



COURT OF APPEAL FOR ONTARIO

CITATION: Taylor v. 864773 Ontario Inc.,
    2020 ONCA 345

DATE: 20200603

DOCKET: C67381

Rouleau, van Rensburg and
    Roberts J.J.A.

BETWEEN

Donald Taylor, Eleanor Hepburn,
    Mary Lou Taylor-Hawley and
Janet Taylor Walker

Applicants
    (Respondents/
Appellants by way of cross-appeal)

and

864773 Ontario Inc.

Respondent
    (Appellant/
Respondent by way of cross-appeal)

Frank
    Sperduti and Graham Splawski, for the appellant/respondent by way of
    cross-appeal 864773 Ontario Inc.

Cameron
    Fiske and William S.M. Cord, for the respondents/appellants by way of
    cross-appeal Donald Taylor, Eleanor Hepburn, Mary Lou Taylor-Hawley and Janet
    Taylor Walker

Heard:
    in writing

On appeal
    from the judgments of Justice Michael R. Gibson of the Superior Court of
    Justice dated July 25, 2019.

REASONS FOR DECISION

A.

Overview

[1]

Pursuant to an option agreement, the appellant had
    a right of first refusal in respect of land owned by the respondents. A dispute
    arose as to whether the appellant had validly exercised its option. The application
    judge declared that the appellants purported exercise of the option was
    invalid because its offer was not for a like amount to a third party offer for
    the purpose of the agreement.

[2]

On appeal, the appellant argues that the
    application judge erred in concluding that its offer was not sufficiently
    like the third-party offer. The respondents cross-appeal, seeking to vary the
    language in the judgments to facilitate the sale to the third party.

[3]

For the following reasons, we dismiss the appeal
    and allow the cross-appeal.

B.

Background

[4]

The subject property is a piece of undeveloped
    farmland in Burlington. The appellant, a neighbouring land owner, has a right
    of first refusal in respect of the sale of the property pursuant to an option
    agreement entered into by the parties legal predecessors. The appellant can
    exercise its option under the agreement by indicating its willingness to
    purchase the property upon the same terms and conditions and for a like
    amount as a third-party offer.

[5]

There have been many unsuccessful attempts to
    sell the land. The respondents now seek to sell the land to a third party
    pursuant to a conditional agreement of purchase and sale with a purchase price
    of $15.3 million. The conditions in the agreement include the purchasers
    satisfaction with the environmental condition and development suitability of
    the property. The respondents notified the appellant of this offer pursuant to
    the terms of the option agreement. The appellant then purported to exercise the
    option by making an offer to buy the property for $10,000,000, with no
    conditions.

[6]

The respondents brought the underlying
    application seeking a declaration that this was an invalid exercise of the
    option and that the option be discharged from title. The appellant brought a
    counter-application, seeking a declaration that it had validly exercised the
    option. Its position was that considering the factual matrix of the property
    and the option, and notably the impediments to development of the property, the
    proposed $10,000,000 purchase price offered without conditions is a like
    amount.

[7]

The application judge allowed the respondents
    application in part and dismissed the appellants counter-application. He
    declared that the option had not been validly exercised because $10,000,000 is
    not a like amount to the $15.3 million offer. The application judge further declared
    that the option to purchase will be extinguished should the transaction be
    completed and at that point the respondents could move for an order directing the
    removal of certain instruments related to the option agreement from title.

C.

Analysis

(1)

The Application Judge Did Not Err in Concluding
    that the Exercise of the Option is Invalid

[8]

The appellant alleges that the application judge
    disregarded two key pieces of evidence. First, the appellant explains that the
    development costs it alleges will have to be incurred to develop the property
    for residential purposes are such that its offer of $10,000,000 without
    conditions is a like amount to the $15.3 million offer received by the
    respondents. The appellant argues that the application judge disregarded this
    evidence solely on the basis that no expert opinion was led in support, despite
    the fact that the evidence filed by the appellant came from its corporate
    vice-president who had first-hand knowledge of the matter. Second, the
    appellant argues that the application judge did not consider the fact that
    numerous prior agreements of purchase and sale had failed to close because of
    the significant development costs that would have to be incurred by prospective
    purchasers.

[9]

We see no reason to interfere with the application
    judges conclusion. He considered all of the relevant evidence and his
    conclusion that the appellant's offer was not in a like amount is well
    supported in the record.

[10]

The third-party agreement of purchase and sale
    in the amount of $15.3 million received by the respondents, states that the
    property is being bought as is without representations or warranties. Nothing
    in the record indicates the purchasers proposed use of the property. Even
    accepting the existence of extraordinary costs associated with developing the
    property, as advanced by the appellant in its supporting affidavit, adjustments
    to the purchase price to account for these costs may not be demanded. It is
    simply speculation as to whether the third-party purchaser will seek to
    renegotiate the price and, if such a renegotiation is attempted, whether it
    will result in a new or modified agreement of purchase and sale or the
    agreement simply falling through. In our view, none of these possibilities
    change the nature of the existing offer.

[11]

Further, we do not accept the appellants
    argument that the application judge did not consider the propertys history of
    failed attempts at sale. These prior offers are referenced in his reasons. The
    fact that prior offers have fallen through as a result of higher than expected
    development costs does not establish the requisite similarity between the purchase
    prices at issue.

[12]

As for the appellants argument that the
    application judge erred by concluding there was insufficient evidence that the
    unconditional offer is worth the difference in price, we disagree. The
    application judge was not required to accept the partisan opinion of similarity
    tendered by the appellants own officer, an opinion premised on the appellants
    proposed use of the property. He properly concluded that absent expert evidence
    confirming the appellants proposed adjustments are necessary and appropriate
    when comparing the two offers, it would not accord with sound commercial
    principles and good business sense, or indeed common sense to make adjustments
    of that magnitude.

[13]

In these circumstances, we see no error in the application
    judges conclusion that the proposed purchase price of $10,000,000 is not a like
    amount to the $15.3 million purchase price being considered by the respondents.
    It may well be that, if the appellant was the party seeking to purchase the
    property, it would demand a reduction in the purchase price equal to the amount
    of the costs it alleges need to be incurred to develop the property for
    residential purposes. The fact remains, however, that the $15.3 million price
    has not been renegotiated and, at this point, nothing in the record indicates
    that it will be.

(2)

The Cross-appeal is Allowed on Consent

[14]

The appellant agrees that, if its appeal is
    dismissed, the respondents cross-appeal regarding the form of the judgments should
    be allowed. As a result, we allow the cross-appeal, set aside paragraph two of
    both judgments and replace them with the following:

THIS COURT DECLARES that the rights of 864773
    Ontario Inc. to purchase the Property (as hereinafter described) pursuant to
    the Option to Purchase dated the 14
th
day of June, 1973, registered against those
    lands and premises known municipally as 1309 Appleby Line, in the City of
    Burlington, Ontario and registered as Instrument No. 364344 as against PIN
    07183-0185 (LT), (the Property), which rights were assigned by Instruments
    Nos. 642060 registered June 3, 1986, 680569 registered November 19, 1987 and
    684283 registered January 15, 1988, are extinguished in their entirety on the
    completion of the purchase of the Property pursuant to an Agreement of Purchase
    and Sale between Taylor, Donald; Hepburn, Eleanor, Walker, Janet Taylor; and
    Taylor-Hawley, Mary Lou as Sellers and John Vitulli Jr. in trust (and without
    personal liability) as Buyer, dated the 17th day of December, 2018, (the
    Agreement of Purchase and Sale) by John Vitulli Jr. in trust (and without
    personal liability) or his Permitted Assignee, as defined in Schedule A,
    paragraph 10 of the Agreement of Purchase and Sale.

THIS COURT ORDERS that immediately following
    the registration of a Transfer/Deed of Land from Donald Taylor, Eleanor
    Hepburn, Janet Taylor Walker and Mary Lou Taylor-Hawley to John Vitulli Jr. in
    trust (and without personal liability) or his Permitted Assignee, showing
    consideration of $15,300,000.00, the Land Registrar for the Regional
    Municipality of Halton (No. 20) (hereinafter referred to as the Land
    Registrar) is hereby directed to delete, discharge or otherwise rule off the
    title abstract for PIN 07183-0185 (LT) Instruments Nos. 364344, registered June
    14, 1973, 642060, registered June 3, 1986, 680569, registered November 19, 1987
    and 684283, registered January 15, 1988, forthwith upon this Order, being
    submitted for registration.

THIS COURT ORDERS that a law statement of a
    lawyer for Donald Taylor, Eleanor Hepburn, Janet Taylor Walker and Mary Lou
    Taylor-Hawley that the Transfer of the Property has been made to either John
    Vitulli Jr. in trust or a Permitted Assignee, as defined in Schedule A,
    paragraph 10 of the Agreement of Purchase and Sale, shall be full and
    sufficient evidence of same having occurred and the Land Registrar shall accept
    such law statement as good and sufficient evidence of same, and is directed and
    shall on the registration of such Transfer of the Property with such law
    statement, delete, discharge or otherwise rule off the instruments referred to
    in paragraph 2 of this Order.

D.

Disposition

[15]

The appeal is dismissed, the cross-appeal is
    allowed and the judgment is varied as described above.

[16]

If the parties cannot agree on costs of this
    appeal and cross-appeal, they may make brief submissions in writing
    electronically to coa.e-file@ontario.ca, not to exceed five pages in length as
    follows: the respondent within ten days of the release of this decision, and
    the appellant within five days thereafter.

Paul
    Rouleau J.A.

K.
    van Rensburg J.A.

L.B.
    Roberts J.A.


