreement for
    the purchase of the shares existed separate and apart from the SPA. The
    appellant further argues that the motion judges decision to rely on the Enurement
    clause in the SPA, requiring execution by both parties, as providing a base for
    not enforcing the oral contract undermines the principle of good faith outlined
    in
Bhasin v. Hrynew
, 2014 SCC 71, [2014] 3 S.C.R. 494.

[8]

We disagree.

[9]

As this court explained in
Bawitko
,
where the understanding or intention of
    the parties is that their obligations are to be deferred until a formal
    contract has been approved and executed, any preliminary agreement as to the
    terms of the contract is not enforceable.

[10]

The motion judges finding that the clear
    intention of the parties was that their obligations are to be deferred until a
    formal contract has been approved and executed is fatal. This finding of fact
    is fully supported by the terms of the SPA executed by the appellant and the
    appellants admission that the SPA contained the terms agreed upon for the
    purchase of the shares. In our view, there is no basis for the suggestion that
    the motion judge failed to consider the entire context or ignored relevant
    evidence. The fact that other interpretations of the appellants evidence were
    available does not constitute palpable end overriding error.

[11]

We also reject the suggestion that the motion
    judges decision undermines the doctrine that parties must perform their
    contractual obligations honestly and reasonably. As the motion judge correctly
    found, the parties did not have the requisite intention to contract. As a
    result, there simply existed no contractual obligations to perform.

[12]

The appeal is therefore dismissed.

[13]

Costs to the respondent are fixed in the amount
    of $5,500 inclusive of disbursements and applicable taxes.

Paul
    Rouleau J.A.

Alexandra
    Hoy J.A.

C.W.
    Hourigan J.A.


