



COURT OF APPEAL
    FOR ONTARIO

CITATION: 1418885 Ontario Ltd. v. 2193139 Ontario Limited,
    2018 ONCA 54

DATE: 20180124

DOCKET: C64034

Simmons, Roberts and Nordheimer JJ.A.

BETWEEN

1418885 Ontario Ltd.

Plaintiff (Appellant)

and

2193139 Ontario Limited

Defendant (Respondent)

David Goodman, for the appellant

Charles Chang, for the respondent

Heard:  January 19, 2018

On appeal from the judgment of Justice Mario Faieta of
    the Superior Court of Justice sitting without a jury, dated June 12, 2017.

REASONS FOR DECISION

[1]

The plaintiff appeals from the judgment
    of the motion judge that dismissed the appellants motion for summary judgment
    against the respondent and also dismissed the appellants action.

[2]

The background facts are as
    follows.  The respondent was the owner of property municipally described as 9196
    Sixth Line, Milton, Ontario (the Property). On or about April 19, 2016, the appellant
    entered into an agreement of purchase and sale (the APS) to buy the Property
    from the respondent.

[3]

The closing date was scheduled to
    be June 15, 2016.  Two deposits were paid, the first in the sum of $50,000.00,
    and the second in the sum of $100,000.00.

[4]

The Property had been advertised
    for sale as containing a pub-style restaurant with patios, a nine hole golf
    course, 12 residential apartments, a two-storey home, and a banquet hall.  By
    the terms of the APS, the appellant was allowed until May 30, 2016 to make
    requisitions on title and until five days prior to completion to satisfy itself
    that the use of the property could be lawfully continued.

[5]

An issue arose respecting the
    residential apartments and whether they were a permitted use under the existing
    zoning by-law applicable to the Property.  On May 30, 2016, the lawyer for the
    appellant submitted a requisition that required the respondent to provide on
    or before closing an amendment to the local zoning by-laws to permit the
    current use to continue legally after closing.  The lawyer for the respondent rejected
    this requisition and advised that the residential apartments were a legal
    non-conforming use.

[6]

Subsequent to this reply to the
    requisition, the lawyer for the appellant made certain inquiries of the Niagara
    Escarpment Commission which has jurisdiction over the zoning applicable to the
    Property.  The Commissions response to these inquiries suggested that there might
    indeed be a problem regarding the residential apartments.  On June 9, 2016, the
    lawyer for the appellant sent a letter to the lawyer for the respondent that,
    among other things, referred to the advice that he had received from the
    Niagara Escarpment Commission and expressed the view that the residential
    apartments were clearly non-conforming.  The lawyer for the appellant then
    suggested that if a resolution could not be reached, the deposits had to be
    returned.

[7]

Nonetheless, the parties moved
    towards the closing date by exchanging draft documentation and related
    material.  However, on the day set for closing, the lawyer for the appellant
    advised the lawyer for the respondent that the appellant would not be closing
    the purchase because of the issue over the residential apartments.

[8]

This claim was then commenced by
    the appellant for the return of the deposits.  After pleadings were exchanged,
    the appellant brought a motion for summary judgment for the amount of the
    deposits.  The motions judge dismissed that motion.  The motion judge also
    dismissed the appellants action.  In doing so, the motion judge made the
    following findings:


(i)

that the issues raised by the motion were appropriate to be determined
    by way of summary judgment;


(ii)

that the respondent had failed to establish that the residential
    apartments were a legal non-conforming use;


(iii)

that the fact that the residential apartments were not a legal
    non-conforming use was a legitimate objection raised by the appellant to the
    use of the Property and, if the respondent could not remedy that objection, the
    terms of the APS would bring the APS to an end unless the appellant waived the
    objection;


(iv)

that the appellant had, by its conduct, waived the objection.

[9]

No real issue is taken with
    respect to the first three findings made by the motions judge.  In any event, the
    evidence in the record would clearly substantiate the second and third
    findings.  The central issue is whether the finding that the appellant had
    waived the objection is a proper one based on the evidence.

[10]

The motion judge cited this
    courts decision in
Technicore Underground Inc. v. Toronto (City)
,
2012 ONCA
    597 respecting the requirements to establish that a party has waived a right
    under a contract.  More specifically, the motion judge referred to the
    following observation of Gillese J.A., at para. 63:

Waiver occurs when one party to a contract (or proceeding)
    takes steps that amount to foregoing reliance on some known right or defect in
    the performance of the other party. It will be found only where the evidence
    demonstrates that the party waiving had (1) a full knowledge of the deficiency
    that might be relied on and (2) an unequivocal and conscious intention to
    abandon the right to rely on it. The intention to relinquish the right must be
    communicated. Communication can be formal or informal and it may be inferred
    from conduct. The overriding consideration in each case is whether one party
    communicated a clear intention to waive a right to the other party.

[11]

There is no doubt in this case that the appellant had
    full knowledge of the deficiency, that is, that the residential apartments were
    not a legal non-conforming use under the zoning by-law applicable to the
    Property.  The issue was whether the appellant had communicated an unequivocal
    and conscious intention to abandon that deficiency.  The motion judge held that
    it had.  With respect, we find that the motion judge erred in so holding.

[12]

The motion judge relied on three
    facts in support of his finding that the appellant had waived the deficiency. 
    Those three facts are:


(i)

on May 18, 2016 the appellant agreed to amend the APS to provide that it
    would assume all existing tenants on closing;


(ii)

the appellant asked the respondent to obtain an amendment to the local
    zoning by-law, prior to closing, to permit the current use (i.e. the
    residential apartments) to continue legally after closing;


(iii)

the appellant advised, in its lawyers June 9, 2016 letter, that it was
    prepared to continue with the purchase, despite its concerns related to the
    current use, if the respondent provided satisfactory rental and golf course
    documentation.

[13]

With respect, none of those facts,
    either individually or collectively, establish an an unequivocal and conscious
    intention to abandon the deficiency.  The first fact is entirely consistent
    with completing the purchase if the deficiency can be overcome.  The second
    fact would have cured the deficiency but the respondent never obtained the
    amendment nor did it ever say that it would do so.  The third fact suggests
    that the appellant might have been prepared to waive the deficiency, if it
    received another benefit or advantage, but that never happened.

[14]

The respondent places considerable
    reliance on the fact that the appellant proceeded right up to the date of
    closing as if it would close the transaction.  Correspondence was exchanged
    between the lawyers for the parties finalizing various matters necessary for
    the closing.  Further, on the day set for closing, the appellants lawyer communicated
    that the appellant would be signing the closing documents and delivering the
    closing funds.

[15]

None of this conduct amounts to
    an unequivocal act constituting waiver.  It is consistent with the appellant
    placing itself in a position to close the transaction if, in the end result, it
    decided to waive the deficiency or some other solution came about.  That never
    happened.

[16]

There was a deficiency arising
    from the APS.  It was never waived by the appellant.  In accordance with the
    express terms of the APS, given that deficiency, the APS came to an end and the
    deposits had to be returned.  That is the conclusion to which the motion judge
    ought to have come.  The appellant was entitled to summary judgment as claimed.

[17]

The appeal is therefore allowed,
    the judgment below is set aside, and in its place judgment should issue in
    favour of the appellant for the amount of the deposits, namely, $150,000 plus pre-judgment
    interest.  The appellant is entitled to its costs of the motion in the amount
    of $15,000 inclusive of disbursements and HST and its costs of the appeal which
    we fix in the agreed amount of $10,000 inclusive of disbursements and HST.

Janet Simmons J.A.

Lois Roberts J.A.

I.V.B. Nordheimer J.A.


