Mahoney, J:—This issue is whether the defendant was entitled to claim capital cost allowance for 1968 in respect of certain real estate. The facts of the case are fully set forth in the decision of the Tax Review Board which allowed the defendant’s appeal against the disallowance of that claim by the Minister of National Revenue. It is agreed that this appeal will also govern the cases of other taxpayers who were party to the proceedings before the Tax Review Board.
The defendant and his associates entered into an agreement to purchase the subject property on December 4, 1968. The vendor was a company whose equal shareholders were an active real estate operator and a dentist. The transaction was to be completed on or before December 15, 1968. Title was actually registered in the name of one R Keith Sullivan, Trustee. The circumstances of Sullivan’s ownership clearly establish that he and his associates were equitable mortgagees of the property. The proposed purchasers’ investigations disclosed a number of misrepresentations in the vendor’s warranties in the agreement with the result that, on December 23, the agreement was amended in certain particulars and closing was postponed to December 27.
Sullivan had, on December 12, executed a reconveyance of the property and left it with his solicitor. That solicitor, a close relative of the active principal of the vendor company, also represented the vendor. On or about December 20 he had locked the document in his vault and gone to Barbados on holiday. He returned on January 6 or 7, 1969. Meanwhile, his partner was attempting to close the deal. The closing date was, successively, deferred to December 31. Throughout the series of postponements of the closing date, the date for adjustments was kept at December 15. The vendor was anxious to sell; the purchasers were anxious to buy but the deal could not be closed because Sullivan refused to execute a duplicate reconveyance and his solicitor expressly forbade his partner to deliver that already executed. On December 31, the purchasers tendered a certified cheque for the cash payable and an executed third mortgage direct to the vendor who was, of course, unable to close.
The defendant was solicitor for, as well as a member of, the purchasing group. Upon the return of the vendor’s solicitor from Barbados, they exchanged recriminations via the mail culminating, on January 14, 1969, in the purchasers taking out a writ in the Supreme Court of Ontario directed to the vendor. On January 24, 1969 the sale closed on precisely the terms and conditions that had been established December 23, with adjustments as of December 15, 1968. It is the plaintiff’s position that certain statements in the defendant’s letter of January 14, 1969, taken with the issue of the writ, constituted a repudiation of the contract completed December 23, 1968, and that the contract which closed January 24, 1969 was a new contract and not the contract which had been in force at the end of 1968.
The statement in the letter is the closing sentence:
Under the circumstances we are obliged to commence an action for damages against the Vendor.
The fact is that the writ announced a claim for damages and did not assert a right to specific performance of the contract. The defendant admits that, at the time he issued the writ, he was under the impression that an election had to be made at that point as to the remedy to be sought. He did not know the election is required at the time of trial. He says that the letter and the issue of the writ were to apply pressure to expedite the closing of the deal and it was not intended to repudiate the 1968 agreement, That is, in all the circumstances, a considerably more reasonable explanation than that given by the defendant in his examination for discovery (questions 212 to 215, inclusive) when he said that he thought the question had been considered and that the purchasers did not still want the property. The letter of January 14, while threatening the action for damages against the vendor, clearly acknowledges that, while recourse might be there, the fault lay not with the vendor but with Sullivan and the solicitor. The defendant was an entirely credible witness as was Bernard Karp, the active principal of the vendor. Sullivan’s recollection of events was vague. His impression of the combined effect of the purchase, leaseback and right of repurchase, contained in the conveyance by which he had become owner, was grossly inaccurate and, in my view, incomprehensible in a chartered accountant. Whenever his cross-examination got tough, he took refuge in the response that he had relied on the solicitor. The plaintiff had subpoenaed but did not call the solicitor.
Some appreciation of the vigour with which the plaintiff has pursued the defendant and his associates may be gleaned from the fact that Mr Sullivan was allowed his claim for capital cost allowance for 1968 in respect of the property after objecting to a reassessment. That blunder, even if irremediable, cannot deprive the defendant of a right he is entitled to by law.
The action is dismissed with costs.