



COURT OF APPEAL FOR ONTARIO

CITATION: Bennett v. Bennett Estate, 2018 ONCA 45

DATE: 20180122

DOCKET: C63622

Feldman, MacPherson and Huscroft JJ.A.

BETWEEN

Darlene Bennett

Plaintiff (Appellant)

and

The Estate of Joyce Margaret Bennett, Deceased,
    Alan Leslie Soles, Bertram Shaun Soles and A. Miron Topsoil Ltd.

Defendants (Respondents)

William V. Sasso, for the appellant

Christopher Statham, for the respondent A. Miron Topsoil
    Ltd.

No one appearing for the respondents the Estate of Joyce
    Margaret Bennett, Deceased, Alan Leslie Soles and Bertram Shan Soles

Heard: November 9, 2017

On appeal from the judgment of Justice Edward J. Koke of
    the Superior Court of Justice, dated March 21, 2017, with reasons reported at
    2017 ONSC 1811.

CIVIL  Contract interpretation - right
    of first refusal - failure to grant specific performance of right of first
    refusal

Huscroft J.A.:

OVERVIEW

[1]

The Bennett brothers  Dennis, George, Donald,
    and John  divided a large parcel of land given to them by their father into
    separate properties, and entered into an agreement establishing a right of
    first refusal in the event of a sale of any of the properties by any of them.
    Donald Bennett died in 2006 and is survived by his wife Darlene Bennett. John
    Bennett died in 2009, and his property was transferred to his wife Joyce and
    her sons, Bertram Shaun Soles and Alan Leslie Soles.

[2]

In 2012, Joyce and her sons proposed to sell
    their property to Miron Topsoil Ltd. The agreement of purchase and sale acknowledged
    the right of first refusal agreement and specified that the sale to Miron was
    conditional upon George Bennett, Dennis Bennett, and the Estate of Donald Bennett
    failing to exercise their right of first refusal. Notice of the offer to
    Miron was given by the vendors lawyer to the surviving brothers, Dennis and
    George, as well as to Darlene Bennett. The notice acknowledged that the
    property was subject to the first right agreement in favour of George Bennett,
    Dennis Bennett and Donald Bennett, and advised the recipients that they had 21
    business days in which to exercise their right to acquire the property on the
    same terms and conditions as Mirons offer.

[3]

The two surviving Bennett brothers did not seek
    to exercise the right, but Darlene Bennett did. She provided notice that she
    was exercising the right to purchase the property and provided the required
    deposit.

[4]

Both Miron and Darlene Bennett took the position
    that they were entitled to purchase the property. Neither proposed sale of the
    property closed. Darlene Bennett brought a motion for summary judgment
    requesting an order of specific performance granting her the right to purchase
    the property. Miron responded with its own motion for summary judgment,
    requesting an order dismissing Darlene Bennetts claim on the basis that she
    was not entitled to exercise the right of first refusal. The vendors of the
    property  the Estate of Joyce Bennett, and Allan and Bertram Soles  were
    prepared to sell to whomever was entitled to purchase the property.

[5]

The motion judge found that the right of first refusal
    agreement was not ambiguous. He found that it clearly limited the right of first
    refusal to parties to the agreement  a right that did not extend to family
    members of the parties  and that this interpretation was neither unfair nor
    absurd.

[6]

Darlene Bennett could not exercise the right of
    first refusal because she was not a party to the agreement. The motion judge
    rejected evidence concerning the parties intentions in drafting the agreement
    and concluded that she had no enforceable rights under the contract. Although the
    parties agreed that Donald Bennetts estate was entitled to exercise the right
    of first refusal, Darlene Bennett had not brought her claim on behalf of the estate.
    She based her claim on her status as a family member, and as such she was not
    entitled to exercise the right. The motion judge granted summary judgment to
    Miron.

[7]

Darlene Bennett appeals. She submits, in
    essence, that she in fact exercised the right of first refusal on behalf of
    Donald Bennetts estate.

[8]

In her factum on the motion below, Darlene
    Bennett submitted that Donald Bennetts estate
would have had the right
    of first refusal in respect of the property.
However, her
    ability to act on behalf of Donalds estate was never established in evidence. The
    focus of the motion was her claim that she was entitled to exercise the right
    of first refusal on the basis that she was a family member under the
    agreement, and her claim was properly rejected by the motion judge on this
    basis.

[9]

I would dismiss the appeal for the reasons that
    follow.

THE RIGHT OF FIRST REFUSAL

[10]

The right of first refusal agreement made by the
    Bennett brothers provides, in relevant part, as follows:

IN CONSIDERATION of the sum of ONE DOLLAR
    ($1.00) now paid by each party to the other, the receipt whereof is by each
    party acknowledged, each party grants unto the other parties a first right of
    refusal to acquire ownership of that partys real estate herein identified upon
    the terms and conditions herein.

[11]

Article II (c) of the agreement provides:

If a selling
    party receives a
bona fide
offer to purchase his lands or part of his lands described in the
    appendix hereto which he is willing to accept, then the selling party shall
    give written notice of the offer to each of the other parties by presenting
    them with a photocopy of such offer. The other parties shall have a right
    during the next twenty-one (21) business days after receiving such notice, by
    written notice to the selling party to elect to purchase the lands offered to
    be sold for the same price and on identical terms as contained in the offer
    presented to them. [Emphasis in original.]

[12]

The agreement also provides that a party may
    transfer his lands to a family member  defined under the agreement as a
    son, daughter or spouse, or any combination of them of any party  without observing
    the requirements of Article II, but any such transferee would become bound by
    the provisions of the agreement. The agreement was to operate for 23 years.

THE POSITIONS OF THE PARTIES

[13]

The appellant submits that the motion judge
    erred in deciding the claim outside the boundaries of the pleadings and in
    concluding that there was no genuine contractual issue to be decided on the
    motion. The parties agreed that Donald Bennetts estate was entitled to
    exercise the right of first refusal, and neither the vendors nor the respondent
    disputed that the appellant was entitled to exercise the right on behalf of the
    estate. The appellant points to the fact that the vendors offer inviting the exercise
    of the right was made directly to her and the surviving parties to the
    agreement.

[14]

In essence, the appellant contends that the
    vendors extension of the offer to purchase the land to her  her inclusion
    among the parties with a right of first refusal  establishes her right to
    accept it. There was no genuine contract interpretation issue to be determined,
    but in any event the motion judge erred in failing to interpret the contract in
    accordance with the intentions of the parties drafting it, and in precluding
    the appellant from exercising the right of first refusal on the basis of the
    privity of contract doctrine.

[15]

The respondent submits that the appellants
    entitlement to exercise the right of first refusal was put in issue by the
    pleadings and does not accept that the appellant was entitled to act on behalf
    of the estate. The respondent submits that there was no basis in the evidence
    to establish the appellants authority to act for the estate and notes that the
    appellant specifically refused to provide proof of her capacity to do so when
    given an opportunity.

DISCUSSION

[16]

It is clear from the motion judges decision
    that he was alive to the distinction between the appellants claims to exercise
    the right of first refusal on behalf of the estate, on one hand, and as a
    family member under the agreement, on the other hand. He set out the
    appellants position on the motion as follows:

The schedule attached to the agreement of
    purchase and sale to Miron which accompanied the November 16, 2012 Notice of
    Sale from Mr. Hardy refers to the right of the estate of Donald Bennett to
    purchase the property.
The parties agree that Donalds estate is entitled
    to exercise this right. However, Darlene does not make her claim on behalf of
    the estate of her late husband. Instead, she bases her claim that she has a
    right to purchase the property on the fact that she is a family member, as
    defined in the first right agreement
. [Emphasis added.]


[17]

The motion judge then summarized the appellants
    submission concerning her entitlement to exercise the right as a family
    member:

The preamble and paragraphs 11. (a) and 11.
    (c) of the first right agreement purports to grant the right of first refusal
    to the other parties or to the remaining parties. Darlene submits that
    these paragraphs should be construed in such a way that this right is not
    restricted to the four brothers who signed the first right agreement but should
    be construed broadly to include family members as defined in the first right agreement.
    Since she was the spouse of Donald she falls within the definition of a family
    member and is therefore also entitled to exercise this right of first refusal.

[18]

I will consider these two possible claims in
    turn.

(1)

Darlene Bennetts purported entitlement as
    estate trustee

[19]

The appellant may well have been able to
    establish an entitlement to exercise the right of first refusal on behalf of
    the estate, but she did not do so. Her entitlement to exercise the right of
    first refusal was put in issue by the respondent in its statement of defence
    and counterclaim dated February 7, 2014. The respondent disputed that the
    appellant had validly exercised the right of first refusal, and specifically
    requested documentary evidence to support her purported authority to act on
    behalf of the estate in a letter dated August 5, 2014. The appellant did not
    provide such evidence.

[20]

The respondent brought a motion for an order requiring
    the appellant to produce a further and better affidavit of documents. This was
    opposed by the appellant, and when that motion was heard a different motion
    judge declined to rule on the issue, leaving it to be dealt with by the court
    in Parry Sound, where the action had been transferred (from Windsor).

[21]

The appellant baldly asserts her entitlement to
    act on behalf of the estate in a footnote in her appeal factum, stating:

If the issue of the Appellants status to act
    on behalf of Donalds Estate had been put in issue, the Appellant was appointed
    sole Estate Trustee and was sole beneficiary under Donalds last will and testament.
    The Appellants certificate of appointment of Estate Trustee with a will is
    dated August 21, 2006.

[22]

The appellant did not bring a fresh evidence
    application in this court in an attempt to establish her entitlement to act on
    behalf of the estate, either at the time of Donald Bennetts death or at the
    time of the prospective purchase, several years later. Counsel for the
    appellant simply asserted in oral argument that evidence as to her ability to
    act for the estate could easily be adduced.

[23]

The appellant had many opportunities to
    establish the facts on which she seeks to rely but chose not to do so. As a
    result, there was no evidence before the motion judge  and no evidence before this
    court on appeal  concerning the appellants ability to exercise the right of
    first refusal on behalf of the estate. The vendors simple act of extending the
    offer to the appellant did not establish her legal entitlement to accept it on
    behalf of the estate, as the appellant asserts, nor did the respondents
    statement that the appellant

purported

to exercise the right of first refusal constitute an
    admission that she had done so in accordance with the agreement.

[24]

The motion judge was asked to determine the appellants
    entitlement on the basis that she was a family member. He cannot be faulted
    for having done so.

(2)

Darlene Bennetts entitlement as a family
    member

[25]

The motion judges interpretation of the
    agreement is entitled to deference. First, it was open to the motion judge to
    find that the agreement was not ambiguous. On its face, the right of first
    refusal is limited to parties to the agreement.

[26]

The motion judge found that the evidence of the
    parties intention relied on by the appellant had little or no probative value
    and ran afoul of the parol evidence rule in any event. However, even assuming
    that the evidence of the lawyers involved in preparation of the agreement was
    not parol evidence, taken at its highest it does no more than establish that the
    appellant and the lawyers who drafted the agreement clearly understood that
    the estate of a deceased Bennett brother would be entitled to exercise the
    First Right in the event of a death of that contracting party.  The problem
    for the appellant, as noted above, is that she failed to establish her ability
    to act on behalf of Donald Bennetts estate.

[27]

The motion judge also did not err in his
    analysis of the privity of contract doctrine. The doctrine applies only where
    the contract in question confers the relevant benefit on a third party. The
    motion judges finding that the agreement did not confer a right of first
    refusal on anyone but the parties to the agreement is determinative of this
    analysis. In the absence of a benefit conferred on a third party, recent
    caselaw ameliorating the strictures of the privity doctrine and allowing third
    parties to enforce contractual provisions for their benefit  see e.g.
London
    Drugs Ltd. v. Kuehne & Nagel International Ltd.,
[1992] 3 S.C.R. 299,
    and
Fraser River Pile & Dredge Ltd. v. Can-Dive Services Ltd.
,
    [1999] 3 S.C.R. 108  is irrelevant and cannot assist the appellant.

[28]

I see no legal error in the motion judges
    analysis, nor did he make any palpable and overriding error that would allow
    this court to intervene.

CONCLUSION

[29]

I would dismiss the appeal.

[30]

The respondent is entitled to its costs on the
    appeal, fixed in the amount of $10,000 inclusive of disbursements and HST.

Released: January 22, 2018 (K.F.)

Grant Huscroft J.A.

I agree. K. Feldman J.A.

I agree. J.C. MacPherson J.A.


