



COURT OF APPEAL FOR ONTARIO

CITATION: Downey v. Arey, 2019 ONCA 450

DATE: 20190530

DOCKET: C66108

Doherty, Nordheimer and Harvison Young JJ.A.

BETWEEN

Heather Downey and
    Francesco Marchese a.k.a. Frank Marchese

Plaintiffs (
Respondents
)

and

Douglas Alexander Arey

Defendant (
Appellant
)

Alan Butcher, for the appellant

Domenic Saverino, for the respondents

Heard: May 24, 2019

On appeal from the judgment of
    Justice Kofi Barnes of the Superior Court of Justice, dated October 2, 2018,
    with reasons reported at 2018 ONSC 5832a.

REASONS FOR DECISION

[1]

The motion judge granted summary judgment to the respondents enforcing
    an oral agreement of purchase and sale between the respondents and the
    appellant. He directed that the property owned by the appellant be transferred
    to the respondents for $750,000, pursuant to the terms of the agreement. He
    also ordered the appellant to reimburse the respondents for certain renovation-related
    costs. At the conclusion of the hearing, we allowed the appeal with reasons to
    follow. We now provide those reasons.

[2]

The appellant alleges that the motion judge made several errors in
    arriving at his decision. First and foremost, the appellant contends that the
    crucial factual question, that is, whether the parties had agreed to extend the
    closing date of the agreement of purchase and sale when it did not close as
    contemplated, could not be properly resolved by way of a summary judgment
    motion.

[3]

We agree.

[4]

The parties entered into an oral agreement, pursuant to which the
    appellant agreed to sell his home to the respondents. Ms. Downey is the
    appellants daughter and Mr. Marchese is Ms. Downeys partner.

[5]

The agreement provided for a sale price of $850,000. There was, however,
    a disagreement over the actual price to be paid by the respondents. The
    respondents contended that the appellant had agreed to gift $100,000 to his
    daughter, Ms. Downey, resulting in a net purchase price of $750,000. The
    appellant agreed that he had offered the gift of $100,000 to his daughter, but
    contended that the $850,000 purchase price was the net price after the gift.

[6]

The agreement for the sale of the property was scheduled to close on
    August 31, 2016. The respondents were not in a position to close the
    transaction on that date.

[7]

The appellant contended that there was no agreement to extend the
    closing date beyond August 31, 2016. He indicated that he was initially prepared
    to complete the transaction on the same terms, but when the transaction did not
    close for several months and the value of the property increased significantly,
    he determined that he was no longer prepared to sell it to the respondents for
    $850,000, but offered to sell it at a higher price.

[8]

The respondents maintained, in their pleadings and in their affidavits
    on the summary judgment motion, that there was a specific agreement to extend
    the closing date to May 31, 2017. They contended that the appellant failed to
    close as promised.

[9]

The motion judge found, at para. 33:

In considering the entire evidentiary record, including the
    portions referred to above, I conclude on balance, that on August 21, 2016 the
    parties, by oral agreement, agreed to extend the May 2016 agreement to an
    unspecified date. The purchase price of $850,000 (minus the $100,000 gift)
    remained unchanged.

[10]

The
    fate of the respondents claim turned in large measure on whether there was an
    agreement to extend the closing date of the agreement of purchase and sale. The
    resolution of that question depended, to a large degree, on an assessment of
    the reliability and credibility of the competing versions of the relevant
    events put before the motion judge by the parties. As both the agreement and
    the alleged extension of the agreement were said to be oral, there was little
    by way of documentary evidence to assist in determining this crucial factual
    question.

[11]

The
    motion judge, at para. 20, acknowledged that there were factual disagreements which
    raised genuine issues for trial. He went on, however, to hold that he could
    grant summary judgment using the enhanced fact-finding powers found in r.
    20.04(2.1) and (2.2). It would appear that his reference to r. 20.04 (2.2) is
    in error since the motion judge did not conduct any mini trial.

[12]

Rule
    20.04(2.1) identifies two fact-finding powers that could have been used by the
    motion judge to address the factual disputes raised on this motion. A motion
    judge can both evaluate credibility and draw reasonable inferences from the
    evidence on a r. 20 motion, unless the interests of justice require that those
    powers be exercised only at trial.

[13]

The
    motion judge did not make findings of fact based on credibility determinations.
    His finding that there was an agreement to extend the closing date to some
    unspecified date in the future is inconsistent with the evidence of both the
    appellant and the respondents. It also runs contrary to the pleadings of both
    parties. On this record, the motion judges finding that there was an agreement
    to extend the closing date to some unspecified date in the future, cannot be
    explained by reliance on any assessment, positive or negative, of the
    credibility of either the respondents or the appellant.

[14]

Turning
    to the second fact-finding power which permits the drawing of reasonable
    inferences from primary facts, it would appear that the motion judge inferred
    that there was an agreement to extend the closing to some unspecified future
    date. In our view, the evidence before the motion judge did not permit that
    inference. The events referred to by the motion judge as the basis for the
    inference, for example the payment of rent by the respondents after the first
    closing date passed, were essentially neutral in respect of whether there was
    any extension of the closing date. Those events could only support the
    inference drawn by the motion judge after a consideration of the very different
    explanations offered by the parties for those events, and a determination of
    the credibility of the witnesses offering those competing versions of events.
    As indicated above, the motion judge did not purport to make credibility
    assessments with respect to the explanations put forward. Nor, in our view,
    could he properly do so on this record.

[15]

We
    are satisfied that this was not a case in which the motion judge could, through
    the inference-drawing power provided in r. 20.04(2.1), make the necessary
    findings to determine the claim. His finding that the parties had agreed to
    extend the closing date to some unspecified date in the future is not a
    reasonable inference on this record. It is unsupported in the evidence. The
    motion judges finding constitutes a palpable and overriding error,
    necessitating appellate intervention.

[16]

Our
    conclusion that the motion judge could not properly make the factual
    determination he did on the motion compels the conclusion that the motion
    judges order granting summary judgment must be set aside. Although the
    appellant also moved for summary judgment, this is equally not a case for
    summary judgment in favour of the appellant. This is a case for a trial.

[17]

Given
    our finding on the main ground of appeal, it is unnecessary to address the
    other arguments. We would, however, observe that, as the alleged agreement of
    purchase and sale was based on an oral agreement between the parties, there is
    potentially a serious issue to be considered under s. 4 of the
Statute of
    Frauds Act
, R.S.O. 1990, c. S.19. There is also a serious issue with
    respect to the availability of specific performance as a remedy, even if the
    agreement is established. Neither of these issues were addressed by the motion
    judge. Both issues and any other relevant issues may, of course, be raised at
    the trial.

[18]

The
    appellant is entitled to his costs on the motion in the amount of $20,000,
    inclusive of disbursements and relevant taxes. He is also entitled to his costs
    on the appeal, also fixed at $20,000, inclusive of disbursements and relevant
    taxes.

Doherty J.A.

I.V.B. Nordheimer
    J.A.

Harvison Young J.A.


