The Rosseau Group Inc. v. 2528061 Ontario Inc.

CITATION: The Rosseau Group Inc. v. 2528061 Ontario Inc., 2022 ONSC 486

COURT FILE NO.: CV-17-3360

DATE: 20220124

ONTARIO

SUPERIOR COURT OF JUSTICE

)

BETWEEN:

The Rosseau Group Inc.

)

Stephen Schwartz and Emily Quail, for the

Plaintiff

– and –

James S.G. MacDonald, for the Defendant

2528061 Ontario Inc.

Defendant

) HEARD: April 8, 9, 12, 13, 14, 15, 16, 19

and June 11, 2021

REASONS FOR JUDGMENT

COATS J.

1. Nature of Hearing:

[1]

The Plaintiff purchaser, Rosseau Group Inc. (“Rosseau”), brings this action against the

defendant vendor, 2528061 Ontario Inc. (“252”), for an order for damages arising from the

Defendant’s alleged breach of the parties’ Amended Agreement of Purchase and Sale dated

March 10, 2017, (“amended APS”). The amended APS relates to land municipally known as

3728 Mayfield Road, Town of Caledon, Region of Peel (“the Property”). While the Plaintiff

originally sought an order for specific performance in its Statement of Claim, the Plaintiff has

since abandoned that relief.

[2]

The Plaintiff now seeks general damages for all expenses, losses, including economic

losses, and lost profits arising from the Defendant’s alleged failure to close the transaction,

contrary to the terms of the Agreement of Purchase and Sale (“APS”) and the amended APS. The

Plaintiff also seeks costs on a full indemnity basis.

Page 2

[3]

The Defendant seeks that the action be dismissed with costs. The Defendant also

counterclaims against the Plaintiff for damages in the amount of $400,000, plus pre and post

judgment interest. The sum of $400,000 is the amount of further deposit Rosseau was to pay

upon the waiver of conditions in the APS.

2. Brief Facts / Chronology:

Key Individuals:

1. Dilip Jain: owner and director of 252.

2. Sukhpreet Sandhu: agent retained by 252 to privately market the Property.

3. Glen Schnarr & Associates: a planning firm retained by 252.

4. Manjit Singh Mangat: solicitor for 252.

5. Chuck Mady: runs the development operations of Rosseau.

6. John Mehlenbacher: director at Rosseau.

7. Christopher Haber: solicitor for Rosseau.

8. Wesley Bagnell: realtor at X-Sell Realty Inc.

Chronology

January 20, 2017

On January 20, 2017, the parties entered into an Agreement of

Purchase and Sale (“APS”). The APS stipulated that the Defendant

vendor 252 agreed to sell the Property to the Plaintiff purchaser

Rosseau at a purchase price of $10,500,000, subject to terms set out in

Schedule A to the APS. The parties agreed to a deposit of $50,000.

Schedule A to the APS included the following relevant terms:

1. The offer was conditional for a period of 90 days from the date

that the purchaser received the following documents from the

vendor (“vendor’s documents”):

a. An existing survey of the Property.

b. All documents in the vendor’s possession relating to the

development of the Property.

c. All environmental, Geo-technical, soil, and other

reports relating to the development of the Property.

2. The offer would be conditional for 90 days (the “due diligence

period”) so that the purchaser could review the vendor’s

documents and satisfy itself of applicable zoning rules,

restrictions, and the economic feasibility of the site.

3. If the purchaser did not provide a waiver to the vendor within

the 90-day period, then the offer would become void and the

Page 3

deposit would be returned to the buyer.

4. The closing date was 60 days after the removal of all of the

conditions set out in Schedule A to the APS.

5. The purchaser agreed to “pay a further sum of Four Hundred

Thousand $400,000.00 by bank draft or certified cheque to be

held in the trust of the seller’s solicitor upon waiving all the

conditions.”

6. The purchase price was based on 45.71 acres of land, of which

approximately 30 acres was designated for residential

development. The parties agreed that if the parties found that

the number of developable acres was more, or less, than 30

acres, the purchase price would be adjusted by $350,000 per

developable acre, which would reflect the final sale price.

7. If the “net developable acres” was not established prior to the

closing date, then the closing date would be extended by 60

days. If the “net developable acres” was not established prior to

the new, extended closing date, then the vendor agreed to take

back an interest free mortgage for 50 percent of the sale price

until final acreage is established.

March 10, 2017

The parties entered into an amended APS on March 10, 2017. The

purchase price was adjusted to reflect a lower “net developable area”

on the Property than that set out in the APS. The purchase price was

reduced from $10,500,000 to $6,615,000, based on a reduction in the

net developable area from 30 acres to 18.9 acres.

In the amended APS, the parties agreed to remove the following terms

from the APS:

1. The purchase price of $10,500,000.

2. The buyer shall pay the balance of the purchase price by bank

draft.

3. The purchase price was based on 45.71 acres of land, of which

approximately 30 acres was designated for residential

development. If the parties found that the number of

developable acres was more or less than 30 acres, then purchase

price would be adjusted. The adjustment would be $350,000

per developable acre, which would reflect the final sale price.

4. If the “net developable acres” was not established prior to the

closing date, then the closing date would be extended by 60

Page 4

days. If the “net developable acres” was not established prior to

the new, extended closing date, then the vendor agreed to take

back an interest free mortgage for 50 percent of the sale price

until final acreage is established.

The parties agreed to the following terms in the amended APS:

5. The new purchase price was $6,615,000. This was based on

18.9 natural net developable acres with a final price adjustment

accordingly based on more or less at $350,000 per natural net

developable acre.

6. On the closing date, the Plaintiff purchaser Rosseau would pay

$1,790,000 and the original $50,000 deposit to the defendant

vendor 252.

7. The Plaintiff purchaser Rosseau would assume the defendant

vendor 252’s Bank of Montreal mortgage (the “BMO

Mortgage”) of $1,660,000.

8. The Defendant vendor 252 would provide a vendor take back

mortgage of $3,115,000 to the Plaintiff purchaser Rosseau. The

vendor take-back mortgage would bear no interest until

“natural net developable acres are established.” Upon

establishment of natural net developable acres this vendor take

back would be discharged and Rosseau would pay 252 the sum

of $3,115,000 plus or minus the natural net developable acres

that are established.

9. If the “net developable acres” was not established prior to the

closing date, then the closing date would be extended by 30

days. If the “net developable acres” was not established prior to

the new, extended closing date, then the closing date was to be

pushed back by an additional 15 days.

June 7, 2017

The Plaintiff purchaser Rosseau “waived all the conditions” during the

due diligence period.

The Plaintiff purchaser did not make the $400,000 payment following

the waiver of the conditions.

June 13, 2017

July 4, 2017

The Defendant vendor 252 treated the failure to pay the $400,000 as a

repudiation of the amended APS and communicated this view to the

Plaintiff purchaser in two letters, dated June 13, 2017 and July 4, 2017.

July 5, 2017

The Defendant vendor returned the $50,000 deposit to the Plaintiff

Page 5

purchaser.

August 7, 2017

This was the scheduled date for closing of the transaction. The APS

dictated that the closing date was 60 days after the removal of all the

conditions set out in Schedule A to the APS.

August 18, 2017

The Plaintiff commenced this action for specific performance and

damages.

September 4, 2017

The Plaintiff extended the closing date to September 4, 2017.

September 19, 2017 After the final extension, the scheduled date for closing of the

transaction was September 19, 2017.

October 2, 2017

The Plaintiff purchaser Rosseau obtained a Certificate of Pending

Litigation on the Property.

November 29, 2017 The Defendant vendor 252 moved to set aside the CPL.

December 14, 2017

Justice Trimble ordered the CPL on the Property to be set aside.

3. Issues:

1. Did the Defendant breach the APS or the amended APS? This involves a determination

as to whether the terms of the amended APS nullified the requirement that the Plaintiff

purchaser pay the Defendant a further deposit of $400,000 upon waiver of the due

diligence condition?

2. Was the Plaintiff ready, willing, and able to close the APS and amended APS on

September 19, 2017?

3. Do Justice Trimble’s findings in his December 14, 2017, Endorsement estop the Plaintiff

from raising the issue of uniqueness and whether the Plaintiff was ready, willing, and

able to close the transaction?

4. What are the Plaintiff’s damages, if any?

a. Is the Plaintiff’s expert, Martin Quarcoopome of Weston Consulting, qualified to

provide opinion evidence concerning Rosseau’s estimate of damages?

b. Did the Plaintiff take steps to mitigate its damages?

c. How are damages to be calculated and what are the Plaintiff’s damages?

5. Is the Defendant entitled to $400,000 arising out of the Plaintiff’s failure to pay the

deposit as required under the APS?

Page 6

4. Summary of Parties’ Positions:

i) The Plaintiff Rosseau

[4]

252 breached the APS and amended APS by declaring the agreement to be at an end on

June 13, 2017. When interpreting the terms of the contract as a whole, with meaning given to all

of its parts, the correct interpretation of the APS and amended APS is that the $400,000 deposit

was not required to be paid by Rosseau when it waived the conditions in the APS and amended

APS on June 7, 2017. Dilip Jain (“Mr. Jain”), the owner of the Defendant, admitted that the non-

payment of the deposit was the only reason 252 relied upon for the alleged breach of the APS

and amended APS by Rosseau.

[5]

Prior to the scheduled date for closing, September 19, 2017, 252 consistently and

clearly communicated its decision not to proceed with the transaction and that the APS and

amended APS were at an end. By doing so, 252 was in anticipatory breach of the APS and

amended APS. Rosseau did not accept 252’s breach of the APS and amended APS. Rosseau was

ready, willing, and able to close the transaction. In these circumstances, Rosseau was not

required to tender. The evidence is clear that Rosseau had the funds available to pay the

$400,000 deposit on June 7, 2017 and to pay $1,790,000 in cash due on closing. Rosseau was

also prepared to assume the BMO Mortgage as a concession to 252. To suggest otherwise, is

speculation.

[6]

Rosseau is entitled to damages for breach of contract based on the losses flowing from

the special circumstances known to the parties at the time they entered into the APS and

amended APS. Rosseau’s damages should be assessed by reference to the estimated profits

Rosseau anticipated it would earn but for 252’s breach. The award of damages does not require

Rosseau to establish a precise calculation of these losses. Rather, it is only necessary that

Rosseau show that the parties contemplated the circumstances which embraced the damages

claimed.

[7]

Martin Quarcoopome should be qualified as an expert to testify on the estimated profit

Rosseau would have earned but for 252’s breach. Mr. Quarcoopome obtained his knowledge and

skill on this issue through his work experience and regularly renders these services and provides

Page 7

that advice to his clients. His expertise in this area is consistent with the basis for Rosseau’s

calculation of its claim for damages.

[8]

If 252 is found to be in breach of the Agreement, then the Counterclaim should be

dismissed. In the alternative, if the Counterclaim is successful, the deposits should not be paid.

Alternatively, the amount of the deposits should be reduced.

ii.) The Defendant 252

[9]

252 requests judgment on its Counterclaim in the sum of $400,000 and a dismissal of

Rosseau’s action with costs. The requirement on Rosseau to pay the $400,000 was not expressly

deleted from the APS. It would be unreasonable to interpret the amended APS to do so impliedly

and Rosseau’s failure to make that payment was a breach of the APS and amended APS. In the

alternative, Rosseau was not ready, willing, and able to complete the APS and amended APS

despite its insistence on completing same on September 19, 2017. That failure was itself a breach

of the APS and amended APS and is fatal to Rosseau’s claim. In the further alternative, Rosseau

failed to mitigate its damages by failing to purchase or even look for a substitute where many

other development opportunities were available (and even acted on by Rosseau’s principals in

other transactions). In the further alternative, Rosseau has failed to adduce evidence relating to

the normal measure of damages and a proper date of assessment for damages. Instead, it has

requested that abnormal measures be utilized to assess damages on a date years in the future and

has proffered a land-use planner as its expert on damages where such planner has no expertise in

assessing damages and his report suffers from the frailties of that inexperience.

5. Positions of the Parties:

ISSUE 1: Did 252 breach the APS, as amended on March 10, 2017 by the amended APS? Did

the terms of the amended APS nullify the requirement that the Plaintiff purchaser pay the

Defendant a further deposit of $400,000 upon waiver of the due diligence condition?

Plaintiff:

[10]

The Plaintiff takes the position that the parties agreed that the amended APS removed

the requirement that the Plaintiff pay the $400,000 deposit upon waiver of all conditions.

Page 8

[11]

To support its position, the Plaintiff relies on the testimonies of Mr. Bagnell, Mr.

Sandhu, and Mr. Jain, who all testified that at a meeting in February 2017, the parties discussed

an amendment to the APS that would reduce the purchase price to $6,615,000. Mr. Bagnell and

Mr. Jain both testified that the Defendant had a Bank of Montreal mortgage registered on the

Property, and that the parties discussed that the Plaintiff would assume the BMO mortgage, so

that the Defendant could avoid a penalty. The Plaintiff’s position is that the Plaintiff agreed to

assume the mortgage in exchange for the removal of the $400,000 deposit requirement.

[12]

The Plaintiff also submits that that the $400,000 deposit was deleted in the amended

APS, because when the agreed upon payments in the amended APS are totaled, an additional

$400,000 payment would increase the purchase price beyond the amount specified in the

amended APS. Specifically, the Plaintiff submits that the parties agreed on the following

payments: $50,000 (deposit); $1,790,000 (due on closing); $1,660,000 (BMO Mortgage); and

$3,115,000 (vendor take back mortgage). The Plaintiff submits that because the total of these

amounts is equal to the agreed upon purchase price, it is clear that there was no requirement to

pay an additional $400,000 as a deposit.

[13]

The Plaintiff relies on the Supreme Court of Canada’s decision in Sattva Capital Corp.

v. Creston Moly Corp., 2014 SCC 53, [2014] 2 S.C.R. 633 (“Sattva”), at para. 47 to submit that

the words of a contract, alone, do not have an immutable or absolute meaning. Rather, when

interpreting the provisions of a contract, courts should determine the intent of the parties and the

scope of their understanding by reading the contract as a whole and in a manner consistent with

the circumstances known to the parties at the time of the formation of the contract. The Plaintiff

also relies on the Court of Appeal for Ontario’s decisions in Beatty v. Wei, 2018 ONCA 479

(“Beatty”), at para. 47 and Starrcoll Inc. v. 2281927 Ontario Ltd., 2016 ONCA 275 (“Starrcoll“),

at para. 17. to emphasize that the words in a contract must be read in the context in which these

words are used.

Defendant:

[14]

The Defendant’s position is that the Plaintiff was required to pay the $400,000 deposit

and that this requirement was not deleted by the amendment to the APS. The Defendant submits

Page 9

that a $50,000 deposit would not have been reasonable in the context of the agreed upon

purchase price of approx. $6,600,000, whereas a $450,000 deposit was reasonable, because it

amounted to four percent of the agreed upon purchase price. The Defendant submits that the

combined $450,000 deposit was a “significant and substantial” part of the APS. In this regard,

the Defendant relies on Mr. Sandhu’s testimony that a $500,000 deposit would have been

appropriate, given the purchase price.

[15]

In response to the submission the Plaintiff agreed to assume the BMO Mortgage in

exchange for a removal of the $400,000 deposit requirement, the Defendant submits that the

Plaintiff’s assumption of the BMO mortgage was not a burden to the Plaintiff. The Defendant

submits that by assuming the mortgage for $1,660,000, the Plaintiff would have been able to

avoid paying approximately $1,660,000 in cash on closing. The Defendant relies on the

testimonies of Mr. Jain and Mr. Sandhu, who testified that neither of them discussed the deletion

of the $400,000 deposit at the February 2017 meeting.

[16]

The Defendant also relies on the Supreme Court of Canada’s decision in Sattva to

submit that the interpretation of contracts requires an analysis of the objective intentions of the

parties as expressed in the words of the contract (see Sattva, at para. 32). The Defendant’s

position is that the Plaintiff’s interpretation of the amended APS is neither reasonable nor

supported by the context of the negotiations leading up the amendment of the APS. First, the

Defendant submits that the amended APS clearly listed which terms of the APS were deleted,

and that the additional $400,000 payment was not deleted in the amended APS. Second, the

Defendant submits that the amendment to the APS was primarily intended to address (a) the

reduction in the estimated developable acreage, and (b) the assumption of the BMO mortgage.

The Defendant relies on the testimonies of Mr. Jain and Mr. Sandhu, who both testified that the

$400,000 deposit was not discussed at the February 2017 meeting.

[17]

Finally, in response to the Plaintiff’s submission that “since there was no room for the

further $400,000 deposit, it must not exist” the Defendant submits that this interpretation appears

to be taken after the amendment to the APS in order to justify the Plaintiff’s failure to pay the

$400,000 deposit. The Defendant submits that this interpretation of the amended APS was never

recorded by the Plaintiff, nor conveyed to the Defendant via correspondence. The Defendant

Page 10

submits that neither 252 nor Mr. Jain had knowledge or notice of the Plaintiff’s interpretation of

the amendment as deleting the $400,000 deposit. Significantly, the Defendant submits that the

interpretation that the $400,000 deposit would cause the purchase price to increase by $400,000

is an ill-considered view to take because this view does not consider that the $400,000 would

have been credited against the purchase price.

Plaintiff’s Reply:

[18]

The Plaintiff asserts that the Defendant misstates the evidence in four instances. First,

the Defendant states that Mr. Sandhu did not intend to delete the $400,000. In response, the

Plaintiff submits that Mr. Sandhu stated in his testimony that he did not recollect whether he

discussed deleting the $400,000 with Mr. Bagnell. The Plaintiff further points to Mr. Sandhu’s

repeated claim that the numbers as tallied in the amendment total the final purchase price as

indicative that the $400,000 was to be excluded. Second, in response to the Defendant’s reliance

on Mr. Jain’s subjective interpretation of the amendment to include the $400,000, the Plaintiff

argues that Mr. Jain’s subjective interpretation is both unreasonable and irrelevant. Third, the

Defendant claimed that neither 252 nor Mr. Sandhu were informed about the Plaintiff’s opinion

as to the $400,000. The Plaintiff challenges this claim by pointing to Mr. Mady’s testimony,

during which he claimed to have negotiated the reduction. Fourth, the Defendant submits that the

parties agreed that the second deposit (presumably the $400,000) would be applied to the

purchase price. The Plaintiff suggests that this assertion cannot be reconciled with the text of the

amendment which neatly broke down the final purchase sum and did not include the $400,000.

Finally, the Plaintiff asserts that the deletion of the $400,000 was consistent with the proposed

structure of the transaction whereby the Plaintiff would take over the Defendant’s mortgage with

the Bank of Montreal.

ISSUE 2: Was the Plaintiff purchaser ready, willing, and able to close the APS and amended

APS on September 19, 2017

Plaintiff:

[19]

The Plaintiff makes two submissions in relation to this issue. First, the Plaintiff submits

that the Defendant engaged in an anticipatory breach of the agreement that released the Plaintiff

from continuing in its obligations under the APS. Second, the Plaintiff submits that it rejected the

Page 11

Defendant’s repudiation of the contract and was ready, willing, and able to complete the

transaction on September 19, 2017.

[20]

In support of its position, the Plaintiff relies on the Court of Appeal for Ontario’s

decision in Place Concorde East Limited Partnership v. Shelter Corporation of Canada (2006),

211 O.A.C. 141 (C.A.) (“Place Concorde”). The Plaintiff submits that per Place Concorde

paras. 49-50, a repudiatory breach confers a right on the innocent party to decide whether it will

accept the repudiation and bring an end to the contract, or to treat the contract as if it is still in

full force and effect. The Plaintiff submits that it rejected the repudiation of the contract, and

treated it as binding.

[21]

In response to the Defendant’s submissions on this issue, the Plaintiff posits that it was

ready, willing, and able to complete the transaction because it had the required funds to pay on

closing; it was prepared to assume the BMO mortgage; and it had established the estimated

developable acreage of the Property. The Plaintiff submits that it had $1,942,311.91 available to

pay off the outstanding $1,790,000 due on closing. Further, the Plaintiff submits that because

the Defendant vendor breached the agreement, the Plaintiff was released from its obligation to

tender. The Plaintiff relies on the Ontario Court of Appeal’s decisions in Pompeani v. Bonik

(1997), 104 O.A.C. 149 (C.A.) (“Pompeani”) and Di Millo v. 2099232, 2018 ONCA 1051, 430

D.L.R. (4th) (“Di Millo”), and the Superior Court decision Silverberg v. 1054384 Ontario

Limited (2008), 77 R.P.R. (4th) 102 (Ont. S.C.), 2009 ONCA 698 affirmed (“Silverberg”). The

Plaintiff submits that these decisions stand for the proposition that where the vendor was the

party that breached the agreement, the Plaintiff was released from its obligation to tender on

closing.

Defendant:

[22]

The Defendant’s position is that the Plaintiff Rosseau breached the APS because the

Plaintiff was not ready, willing, and able to complete the APS on September 19, 2017. The

Defendant submits that the Plaintiff was required to pay $3,450,000 on closing to satisfy the

purchase price. The Defendant submits that the Plaintiff’s assertions that it “could have been

ready to close” are not relevant to the analysis of whether the Plaintiff was actually ready to

Page 12

close on the September 19 closing date. The Defendant relies on the Court of Appeal for

Ontario’s decisions in Domicile Developments v. MacTavish (1999), 120 O.A.C. 375 (C.A.)

(“Domicile”); Kwon v. Cooper (1996), 89 O.A.C. 239 (C.A.) (“Kwon”); and 1179 Hunt Club Inc.

v. Ottawa Medical Square Inc., 2019 ONCA 700, 6 R.P.R. (6th) 173 (“Hunt Club”).

[23]

The Defendant relies on evidence that it says shows that the Plaintiff lacked sufficient

funds in its two bank accounts to cover the required payments on closing. The Defendant further

submits that the Plaintiff is relying on the ‘group enterprise theory’ to support its proposition that

it was ready, willing, and able to close the transaction. That is, the Plaintiff asserts that it could

have availed itself of the funds of related corporations. The Defendant submits that the group

enterprise theory was already rejected by the Court of Appeal for Ontario in Yaiguaje v. Chevron

Corporation, 2018 ONCA 472, 141 O.R. (3d) 1 (“Yaiguaje”), as it violates the principle of

“corporate separates.” The Defendant further submits that even if the court were willing to

accept the group enterprise theory, the Plaintiff would still not have been able to muster the

necessary funds to close the transaction on the agreed upon terms.

Plaintiff’s Reply:

[24]

The Plaintiff submits that the Defendant’s assertion that Rosseau did not wish to close

the transaction is not supported by the evidence. First, the Plaintiff submits that the Defendant

has misrepresented Mr. Mady’s testimony in respect to his feelings following the reduction in net

developable acreage: the Defendant claimed that Mr. Mady was disappointed; the Plaintiff

emphasizes that Mr. Mady said ‘a little disappointed.’ Second, the Plaintiff claims that the

Defendant’s assertion that the Rousseau group did not begin due diligence until July 2017 and

that it failed to produce an extensive feasibility study are refuted by the evidence. The Plaintiff

points to Mr. Mady’s testimony that he engaged in a ‘high level analysis’ which he then

discussed with Mr. Quarcoopome.

[25]

The Plaintiff rejects the Defendant’s claim that in the absence of taking over the BMO

Mortgage they would not have been ready, willing, and able to close. Instead, the Plaintiff relies

on Nutzenberger v. Mert, 2021 ONSC 36, at para. 35, to submit that the Defendant’s failure to

provide them with contact information for the mortgage ought to be considered - presumably in

Page 13

determining whether they took steps to take over the mortgage. Additionally, the Plaintiff relies

on Mr. Mehlenbacher’s testimony to suggest that even in the absence of the BMO mortgage, the

Plaintiff was in a position to raise the necessary funds to complete the transaction and were,

therefore, ready, willing, and able to close.

[26]

The Plaintiff further asserts that the cases cited by the Defendant are factually

distinguishable from the case at bar, and that the legal maxims set out in the cases favour the

Plaintiff. The Plaintiff reiterates the argument it made in its closing submission that Domicile,

which the Defendant cites, stands for the proposition that where a vendor refutes the contract, the

innocent purchaser is not required to prove that they were ready, willing, and able to close. The

Plaintiff asserts that Hunt stands for that same proposition.

ISSUE 3: Do Justice Trimble’s findings in his December 14, 2017 Endorsement estop the

Plaintiff from raising the issue of uniqueness and the issue of whether the Plaintiff was ready,

willing, and able to close the transaction?

Plaintiff:

[27]

The Plaintiff’s initial closing submission was silent on this issue.

Defendant:

[28]

The Defendant asserts that the issue of uniqueness in respect to the Property and the

question of whether the Plaintiff was ready, willing, and able to close were conclusively dealt

with at the motion to vacate the CPL. There, Justice Trimble concluded, after considering

evidence from both parties, that the Property was not unique and that the Plaintiff was not ready,

willing, and able to close. The Defendant relies the Toronto Dominion Bank v Leigh, 63 O.T.C. 1

(Gen. Div.), additional reasons in 78 O.T.C. 134, affirmed in 124 O.A.C. 87 (“Leigh”). to assert

that the Plaintiff’s failure to appeal the ruling made on the interlocutory CPL motion precludes

them from now raising these issues here.

Plaintiff’s Reply:

[29]

In response, the Plaintiff asserts that Leigh, is distinguishable from the facts of this

case; therefore, they ought to be permitted to raise both issues again. In Leigh, estoppel was

applied to prevent a party from asking a series of questions that were designed to elicit

Page 14

information contained in a memorandum, the release of which was prohibited by order of a

motions judge. Instead, the Plaintiff relies on the Court of Appeal for Ontario’s decision in G.P.I.

Greenfield Pioneer Inc. v Moore (2002), 155 O.A.C. 305 (C.A.) (“Greenfield”), at paras. 18-20,

to argue that the issue of uniqueness and whether the Plaintiff was ready, willing, and able to

close have not been conclusively dealt with. There, the Court held that a motion to discharge a

CPL does not constitute a final determination in respect to a party’s interest in a property.

ISSUE 4: What are the plaintiff’s damages?

a. Is the Plaintiff’s expert, Martin Quarcoopome of Weston Consulting, qualified to provide

opinion evidence concerning the Plaintiff’s estimate of damages?

Plaintiff:

[30]

The Plaintiff concedes that their expert Mr. Quarcoopome is not an expert appraiser or

expert business valuator. However, the Plaintiff submits that Mr. Quarcoopome was not retained

to value land or the business. Rather, he was asked to opine on a specific type of damages,

namely, those suffered due to being unable to develop the Property; this, the Plaintiff contends,

lies within Mr. Quarcoopome’s area of expertise as a development consultant. The Plaintiff

contends that Mr. Quarcoopome’s 15 years of experience working with landowners to determine

the financial cost, and ultimate profit, of real estate development make him an expert on the

development potential of various properties. The Plaintiff explains that, in his capacity as

development consultant, Mr. Quarcoopome collects information and reports from third parties in

respect to the reports that he prepares.

Defendant:

[31]

The Defendant asserts that Mr. Quarcoopome is not qualified to testify as an expert in

respect to damages, that the methodology he employed in creating his report is unreliable, and

that he is not free of bias. The Defendant argues that Mr. Quarcoopome’s expertise as a land

planner does not qualify him to opine on contract damages, especially since he has never

prepared a damage valuation report. The Defendant further argues that Mr. Quarcoopome’s

evidence ought not to be admitted. The Defendant asserts that the Plaintiff’s history of

transferring acquired properties to a related corporation indicates a lack of intention to develop

the Property now subject of the litigation. Therefore, the expert’s report is irrelevant as it

Page 15

discusses specifically those damages suffered on account of being unable to develop the

Property. Similarly, the Defendant argues that the methodology employed by Mr. Quarcoopome

is too imprecise and primitive to yield a reliable outcome. In particular, the Defendant points to

the following perceived flaws in Mr. Quarcoopome’s report:

 He opined on the Plaintiff’s hypothetical profit from developing the Property without

investigating the profitability of the Plaintiff’s other projects.

 He did not consider the Plaintiff’s ability to mitigate of damages.

 His analysis is premised on the assumption that the Plaintiff will develop the land;

however, Mr. Mady and Mr. Mehlenbacher conceded that in their business structure

another corporation would be responsible for development.

 His report does not state what date of assessment was used.

[32]

The Defendant questions Mr. Quarcoopome’s impartiality on the basis that he is the

only planner Mr. Mady has used in five years.

Plaintiff’s Reply:

[33]

In respect to the Defendant’s allegations of partiality, the Plaintiff submits that a prior

retention of the expert is irrelevant when assessing bias. Relying on the Supreme Court’s ruling

in White Burgess Langille Inman v Abbott Haliburton Co., 2015 SCC 23, para. 49, the Plaintiff

posits that it is settled law that the impartiality of an expert is related to their ability to provide

the court with objective evidence and is not impeached merely because they were involved in

work ultimately leading to the litigation.

b. Did the Plaintiff take steps to mitigate its damages?

Plaintiff:

[34]

The Plaintiff cites Southcott Estates Inc. v. Toronto Catholic District School Board,

2012 SCC 51, [2012] 2 S.C.R. 675, to assert that the Defendant bears the onus to demonstrate

that mitigation was possible and that the Plaintiff failed to take reasonable steps to mitigate their

damages. The Plaintiff states that the Defendant has been unable to demonstrate this, and that in

any event, the Plaintiff was unable to mitigate its’ loss. The Plaintiff points out that they

examined up to 30 properties each month in the Greater Toronto Area (“GTA”) and the regions

beyond; this, Plaintiff suggests constitutes reasonable steps to seek out a viable alternative

property to mitigate their loss. The Plaintiff further submits that they made a series of purchases

Page 16

in 2017; however, none that were able to mitigate for the alleged loss of the Property. The

Plaintiff, relying on the conclusion of their expert, Mr. Bottero, asserts that the properties that the

Defendant’s expert, Mr. Tilley, deemed ‘similar’ were not comparable to the Property.

[35]

The Defendant retained Mr. Tilley to demonstrate that mitigation was possible for the

Plaintiff. The Plaintiff called Mr. Tilley’s methodology into question. In particular, the Plaintiff

points to the following perceived flaws in Mr. Tilley’s report:

 He toured neither the Property nor the properties suggested as alternatives at the time of

the report.

 His analysis on the viability of the alternate properties was premised on outdated and

inaccurate data in respect to size of the area available for development.

 He did not contact Weston Consulting to obtain an updated number for the developable

acreage of the Property.

 He conceded that his budget in completing the report was on the lower range of the

spectrum.

 He did not verify the relationship between transacting parties in respect to the alternative

properties and failed to determine the nature and methodology of those transactions.

[36]

In their written submissions, the Plaintiff reviewed each of the eleven alternative sites

identified by Mr. Tilley and, relying on concessions obtained during Mr. Tilley’s cross-

examination, submits that none of the suggested cites are a viable alternative to the Property.

[37]

The Plaintiff requests that the Court accept the evidence of Mr. Bottero, its own expert,

over that of Mr. Tilley. The Plaintiff submits that Mr. Bottero’s methodology was more precise

and did not contain the flaws that it alleges mar Mr. Tilley’s assessment. Relying on Mr.

Bottero’s testimony, the Plaintiff claims that several of the alternative properties were not listed

on the open market and therefore not readily accessible to the Plaintiff. In any event, the Plaintiff

posits that in Mr. Bottero’s opinion the Property was more desirable than any of the alternative

properties.

Defendant:

[38]

The Defendant submits that the Plaintiff failed to take steps to mitigate their losses. The

Defendant analogizes the facts of the case at bar to those of Southcott, at para. 83 where the

Supreme Court found that the Plaintiff in a real estate litigation had failed to mitigate their losses

Page 17

after not taking steps to locate alternate properties. There, at para. 84, the Plaintiff corporation

was a subsidiary of a larger business; the court held the Plaintiff was not free to rely on the

purchase of other subsidiaries controlled by the same directing mind to argue that it was engaged

in mitigation. The Defendant submits that the evidence of its expert, Mr. Tilley, illustrates that if

the Plaintiff had engaged in steps to mitigate, it would have been successful. The Defendant also

submits that the Plaintiff’s expert, Mr. Bottero’s, claim that the alternatively available properties

were not sufficiently similar is irrelevant as the Plaintiff abandoned their claim for specific

performance, thereby conceding that the Property was not unique.

[39]

The Defendant further submits that in any case the Court does not need to concern itself

with the discrepancy between Mr. Tilley’s and Mr. Bottero’s opinions. The Defendant submits

that the issue of uniqueness of the land was conclusively dealt with by Justice Trimble and the

issue is, therefore, res judicata.

Plaintiff’s Reply:

[40]

The Plaintiff rejects the Defendant’s assertion that there were “thousands” of

comparable properties available. Instead, the Plaintiff reiterates that that the evidence shows that

they sought out alternatives but were unable to find a satisfactory property.

[41]

The Plaintiff posits that the testimony of Mr. Bottero continues to be relevant and does

not address a moot issue. The Plaintiff submits that the defense is erroneously conflating the

issue of uniqueness for purposes of specific performance and the issue of mitigation. The

Plaintiff maintains that Mr. Bottero’s evidence demonstrates that mitigation was not possible.

c. How are damages to be calculated and what are the Plaintiff’s damages?

Plaintiff:

[42] The Plaintiff initially requested specific performance but has since abandoned that claim.

Instead, the Plaintiff asks for damages ‘somewhere’ between $10.1 million to $12.1 million,

based on the estimated profit the Plaintiff would have earned had the purchase closed and the

Plaintiff developed the Property. The Plaintiff relies on Performance Industries Ltd. v. Sylvan

Lake Golf & Tennis Club Ltd., 2002 SCC 19, [2002] 1 S.C.R. 678, for the proposition that ‘lost

Page 18

profits’ are an appropriate measure of damages in litigation such as this. The Plaintiff refers to

the evidence of Mr. Quarcoopome to justify the range of the quantum requested. He estimated

that Rosseau would have incurred approximately $11 million in expenses to, inter alia, develop,

construct, and rezone, the land and the associated tax and legal costs of this venture. However,

Rosseau’s efforts would have yielded approximately $21.5 million to $23.5 million in revenue,

totaling lost profits of $10.1 million to $12.1 million.

Defendant:

[43] The Defendant refers to the Court of Appeal for Ontario’s ruling in Rougemount Capital

Inc. v. Computer Associates International Inc., 2016 ONCA 847, for the proposition that this

Court should start from a presumption that damages are assessed from the point in time of the

breach of the contract. Therefore, the Defendant asks the Court to conclude that the appropriate

measure of damages ought to be the difference in the contracted price and the market value of

the Property on September 19, 2017.

Plaintiff’s Reply:

[44] In reply, the Plaintiff counters that Justice Morgan clarified at para. 22 in Akelius Canada

Inc. v. 2436196 Ontario Inc., 2020 ONSC 6182, a case that the Defendant had themselves relied

on, that “the date for the assessment of damages is determined by what is fair on the facts of each

case.” Therefore, the Plaintiff submits that the Defendant’s theory of damages ought to be

disregarded.

ISSUE 5: The Defendant’s Counterclaim.

Plaintiff:

[45]

The Plaintiff submits that the Defendant’s own conduct following its repudiation of the

APS illustrates that its counterclaim is without merit. After indicating to the Plaintiff’s counsel

that it treated the APS and amended APS to be at an end, the Defendant returned the deposit and

issued no subsequent demands for money. The Plaintiff now asks the court to exercise its

discretion under s. 98 of the Courts of Justice Act, R.S.O. 1990, c. 43 and excuse the Plaintiff

from having the deposit forfeited. The Plaintiff relies on Jesan Real Estate Ltd. v. Doyle, 2020

ONCA 714, 26 R.P.R. (6th) 233, (“Doyle”) at para. 54 to support its proposition. There, the

Page 19

Court of Appeal for Ontario held that the exercise of judicial discretion was warranted where the

forfeited deposit was disproportional to the damages suffered and where it would be

unconscionable for the vendor to retain the monies. The Plaintiff submits that the deposit of

$400,000 was premised on a total purchase price of $10,500,000. When the overall price was

adjusted downward to $6,615,000 the deposit price was not reduced; therefore, the Plaintiff

reasons, it is not proportional. The Plaintiff notes that it would be unconscionable for the

Defendant to retain the deposit as it suffered no losses on account of its conduct, had no apparent

expectations of receiving the monies, and had the opportunity to obtain the deposit and the full

purchase price if it would have closed the transaction.

Defendant:

[46]

The Defendant submits that it is entitled to $400,000 in damages because the Plaintiff

failed to pay the $400,000 deposit. The Defendant takes the position that the termination of the

APS did not extinguish 252’s rights under the agreement, including the Plaintiff’s obligation to

pay the $400,000 deposit. In support of its position, the Defendant relies on the British Columbia

Court of Appeal’s decision in Vanvic Ent. Ltd. v. Mack (1985), 17 D.L.R. (4th) 177 (B.C. C.A.)

(“Vanvic”). The Defendant submits that it bases its counterclaim on the Vanvic decision, wherein

the court held that a Plaintiff had the right to recover a deposit that had been paid by the

Defendant via cheque where the contract had been repudiated. The Defendant submits that the

deposit was a right that accrued to 252 at the time of the waiver and survives the contract.

Consequently, 252 is entitled to recover the amount of the $400,000 as damages.

Plaintiff’s Reply:

[47]

The Plaintiff makes three submissions in reply in respect to the Defendant’s claim for

$400,000. First, the Plaintiff asserts that the Defendant misrepresents Mr. Sandhu’s evidence in

respect to the amendment to the APS. Second, the Plaintiff posits that because Mr. Jain

instructed his solicitors to terminate the agreement, his subjective interpretation of the contract is

irrelevant. Third, the Plaintiff submits that the contextual evidence surrounding the amendment

indicates that the parties intended to remove the $400,000 deposit from the final agreement.

Page 20

6. Analysis

ISSUE 1: Did 252 breach the APS, as amended on March 10, 2017 by the amended APS? Did

the terms of the amended APS nullify the requirement that the Plaintiff purchaser pay the

Defendant a further deposit of $400,000 upon waiver of the due diligence condition?

I. The Law

[48]

The proper approach to contract interpretation was summarized by the Supreme Court

of Canada in Sattva, at paras. 47 and 57:

[47] Regarding the first development, the interpretation of contracts has evolved

towards a practical, common-sense approach not dominated by technical rules of

construction. The overriding concern is to determine “the intent of the parties and

the scope of their understanding” (Jesuit Fathers of Upper Canada v. Guardian

Insurance Co. of Canada, 2006 SCC 21, [2006] 1 S.C.R. 744, at para. 27, per

LeBel J.; see also Tercon Contractors Ltd. v. British Columbia (Transportation

and Highways), 2010 SCC 4, [2010] 1 S.C.R. 69, at paras. 64-65, per Cromwell

J.). To do so, a decision-maker must read the contract as a whole, giving the

words used their ordinary and grammatical meaning, consistent with the

surrounding circumstances known to the parties at the time of formation of the

contract. Consideration of the surrounding circumstances recognizes that

ascertaining contractual intention can be difficult when looking at words on their

own, because words alone do not have an immutable or absolute meaning:

No contracts are made in a vacuum: there is always a setting in

which they have to be placed. . . . In a commercial contract it is

certainly right that the court should know the commercial purpose

of the contract and this in turn presupposes knowledge of the

genesis of the transaction, the background, the context, the market

in which the parties are operating.

(Reardon Smith Line, at p. 574, per Lord Wilberforce)

***

[57] While the surrounding circumstances will be considered in interpreting the

terms of a contract, they must never be allowed to overwhelm the words of that

agreement (Hayes Forest Services, at para. 14; and Hall, at p. 30). The goal of

examining such evidence is to deepen a decision-maker’s understanding of the

mutual and objective intentions of the parties as expressed in the words of the

contract. The interpretation of a written contractual provision must always be

grounded in the text and read in light of the entire contract (Hall, at pp. 15 and 30-

32). While the surrounding circumstances are relied upon in the interpretive

process, courts cannot use them to deviate from the text such that the court

effectively creates a new agreement (Glaswegian Enterprises Inc. v. B.C. Tel

Mobility Cellular Inc. (1997), 1997 CanLII 4085 (BC CA), 101 B.C.A.C. 62).

Page 21

[49]

Further, para. 47 of the Court of Appeal for Ontario’s decision in Beatty provides as

follows:

[47] A fundamental precept of contractual interpretation is that “a contract is to

be construed as a whole with meaning given to all of its parts”: Geoff R. Hall,

Canadian Contractual Interpretation Law, 3d ed. (Toronto: LexisNexis Canada,

2016), at p. 16. A provision in a contract should not be read as standing alone, but

in light of the agreement as a whole and its other provisions: Hillis Oil and Sales

Limited v. Wynn's Canada, Ltd., 1986 CanLII 44 (SCC), [1986] 1 S.C.R. 57, at p.

66. See also Hall, at p. 21.

[50]

The Court of Appeal for Ontario elaborated on this approach in para. 20 of Starrcoll:

[20]

As explained in Sattva, contractual interpretation is a search for the

objective intention of the parties as discerned from the language of the relevant

provision considered in the context of the entirety of the agreement, the purpose

of the provision, the nature of the relationship created by the agreement, and any

other relevant surrounding circumstances. An application of that approach to the

Escrow Provision leads me to conclude that gross rental as at the end of the

Performance Period (May 1, 2014) was to be determined by annualizing the

amount of rental income shown on the rent rolls setting out the rents as of May 1,

2014. On that interpretation, the $960,000 threshold was met and Starrcoll is

entitled to the $300,000.

[51]

While surrounding circumstances will be considered in interpreting the terms of a

contract, the surrounding circumstances cannot “overwhelm the words” of the agreement. The

court must ground its interpretation in the text of the contract, looking at the objective evidence.

Evidence of an individual’s interpretation of the agreement is not helpful. (See Deslaurier

Custom Cabinets Inc. v. 1728106 Ontario Inc., 2017 ONCA 293, 135 O.R. (3d) 241, at paras.

37-38.)

II. The Evidence

a) The Parties:

[52]

Most of the facts concerning the circumstances surrounding the execution of the APS

are not in dispute. There is only disagreement as to the evidence surrounding the execution of the

amended APS. I will resolve any factual disputes as required and indicate where the positions

differ on the evidence.

Page 22

[53]

Rosseau was formed in 2013. It is directed by John Mehlenbacher. Mr. Mehlenbacher

deposed that the Rosseau operates in two silos. One silo is a private equity fund where the

company raises money from outside investors in a limited partnership format to invest in its own

or other parties’ projects. In the second silo, Rosseau buys and develops land financed with

private equity funds.

[54]

Mr. Mehlenbacher testified that in almost all circumstances, he incorporates separate

corporations to own lands purchased for investment and development. This is confirmed by

evidence regarding previous investments and projects in which Mr. Mehlenbacher participated -

all of which, save one, were entered into by corporations other than Rosseau.

[55]

Mr. Mehlenbacher testified that there were a number of separate corporations also

owned and managed by himself and other shareholders. Some of the corporations mentioned

were Rosseau Development Corp., Condo Store Realty Inc., Condo Store Marketing System Inc.,

and Insider Condo Club Ltd. There was no evidence submitted that these corporations were

subsidiaries of Rosseau - only that Mr. Mehlenbacher was involved in them as he is involved

with the Rosseau.

[56]

In 2013, when Rosseau started, it operated as a private equity fund and invested in other

parties’ projects. In 2016, Rosseau opened its own development infrastructure to finance its own

projects with its own funds. Rosseau retained Chuck Mady for that purpose. Mr. Mady runs the

development operation of Rosseau and oversees sourcing land and projects from the start to

finish.

[57]

Mr. Mady provided evidence of his decades long career in real estate development

including his substantial experience and expertise in planning, construction, financing, and

determining revenue.

[58]

Mr. Jain is a director of 252. He testified that 252 was incorporated in July 2016 for the

sole purpose of purchasing and owning the Property. Mr. Jain is a pharmacist and has been a

pharmacist for approximately 36 years. He had no real estate development experience prior to

the acquisition of the Property.

Page 23

[59]

Mr. Jain testified that in July 2016, 252 purchased the Property for $2.65 million. The

purchase was financed by a $1,680,000 loan from BMO, which was secured by a first mortgage

registered against title to the Property. It was a fixed mortgage for five years at an interest rate of

2.49 % per annum.

[60]

Mr. Jain’s intention in purchasing the Property through 252 was to develop it himself

by rezoning it and building residential homes. He also hoped to have 252 develop and build a

health clinic at the Property. He intended to develop the Property because he knew “that is where

the real money was.” He retained Glen Schnarr & Associates (“Schnarr”) to assist him with the

development of the Property.

b) The APS:

[61]

The litigation arises out of the failed purchase and sale of the Property. The Property is

located at the north east corner of Mayfield Road and Kennedy Road in Caledon. It is 45.71

acres and contains a substantial amount of natural heritage features including a wetland and

valley system.

[62]

The Property is undeveloped and made up of vacant farmland, wetlands, and a

residential house. The Property is zoned for agricultural (A1) and conservation (EPA 2 -

Environmental Policy Area 2) uses. A large part of the Property is made up of environmentally

sensitive wetland and the Property is under the jurisdiction of the Toronto and Region

Conservation Authority (“TRCA”).

[63]

The parties’ evidence is consistent concerning their introduction to each other and the

steps leading to the preparation and execution of the APS.

[64]

Schnarr advised Mr. Jain that it would take, at a minimum, seven and half to ten years

to develop the Property. The process would be long and costly. As a result, Mr. Jain decided to

sell the Property instead.

[65]

Mr. Jain was approached by a realtor, Sukhpreet Sandhu at the Jain Professional Centre

in January of 2017. Mr. Sandhu’s brother-in-law was one of Mr. Jain’s tenants at the

Professional Centre. Mr. Sandhu came to know about 252’s ownership of the Property and

Page 24

offered to market it for sale. Mr. Sandhu was retained by 252 as agent to privately market the

Property; it was not listed on the Multiple Listing Service.

[66]

Mr. Sandhu brought the Property to the attention of Wesley Bagnell, a realtor at X-Sell

Realty Inc., in or about January of 2017. Mr. Sandhu described the Property to Mr. Bagnell as

having 30 developable acres and that a lot of work had to be done to get it developed. Mr.

Sandhu and Mr. Bagnell discussed that 252 was interested in selling the land for $350,000 per

developable acre.

[67]

In or about December 2016 or January 2017, Mr. Mady met Mr. Bagnell. Mr. Mady

advised Mr. Bagnell that he was looking for small to average residential parcels of land with

interesting physical characteristics. Mr. Mady testified that he did not want to develop a

subdivision in tract land. He was looking for a small property of 5 - 40 acres, that had physical

characteristics that he could leverage.

[68]

Mr. Mady explained it was harder to compete with the large tract builders in Toronto.

He was interested in finding “niche plays”: small properties with unique features, like wetlands

or rolling terrain, that he could leverage into a “green themed community.” By “leverage”, Mr.

Mady confirmed, he meant developing a natural heritage subdivision of single and townhomes

with walking trails or nature trails. Mr. Mady had experience with this type of development in

the past, testifying that he has “known people to love getting involved with a community like

that.”

[69]

According to Mr. Bagnell, Mr. Mady advised him that Rosseau was interested in

purchasing “development properties” and “investment properties” to develop or sell. Mr. Bagnell

testified that there were no particular or unique features described by Mr. Mady to guide Mr.

Bagnell’s search - simply that Rosseau was looking for investment or development properties.

[70]

Mr. Bagnell and Mr. Mady both testified that Mr. Bagnell introduced Mr. Mady to the

Property. They visited it together and after seeing it, Mr. Mady instructed Mr. Bagnell to prepare

an offer at $350,000 per net developable acre. All relevant witnesses testified that the purchase

price was based on the amount of net developable acres because the value in the land is in its

potential for development.

Page 25

[71]

Mr. Bagnell prepared an APS dated January 20, 2017. Rosseau signed on January 16,

2017, and 252 signed on January 18, 2017. The Defendant did not negotiate the APS. 252

accepted the terms of the APS without any amendments.

[72]

The material terms of the APS are as follows:

i.

Purchase price $10,500,000;

ii.

The APS was conditional for a period of 90 days from the receipt of the

vendor’s documents for the purchaser to satisfy itself including but not

limited to the following issues:

a) Reviewing all the vendor’s documents in its possession

related to the development of the Property;

b) Zoning and restrictions;

c) The economic feasibility of the development of the site.

iii. If the Seller or the Seller’s agent did not receive in writing during the due

diligence period that the condition has been waived, then the APS would

be null and void and the deposit returned to the Buyer in full without

interest or deductions. Rosseau had paid a $50,000 deposit at the time of

the APS to Manjeet Singh Mangat, 252’s solicitor. The deposit was to be

held in trust pending completion and to be credited toward the purchase

price on completion.

iv.

The Buyer agrees to pay a further sum of $400,000 by bank draft or

certified cheque to be held in the trust of the Seller’s solicitor upon

waiving all the conditions.

v.

The purchase price under the APS was adjustable based in the

“developable” acres as provided for at Schedule A to the APS. The

purchase price was based on a price of $350,000 per developable acre to

be adjusted accordingly, with 50 per cent of the sale price held by an

interest free take back mortgage until the final acreage is established.

Schedule A to the APS provides the following clause:

The purchase price of $10,500,00 is based on 45.71 acre of

which approximately 30 acre being developable and

designated for residential development, allowing

townhouses, semis and single homes, in the event of the

number of developable acres is changed to be more or less

as stated above, then the purchase price to be adjusted

accordingly based on a price of $350,000 per developable

acre to reflect the final sale price, in the event net

developable acres is not established prior to the date set for

closing, then closing shall be expanded for further 60 days

Page 26

and in the event net developable is still not established,

then Seller agrees to take back an interest -free mortgage

for 50 per cent of the sale price until, final acreage is

established, the mortgage shall be due and payable 15 days

following the net developable being established.

vi.

Closing was scheduled to be 60 days after the removal of the all

conditions.

vii. Rosseau had free reign to conduct its own due diligence and inspect the

Property.

[73]

Mr. Jain testified that he knew Rosseau’s intention in purchasing the Property was to

develop the land and build houses. The APS clearly contemplates residential development on the

Property. Mr. Jain acknowledged that the value of the Property was based on its development

potential. He knew it would take many years to develop.

[74]

Mr. Jain agreed that the parties would not know the final determination of the net

developable acres of the Property until after closing. Once it was determined, Rosseau would pay

the balance of the purchase price and the vendor take back mortgage would be discharged.

[75]

The identity of the person or authority who would determine or “establish” the “final

acreage” referred to in the APS was not resolved by the parties during the life of the transaction.

Mr. Mady testified that he believed that it would be determined by TRCA and 252’s planner. Mr.

Quarcoopome testified that TRCA would make that determination. Mr. Jain testified that he

thought it would be Rosseau and its planner who would establish that acreage.

c) Events Subsequent to the Delivery of the APS:

[76]

Mr. Jain testified that shortly after the APS was entered into between 252 and Rosseau,

he was informed by 252’s planners at Schnarr that the estimated developable acreage at the

Property was much less than 30 acres. The new estimate was 18.9 acres. Mr. Jain testified that he

directed Mr. Sandhu to advise Rosseau thereof. Mr. Mady testified that Mr. Bagnell was in touch

with him in February or March 2017 and advised him that there was a reduction in the

developable acreage at the Property.

Page 27

[77]

I find that Rosseau knew about the new estimate of 18.9 developable acres by February

11, 2017. That is the date that Rosseau entered into an assignment agreement with 1371975

Ontario Inc. (a company that Mr. Mady and Mr. Bagnell described as being managed by a man

named Joseph Cohen). That assignment agreement set out the price of the assignment as

$8,977,500 based on the same 18.9 “net developable acres” that had been estimated for 252 by

Schnarr. The assignment agreement set out a price of $475,000 per developable acre (at

Schedules A and B). Rosseau did not advise 252 of its assignment of the APS to Mr. Cohen’s

corporation.

[78]

Mr. Bagnell, Mr. Sandhu, and Mr. Jain testified that a meeting was held between the

three of them at Mr. Jain’s office in February 2017. Mr. Sandhu arranged the meeting because as

set out above, Schnarr had calculated a new estimate for the net developable acres of the

Property. In the new estimate the Property contained only 18.9 developable acres not 30

developable acres. As a result, the purchase price under the APS had to be amended.

[79]

Mr. Jain testified that 252 was still prepared to sell the Property at $350,000 per net

developable acre and was also prepared to grant a vendor take back mortgage for one half of the

purchase price, at zero interest, pending the determination of the net developable acreage for the

Property. The new purchase price was calculated at 18.9 acres x $350,000 for a total of

$6,615,000.

[80]

Mr. Bagnell and Mr. Jain both testified that at the February 2017 meeting, Mr. Jain

raised the issue of the BMO Mortgage registered against the Property. Mr. Jain wanted Rosseau

to assume the mortgage, so that 252 could avoid incurring a $200,000 penalty for its early

discharge. Mr. Jain testified, that at the meeting he did not know the penalty amount other than

that it would be substantial. Mr. Sandhu testified that Mr. Jain gave him the amount of the

penalty. BMO would have to approve the assumption of the mortgage by Rosseau.

[81]

There is consensus that Mr. Jain, Mr. Sandhu, and Mr. Bagnell did not discuss the

deletion of the $400,000 deposit at their February 2017 meeting.

[82]

Mr. Bagnell and Mr. Mady both testified that after the meeting, Mr. Bagnell

approached Mr. Mady and told him of the change in the estimated net developable acres from 30

Page 28

to 18.9 acres and of 252’s request for Rosseau to assume the BMO Mortgage. Mr. Bagnell and

Mr. Mady testified that Rosseau was prepared to proceed with the purchase of the Property at

18.9 acres based on a $350,000 per developable acre price.

[83]

Mr. Mady testified that Rosseau agreed to assume the BMO Mortgage and understood

that it was responsible for the $200,000 penalty. Mr. Mady testified that if Rosseau was to

assume the mortgage, he wanted something in return: “252 has no problem bettering the

Agreement for themselves so it is only fair we get a benefit ourselves.” He suggested that the

parties delete the requirement to pay the $400,000 second deposit to better the APS for Rosseau

in its amended version. Mr. Mady was prepared for Rosseau to pay the $200,000 penalty under

the BMO Mortgage and thought that the deletion of the requirement to pay the $400,000 deposit

on the waiving of conditions was a fair trade.

[84]

Mr. Mady testified that he viewed the assumption of the BMO Mortgage as a penalty

because he would have to discharge it early to obtain construction financing as part of the

development of the Property.

[85]

Mr. Bagnell testified that he obtained instructions from Mr. Mady to agree to the new

purchase price of $6,615,000 and to assume the BMO Mortgage on the basis that the requirement

of Rosseau to pay the $400,000 deposit would be deleted.

[86]

What happened next is disputed by the parties. Mr. Bagnall testified that he called Mr.

Sandhu and explained his instructions that Rosseau would only assume the BMO Mortgage if the

requirement for the further $400,000 deposit on the waiver of conditions would be deleted. Mr.

Bagnall testified that he told Mr. Sandhu that he had met with Rosseau and that everything was

acceptable except the $400,000; these monies would not be due on the waiver because Rosseau

was assuming the first mortgage. Mr. Sandhu responded that he would inform Mr. Jain.

[87]

In his examination in-chief, Mr. Sandhu said the requirement for the $400,000 deposit

never changed. It was to be paid. He said he forgot to mention the $400,000 in the amended

APS. He was supposed to mention it and forgot. He said he was supposed to delete it from the

balance due on closing. He said he made a mistake.

Page 29

[88]

In cross-examination, Mr. Sandhu agreed that after the February 2017 meeting, Mr.

Bagnell told him that Rosseau was prepared to assume the BMO Mortgage. He was asked if Mr.

Bagnall told him Rosseau was agreeable to assume the mortgage but did not want to pay the

$400,000 on waiving the conditions. He said he did not recall that conversation; he then denied

having had that conversation. He said that if the discussion had happened, it would have been

reflected in the amended APS. He was then taken through the terms of the amended APS. He

agreed that if Rosseau paid the $1,790,000 on closing, the $50,000 deposit already paid, assumed

the mortgage of $1,666,000 and had a vendor take back mortgage of $3,115,000, all as set out in

the amended APS, Rosseau would have paid the full purchase price. He was asked if the full

purchase price is accounted for on closing, is it clear there was no further requirement by

Rosseau to pay the $400,000? He said he forgot to mention it. He said “that is what I am saying.

I forgot to mention this one.” He said he remembers asking for the $400,000 and asked

rhetorically why he would ask for the monies if they were not going to be paid. He said he made

a mistake. Mr. Sandhu said if the $400,000 was not required, why wasn’t it specifically deleted

in the amended APS. He agreed that if Rosseau had paid $1,790,000 on closing and the $400,000

on waiving the conditions, Rosseau would have paid too much.

[89]

Mr. Sandhu agreed, both in examination in-chief and in cross-examination, that the

numbers in the amended APS added up to the stated purchase price. In-chief, counsel for the

Defendant asked: “And there is no reference to the $400,000 deposit or how that will be

adjusted. Do you recall whether or not you intended [it to be] adjusted?,” to which Mr. Sandhu

responded, “if just given the total amount of the balance if this comes to … the numbers add up

to the purchase price.” In cross-examination, Mr. Sandhu agreed the numbers in the amended

APS added up to the purchase price.

[90]

Mr. Jain testified that he expected Rosseau to still pay the $400,000.

[91]

After the alleged call from Mr. Bagnell, Mr. Sandhu sent an email to Mr. Bagnell on

March 1, 2017, confirming the terms for the amended agreement. The email is reproduced in full

as follows:

Hi Wesley,

Page 30

Below are the terms for the completion of transaction

1. Adjust the price for now @ 18.9 x 350000 = 6,615,000

2. Buyer will Pay 1.84 million to vendor and assume 1^stmortgage of 1.66 million

from BMO bearing interest of 2.49% for 5 yr term or the time till net developable

acres got established (whichever is earlier) as vendor is avoiding to pay off due to

penalty of 200k now. (Vendor will assume the penalty at the end of the term as it

will be lower at that time)

3. Vendor will take back mortgage at first position for the amount of 3,115,000

bearing 0% interest till the net develop-able acres got established.

4. Once the net developable acres get established buyer will pay the vendor

amount of VTD plus/minus the value for more/less developable acres established.

5. If the net developable acres comes out less than 18.9 acres, the amount of per

acre @ $350000 will be deducted from VTB and vendor will get rest of the

amount.

For example:

If net net developable acres come to 23 acres then buyer will pay as below:

3,115,000 million plus 1,435,000 million (4.1 acre x 350000) total 4.55 million if

net net developable acres comes to 18 acres then buyer will pay as below:

3,115,000 million minus 315000 (.9 acre x 350000) total 2.7 million

Thanx & Rgds

Sukhpreet Sandhu

[92]

On March 8, 2017, Mr. Sandhu prepared an Amendment to the APS. The Amendment

deleted certain paragraphs of the APS and inserted the following:

INSERT;

The new Purchase Price shall be $6,615,000 (Six Million Six Hundred and Fifteen

Thousand Dollars) based 45.71 acres of which approximately 18.9 are natural net

developable acres by area statistics data supplied by Glen Schnarr & Associates

Inc. The Buyer and Seller agreed that the final natural net Developable Acres may

vary when final studies are completed and confirmed by both and the Toronto and

Region Conservation Authority (TRCA) and Town of Caledon and designated for

Residential Development allowing Townhouses, semi-Detached and Singles

Homes, and that the final price shall be adjusted accordingly based on more or

less at $350,000 Dollars per Natural net developable acre.

The Buyer will pay to the Seller on the date set for closing the sum of $1,790,000

(One Million Seven Hundred Ninety Thousand CAD Dollars) plus the Deposit of

$50,000 to be credited on closing totaling $1,840,000 dollars.

Page 31

The Buyer also agrees to assume, subject to approval a First Mortgage of

approximately $1,660,000.00 (One Million Six Hundred Sixty Thousand CAD

Dollars) from the Bank of Montreal bearing interest of 2.49% for a 5 year term or

until Natural Net Developable acres are established. The Buyer at his sole option

shall have the right to assume the said First Mortgage for the duration of the full

term.

The Seller agrees to take back a Mortgage at Second position for the amount of

$3,115,000.00 (Three Million One Hundred and Fifty Thousand Dollars) bearing

0% interest until the time Natural Net Developable acres are established.

Upon the establishment of natural Net Developable acres the Second Mortgage

shall be discharged by Buyer and shall pay the Seller the sum of $3,115,000.00

Dollar CAD plus or minus the Natural Net Developable Acres that are

established, payment shall be within 30 days from the date set.

DATE SET FOR CLOSING

In the event that Natural Net Developable Acres is not established on the date set

for closing on page 7 of the Agreement of Purchase and Sale, then the date shall

be extended for a further 30 days, if after the 30 period Natural Net Developable

is not established then the closing date shall be 15 days after that date. If the land

Registry is closed on the 15th day aforesaid, then the day of closing shall be on

the day that the Land Registry Office is open for business, further The Title

Search shall be at least one (1) week prior to the Completion date.

The Buyer shall diligently move forward to minimize DD period

d. The Amendment APS

[93] During his testimony, Mr. Sandhu admitted that the terms of the Amendment APS were

accurate. He admitted that the new purchase price of the Agreement was based on a calculation

of 18.9 developable acres x $350,000 per acre. Mr. Sandhu agreed Rosseau was to pay

$1,840,000 in cash on closing (including the $50,000 deposit), assume the BMO Mortgage of

approximately $1.66 million and receive a vendor take back mortgage of $3,115,000 bearing

zero interest.

[94]

Mr. Sandhu testified that he forgot to mention the $400,000 deposit in the amended

APS. He acknowledged the amended APS does not say that the $400,000 is to be paid as a

second deposit.

Page 32

[95]

Mr. Sandhu admitted that if the $400,000 deposit was paid by Rosseau when it waived

the conditions, the stipulated $1,790,000 in cash due on closing was too much given the purchase

price and the other terms of the amended APS.

[96]

Mr. Mady testified that he did not think that payment of the $400,000 deposit was

required on waiving the conditions based on the negotiations and Rosseau’s willingness to

assume the BMO mortgage. Mr. Mady stated that he did not notice that the $400,000 deposit

requirement was not deleted in the amended APS because he was focused on the Insert section

which confirmed the calculation of the Purchase Price.

[97]

Mr. Jain agreed that the cash to be paid on closing, the assumption of the BMO

mortgage, and the vendor take back mortgage added up to the new purchase price of $6,615,000.

He admitted the amount of cash to be paid by Rosseau on closing could not be varied. He also

admitted that Rosseau was not required to make a payment to BMO on closing but only to

assume the mortgage. If an adjustment was necessary, he agreed, it would take place on closing.

Mr. Jain admitted that the amount of the BMO Mortgage, or any adjustment to it, had nothing to

do with the payment of the $400,000 deposit.

III. Application of Facts to the Law

[98]

The only material fact in dispute is whether Mr. Bagnall told Mr. Sandhu that Rosseau

would assume the BMO mortgage and that in return the further $400,000 deposit would not be

payable. I find as a fact that this was communicated by Mr. Bagnell to Mr. Sandhu during the

telephone call Mr. Bagnell testified that he had with Mr. Sandhu. Mr. Mady’s and Mr. Bagnell’s

evidence was clear and unequivocal on this point.

[99]

After the February 2017 meeting of Mr. Jain, Mr. Sandhu and Mr. Bagnell, Mr. Bagnell

spoke to Mr. Mady. Mr. Mady testified as follows concerning 252’s request that Rosseau assume

the mortgage:

That’s when Wes said to us that an amendment should be drafted:

A) to recognize that the net developable is now 18.9 acres and B)

that we will assume that mortgage that means we are responsible

for that pay out. My comment to Wes was they have no problem

bettering the Agreement for themselves so its only fair we get a

Page 33

benefit ourselves. I suggest we delete the need for $400,000 and

that betters the Agreement for us. We agreed to pay their $200,000

payout I thought that as a fair transaction. [I gave those]

instructions [to Wes] and I knew he would get back to me.

[100]

[101]

This evidence was not challenged in any meaningful way.

Mr. Bagnell’s evidence was clear. He testified to receiving these instructions from Mr.

Mady and to communicating this to Mr. Sandhu.

[102] Mr. Sandhu’s evidence on whether this conversation took place is not at all clear. At

first, he said he didn’t recall. Then he said it didn’t happen. Then he said he forgot the $400,000

when drafting the amended APS and then said he made a mistake. He did not have a clear,

independent recollection of whether he discussed the $400,000 deposit with Mr. Bagnell. He

could only offer an inference of the events from the words of the amended APS.

[103]

I find as a fact that the conversation between Mr. Bagnell and Mr. Sandhu did occur as

Mr. Bagnell described about the $400,000 and it not being payable on the waiver of conditions.

In my view, this finding is consistent with my findings below, that based on the proper

interpretation of the APS and amended APS, the $400,000 was not payable.

[104]

Mr. Jain’s evidence that he expected the $400,000 to be paid on the waiver of the

conditions was not reasonable based on the wording of the amended APS as I have interpreted it.

Further, Mr. Jain’s subjective interpretation is not relevant to the Court’s interpretation of the

APS and amended APS. It is the objective intention of the parties that is relevant (Starroll, para.

20).

[105]

I have read the APS and the amended APS as a whole, given the words used their

ordinary and grammatical meaning, and considered the surrounding circumstances known to the

parties at the time of the formation of the APS and amended APS; and viewed as a whole, I find

that Rousseau was not required to pay a $400,000 further deposit when Rousseau waived the

conditions in the APS and amended APS.

[106]

The full purchase price under the amended APS was $6,615,000. The amount due on

closing was $1,790,000 plus the deposit of $50,000 which was paid when the APS was executed

Page 34

for a total of $1,840,000. Rosseau was to assume the BMO Mortgage in the amount of

$1,660,000. 252 agreed to take a vendor take back mortgage in the amount of $3,115,000. The

totals are as follows:

$1,790,000 Due on closing

$50,000 Deposit, paid when APS signed

$1,660,000 Mortgage assumed

$3,115,000 Vendor take back

$6,615,000 Total stated purchase price

[107]

There is no provision for a $400,000 deposit in the amended APS. There is no provision

for it to be paid and be reduced from the amount payable on closing. Any adjustment to reflect a

variation in the net developable land was to be adjusted from the vendor take back mortgage.

[108]

There did not have to be an explicit deletion of the $400,000 deposit in the amended

APS as it is clear by the terms of the amended APS that it was no longer payable. Otherwise, if

Rousseau paid the $400,000 and the closing amount, Rosseau would have overpaid by $400,000.

[109]

Further, the second paragraph of the “INSERT” portion referred only to the $50,000

deposit paid when the APS was signed to be credited on closing and there was no reference to

the $400,000.

[110]

I specifically find on the evidence that as a matter of fact Rosseau formed an intention

that the $400,000 deposit would not be required to be paid, and did communicate this to 252 by

Mr. Bagnell speaking to Mr. Sandhu. This was done before the amended APS was executed.

[111]

252 argued that the parties intended for the $400,00 to be credited to the purchase price

and that there was no “practical difficulty” with the payment of the second deposit and the

amended APS. In my view, there was a practical difficulty with the $400,000 deposit and the

Page 35

amended APS co-existing. The amount due on closing would be incorrect if the $400,000 was

already paid and there is no mechanism in the amended APS to change the amount due on

closing. All witnesses agree that when the amounts in the amended APS were added together it

totalled the purchase price. Mr. Jain acknowledged in his evidence that there was no language in

the amended APS by which to reduce the amount Rosseau was to pay on closing.

[112]

The deletion of the $400,000 further deposit requirement is supported by the context of

the negotiation. Deleting the deposit was consistent with Rosseau assuming the BMO Mortgage.

[113]

252 argued that Mr. Jain, Mr. Sandhu, and Mr. Bagnell did not discuss the deletion of

the $400,000 deposit at their February 2017 meeting. This is accurate; however, this ignores the

timeline of events. 252 proposed at the meeting that Rosseau assume the BMO Mortgage. Mr.

Mady testified that once he learned that 252 wanted Rosseau to assume the mortgage and the

penalty, he wanted something in return. The $400,000 deposit was not discussed at the meeting

because Mr. Mady raised it after the meeting in his discussion with Mr. Bagnell, in response to

252’s request for Rosseau to assume the BMO mortgage. Mr. Bagnall communicated this to Mr.

Sandhu.

ISSUE 2 - Was the Plaintiff purchaser ready, willing, and able to close the APS and amended

APS on September 19, 2017?

I. The Law

[114]

The answer to this question involves a consideration of two legal concepts: anticipatory

breach and whether an anticipatory breach relieves the other party from obligations under an

agreement to tender. 252’s position also involves a consideration of the “group enterprise

theory.”

[115]

As set out in Nutzenberger v. Mert, 2021 ONSC 36, at para. 5, an anticipatory breach

occurs where one party to a contract repudiates the contract before performance is due. The

anticipatory breach or repudiation may be express or implicit, communicated by words or

conduct of the defaulting party, that the defaulting party may not or cannot perform the terms of

the contract.

Page 36

[116]

The Ontario Court of Appeal described anticipatory breach in Spirent Communications

of Ottawa Limited v. Quake Technologies (Canada) Inc., 2008 ONCA 92, 88 O.R. (3d) 721, at

para. 37:

[37] I would add this. When considering Spirent's conduct, it was important to

keep in mind that what was involved was an anticipatory breach of contract. An

anticipatory breach sufficient to justify the termination of a contract occurs when

one party, whether by express language or conduct, repudiates the contract or

evinces an intention not to be bound by the contract before performance is due.

See Pompeani v. Bonik Inc. (1997), 1997 CanLII 3653 (ON CA), 35 O.R. (3d)

417, [1997] O.J. No. 4174 (C.A.). To assess whether the party in breach has

evinced such an intention, the court is to ask whether a reasonable person would

conclude that the breaching party no longer intends to be bound by it. See

McCallum v. Zivojinovic (1977), 1977 CanLII 1151 (ON CA), 16 O.R. (2d) 721,

[1977] O.J. No. 2341 (C.A.). Having said that, when determining whether such an

intention has been evinced, the courts rely on much the same analysis as they do

in respect of claims of fundamental breach. That is, in determining whether the

party in breach had repudiated or shown an intention not to be bound by the

contract before performance is due, the court asks whether the breach deprives the

innocent party of substantially the whole benefit of the contract.

[117]

The rights conferred on an innocent party where there is an anticipatory breach were

described by the Ontario Court of Appeal in Place Concorde at para. 50:

[50] Thus, a repudiatory breach does not automatically bring an end to a contract.

Rather, it confers a right upon the innocent party to elect to treat the contract at an

end thereby relieving the parties from further performance. As a general rule, the

innocent party must make an election and communicate it to the repudiating party

within a reasonable time: see Chapman v. Ginter 1968 CanLII 72 (SCC), [1968]

S.C.R. 560 at 568. However, in some cases the election to treat the contract at an

end will be found to have been sufficiently communicated by the innocent party’s

conduct: John D. McCamus, The Law of Contracts, (Toronto: Irwin Law Inc.,

2005) at pp. 641-42.

[118]

If an innocent party rejects a repudiation of an agreement, they must show that they are

ready, willing, and able to compute a transaction on the closing date. The leading case for this

principle is the Ontario Court of Appeal’s decision in Domicile.

[119]

The facts in Domicile were set out under the heading “The Facts” as follows:

On February 1, 1995, MacTavish and Domicile signed an agreement of purchase

and sale by which MacTavish agreed to buy a semi-detached house in Ottawa to

Page 37

be built by Domicile. The purchase price was $450,000. The agreement called for

a $5,000 deposit on execution of the agreement and a further $15,000 deposit on

notice that a building permit had been obtained. MacTavish was to obtain vacant

possession on the closing date, September 15, 1995. If the house was substantially

completed on September 15, 1995, MacTavish was obliged to complete the

transaction. The agreement provided that the house was deemed to be

substantially completed when a municipal occupancy permit was issued.

Typically, and importantly in this case, the agreement stated that "time shall in all

respects be of the essence hereof.

MacTavish paid the $5,000 deposit when he signed the agreement. However, two

and one-half months later, on April 13, 1995, he repudiated the agreement. His

lawyer wrote Domicile that "our client has no intention of proceeding with the

purchase of the property" and asked for the return of the $5,000 deposit. Domicile

chose not to accept MacTavish's anticipatory repudiation. Instead its lawyer wrote

that the deposit would not be returned and that "Domicile remains ready, willing

and able to perform its side of the bargain."

On July 7, 1995, Domicile obtained a building permit for the house. On July 19,

1995, Domicile's lawyer wrote MacTavish's lawyer reiterating that Domicile did

not accept MacTavish's anticipatory repudiation of the agreement, that Domicile

considered the agreement in force and that it would "pursue the remedies

available to it under these circumstances." The letter also notified MacTavish of

the building permit and asked for the further $15,000 deposit required by the

agreement. MacTavish did not pay this deposit.

On August 15, 1995, Domicile's lawyer wrote another letter to MacTavish's

lawyer, again saying that Domicile did not accept the repudiation and that it

considered the agreement to still be in effect. On the same day Domicile issued a

statement of claim, seeking specific performance of the agreement or

alternatively, damages. The trial judge found that "Domicile did not accept

MacTavish's repudiation, but elected to keep the contract alive and proceed with

the construction which commenced on July 15, 1995, after approvals were

obtained from the city."

However, on the closing date, September 15, 1995, Domicile had not substantially

completed the house. Therefore neither party tendered on the closing date.

MacTavish did not intend to close and Domicile had not finished the house.

Indeed the house was not substantially completed until May 1996. At no point did

Domicile give MacTavish notice of a new closing date.

Meanwhile housing prices in Ottawa declined in late 1995 and early 1996. On

February 21, 1996, Domicile agreed to sell the house to one of its shareholders for

$365,000-$85,000 less than the price MacTavish had agreed to pay. A municipal

occupancy permit for the house was issued in early May. Thus, as the trial judge

found: "the house was not completed and ready for occupancy until May 3,

1996." Domicile closed the transaction with its shareholder that day.

Page 38

At trial Domicile sought damages. The trial judge awarded Domicile damages of

$97,975.88, representing the difference in the sale price less the $5,000 deposit

($80,000) and Domicile's cost of carrying the house between September 15, 1995

and May 3, 1996 ($17,975.88). MacTavish appeals against the finding of liability

and raises several grounds of appeal against the award of damages. I will deal

only with liability because in my view the trial judge erred in finding MacTavish

liable.

[120]

The analysis in Domicile is set out under the heading “Discussion” as follows:

In April 1995, MacTavish stated that he did not intend to close the transaction.

His conduct amounted to an anticipatory repudiation of the agreement. On being

notified of MacTavish's anticipatory repudiation, Domicile, the innocent party,

had a choice: it could "accept" or reject the repudiation. Had Domicile "accepted"

the repudiation it would have been discharged from closing the transaction and

could have sued for damages for breach of contract. [See Note 1 at end of

document] Domicile, however, rejected the repudiation and therefore the

agreement remained in effect. Because of the view I take of this case, I need not

consider the difficult and important question whether in April 1995 Domicile

should have taken reasonable steps to reduce its losses, instead of ignoring the

repudiation and waiting for the closing date. [See Note 2 at end of document]

Because Domicile's rejection of MacTavish's anticipatory repudiation kept the

agreement alive, time remained of the essence. A time is of the essence provision

means that on the closing date an innocent party may treat the contract as ended

and sue the defaulting party for damages or it may keep the contract alive and sue

for specific performance or damages. [See Note 3 at end of document] In order to

take advantage of a time of the essence provision the innocent party must itself be

"ready, desirous, prompt and eager" to carry out the agreement. [See Note 4 at end

of document] Domicile could not satisfy this requirement on the closing date.

Because it had not yet substantially completed construction of the house it could

not carry out the agreement. Equally MacTavish could not rely on the time of the

essence provision to end the agreement. A time of the essence provision can be

raised as a defence only by a party who is ready, willing and able to close on the

agreed date and MacTavish was not ready, willing and able to close on September

15, 1995. [See Note 5 at end of document]

Therefore, on the closing date neither Domicile nor MacTavish was entitled to

enforce or end the agreement. A similar situation arose in King v. Urban &

Country Transport Ltd. (1974), 1973 CanLII 740 (ON CA), 1 O.R. (2d) 449, 40

D.L.R. (3d) 641, a decision of this court relied on by Binks J. In King v. Urban,

the purchaser was not in a position to close on the closing date; but the vendor

was also in default and not entitled to rely on the time of the essence provision in

the contract. Arnup J.A. resolved the stalemate by applying two propositions (at

pp. 454-56):

Page 39

1. When time is of the essence and neither party is ready to close on the

agreed date the agreement remains in effect.

2. Either party may reinstate time of the essence by setting a new date for

closing and providing reasonable notice to the other party.

An important corollary of Arnup J.A.'s second proposition is that a party who is

not ready to close on the agreed date and who subsequently terminates the

transaction without having set a new closing date and without having reinstated

time of the essence will itself breach or repudiate the agreement. [See Note 6 at

end of document]

The corollary applies to the facts of this case. Domicile did not give MacTavish

reasonable notice of a new closing date. Instead it unilaterally ended the

agreement by selling to a third party and seeking damages from MacTavish.

Because it did not reinstate time of the essence by setting a new closing date,

Domicile was not entitled to end its agreement with MacTavish. Therefore, in

failing to give MacTavish an opportunity to close the transaction after September

15, Domicile itself breached the agreement. Because of Domicile's breach,

MacTavish could no longer be held liable. The trial judge came to the opposite

conclusion because he did not consider the effect of Domicile's inability to close

on September 15. As a consequence, he did not consider Domicile's obligation to

set a new closing date on reasonable notice to reinstate time of the essence.

Domicile's conduct is similar to the conduct of the vendor in Kwon v. Cooper,

[See Note 7 at end of document] another decision of this court dealing with a real

estate transaction in which time was of the essence. In Kwon the purchaser was

not ready to close on the closing date. The vendor, in a letter delivered the day

before closing, said that he would rely on the terms of the contract requiring

closing the following day. When the agreement did not close the vendor sued for

damages. However, this court held that on the closing date, the vendor also was

not ready, willing and able to close because he did not have a discharge of the

existing first mortgage or the guarantee required by the agreement of purchase

and sale. The vendor, therefore, could not rely on King v. Urban and his action for

damages failed.

Similarly, Domicile's action must fail. Having decided to keep the agreement

alive and then having been unable to carry out its part of the bargain on closing,

Domicile could not continue to hold MacTavish liable without also giving

MacTavish a further and reasonable opportunity to perform.

Requiring that time of the essence be reinstated by giving notice of a new closing

date is sensible and produces a just result. This requirement also ensures that the

cost of carrying the property will be properly allocated between the vendor and

the purchaser. To be effective the new closing date must be reasonable. And,

although a provision making time of the essence may be implied from the

surrounding circumstances or from the conduct of the parties, to avoid any dispute

the notice should state that time is of the essence for this new date. [See Note 8 at

end of document]

Page 40

I would allow the appeal and set aside the judgment of Binks J. In its place I

would issue a judgment dismissing Domicile's action with costs and ordering it to

return to MacTavish his $5,000 deposit together with accrued interest. MacTavish

is also entitled to his costs of the appeal.

[121]

The Court of Appeal in Domicile referred to its previous 1996 decision in Kwon. The

Court of Appeal in Kwon faced a similar situation and came to the same determination.

[122] The Court of Appeal, in 1179 Hunt Club, followed its earlier decisions in Domicile and

Kwon and dismissed the appeal of a vendor who had refused to accept the repudiation of a

purchaser. The vendor in Hunt Club had insisted on completing the agreement on a closing date

but could not itself close on that date.

[123]

In Hunt Club the purchaser of a condominium unit had communicated that it did not

intend to complete the agreement on the closing date but the vendor stated that it did not accept

the repudiation and insisted that the contract be performed on the closing date. When the closing

date arrived the vendor, through no apparent fault of its own, had a problem with the registration

of its condominium plans at the Land Registry Office. The application judge had found, as a

result, that the vendor could not have conveyed the condominium unit on the closing date.

[124]

In Hunt Club Justice Lauwers agreed with the determination made by the application

judge that the vendor’s inability to close on its own specified closing date brought the agreement

to an end. He stated at para. 21 as follows:

Domicile Developments states that when time is of the essence and

neither party is ready to close on the agreed date, the agreement

remains in effect. By contrast, here the vendor not only refused to

accept the repudiation but insisted that the transaction close on

November 28, specifying the consequences if that did not occur,

including the immediate pursuit of legal remedies. The application

judge concluded that, in light of that insistence, because the vendor

was not ready on November 28, the agreement came to an end.

[125]

Justice Lauwers concluded at paras. 23 and 26 that the vendor, in insisting on closing

on the closing date, needed to establish that it was ready to close on that closing date:

Having refused to accept the purchaser’s repudiation of the agreement, and having

insisted on perfection in the purchaser’s performance, the vendor was required to

Page 41

render perfection in its own performance and it did not. The vendor’s failure to

tender on November 28, 2017 was fatal This strict approach is not unusual in the

law, in view of the maxim “he who seeks equity must do equity”, or in life, where

the proverbial caution that “he who lives by the sword dies by the sword.” Both

resonate.

xxx

In this case, the issue is not whether the vendor could have been ready to close on

November 28, 2017, but that it was not ready to close on that date, a date on

which it insisted. Hence the controversy was not material.

[126]

These principles are also set out at paras. 60 - 66 of Spiridakis v. Li, 2020 ONSC 2173:

[60]

The defendants concede that they failed to close the purchase of the

plaintiffs’ home on October 30, 2017 as scheduled. But they assert that the

plaintiffs failed to tender on them – to demonstrate that they were ready, able and

willing to close the deal.

[61]

Tendering is not a prerequisite to an entitlement to damages for breach

of an agreement of purchase and sale. But where a plaintiff relies on a

defendant’s failure to close as the breach giving rise to the entitlement of

damages, the plaintiff must be able to demonstrate that he or she was ready,

willing and able to close. Tendering is generally considered to be the best

evidence of that readiness, willingness and ability.

[62]

Having said that, the law is quite clear that an innocent party need not

go through the meaningless exercise of tendering in circumstances of anticipatory

breach.

[63]

The phrase “anticipatory breach” was explained by Justice Cromwell

in dissenting reasons in Potter v. New Brunswick Legal Aid Services Commission,

2015 SCC 10 at para. 149:

An anticipatory breach "occurs when one party manifests, through

words or conduct, an intention not to perform or not to be bound

by provisions of the agreement that require performance in the

future": McCamus, at p. 689; see also A. Swan, with the assistance

of J. Adamski, Canadian Contract Law (2nd ed. 2009), at s. 7.89.

When the anticipated future non-observance relates to important

terms of the contract or shows an intention not to be bound in the

future, the anticipatory breach gives rise to anticipatory

repudiation.

[64]

As I noted above, the parties agreed that “time was of the essence” in

relation to the performance of their respective obligations under the agreement of

purchase and sale. In other words, they agreed that the time limit manifested by

the fixed closing date was an essential term, such that the breach of it would

permit the innocent party to terminate the agreement. When the defendants

Page 42

manifested an intention not to complete the transaction on October 30, 2017, the

plaintiffs were released from any obligation to tender in order to prove that they

were ready, willing and able to close. See Di Millo v. 2099232 Ontario Inc., 2018

ONCA 1051, at paras. 31 and 49.

[65]

In this case there is a factual dispute about whether the plaintiffs in fact

tendered. It does not matter. The defendants’ lawyer undeniably communicated

to the plaintiffs’ lawyer that the defendants were not in a position to close on the

scheduled closing date.

The plaintiffs’ lawyer correctly identified that

communication as an anticipatory breach. The plaintiffs were relieved of any

obligation to tender in order to establish that they were ready, willing and able to

close.

[66]

I conclude that the “tender issue” does not require a trial to resolve.

The plaintiffs were not required to tender.

[127]

The issue of tender in circumstances where one party has repudiated the agreement is

set out by the Ontario Court of Appeal at para. 45 of Pompeani:

45 I think that, taken cumulatively, Bonik's actions in abandoning the plan made part

of the agreement, securing the registration of the new plan, ignoring correspondence from

Pompeani's solicitor for over a year before the date of closing, demanding the profits

from the flip in return for closing and failing to submit a draft deed or statement of

adjustments would lead a reasonable purchaser to believe that the vendor would not

honour its obligations under the agreement. Accordingly, I think that Bonik impliedly

repudiated the agreement before the date of closing, thus relieving Pompeani of his

obligations under the agreement and entitling him to damages. I do not think that in the

circumstances Pompeani was obligated to tender.

[128]

[129]

This is also stated at para. 49 of Di Millo:

[49] Thus, when a party by words or conduct communicates a decision not to

proceed to closing, the other party is released from any obligation to tender in

order to prove he was ready, willing and able to close: see Kirby v. Cameron,

1961 CanLII 203 (ON CA), [1961] O.R. 757 (C.A.); Kloepfer Wholesale

Hardware v. Roy, 1952 CanLII 8 (SCC), [1952] 2 S.C.R. 465.

A similar statement was set out at para. 104 of Silverberg:

[104] Mr. Simaan does not rely on the “time of the essence” clause in the

agreement of purchase and sale and does not suggest that the Purchaser’s failure

to make formal tender on that date is a bar to specific performance. There is good

reason why he takes this position, as it is settled law that a party may not rely on

time of the essence where (a) the party itself was not ready, willing and able to

close on the agreed date; or (b) the party has itself been the cause of the delay; or

Page 43

(c) the party has waived its right to rescind. As Mr. Justice McKay, giving the

judgment of the Court of Appeal in Shaw v. Holmes, (1952), 1952 CanLII 285

(ON CA), 2 D.L.R. 330 (Ont. C.A.) said at 334 :

Time may be insisted upon as of the essence of the agreement by a litigant, (a)

who has shown himself ready, desirous, prompt and eager to carry out his

agreement: Mills v. Haywood (1877), 6 Ch. D. 196; (b) who has not been himself

the cause of the delay or in default; Snell v. Brickles (1914), 1914 CanLII 561

(SCC), 20 D.L.R. 209, 49 S.C.R. 360; rev’d. 1916 CanLII 417 (UK JCPC), 30

D.L.R. 31, [1916] 2 A.C. 599; and (c) who has not subsequently recognized the

agreement as still subsisting; he must not play fast and loose at his pleasure:

Springer v. Gray (1859), 7 Gr. 276; Cudney v. Gives (1890), 20 O.R. 500; Labelle

v. O’Connor (1908), 15 O.L.R. 519, and Harris v. Robinson (1892), 1892 CanLII

14 (SCC), 21 S.C.R. 390.

[130]

In response to Rosseau’s position that it was ready to close with money from other

corporations, 252 relies on the “corporate separateness principle.” The Court of Appeal for

Ontario addressed this in Chevron. 252 specifically referenced paras. 68, 76 and 77:

[68] The Supreme Court of Canada has protected the principle of corporate

separateness without suggesting a stand-alone just and equitable exception. In Sun

Indalex Finance, LLC v. United Steelworkers, [2013] 1 S.C.R. 271, [2013] S.C.J.

No. 6, 2013 SCC 6, at para. 238, Cromwell J. rejected the submission that a

subsidiary should be liable for a breach of fiduciary duty committed by its parent

corporation, holding that "unless there is a legal basis for ignoring the separate

corporate personality of separate entities, those separate corporate existences must

be respected". See, also, Continental Bank Leasing Corp. v. Canada, 1998 CanLII

794 (SCC), [1998] 2 S.C.R. 298, [1998] S.C.J. No. 63, at paras. 108-12.

***

[76] Not only is such an argument problematic from a policy standpoint, it comes

dangerously close to the adoption of the group enterprise theory of liability. That

theory holds that where several corporations operate closely as part of the same

"group" of corporations, they are in reality a single enterprise and should,

accordingly, be responsible for each other's debts. It has been consistently rejected

by our courts: Meditrust Healthcare Inc. v. Shoppers Drug Mart (2002), 2002

CanLII 41710 (ON CA), 61 O.R. (3d) 786, [2002] O.J. No. 3891 (C.A.), at paras.

30-31; and Fairview Donut Inc. v. The TDL Group Corp., [2012] O.J. No. 834,

2012 ONSC 1252 (S.C.J.), at paras. 651-65, affd [2012] O.J. No. 5775, 2012

ONCA 867, 225 A.C.W.S. (3d) 31, leave to appeal to S.C.C. refused [2013]

S.C.C.A. No. 47.⁴It has also been rejected in England: see Adams v. Cape, [1990]

1 Ch. 433 (Eng. C.A.), at pp. 532 and 536-38.

[77] There is good reason for this rejection. There is a difference between

economic reality and legal reality. The fact that on an operational level corporate

Page 44

separateness is more nuanced among a group of related corporations is of no

moment. It is the legal reality, as provided for in the relevant business corporation

statutes, that counts. The CBCA permits subsidiary corporations but also says that

each corporation is a natural person. [page25 ]If Parliament wished to carve out

an exception to the natural person rule for subsidiaries, it would have been very

easy to do so.

II. The Evidence

a) Events after the amended APS

[131]

Rosseau conducted its due diligence. Mr. Mady testified that in June 2017, he retained

Mr. Quarcoopome at Weston Consulting to advise him of the planning status of the Property and

other related issues.

[132]

Mr. Mady testified that based on his own considerable real estate development

experience, prior to waiving the conditions, he estimated the development costs for the Property;

including how much money it would cost to service the land. Among other things, he took into

consideration development charges and related costs. He estimated the revenue for the Property.

Mr. Mady testified that he performed his own high-level analysis of profit. He testified that he

has a lot of experience in doing this type of analysis. He said: “I estimate the cost. I estimate the

revenue and come up with profit potential and I satisfy myself.”

[133]

Mr. Mady also testified that he called Mr. Quarcoopome and ran the numbers he used

in his high-level analysis by Mr. Quarcoopome since Mr. Quarcoopome is more current than Mr.

Mady on the appropriate numbers. Mr. Mady obtained additional comfort from Mr.

Quarcoopome concerning his analysis. Mr. Mady’s evidence on this point was corroborated by

Mr. Quarcoopome.

[134]

Mr. Mady testified that he was looking for a rate of a return of 20 per cent to 25 per

cent for the development of the project to be viable.

[135]

252 takes the position that Rosseau started its due diligence in July 2017. Mr.

Quarcoopome wrote to Mr. Bagnell and Rosseau by email on July 25, 2017, attaching a “concept

plan that incorporates that development limit set on the Glen Schnarr plan.” He wrote to Mr.

Bagnell and TRG by email on August 21, 2017, in which he attached consulting proposals “for

Page 45

the Mayfield site walk.” Mr. Quarcoopome wrote to TRCA, Mr. Bagnell, and Mr. Mady with

several emails on September 11, 2017, regarding “our site walk tomorrow.” Mr. Quarcoopome

stated that TRCA requested that an Ontario Land Surveyor be on site “to define the development

limit.” Rosseau did not hire a surveyor and was using a survey firm’s GPS to stake the limit. Mr.

Quarcoopome advised that TRCA stated that they will not “sign off on a development limit that

has not been surveyed by an OLS.” He further stated in that email that “if you need an approved

limit by TRCA as part of a land purchase, that is an additional step.” That additional step was not

taken by Rosseau.

[136]

I find as a fact that Rosseau started its due diligence in June 2017. It is not for 252 to

say what Roseau is required to do to conduct its due diligence. As set out below Rosseau

unequivocally waived the conditions.

[137]

I accept the evidence of Mr. Mady that he conducted a high-level analysis of the

profitability of the project before Rosseau waived the conditions on June 7, 2017. Mr. Mady

testified that on all projects he analyzes the cost of land, and estimates the site services for storm,

sanitary, and water. He testified as follows:

It was my own high-level analysis of profit. I have to determine if

the project is profitable. I have a lot of experience in doing this. I

estimate the cost. I estimate the revenue and I would come up with

profit potential and I satisfied myself. Additionally, I called Martin

and I run it by him since he is more current than I am. He has the

latest data and access to [information]. I get an additional comfort

from him and then nothing happens after that.

[138]

Mr. Mady testified that during the due diligence period he conducted a “high level”

economic feasibility projection that he ran by Mr. Quarcoopome. Mr. Mady testified:

Q. Let’s be clear, it was not what would you do but what did you

do on this project?

A. I sat down and made notes of what all the costs would be. I

write down land cost estimates. What is then is I [calculate] how

much money it would costs to service. I take into consideration

development charges from municipality and from the region and

all the building permit costs, what am I going to pay my surveyor,

my lawyer, high level estimated costs for every dollar you would

Page 46

spend to get the project developed and ready to sell and then I

came up with X dollars then you estimate what your revenue

would be and fit here is a profit then you are good.

Q. What did you do?

A. I did exactly that.

Q. Did you keep it?

A. I don’t have them now. I literally do them with pad and pen

then run them by planner. If he says “yes you are good to go” then

when it comes to financing, I send them to my [financial guy] and

he would put in it in a format for the investors and the bankers. For

me, its literally one page.

b) Waiver of Conditions

[139] On June 7, 2017, Rosseau waived the conditions under the APS and amended APS.

Rosseau took the position that the APS and amended APS were firm and binding. Rosseau’s

lawyer, Chris Haber stated: “My clients intend to proceed with the deal in accordance with the

terms contained therein.”

[140]

On June 13, 2017, Mr. Mangat, on behalf of 252, wrote to Mr. Haber. In his letter, Mr.

Mangat, inter alia, stated that: “My client treats this Agreement as null and void.” In this

communication and in the July 4, 2017, communication referenced below, 252 took the position

that the failure to pay the $400,000 by Rosseau constituted a repudiation of the APS.

[141]

On June 15, 2017, Mr. Haber, responded to the Mr. Mangat’s June 13, 2017, letter and

stated, inter alia, that the agreement was not null and void.

[142]

On July 4, 2017, litigation counsel to 252, James MacDonald, wrote to Mr. Haber. Mr.

MacDonald stated that the agreement is at an end. He advised that the $50,000 deposit under the

agreement would be returned.

[143]

On July 5, 2017, Mr. Mangat returned the $50,000 deposit to Mr. Haber. The certified

cheque was dated June 28, 2017, and payable to Rosseau.

[144]

On September 1, 2017, Mr. MacDonald emailed Mr. Haber and confirmed that: “His

client's position remains as set out in his June 21, 2017 correspondence.”

Page 47

[145]

When 252 took the position that the APS and amended APS was at an end, Mr. Jain

knew that the value of the Property had increased from January of 2017. He had received calls

from agents or brokers interested in the Property. On April 8, 2017, he received an offer to

purchase the Property from New World Petroleum for $11 million.

[146]

On September 21, 2017, Mr. Jain received a Letter of Intent from Vandyk Group at

$640,000 per developable acre.

[147]

In September 2017, 252 also received an offer from the Rabinowicz Group to purchase

the Property for $14 million.

c) The Closing:

[148]

Mr. Haber wrote to Mr. MacDonald on August 3, 2017, stating that “since the net

Development Acres has not been established the closing (August 5, 2017) is extended [by 30

days] to September 4, 2017.” Mr. Haber stated in that letter that Rosseau was “ready, willing and

able to complete the purchase.”

[149]

[150]

Rosseau commenced this action on August 18, 2017, claiming specific performance.

On August 31, 2017, Mr. Haber further wrote to Mr. MacDonald and extended the

closing date from September 4, 2017 to September 19, 2017.

[151] The parties agree that the Rosseau did not tender. Mr. Haber did not prepare or send

any tender or closing documents. Mr. Mady testified that Mr. Haber advised him that tender was

not necessary when the other party has repudiated the contract. Similarly, 252 did not prepare for

closing.

[152]

It is uncontroverted that Mr. Haber was not put in funds to complete the transaction on

September 19, 2017. It is also uncontroverted that neither Mr. Haber nor Rosseau communicated

with anyone that day in respect to the closing and no further closing date was set by Rosseau.

[153]

252 did not provide any contact information to Rosseau to facilitate Rosseau assuming

the BMO mortgage. Mr. Mady and Mr. Mehlenbacher testified that because 252 stated it would

not close the transaction in June 2017, Rosseau did not pursue the assignment.

Page 48

d) Was Rosseau Ready, Willing and Able to Close the Transaction?

[154]

Rosseau is affiliated with three other companies: The Condo Store Realty Inc., the

Condo Store Marketing Systems Inc., and the Insider Condo Club Ltd. Mr. Mehlenbacher

founded each of these companies and each carry-on business in the real estate industry:

a) The Condo Store Realty Inc. is a real estate broker. The company represents

individual investors purchasing pre-construction condos as a block. The company

sources new condo developments, negotiates deals with the developer to purchase

the majority or all the units, and facilitates purchases for its investors. It earns

commission on each sale;

b) The Condo Store Marketing Systems Inc. has been in business since 2007 and

earns commissions on a transaction basis; and,

c) The Insider Condo Club Ltd. provides a membership-based service to realtors

in the GTA. It pools resources to give its members access to pre-construction

condos.

[155]

Rosseau was incorporated to re-invest some of the returns generated by the Condo

Store Realty Inc. Mr. Mehlenbacher stated that the affiliated companies use the Condo Store

Realty Inc. as their bank account because it always has surplus revenue. It funds the other

businesses through inter company loans.

[156]

Mr. Mehlenbacher testified that typically Rosseau finances its own projects by creating

a limited partnership comprised of its own investors who would finance 85 per cent of the

investment needed with Rosseau contributing up to 15 per cent.

[157]

Mr. Mehlenbacher also testified that Rosseau does not always create a limited

partnership. In this case they did not create a limited partnership because they were told in June

2017, three months prior to the closing date, that 252 was refusing to close the transaction. Mr.

Mehlenbacher testified: “At that stage we had funds to close ourselves. It is not good practice to

go to investors with the project and have them move money or ensure the money available and

then not be able to use it.” Mr. Mehlenbacher testified that he did not approach any investors in

connection with the acquisition of the Property because he usually does so 45 days prior to

closing.

Page 49

[158]

Mr. Mehlenbacher testified, in 2017, Rosseau had about 400 investors in its investor

pool. When the Company began, investors typically invested $150,000 to $250,000 into the

limited partnership for each project. Now investors typically invest in the $1,000,000 to

$2,000,000 range. The Company targets a rate of return of 25 per cent but usually ends up

around 20 per cent.

[159]

Rosseau produced bank statements from its related companies’ accounts (collectively

the “Accounts”). The statements show that on September 19, 2017, Rosseau had $1,942,311.91

available on deposit to pay the $1,790,000 due on closing. Mr. Mehlenbacher testified that the

cash in the Accounts was available to Rosseau to fund the deposit and the cash due on closing.

The source of the funds is primarily commission income which is received by the related

companies throughout the year. Rosseau did not, itself, have sufficient funds to close on

September 19, 2017. It had $195,567.38 in its two bank accounts. This amount is included in the

$1,942,311.91 above.

[160]

Mr. Mehlenbacher testified that the Rosseau related companies had funds on account to

pay the cash due on closing date, on June 7, 2017, when it waived the conditions and on

September 19, 2017. At closing, there was $1,942,311.91 in cash in the accounts. Mr.

Mehlenbacher testified that intercompany loans between Rosseau and other companies are

documented by ledger transfer. There are no written agreements concerning the transfer of

money between the companies.

III Application of Facts to the Law

[161]

I find as a fact that 252 repudiated the APS and amended APS in June of 2017 before

the performance was due. This anticipatory breach or repudiation was express and

communicated both by words and the conduct of 252. As I have found above, the further

$400,000 deposit was not payable by Rosseau at the time of waiver of the conditions. 252

repudiated the contract when it said in writing, through its counsel, multiple times, that it

considered the APS and amended APS at an end and returned the $50,000 deposit and 252

clearly expressed an intention not to be bound by the contract before performance was due. 252

Page 50

had no intention of completing the APS. In June of 2017, it expressly said the APS and amended

APS were at an end. 252 was in anticipatory breach of the APS.

[162]

As set out in Place Concord, para. 50, a repudiatory breach does not automatically

bring an end to a contract. I find as a fact that Rosseau confirmed the closing date of September

19, 2017. It elected to reject the anticipatory breach of the APS and amended APS by 252.

[163]

I find that Rosseau was ready, desirous, prompt, and eager to carry out the APS and

amended APS as required by Domicle, at the 2^ndparagraph under Discussion. 252 argues that

Rosseau did not want to close the transaction because the net developable land was reduced from

30 acres to 8.27 acres. There are several problems with this argument: First, the reduction from

30 to 8.27 acres did not occur until after the closing date; second, this argument is not supported

by the evidence.

[164]

At para. 13 of 252’s written submissions, 252 states that Mr. Mady testified that he was

“disappointed” when the developable acreage was reduced from 30 acres to 18.9 acres in

February or March of 2017. Mr. Mady’s testimony was: “We were a little disappointed. But the

Property was still very viable and I knew we had the price adjustment so it didn’t matter”. This

was not an indication that Rosseau was not eager to close.

[165]

At para. 38 of 252’s written submissions, 252 repeats that Mr. Mady was disappointed

in the reduction from 30 to 18.9 in developable acres and adds that Mr. Mady in his testimony at

trial agreed that he said he was shocked in an answer at his discovery. There are two problems

with 252’s submissions in this regard. First, 252’s trial counsel did not impeach Mr. Mady on

this point. He did not show him the discovery transcript and then ask Mr. Mady if he agreed or

disagreed. Trial counsel asked, “you said you were shocked by this?” Mr. Mady’s answer was

“we were surprised for sure.” Secondly, 252 has used this evidence to suggest that a further

reduction from 18.9 acres to 8.28 acres must have caused Rosseau to rethink the viability of the

project. This is pure conjecture and is inconsistent with the evidence.

[166]

Both Mr. Mady and Mr. Mehlenbacher testified that Rosseau was still interested in the

Property after the reductions in the net developable acres. Between April and June of 2017, 252

Page 51

received at least three offers for the Property. Further, Mr. Jain testified that in 2017 he received

calls from prospective purchasers interested in the Property.

[167]

As set out above, 252 took the position that Rosseau did not start its due diligence until

July of 2017. I have found otherwise. I have accepted the evidence of Mr. Mady that Rosseau did

its due diligence.

[168]

At para. 37 of 252’s written submissions, 252 states that Rosseau failed to produce an

“extensive feasibility study” for the Property and shared it with Mr. Quarcoopome. 252 asks the

Court to draw an adverse inference because this “extensive feasibility study” was never

disclosed. I reject this argument. No one testified that an extensive feasibility study was

completed for the Property.

[169]

Mr. Mady testified that an extensive feasibility report would have been done later for

investors but since the transaction did not close it was never prepared.

[170]

Based on the above, in my view, the evidence shows that Rosseau wanted to close the

transaction.

[171]

In my view, the law did not require Rosseau to tender to demonstrate that it was ready,

willing, and able to close the APS on September 19, 2017. This is set out in Pompeani and

Silverberg. The Court of Appeal’s decision in Di Millo outlines the law governing the

repudiation of a contract and how an innocent party may demonstrate that it was ready, willing,

and able to close at paras. 43 - 63:

[43]

The application judge also refused to accept the appellant’s statement that

he was ready, willing and able to close. He found that it was nothing more than a

“bald statement”, noting that there was “no evidence he had such funds”. He also

commented on the appellant’s failure to prepare any closing documents.

[44]

The appellant argues that the application judge erred in law by finding

that he was required to tender where it was clear that tender of the purchase price

would be futile. He also says he was, in fact, ready, willing and able to close.

[45]

For a party to be entitled to specific performance, the party must show he

or she is ready, willing and able to close: Time Development Group Inc. (In trust)

v. Bitton, 2018 ONSC 4384, at para. 53; see also Norfolk v. Aikens (1989), 1989

CanLII 245 (BC CA), 41 B.C.L.R. (2d) 145 (C.A.). While tender is the best

Page 52

evidence that a party is ready, willing and able to close, tender is not required

from an innocent party enforcing his or her contractual rights when the other party

has clearly repudiated the agreement or has made it clear that they have no

intention of closing the deal: McCallum v. Zivojinovic (1977), 1977 CanLII 1151

(ON CA), 16 O.R. (2d) 721 at p. 723 (C.A.); see also Dacon Const. Ltd. v.

Karkoulis, 1964 CanLII 252 (ON SC), [1964] 2 O.R. 139 (Ont. H.C.).

[46]

In McCallum, at p. 723, this court explained that the renunciation of a

contract may be express or implied:

The renunciation of a contract may be express or implied. A party

to a contract may state before the time for performance that he will

not, or cannot, perform his obligations. This is tantamount to an

express renunciation. On the other hand a renunciation will be

implied if the conduct of a party is such as to lead a reasonable

person to the conclusion that he will not perform, or will not be

able to perform, when the time for performance arises.

[47]

The purchaser in McCallum made it clear that he did not intend to

complete the transaction on the closing date and this renunciation relieved the

vendors from the obligation to tender.

[48]

The principles around the requirement to tender are summarized

succinctly by Perell J. in Time Development Group, at paras. 56-57:

Tender … is not a prerequisite to the innocent party enforcing his

or her contractual rights. Tender is not required from an innocent

party when the other party has clearly repudiated the agreement.

Numerous cases have held that the law does not require what

would be a meaningless or futile gesture. Moreover, when there is

an anticipatory breach, the innocent party need not wait to the date

for performance before commencing proceedings for damages or

in the alternative for specific performance of the agreement.

[Citations omitted.]

[49]

Thus, when a party by words or conduct communicates a decision not to

proceed to closing, the other party is released from any obligation to tender in

order to prove he was ready, willing and able to close: see Kirby v. Cameron,

1961 CanLII 203 (ON CA), [1961] O.R. 757 (C.A.); Kloepfer Wholesale

Hardware v. Roy, 1952 CanLII 8 (SCC), [1952] 2 S.C.R. 465.

[50]

In my view, the appellant was relieved of the obligation to tender when

the respondent clearly communicated a decision not to proceed with the

transaction. On October 6, 2016, the appellant’s lawyer requested confirmation

that the respondent would close failing which he would begin an action. The

respondent’s reply was an invitation to commence the action. Further, in violation

of the agreement, the respondent tried to resell the property without notice to or

the consent of the appellant. Viewed reasonably and objectively, it was clear that

the respondent was not going to close.

Page 53

[51]

In taking issue with the appellant’s failure to tender, the respondent relies

on Pierce v. Empey, 1939 CanLII 1 (SCC), [1939] S.C.R. 247, for the proposition

that all terms of the option as to time must be strictly observed. In particular, the

respondent refers to the following passage at p. 252:

It is well settled that a plaintiff invoking the aid of the court for the

enforcement of an option for the sale of land must show that the

terms of the option as to time and otherwise have been strictly

observed. The owner incurs no obligation to sell unless the

conditions precedent are fulfilled or, as the result of his conduct,

the holder of the option is on some equitable ground relieved from

the strict fulfilment of them. [Citations omitted.]

[52]

The respondent says that Pierce v. Empey is still good law and that it

should be applied in this case, where the appellant failed to take steps to close

within the stipulated timeline.

[53]

I agree that Pierce v. Empey is good law but note that it did not involve

anticipatory repudiation and does not speak to a situation like the one before this

court, where the respondent clearly communicated a decision not to proceed with

the transaction.

[54]

Thus, I am satisfied that the appellant was not required to tender, although

he was required to demonstrate he was ready, willing and able to close to be

entitled to specific performance.

[55]

The application judge was not satisfied that the appellant was ready,

willing and able to close. On that point, he said there was “no evidence” he had

the funds to close. On my review of the record, he was incorrect.

[56]

As the application judge noted, the appellant made the following

statement in his affidavit: “I have always been ready, willing and able to pay the

amount required to be paid under the option agreement.” This evidence is

supported by two other pieces of evidence in the record.

[57] Counsel for the respondent asked the appellant on cross-examination:

Q.

Paragraph 13. The first sentence – this is your Affidavit. “I

have always been ready, willing and able to pay the amount

required to be paid under the option agreement.” … It says in the

Affidavit, 294,000. You don’t really have a specific recollection of

that amount; am I correct?

[58]

Shortly after, the appellant’s counsel, Mr. Conte, and the respondent’s

counsel had the following exchange:

A.

[I]f your question is, did he have that amount in the bank?

He did.

Q.

At what point did he have it in the bank?

Page 54

A.

For a long time. He’s had a lot of money in the bank for a

long time. As you know, he took over the second – the first

mortgage now – or the second mortgage now and he’s paid 500 …

And he paid that from his savings.

[59]

The fact the appellant purchased one of the mortgages for $500,000 was

supported by the appellant’s June 26, 2017 supplementary affidavit. As noted

above, the application judge overlooked the existence of the supplementary

affidavit.

[60]

The fact that the appellant had the $500,000 he used to purchase the

mortgage in his savings “for a long time” is supported by Mr. Conte’s evidence

on behalf of his client.

[61]

While it would have been preferable if the appellant had personally

answered the question, in light of the rules on examinations, the answer of

counsel is deemed to be the answer of the appellant. Rule 31.08 provides:

Questions on an oral examination for discovery shall be answered

by the person being examined but, where there is no objection, the

question may be answered by his or her lawyer and the answer

shall be deemed to be the answer of the person being examined

unless, before the conclusion of the examination, the person

repudiates, contradicts or qualifies the answer.

[62]

There was no objection to Mr. Conte answering for the appellant and the

appellant did not repudiate, contradict or qualify the answer. No further questions

on the issue were put to him. The answer is deemed to be the appellant’s answer.

[63]

In short, the application judge erred in finding that there was “no

evidence” the appellant had the necessary funds to close. I am satisfied that the

appellant was ready, willing and able to close. As to his failure to tender any

documents, I have already explained why in the circumstances of this case it was

unnecessary for the appellant to undertake the futile step of preparing any

documents.

[172]

252 relies on Domicile to argue that Rosseau was not ready willing and able to close the

transaction.

[173]

Domicile holds that an innocent party who rejects the repudiation of a breach must be

ready, willing, and able to close. However, when a vendor breaches an agreement of purchase

and sale, an innocent purchaser is not required to tender to show it was ready, willing, and able

to close. I accept Rosseau’s submissions that since Domicile, it is “settled law” that a repudiating

party cannot insist time was of the essence when they themselves were not ready, willing, and

able to close or caused the delay (see Silverberg at para. 104).

Page 55

[174]

Further, I agree that the facts in Domicile are distinguishable. In that case the builder

rejected the purchaser’s breach and insisted on closing. However, on the closing date the builder

could not deliver a substantially completed house, which was a condition of the sale. The builder

could not complete a fundamental obligation under the agreement – he was not able to close the

transaction. Rosseau, in contrast, was able to complete the transaction.

[175]

252 also relied on Hunt Club to argue Rosseau was not ready, willing, and able to close

the transaction. In Hunt Club the vendor rejected the purchaser’s request for an extension on

closing. However, on closing the vendor was not able to provide title to the purchaser due to an

error with the condominium registration. As with Domicile, the case is distinguishable from the

case before me as I have determined that Rosseau was able to close the transaction.

[176]

Rosseau was ready, willing, and able to close the transaction. 252 had repudiated the

contract. Unlike in Hunt Club or Domicile Rosseau did not breach any fundamental term of the

Agreement.

[177]

I find that the Plaintiff was ready, willing, and able to close the APS and amended APS.

It was prepared to assume the BMO mortgage. It had the required funds to pay the balance due

on closing. It was prepared to and did proceed to establish the net developable acres of the

Property. I will deal with each of these in turn.

[178]

I will deal first with the BMO mortgage. 252 takes the position that Rosseau did not

have enough money to close the transaction on September 19, 2017, because Rosseau did not

demonstrate it had funds to close the transaction without assuming the BMO mortgage.

[179]

I find as a fact that Rosseau could have assumed the BMO mortgage. It was a

sophisticated purchaser who, as Mr. Mehlenbacher testified, regularly took on loans to finance

development projects. However, once 252 decided not to proceed with the sale, it provided no

contact information to Rosseau for the mortgagee. As the Court held in Nutzenberger at para. 35:

It is not possible nor reasonable for one party to advise that they

cannot close the APS and then do and say nothing until after

closing, let the other innocent party do the best they can, not

knowing what the defaulting purchaser is or is not going to do or

Page 56

knowing what documents or requisitions the defaulting purchaser

wants on closing or does not/will not accept or wants

amended….That cooperation is the good faith obligation each

party owes to the other under the APS. While this case is not

framed as a breach of good faith, actions or non-actions of the

defaulting party are relevant to ascertain any alleged deficient

tender (if a tender was made), whether the innocent party was

ready, willing and able to close and , finally, what the fundamental

reason the transaction did not close.

[180]

[181]

252 had an obligation to provide this information to Rosseau.

I also find as a fact that Rosseau would have been able to acquire the additional funds

of $1,790,000 due on closing. I accept Mr. Mehlenbacher’s evidence that Rosseau would have

been able to acquire the funds:

Q. In 2017 September [if] the Rosseau Group was required [to

tender] 1.79 million on closing could they have paid that… did

they have the ability to pay the 1.79 million?

A. Yes it did.

Q. How would it have funded that it?

A. [We would have] taken money from the different accounts of

the Rosseau Group and the Condo Store Realty Inc.

Q. It had never happened before?

A. There could be inter company loans from ICC to other entities

but TCS was where we always had it. We always loaned through

condo store even it was personal money, my line of credit we loan

it from TCS.

[182]

I accept the evidence from the bank statements provided by Rosseau that Rosseau and

its related companies, on September 19, 2017, had $1, 942,311.91 available on deposit to pay the

$1,790,000 due on closing. I accept Mr. Mehlenbacher’s evidence that cash in these collective

accounts was available to Rosseau to fund the cash due on closing. I further accept Mr.

Mehlenbacher’s evidence that inter company loans between Rosseau and its related companies

are documented by ledger transfers. There are no written agreements concerning the transfer of

money between companies.

Page 57

[183]

It is 252’s position that Rosseau is advancing the group enterprise theory and submits

that the Court should disregard the evidence on available funds from Rosseau’s affiliated

companies. 252 argues that the Court should find that Rosseau did not have the funds available

to close the transaction. I find that Rosseau is not relying on the group enterprise theory and that

the theory is not applicable in this case.

[184]

252 relies on Chevron to argue that Rosseau cannot rely on available funds from its

affiliated companies, or how the affiliated companies finance transactions, to show that it was

ready, willing, and able to close on September 19, 2017. The Defendant submits that to do so

disregards the “corporate separateness principle.” I disagree with 252’s position.

[185]

In Chevron, the Ontario Court of Appeal considered whether an indigenous group from

Ecuador could enforce a judgment from the Ecuadorian courts for environmental damage against

the Canadian arm of the global conglomerate. The Court heard a summary judgment motion on

the issue of whether Chevron Canada’s shares and assets are eligible to satisfy the foreign

judgment. Chevron was successful at first instance and the indigenous group appealed to the

Court of Appeal.

[186]

The Court of Appeal upheld the corporate separateness between the Chevron

Corporation (who caused the harm) and Chevron Canada. In doing so, the Court reviewed the

jurisprudence on when it is appropriate to pierce the corporate veil and found that in this instance

the requirements of the common law test were not met.

[187]

I accept Rosseau’s submission that the “group enterprise theory”, as cited by the 252,

relates to whether a company can be held liable for the wrongdoings of its affiliate or subsidiary

by piercing the corporate veil.

[188]

252 suggests that the “group enterprise theory” can be adapted to the facts of this case.

However, the group enterprise theory relates to liability since that was the issue on the facts of

that case, not to sourcing funds which is in issue in this case. This is clear from para. 76 of

Chevron:

Page 58

Not only is such an argument problematic from a policy standpoint, it comes

dangerously close to the adoption of the group enterprise theory of liability. That

theory holds that where several corporations operate closely as part of the same

“group” of corporations, they are in reality a single enterprise and should,

accordingly, be responsible for each other’s debts. It has been consistently

rejected by our courts…(emphasis added)

[189]

I find that Rosseau is not relying on the group enterprise theory. This case is not about

group enterprise liability or the piercing a corporate veil. The corporate separateness principle

has no relevance.

[190]

Further, 252’s position in respect to Rosseau’s evidence on available funds fails to take

into consideration the ordinary manner in which the Rosseau group of companies carries on

business. According to Mr. Mehlenbacher’s uncontroverted evidence, it was common practice

for him to move funds between related companies. The full quote from Mehlenbacher’s

testimony is as follows:

Q. This bank account is not in the name of the Rosseau Group Inc.

Would this money have been available to acquire the property?

A. Yes it would.

Q. Why is that?

A. Because the owners of this bank account is myself and my

partner who are owners of the Rosseau Group. We use this money

whenever needed to fund Rosseau Group purchases.

Q. Prior to June 2017 had the Condo Store Realty Inc. loaned

money to the Rosseau Group by inter company loan?

A. Yes.

Q. How often?

A. The inter company loan [was our] standard practice. [For

example,] by November 30 2020, the loans were just over

$12,000,000. I can’t tell you how often we loaned but it

accumulated to $12,000,000.

Q. Is this money loaned from the Condo Store Reality to the

Rosseau Group or the other way around?

A. It is money the Condo Store Realty loaned to the Rosseau

Group.

Page 59

[191]

I also find that Rosseau did proceed to establish the net developable acreage of the

Property. Rosseau relied upon the evidence of the planner, Mr. Quarcoopome, as an expert in

planning approvals, costs and profit estimate for real estate development. The Defendant did not

object to Mr. Quarcoopome providing expert opinion evidence on planning and development,

development costs and planning costs. I find that Mr. Quarcoopome is an expert on planning and

development, development costs and planning costs. I will deal below with whether he is an

expert on profit estimate for real estate development.

[192]

252 did not call any planning evidence and Mr. Quarcoopome’s expertise respecting

planning, development costs and planning costs was not challenged.

[193]

On June 14, 2017, Rosseau hired Mr. Quarcoopome to determine the net developable

acres on the Property. As several of the witnesses commented, the Property contains a wetland.

Mr. Quarcoopome testified that he could not come to a conclusion regarding the net developable

acreage until he completed a “detailed analysis of what was developable on the Property.” His

process began by looking at an aerial photograph of the Property and overlaying it with a

provincial conservation map from the Ministry of Natural Resources to identify an approximate

limit of the wetland. Mr. Quarcoopome testified that the map from the Ministry of Natural

Resources is “un-evaluated,” meaning the wetland has not been visited and specifically defined

by the Province. It has only been approximated.

[194]

After identifying the approximate limit of the wetland, Mr. Quarcoopome applied a ten-

metre buffer. Mr. Quarcoopome explained ten metres is a standard protection measure between

development lands and an environmental feature.

[195]

The next step was to determine a more precise boundary for the developable area. As

Mr. Quarcoopome testified “it’s one thing to take a map and see the limits, it’s a different

experience to go on the property and define those limits.”

[196]

In July 2017, Rosseau applied to the TRCA for a site walk. Rosseau also hired Natural

Resource Solutions (“NRSI”). In September 2017, Mr. Quarcoopome walked the Property with

the TRCA and NRSI twice. At the site walks, TRCA staked the development limit and NRSI geo

tagged each stake with a GPS backpack.

Page 60

[197]

On October 12, 2017, NSRI uploaded the locations marked by the backpack and

converted them into a new map. The new boundary for the Property is marked with a purple line.

The map shows three developable areas: on the north west, south west, and north east corners of

the Property. Mr. Quarcoopome determined the net developable acres for the Property was 8.28

acres.

[198]

The TRCA was not asked to confirm the net developable acres of the Property. To

obtain confirmation, Rosseau needed to hire an Ontario Land Surveyor (“OLS”) to complete a

registered plan of survey and submit it for review by the TRCA. Rosseau did not take this final

step as 252’s breach had put the amended APS at an end. I accept Rosseau’s position that it did

not make commercial sense for them do more at that stage.

[199]

In Mr. Quarcoopome’s uncontroverted opinion, there would not have been a wide

variance between the TRCA approved net developable area and his calculation. Mr.

Quarcoopome testified that in preparing a registered plan of survey, an OLS would have used the

same stakes used by the NSRI, which were marked with the onsite review of the TRCA. The

map would be very similar, if not identical, to Mr. Quarcoopome’s map.

[200]

In October 2017, Mr. Quarcoopome created a conceptual plan for the development of

the Property using the 8.28 net developable acres. His plan included a feasible lay out for the lots

and proposed roads. Mr. Quarcoopome testified that he used the neighbouring development of

Snell’s Hollow as a template for the proposed lots. Relying on the Snell’s Hollow development

standard and its lot frontage, he testified that 49 detached lots of approximately 12-14 metres

each were feasible on the Property. Again, this was not disputed and no planning evidence was

called by 252.

[201]

In preparing the conceptual plan Mr. Quarcoopome used a cut and fill exercise. Some

of the developable area was irregular and could not support efficient development. He testified

that a common approach to irregular land is to “trade” some developable land for

environmentally protected land. Developers will cut a portion of their developable lands,

removing the soil to extend the valley of the environmental feature and use that soil to fill

Page 61

another portion of the valley to create a more efficient lot: “The intent is that the area of the

valley, the bowl, remains the same.”

[202]

A small portion of the south western development area was proposed as a cut and fill.

Mr. Quarcoopome testified that these types of exercises are traditionally approved by the

appropriate authorities. Again, this evidence was not disputed.

[203]

For all of these reasons, I find that Rosseau was ready, willing and able to close the

transaction.

ISSUE 3: Do Justice Trimble’s findings in his December 14, 2017 endorsement estop the

Plaintiff from raising the issue of uniqueness and the issue of whether the Plaintiff was ready,

willing, and able to close the transaction?

I) The Law:

[204]

252 relied on Leigh and Justice Winkler’s (as he then was), reference to Lord Diplock’s

reasons in Fidelitas Shipping Co. Ltd. v. V/O Expert [1965] 2 All E.R.4, as follows:

“Where the issue determined is not decisive of the suit, the

judgment on that issue is an interlocutory judgment and the suit

continues. Yet I take it to be too clear to need citation of authority

that the parties to the suit are bound by the determination of that

issue. They cannot subsequently in the same suit advance argument

or adduce further evidence directed to show that the issue was

wrongly determined. There only remedy is by way of appeal from

the interlocutory judgment and, where appropriate, an application

to the appellate court to adduce further evidence….”

[205]

Rosseau relies on Greenfield, paras. 14 - 26, which provide as follows:

[14] In my view, the trial judge erred in finding that the decision of McTurk J.

was a decision in rem and that "the matter is res judicata in respect of any claims

for damages under s. 103(4)" of the CJA. A brief review of the nature and purpose

of a CPL and the nature of a motion to discharge a CPL will be helpful in

explaining why I have reached this conclusion.

[15] Section 103(1) of the CJA entitles a plaintiff, who has commenced a

proceeding in which an interest in land is in question, to obtain a CPL and to

register it against the title to the land. The registration of the CPL protects the

plaintiff by effectively preventing disposition of the property prior to judgment.

As such, a CPL can be as effective as an interlocutory injunction in restraining

Page 62

dealings with the property as, generally speaking, it is considered to be an

encumbrance on the land. See Brock v. Crawford (1908), 11 O.W.R. 143 at p. 146

(K.B.). No rights are given by a CPL. The effect of registration of a CPL on the

title to land is to give notice that rights in respect to the land are being claimed in

a pending court proceeding.

[16] As severe hardship may result to the owner of the land as the result of the

registration of a CPL, s. 103(6) confers a broad discretion on the court to

discharge a CPL and, depending on the circumstances, to impose appropriate

terms. As the practical effect of a CPL is similar to that of an interlocutory

injunction restraining dealing with the land, to discourage abuse s. 103(4) imposes

liability for damages resulting from the registration of a CPL where the registrant

is "without a reasonable claim to an interest in the land". For an historical

discussion of a certificate of lis pendens, which was the term by which a CPL was

previously known, see W.B. Williston and R.J. Rolls, The Law of Civil Procedure

(Toronto:

Butterworths, 1970), Vol. 2, at pp. 599-607 and Brock v. Crawford, supra, at pp.

145-47 O.W.R.

[17] Subsection 103(6) confers a broad discretion upon the court to discharge a

CPL upon a demonstration by the defendant in the action in which the CPL was

obtained of any of the grounds contained in the subsection, the last of which

invites an examination of the equities as between the parties. How such discretion

is to be exercised was described by Steele J. in Clock Investments Ltd. v.

Hardwood Estates Ltd. (1977), 1977 CanLII 1414 (ON SC), 16 O.R. (2d) 671 at

p. 674, 79 D.L.R. (3d) 129 (Div. Ct.):

I am of the opinion that the governing test is that the Judge must

exercise his discretion in equity and look at all of the relative

matters between the parties in determining whether or not the

certificate should be vacated.

[18] In this case, Ms. Moore based her motion to discharge the respondent's CPL

on s. 103(6)(a)(ii), contending that he did not have a reasonable interest in the

land claimed. In Procopio v. D'Abbondanza (1969), 1969 CanLII 291 (ON CA),

[1970] 1 O.R. 127 at p. 128, this court stated that a certificate of lis pendens

should not be discharged where "there is a triable issue as between the parties as

to an interest in the lands in question . . .". It is significant for the purpose of the

issue raised in this appeal that at p. 128 O.R. the court went on to make it clear

that in finding that there was a triable issue as to an interest in the lands it was

"not in any way deciding the rights of the parties in any respect, either as to the

lease, the assignment of the lease or the right to register the assignment of the

lease", which were the issues to be decided in the pending action. See, also, Brock

v. Crawford, supra, at p. 147 O.W.R.; Inwood v. Ivey, 1939 CanLII 331 (ON SC),

[1939] O.W.N. 56 at p. 58 , [1939] 2 D.L.R. 101 (H.C.J.); Willoughby v. Knight

(1973), 1973 CanLII 737 (ON SC), 1 O.R. (2d) 184 at p. 195, 39 D.L.R. (3d) 656

(H.C.J.); Galinski v. Jurashek (1976), 1 C.P.C. 68 (Ont. H.C.J.).

Page 63

[19] Although the cases to which I have referred were concerned with the test to

be applied on a motion to discharge a certificate of lis pendens obtained under the

relevant provisions of the Judicature Act prior to its replacement by s. 103(1) of

the CJA, which introduced the term CPL, there is no reason in principle why the

earlier jurisprudence should not apply to a motion under s. 103(6) of the CJA.

Indeed, cases which have been decided since the CJA came into force in 1984

continue to apply the earlier jurisprudence. See, e.g., Graywood Developments

Ltd. v. Campeau Corporation (1985), 8 C.P.C. (2d) 58 (Ont. S.C.); Chiu v. Pacific

Mall Developments Inc. (1998), 24 C.P.C. (4th) 67, 19 R.P.R. (3d) 236 (Ont. Gen.

Div.).

[20] It follows that on the motion to discharge the CPL the onus was on the

moving party, Ms. Moore, to demonstrate that there was no triable issue in respect

to whether the respondent had "a reasonable claim to the interest in the land

claimed". As such, the onus is analogous to that of a defendant seeking a

summary judgment dismissing a plaintiff's claim under Rule 20 of the Rules of

Civil Procedure. As on a Rule 20 motion, the role of the motion judge was not to

find as a fact whether the respondent had, or did not have, "a reasonable claim to

the interest in the land" which was the subject of the claim in his action against

Ms. Moore. That issue remained to be determined at the trial of the pending

action. Just as the finding of a motion judge on a Rule 20 motion that a genuine

issue for trial exists in respect to a plaintiff's claim cannot support a plea of res

judicata at the trial of that issue, neither can a finding of a motion judge on a s.

103(6) motion to discharge a CPL that there is a triable issue in respect to whether

the registrant has a reasonable claim to the interest in the land support a plea of

res judicata at the trial of a claim for damages under s. 103(4) of the CJA. This is

because no adjudication of the registrant's interest in the land is required on a

motion to discharge a CPL.

[21] Moreover, to preclude a claim for damages under s. 103(4) of the CJA on the

basis of a ruling under s. 103(6) would be contrary to the principles on which a

plea of res judicata is based. See, e.g., 420093 B.C. Ltd. v. Bank of Montreal

(1995), 1995 CanLII 6246 (AB CA), 128 D.L.R. (4th) 488, 34 Alta. L.R. (3d) 269

(C.A.). If a ruling on a motion to discharge a CPL could properly be considered as

determinative of whether a registrant had a reasonable claim to an interest in the

land, this would render meaningless a claim for damages under s. 103(4).

[22] Although in his reasons for declining to discharge the CPL McTurk J.

appears to have made a finding that the respondent had a reasonable claim to an

interest in land, it was not necessary for him to do so. Read as a whole, his

reasons indicate that he appreciated that in ruling on the motion he was exercising

the discretion conferred by s. 103(6). In my view, it is clear that in declining to

discharge the CPL McTurk J. correctly applied the test on a motion under s.

103(6)(a)(ii), namely, whether there is a triable issue as to the reasonableness of

the registrant's claim to an interest in the land. There is no doubt that the evidence

in the respondent's affidavit opposing the motion to discharge the CPL supports

such a result. The functional effect of McTurk J.'s ruling was to permit the

Page 64

registration of the CPL to remain on the title to the property pending the trial of

the respondent's claim against Ms. Moore. As he did not adjudicate the issue

raised by the appellants in this action, his ruling cannot preclude the appellants

from doing so.

[23] It follows that the trial judge was incorrect in holding that McTurk J.'s

decision gave rise to a successful plea of res judicata in this action. It appears that

the trial judge, in concluding that "McTurk J. was required to decide whether

Beattie had a reasonable claim to an interest in land", did not appreciate that the

role of the court on a motion to discharge a CPL under s. 103(6)(a)(ii) of the CJA

is limited to deciding whether there is a triable issue in respect to whether the

registrant has a reasonable claim to the interest in the land claimed.

[24] This conclusion conforms with the caution issued by this court in Procopio,

supra, at p. 128 O.R. that the result of a motion to discharge a certificate of lis

pendens is not determinative of the issue of whether the registrant in fact has a

reasonable interest in the land claimed. This was also the opinion of Henry J. in

Mormick Investments Inc. v. Khoury, [1985] O.J. No. 1072 (H.C.J.), which was a

claim for damages arising out of the registration of cautions against the plaintiffs'

lands. Prior to the action, Linden J. had vacated one of the cautions on the ground

that the defendant had no interest in the land. Henry J. rejected the submission

that the issue decided by Linden J. was res judicata. At para. 37, Henry J. stated:

While [Linden J.] clearly found that the plaintiff had no interest in

the lands the proceeding before him was interlocutory in nature,

designed to decide only whether the cautions ought to remain on

title until trial, or be vacated. The motion to vacate them was not

appropriate to dispose of the issue finally; to say that it had that

effect would have the result that, because the motions court judge

found on affidavit evidence that the plaintiff could not succeed as

the material before him disclosed no interest in the land, it would

foreclose to the plaintiff the resolution of the action on its merits at

a full trial.

[25] It would also appear that the respondent, in para. 41 of his affidavit in

response to the motion to discharge the CPL which I have set out in para. 9, was

of the opinion that the purpose of the motion was not to adjudicate whether he had

a reasonable claim to an interest in the land. In his affidavit he acknowledged his

potential liability under what is now s. 103(4) of the CJA should the court "later

determine that the Certificate was registered without a reasonable claim to the

interest in the land".

[26] Finally, I would add that the trial judge also erred in characterizing the order

of McTurk J. as "a decision in rem". As McTurk J. was not adjudicating whether

the respondent had a reasonable claim to an interest in land, his ruling did not

amount to a judgment upon the rights and claims to the land asserted by the

parties to the action in which the CPL had been obtained. Indeed, no rights are

given by a CPL; its entire effect is only to serve as notice that rights in land are

Page 65

being claimed. Although obtaining and registering a CPL may have the effect of

turning the action in which it was obtained from an action in personam into an

action in rem, it is only if the result of the action is a determination of the title to

the property, or some interest therein, that the action would result in a judgment in

rem. See McTaggart v. Toothe (1884), 10 P.R. 261 at p. 262 (Ont. Ch.).

II) The Evidence:

[206] It is uncontroverted that 252 brought a motion to discharge the CPL obtained by

Rosseau on October 2, 2017. The Honourable Justice Trimble made an Order, dated December

14, 2017 in which the CPL was discharged. The reasons set out in his Endorsement included as

follows:

a. “Contemporaneous evidence supports the conclusion that [Rosseau] planned to

re-sell, not to develop the property. There is no evidence that it sought

permissions for or asked about permissions to develop the property. It did not take

steps to make inquiries about assuming 252’s mortgage over the property as it

agreed to do. [Rosseau] began to market the property shortly after entering into

the APS with the Defendant….”

b. “I find that [Rosseau] intended to treat the property as an investment and not to

develop the land.”

c. “…[Rosseau] did not tender…Notwithstanding the Plaintiff’s statements,

however, it was never ready, willing + able to close as it had taken no steps to

assume 252’s first mortgage with BMO, as stipulated.”

III) Application of the Facts to the Law:

[207]

I agree with the Plaintiff, Leigh is distinguishable. In that case, counsel tried to

circumvent a motion judge’s order preventing the release of a memo because it was protected by

litigation privilege by eliciting the evidence in cross-examination. Justice Winkler, as he then

was, held that the defendant could not re-litigate the issue of tendering this specific memo as

evidence at trial.

[208]

In contrast to an order preventing the release of a specific document, an order

discharging a Certificate of Pending Litigation, contemplates the parties litigating the dispute

regarding the ownership of a property at trial. The Ontario Court of Appeal specifically

considered issue estoppel from findings in a CPL motion in Greenfield, holding that the findings

on the CPL motion could not create issue estoppel regarding the interest in property.

Page 66

[209]

In Greenfield, the Court held at para. 23 that a disposition on the interest in property is

by nature an interlocutory decision that explicitly contemplates litigation to decide the issue: the

“role of the court on a motion to discharge a CPL under s. 103(6)(a)(ii) of the CJA is limited to

deciding whether there is a triable issue in respect to whether the registrant has a reasonable

claim to the interest in the land.” The Court went on to hold at para. 24 that “a motion to

discharge a Certificate of Pending Litigation is not determinative of the issue of whether a

registrant in fact has a reasonable interest in the land claimed.” Finally, the Court concluded at

para. 26:

Indeed, no rights are given by a CPL; its entire effect is only to

serve as notice that rights in land are being claimed. Although

obtaining and registering a CPL may have the effect of turning the

action in which it was obtained from an action in personam into an

action in rem, it is only if the result of the action is a determination

of the title to the property, or some interest therein, that the action

would result in a judgment in rem.

[210]

Justice Trimble’s Endorsement specifically states that his findings of fact lead to the

conclusion that the CPL “must be discharged.” In my view, his order does not preclude a final

determination of the issues in this trial including the issues of uniqueness and whether Rosseau

was ready, willing, and able to close. Justice Trimble was deciding only whether to discharge the

CPL. He was not determining any rights.

ISSUE 4: What are the Plaintiff’s damages?

[211]

To answer this question there are three matters:

i) Is the Plaintiff’s expert, Martin Quarcoopome, qualified to provide expert

evidence concerning Rosseau’s estimate of damages?;

ii) Did the Plaintiff take reasonable steps to mitigate its damages?; and,

iii) How are damages to be calculated and what are the Plaintiff’s damages?

Page 67

I. The Law:

a) Qualification of Martin Quarcoopome as an Expert Witness Regarding the Estimate of

Damages

[212]

Mr. Quarcoopome was called to testify to give opinion evidence on behalf of the

Plaintiff at trial. A voir dire was held with respect to Mr. Quarcoopome’s qualifications. Rosseau

sought to have Mr. Quarcoopome qualified to give opinion evidence in respect to planning

approvals and the costs and profit estimates for real estate developments. 252’s counsel had no

objection to Mr. Quarcoopome providing opinion evidence on land planning, land use planning

and development, and development and planning costs. The objection by 252 to Mr.

Quarcoopome’s qualifications was limited to him providing opinion evidence on estimated

profit.

[213]

Having heard the voir dire and with no objection from the Defendant, Mr.

Quarcoopome was and is qualified to give opinion evidence on land planning, land use planning

and development including planning approval and planning costs.

[214]

Counsel agreed at the trial that Mr. Quarcoopome would give his full evidence on all

issues at the trial including on profit estimates and that they would make submissions on whether

Mr. Quarcoopome was qualified to give opinion evidence on profit estimate in their written and

oral submissions at the end of the trial and that I decide this issue when I am deciding all issues

at the end of the trial. This is the context for this matter.

[215]

The Supreme Court of Canada in R. v. Mohan, [1994] 2 S.C.R. 9, at para. 31, held that

for a witness to be properly qualified as an expert, he or she must have “acquired special or

peculiar knowledge through study or experience in respect of the matters in which he or she

undertakes to testify.” This is also set out at paras. 16 - 25 of White Burgess as follows:

[16] Since at least the mid-1990s, the Court has responded to a number of

concerns about the impact on the litigation process of expert evidence of dubious

value. The jurisprudence has clarified and tightened the threshold requirements

for admissibility, added new requirements in order to assure reliability,

particularly of novel scientific evidence, and emphasized the important role that

judges should play as “gatekeepers” to screen out proposed evidence whose value

Page 68

does not justify the risk of confusion, time and expense that may result from its

admission.

[17] We can take as the starting point for these developments the Court’s

decision in R. v. Mohan, 1994 CanLII 80 (SCC), [1994] 2 S.C.R. 9. That case

described the potential dangers of expert evidence and established a four-part

threshold test for admissibility. The dangers are well known. One is that the trier

of fact will inappropriately defer to the expert’s opinion rather than carefully

evaluate it. As Sopinka J. observed in Mohan:

There is a danger that expert evidence will be misused and will

distort the fact-finding process. Dressed up in scientific language

which the jury does not easily understand and submitted through a

witness of impressive antecedents, this evidence is apt to be

accepted by the jury as being virtually infallible and as having

more weight than it deserves. [p. 21]

(See also D.D., at para. 53; R. v. J.-L.J., 2000 SCC 51, [2000] 2

S.C.R. 600, at paras. 25-26; R. v. Sekhon, 2014 SCC 15, [2014] 1

S.C.R. 272, at para. 46.)

[18] The point is to preserve trial by judge and jury, not devolve to trial by

expert. There is a risk that the jury “will be unable to make an effective and

critical assessment of the evidenceˮ: R. v. Abbey, 2009 ONCA 624, 97 O.R. (3d)

330, at para. 90, leave to appeal refused, [2010] 2 S.C.R. v. The trier of fact must

be able to use its “informed judgment”, not simply decide on the basis of an “act

of faith” in the expert’s opinion: J.-L.J., at para. 56. The risk of “attornment to

the opinion of the expertˮ is also exacerbated by the fact that expert evidence is

resistant to effective cross-examination by counsel who are not experts in that

field: D.D., at para. 54. The cases address a number of other related concerns: the

potential prejudice created by the expert’s reliance on unproven material not

subject to cross-examination (D.D., at para. 55); the risk of admitting “junk

science” (J.-L.J., at para. 25); and the risk that a “contest of experts” distracts

rather than assists the trier of fact (Mohan, at p. 24). Another well-known danger

associated with the admissibility of expert evidence is that it may lead to an

inordinate expenditure of time and money: Mohan, at p. 21; D.D., at para. 56;

Masterpiece Inc. v. Alavida Lifestyles Inc., 2011 SCC 27, [2011] 2 S.C.R. 387, at

para. 76.

[19] To address these dangers, Mohan established a basic structure for the law

relating to the admissibility of expert opinion evidence. That structure has two

main components. First, there are four threshold requirements that the proponent

of the evidence must establish in order for proposed expert opinion evidence to be

admissible: (1) relevance; (2) necessity in assisting the trier of fact; (3) absence of

an exclusionary rule; and (4) a properly qualified expert (Mohan, at pp. 20-25; see

also Sekhon, at para. 43). Mohan also underlined the important role of trial judges

in assessing whether otherwise admissible expert evidence should be excluded

because its probative value was overborne by its prejudicial effect — a residual

Page 69

discretion to exclude evidence based on a cost-benefit analysis: p. 21. This is the

second component, which the subsequent jurisprudence has further emphasized:

Lederman, Bryant and Fuerst, at pp. 789-90; J.-L.J., at para. 28.

[20] Mohan and the jurisprudence since, however, have not explicitly addressed

how this “cost-benefit” component fits into the overall analysis. The reasons in

Mohan engaged in a cost-benefit analysis with respect to particular elements of

the four threshold requirements, but they also noted that the cost-benefit analysis

could be an aspect of exercising the overall discretion to exclude evidence whose

probative value does not justify its admission in light of its potentially prejudicial

effects: p. 21. The jurisprudence since Mohan has also focused on particular

aspects of expert opinion evidence, but again without always being explicit about

where additional concerns fit into the analysis. The unmistakable overall trend of

the jurisprudence, however, has been to tighten the admissibility requirements and

to enhance the judge’s gatekeeping role.

[21] So, for example, the necessity threshold criterion was emphasized in cases

such as D.D. The majority underlined that the necessity requirement exists “to

ensure that the dangers associated with expert evidence are not lightly tolerated”

and that “[m]ere relevance or ‘helpfulness’ is not enough”: para. 46. Other cases

have addressed the reliability of the science underlying an opinion and indeed

technical evidence in general: J.-L.J.; R. v. Trochym, 2007 SCC 6, [2007] 1

S.C.R. 239. The question remains, however, as to where the cost-benefit analysis

and concerns such as those about reliability fit into the overall analysis.

[22] Abbey (ONCA) introduced helpful analytical clarity by dividing the inquiry

into two steps. With minor adjustments, I would adopt that approach.

[23] At the first step, the proponent of the evidence must establish the threshold

requirements of admissibility. These are the four Mohan factors (relevance,

necessity, absence of an exclusionary rule and a properly qualified expert) and in

addition, in the case of an opinion based on novel or contested science or science

used for a novel purpose, the reliability of the underlying science for that purpose:

J.-L.J., at paras. 33, 35-36 and 47; Trochym, at para. 27; Lederman, Bryant and

Fuerst, at pp. 788-89 and 800-801. Relevance at this threshold stage refers to

logical relevance: Abbey (ONCA), at para. 82; J.-L.J., at para. 47. Evidence that

does not meet these threshold requirements should be excluded. Note that I would

retain necessity as a threshold requirement: D.D., at para. 57; see D. M. Paciocco

and L. Stuesser, The Law of Evidence (7th ed. 2015), at pp. 209-10; R. v. Boswell,

2011 ONCA 283, 85 C.R. (6th) 290, at para. 13; R. v. C. (M.), 2014 ONCA 611,

13 C.R. (7th) 396, at para. 72.

[24] At the second discretionary gatekeeping step, the judge balances the

potential risks and benefits of admitting the evidence in order to decide whether

the potential benefits justify the risks. The required balancing exercise has been

described in various ways. In Mohan, Sopinka J. spoke of the “reliability versus

effect factor” (p. 21), while in J.-L.J., Binnie J. spoke about “relevance, reliability

and necessity” being “measured against the counterweights of consumption of

Page 70

time, prejudice and confusion”: para. 47. Doherty J.A. summed it up well in

Abbey, stating that the “trial judge must decide whether expert evidence that

meets the preconditions to admissibility is sufficiently beneficial to the trial

process to warrant its admission despite the potential harm to the trial process that

may flow from the admission of the expert evidence”: para. 76.

[25] With this delineation of the analytical framework, we can turn to the nature

of an expert’s duty to the court and where it fits into that framework.

[216]

Burgess:

The duties owed by an expert witness to the court are set out at paras. 35 - 54 of White

[35] The weight of authority strongly supports the conclusion that at a certain

point, expert evidence should be ruled inadmissible due to the expert’s lack of

impartiality and/or independence.

[36] Our Court has confirmed this position in a recent decision that was not

available to the courts below:

It is well established that an expert’s opinion must be independent,

impartial and objective, and given with a view to providing

assistance to the decision maker (J.-C. Royer and S. Lavallée, La

preuve civile (4th ed. 2008), at No. 468; D. Béchard, with the

collaboration of J. Béchard, L’expert (2011), chap. 9; An Act to

establish the new Code of Civil Procedure, S.Q. 2014, c. 1, s. 22

(not yet in force)). However, these factors generally have an

impact on the probative value of the expert’s opinion and are not

always insurmountable barriers to the admissibility of his or her

testimony. Nor do they necessarily “disqualify” the expert (L.

Ducharme and C.-M. Panaccio, L’administration de la preuve (4th

ed. 2010), at Nos. 590-91 and 605). For expert testimony to be

inadmissible, more than a simple appearance of bias is necessary.

The question is not whether a reasonable person would consider

that the expert is not independent. Rather, what must be

determined is whether the expert’s lack of independence renders

him or her incapable of giving an impartial opinion in the specific

circumstances of the case (D. M. Paciocco, “Unplugging Jukebox

Testimony in an Adversarial System: Strategies for Changing the

Tune on Partial Experts” (2009), 34 Queen’s L.J. 565, at pp. 598-

99).

(Mouvement laïque québécois v. Saguenay (City), 2015 SCC 16,

[2015] 2 S.C.R. 3, at para. 106)

[37] I will refer to a number of other cases that support this view. I do so by way

of illustration and without commenting on the outcome of particular cases. An

expert’s interest in the litigation or relationship to the parties has led to exclusion

in a number of cases: see, e.g., Fellowes, McNeil v. Kansa General International

Page 71

Insurance Co. (1998), 1998 CanLII 14856 (ON SC), 40 O.R. (3d) 456 (Gen. Div.)

(proposed expert was the defendant’s lawyer in related matters and had

investigated from the outset of his retainer the matter of a potential negligence

claim against the plaintiff); Royal Trust Corp. of Canada v. Fisherman (2000),

2000 CanLII 22384 (ON SC), 49 O.R. (3d) 187 (S.C.J.) (expert was the party’s

lawyer in related U.S. proceedings); R. v. Docherty, 2010 ONSC 3628 (expert

was the defence counsel’s father); Ocean v. Economical Mutual Insurance Co.,

2010 NSSC 315, 293 N.S.R. (2d) 394 (expert was also a party to the litigation);

Handley v. Punnett, 2003 BCSC 294 (expert was also a party to the litigation);

Bank of Montreal v. Citak, 2001 CanLII 12419 (QC CQ), [2001] O.J. No. 1096

(QL) (S.C.J.) (expert was effectively a “co-venturer” in the case due in part to the

fact that 40 percent of his remuneration was contingent upon success at trial: para.

7); Dean Construction Co. v. M.J. Dixon Construction Ltd., 2011 ONSC 4629, 5

C.L.R. (4th) 240 (expert’s retainer agreement was inappropriate); Hutchingame v.

Johnstone, 2006 BCSC 271 (expert stood to incur liability depending on the result

of the trial). In other cases, the expert’s stance or behaviour as an advocate has

justified exclusion: see, e.g., Alfano v. Piersanti, 2012 ONCA 297, 291 O.A.C.

62; Kirby Lowbed Services Ltd. v. Bank of Nova Scotia, 2003 BCSC 617; Gould

v. Western Coal Corp., 2012 ONSC 5184, 7 B.L.R. (5th) 19.

[38] Many other cases have accepted, in principle, that lack of independence or

impartiality can lead to exclusion, but have ruled that the expert evidence did not

warrant rejection on the particular facts: see, e.g., United City Properties Ltd. v.

Tong, 2010 BCSC 111; R. v. INCO Ltd. (2006), 2006 CanLII 14962 (ON SC), 80

O.R. (3d) 594 (S.C.J.). This was the position of the Court of Appeal in this case:

para. 109; see also para. 121.

[39] Some Canadian courts, however, have treated these matters as going

exclusively to weight rather than to admissibility. The most often cited cases for

this proposition are probably R. v. Klassen, 2003 MBQB 253, 179 Man. R. (2d)

115, and Gallant v. Brake-Patten, 2012 NLCA 23, 321 Nfld. & P.E.I.R. 77.

Klassen holds as admissible any expert evidence meeting the criteria from Mohan,

with bias only becoming a factor as to the weight to be given to the evidence: see

also R. v. Violette, 2008 BCSC 920. Similarly, the court in Gallant determined

that a challenge to expert evidence that is based on the expert having a connection

to a party or an issue in the case or a possible predetermined position on the case

cannot take place at the admissibility stage: para. 89.

[40] I conclude that the dominant approach in Canadian common law is to treat

independence and impartiality as bearing not just on the weight but also on the

admissibility of the evidence. I note that while the shareholders submit that issues

regarding expert independence should go only to weight, they rely on cases such

as INCO that specifically accept that a finding of lack of independence or

impartiality can lead to inadmissibility in certain circumstances: R.F., at paras.

52-53.

Page 72

[41] Outside Canada, the concerns related to independence and impartiality have

been addressed in a number of ways. Some are similar to the approach in

Canadian law.

[42] For example, summarizing the applicable principles in British law, Nelson J.

in Armchair Passenger Transport Ltd. v. Helical Bar Plc, [2003] EWHC 367

(Q.B.), underlined that when an expert has an interest or connection with the

litigation or a party thereto, exclusion will be warranted if it is determined that the

expert is unwilling or unable to carry out his or her primary duty to the court: see

also H. M. Malek et al., eds., Phipson on Evidence (18th ed. 2013), at pp. 1158-

59. The mere fact of an interest or connection will not disqualify, but it

nonetheless may do so in light of the nature and extent of the interest or

connection in particular circumstances. As Lord Phillips of Worth Matravers,

M.R., put it in a leading case, “[i]t is always desirable that an expert should have

no actual or apparent interest in the outcome of the proceedings in which he gives

evidence, but such disinterest is not automatically a precondition to the

admissibility of his evidence”: R. (Factortame Ltd.) v. Secretary of State for

Transport, [2002] EWCA Civ 932, [2003] Q.B. 381, at para. 70; see also

Gallaher International Ltd. v. Tlais Enterprises Ltd., [2007] EWHC 464

(Comm.); Meat Corp. of Namibia Ltd. v. Dawn Meats (U.K.) Ltd., [2011] EWHC

474 (Ch. D.); Matchbet Ltd. v. Openbet Retail Ltd., [2013] EWHC 3067 (Ch. D.),

at paras. 312-17.

[43] In Australia, the expert’s objectivity and impartiality will generally go to

weight, not to admissibility: I. Freckelton and H. Selby, Expert Evidence: Law,

Practice, Procedure and Advocacy (5th ed. 2013), at p. 35. As the Court of

Appeal of the State of Victoria put it: “. . . to the extent that it is desirable that

expert witnesses should be under a duty to assist the Court, that has not been held

and should not be held as disqualifying, in itself, an ‘interested’ witness from

being competent to give expert evidence” (FGT Custodians Pty. Ltd. v.

Fagenblat, [2003] VSCA 33, at para. 26 (AustLII); see also Freckelton and Selby,

at pp. 186-88; Collins Thomson v. Clayton, [2002] NSWSC 366; Kirch

Communications Pty Ltd. v. Gene Engineering Pty Ltd., [2002] NSWSC 485;

SmithKline Beecham (Australia) Pty Ltd. v. Chipman, [2003] FCA 796, 131

F.C.R. 500).

[44] In the United States, at the federal level, the independence of the expert is a

consideration that goes to the weight of the evidence, and a party may testify as an

expert in his own case: Rodriguez v. Pacificare of Texas, Inc., 980 F.2d 1014 (5th

Cir. 1993), at p. 1019; Tagatz v. Marquette University, 861 F.2d 1040 (7th Cir.

1988); Apple Inc. v. Motorola, Inc., 757 F.3d 1286 (Fed. Cir. 2014), at p. 1321.

This also seems to be a fair characterization of the situation in the states (Corpus

Juris Secundum, vol. 32 (2008), at p. 325: “The bias or interest of the witness

does not affect his or her qualification, but only the weight to be given the

testimony.”).

[45] Following what I take to be the dominant view in the Canadian cases, I

would hold that an expert’s lack of independence and impartiality goes to the

Page 73

admissibility of the evidence in addition to being considered in relation to the

weight to be given to the evidence if admitted. That approach seems to me to be

more in line with the basic structure of our law relating to expert evidence and

with the importance our jurisprudence has attached to the gatekeeping role of trial

judges. Binnie J. summed up the Canadian approach well in J.-L.J.: “The

admissibility of the expert evidence should be scrutinized at the time it is

proffered, and not allowed too easy an entry on the basis that all of the frailties

could go at the end of the day to weight rather than admissibility” (para. 28).

[46] I have already described the duty owed by an expert witness to the court: the

expert must be fair, objective and non-partisan. As I see it, the appropriate

threshold for admissibility flows from this duty. I agree with Prof. (now Justice of

the Ontario Court of Justice) Paciocco that “the common law has come to accept .

. . that expert witnesses have a duty to assist the court that overrides their

obligation to the party calling them. If a witness is unable or unwilling to fulfill

that duty, they do not qualify to perform the role of an expert and should be

excluded”: “Taking a ‘Goudge’ out of Bluster and Blarney: an ‘Evidence-Based

Approach’ to Expert Testimony” (2009), 13 Can. Crim. L.R. 135, at p. 152

(footnote omitted). The expert witnesses must, therefore, be aware of this primary

duty to the court and able and willing to carry it out.

[47] Imposing this additional threshold requirement is not intended to and should

not result in trials becoming longer or more complex. As Prof. Paciocco aptly

observed, “if inquiries about bias or partiality become routine during Mohan voir

dires, trial testimony will become nothing more than an inefficient reprise of the

admissibility hearing”: “Unplugging Jukebox Testimony in an Adversarial

System: Strategies for Changing the Tune on Partial Experts” (2009), 34 Queen’s

L.J. 565 (“Jukeboxˮ), at p. 597. While I would not go so far as to hold that the

expert’s independence and impartiality should be presumed absent challenge, my

view is that absent such challenge, the expert’s attestation or testimony

recognizing and accepting the duty will generally be sufficient to establish that

this threshold is met.

[48] Once the expert attests or testifies on oath to this effect, the burden is on the

party opposing the admission of the evidence to show that there is a realistic

concern that the expert’s evidence should not be received because the expert is

unable and/or unwilling to comply with that duty. If the opponent does so, the

burden to establish on a balance of probabilities this aspect of the admissibility

threshold remains on the party proposing to call the evidence. If this is not done,

the evidence, or those parts of it that are tainted by a lack of independence or

impartiality, should be excluded. This approach conforms to the general rule

under the Mohan framework, and elsewhere in the law of evidence, that the

proponent of the evidence has the burden of establishing its admissibility.

[49] This threshold requirement is not particularly onerous and it will likely be

quite rare that a proposed expert’s evidence would be ruled inadmissible for

failing to meet it. The trial judge must determine, having regard to both the

particular circumstances of the proposed expert and the substance of the proposed

Page 74

evidence, whether the expert is able and willing to carry out his or her primary

duty to the court. For example, it is the nature and extent of the interest or

connection with the litigation or a party thereto which matters, not the mere fact

of the interest or connection; the existence of some interest or a relationship does

not automatically render the evidence of the proposed expert inadmissible. In

most cases, a mere employment relationship with the party calling the evidence

will be insufficient to do so. On the other hand, a direct financial interest in the

outcome of the litigation will be of more concern. The same can be said in the

case of a very close familial relationship with one of the parties or situations in

which the proposed expert will probably incur professional liability if his or her

opinion is not accepted by the court. Similarly, an expert who, in his or her

proposed evidence or otherwise, assumes the role of an advocate for a party is

clearly unwilling and/or unable to carry out the primary duty to the court. I

emphasize that exclusion at the threshold stage of the analysis should occur only

in very clear cases in which the proposed expert is unable or unwilling to provide

the court with fair, objective and non-partisan evidence. Anything less than clear

unwillingness or inability to do so should not lead to exclusion, but be taken into

account in the overall weighing of costs and benefits of receiving the evidence.

[50] As discussed in the English case law, the decision as to whether an expert

should be permitted to give evidence despite having an interest or connection with

the litigation is a matter of fact and degree. The concept of apparent bias is not

relevant to the question of whether or not an expert witness will be unable or

unwilling to fulfill its primary duty to the court. When looking at an expert’s

interest or relationship with a party, the question is not whether a reasonable

observer would think that the expert is not independent. The question is whether

the relationship or interest results in the expert being unable or unwilling to carry

out his or her primary duty to the court to provide fair, non-partisan and objective

assistance.

[51] Having established the analytical framework, described the expert’s duty

and determined that compliance with this duty goes to admissibility and not

simply to weight, I turn now to where this duty fits into the analytical framework

for admission of expert opinion evidence.

[52] Courts have addressed independence and impartiality at various points of the

admissibility test. Almost every branch of the Mohan framework has been

adapted to incorporate bias concerns one way or another: the proper qualifications

component (see, e.g., Bank of Montreal; Dean Construction; Agribrands Purina

Canada Inc. v. Kasamekas, 2010 ONSC 166; R. v. Demetrius, 2009 CanLII 22797

(Ont. S.C.J.)); the necessity component (see, e.g., Docherty; Alfano); and during

the discretionary cost-benefit analysis (see, e.g., United City Properties; Abbey

(ONCA)). On other occasions, courts have found it to be a stand-alone

requirement: see, e.g., Docherty; International Hi-Tech Industries Inc. v. FANUC

Robotics Canada Ltd., 2006 BCSC 2011; Casurina Ltd. Partnership v. Rio Algom

Ltd. (2002), 2002 CanLII 9356 (ON SC), 28 B.L.R. (3d) 44 (Ont. S.C.J.); Prairie

Page 75

Well Servicing Ltd. v. Tundra Oil and Gas Ltd., 2000 MBQB 52, 146 Man. R.

(2d) 284. Some clarification of this point will therefore be useful.

[53] In my opinion, concerns related to the expert’s duty to the court and his or

her willingness and capacity to comply with it are best addressed initially in the

“qualified expert” element of the Mohan framework: S. C. Hill, D. M. Tanovich

and L. P. Strezos, McWilliams’ Canadian Criminal Evidence (5th ed. (loose-

leaf)), at 12:30.20.50; see also Deemar v. College of Veterinarians of Ontario,

2008 ONCA 600, 92 O.R. (3d) 97, at para. 21; Lederman, Bryant and Fuerst, at

pp. 826-27; Halsbury’s Laws of Canada: Evidence, at para. HEV-152

“Partiality”; The Canadian Encyclopedic Digest (Ont. 4th ed. (loose-leaf)), vol.

24, Title 62 ― Evidence, at §469. A proposed expert witness who is unable or

unwilling to fulfill this duty to the court is not properly qualified to perform the

role of an expert. Situating this concern in the “properly qualified expert” ensures

that the courts will focus expressly on the important risks associated with biased

experts: Hill, Tanovich and Strezos, at 12:30.20.50; Paciocco, “Jukebox”, at p.

595.

[54] Finding that expert evidence meets the basic threshold does not end the

inquiry. Consistent with the structure of the analysis developed following Mohan

which I have discussed earlier, the judge must still take concerns about the

expert’s independence and impartiality into account in weighing the evidence at

the gatekeeping stage. At this point, relevance, necessity, reliability and absence

of bias can helpfully be seen as part of a sliding scale where a basic level must

first be achieved in order to meet the admissibility threshold and thereafter

continue to play a role in weighing the overall competing considerations in

admitting the evidence. At the end of the day, the judge must be satisfied that the

potential helpfulness of the evidence is not outweighed by the risk of the dangers

materializing that are associated with expert evidence.

[217]

The test for the admissibility of expert evidence is also summarized at paras. 7 and 14

of Laderoute v. Heffernan, 2019 ONSC 914:

[7] Here, the scrutiny is on the qualifications of Mr. Kostaras as an expert in

business valuation. According to Mohan, for a witness to be properly qualified

as an expert, he or she must have “acquired special or peculiar knowledge through

study or experience in respect of the matters on which he or she undertakes to

testify”; see para 31.

***

[14] Apart from my conclusion that Mr. Kostaras is not properly qualified to give

expert evidence, I also consider the second stage of the admissibility test as

established in White Burgess. This stage is the discretionary gatekeeping role of

the trial judge. Rather than admitting expert evidence and considering

weaknesses only when deciding the weight to be given to it, the judge, as

gatekeeper, is required to consider the frailties in the evidence at the second stage

Page 76

of the admissibility test. It is at this juncture, that the court must “weigh the

strength or cogency of the evidence against its potential prejudice in the sense that

it may be used by the trier of fact for an impermissible purpose, may create unfair

prejudice against the opponent, or may confuse or mislead the trier of fact,

thereby rendering the trial unfair, or result in an inefficient and costly trial”; see

Sopinka, Lederman & Bryant, The Law of Evidence in Canada, Fifth Edition, at p.

875. For the reasons set out below, I find that the frailties in Mr. Kostaras’ report

create more risk than value to the court. The potential prejudice of admitting

outweighs the probative value. Accordingly, I exercise my gatekeeping discretion

and rule Mr. Kostaras’ evidence to be inadmissible.

[218]

Rosseau also relies on one case specifically related to the development context in

Sylvan Lake Golf & Tennis Club Ltd. v. Performance Industries Ltd., 1999 ABQB 479, later

affirmed on the issue of compensatory damages by the Supreme Court of Canada in Performance

Industries Ltd. v. Sylvan Lake Golf & Tennis Club Ltd, 2002 SCC 19, [2002] 1 S.C.R. 678. At

para. 30 of the Court of the Queen’s bench decision, the trial judge qualified a development

consultant as an expert who prepared “a preliminary cost estimate, investigated utilities and other

matters and produced a revenue profit/expense sheet for 100 lots.”. This is set out at paras 30 and

94 - 105 of the trial decision as follows:

[30]

Bell contacted Norm Trouth a development consultant in the latter half of

1992 and provided Trouth with a copy of the UMA proposal. Bell and Trouth

talked about development of the 18^thhole and conducted a physical tour of the

golf course. Trouth proposed that there were several locations which would have

the potential for development of residences. He recommended that Bell obtain a

legal survey to outline those locations that might afford room for more

development lots than could be obtained on the 18^thfairway. It was felt that those

developments might be more marketable. With Bell’s agreement Trouth did a

preliminary cost estimate, investigated utilities and other matters and produced a

revenue profit/expense sheet for 100 lots. It was Bell’s evidence that he calculated

the area encompassed by the 18^thhole to be roughly 110 yards by 500 yards

which would be approximately 12.5 acres. Bell testified that in late December of

1992 or early January of 1993 he met with Mr. O’Connor and left for his

consideration the proposal and sketches prepared by Mr. Trouth. He testified that

as the lands in the golf course had been annexed to the town of Sylvan Lake in

1991 there was potential for residential development throughout the golf course.

The area for the proposed development in the materials left for O’Connor related

to sections of the golf courses other than the 18^thhole itself and comprised about

15 acres. The material was left with Mr. O’Connor on the basis he would look at

it while Bell was recuperating outside of the country and should he have any

questions he could contact Mr. Trouth.

Page 77

***

[94]

The evidence as to the reasonably expected profit Bell could realize on the

development of the 18^thhole was provided by Norman Trouth who was accepted

by the court as a witness capable of offering expert opinion in the areas of land

development including land planning, zoning, marketing, land valuation, costing

and revenue estimate of development projects as well as the feasibility and

commercial and reasonableness of land development. No contrary expert or lay

evidence was offered by the defence in relation to the issue of damages although

Mr. Trouth was cross-examined extensively. Evidence in relation to the costs

associated with the re-alignment of the golf course property to accommodate the

proposed residential subdivision was offered on behalf of the Plaintiff by Mr.

Albers and on behalf of the Defendant by Gary Browning both of whom were

accepted as experts in golf course construction and re-design.

[95]

Mr. Trouth provided a proposed residential subdivision cost revenue

statement which was expressed on an alternate basis of 50 lots of 50 feet wide on

8.5 acres and 58 lots of 50 feet wide on 10.91 acres. The net revenue attributed to

50 lots was determined to be $665,600 while 58 lots would net $820,100. The

proposed development was based on the lots having a minimum depth of 110 feet

with a central road system servicing the lots on both sides and having a minimum

width of 55 feet. The opinion of Mr. Trouth was that single family lots of this size

was the highest and best use for a property in the area at that time:

Q

And can you explain to the court approximately how many

single family residential lots could be developed on that area of

land comprising the 18^thhole of the Sylvan Lake golf course?

A

If you produce all 50-foot lots, which would produce a

depth of lot of a little under 140 feet, which are really quite nice-

sized residential lots, you could get 58 lots in the 480 yards of

length quite comfortably. If you wanted to struggle with narrower

widths or putting some duplexes or something in, you could get

more.

Q

And you can explain to the court what the layout would be

of such a development?

A

It would be a long cul-de-sac terminating at the north end

and originating on a street at the south end with 50-foot lots up

both sides of the -- of the street and a bell on the end of the cul-de-

sac for turning fire trucks and so forth around to the standards of

the town.

[96]

He further stated:

Q

Could you explain to the court what your opinion is about

the market opportunities for a development that is a residential

housing on the 18^thhole of the Sylvan Lake golf course in the 1994

and 1995 period?

Page 78

A

As you’re no doubt aware, Sylvan Lake is a dormitory town

for Red Deer as well as being a very popular resort area, and I felt

that the market was top -- tops for a development at that time and

would sell out in no more than two years.

[97]

The opinion of Mr. Trouth was received in evidence and it remains the

only evidence of the expected net revenue which could have been realized by Mr.

Bell on a development of the 18^thhole.

[98]

Mr. Trouth’s estimate of the net profit available to Mr. Bell included

provision for restoration of the golf course in the amount of $100,000 which was

based on a plan for restoration and an estimated budget provided by Mr. Albers.

[99]

Mr. Albers testified as to his experience in the golf course business and

provided his proposed design of change and his estimate for costs of the same in a

gross amount of $100,000, being the amount utilized by Mr. Trouth.

[100] The Defendant called Gary Browning who testified that his preliminary

construction cost estimate for a proper re-design that would amount to $246,875.

[101] In cross-examination Mr. Browning acknowledged that in the preparation

of his expert report he had not seen the Sylvan Lake Golf Course; had not had

occasion to traverse the course until immediately prior to his testimony; and that

he had not been provided a description of the specific nature of the greens and tee

boxes of the existing Sylvan Lake Golf Course. Mr. Browning acknowledged that

his estimate of costs would necessarily have produced a substantial upgrading of

the golf course in the areas that were touched by renovation. In response to a

question from the court he indicated that he would not allow his name to be

associated with any development that did not upgrade the course in relation to

greens and tee boxes to an acceptable standard. It is clear from a review of Mr.

Browning’s estimate of costs that his proposal represents re-development of the

golf course arising from the subdivision that was far beyond the requirements of

the provisions of clause 18 of the Agreement between Bell and O’Connor and far

beyond anything the parties could have contemplated.

[102] On the other hand the evidence of Mr. Albers was to the effect that he had

successfully done many country style golf course developments which were

developed on a similar basis to the existing Sylvan Lake Golf Course. It was his

opinion that re-development necessitated by the subdivision should be

accomplished in those few areas to be re-designed in a manner to be consistent

with the rest of the golf course. It was his opinion that any substantial upgrade to

the holes being re-designed would make the golf course less attractive and less

playable. Mr. Albers spoke of costs on the basis of his experience and his

assessment of the needs of the golf course after having thoroughly examined the

course and the requirements on the course for changes arising from the proposed

residential development.

[103] There is nothing in the evidence offered by Mr. Browning in his criticisms

of the Alber’s proposal which convinces this court on a balance of probability that

Page 79

the proposal by Mr. Albers could not have permitted the reasonable modification

of the golf course as contemplated by clause 18 at the cost quoted by Mr. Albers.

It is clear that the cost projected by Mr. Browning cannot be used as a proper

basis for challenge to Mr. Alber’s proposal for costs. The respective proposals are

for golf courses of entirely different types in a manner that a Cadillac and a

Volkswagen are cars of different types.

[104] It is the conclusion of this court that the true measure of damages suffered

by Mr. Bell for the denial of his opportunity to develop a residential subdivision

of single family lots on the 18^thhole of the Sylvan Lake Golf Course should be

assessed on the basis of 58 lots and that the cost of restoration of the golf course

would be in the amount quoted by Mr. Albers of $100,000. As projected by Mr.

Trouth, Bell’s net revenue from that development would be in the amount of

$820,100, after making the payment to O’Connor for his interest in the land in

accordance with clause 18. Bell is entitled to a judgment or damages in that

amount.

[105] Bell shall also have judgment against the Defendant in the additional

amounts of $10,000 representing my reasonable assessment of damage for the

value of the club house developed by Bell during the term of his occupancy in

accordance with the provisions of paragraph 8 of the December 21 Agreement.

Finally Bell will also have judgment in the amount of $17,710 being the net

balance due to be paid by O’Connor after the defaults of Bell and payments due

during his period of occupancy have been offset against the final balance due

under the Agreement, as declared by the judgment of the Court of Queen’s Bench

in the specific performance action.

[219]

The Supreme Court’s decision at paras. 72 - 76 upheld the trial judge’s determination of

compensatory damages. As set out above, the trial judge relied on the evidence of a development

consultant.

ii) Did the Plaintiff take reasonable steps to mitigate its damages?

[220]

The burden of showing that mitigation was possible rests with the Defendant who is

alleging that the Plaintiff failed to mitigate. This is set out at paras. 45 and 46 of Southcott:

[45] As noted above, where it is alleged that a plaintiff has failed to mitigate

damages, the onus of proof on a balance of probabilities lies with the defendant,

who must establish not only that the plaintiff failed to take reasonable efforts to

find a substitute, but also that a reasonable profitable substitute could be found.

[46] Thus, it would be an error to suggest that the defendant did not have the

burden of showing that mitigation was possible even where the plaintiff made no

attempt to do so. Further, while I agree that the trial judge erred in dealing with

the Board’s evidence regarding the availability of the 81 properties, the error is

Page 80

best approached as an evidentiary issue rather than as one engaging the burden of

proof.

[221]

This onus is on the Defendant to satisfy the court on a balance of probabilities and

without using hindsight. These requirements and what the Defendant must prove are as set out in

Marshall v. Meirik, 2021 ONSC 1687, at para 44:

[44] The plaintiffs rely on 100 Main Street and cases that have interpreted and

applied it (including Malatinszky v. Miri, 2020 ONSC 16, at paras. 81-82,

Novotny v. Ahmaddi, 2018 ONSC 7310, at paras. 18-20, and Zou, at para. 45).

These cases describe the defendants’ onus to be to satisfy the court, on a balance

of probabilities and without the use of hindsight, both that:

a. the plaintiffs failed to make reasonable efforts to mitigate, based

on evidence identifying certain reasonable steps that they failed to

take, or identifying some step that was taken that was not

reasonable; and

b. mitigation was possible.

[222]

252 relies on the following paragraphs of Southcott, paras. 24, 27, 30, 37, 40 - 41, 55,

57 and 62:

[24] In British Columbia v. Canadian Forest Products Ltd., 2004 SCC 38, [2004]

2 S.C.R. 74, at para. 176, this Court explained that “[l]osses that could reasonably

have been avoided are, in effect, caused by the plaintiff’s inaction, rather than the

defendant’s wrong.” As a general rule, a plaintiff will not be able to recover for

those losses which he could have avoided by taking reasonable steps. Where it is

alleged that the plaintiff has failed to mitigate, the burden of proof is on the

defendant, who needs to prove both that the plaintiff has failed to make

reasonable efforts to mitigate and that mitigation was possible (Red Deer College

v. Michaels, 1975 CanLII 15 (SCC), [1976] 2 S.C.R. 324; Asamera; Evans v.

Teamsters Local Union No. 31, 2008 SCC 20, [2008] 1 S.C.R. 661, at para. 30).

***

[27] Southcott sought specific performance and was therefore ready to complete

the purchase. In any event, its alternative claim for consequential damages was

predicated upon its access to capital to complete the agreement of purchase and

sale. As such, both claims were premised upon resources, resources that were not

tied up as a result of the breach alleged. Indeed, the alleged breach in this case

did not affect Southcott’s ability to obtain capital. Southcott can hardly argue that

the same money would not have been available for mitigation.

***

Page 81

[30] The trial judge found that the purchases of development land by other

corporations within the Ballantry Group did not in fact mitigate Southcott’s loss;

that finding is not challenged here. As noted above, he found that the other

properties purchased by other members of the Ballantry group were “collateral” in

the sense that the purchases would have occurred whether or not the defendant

had breached its contract with Southcott (para. 143). However, because Southcott

is a separate legal entity, purchases by other Ballantry corporations of other

comparable property did not make those properties “unavailable” for mitigation.

As a separate legal entity, Southcott was required to mitigate by making diligent

efforts to find a substitute property. Those who choose the benefits of

incorporation must bear the corresponding burdens: Kosmopoulos v. Constitution

Insurance Co., 1987 CanLII 75 (SCC), [1987] 1 S.C.R. 2, at pp. 10-12. Southcott

is entitled to the benefits of limited liability, but it is also saddled with the

responsibilities that all legal entities have. The requirement to take steps to

mitigate losses is one such responsibility. A plaintiff cannot recover losses that

could reasonably have been avoided. The overriding issue here is whether

Southcott’s inaction was reasonable, and if not, whether it could have reasonably

mitigated if it had tried to do so.

***

[37] Asamera set out the general principles governing mitigation: was the

plaintiff’s inaction reasonable in the circumstances, and could the plaintiff have

mitigated if it chose to do so. Those principles apply to a plaintiff seeking

specific performance. If the plaintiff has a “substantial justification” or a

“substantial and legitimate interest” in specific performance, its refusal to

purchase other property may be reasonable, depending upon the circumstances of

the case.

***

[40] I agree with the courts below that this is not a case where the plaintiff could

reasonably refuse to mitigate. The trial judge made clear findings that the land

was nothing more unique to Southcott than a singularly good investment and that

this was not a case in which damages were too speculative or uncertain to be a

satisfactory remedy. The unique qualities related solely to the profitability of the

development for which damages were an adequate remedy (paras. 126 and 128).

The calculation of profits was not conjectural or speculative as the proposed

development was not complex, and the only disagreement between the parties

regarding the quantum of damages related to the timing and rate of sale of

completed units (paras. 130 and 132).

[41] A plaintiff deprived of an investment property does not have a “fair, real,

and substantial justification” or a “substantial and legitimate” interest in specific

performance (Asamera, at pp. 668-69) unless he can show that money is not a

complete remedy because the land has “a peculiar and special value” to him

(Semelhago, at para. 21, citing Adderley, at p. 240). Southcott could not make

such a claim. It was engaged in a commercial transaction for the purpose of

Page 82

making a profit. The property’s particular qualities were only of value due to

their ability to further profitability. Southcott cannot therefore justify its inaction.

***

[55] The trial judge did not go on to consider, however, whether these

transactions established that those same properties were evidence of “available”

comparable mitigation opportunities in the market. Because Southcott is a

separate legal entity, purchases by other Ballantry corporations of other

comparable property did not make those properties “unavailable” for mitigation.

In effect, the trial judge ignored the separate legal personalities of Southcott and

the other corporations in the Ballantry Group by failing to consider those

purchases as evidence of the existence of mitigation opportunities.

***

[57] The defence raised by Southcott, which was accepted by the trial judge, was

that the purchases by Ballantry Group of development lands in the GTA were

purchases which would have been made in any event, regardless of whether

Southcott purchased the Board’s property. However, it is no answer to say that

other companies in the same corporate group would have purchased the other

available lands in any event. It was clear from the testimony of the president of

Southcott and co-owner of Ballantry that the Ballantry Group was always

purchasing promising development land and that the different companies were

simply used as different vehicles to invest.

***

[62] In these circumstances, the Court of Appeal was entitled to look at the

record and conclude that the trial judge’s findings regarding mitigation were not

available to him on the evidence. The evidence of the Ballantry purchases, in the

context of Southcott’s refusal to mitigate, established that there were

opportunities to mitigate by purchasing other development land in the GTA.

Failure to mitigate reduces damages. The Court of Appeal concluded that, based

upon the investment properties purchased by Ballantry, and in the absence of

evidence to the contrary, the Board discharged the burden of showing that other

investment properties were available in the relevant time period to mitigate the

losses and that the trial judge’s finding that there were no comparable properties

was not open to him on the evidence. I agree.

[223]

The Defendant referred to the 2020 case of Akelius Canada Inc. v. 2436196 Ontario

Inc., 2020 ONSC 6182. In Akelius, Justice Morgan determined a summary judgment motion

relating to a lost profit claim made by a subsidiary corporation of an international investment

group arising from a commercial real estate transaction in which it was the purchaser. The

money earmarked for the purchase was returned to the corporate group and the purchaser did not

Page 83

provide any evidence as to what investments were made with that money. Justice Morgan, in

Akelius, reasoned at in paras. 40-48 as follows:

[40] The Plaintiff’s expert’s focus on the Toronto, or even the broader Canadian

market is itself questionable. Given the international nature of the Plaintiff’s

business, there is nothing special about Toronto or Canada. The Plaintiff’s

evidence is that it owns 45,000 residential units in at least a dozen cities over two

continents. For its business model, it has no particular attachment to any one

locale or type of building. Its press releases declare that it bought 2,339 units

worldwide in 2016 and 2,247 units in 2017. During that same time period, a total

of 3,061 units sold overall in Toronto and 3,474 units in Montreal in 2016, and

3,544 in Toronto and 5,544 in Montreal in 2017. The seven buildings included in

the APS were composed of 1,127 units.

[41] Accordingly, the Plaintiff, operating worldwide, in each of 2016 and 2017,

bought double the amount of apartment units as were in its deal with the

Defendants. The attraction of those buildings or units to the Plaintiff was that all

they fit the Plaintiff’s economic formula for return on investment; like all of the

Plaintiff’s holdings, they were fungible units, purchased not because of their

location or architectural beauty but because they fit the Plaintiff’s numerical

analysis for income-generation. The Plaintiff has provided no evidence as to

whether the units that they bought in the year or two subsequent to January 2016

were or were not substitutes for the units in the Defendants’ buildings. That said,

the Supreme Court of Canada has noted that “subsequent purchases were

evidence that other development properties were reasonably available”: Southcott,

at para 48.

[42] In this kind of business, where investment units are entirely fungible, it is

enough for the Defendants to show that the Plaintiff did, in fact, make

investments that appear to have replaced the properties in the failed transaction at

issue here. The Plaintiff does not publicize further details of its purchases, and so

more than the overall data about the Plaintiff’s purchases is difficult for the

Defendant to come by. In discovery, the Defendants asked the Plaintiff for the

relevant information regarding all buildings which it acquired subsequent to

January 2016, but this request was refused. It was the Plaintiff’s stated position

that this request was “burdensome and irrelevant to the motion”. It was also the

Plaintiff’s view that it did not have to produce information held by its parent

company. That position, however, elevates form over content in a way that is

contrary to the real manner in which the Plaintiff and its multinational corporate

group operate.

[43] I can see how the Defendant’s request for financial information spanning

numerous jurisdictions may well have been burdensome to the Plaintiff. But with

respect, this burden was not disproportionate to the approximately $50,000,000

that the Plaintiff has claimed for lost opportunity. As for its relevancy, this request

strikes me as directly relevant to the quantification of the Plaintiff’s damages.

Page 84

[44] Counsel for the Plaintiff argues that what was special about the Toronto

properties is the unexpected capital appreciation experienced in the Toronto real

estate market during the relevant years. The Plaintiff further contends that one

cannot replicate the capital appreciation achieved in Toronto by buying a building

in Boston or Stockholm or Zurich. That argument is an interesting one, and may

or may not be true. It is obvious, however, that without some expert evidence on

point, the argument means very little. Sitting in motions court, I cannot simply

take judicial notice of the rising Toronto real estate market and the flat Zurich

market, or vice versa.

[45] The Plaintiff’s refusal to produce its own corporate group’s records has left

the Defendant with an impossible task. In Southcott, the Supreme Court

considered a similar lack of transparency by the claimant, and found that the court

of first instance had come up short by failing to consider the implications of the

claimant’s non-production for the damages claim. In Justice Karakatsanis’ words,

at para 53: “[T]he trial judge also failed to consider that an adverse inference

against Southcott could be drawn from the fact that it led no evidence about the

profitability of the alternative development opportunities.”

[46] I will take a lesson from the Southcott case and will draw an adverse

inference from the fact that the Plaintiff has refused to produce the relevant details

of its post-January 2016 property acquisitions, and has failed to assist the court in

establishing the use to which the $240,00,000 saved on the transaction with the

Defendants has been put. The funds were admittedly used in other property

investments, and the Plaintiff has uniform financial parameters in which it

operates worldwide in seeking out new investments. I will therefore infer that the

Plaintiff’s records would show that its purchases in 2016 and forward for a year or

two were quite comparable to the buildings or units contained in the aborted APS.

[47] Furthermore, all of the Plaintiff’s property investments are, like the ones

under the APS, located in sophisticated financial centres in Europe and North

America. I will therefore infer that the potential for capital appreciation of its

post-January 2016 investments was, if not identical to Toronto (since every

market has its idiosyncratic features), at least comparable and in a similar range.

[48] The Defendants have established that the Plaintiff has either failed to

mitigate its loss or, perhaps more likely, has mitigated its loss in its entirety.

Either way one looks at it, the Plaintiff lost the opportunity to buy one set of

investment units, thereby freeing up the funds to buy another set of investment

units. With multiple real estate markets at its disposal, the Plaintiff could deploy

the funds from the aborted deal with the Defendants in keeping with its own strict

financial parameters and in the market or markets of its choosing. The Plaintiff

therefore suffered no capital loss or loss of opportunity for capital gains.

Page 85

iii) How are damages to be calculated?

[224]

The Plaintiff initially sought specific performance. On January 17, 2019, Rosseau

elected to proceed with damages.

[225]

The normal measure of damages for failure to complete a purchase of land is the

difference between the contract price and the market value of the land which is intended to

represent the lost benefit of the bargain to the vendor. This is set out at para. 12 of Marshall v.

Meirik, 2019 ONSC 6215, quoting DHMK Properties Inc. v. 2296608 Ontario Inc., 2017 ONSC

2432, rev’d on other grounds in 2017 ONCA 996:

[12] The parties agree on the basic legal principles to be applied to assess the

plaintiffs’ damages in the case of an aborted real estate transaction such as this. I

have summarized them as follows:

a.

The normal measure of damages for failure to complete a

purchase of land is the difference between the contract price and

the market value of the land – which is intended to represent the

lost benefit of the bargain to the vendor. See DHMK Properties

Inc. v. 2296608 Ontario Inc., 2017 ONSC 2432, 279 A.C.W.S.

(3d) 296, at para. 49; rev’d on grounds other than as are relied

upon herein, at 2017 ONCA 961.

b.

The basic premise is that the normal measure of damages for

breach of contract is the loss of the bargain which is intended to

put the plaintiffs in the position they would have been had the APS

been performed. See 100 Main Street Ltd. v. W.B. Sullivan

Construction Ltd. (1978), 1978 CanLII 1630 (ON CA), 88 D.L.R.

(3d) 1 (Ont. C.A.), at para. 55.^[1]

c.

These damages are typically measured by the difference

between the original contract price and the market value on the

assessment date, the latter of which may vary depending on the

circumstances of the case (see 100 Main Street at para. 55). In that

case, Morden J.A. canvassed some of the variables that might

affect the assessment date and the damages assessment, including:

i.

If there is a contractual time fixed for

conveyance (the “intended closing date”), the

market value may be determined on that date (para.

54);

ii. If there has been an accepted anticipatory

repudiation, the proper date for taking the market

value should still be the intended closing date,

Page 86

subject to the vendor’s duty to mitigate following

acceptance of repudiation (para. 55);

iii. If there is no date fixed, the market value may

be determined on the date of the repudiation of the

contract (para. 55);

iv. The price achieved on a subsequent mitigating

sale may be good evidence of the market value on

the intended closing date, but it is not determinative

if there is a suggestion that the re-sale price differed

from the relevant market price (para. 65); and

v. While the onus is on the defendants with respect

to the issue of mitigation (to show that, had the

plaintiffs taken certain reasonable steps, the

damages would be lower) that does not relieve the

plaintiffs from proving the elements of the damages

claim – the plaintiffs still must present their case

and adduce evidence of the contract price and of the

market value or re-sale price relied upon to establish

the loss of bargain. (para. 78).

d.

The Court of Appeal, in its reasons reversing the decision at

first instance in DHMK on other grounds (at 2017 ONCA 961, at

para. 15), affirmed that, while the typical approach to the

assessment of damages is based on the market value on the

intended closing date under the original contract, there is a general

discretion in the court to depart from that if the circumstances

warrant it.

e.

Generally, the market value assessment will require expert

(appraisal) evidence. See DHMK at para. 56.

f. The principles relating to mitigation and how it impacts the

assessment of damages are reproduced by Edwards J. in Gamoff v.

Hu, 2018 ONSC 2172, 290 A.C.W.S. (3d) 882, at para. 38,

referring to the decision of Perell J. in DHMK, at paras. 52-55.

Paraphrasing from those decisions, some further relevant

considerations are:

i.

The date of assessment is determined by what is

fair in the circumstances of each case;

ii. If the guilty party can show that the innocent

party unreasonably missed an opportunity to reduce

damages (e.g., if the innocent party ought to have

mitigated before the intended closing date) then the

date for the assessment of damages will be adjusted;

Page 87

iii. Conversely, the innocent party may show that it

is not appropriate to use the intended closing date for

the assessment of damages, and a later date should be

selected because he or she should be allowed a

reasonable opportunity to mitigate;

iv. The date of assessment is variable. The essential

object of the court’s inquiry is always to determine

the plaintiff’s true loss having regard to the legal

policy that avoidable losses are not recoverable.

g.

The innocent parties need only act reasonably

(not perfectly), using what they knew then, without

hindsight, and need not do anything risky. Mitigation

is a doctrine of fairness and common sense that seeks

to do justice between the parties in the particular

circumstances of the case. See DHMK, at para. 73.

[226]

This is also set out at paras. 22, 23, and 27 of Akelius:

[22] What the parties do not agree on is what to make of this information. First,

in assessing damages, the basic principle is that damages should put the injured

party as nearly as possible in the position it would have been in had the contract

not been breached. In the ordinary case of an aborted purchase and sale of real

estate, this principle is put into effect by assessing damages at the date that had

been set for closing: 100 Main Street Ltd. v. W.B. Sullivan Construction Ltd.

(1978), 1978 CanLII 1630 (ON CA), 20 OR (2d) 401 (Ont CA). There is,

however, flexibility in this approach. As Laskin JA observed in 6472047 Ontario

Ltd. v. Fleischer (2001) 2001 CanLII 8623 (ON CA), 56 OR (3d) 417, at para 42

(Ont CA), “The date for the assessment of damages is determined by what is fair

on the facts of each case.”

[23] Most typically, “the ‘normal measure’ [of damages] is the difference

between the contract price and the market price”: 100 Main Street, at para 69. In

approaching this assessment, however, the court can take into account the nature

of the property and the nature of the market: Greenberg & Greenberg v. Shanghai

Real Estate Limited, 2010 BCSC 1837, at paras 28. Thus, “[t]he price achieved on

a subsequent mitigating sale may be good evidence of the market value on the

intended closing date, but it is not determinative if there is a suggestion that the

re-sale price differed from the relevant market price” Marshall v. Meirik, 2019

ONSC 6215, at para 12.

***

[27] Interestingly, the Plaintiff has been clear that it is not in the business of

flipping apartment buildings and had no intention of re-selling the properties in

issue here for a quick capital gain. It is in the apartment investment and rental

business, and looks to purchase income-producing properties for long-term holds.

Page 88

Its evidence is that it typically seeks a 7% income return on its investments, but

that for the properties in issue it was willing to achieve a 6.55% return for a long-

term hold. Plaintiff’s counsel has explained that the Plaintiff is now seeking

compensation for lost capital gains only, and not for lost income. The Plaintiff has

framed its motion for judgment in this way due to the convenience of the

Defendants having subsequently sold the properties and thereby crystallizing the

amount of capital gain that the Plaintiff would have enjoyed.

[227]

In DHMK Properties (trial level), at paras. 47–58, Justice Perell summarized the

measure of damages for an abortive real estate transaction:

[47] When a contract for the sale of land fails to close because of the default of

one of the parties, the other party’s expectations will have been disappointed. In

contract law, an award of damages addresses the disappointment in expectations

and compensates by using money to put the innocent party in the same economic

position in which he or she would have been had the contract been performed:

Bank of America Canada v. Mutual Trust Co., 2002 SCC 43 at para. 26; Dasham

Carriers Inc. v. Gerlach, 2013 ONCA 707 at para. 29; Baud Corp., N.V. v. Brook,

1978 CanLII 16 (SCC), [1979] 1 S.C.R. 633 at para. 18.

[48] This goal for damages for breach of contract is refined and qualified by

requirements that, to be recoverable: (1) the damages must be reasonably

foreseeable (the remoteness principle): Hadley v. Baxendale (1854), 9 Exch. 341,

156 E.R. 145; Victoria Laundry (Windsor) Ltd. v. Newman Industries Ltd., [1949]

1 All E.R. 997 (C.A.); Koufos v. C. Czarnikow Ltd. (The Heron II), [1967] 3 All

E.R. 686 (H.L.); (2) they must be unavoidable in the sense that the innocent party

is treated as if it had an obligation to take reasonable steps to avoid loss; that is, to

mitigate: Wertheim v. Chicoutimi Pulp Co., [1991] A.C. 301 (P.C.); Robinson v.

Harrison v. Harman (1848), 1 Exch. 850; Southcott Estates Inc. v. Toronto

Catholic District School Board, 2012 SCC 51, affg. 2010 ONCA 310, revg.

[2010] O.J. No. 1772 (S.C.J.); British Columbia v. Canadian Forest Products

Ltd., 2004 SCC 38 at para. 176; Red Deer College v. Michaels, [1976] 2 S.C.R.

32; and (3) the damages must be proved with some certainty: Penvidic Contr. Co.

v. Int. Nickel Co. of Canada (1975), 1975 CanLII 6 (SCC), 53 D.L.R. (3d) 748

(S.C.C.); T.T.C. v. Aqua Taxi Ltd., (1957), 1956 CanLII 443 (ON SC), 6 D.L.R.

721 (Ont. H.C.J.); Haauk v. Martin, 1927 CanLII 57 (SCC), [1927] S.C.R. 413;

Chaplin v. Hicks [1911] 2 K.B. 786 (K.B.).

[49] The normal measure of damages at common law for the failure to complete

a purchase of land is the difference between the contract price and the market

value of the land. That difference is the benefit of the bargain to the vendor.

[50] In 100 Main Street Ltd. v. W.B. Sullivan Construction (1978), 1978 CanLII

1630 (ON CA), 20 O.R. (2d) 401 (C.A.), the leading case in Ontario about the

calculation of a vendor’s claim for damages, Justice Morden stated that, subject to

Page 89

the duty of the vendor to mitigate, the proper date for taking the market value

should be the time fixed for closing. Justice Morden stated at pp. 415-16:

Accepting that the basic principle of damages is that the plaintiff

should be put in the position it would have been if the contract had

been performed, it appears to me that even in the case of an

anticipatory repudiation, the proper date for taking the market

value should be as of the time fixed by the contract for completion,

subject to the duty of the vendor to mitigate following acceptance

of the repudiation. The approach which I adopt is set forth in the

earlier part of [McGregor on Damages], supra, at p. 149:

Where a party to a contract repudiates it, the other party has an

option to accept or not to accept the repudiation. If he does not

accept it, there is still no breach of contract, and the contract

subsists for the benefit of both parties and no need to mitigate

arises. On the other hand, if the repudiation is accepted this results

in an anticipatory breach of contract in respect of which suit can be

brought at once for damages, and, although the measure of

damages is still prima facie assessed as from the date when the

defendant ought to have performed the contract, this amount is

subject to being cut down if the plaintiff fails to mitigate after his

acceptance of the repudiation.

See also 642947 Ontario Ltd. v. Fleischer (2002), 2001 CanLII

8623 (ON CA), 56 O.R. (3d) 417 (C.A.).

[51] In most abortive real estate transactions, the breach takes place on or about

the closing date, and if the innocent party treats the breach as ending the contract,

that is, accepts the repudiation, the damages, if any, will be assessed as about that

date. It was Justice Morden’s view that if there was an anticipatory breach, that is,

a repudiation before closing, and the anticipatory breach is treated as ending the

contract, then the date set for closing is still used as the date to measure damages

but subject to the principle of mitigation. In 100 Main Street Ltd., Justice Morden

explained that unless the date of assessment was adjusted to accommodate the

effort to mitigate, the assessment of the damages would not correspond with the

goal of an award of damages. He stated at p. 420:

If the law casts a burden upon a plaintiff to take reasonable steps to

mitigate his loss, because he is not entitled to recover for avoidable

loss, it would appear to be inconsistent with this to calculate his

damages “as of” a date upon which, because of the nature of the

property and the market therefor, he could not reasonably be

expected to have effected a mitigating resale. In a case of a falling

market where the plaintiff has taken reasonable steps to avoid his

loss such an approach would fail to cover his loss.

[52] In 642947 Ontario Ltd. v. Fleischer, supra, the Court of Appeal stated that

the date of assessment is determined by what is fair in the circumstances of each

Page 90

case. The Court also stated that where the vendor retains the property to speculate

on the market, damages will be assessed at the date of closing.

[53] The selection of the date of assessment is subject to adjustment because of

the duty to mitigate. If the guilty party can show that the innocent party

unreasonably missed an opportunity to reduce damages, that is, that the innocent

party ought to have mitigated before the closing date, then the date for the

assessment for damages will be adjusted. Conversely, the innocent party may

show that it is not appropriate to use the closing date for the assessment of

damages, and a later date should be selected because he or she should be allowed

a reasonable opportunity to mitigate.

[54] The date of assessment is a variable. Justice Morden stated that the principle

relating to the plaintiff’s duty to take reasonable steps to mitigate its loss is itself a

factor in determining the measure of its loss; the essential object of the court’s

inquiry is always to determine the plaintiff’s true loss having regard to the legal

policy that avoidable losses are not recoverable.

[55] It is worth noting that there is, in fact, no positive duty or obligation to

mitigate, apart from the duty of self-interest; rather, it is a principle of the

calculation of damages that the innocent party is denied recovery for avoidable

loss. A person mitigates for the sensible reason that he or she would not otherwise

recover for the growing losses because, for the purposes of calculating

compensatory damages, the innocent party is treated as if he or she mitigated.

Talisman Homes Ltd. v. Endicott (2002), 2 R.P.R. (4th) 109 (Alta. Q.B.) is an

example where damages were reduced because of the vendor’s failure to mitigate.

[56] In 100 Main Street Ltd. v. W.B. Sullivan Construction, supra, in his reasons,

in addition to outlining the general principles, Justice Morden noted that the onus

is on the defendant to prove a failure to mitigate but that this onus did not relieve

the plaintiff from proving the elements of the damages claim. The proper course

was for the plaintiff to adduce evidence of the contract price and of the market

value or resale price relied upon to establish the loss of value. Generally, this will

require expert evidence; that is, appraisal evidence. The price of any resale, if it

occurred after the date of assessment, could be resorted to only as evidence of the

market value on the relevant assessment date. Justice Morden stated at p. 423:

As I have said, with respect to the issue of mitigation, the onus is

on the defendant. However, the onus on the defendant to prove

failure to mitigate does not relieve the plaintiff from proving an

obvious element in the calculation of his damages. McGregor on

Damages, supra, in para. 212, p. 149, puts the matter this way:

The onus of proof on the issue of mitigation is on the defendant. If

he fails to show that the plaintiff ought reasonably to have taken

certain mitigating steps, then the normal measure will apply.

[57] In the case at bar, the Mund Group misconceives the formula for the

measure of damages and conflates, more than once, the general principles. One

Page 91

error is that the Mund Group equates the contract price with the value of the land.

It submits that the value of the property must be determined having regard to the

specific bargain reached by the parties and that the fair market value of the land is

determined by the parties’ particular bargain. This is just wrong.

[58] The fair market value is what the land is worth in the competitive

marketplace, not what the immediate parties believe or hope that the land is

worth. The fair market value of the land is objective not subjective. The fair

market value of land is its exchange value; i.e., what a willing buyer would pay

for the land in the open market and is based upon what a seller and buyer, each

knowledgeable and willing, would pay and would accept as payment respectively

for the land on the open market: Revenue Properties Co. v. Victoria University,

1993 CanLII 9432 (ON SCDC), [1993] O.J. No. 843 (Div. Ct.); Musqueam Indian

Band v. Glass, 2000 SCC 52 at para. 9.

[228]

The Defendant submits that a date on which damages are assessed is required. The law

in this regard is set out in paras. 43-51 of Rougemount Capital Inc. v. Computer Associates

International Inc., 2016 ONCA 847, as follows:

[43]

The appellant submits that the trial judge erred in following the approach

offered by Rougemount’s expert, thereby rejecting the date of the breach and

using the date at the end of the Business Plan as the date for the assessment of

damages. We agree.

[44]

It is well established that the general measure of damages for breach of

contract is the amount of damages that will, so far as money can, place the

aggrieved party in the same position as if the wrong had not been done: Ticketnet

Corp. v. Air Canada (1997), 1997 CanLII 1471 (ON CA), 154 D.L.R. (4th) 271

(Ont. C.A.), at para. 97. The focus is on the injured party’s loss and on the

measure of compensation required to restore it to the position that it would have

been in had the contract been performed: 642947 Ontario Ltd. v. Fleischer

(2001), 2001 CanLII 8623 (ON CA), 56 O.R. (3d) 417 (C.A.) , at para. 41;

Kinbauri Gold Corp. v. Iamgold International African Mining Gold Corp. (2004),

2004 CanLII 36051 (ON CA), 246 D.L.R. (4th) 595 (Ont. C.A.), at para. 53.

[45]

With respect to the appropriate date for the assessment of damages, the

presumption is that damages, including those for loss of a business or opportunity,

should generally be assessed as of the date of breach: Johnson v. Agnew, [1980]

A.C. 367 (H.L.), at pp. 400-401.

[46]

The trial judge correctly noted that the presumptive rule for assessing

damages is that damages for breach of contract are to be quantified at the time of

breach. However, she accepted Rougemount’s submission that she could choose a

date other than the date of the breach if an assessment as of that date would not

fairly reflect Sixdion’s actual loss.

Page 92

[47]

The trial judge found that an assessment of damages at the date of breach

would not fairly reflect Sixdion’s actual loss or put it in the position it would have

been in but for CA’s breach. She concluded that had the contract been honoured,

Sixdion’s earnings from the contract would have started shortly after July 30,

2004 and continued until at least January 31, 2010. As a result, she found that it

would be unfair to assess damages as of the date of breach in 2004 and to fail to

reflect the benefits Sixdion would have derived after 2004 from the CA contract.

Instead, she assessed damages as of the end of the Business Plan, on January 31,

2010.

[48]

The trial judge appears to have based her conclusion largely on the

opinion of Rougemount’s expert, which she modified. Mr. Pittman did not assess

Sixdion’s damages as of the date of breach in 2004. Rather, he valued Sixdion as

it would have been in 2012 or 2014. In response to the trial judge’s question as to

why he did not choose the date of breach, Mr. Pittman testified that it would not

have properly reflected the “upside” of executing the Business Plan. Specifically,

he opined that the discounted valuation at the date of breach was not appropriate

because it would apply all of the weight to the early years when there were losses

anticipated and very little weight to the latter years when all of the upside of the

Business Plan would be realized. As a result, he felt it did not fairly reflect the

true damages sustained by Sixdion.

[49]

Rougemount submits that the presumptive rule that damages are assessed

at the date of breach can be displaced where fairness requires it: Kinbauri, at

paras. 66-68. Moreover, Rougemount submits that the trial judge’s determination

that fairness required damages to be assessed at a later date in this case was an

exercise of her discretion, based on the all of the circumstances, which should not

be disturbed on appeal.

[50]

We agree that the general presumption that damages will be assessed as of

the date of breach may be subject to exceptions where fairness requires it.

However, this presumption should not be easily displaced; any deviation from it

must be based on legal principle. As the British Columbia Court of Appeal

recently noted in Dosanjh v. Liang, 2015 BCCA 18, 380 D.L.R. (4th) 137, at para.

55:

[T]he presumption that contract damages are to be assessed as of

the date of the breach is not so easily displaced. It is important that

the law in this area be predictable, and such predictability is not

served by allowing judges unbounded discretion as to the date for

assessment of damages.

[51]

The rationale for this general presumption was articulated by Laskin J.A.,

concurring in Kinbauri, at para. 125:

As Cronk J.A. points out, damages for breach of contract are

generally assessed at the date of breach. An early crystallization of

the plaintiff’s damages promotes efficient behaviour: the litigants

become as free as possible to conduct their affairs as they see fit.

Page 93

Early crystallization also avoids speculation: the plaintiff is

precluded from speculating at the defendant’s expense by reaping

the benefits of an increase in the value of the goods in question

without bearing any risk of loss.

[229]

Rosseau is not seeking the “normal measure” of damages. Rosseau is seeking the type

of damages as is described in WED Investments Limited v. Showcase Woodycrest Inc., 2021

ONSC 237, at paras. 94 – 97; namely, the lost profits that it claims it would have earned if it had

acquired the property and developed it:

[94] The first approach seeks the lost profits the plaintiff says it would have

earned if it had acquired the properties and developed them, as was its intention

when it signed the Agreements in 2016.

[95] The plaintiff’s second approach considers the increase in value of the

properties as undeveloped land calculated on expected closing dates in July 2018.

This approach is common in real estate litigation, in part because it involves a

relatively straightforward method of determining the value of the loss of the

bargain in order to put the plaintiff in the position it would have been in if the

agreement of purchase and sale had been performed. See, e.g., Marshall v. Meirik,

2019 ONSC 6215, at para. 12.

[96] The defendants did not take issue with the appropriateness of the plaintiff

taking these two approaches to damages, although they challenge the outcomes.

[97] In my view the plaintiff is entitled to advance each approach. When the

Agreements were negotiated, the parties specifically contemplated that the

plaintiff was acquiring the properties in order to construct and sell residential

units at a profit and therefore, subject to proving such damages, it is entitled to

seek its lost profit arising from the defendants’ wrongful breaches. As the

Supreme Court of Canada stated in Performance Industries Ltd. v. Sylvan Lake

Golf & Tennis Club Ltd., 2002 SCC 19, [2002] 1 S.C.R. 678, at paras. 72-73, in

rejecting the argument that compensatory damages should not include the

“reasonably expected profit” from a 58-lot housing development:

…the parties specifically contemplated…that the optioned land

would be put to the use of residential housing. Damages for breach

of the contract, as rectified, therefore must include losses flowing

from the special circumstances known to the parties at the time

they made their contract: [citations omitted] In New Horizon

Investments Ltd. v. Montroyal Estates Ltd. (1982), 26 R.P.R. 268

(B.C. S.C.), Nemetz C.J.B.C. observed, at pp. 272-273:

[T]he plaintiff's damages should be assessed by reference to the

profits which both parties contemplated the plaintiff would make

but for the breach. It is not necessary that this contemplation

include a precise pre-estimate or calculation of these losses, only a

Page 94

" . . . contemplation of circumstances which embrace the head or

type of damage in question".

[230]

As set out in WED, while the normal approach to damages is based on market value on

the intended closing date under the contract, there is a general discretion in the court to depart

from that if the circumstance warrant. The court may award compensatory damages.

[231]

As set out at paras 72 - 73 of Performance Industries Ltd., damages for breach of

contract may include losses flowing from the special circumstances known to the parties at the

time they made the contract; including the lost profits that were anticipated to be earned by the

Plaintiff:

72 The trial judge awarded $620,100 in compensatory damages representing the

loss of profit on a fully built residential development on the 18th fairway. The

appellants argue that damages should be limited to the difference between the

market value of the land and the option price of $400,000. They say

compensatory damages should not include the “reasonably expected profit” from

a 58-lot housing development.

73 The finding of fact is, however, that the parties specifically contemplated

(even on O’Connor’s evidence) that the optioned land would be put to the use of

residential housing. Damages for breach of the contract, as rectified, therefore

must include losses flowing from the special circumstances known to the parties

at the time they made their contract: Brown & Root Ltd. v. Chimo Shipping Ltd.,

1967 CanLII 47 (SCC), [1967] S.C.R. 642, at p. 648; General Securities Ltd. v.

Don Ingram Ltd., 1940 CanLII 28 (SCC), [1940] S.C.R. 670; Burrard Drydock

Co. v. Canadian Union Line Ltd., 1954 CanLII 39 (SCC), [1954] S.C.R. 307;

Corbin v. Thompson (1907), 1907 CanLII 64 (SCC), 39 S.C.R. 575; Asamera Oil

Corp. v. Sea Oil & General Corp., 1978 CanLII 16 (SCC), [1979] 1 S.C.R. 633,

at p. 655. In New Horizon Investments Ltd. v. Montroyal Estates Ltd. (1982), 26

R.P.R. 268 (B.C.S.C.), Nemetz C.J.B.C. observed, at pp. 272-73:

[T]he plaintiff’s damages should be assessed by reference to the

profits which both parties contemplated the plaintiff would make

but for the breach. It is not necessary that this contemplation

include a precise pre-estimate or calculation of these losses, only a

“. . . contemplation of circumstances which embrace the head or

type of damage in question”.

[232]

In Sylvan Lake Golf, the trial judge, later affirmed by the Supreme Court of Canada in

Performance Industries Ltd., awarded damages for the lost profits on a failed development of

residences along a fairway of a golf course.

Page 95

[233]

At para. 94 of the trial decision in Sylvan Lake Golf the trial judge accepted evidence of

a reasonably expected profit: