



COURT OF APPEAL FOR ONTARIO

CITATION: Ju v. Tahmasebi, 2020 ONCA 383

DATE: 20200615

DOCKET: C67658

Doherty, Hourigan and Fairburn
    JJ.A.

BETWEEN

Hong Ju and Songlin Cai

Applicants

(Appellants)

and

Monir Tahmasebi
and Golden Life Realty Ltd.

Respondents

(Respondents)

Julian Binavince, for the appellants

Pathik Baxi, for the respondent

Heard: In Writing

On
    appeal from the judgment of Justice Janet Leiper of the Superior Court of
    Justice, dated October 11, 2019.

REASONS FOR DECISION

Overview

[1]

The appellants and individual respondent
    (respondent) entered into two agreements of purchase and sale (agreements)
    for a property that the appellants were responsible for having severed into two
    lots.

[2]

The respondent provided a $100,000 deposit at
    the time that the agreements were entered into, to be held in trust by Golden
    Life Inc. (Golden Life). The respondent agreed to pay a second total deposit of
    another $100,000 ($50,000 per lot), in accordance with the following term:

The buyer agrees to pay an
    additional deposit of $50,000 dollars payable to Golden Life Realty Ltd. in
    trust
after the seller provides City or OMB severance approval to the
    buyers lawyer
. [Emphasis added.]

[3]

Over two years after the agreements had been
    entered into, the appellants informed the respondent that the lots had been
    severed. Shortly after having told the respondent about the severance, the appellants
    insisted on payment of the second deposit ASAP. When the respondent did not comply
    with the appellants unilaterally imposed deadline for payment, the appellants
    terminated the agreements and relisted the properties for sale. When the specified
    closing date finally arrived, neither party tendered to close.

[4]

The appellants brought an application for two declarations:
    (a) that the respondent had repudiated the agreements by failing to pay the
    second deposit by the date insisted upon by the appellants; and (b) that the $100,000
    held in trust by Golden Life be transferred to the appellants. The appellants
    also asked for an order directing a trial with respect to the damages caused by
    the respondents purported repudiation of the agreements.

[5]

The application judge concluded that the
    appellants had set an unreasonable date for the payment of the second deposit
    and ought not to have terminated the agreements. The application was dismissed.

[6]

This is an appeal from that decision. The
    appellants claim that the application judge erred in three respects:

1.

misapprehending the date on which the approval
    for severance had been obtained;

2.

misapprehending the date on which the second
    deposit should have been paid; and

3.

misapplying the doctrine of good faith
    performance.

[7]

For the reasons that follow, the appeal is
    dismissed.

Findings of Fact and the Decision Appealed
    From

[8]

The application judges findings of fact, to
    which we owe deference, are central to understanding her conclusion that the
    appellants set an unreasonable date for the payment of the second deposit and,
    therefore, ought not to have terminated the contract. Those factual findings are
    as follows:

(a)

March 23, 2016  The agreements were signed.

(b)

November 20, 2017  The respondent wrote to the
    appellants, suggesting that they had failed to seek timely severance.

(c)

December 15, 2017  Although the Committee of Adjustment
    originally denied the application to sever, that decision was successfully
    appealed to the Toronto Local Appeal Body (TLAB). The TLAB granted severance
    on certain conditions being met.

(d)

December 15, 2017 to June 27, 2018  The
    appellants did not inform the respondent that severance had been granted.

(e)

December 19, 2017, January 26, February 20, and March
    12, 2018  Unaware that severance had been granted, the respondent wrote to the
    appellants asking for updates about the status of the severance application.  No
    response was received.

(f)

March 25, 2018  The appellants counsel finally
    wrote back to the respondent, claiming he had been busy with work and away. The
    respondent was not told about the TLAB decision granting severance.

(g)

June 8, 2018  Certificate of Official issued
    pursuant to s. 53(42) of the
Planning Act
, R.S.O. 1990, c. P.13,
    confirming that the severed parcel of land could be conveyed.

(h)

June 27, 2018  The severed parcel of land was
    transferred by the appellants to themselves for no consideration.

(i)

June 27, 2018  On the same day that the severed
    land was transferred to the appellants, they informed the respondent for the
    first time that severance had been approved. As the agreements contained a
    condition that the closing will be 60 days after the seller received a
    separate deed from the City of Toronto, the appellants set a closing date 60
    days into the future.

(j)

July 6, 2018  The respondent asked for an
    extension of 45 days to close the properties because the agreements had been
    outstanding for more than two years and she was out of the country for the
    summer.

(k)

July 22 and 25, 2018  The request for an
    extension of time was refused and the appellants demanded the second deposit
    ASAP.

(l)

August 1, 2018  The appellants informed the
    respondent that she was in default and that the appellants would exercise
    their rights under the agreements, including terminating the agreements if the
    second deposit was not paid by August 7, 2018.

(m)

August 7, 2018  The appellants terminated the agreements and later
    listed the properties for resale.

[9]

The application judge worked with this
    constellation of facts in arriving at her conclusion that the appellants had
    not behaved reasonably when they insisted on payment of the second deposit on
    such a tight turnaround.

[10]

The application judge found that, despite the
    respondents repeated inquiries about the status of the application to sever,
    the appellants never informed her that the city, through the TLAB decision, had
    actually approved the application on December 15, 2017. Rather, the appellants
    chose to inform the respondent about the approval of severance only after the
    severance was complete and the parcel of land had been transferred. At that
    point, the closing date for the property was fixed under the agreements for 60 days
    later.

[11]

As the application judge found, having received
    the respondents extension request, and knowing that the respondent was out of
    the country, the appellants proceeded to set a deadline that they could
    reasonably have expected would be impossible for the [respondent] to meet. In
    light of the fact that the appellants had waited over six months to inform the
    respondent about the City approval, the triggering event for the second
    deposit, the application judge concluded that the appellants demands for fast
    payment of the second deposit were not reasonable nor consistent with the
    organizing principle of good faith that underlies Canadian contract law.

The Date on
    Which Severance was Approved

[12]

The appellants argue that the application judge made
    a palpable and overriding error by misapprehending the date on which the severance
    was approved. While December 15, 2017 was the date of the TLAB decision, the appellants
    maintain that the approval was only conditional in nature. According to the
    appellants, actual approval was not obtained until the Certificate of
    Official was signed pursuant to s. 53(42) of the
Planning Act

on
June 8, 2018
.

[13]

This argument cannot succeed. It overlooks the
    fact that the agreements specifically refer to the city  severance approval
    being the triggering event for the second deposit. The application judge interpreted
    that clause to refer to when the city first approves the application for
    severance. For the application judge, that was when the TLAB decision was
    rendered.

[14]

This court is not engaged in a
de novo

inquiry. The question is whether the trial judges finding, that the city
    approval was given in the TLAB decision, constitutes a palpable and overriding
    error. We see no error, let alone palpable and overriding error, in the
    application judges determination that the citys approval was provided in the
    TLAB decision on December 15, 2017.

[15]

The fact that the TLAB decision was conditional
    on certain steps being taken did not mean that the city had not approved the
    severance. It was approved subject to the appellants doing what was required of
    them to obtain the necessary Certificate of Official. If the parties had
    intended to have the issuance of the Certificate of Official govern the date
    for triggering the need for the second deposit, they would have contracted to
    that effect. Of course, any such agreement would have offered less protection
    for the appellants because it would have delayed the securing of the second
    deposit for a significant period of time.

[16]

In any event, even if the date for city approval
    was the date of the Certificate of Official, we agree with the respondent that
    the application judges decision did not turn on this point. Whether the date
    was December 15, 2017 (the TLAB decision) or June 8, 2018 (the Certificate of
    Official) does not impact the application judges core reason for finding that
    the appellants behaved unreasonably.

[17]

The fact is that once the respondent was finally
    informed of the severance, she asked for an indulgence because she was out of
    the country. The respondents whereabouts were captured in counsel
    correspondence at the time. While the appellants suggest that the respondents
    claim that she was out of the country constitutes inadmissible hearsay, this
    misses the point. This case did not turn on whether the respondent was actually
    out of the country or not, but on the fact that, in light of the history of
    this matter, when faced with a request for an indulgence, the appellants
    behaved unreasonably. That finding is not fixed in the date of the city
    approval, but in the appellants behaviour in the over six months preceding their
    sudden insistence upon payment of the second deposit.

[18]

We see no error in the application judges
    reasoning to this effect and defer to her conclusion.

The Date on Which the Second Deposit Should
    have been Paid

[19]

The appellants argue that the application judge
    erred in law by failing to set out what would have constituted a reasonable
    time within which to pay the second deposit. They argue that, in light of a clause
    in the agreements, stating that time was of the essence, it was reasonable for
    the respondent to pay the second deposit immediately after she learned of the
    severance. The appellants say that this should have occurred within 24 hours
    and, at the outside, within one week of them having shared with the respondent
    that severance was complete.

[20]

Where there is no express reference in an agreement
    to the time of performance, the law requires performance within a reasonable
    time. What is reasonable will be determined upon the facts of the individual
    case:
Illidge v. Sona Resources Corporation

2018 BCCA 368, at
    para. 61. The application judge was under no obligation to set out what date
    would have been reasonable. The key is that, in light of all of the operative
    facts, she concluded that August 7, 2018 was not reasonable.

The Duty of Good Faith Performance

[21]

The appellants take issue with the application
    judges finding that their imposing of the August 7, 2018 deadline was not
    consistent with the organizing principle of good faith that underlies Canadian
    contract law. The appellants claim that they were merely curing what they
    understood to be a breach with respect to the obligation to pay the second
    deposit. The appellants argue:

If payment of the Second Deposit was overdue
    , the [appellants] were under no duty to waive the default or provide an
    extension for the payment of the Second Deposits. Put another way, if the
    [respondent] was in default with respect to the payment of the Second Deposits,
    it was not unreasonable and inconsistent with the organizing principle of good
    faith that underlies Canadian contract law for the Purchaser to terminate the
    Agreements.

[22]

This is a circular argument. In our view, it is just
    another way of saying that the respondents payment of the deposit was overdue.
    That argument is directly contrary to the application judges conclusion, as
    previously addressed, that there was nothing in the agreements demanding the
    payment by a specific date or within a specific time.

[23]

We defer to the application judges conclusion
    that it was a violation of the principle of good faith to proceed as the
    appellants did: ignore the respondents repeated requests for an update for
    many months, withhold critical information about the city approval, and then
    demand immediate payment by an arbitrarily set date when the respondent said she
    was not in a position to pay because she was out of the country and needed an
    indulgence.

[24]

The application judges reference to the
    appellants having behaved in a manner that was inconsistent with the organizing
    principle of good faith underlying Canadian contract law was really just
    another way of saying that the appellants had acted unreasonably. As noted in
Bhasin
    v. Hrynew

2014 SCC 71, [2014] 3 S.C.R. 494, at para. 66: the
    organizing principle of good faith manifests itself through the existing
    doctrines about the types of situations and relationships in which the law
    requires, in certain respects, honest, candid, forthright or reasonable
    contractual performance.

Conclusion

[25]

The appeal is dismissed.

[26]

The appellant will pay costs in the amount of $7,500
    to the respondent, inclusive of taxes and disbursements.

Doherty J.A.

C.W. Hourigan J.A.

Fairburn J.A.


