



COURT OF APPEAL FOR ONTARIO

CITATION: Kinbridge (Bronte) Inc. v. 1401114 Ontario Inc.,  2018 ONCA 957

DATE: 20181128

DOCKET: C64977

Strathy C.J.O., Benotto and Roberts JJ.A.

BETWEEN

Kingridge (Bronte) Inc.

Applicant
(Appellant)

and

1401114 Ontario Inc. and QEW-Bronte Developments
    Inc.

Respondents
(Respondents in Appeal)

Christopher I.R. Morrison and Joel Cormier, for the
    Appellant

Michael R. Kestenberg and Aaron Hershtal, for the
    Respondents

Heard: November 23, 2018

On appeal from the order of Justice Jennifer Woollcombe of
    the Superior Court of Justice dated January 17, 2018.

REASONS FOR
    DECISION

[1]

The appellant appeals from the dismissal of its application to obtain
    payment out of court of the sum of $600,000.

[2]

The appellant purchased two parcels of land (the lands) from the
    respondents with a vendor take-back mortgage held by the respondents. The parties
    amended agreement of purchase and sale and the vendor take-back mortgage terms
    provided that if the official plan was not amended to change the zoning designation
    of a portion of the lands to Business Commercial prior to the mortgages
    maturity date, which the parties agreed, as stated in the mortgage, would be June
    17, 2018, the principal amount owing under the mortgage would be reduced by
    $600,000. The standard charge terms of the mortgage also stipulated that if the
    lands were sold without the consent of the respondents, the principal owing
    under the mortgage, with accrued interest, plus a bonus equal to three months
    interest, would immediately become due and payable at the sole discretion of
    the respondents.

[3]

On February 3, 2017, the appellant sold the property without the
    respondents consent. When the appellant sought a discharge of the mortgage, the
    respondents demanded payment of all amounts owing under the mortgage, including
    the three months interest bonus. The appellant refused to pay the interest
    bonus, arguing that the $600,000 reduction applied because the zoning had not
    yet been amended. The appellant paid the amount of $600,000 into court.  The
    appellant and the respondents sought payment of these monies.

[4]

The application judge rejected the appellants principal argument that
    its sale of the lands accelerated the date by which the property designation
    under the official plan had to change. Had the appellant wanted such a term, he
    could have negotiated its inclusion into the parties agreements. The appellant
    was represented on the purchase and the mortgage by experienced counsel. The
    plain language of the mortgage did not provide for that interpretation and
    clearly stipulated that the date by which the amendment had to take place was
    June 17, 2018. The appellant sold the lands without the respondents consent
    prior to June 17, 2018. This triggered the clear obligation to pay all monies
    owing under the mortgage and the three-month interest bonus.

[5]

In the court below, the parties agreed on the applicability of the
    principles of contractual interpretation set out in
Sattva

Capital
    Corp. v. Creston Moly Corp.
, 2014 SCC 53.

[6]

On appeal, the appellant essentially repeats the same submissions that
    were rejected by the application judge. The appellant also advances on appeal
    the newly framed argument that the application judges order erroneously serves
    to nullify the express term of the parties agreement of purchase and sale and
    mortgage that the purchase price would be reduced by $600,000 if the rezoning
    did not occur before June 17, 2018. It is common ground that there was no
    rezoning by that date, therefore, the appellant is entitled to the price reduction,
    notwithstanding that it sold the lands in February 2017.

[7]

We are not persuaded by these submissions.

[8]

Aside from the fact that this argument was never made in this form to
    the application judge, the appellants application itself precludes such a position.
    There is no mention of a separate, free-standing right to a reduction of the
    purchase price nor is there a request that the court find that such a right
    exists.  Rather, in the grounds for the application, it is clearly stated that
    the parties reached a compromise of the appellants request for a $600,000
    reduction in the purchase price by agreeing that a $600,000 reduction in the
    principal of the VTB would be applied if the portion of the lands in question
    currently designated Office Employment is not amended to designate such lands
    as Business Commercial, prior to June 17, 2018.

[9]

We are also of the view that the appellants newly framed
    interpretation of the parties agreements makes no commercial sense. Without an
    express term providing that the price reduction would survive the appellants
    sale of the lands prior to June 17, 2018, it is not reasonable to infer that
    the parties would intend to have any outstanding obligations under their
    agreements following the appellants sale of the lands.

[10]

The
    appellant has identified neither a palpable and overriding error in the
    application judges meticulous assessment of the factual matrix of the
    agreement nor an extricable legal of law in her interpretation of the
    agreement. Her interpretation of the parties purchase and mortgage agreements
    is reasonable and subject to deference by this court.

[11]

Accordingly,
    the appeal is dismissed. As agreed, the respondents are entitled to their costs
    in the amount of $20,000, inclusive of disbursements and taxes.

G.R. Strathy
    C.J.O.

M.L. Benotto
    J.A.

L.B. Roberts
    J.A.


