



COURT OF APPEAL FOR ONTARIO

CITATION: Canadian Imperial Bank of Commerce v. Urbancorp
    (Leslieville) Developments Inc., 2020 ONCA 449

DATE: 20200709

DOCKET: C67779

Strathy C.J.O., Lauwers and van Rensburg JJ.A.

BETWEEN

Canadian Imperial Bank of Commerce

Applicant

and

Urbancorp (Leslieville) Developments Inc.,

Urbancorp (Riverdale) Developments Inc., &

Urbancorp (The Beach) Developments
    Inc.

Respondents

Application
    under section 243 of the
Bankruptcy and Insolvency Act
, R.S.C. 1985, c.
    B-3, as amended, section 68 of the
Construction Lien Act
, R.S.O. 1990,
    c. C.30, and under section 101 of the
Courts of Justice Act
, R.S.O.
    1990, c. C.43

R. Brendan Bissell, for the appellant, Terra Firma
    Capital Corporation

Megan Mackey and Thomas McRae, for the
    respondents, the Certain Curzon Purchasers

Chris Burr, for Alvarez & Marsel Canada
    Inc. in its capacity as both Receiver and Manager, and Construction Lien
    Trustee of the Assets, Undertakings and Properties of Urbancorp (Leslieville)
    Developments Inc., Urbancorp (Riverdale) Developments Inc., and Urbancorp (The
    Beach) Developments Inc.

Heard: in writing

On appeal from the order of Chief Justice Morawetz of the
    Superior Court of Justice, dated October 10, 2019, with reasons reported at
    2019 ONSC 4971.

REASONS FOR DECISION

[1]

The motion judge found that the respondent residential condominium
    purchasers, known as the Certain Curzon Purchasers, were not obliged to pay to
    the Receiver their proportionate share of the notional value of land conveyed to
    the City of Toronto to meet the condominium developers parkland obligations.
    The ranking creditor, Terra Firma Capital Corporation, appeals. For the reasons
    that follow, the appeal is dismissed.

The Factual and Procedural Context

[2]

Under s. 42 of the
Planning Act
, R.S.O. 1990, c. P.13, a
    municipality in which land is to be developed  in this case the City of
    Toronto  may require the developer to convey land to it for parkland purposes,
    or instead may require the payment of cash in lieu of land. The motion judge
    noted: Although the conveyance of parkland had not been finalized at the time
    of approval of the Opt-In Leslieville Purchaser [Agreement of Purchase and Sale],
    the documents establish that the City was likely going to require a conveyance
    of parkland in order to comply with section 42 of the
Planning Act
: at
    para. 48. As expected, the City required a transfer of 700.09 sq. meters to it
    for parkland purposes, not a cash payment-in-lieu of the conveyance.

[3]

The developer experienced financial difficulties, which led to the Receivers
    appointment. In the course of refinancing the development, the Receiver
    renegotiated the agreements of purchase of sale with each of the Certain Curzon
    Purchasers, increasing the cost per unit by about $255,000.

[4]

The development was completed. When the conveyances were ready to
    proceed, the Receiver required purchasers, including the Certain Curzon
    Purchasers, to pay a proportionate share of the value of the land transferred
    to the City for parkland purposes (calculated as a share of the value of the
    released letter of credit provided to the City to secure the transfer of the
    land). In doing so, the Receiver invoked a clause in the renegotiated
    agreements of purchase and sale and demanded that the Certain Curzon Purchasers
    pay additional amounts per unit of between about $13,000 and almost $18,800 in
    order to close their condominium purchases. They then pursued reimbursement.

[5]

The parties asked the court to determine this issue: Was the Parks Levy
    properly charged by the Construction Receiver to the Certain Curzon Purchasers,
    pursuant to the terms of their respective agreements of purchase and sale?

[6]

The motion judge held that the Parks Levy had not been charged properly to
    the Certain Curzon Purchasers and required the Receiver to reimburse to them
    the amounts they had paid in order to close their purchases.

The Decision under Appeal

[7]

The decision turns on the proper interpretation of clause 7(d)(iii) of
    the court-approved agreements of purchase and sale:

The Purchaser shall be responsible for the amount of any
    parks levy
or any charges pursuant [to] a Section 37 Agreement (pursuant to
    the Planning Act),
levied, charged or otherwise imposed with respect to the
    Condominium
, the Property or the Unit by any governmental authority,
which
    is equivalent to the common interest allocation attributable to the Unit
as
    set out in Schedule D to the Declaration. [Emphasis added.]

[8]

The motion judge took the view that: While the plain meaning of the
    document provides for an adjustment where there has been a payment-in-lieu, it
    does not follow that there is to be an adjustment where there has been a
    conveyance of land: at para. 63. He found that the clause does not clearly
    state that the Certain Curzon Purchasers are responsible for park levy
    charges in circumstances where there has been a conveyance of land and not
    payment-in-lieu: at para. 55. The motion judge construed the language of the
    provision, at para. 60:

I must consider the plain and ordinary meaning of the
    contractual provision read in context with the rest of the contract. One
    consideration here, in addition to the dictionary definitions offered by the
    Parties, is the wording of the entire Parks Levy Clause. The Clause states that
    it is the amount of any parks levy, rather than, for example, the value of
    any parks levy that is to be the subject of an adjustment.
In my view, this
    language is indicative of a payment of cash-in-lieu rather than a conveyance.
[Emphasis added.]

[9]

The motion judge noted that the language of the clause on which Terra
    Firma relies replicates the terms of the Tarion Addendum (the Tarion Warranty
    Corporation Statement of Critical Dates and Addendum to Agreement of Purchase
    and Sale) and must accordingly be given the same consumer protective
    interpretation: at paras. 5, 50, citing

Reddy
    v. 1945086 Ontario Inc
., 2019 ONSC 2554, at para. 21.

He observed, at para. 65:

In considering the factual matrix at the relevant time, it is
    necessary to focus on Schedule B of the Tarion Addendum and its purpose and
    to acknowledge Tarions mandate to protect new home buyers. Any price
    adjustments need to be clearly set out. In this case, the proposed park levy
    adjustment is not clearly or expressly set out. This favours the position of
    the Certain Curzon Purchasers.

[10]

The
    motion judges conclusion was that the provision does: not require the Certain
    Curzon Purchasers to pay for the notional value of parkland transfers to the
    City: at para. 70.

Analysis

[11]

Terra
    Firma makes three arguments. First, it argues that the motion judge misconstrued
    the meaning of the word levy, and submits that its interpretation must
    reflect the established use of the term levy as applying to the taking of
    property and not just the payment of money. Terra Firma acknowledges that levy
    is a term that it is used in land development, but points out that none of the
    applicable legislation and the
Planning Act
or
Toronto Municipal Code
defines what a parks levy is (nor even uses that term).

[12]

Accordingly,
    Terra Firma argues that an alternative interpretation is superior, which is
    that the conventional use of that term can refer to the taking of money, but
    also includes the appropriation of property other than money. In support of
    this argument, Terra Firma refers to ss. 32(2) and 32(3) of the
Commercial
    Tenancies Act
,
R.S.O. 1990,
    c. L.7, which uses the term levy to describe what a landlord does in
    distraining a tenants goods for arrears of rent. Terra Firma also refers to s.
    15 of the
Warehouse Receipt Act
,
R.S.O. 1990, c. W.3, which exempts goods held by a storer from being levied
    under an execution, unless the receipt is first surrendered to the storer.

[13]

That
    is not how the motion judge interpreted the term levy. His reasoning is set
    out at para. 60, quoted above. The motion judges conclusion, in working
    through the language of the provision, was that: this language is indicative
    of a payment of cash-in-lieu rather than a conveyance: at para. 60. Before
    embarking on this analysis, he summarized the parties positions and pointed to
    the Receivers acknowledgement that s. 42 of the
Planning Act
, and in
    particular the definition of a parks levy,

has received scant judicial
    consideration: at para. 29. The Receiver pointed out that
Gemterra
    Developments Corp. v. Toronto (City)
, 2017 ONSC 1776, 66 M.P.L.R. (5th) 102
    was the closest the court had come to defining the term. In that decision,
    Perell J. stated that a payment in lieu of a conveyance is commonly referred
    to as a park levy:
Gemterra Developments
, at para. 8.

[14]

Terra
    Firmas argument does not overcome the motion judges interpretation. A levy is
    more commonly understood to be a financial charge, particularly in the land
    development context, as noted in
Gemterra Developments
. The references
    to levy used by Terra Firma are not apt. The statutes to which Terra Firma
    refers use the term levy as a verb, not as a noun.

[15]

We
    agree with the motion judges disposition of this argument.

[16]

Second,
    Terra Firma submits that the motion judges interpretation does not accord with
    sound commercial principles and good business sense, because it creates
    rather than avoids a commercial absurdity:
Ventas, Inc. v. Sunrise Senior
    Living Real Estate Investment Trust
, 2007 ONCA 205, 85 O.R. (3d) 254, at para. 24.

[17]

Terra
    Firma argues that the land conveyed to the City had value and its conveyance
    therefore imposed a cost on the Receiver. Terra Firma disputes the motion
    judges statement that: The result is neutral to the developer, or in this
    case, the Receiver. Conversely, the result urged by the Receiver could result
    in a windfall for the Receiver: at para. 68.

[18]

We
    do not accept this argument because it is inconsistent with the factual matrix
    in the land development context, as the motion judge noted at paras. 67-68:

In considering the principle of commercial efficacy, a result
    that favours the Certain Curzon Purchaser[s] is, in my view, reasonable. While
    I accept that it is commercially reasonable for the developer to seek to
    recover the additional expense of the consideration paid to the City where
    there has been a payment-in-lieu in compliance with section 42, the developer
    does not incur additional costs where compliance has been achieved through the
    conveyance of land.

The land is part of the project and is conveyed to the
    municipality for park or other public recreational purposes. There is no
    evidence of any additional costs which have to be recovered from the
    purchasers. In my view, this scenario is not commercially unreasonable. The
    result is neutral to the developer, or in this case, the Receiver. Conversely,
    the result urged by the Receiver could result in a windfall for the Receiver. A
    result that favours the Certain Curzon Purchaser[s] is, in my view, reasonable.

[19]

Terra
    Firma asserts: had the Receiver not conveyed the land, it logically would have
    been in a position to either develop more units or even just sell a sizeable
    amount of land to a third party. This assertion is not consistent with the way
    in which land is developed in Toronto. The municipal permissions, which enabled
    the development and the number of units (giving it the value that the Receiver
    reaped), depended on the developers compliance with s. 42 of the
Planning
    Act
, which, as noted, provides either for the conveyance of land for parkland
    or cash-in-lieu, according to the Citys choice.

[20]

Against
    that backdrop, Terra Firma posits this scenario:

Now, it is likely that not conveying land to the City would
    have resulted in the City asking for a monetary payment for park issues as a
    term of any development. That hypothetical situation illustrates, however, the
    anomalous commercial results that flow from the Decisions interpretation of
    clause 7(d)(iii), because if the Receiver had made such a monetary payment
    then:

a)

the Decision holds
    that the Receiver could have adjusted for that payment under clause 7(d)(iii),
    and

b)

the Receiver would
    then have been able to also generate more revenue through either developing
    more units or selling the land to a third party.

[21]

Terra
    Firma argues that this scenario would lead to a commercial absurdity, which the
    principles of contractual interpretation were designed to avoid: the outcome in
    which all the costs would be borne by the developer for a conveyance of land
    in kind but no loss (and in fact further profit from the land not conveyed) for
    payment of a monetary fee[.]

[22]

Terra
    Firmas hypothetical rests on the plainly erroneous premise that the developer
    could have refused to convey the land to the City and could have insisted on
    paying cash-in-lieu. The motion judge saw it differently. The conveyance was
    the predictable result of ordinary land development, he noted at paras. 67-68,
    quoted above. In short, the hypothetical scenario is unrealistic and
    speculative; it should not drive the analysis.

[23]

Third,
    Terra Firma argues that the motion judge improperly applied the
contra
    proferentem
principle against it, because the renegotiated agreements of
    purchase and sale were actively negotiated and the Certain Curzon Purchasers
    were legally represented. Terra Firma relies on
Ironside v. Smith
,
    1998 ABCA 366, 223 A.R. 379, at para. 67:

The use of
contra proferentem
is contingent on an
    absence of meaningful negotiating ability. So long as a party is permitted to
    participate in real negotiations, even if he chooses not to do so, it is
    inappropriate to invoke the rule.

[24]

We
    do not see this as a traditional application of the
contra proferentem
principle. The motion judge was making the point that the developer, in whose
    shoes the Receiver stands, knew all along that the City would require the
    conveyance of land, not payment of cash-in-lieu. In that circumstance, the
    Receiver could have taken the opportunity in renegotiating the agreements of
    purchase and sale to bargain for the transfer of the cost and the risk of the
    land conveyance to the purchasers, and thereby have taken this issue off the
    table. The motion judge noted: The language  could have been drafted to
    expressly cover the conveyance of land scenario -- but it was not: at para.
    49.

[25]

The
    invocation of the
contra proferentem
principle was not the core of the
    motion judges analysis. He turned to it only after concluding that a result
    favouring the Certain Curzon Purchasers was reasonable: at paras. 59, 67-69.
    While other provisions in the agreements of purchase and sale were negotiated,
    this clause was not. The motion judge was alive to the consumer protection
    purpose of the Tarion Addendum, which the clause replicates: at para. 56. He
    observed that: Any price adjustments need to be clearly set out: at para. 65.
    He added: In this case, the proposed park levy adjustment is not clearly or
    expressly set out: at para. 65.

[26]

In
    our view, all of Terra Firmas arguments fail. Terra Firma relies on a tortured
    and unpersuasive interpretation of a clause that does not clearly require the
    purchasers to pay a proportionate share of the cost of the conveyance of land
    to the City for parkland purposes. We agree with the motion judges analysis
    and disposition.

The Standard of Review

[27]

This is an unusual case, in that the clause on which it turns is
    the replica of a provision in a standard form Tarion Addendum in wide use in
    Ontario pursuant to legislation. It would be legally incongruous for the
    interpretation of the provision in this case to be different from its usual
    interpretation. For this reason, the normal posture of deference to the motion
    judges interpretation pursuant to
Sattva Capital Corp. v. Creston Moly
    Corp.
,
2014 SCC 53, [2014] 2 S.C.R. 633
is displaced.
The interpretation of a standard
    form contract has precedential value, so that its interpretation is better
    characterized as a question of law subject to correctness review:
Ledcor
Construction Ltd. v.
    Northbridge Indemnity Insurance Co.,

2016 SCC 37
,
[2016] 2 S.C.R. 23
, at para. 46; see also
MacDonald v. Chicago Title
    Insurance Co. of Canada
,
2015 ONCA 842
,
127 O.R. (3d) 663, leave to appeal refused, [2016] S.C.C.A. No.
    39
.

[28]

That said, in our view, the motion
    judges interpretation was correct, as we have said. On the deference standard,
the motion judge identified the appropriate principles of interpretation
    and had regard to the factual matrix, evident from his reliance on
Ventas
.
    Terra Firma has not demonstrated that the motion judge made any palpable and
    overriding errors in his assessment of the evidence, nor did he make any
    extricable errors of law.

Disposition

[29]

The
    appeal is dismissed with costs payable by the appellant to the Certain Curzon
    Purchasers in the amount of $12,000 as agreed.

G.R. Strathy C.J.O.

P. Lauwers J.A.

K. van Rensburg J.A.


