|
Real Property - Breached APS (2). Nhem v. Simpson
In Nhem v. Simpson (Div Court, 2023) the Divisional Court considered (and allowed) an appeal relating to a standard OREA APS provision regarding utility easements, here where the lower court allowed an application to terminate the APS at the hands of the purchaser for failure to remove an easement:[1] This appeal arises from a terminated agreement of purchase and sale for a residential property in Penetanguishene. Ms. Nhem terminated the purchase agreement when a title search of the property disclosed the existence of an easement in favour of Consumer’s Gas permitting the construction and maintenance of a natural gas pipeline across the rear yard of the property, and the Simpsons failed to remove the easement from title. Ms. Nhem commenced an application seeking the return of the deposit. ...
....
[3] The principal issue on the appeal is whether the application judge committed a palpable and overriding error in finding that the purchase agreement did not provide sufficient notice of the easement. In my view, the application judge erred in so finding and I would allow the appeal.
[4] The parties used the standard OREA agreement of purchase and sale, which provided, at para. 10:Provided that title to the property is good and free from all registered restrictions, charges, liens, and encumbrances except as otherwise specifically provided in this Agreement and save and except for… (c) any minor easements for the supply of domestic utility or telephone services to the property or adjacent properties ... . ....
[7] Paragraph 10 of the purchase agreement provides that the title to the property is good and free from all registered restrictions, charges, liens, and encumbrances “except as otherwise specifically provided in this agreement” and other specified exceptions. That the property was subject to a registered easement was specifically and clearly disclosed in the purchase agreement. Further, the respondent in appeal did not establish that para. 10(c) did not apply, that is, that the pipeline did not fit within the category of “minor easements for the supply of domestic utility services to the property.” The home on the property included several gas appliances, so on the inspections undertaken by the respondent in appeal, it would have been evident that the property was serviced with gas. With respect, it was a palpable and overriding error for the application judge to conclude that the respondent in appeal did not have notice of the easement in the purchase agreement. . 3 Gill Homes Inc. v. 5009796 Ontario Inc. (Kassar Homes)
In 3 Gill Homes Inc. v. 5009796 Ontario Inc. (Kassar Homes) (Ont CA, 2023) the Court of Appeal considered (and dismissed) an appeal from a breached APS case, here where the purchaser missed funding the closing by 35 minutes but the court held the APS breached - largely on the strength (and the parties' behaviour) of a 'time is of the essence' APS provision:ANALYSIS
[17] While the outcome for the respondent was indeed harsh, it was not unconscionable or unfair. The wording of the contract and the warnings provided by the respondent beforehand were clear. ...
[18] No such error was made by the application judge.
[19] The appellant argues that the application judge misinterpreted the APS, in particular by finding that the requirement of completing the closing through the electronic registration system as set out in article 14.02(d) of the APS was “clear and unambiguous.” If interpreted in the context of the entire APS document, the appellant contends, payment was not required by 3:00 p.m. on January 28, 2022 but rather, by the end of business at 5:00 p.m. on that calendar day. Further, if payment was due by 3:00 p.m., the appellant submits the only consequence of failing to convey the funds in time was the right of the respondent to refuse to release the deed for electronic registration, not the termination of the APS.
[20] We are not persuaded by these submissions. The same arguments were put to, and rejected by, the application judge.
[21] In our view, the wording of article 14.02(d) of the APS was clear and meant that where, as here, electronic registration was mandatory, the funds due on closing had to be received by 3:00 p.m. on the closing date. It would be an unwarranted intervention into the freedom of contract for a court to alter the APS and its closing time.
[22] We also do not accept the appellant’s related argument that the application judge erred by citing and relying on the regulation that made electronic registration mandatory in the absence of any evidence that Mr. Gill was aware of this regulation when he signed the contract for the appellant. Contrary to this argument, the parties had put their minds to the possibility of mandatory electronic registration and the contract clearly stated that if electronic registration was mandatory – as it in fact was on the scheduled closing date – the parties were agreeing to follow the process for effecting the transfer of the property that was set out in the contract.
[23] This ground of appeal fails.
[24] As this court stated in Di Millo v. 2099232 Ontario Inc., 2018 ONCA 1051, 430 D.L.R. (4th) 296, at para. 31: “A ‘time is of the essence’ clause is engaged where a time limit is stipulated in a contract. The phrase ‘time is of the essence’ means that a time limit in an agreement is essential such that breach of the time limit will permit the innocent party to terminate the contract.”
[25] The appellant submits that the “time is of the essence” clause was not strictly enforced in a series of transactions between the parties, including with respect to prior missed deadlines under the APS at issue in this appeal. While the prior conduct of the parties treated deadlines as flexible (and the respondent previously missed a number of deadlines for the completion of the project without the consequence of the APS being terminated), the application judge found that the amending agreement to the APS dated November 15, 2021 changed this state of affairs. It was open to the application judge to treat the amendment as a starting point from which the closing deadline of 3:00 p.m. on January 28, 2022 was to be treated as firm.
[26] The exchanges between the parties in the days prior to January 28, 2022, which included reminders by the respondent of the closing time, and an extension sought by the appellant and refused by the respondent, all reflect what the application judge found to be a shared understanding that the closing date and time was to be enforced. Further, article 16.02 of the APS made clear that the default by the appellant in failing to deliver the funds owing by the closing time justified the respondent in treating the APS as terminated.
[27] The application judge’s reliance on the “time is of the essence” clause in the APS reveals no error, and this ground of appeal fails as well.
|
