



COURT OF APPEAL FOR ONTARIO

CITATION: 2260695 Ontario Inc. v. Invecom Associates Limited,
    2017 ONCA 70

DATE: 20170125

DOCKET: C62333 & C62334

Simmons, Brown and Roberts JJ.A.

BETWEEN

2260695 Ontario Inc., 2260698 Ontario Inc. and
    2260700 Ontario Inc.

Applicants/Respondents by Counter-Application

(Respondents)

and

Invecom Associates Limited

Respondent/Counter-Applicant

(Appellant)

Benjamin Salsberg, for the appellant

Martin Sclisizzi, for the respondents

Heard: January 17, 2017

On appeal from the order of Justice Thomas R. Lederer of
    the Superior Court of Justice, dated May 26, 2016, with reasons reported at
    2016 ONSC 3327.

ENDORSEMENT

Overview

[1]

Following the oral hearing, we
    dismissed this appeal for reasons to follow. These are our reasons.

[2]

The appellant, Invecom
    Associates Limited (Invecom), appeals the applications judges decision that
    it forfeited a $400,000 deposit placed under an agreement of purchase and sale
    made January 10, 2014 (the Agreement) with the respondents, 2260695 Ontario
    Inc., 2260698 Ontario Inc. and 2260700 Ontario Inc. (collectively the
    Vendors), to acquire three properties in Waterloo, Ontario.

[3]

Section 4.1 of the Agreement
    contained several conditions of closing in favour of Invecom. It set 5:00 p.m.
    on a specified Condition Date as the time by which Invecom could waive the
    conditions by written notice to the Vendors. Specifically, s. 4.1 stated, in
    part:

The obligation of the Purchaser to complete the Transaction is
    subject to the following conditions (it being understood that each of these
    conditions is for the benefit of the Purchaser and may be waived in whole or in
    part by the Purchaser by written notice to the Vendors on or before the
    applicable date for the satisfaction of such condition)



[4]

Section 4.3 provided, in part:

4.3. If by the applicable times or dates referred to in Section
    4.1 the Purchaser has not given notice to the Vendors that such conditions have
    not been satisfied or waived,
such conditions will be deemed to have been
    satisfied and waived and the parties hereto hereby covenant and agree to
    complete the Closing pursuant to the terms and conditions of this Agreement.
[Emphasis added].

[5]

An amendment to the Agreement
    extended the Condition Date for waiving the conditions to 5:00 p.m. on April
    15, 2014.

[6]

Around 2 p.m. on April 15,
    2014, Invecom sent the Vendors real estate agent an Amending and Extending
    Agreement that proposed to extend the Condition Date until April 30, 2014 (the
    Draft Extension Agreement). The agent promptly transmitted the document to
    the Vendors.

[7]

Towards midnight of that day,
    the agent informed Invecom the Vendors would not give a straight extension.
    Invecom then took the position that if the Vendors would not agree to an
    extension, the deal was at an end. As a result, Invecom did not close the
    transaction.

[8]

The Vendors took the position
    they were entitled to retain the deposit, relying on Section 2.2 of the
    Agreement, which stated: If the Transaction contemplated by this Agreement is
    not completed as a result of the Purchasers default, then the Deposit and all
    accrued interest thereon will be forfeited to the Vendors as liquidated damages
    and in full and complete satisfaction of any Claims that the Vendors may have
    against the Purchaser as a result of such default

[9]

The Vendors applied for
    declarations Invecom had breached the Agreement and they were entitled to
    retain the deposit. Invecom commenced its own application, seeking declarations
    it had lawfully terminated the Agreement and was entitled to the deposit.

[10]

The applications judge granted
    the Vendors application, declared Invecom was in default of the Agreement, and
    declared the deposit and all accrued interest forfeited to the Vendors. The
    applications judge dismissed Invecoms application.

Analysis

[11]

Invecom advances two grounds
    of appeal.

[12]

The first submission concerns
    the applications judges findings with respect to the Draft Extension
    Agreement.  After reviewing the terms of the Agreement and the events of April
    15, 2014, the applications judge stated, at para. 14:

The conditions are clear and
    unambiguous. The notice was to indicate that the conditions were not waived or
    satisfied. It was to be delivered or transmitted to the individual designated
    for the purpose by the time the agreement specified. This is not what the
    proposed Amending and Extending Agreement did. It was an offer. It confronted
    the vendors with a choice, accept the offer or risk the possibility that notice
    indicating the conditions were not being waived and were not satisfied would
    follow and, by the terms of the contract, end the agreement. If the vendors did
    not respond, the need for a decision returned to the purchaser. It could amend
    its offer and provide some additional benefit to the vendors in exchange for
    the extension in the hope that this amended proposal would be accepted  Once
    5:00 p.m. approached, the decision the purchaser was required to make changed:
    send the notice as required by the agreement or accept the conditions and prepare
    to close the purchase.

[13]

Invecom submits the
    applications judge erred in reaching this conclusion. It argues the Draft
    Extension Agreement served dual purposes: (i) as written notice to the Vendor
    under ss. 4.1 and 4.3 of the Agreement that the conditions in its favour had
    not been satisfied or waived; and (ii) as an offer to avoid the termination of
    the Agreement by extending the Condition Date and Closing Date. Consequently,
    the applications judge erred in failing to find the Draft Extension Agreement
    constituted the written notice ss. 4.1 and 4.3 required and, instead,
    erroneously characterized the Draft Extension Agreement simply as an offer.

[14]

We do not accept this
    submission.

[15]

A deferential standard of
    review applies to the applications judges conclusion as to whether the Draft
    Extension Agreement constituted a written notice under ss. 4.1 and 4.3 of the
    Agreement. This court ought not to intervene absent palpable and overriding
    error.

[16]

The applications judges
    finding that the Draft Extension Agreement amounted to an offer to extend was
    fully supported by the evidence. We see no reversible error. Neither the Draft
    Extension Agreement nor its accompanying transmittal email contained any
    language suggesting Invecom intended the document to serve as written notice
    under ss. 4.1 and 4.3 that the conditions had not been satisfied or waived. As
    the documents recitals stated, it constituted a request by Invecom for
    extensions of the Condition Date and the Closing Date.

[17]

As its second ground of
    appeal, Invecom submits the applications judge erred in failing to find the
    Vendors breached their good faith obligations described in
Bhasin v. Hrynew
,
    2014 SCC 71, [2014] 3 S.C.R. 494. They argue such a breach arose from the Vendors
    failure to respond to the Draft Extension Agreement until after 5:00 p.m. on
    April 15, 2014.

[18]

The applications judge
    examined this argument in the context of the Agreements language and the
    parties specific conduct. He concluded, correctly in our view, the Agreement
    placed on Invecom the obligation to act as the time for waiving the conditions
    in its favour ran out: para. 19. We see no error in his conclusion that
    [t]here is no failure of good faith and nothing dishonest in leaving it to the
    purchasers to look after their own interests when the terms of the agreement
    are known to all. As Invecoms counsel fairly acknowledged, these were
    sophisticated parties who entered into a sophisticated agreement with the assistance
    of counsel.

[19]

Accordingly, we see no basis
    to interfere with the applications judges conclusion, at para. 20, that:

[P]roper notice advising that the conditions had not been
    satisfied and were not being waived was not given. The conditions were deemed
    to be satisfied or waived. The purchasers were obliged to complete the
    contract. They are in default. The deposit of $400,000 is forfeited to the
    vendors.

[20]

The appeals are dismissed.

[21]

In accordance with the
    agreement of counsel at the hearing that the successful party would be entitled
    to costs of the appeal in the amount of $9,000.00, inclusive of all applicable
    taxes and disbursements, the respondents are entitled to their costs in that
    amount.

"Janet Simmons J.A."

"David Brown J.A."

"L.B. Roberts J.A."


