COURT OF APPEAL FOR ONTARIO

CITATION: First National Financial GP
    Corporation v. Golden Dragon HO 10 Inc., 2019 ONCA 873

DATE: 20191105

DOCKET: M50969 (C67612)

Fairburn J.A. (Motion Judge)

BETWEEN

First National Financial GP Corporation

Applicant (Respondent)

and

Golden Dragon HO 10 Inc. and
    Golden Dragon HO 11 Inc.

Respondents (Appellants/Responding Parties)

David Preger and David Seifer, for the moving
    party, the receiver Deloitte Restructuring

Ian Matthews, for the Ministry of
    Municipal Affairs & Housing

Chad Kopach, for First National
    Financial GP Corporation

Karen Perron, for Royal United
    Investments

Martin Diegel, for the responding
    parties

Heard: November 4, 2019

REASONS FOR DECISION

A.

Overview

[1]

This motion for declaratory relief was heard
    yesterday. I granted that relief with written reasons to follow. These are my
    reasons.

[2]

On September 22, 2017, Deloitte Restructuring
    Inc. was appointed as an interim receiver under s. 47 of the
Bankruptcy and
    Insolvency Act,
R.S.C., 1985, c. B-3
.
The order related to
a
    two-building apartment complex at 345 and 347 Barber Street, Ottawa. Of the 110
    units in the buildings, 30 units are used for affordable housing pursuant to
    agreements with the City of Ottawa and the Ontario Ministry of Municipal
    Affairs and Housing.

[3]

Those properties are the subject of five
    mortgages extended by three mortgagees: (1) First National Financial GP
    Corporation (three mortgages); (2) Liahona Mortgage Investment Corp; and (3)
    the City of Ottawa and Ministry of Municipal Affairs and Housing. The total value
    of the mortgages exceeds $15,000,000.

[4]

The receivers powers were expanded on May 21,
    2019. At that time, the motion judge issued a receiver and manager order which
    included an approved marketing and sale process for the properties. The
    receiver was authorized pursuant to that order to enter into a listing
    agreement for the properties. That process was followed and, ultimately, an agreement
    of purchase and sale (APS) was entered into on August 27, 2019. The purchase
    was conditional on only one matter. That condition was waived on September 26,
    2019.

[5]

The APS requires that an approval and vesting
    order be granted within 21 days of the purchasers waiver and that the transaction
    close within 10 days following the issuance of that order. It further provides
    that the receiver may postpone the closing date for up to 60 days after the
    original closing date.

[6]

The appellants, who are the debtors in this
    case, opposed the issuance of the approval and vesting order on the basis that the
    purchase price under the APS does not represent fair market value. In support
    of that claim, the debtors pointed to another higher offer. However, they admit
    that the higher offer was late, having been delivered to the receiver on
    September 19, 2019. Indeed, the late offer was provided after:

(i)

the call for offers had closed on July 30, 2019,

(ii)

the qualified offers had been identified and the
    offerors had been invited to resubmit their offers with improved terms by August
    7, 2019,

(iii)

the qualified offerors had complied with the
    August 7, 2019 deadline,

(iv)

the best offer had been identified, and

(v)

the APS had been signed by the purchaser and
    receiver on August 27, 2019.

[7]

After the purchaser waived the sole condition
    upon which the APS rested and delivered written directions to the receiver,
    directing that title to the properties be placed in the names of certain designees
    upon closing, the late offer was replaced by an amended late offer. The
    amended late offer was delivered to the receiver on October 4, 2019, which was the
    day after the original return date for the receivers motion for the approval
    and vesting order.

[8]

The receiver did not consider either of the late
    offers to be credible ones. I will later explain why I agree with that
    position.

[9]

The motion judge granted the approval and
    vesting order on the same day that the motion was heard, October 11, 2019, with
    written reasons following just over a week later.

[10]

The debtors have filed a notice of appeal
    seeking to set aside the approval and vesting order. They signaled their
    intention to do so on October 17, 2019, right after the receiver informed them
    that the closing date was being moved to October 18, 2019. The closing date was
    moved to accommodate a religious holiday that conflicted with the original
    closing date.

[11]

A new closing date was then chosen to
    accommodate having this motion heard. I was informed during oral submissions
    that the new closing date is November 6, 2019. Accordingly, there is urgency around
    deciding this matter.

[12]

The receiver seeks directions to ensure that the
    closing proceeds on schedule. The receiver seeks the following relief:

(i)

a declaration that the appeal from the approval
    and vesting order dated October 11, 2019 is governed by the
BIA
;

(ii)

a declaration that the appellants do not have an
    automatic right of appeal under ss. 193(a) to (d) of the
BIA

(meaning
    that they must seek leave to appeal pursuant to s. 193(e) of the
BIA
);
    and

(iii)

a declaration that the approval and vesting
    order is not automatically stayed pursuant to s. 195 of the
BIA
and, if it is stayed pursuant to that provision, an
    order cancelling the stay.

B.

analysis

(1)

Is the appeal governed by the
BIA
?

[13]

The appellants agree that the appeal is governed
    by the
BIA
. In light of that concession, there is no need to address
    this issue.

(2)

Do the appellants have a right to appeal under ss.
    193(a) to (d) of the
BIA
or must they seek leave to appeal under s.
    193(e)
of
the
BIA
?

[14]

The appellants contend that their right to appeal
    lies under s. 193(c) of the
BIA
. Accordingly, I will only address the
    arguments advanced in respect of that provision. Section 193(c) reads:

193 Unless otherwise expressly
    provided, an appeal lies to the Court of Appeal from any order or decision of a
    judge of the court in the following cases:

(c) if the property involved in
    the appeal exceeds in value ten thousand dollars.

[15]

In the event of an appeal as of right under s.
    193(c) of the
BIA,
a stay of the order appealed from is automatically
    triggered by virtue of s. 195 of the
BIA
. Therefore, in light of the broad
    nature of the stay imposed by s. 195 of the
BIA
, the right to appeal under
    s. 193(c) (as opposed to seeking leave to appeal under s. 193(e)) has been narrowly
    construed:
Enroute Imports Inc., Re.,
2016 ONCA 247, 35 C.B.R. (6th) 1,
    at para. 5. Accordingly, s. 193(c) has been granted a restrictive interpretation,
    one that accords with the needs of modern, real-time insolvency litigation:
2403177 Ontario Inc. v. Bending Lake Iron Group Limited
, 2016 ONCA 225,
    347 O.A.C. 226, at para. 53.

[16]

In keeping with that narrow interpretation, the total
    value of the property that forms the subject of the impugned order does not
    inform whether the property involved in the appeal exceeds in value ten
    thousand dollars. As Blair J.A. held in
Business Development Bank of Canada
    v. Pine Tree Resorts, Inc., et al.,
2013 ONCA 282, 115 O.R. (3d) 617, at
    para. 17, to allow an appeal as of right under s. 193(c) of the
BIA
every
    time property value exceeds $10,000 would be to permit an appeal as of right in
    almost every case.

[17]

To bring some meaningful limit to the parameters
    of s. 193(c), the court must instead focus upon the value of the loss that
    results from the impugned order:
Bending Lake
, at para. 64. The
    evidentiary record must be considered to determine the question of loss. As Brown
    J.A. held in
Bending Lake,
at para. 69:

Taken together, those facts do not disclose
    any basis in the evidentiary record for the Debtor's assertion that the sale
    would result in a loss of rights greater than $10,000 because the Receiver
    could have obtained a higher price for the Debtor's property. Accordingly, I am
    not persuaded that there is any evidentiary basis to the Debtor's bald
    assertion in its notice of appeal that the Approval and Vesting Order
    sanctioned an improvident sales transaction which resulted in a loss to the
    Debtor within the meaning of s. 193(c).

[18]

When determining the amount of loss in a
    situation like this case, the court looks beyond the simple question of whether
    a higher price for the subject property could be obtained. In
Downing
    Street Financial Inc. v. Harmony Village-Sheppard Inc.
, 2017 ONCA 611, 49
    C.B.R. (6th) 173, a case that is very similar to this one, Tulloch J.A. emphasized
    the fact-specific nature of the inquiry into potential loss and the need to
    determine loss by way of a substantive assessment of competing offers and not
    a mere comparison of formal prices:
Downing Street
,
at para.
    28.

[19]

The appellants argue that there is a clear loss
    in excess of $10,000 arising from the approval and vesting order in this case. The
    appellants say that the purchase price under the APS is $3.5 million below the
    late offer and $2 million below the amended late offer. They say that this
    proves that the purchase price, as encapsulated under the APS, and as approved
    by the impugned order, does not reflect fair market value.

[20]

They go on to disavow any suggestion that they
    are simply comparing prices. Instead, they claim that the differential between
    the current purchase amount and the late offers should give the court pause
    about the actual value of the subject properties. The appellants argue that the
    late and amended late offers should be considered against the backdrop of the
    vacancy rate for the building, which lies at about 8 to 10 percent and which they
    argue is well above market average. They also submit that the value of the
    buildings should be considered in relation to the value of the units on a per
    unit basis. That comparison is said to yield a fair market value well exceeding
    the current purchase price. The appellants also claim that there was
    insufficient marketing done on the property and that it was not properly
    exposed to the market, including the failure to list it on MLS.

[21]

In all of these circumstances, the appellants
    say that the court should be satisfied that the loss exceeds $10,000 and that
    they come within s. 193(c) of the
BIA
.

[22]

I disagree.

[23]

I start with the late and amended late offers. I
    agree with the receiver that neither of those offers were credible and cannot
    be used to set the benchmark for the fair market value of the subject
    properties. I say this for a number of reasons:

(i)

I note that the purchaser
    under the late offer is the director of a company that registered a collateral
    third mortgage over one of the properties five days after the original
    appointment order was made. That collateral third mortgage was later discharged
    and deleted by the court.

(ii)

The terms of the late offer
    are not credible, including that:

(a)

The deposit of $50,000 was entirely out of
    proportion to the purchase price offered;

(b)

the offer was conditional on the purchaser
    obtaining a mortgage to finance the purchase;

(c)

the closing date was into December; and

(d)

the purchaser wanted the vendor to obtain estoppel
    certificates from all tenants within the complex.

[24]

Both the proposed purchaser and the terms of the
    late offer render it highly suspicious, full of risk, uncertain, and difficult
    for the vendor to comply with (particularly the insistence upon estoppel
    certificates). The offer was entirely dependent on financing and there is no
    evidence that the financing was even realistic. This is to be contrasted with
    the solid APS as approved by the court, one that rested on a single condition
    that was waived early in the process. I agree with the receiver that, unlike
    the actual APS, the late offer was not a serious or credible offer.

[25]

In my view, the revised late offer was no
    better. The purchase price went down by $1.5 million, and the deposit rose by $50,000
    to $100,000 in total. That deposit was still out of proportion to the actual
    purchase price being offered. The closing date was moved up by a couple of
    weeks, but the offer had become entirely conditional upon the purchaser
    convincing First National to allow the purchaser to assume the First National mortgages
    over the property. First National is not prepared to entertain that request.
    Accordingly, and importantly, even if the late amended offer had been a
bona
    fide
offer (which I do not accept), it would not have survived the test of
    time.

[26]

In my view, the late offers were not credible
    and should not be used as a benchmark for loss under s. 193(c).

[27]

Moreover, I do not agree with the appellants
    suggestion that the motion judge erred by failing to take into account the per
    unit price to calculate the value of the property and determine whether fair
    market value had been achieved. The motion judge specifically rejected the
    appellants evidence on that point. He was entitled to do so and his conclusion
    attracts deference by this court.

[28]

Nor did the motion judge accept the appellants criticism
    of the receivers failure to have the property marketed on MLS. Indeed, there
    was evidence before the motion judge, which he accepted, that marketing a
    property of that value through MLS is not a suitable means to attract buyers. In
    fact, the appellants are known to have marketed similar large-scale properties
    in the past and foregone any use of MLS as a marketing tool. Again, deference
    applies to the motion judges factual determination on this point.

[29]

As for the vacancy rate, I do not accept the
    appellants submission that it impacts the amount of loss. The appellants say
    that the motion judge erred by not considering the vacancy rate, for which they
    say the receiver is responsible, in determining the fair market value. The
    appellants argue that, had the vacancy rate been at the market standard, the
    building would have attracted a higher purchase price.

[30]

I do not accept this submission. Although a
    higher occupancy rate may have attracted a higher price, the fact is that the occupancy
    rate for the buildings was vastly improved under the receivership, going from
    about 60% occupancy when the receiver originally took over, to about 90% or
    more. Even if that occupancy rate was still below the average occupancy rate for
    that area in Ottawa, the receiver had made great strides in achieving an
    increase in the occupancy rate which no doubt assisted in increasing the market
    value for the buildings. There is no evidence to support the suggestion that
    the receiver could have achieved an even higher occupancy rate.

[31]

The fact is that the properties were appraised.
    While the purchase price as reflected in the APS is below the appraised value,
    this court has been provided with information explaining the gap. That
    information was filed in this court on the consent of the parties. Included in
    that information is reference to the purchasers estimated capital expenditure
    upon closure, which will well exceed the differential between the purchase
    price and the average appraised value of the properties. In these
    circumstances, it is unsurprising that the motion judge granted the approval
    and vesting order.

[32]

While the appellants also maintain that the real
    estate market was gaining in strength after the appraisals were done, and they
    do not, therefore, reflect the true market value of the buildings, I see nothing
    in the record to support that submission.

[33]

In my view, the granting of the approval and
    vesting order did not result in a loss of more than $10,000 because there is no
    credible evidence to support the position that the receiver could have obtained
    a higher sales price for the debtors property. Nor is there credible evidence
    that, when looked at on a more substantive and general level, the receiver
    could have obtained a better offer.

[34]

Accordingly, the appeal is not governed by s.
    193(c) of the
BIA

and the appellants must seek leave to appeal
    under s. 193(e) of the
BIA
.

[35]

Although the appellants ask that leave to appeal
    be granted as a form of relief in their factum in response to this motion, they
    have not sought leave to appeal to this court under s. 193(e). No such
    application has been filed and no material in support of that application has
    been given. There is simply a notice of appeal.

[36]

In light of the absence of a leave to appeal
    application, I am not inclined to determine the issue of leave.

[37]

For the reasons that follow, though, even if the
    appellants had a right to appeal or were granted leave to appeal, triggering a
    s. 195
BIA
stay of the approval and vesting order, I would cancel that
    stay. Accordingly, and in the alternative, I will address the issue of a stay.

(3)

Does section 195 of the
BIA
apply and, if
    so, should the stay be cancelled?

[38]

Among other things, s. 195 of the
BIA
allows for an automatic stay where there is an appeal from an approval and
    vesting order unless the stay is cancelled for a reason deemed proper. Section
    195 of the
BIA
reads:

Except
    to the extent that an order or judgment appealed from is subject to provisional
    execution notwithstanding any appeal therefrom, all proceedings under an order
    or judgment appealed from
shall be stayed until the appeal is disposed o
f,
    but the Court of Appeal or a judge thereof
may vary or cancel the stay
or the order for provisional execution if it appears that the appeal is not
    being prosecuted diligently, or
for such other reason as the Court of Appeal
    or a judge thereof may deem proper
. [Emphasis added.]

[39]

Even if there was a properly constituted appeal
    before this court, I would cancel the stay so that the transaction can be
    completed by tomorrow.

[40]

In doing so, I emphasize two points: (a) the
    appeal is lacking in merit; and (b) the relative prejudice to the parties
    arising from a stay of the approval and vesting order.

[41]

In my view, the grounds do not raise a serious
    issue to be appealed. The notice of appeal refers to only very general grounds,
    which are largely complaints about findings of fact and appear to be based upon
    a desire to factually relitigate the matter that was already determined by the
    motion judge. Accordingly, even if the appeal was properly constituted, I am
    not satisfied that there is any substance to the appeal.

[42]

The fact that the appeal is lacking in merit
    combines with the prejudice that would arise and costs that would be
    accumulated if a stay under s. 195 (assuming s. 195 is invoked) were allowed to
    continue. The appellants (debtors) have no money. They are broke. Importantly,
    therefore, any costs arising from the continued operation of the buildings, and
    any risk associated with those buildings, comes out of the pockets of the
    creditors. The monthly costs are exorbitant. For example:

(i)

$60,000 monthly interest is accruing under the
    mortgages registered on title;

(ii)

$22,000 per month insurance costs are accruing;

(iii)

utility costs are rising with the winter coming;
    and

(iv)

the receivers costs continue to accumulate.

[43]

Moreover, I agree with the receiver that if this
    transaction is lost, there will be a serious chilling effect on the market
    and a risk that another buyer would not assume the affordable housing
    agreement with the City of Ottawa and the Province. That agreement is critical
    to many people residing in that affordable housing.

[44]

In my view, the integrity of the sale process,
    combined with the costs currently being incurred, and the risks associated with
    this transaction not being completed, pitted against what I determine to be a
    very weak appeal, all favour the lifting of any stay that may be operative
    under s. 195 of the
BIA
.

C.

Conclusion

[45]

I conclude that this appeal is not brought under
    s. 193(c) of the
BIA

and, therefore, leave to appeal must be
    sought. Leave to appeal has not been properly sought. Even if the appeal is
    properly constituted under s. 193(c) or leave should be granted under s.
    193(e), pursuant to the powers under s. 195 of the
BIA
, I would cancel
    any stay of the approval and vesting order.

Fairburn
    J.A.


COURT OF APPEAL FOR ONTARIO

CITATION: Fortress Carlyle Peter St. Inc. v. Rickis
    Construction and Painting Inc., 2019 ONCA 866

DATE: 20191104

DOCKET: C66769

MacPherson, Pepall and Lauwers JJ.A.

BETWEEN

Fortress Carlyle Peter
    St. Inc.

Plaintiff
(Respondent/Responding Party)

and

Rickis Construction and Painting Inc.

Defendant
(Appellant/Moving Party)

Daniel Schwartz and Scott McGrath, for the appellant

Maureen L. Whelton and Neil G. Wilson, for the
    respondent

Heard: October 25, 2019

On appeal from the
    judgment of Justice Paul M. Perell of the Superior Court of Justice, dated March
    6, 2019, with reasons reported at 2019 ONSC 1507.

REASONS FOR DECISION

I.

Introduction

[1]

In 2017, the respondent, Fortress Carlyle Peter St. Inc. (Fortress),
    signed an agreement of purchase and sale (APS) with the appellant, Rickis Construction
    and Painting Inc. (Rickis), to purchase property in Toronto. The transaction
    did not close and Fortress sued Rickis for specific performance. The parties
    brought duelling motions for summary judgment. The motions judge dismissed
    Rickis motion for summary judgment, but granted summary judgment in favour of
    Fortress, and ordered specific performance of the APS. Rickis appeals from
    that order and seeks leave to admit fresh evidence.

II.

Background
    Facts

[2]

Beginning in 2013, Fortress began to assemble properties for a condominium
    project in Toronto. One of the properties it sought to acquire was 120 Peter St.
    (the Property). This Property was owned by Rickis. Fortress and Rickis had
    made numerous attempts to buy and sell the Property, but none of these efforts
    materialized.

[3]

In the summer of 2017, the parties signed a letter of intent (LOI) for
    the sale of the Property for $4.5 million, subject to Fortress reviewing and
    being satisfied with the leases encumbering the Property. The Property was
    encumbered by four leases. One of the tenants was 1730474 Ontario Inc., whose
    principal was Kole Ndreka, the brother of the principal of Rickis, Rick
    Ndreka. A review of that lease revealed that it could be terminated on 90 days
    notice. Having reviewed the four leases, Fortress waived the conditions in the
    LOI and proceeded to sign the APS. Fortress provided a total of $1 million as a
    deposit and the closing date was set for August 13, 2018, at 6:00 p.m.

[4]

The APS provided that estoppel certificates for the tenancies were to be
    provided to Fortress five days prior to closing. Rickis solicitor, Peggy
    Spadafora, advised Fortress solicitor, Emily Lau, that three of the four
    tenants had vacated the property and only 1730474 Ontario Inc. would be
    providing an estoppel certificate.

[5]

On July 30, 2018, Ms. Lau sent Ms. Spadafora a letter enclosing the
    template of the estoppel certificate required. On August 1, 2018, Ms. Spadafora
    sent Rickis, Fortress template. On August 2, 2018, Ms. Lau sent a letter of
    title requisitions for the pending closing. It was sent without prejudice to Fortress
    rights and requested the estoppel certificate on or before closing. Up until
    August 13, 2018, Fortress, through its counsel, made numerous unsuccessful requests
    for the estoppel certificate.

[6]

In the morning of August 13, 2018, Rick Ndreka attended Ms. Spadaforas office
    to sign the vendors closing documents. He returned the estoppel certificate to
    Ms. Spadafora. However, the certificates contents had been altered. The 90 day
    notice to vacate provision had been replaced with a provision stating that the
    termination of the lease was to be negotiated between the parties. Rick
    Ndreka did not advise of this change nor was Ms. Spadafora aware of it.

[7]

Naram Mansour, Fortress principal, called Rick Ndreka that morning
    seeking the estoppel certificate. Mr. Mansour also sought to extend the closing
    date to August 15, 2018 until the certificates were received and reviewed. Mr.
    Ndreka said he would get back to Mr. Mansour later in the day.

[8]

At approximately noon, Ms. Spadaforas office sent Ms. Lau the signed
    copy of the altered estoppel certificate. Ms. Lau reviewed it and wrote to Ms.
    Spadafora advising that the alterations were unsatisfactory. Ms. Lau also advised
    Mr. Mansour of the problem. Mr. Mansour then repeatedly attempted to contact
    Mr. Ndreka about the altered estoppel certificate. Mr. Ndreka said that he
    would contact Mr. Mansour but failed to do so. In the meantime, Mr. Mansour
    also pressed his bank to ensure that the closing funds were deposited into his
    lawyers trust account.

[9]

Close to 5:00 p.m., Ms. Spadafora sent Ms. Lau the correct estoppel
    certificate. At around 5:15 p.m., Ms. Lau contacted Ms. Spadafora requesting an
    extension of the closing until the next morning. Mr. Mansour also attempted to
    contact Mr. Ndreka and later texted him advising him that confirmation of the
    funds being transferred from the bank was imminent.

[10]

At
    6:00 p.m., Ms. Spadafora wrote to Ms. Lau stating that Rickis had delivered
    all necessary closing documents and keys, was ready, willing, and able to close
    the transaction that day, and if closing funds were not received by 6:00 p.m.,
    Rickis would note Fortress in default and the APS would be terminated. Ms.
    Spadafora stated that Rickis was not willing to grant any extensions for the
    transaction.

[11]

At
    6:16 p.m., the bank confirmed that the closing funds had been transferred to
    the trust account, and Ms. Lau forwarded this confirmation to Ms. Spadafora at
    6:19 p.m. Mr. Mansour called Mr. Ndreka at 6:20 p.m. to advise him the funds
    had been wired. Mr. Ndreka stated that the transaction was dead.

[12]

On
    August 21, 2018, Fortress issued a statement of claim against Rickis claiming
    specific performance. As mentioned, it brought a motion for summary judgment
    for such relief on October 31, 2018, and Rickis bought a cross-motion for
    summary judgment seeking an order dismissing Fortress action.

III.

Decision of the Motions Judge

[13]

In
    his reasons, the motions judge confirmed that both parties had taken the
    position that the case was appropriate for summary judgment. He agreed with
    their position. He recognized that there were genuine issues of credibility,
    fact and law, but they did not require a trial, and it was in the interests of
    justice to decide the matter by summary judgment.

[14]

The
    motions judge wrote comprehensive reasons and described the relevant real
    estate legal principles engaged by the case. Before this court, no one takes
    issue with the motions judges description of the applicable legal principles.

[15]

The
    motions judge granted Fortress request for specific performance. He found that
    the Property was critical to Fortress development plans, and as such, Fortress
    had established the uniqueness of the Property, a precondition to an order for
    specific performance.

[16]

The
    motions judge found that Rickis had breached the APS and had failed to act in
    good faith. It had not delivered the estoppel certificate as provided by the
    APS, it had delivered an altered estoppel certificate which also amounted to a
    breach of the APS, and only delivered the suitable estoppel certificate close
    to 5 p.m. on the day of closing. As a result, in these circumstances, Rickis
    was no longer in a position to insist on time being of the essence. As such,
    Rickis was not entitled to terminate the APS and forfeit the deposit even if
    Fortress was offside in meeting the 6:00 p.m. deadline. For Rickis to insist
    on time being of the essence: (i) it had to have shown itself to be ready,
    desirous, prompt, and eager to carry out the APS; and (ii) it could not have been
    the cause of the delay or default in performing the APS. Neither of these
    preconditions was satisfied.

[17]

For
    Fortress part, the motions judge concluded that it had acted in good faith and
    had satisfied the preconditions for a claim for specific performance. Applying
    Justice Catzmans dicta in
Morgan v. Lucky Dog Ltd.
(1987), 45 R.P.R.
    263 (Ont. H.C.J.), the motions judge held that Fortress would have been ready,
    willing, and able to close on August 13, 2018 but for the misconduct of Rickis
    which more than discomfited Fortress. The estoppel certificate was a critical
    factor in Fortress development plans, and the delivery of a proper certificate
    approximately one hour before the scheduled 6:00 p.m. closing precluded Rickis
    from relying on the provision in the APS making time of the essence.

[18]

Alternatively,
    even accepting that both parties were at fault, Rickis still would not have a
    defence to Fortress claim for specific performance. As the motions judge said,
    at para. 107:

In accordance with the major legal principles set out above,
    when both contracting parties breach the contract, the contract remains alive
    with time no longer of the essence but either party may restore time of the
    essence by giving reasonable notice to the other party of a new date for
    performance, which is what occurred in the immediate case when Ms. Lau
    suggested that the transaction close on August 14, 2018.

[19]

Even
    if both parties were at fault, it was reasonable for Fortress to fix August 14,
    2018 for the closing of the transaction. Rickis refused to close, and thus, Fortress
    was entitled to a decree of specific performance.

IV.

Grounds of Appeal

[20]

The
    appellant raises four grounds of appeal. It also seeks to admit fresh evidence to
    establish that Fortress was and is in financial difficulties, and hence was and
    is not ready, willing, and able to close the transaction.

(1)

Legal Theory Relied on by Motions Judge

[21]

Rickis
    submits that the motions judge decided the case on a legal theory that was not
    pleaded or argued. In particular, it argues that the motions judge made
    findings of deceit and fraudulent misrepresentation, and that these causes of
    action were not pleaded or argued. It submits that the appellant was prejudiced
    because it did not know the case it had to meet.

[22]

We
    do not agree with this submission.

[23]

At
    para. 76(c) of his reasons, the motions judge found that Rickis delay, deceit,
    and breach of contract in providing an altered estoppel certificate at noon,
    and its late delivery of the correct estoppel certificate on the day of closing
    meant it could no longer rely on time being of the essence. Its misconduct
    precluded that reliance.

[24]

Dealing
    first with the argument relating to deceit, the statement of claim clearly
    pleaded an absence of good faith and lack of honesty. The cross-examinations
    made it abundantly clear that Fortress was relying on Rickis misconduct to
    argue that time was no longer of the essence. Moreover, Fortress factum also
    made it clear that it was relying on the doctored estoppel certificate as the
    basis for its claim that Rickis had breached the APS and acted in bad faith.
    Indeed, Fortress asserted that providing the doctored estoppel certificate was
    an act of bad faith tantamount to fraud. The theory behind the time not being
    of the essence was fully explored. There was no surprise and no prejudice to
    Rickis.

[25]

In
    any event, to the extent the motions judges analysis referred to deceit, his
    conclusion was not dependent on any such finding. As already discussed,  he
    also relied on the alternative scenario where both parties were at fault for
    breaching the APS, and arrived at the same conclusion that Fortress was
    entitled to a decree of specific performance.

[26]

As
    for fraudulent misrepresentation, the only reference to that claim was in para.
    18 of the motions judges reasons. There he listed the six applicable legal
    principles with which neither party takes issue on appeal.  No reliance was
    placed on that cause of action.

[27]

We
    would not give effect to this ground of appeal.

(2)

Summary Judgment Procedure

[28]

Second,
    Rickis submits that it was incumbent on the motions judge to expressly
    consider whether the expanded summary judgment powers should have been used to
    resolve conflicts in the evidence.  In addition, the motions judge failed to
    address all of the inconsistencies in the parties evidence.

[29]

The
    motions judge was clearly alive to the state of the evidentiary record before
    him. From the outset, the motions judge expressly identified the presence of
    issues of credibility, fact and law, and went on to conclude that a trial was
    unnecessary. He proceeded to provide a detailed analysis of his credibility and
    factual findings, together with his legal reasoning. In these circumstances, it
    was unnecessary to advert to the summary judgment expanded powers rule. He
    implicitly considered that rule and was satisfied that the interests of justice
    were served without resort to the expanded powers. Both parties agreed that the
    case was appropriate for summary judgment and neither counsel asked the motions
    judge to have recourse to the expanded summary judgment powers.

[30]

As
    for the appellants argument that the motions judge failed to resolve all of
    the inconsistencies in the evidence, he was not required to do so. He did
    explain why he accepted the respondents evidence and rejected that of the appellant.
    He dismissed the appellants assertions that the doctored estoppel certificate
    was provided by mistake and that it was based on one of the parties earlier
    transactions. This made no sense given that no estoppel certificates existed in
    the earlier transactions. Moreover, Rickis provided no explanation on why the
    estoppel certificate prepared by Ms. Spadafora using Fortress template and
    which she had emailed to Rickis, had been altered. The motions judge also
    legitimately drew an adverse inference from Rickis failure to call his
    brother, the principal of the tenant, as a witness. Lastly, there were no other
    witnesses or documents that supported Rickis mistake theory.

[31]

As
    for the respondents evidence, the motions judge did wrestle with the issue of
    the availability of funds to close and found in favour of the respondent. He concluded
    that on the morning of August 13, 2018, there was no reason for Mr. Mansour to
    say that money was tight because the respondent had the funds available to be
    wired to close the transaction.

[32]

We
    would not give effect to the appellants submissions with respect to this
    ground of appeal.

(3)

No Palpable and Overriding Errors

[33]

Third,
    the appellant submits that the motions judge ignored or failed to consider key
    evidence and made palpable and overriding errors with respect to the timeline
    of events.

[34]

We
    disagree with these propositions. The errors were minor in nature and had no
    impact on the outcome of the parties dispute.

·

The fact that Ms. Lau suggested in cross-examination that
    Fortress be in funds ahead of time was not a material omission by the motions
    judge. Nothing turned on this fact.

·

The requisition letter was quoted by the motions judge. There was
    no need for him to pursue this line of inquiry given that by its terms, it did
    not amount to waiver. In addition, there must be an unequivocal and conscious
    intention to abandon a right for waiver to be effective. See
Technicore
    Underground Inc. v. Toronto (City)
, 2012 ONCA 597, 296 O.A.C. 218, at
    para. 63. There was none.

·

The motions judge referred to the previous failed transactions. He
    was not obliged to draw any inferences or conclusions from those failures.
    While they provided background detail, nothing turned on them.

·

The motions judge found at para. 62 that: While it would have
    been prudent for Fortress to have already put Brattys LLP in funds, it had the
    money available to be wired to the law firm. The only reason that Fortress
    wished a delay in closing was to confirm that a proper estoppel certificate had
    been delivered.  Money was not the issue. This finding was available to the
    motions judge on the record.

·

While we accept that the motions judge misstated the precise time
    of the banks transmission of funds, it is evident from his reasons read as a
    whole that he understood that the money arrived 16 minutes after 6 p.m.

·

The other timing oversights identified by the appellant were
    minor in nature and of no moment in the ultimate result.

[35]

We
    are not persuaded of the merit of this ground of appeal.

(4)

Nexus Between Bad Faith and Inability to Close

[36]

Fourth,
    the appellant submits that even if Rickis acted in bad faith and was
    deceitful, specific performance was not justified.  Counsel argues that for
    Fortress to successfully obtain an order for specific performance, Fortress had
    to show that: (i) it was ready, willing, and able to close on August 13, 2018;
    (ii) the default was in no way attributable to it; and (iii) it continued to be
    ready, willing, and able to perform the contract. The appellant submits that
    Fortress was not ready, willing, and able to close on the date fixed for
    closing because it needed to have the closing funds by 6:00 p.m. which it did
    not have.

[37]

Again,
    we disagree.

[38]

As
    in
Lucky Dog
, the motions judge concluded that Rickis delay was a
    deliberate tactical decision to discomfit the purchaser, Fortress. The motions
    judge found, at para. 105: Fortress would have been ready, willing and able to
    close on August 13, 2018 but for the misconduct of Rickis Construction which
    more than discomfited Fortress. The estoppel certificate was a critical factor
    in Fortresss development plans, and after the delayed delivery of any
    certificate, the late delivery of a certificate with serious issues, and the
    late delivery of a proper certificate, one hour before the scheduled 6:00 p.m.
    closing, Rickis Construction was precluded from relying on the provision in
    the Agreement of Purchase and Sale making time of the essence.

[39]

The
    motions judge went on to conclude that alternatively, if the legal situation
    was that both parties were at fault, Rickis still did not have a defence to Fortress
    claim for specific performance. This is because when both contracting parties
    breach a contract, the contract remains alive with time no longer being of the
    essence. As the motions judge explained, either party may restore time of the
    essence by giving reasonable notice to the other party of the new date for
    performance. This is precisely what occurred when Ms. Lau suggested that the
    transaction close on August 14, 2018.

[40]

We
    would not give effect to this ground of appeal.

(5)

Fresh Evidence

[41]

Lastly,
    we would not admit the fresh evidence.

[42]

The
    fresh evidence does not meet the test articulated in
Palmer v. The Queen
,
    [1980] 1 S.C.R. 759, at p. 775, and
Sengmueller v. Sengmueller
(1994),
    17 O.R. (3d) 208 (C.A.).

[43]

In
    our view, the fresh evidence, even if believed, could not reasonably, when
    taken with the other evidence adduced, be expected to have affected the result.

V.

Disposition

[44]

For
    these reasons, the motion to admit the fresh evidence is dismissed, as is the
    appeal. If any directions are required to implement the judgment for specific
    performance, they may be sought from the motions judge. The appellant shall pay
    the respondent costs fixed in the amount of $40,000, inclusive of disbursements
    and applicable tax.

J.C. MacPherson J.A.

S.E. Pepall J.A.

P. Lauwers J.A.


COURT OF APPEAL FOR ONTARIO

CITATION: Metropolitan Toronto Condominium
    Corporation No. 1328 v. 2145401 Ontario Inc., 2019 ONCA 944

DATE: 20191129

DOCKET: C66753

Watt, Hourigan and Trotter JJ.A.

BETWEEN

Metropolitan
    Toronto Condominium Corporation No. 1328

Applicant

(Respondent
    in Appeal)

and

2145401
    Ontario Inc. and Paul Starkman

Respondents

(Appellants)

Benjamin Salsberg, for the appellants

Spencer Toole, for the respondent

Heard and released orally: November 26, 2019

On
    appeal from the judgment of Justice Kimmel of the Superior Court of Justice,
    dated February 20, 2019.

REASONS FOR DECISION

[1]

The facts underlying this appeal may be briefly
    stated. After a complaint about noise emanating from the staircase in the
    appellants condominium unit, the respondent, Metropolitan Toronto Condominium
    Corporation, requested entry into the unit to investigate. The appellant denied
    entry and issued a trespass notice. Consequently, the respondent brought an
    application for an order to enter and inspect the staircase. The application
    was granted. The appellant appeals that decision.

[2]

In their factum, the appellants have raised
    seven grounds of appeal which were not pursued in any meaningful way during
    oral argument. We need not refer to these arguments in any detail. In our view,
    they were all wholly without merit.

[3]

At the hearing, the grounds of appeal were
    narrowed considerably to one principal argument. The appellants submit that
    there was no evidentiary basis to determine whether the condominium board had a
    reasonable basis for carrying out an inspection.

[4]

We do not give effect to that argument. The
    record established that there was a complaint by another owner. The respondent
    has a right and duty under s. 17(3) and 119(3) of the
Condominium Act
,
    1998, S.O. 1998, c. 19 to ensure that the owner and occupier of a unit comply
    with the legislation. This includes that the unit is not being used in a manner
    that will affect the structural integrity of the appurtenant common elements.
    In discharging that duty, the respondent is entitled to inspect the unit to
    gather information about the nature and extent of a suspected problem.

[5]

The appeal is dismissed, with costs to the
    respondent in the amount of $4,045.92.

David Watt J.A.

C.W. Hourigan
    J.A.

G.T. Trotter
    J.A.