



COURT OF APPEAL FOR ONTARIO

CITATION: International Property Group Inc. v. 2262814
    Ontario Ltd., 2016 ONCA 203

DATE: 20160310

DOCKET: C60954

Epstein, Pepall and Hourigan JJ.A.

BETWEEN

International Property Group Inc.

Plaintiff (Respondent)

and

2262814 Ontario Ltd., 1577020 Ontario Ltd., 1577021
    Ontario Ltd., 1577010 Ontario Ltd. and Claude Bitton

Defendants (Appellants)

Douglas Bourassa, for the appellants

Harvin D. Pitch, for the respondent

Heard and released orally: March 3, 2016

On appeal from the judgment of Justice Grant R. Dow of
    the Superior Court of Justice, dated August 4, 2015.

ENDORSEMENT

[1]

By agreement of purchase and sale dated May 15, 2014, t
he appellants agreed to sell certain properties to the respondent.
    The purchase price was $36,000,000, and included a $2,000,000 deposit. Part of
    the purchase price was to be covered by the respondents assumption of the two
    existing mortgages on the properties. The agreement contained a clause (Rider
    #1) that required the respondent to proceed in good faith and with due
    diligence to make application to the existing mortgagees for approval to assume
    the two mortgages.  If the respondent fulfilled this obligation, it was
    entitled to determine, in its sole discretion, whether the terms the mortgagees
    offered were acceptable.

[2]

The respondent did not agree to the conditions
    imposed by one of the two mortgagees (CTC) and repudiated the agreement. The
    appellants refused to return the deposit.

[3]

The parties agreed to have their disagreement
    over the deposit settled by way of summary judgment. The motion judge found for
    the respondent.  The appellants appeal on the basis that the motion judge
    committed errors of law in interpreting the agreement, specifically Rider #1.

[4]

The appellants identify three such errors.

[5]

First, the appellants submit that the motion
    judge erred in
failing to interpret Rider #1 in the
    context of the factual matrix and the surrounding circumstances  specifically
    the circumstances that gave rise to the wording of Rider #1. The appellants
    argue that although the motion judge described the history of Rider # 1 in his
    recitation of the facts, he did not take this history into account in
    interpreting the clause.

[6]

We do not accept this submission.  The
    surrounding circumstances upon which the appellants rely relate to the parties
    negotiations and subjective intent.  Such evidence is not relevant to the
    interpretation of the agreement.  We also note that the entire agreement clause
    in the agreement of purchase and sale precludes consideration of this evidence.

[7]

The appellants also contend that the motion judge
    erred in failing to interpret Rider #1 as a whole.  They say that he failed to
    understand that interpreting the clause as he did would render meaningless the
    words in [the respondents] sole and absolute discretion.  This wording
    imposed on the respondent a precondition to the exercise of discretion to
    accept or reject the terms offered by the mortgagee. The appellants submit that
    there was no dispute that the respondent did not make an application to the CTC
    and did not provide documents, as requested.

[8]

We do not agree with this argument.  It is clear
    that the motion judge considered the language of Rider #1 as a whole.  He
    referred to the respondents obligation to apply to the mortgagees to assume
    the mortgages and to the discretion the clause gave to the respondent.  We see
    no palpable and overriding error.

[9]

Finally, the appellants contend that the motion
    judge erred in failing to interpret the word application in accordance with
    its ordinary meaning  in interpreting the word as requiring something short of
    a formal written application.  The appellants submit that the wording of Rider
    # 1 is clear.  The respondent was required to make an application to each
    mortgagee and it did not do so.

[10]

Again, we do not agree.  It is clear that the
    motion judge was of the view that the respondent acted in good faith and that
    the evidence supported a finding that a formal application would be an exercise
    in futility.  This finding was open to him to make.  In so doing, the motion
    judge considered Mr. Marchants evidence as a whole, including evidence
    inconsistent with his position.

[11]

According to
Sattva
    Capital v. Creston Moly Corp
., 2014 SCC 53, [2014]
    2 S.C.R. 633, at paras. 50 and 52, contractual interpretation involves issues
    of mixed fact and law and courts should be cautious in identifying extricable
    questions of law in such interpretative disputes.  We see no error here and see
    no reason to interfere with the motion judges interpretation of the agreement.

[12]

The appeal is therefore dismissed.  The
    respondent is entitled to its costs fixed in the agreed-upon amount of $20,000,
    inclusive of disbursements and applicable taxes.

Gloria
    Epstein J.A.

S.E.
    Pepall J.A.

C.W.
    Hourigan J.A.


