George Wimpey Canada Ltd. v. Focal Properties Ltd., [1978] 1 SCR 2

Supreme Court of Canada

George Wimpey Canada Ltd. v. Focal Properties Ltd., [1978]  1 S.C.R. 2

Date: 1977-06-14

George Wimpey Canada Limited (Defendant) Appellant;

and

Focal Properties Limited (Plaintiff) Respondent.

1977: February 17, 18; 1977: June 14.

Present: Laskin C.J. and Judson, Spence, Pigeon and Dickson JJ.

ON APPEAL FROM THE COURT OF APPEAL FOR ONTARIO.

Contracts—Sale of land—Development of land—Condition precedent—Inability to secure registration of subdivision plans by closing date—Time of the essence—No extension of time mutually agreed—The Planning Act, R.S.O. 1970, c. 349, s. 26 (now s. 29).

Brumac, respondent’s predecessor, entered into three separate agreements with appellant viz. a sale agreement, a joint venture agreement and a lot sale agreement. There was also a collateral agreement given by Brumac to ensure performance under the agreements. The transaction involved the sale by Brumac to Wimpey of an undivided one-half interest in some 632 acres of land (including 1,419 proposed building lots and 22 acres for proposed multiple family dwellings) which the parties were as a joint venture to subdivide, service and otherwise develop for sale to qualified builders. Brumac was to use its expertise to obtain registration of the proposed subdivision plans and to sell the properties and Wimpey was to service the land. Respondent was however unable to get registered the proposed subdivision plans. Time was stated to be of the essence and although the sale agreement contemplated extension of the closing date by mutual agreement no such agreement was made. [The parties agreed that s. 26 (now s. 29) of The Planning Act, R.S.O. 1970, c. 349, applied.] The trial judge found that the sale agreement came to an end on the failure to get registration of the subdivision plans by the closing date and that the agreements were frustrated because of impossibility of performance within a forseeable period. The Court of Appeal agreed.

Held. The appeal should be dismissed.

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The judgments at trial and on appeal should be affirmed on the one ground that the contract came to an end on the closing date.

APPEAL from a judgment of the Court of Appeal for Ontario dismissing an appeal from a judgment of Reid J.[1] at trial declaring that three agreements between the parties were frustrated and a collateral mortgage discharged. Appeal dismissed.

J.W. Garrow and R.S. Bruser, for the appellant.

D. Laidlaw, Q.C., for the respondent.

The judgment of the Court was delivered by

JUDSON J.—Focal Properties Limited brought this action against George Wimpey Canada Limited for declarations that three agreements with Wimpey were frustrated and terminated and for the discharge of a collateral mortgage. The trial judge made the declarations. The Ontario Court of Appeal dismissed on appeal to them but granted leave to appeal their decision to this Court.

Brumac Developments Limited, the predecessor of Focal Properties Limited, entered into three separate agreements with Wimpey. These agreements were:

a sale agreement dated February 28, 1968;

a joint venture agreement dated March 15, 1968, and

a lot sale agreement dated March 22, 1968.

There was also a collateral mortgage, dated March 14, 1968, given by Brumac to one Brown as trustee for Wimpey, to ensure Brumac’s performance under the agreements.

By the sale agreement, Brumac agreed to sell to Wimpey an undivided one-half interest in about 632 acres of land, which included 1,419 proposed building lots and some 22 acres of land for proposed multiple family dwellings in the Town of Georgetown in Halton County, Ontario. The

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amount payable was $2,633,250 subject to some possible future adjustment.

By the joint venture agreement, the parties agreed to subdivide, service and otherwise develop the land for sale to qualified builders. The conveyances to the builders were to be made by Focal, which was to continue as the registered owner holding the property in trust for the co-owners.

By the lot sale agreement, Wimpey agreed to purchase 500 lots from the joint venture for sale to others. This agreement contained a clause rendering it null and void if registration was not obtained within five years, and Wimpey admits that this lot sale agreement came to an end by its own terms.

The object of the overall enterprise was the developing and marketing of residential lots. Brumac was to use its knowledge and experience to obtain registration of the proposed plans of subdivision and to sell the properties. Wimpey’s role was to service the land.

In accordance with the sale agreement, Wimpey paid $500,000 to Brumac prior to March 15, 1968. The balance of the purchase price, payment of which was secured by the collateral mortgage, was to come primarily from the proceeds of lot sales to third parties by the co‑owners under the joint venture agreement.

The disposition of this case turns upon the proper construction to be placed upon the sale agreement and specifically whether the inability of Focal on March 15, 1973, to deliver to the appellant a good and registerable conveyance of an undivided one-half interest in the property to be conveyed, put an end to the agreements between the parties by the terms thereof or, alternatively, by reason of the agreements being frustrated.

The main provisions of the sale agreement dealing with the obligations of the parties are:

4. Brumac shall be responsible at its sole cost and expense to obtain registration in the Registry Office for

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the Registry Division of the County of Halton of three plans of subdivision substantially in accordance with the three draft plans of subdivision attached hereto and shall indemnify Wimpey in respect of any claims arising therefrom. Brumac shall enter into all reasonable subdivision and other agreements required by the Town of Georgetown or any other municipality or government with respect to registration of the said plans and provision and installation of the services referred to in paragraph 5 hereof. The obligations of Brumac under each subdvision agreement shall, if required, be secured by a performance bond or other security satisfactory to the Town of Georgetown or such other governmental authorities. Brumac shall be responsible for the payment of all costs, charges, levies and other expenses incurred or to be incurred in connection with the development of the property, including real estate taxes up to the registration date and excluding only the servicing charges mentioned in paragraph 5 hereof. All rebates of levies shall be deemed to be the exclusive property of Brumac.

…

6. Wimpey shall have the right at all times, prior to the closing date, through its agents or representatives, to enter on the property or any part thereof for the purposes of inspecting the same, making soil tests and other tests and taking or checking levels, elevations, contours and grades.

…

9. The transaction of purchase and sale shall be completed on March 15th, 1973 or on such other date as may be mutually acceptable (the “Closing Date”) when Brumac shall deliver to Wimpey a good and registrable conveyance of an undivided one-half interest in the property then remaining.

10. Time shall be of the essence of this agreement.

…

14. This agreement is subject to the condition that if the provisions of Section 26 of The Planning Act apply, this agreement shall be effective to create an interest in land only if such provisions are complied with by Brumac obtaining the necessary consents or otherwise complying with the said provisions, and the parties hereto agree that The Planning Act vis a vis themselves shall be deemed to be complied with, and the purchaser will not requisition to the contrary.

The parties agree that s. 26 (now s. 29) of The Planning Act, R.S.O. 1970, c. 349, applies.

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The trial judge held that notwithstanding earnest and continued efforts, Focal was unable to get registered the proposed subdivision plans contemplated by para. 4 of the sale agreement. Although para. 9 contemplated extension of the date for closing beyond March 15, 1973 by mutual agreement, no such agreement was made. His conclusion is stated in the following paragraph:

I have concluded that March 15, 1973 was the closing date contemplated by the parties and that time was of the essence in relation to it. That seemed to me to be the plain meaning of the sale agreement. The parties appear to have allowed some five years to obtain registration in circumstances both were aware might not be easy. They provided for extension of this period by mutual agreement. No evidence was called that would indicate any other intention on the part of either side to the transaction.

In the Court of Appeal, Jessup J.A., in complete agreement with the trial judge, held that the sale agreement, by its terms, came to an end on the failure to get registration of the proposed plans of subdivision by March 15, 1973. He also held that the trial judge had correctly concluded that the agreements were frustrated because of the impossibility of their performance within any foreseeable period of time.

Houlden J.A. confined his reasons to finding that the contracts were frustrated.

Lacourcière J.A., in a dissenting judgment, held that the obligation to achieve registration was not qualified as to time and therefore continued after March 15, 1973. He also held that there was no case of frustration.

All three members of the Court of Appeal were of the opinion that registration of the proposed plans of subdivision constituted a true condition precedent to the performance of the contract.

I would affirm the judgment at trial and that of the Court of Appeal on the one ground that the contract came to an end on March 15, 1973. It is

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unnecessary to deal with the question of frustration.

I would dismiss the appeal with costs.

Appeal dismissed with costs.

Solicitors for the appellant: Blake, Cassels & Graydon, Toronto.

Solicitors for the respondent: McCarthy & McCarthy, Toronto.