Barnett v. Harrison, [1976] 2 SCR 531

Supreme Court of Canada

Barnett v. Harrison, [1976] 2 S.C.R. 531

Date: 1975-05-20

Percy Barnett (Plaintiff) Appellant;

and

Arnott D. Harrison, Neil Douglas Harrison and Aileen Harrison (Defendant) Respondents.

1974: June 18, 19 (rehearing); 1975: May 20.

Present: Laskin C.J. and Martland, Judson, Ritchie, Spence, Pigeon, Dickson, Beetz and de Grandpré JJ.

ON APPEAL FROM THE COURT OF APPEAL FOR ONTARIO.

Sale of land—Specific performance—Condition precedent—Agreement conditional on necessary approvals of site plan and zoning—Condition unfulfilled—Right of purchaser to waive condition.

An agreement for the sale and purchase of land contained conditions that necessary approvals as to site plan and zoning be sought and obtained subject to certain time limits. The agreement provided that in the event that these conditions were not complied with the agreement would be null and void. On the day that the hearing by the Municipal Board should have been completed the purchaser served on the vendors a notice in which he purported to waive all conditions set forth in the agreement except as to title and offered to complete the purchase within sixty days thereafter. The vendors promptly replied that since the condition for completion of the application and hearing before the Municipal Board had not been satisfied the agreement was therefore null and void. The purchaser claimed at trial that if there had been non-compliance with the conditions, the conditions were inserted solely for his benefit and he had waived compliance. The trial judge found the conditions to be true conditions precedent which, therefore, could not be unilaterally waived and his dismissal of the action was affirmed by the Court of Appeal.

Held (Laskin C.J. and Spence J. dissenting): The appeal should be dismissed.

Per Martland, Judson, Ritchie, Pigeon, Dickson, Beetz and de Grandpré JJ.: The rule in Turney v. Zhilka, [1959] S.C.R. 578, should not be disturbed for several reasons. First, because there is a valid distinction between the right of A to waive default by B in the

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performance of a severable condition intended for the benefit of A and the attempt by A to waive his own default or the default of C, upon whom depends the performance which gives rise to the obligation (i.e. the true condition precedent). Second, because when parties aided by legal advisors make a contract subject to explicit conditions precedent and provide specifically that, in the event of non-compliance with one or more of the conditions, the contract should be void, the Court would run roughshod over the agreement in introducing an implied provision conceding to the purchaser the right to waive compliance. In the instant case certain conditions (for water and sewer requirements) were expressed to be subject to waiver at the option of the purchaser but other conditions (respecting site plan and zoning) were not; if all of these various conditions were to be placed on the same footing, the Court would be rewriting the agreement. Third, if the purchaser is put in the position of being able to rely on conditions precedent or to waive them the result may be that the purchaser has been given an option to purchase, for which he has paid nothing. Finally, as the rule in Turney v. Zhilka has been in effect since 1959 and applied many times, in the interests of certainty and predictability that rule should endure unless compelling reasons for change be shown.

Per Laskin C.J. and Spence J. dissenting: A condition which is characterized as a condition precedent may be one in which both parties have an interest and yet it may be subject to waiver at the suit of one only of the parties, because their interest in it may not be the same. It would be a mistake to move from the fact that both parties have an interest in the performance or non-performance of a condition of the contract to the conclusion that the condition cannot therefore be waived by that party for whose sole benefit the condition was introduced. Further the fact that the conduct or action of a third party is involved in the proper performance of a condition does not ipso facto make the condition a ‘true condition precedent’ which cannot be waived. If the conditions in O’Reilly v. Marketers Diversified Inc., [1969] S.C.R. 741, and in the present case are not instances of conditions which can be waived by the party to whose duty of performance they go, there can be hardly any case in which waiver can lawfully be effected unless there is an express provision for waiver in the contract of sale. Waiver does not involve a rewriting of an agreement any more than does estoppel of a party from insisting on a term of an agreement; nor is there anything prejudicial in the fact that a vendor may not know until completion date whether the contract will be performed according to its terms or whether the pur-

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chaser will, by exercising his right to waive a condition or conditions, be given a choice to opt out or to insist on performance by the vendor.

[Turney v. Zhilka, [1959] S.C.R. 578; F.T. Developments Limited v. Sherman et al., [1969] S.C.R. 203; O’Reilly v. Marketers Diversified Inc., [1969] S.C.R. 741 followed; Genern Investments Ltd. v. Back et al., [1969] 1 O.R. 694; Dennis v. Evans, [1972] 1 O.R. 585; Beauchamp et al. v. Beauchamp et al., [1973] 2 O.R. 43, appeal dismissed [1974] S.C.R. v. referred to.]

APPEAL from a judgment of the Court of Appeal for Ontario[1] dismissing an appeal from a judgment of Thompson J. at trial. Appeal dismissed, Laskin C.J. and Spence J. dissenting.

H.J. Bliss, for the appellant.

J.J. Robinette, Q.C., and J. White, Q.C., for the respondent.

The judgment of Laskin C.J. and Spence J. was delivered by

THE CHIEF JUSTICE (dissenting)—This case raises the correctness and, if correct, the applicability of the judgments of this Court in Turney v. Zhilka[2], F.T. Developments Ltd. v. Sherman[3] and O’Reilly v. Marketers Diversified Inc.[4] It was twice argued, first before a Bench of five (as was each of the three cases just mentioned) and then before the full Court.

On the first argument, counsel for the respondent vendors admitted that the unperformed condition in the contract of sale, upon which they rested their resistance to specific performance sought by the appellant purchaser, was one solely for the benefit of the purchaser who had effected a timely waiver before bringing his suit. On the argument before the full Court, a different position was taken by way of a submission that the unperformed condition was a “true condition precedent”, was for the benefit of both parties and hence could not be waived by the purchaser alone.

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The concession on the first argument that the vendors had no interest in the performance of the particular condition, as being one exacted by the purchaser solely for his benefit, was in effect withdrawn.

The contract of sale which gave rise to the issue which is now before this Court was entered into on February 10, 1967, and was for the sale of certain land in Stoney Creek, an Ontario town, for the sum of $350,000. A deposit of $5,000 was paid and the contract provided that $70,000 would be paid on closing and the balance of $275,000 would be covered by way of a mortgage back to the vendors. In the events which happened nothing turns on these terms of payment because the purchaser offered to close by payment in full in cash and, indeed, the contract of sale provided that the purchaser could pay the whole or any part of the principal at any time without notice or bonus.

Two provisions of this contract of sale are relevant to the determination of the question at issue. The first is a lengthy clause which is alleged by the purchaser to embody a condition which was solely for his benefit. The second is another clause expressing certain conditions which, on the respondents’ submission, highlights, by comparison with the language of the first clause, why the latter is a “true condition precedent”. For proper context I set out hereafter not only the two clauses but as well two other provisions of the agreement, numbering them for convenience from one to four. They are as follows:

1. The purchaser shall prepare and have ready for presentation to the said Town of Stoney Creek (and obtain an appointment from the said Municipality) his site plan within four months of acceptance of this offer.

If this offer is accepted by the vendors, the contract of purchase and sale will be subject to the condition that the necessary approvals of the Ontario Municipal Board and the Town of Stoney Creek to the site plan and proposed changes in zoning, and any approval of the Committee of Adjustment or Planning Board required are given. The applications for and all matters and appearances relating to such approvals shall be prepared by and at the expense of the purchaser but may be brought in the names of the vendors. The

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vendors agree and undertake to give all help and co-operation required by the purchaser and to execute all necessary documents and make all attendances necessary (without costs to the purchaser) to assist in and facilitate the obtaining of the approvals and registrations required by the purchaser. It is agreed between the parties that the Application and hearing before the Ontario Municipal Board shall be completed on or before the 30th day of September, 1968 (without the decision necessarily having been made). Provided however, if any adjournment results from opposition beyond the control of the purchaser, then the said date for completion of the application and hearing shall be extended to the 31st day of January, 1969 at the latest. Provided further, that the purchaser shall within two months after all Municipal approvals have been granted, cause an appointment to be obtained for a hearing before the Ontario Municipal Board. In the event that these conditions are not complied with, then notwithstanding anything herein contained, the agreement of purchase and sale shall be null and void and the deposit monies returned to the purchaser.

2. If this Offer is accepted by the vendors, the contract of Purchase and Sale will be conditional upon:

(a) The said lands being serviced with adequate water and adequate sanitary sewer facilities to accommodate the purchaser’s site plan of commercial and residential requirements within the terms of the zoning by-law.

(b) There being no charges for services against the lands other than those charges in existence at the date of acceptance of this agreement.

(c) There being no capital contribution required by the Town of Stoney Creek other than the usual five per cent (5%) for land dedication.

In the event that any of the above conditions are not complied with, the purchaser shall have the option to declare this agreement null and void and to have the deposit returned or to accept the changes and complete the agreement.

3. It is understood and agreed that the purchaser shall not be required to make any amendments to his proposed site plan in the event that approval by all necessary persons, departments or agencies is not obtained. In the event that the proposed site plan submitted by the purchaser is not approved by all persons, departments and agencies, then the said agreement shall be null and void and the deposit returned to the purchaser forthwith. Provided, however, the purchaser may at his option, make any

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necessary amendments to meet the requirements of the persons, departments or agencies. Notice of the exercise of such Option by the purchaser shall be given to the vendors within forty-five days of the said refusal of approval having been communicated to the purchaser.

4. This offer shall be accepted on or before the 11th day of February, 1967, otherwise void. The sale shall be completed sixty days after the date the Ontario Municipal Board approves the proposed site plan prepared by the purchaser on which date possession of the lands is to be given to the purchaser.

The offer to purchase, under the above and other terms of the offer made by the purchaser, was duly accepted. Time was of the essence under the contract. The purchaser had sought the property for an apartment project and he proceeded to submit site plans for approval by the municipal authorities. After he had submitted some fifteen plans to no avail (although he was prepared to accept all amendments proposed by the municipality), it became quite obvious that he was not going to succeed in obtaining the necessary approval for his apartment project. Thereupon, he advised that he was prepared to take and use the land under the existing zoning.

The vendors took no part in and were not consulted on the preparation of any of the site plans. The record of the evidence adduced at the trial shows that the vendors regarded the condition numbered one above as of no interest or consequence to them. I draw attention to this because, in my opinion, the construction mutually placed upon a contract by the parties thereto is not to be ignored when the benefits and obligations of the contract come to be considered. What happened in this case, as counsel for the vendors was candid to admit on the first argument, was that the vendors got a better offer for their land and looked for a way to recede from their contract with the appellant.

The purchaser made a formal waiver in writing of all conditions save as to title, and avowed his readiness and willingness to complete in accordance with the prescriptions of the agreement otherwise governing completion. The vendors then took

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the position that approvals of the site plan and consequent changes in zoning constituted a condition precedent which they would not waive, and since the date by which to secure such approvals had not been met they regarded the agreement as null and void. In the ensuing action brought by the purchaser for specific performance, the trial judge held that the case was governed by Turney v. Zhilka in that there was here, as there, a “true condition precedent” whose performance depended on the will of third parties, that is the municipal authorities, and that unless there was performance in accordance with its terms specific performance could not be had by the purchaser.

A majority of the Ontario Court of Appeal took the same position in affirming dismissal of the purchaser’s action. Jessup J.A. dissented, holding that Turney v. Zhilka was distinguishable because in the present case, unlike that one, the purchaser was given an unlimited right of amendment to meet the requirements of the proper authorities and hence it was open to him to accept the present zoning, as he in fact did. This conclusion by Jessup J.A. goes to support the purchaser’s view of the contract as involving a condition solely for his benefit.

I pass now to a consideration of Turney v. Zhilka and to the principle on which it was based. The condition in that case, upon which the suit for specific performance foundered, was one fixed by the contract without reference to any obligation of performance being placed on either the vendor or the purchaser. The relevant condition read as follows:

Providing the property can be annexed to the Village of Streetsville and a plan is approved by the Village Council for subdivision.

Judson J. speaking for this Court read this provision as depending (to use his words) “entirely on the will of a third party”. That is not the present case, it being quite clear under the contract (even apart from the evidence of the vendors) that it was

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the purchaser who was to prepare and seek approval of a site plan, and of necessary rezoning, in order to carry out his apartment project which was the known and particularized use to which the land was to be put. Since the obligation to proceed with a site plan and to seek rezoning was expressly put on the purchaser, and since, on the evidence, the condition was one exacted by him solely for his benefit, there is a marked difference between the present case and Turney v. Zhilka.

The issue raised by Turney v. Zhilka and by the cases that have followed it, such as the F.T. Developments case and the O’Reilly case, appears to me to require a proper understanding of the phrase “true condition precedent” which was used by Judson J. in Turney v. Zhilka in the following passage of his reasons (at pp. 583-4):

The obligations under the contract, on both sides, depend upon a future uncertain event, the happening of which depends entirely on the will of a third party—the Village council. This is a true condition precedent—an external condition upon which the existence of the obligation depends. Until the event occurs there is no right to performance on either side. The parties have not promised that it will occur. In the absence of such a promise there can be no breach of contract until the event does occur.

I shall return to this passage after some preliminary observations which follow.

A condition which is characterized as a condition precedent may be one in which both parties have an interest and yet it may be subject to waiver at the suit of one only of the parties. That is because their interest in it may not be the same. The condition may be for the protection of one party only in the sense that it is solely for his benefit, but it may be important to the other party in the sense that he is entitled to know the consequence of its performance or waiver by the date fixed for its performance so that he may, if he is the vendor, either collect his money or be free to look for another purchaser. It would, in my view, be a mistake to move from the fact that both parties have an interest in the performance or

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non-performance of a condition of the contract to the conclusion that the condition cannot therefore be waived at the suit of the one party for whose sole benefit the condition was introduced into the contract. Some of the submissions made here, especially on the re‑argument of the appeal, failed to draw this distinction which, to me, is a vital one.

Another distinction that appears to me to be vital is one that is clear upon a comparison of the relevant conditions in Turney v. Zhilka and in the present case. The fact that the conduct or action of a third party is involved in the proper performance of a condition does not on that ground alone make it a “true condition precedent” which cannot be waived. Thus, to take a homely example, the fact that a purchaser may make it a condition of completion that he be able to obtain mortgage financing within a fixed period does not, in my opinion, preclude him from waiving the condition and paying in cash, provided, of course, he makes his election to waive the condition within the period fixed by the contract: see Scott v. Rania[5]. In principle, there is no difference between the foregoing situation and one where the duty of one of the parties to the contract arises only upon the act of a third party, as for example, the obligation to pay money upon the certificate of an architect or engineer. Of course, the obligor is not likely to make the payment unless the certificate is provided, but the fact that he could insist on its production does not mean that he could not waive this condition of his duty to pay.

There is a parallel situation where title defects are involved. It is unquestionable that a purchaser may choose to accept the subject property notwithstanding an impediment to perfect title upon whose removal he could insist: see Bennett v. Fowler[6]. As Cardozo J. put it in Catholic Foreign Mission Society of America v. Oussani[7], at p. 8:

…a buyer in such circumstances is not bound to rescind. He may waive the condition and accept the title though defective. If he does, the seller may not refuse to

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convey because the buyer could not have been compelled to waive.

The same point of principle was made much earlier by Lopes L.J. in Hawksley v. Outram[8], at p. 378 when he said, in respect of certain non-competition provisions in a contract for the sale of a business, that “it is perfectly clear that they are provisions intended solely for the benefit of the purchaser; the purchaser, therefore, is at liberty to relinquish them and, if he does so, it is immaterial whether he could have successfully insisted on them”.

The principle operates in favour of a vendor as well as in favour of a purchaser. Morrell v. Studd & Millington[9] is illustrative. There it was held that a vendor could waive a provision that the balance of the purchase price be secured to his satisfaction and could sue the purchaser for specific performance after foregoing that provision which was one solely for his benefit.

In this class of case, whether it be action or conduct by one of the parties that is involved or action or conduct of a third party, what is important is whether that action or conduct is a condition of an obligation of one of the parties only or of both. If of one only, there is no reason why he should not be able to offer performance of his own obligation or duty without insisting on the condition and then call on the other to perform his side of the bargain.

What has sometimes complicated the application of this principle are cases which involved not the performance of a concluded contract but rather the question whether there was a concluded contract. Lloyd v. Nowell[10], is referred to by Fry on Specific Performance, 6th ed. (1921), at pp. 175 and 461 to point up the distinction. Thus, where a transaction was subject to “the preparation by my solicitor and completion of a formal contract”, it could not be said that the vendor could waive this provision and create a contract by

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his unilateral act. Nor could a purchaser do so under a similar provision respecting the preparation of a formal contract by his solicitor: see Von Hatzfeldt-Wildenburg v. Alexander[11].

I take Turney v. Zhilka to have involved, as a matter of construction, a condition which was applicable to the duty of both parties. As Judson J. put it, at p. 583 of [1959] S.C.R., “the obligations under the contract, on both sides, depend upon a future uncertain event, the happening of which depends entirely on the will of a third party—the Village council”. (The italics are my own.) It is on this basis only that it can be said, as Judson J. did, that there was here a “true condition precedent”, that is one external to the obligations of both parties and one where the contract did not give the carriage of the matter to either one of the parties so as to provide a basis for contending that it was for his benefit alone and could be waived by him. This construction of a condition involving some action of a third party is not a necessary one: see, for example, Funke v. Paist[12] and Richardson v. Snipes[13] holding required zoning approvals to be conditions of the duty of the purchaser only and hence open to waiver by him. Nevertheless, there can be no doubt that, in particular situations of which Turney v. Zhilka is illustrative, a provision for rezoning or redevelopment consent may be construed as one for the mutual advantage or benefit of both of the parties to a contract of sale of land and hence not open to unilateral waiver. This was the result reached in the recent English case of Heron Garage Properties Ltd. v. Moss[14]. There is one point in that case which also calls for consideration here and that is the fact that the date of completion is geared to the obtaining of planning consent or zoning approval, thus raising the question of the severability of the provision which the purchaser purported to waive. I will return to this point later in these reasons.

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In F.T. Developments Ltd. v. Sherman, supra, Judson J. again construed a condition respecting rezoning as applicable to the duties of both parties. The terms of the condition were as follows:

This offer is conditional upon the Purchaser obtaining the rezoning of the said lands on a M-5 zoning basis. Such rezoning to be obtained within 6 months from the date of the acceptance of the Offer. Provided that should the rezoning be approved by the Municipality of the Township of North York, and should it be before the Municipal Board within a six-month period, a further extension for the approval of the Municipal Board will be given for a period of 90 days, if the Municipal Board has not had an opportunity of giving its approval prior to the said extension date.

It may be noted that the situation in the F.T. Developments case was different from that in Turney v. Zhilka in that there the very offer of the purchaser was made conditional upon obtaining the rezoning while in the latter there was a concluded contract, performance of which depended upon a certain condition, but this difference did not enter into the Court’s assessment of the issue. However, Cartwright C.J.C. did not find it necessary to decide whether the condition could be unilaterally waived because on the evidence and findings of fact there was no waiver declared until after the time for closing had passed.

I would not myself have found any consonance between the condition in the F.T. Developments case and that in Turney v. Zhilka. Even less of a consonance appears to me to exist between the condition in Turney v. Zhilka and that in the O’Reilly case, supra. In the latter case, a purchaser had agreed to buy lot 7 in a certain area from a vendor, and the contract included a provision as to the purchaser being able to purchase lot 8 from a third party on terms and conditions satisfactory to the purchaser and prior to a named date. On the question whether this was a condition for the purchaser’s sole benefit and open to waiver by him, the British Columbia Court of Appeal so held in reversal of the trial judge. This Court, again speaking through Judson J., held that Turney v.

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Zhilka and the F.T. Developments case governed the legal issue. It was his view, to quote his words, that “the vendor in the present appeal had no enforceable contract without performance of the condition. Neither had the purchaser”. In short, the view was taken that the provision as to the purchase of lot 8 was a condition of the duty of performance of both the vendor and the purchaser. I cannot so read the provision which, on its face, seems so clearly to be directed to the duty of the purchaser and not to any duty or interest of the vendor. Being, in my opinion, for the purchaser’s benefit alone, it was one which he could forgo in asserting a claim to specific performance against the vendor. The provision was there to enable the purchaser to defend against the vendor if it was unperformed and not vice versa.

I cannot but think that if the condition in the present case and the condition in the O’Reilly case are not instances of conditions which can be waived by the one party to whose duty of performance they go, there can hardly be any case in which waiver can be lawfully effected short of an express provision therefor in the contract of sale. No doubt this is a salutary procedure, but the law of contract has long ago ceased to depend on exact expression of every consequence of a contractual provision.

An examination of the case law in England, in Australia, in New Zealand and the United States discloses no differentiation in applicable principle between those provisions where action of a third party is involved and those where only the action of the opposite party is involved so far as concerns the right of waiver of a provision which is found to be for the benefit of one party only. Of course, a party cannot base a claim for performance by the opposite party of a conditional obligation on his own failure to perform, unless it can be said that the failure relates to a mere promise rather than to the condition; but, even as to a condition to which a party is obliged in favour of the opposite party, the latter may elect to enforce the contract rather than rescind upon breach of the condition.

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The present case, in a sense, shows the opposite side of the coin because if the provision in question is solely for the benefit of a party who decides to renounce that benefit, there is then no impediment to calling for the opposite party’s performance provided the provision waived is not tied in with other terms from which it cannot be extricated by way of unilateral relinquishment. What the earlier observation shows, however, is that failure to perform a condition does not necessarily mean that there is no contract to enforce since the innocent party may elect to keep it alive. This also goes to a point raised in the present case and I shall deal with it now.

Counsel for the respondent vendors urged that the provisions of the contract of sale themselves set up a distinction between provisions open to waiver by the purchaser and those that were not. The submission related to the provision numbered 2 in these reasons which stated that if the conditions therein were not complied with “the purchaser shall have the option to declare this agreement null and void”. The contrast alleged was with the site plan condition, the one central to this appeal, numbered 1 in these reasons, which concluded that “in the event that these conditions are not complied with… the agreement of purchase and sale shall be null and void”. Here there was no express “option” to that end given to the purchaser.

There are two comments that I would make on the foregoing submissions. First, the provision numbered 2, respecting water and sewer facilities and protection of the purchaser against service charges and capital contributions, did not call for any action or initiative by the purchaser and he would have been entitled to resist enforcement of the contract by the vendors if the conditions stated to be such, were not fulfilled, even if the contract had not expressly so stated. Further, the presence of a waiver clause did not make the conditions any more directly conditions of the buyer’s duty of performance than they would have been without it. In short, the situation here was simply one where the waiver clause emphasized that the provisions in question were for the purchaser’s benefit; and, to

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recall an earlier observation here, the purchaser could insist on them if he so desired, and it would be no defence to the vendors to say that because the purchaser could not be compelled to waive they would not perform.

The second comment relates to the site plan provision and to the concluding stipulation that the agreement should be null and void (without giving either party a power so to elect) “in the event that these conditions are not complied with”. I accept the proposition stated in Corbin on Contracts, Vol. 3A, at p. 517, that a provision that the contract shall be null and void “seldom means what it appears to say” and that “generally what is meant is that the duty of one of the parties shall be conditional on [performance] by the other party exactly as agreed”; otherwise the contract would in effect be giving an option to the party who is to render the performance on the failure of which the contract is to be null and void. This proposition does not, however, preclude a party entitled to call for such performance from waiving it where it is solely for his benefit. In relation to the present case, it invites consideration of the conditions to which the “null and void” provision relates. In my view, those conditions are the provisions as to the time fixed for completion of the hearings before the Municipal Board and related time provisions, all annexed to the site plan provisions. If the latter can be waived, the time provisions go with them, and there is consequently no bar in them to the purchaser’s right to call for performance by the vendors.

The High Court of Australia in Maynard v. Goode[15] was met with a submission that a provision in a contract of sale of land that the Crown postpone payment of rent due to it was a “true condition precedent” as being for the benefit of both parties to the contract. The fact that action by a third party, the Crown, was involved, did not

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prevent the Court from concluding, as had the trial judge, that the provision was open to waiver as being for the sole benefit of the purchaser in that case. The matter was considered at great length by Hutchison J. of the Supreme Court of New Zealand in Donaldson v. Tracy[16], in terms of a distinction drawn by counsel between a “pure” condition (the “true condition precedent” under another formula) depending on the action of a third party and provisions that were merely promises or undertakings. The case arose out of an accepted offer for the purchase of a hotel property and of the hotel business. In the offer the purchaser stipulated for the approval of the Licensing Commission and also that it not recommend any other licensed premises within a two-mile radius. The Commission did in fact approve a license within that area but the purchaser sought to waive this provision and sued for specific performance when the vendor contended that the contract was no longer binding. The purchaser obtained a decree.

Two points emerge from the judgment and, although they have already been made, they are worth repeating. First, to use the words of the Court (at p. 691):

Where there is a failure of condition I think on principle that it does not make any difference whether the failure is due to the action of a party or to the action of an outsider, so far as regards the right of the other party to waive the condition if it is solely for his benefit.

Second, that a condition is for the sole benefit of the party who purports to waive it may be shown by evidence of surrounding circumstances. Hutchison J. was of opinion that on the face of the contested provision it was for the benefit of the purchaser, a conclusion fortified by the observation that the vendor would suffer no prejudice if the particular condition was not in the contract.

A similar approach with similar results runs through American case law. I may refer first to 17A Corpus Juris Secundum pp. 688-690 which brings into relation the position of a party who may waive rights to which he is entitled and who

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may also elect not to take advantage of a breach by the opposite party. A line of authorities supporting waiver of a provision for rezoning approval will be found in American Law Reports Annotated, 76 ALR 2d 1204. I will refer in detail to only one modern American case, Godfrey Co. v. Crawford[17] because it bears also on the “null and void” contention previously canvassed in these reasons.

The case involved an accepted offer to purchase certain land and it had a completion date of March 1, 1963. The contract provided that the purchaser should be joined by the vendors and by owners of adjacent premises to petition the Municipal Council for rezoning to permit a certain development, such petition to be filed on or before January 3, 1963, “and in the event the petition for rezoning is denied or cannot be consummated on or before March 1, 1963. …this offer to purchase shall become null and void and all monies paid hereunder shall be returned to the buyer”. Prior to March 1, 1963, the purchaser advised the vendors of a waiver and of a readiness to complete the purchase on the completion date. In affirming dismissal of a demurrer to the purchaser’s action for specific performance, the Court made some observations which I reproduce and adopt here, as follows (at pp. 497-8):

We agree with defendants’ contention that the provision in the contract, that it was to become null and void upon the failure to consummate the zoning revision by March 1st, is obviously for the protection of the sellers as well as the buyer. It is for the protection of the buyer because nonfulfillment of the zoning revision cancels its liability on the contract and enables it to recover any prior payments made on the purchase price. It is for the protection of the sellers because such nonfulfillment also terminates their liability on the contract and leaves them free to immediately sell the premises to someone else. Without such a provision the sellers might well have their property tied up for a long period of time should a court find that time was not of the essence with respect to accomplishing the zoning revision. If at the end of such time the buyer defaulted the sellers in the mean-

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time could have lost an opportunity of an advantageous sale to someone else…

The fact that this particular provision is held to be for the benefit of the sellers as well as the buyer, however, does not in itself preclude the buyer from waiving prior to March 1, 1963, the condition that the zoning revision be consummated by March 1, 1963. This is because it is alleged in the amended complaint that the zoning change was for the protection of the buyer, and the general rule is that a party to a contract can waive a condition that is for his benefit…

By permitting the buyer to waive the condition with respect to zoning revision, providing such waiver occurs prior to the specified cut-off date of March 1, 1963, there is no interference with the protection afforded sellers by the provision in the contract that, if the zoning revision is not consummated by that date, the contract is rendered null and void. The prior waiver has the same effect as a consummated zoning revision insofar as the rights of the sellers are concerned. In either event the buyer is absolutely obligated to pay the balance of purchase price on the closing date of March 1, 1963. The sellers have no protectable interest in whether or not the zoning revision has been consummated as such, but only in knowing on March 1, 1963, that either (1) the buyer is absolutely bound to immediately pay the balance of purchase price, or (2) the contract is at an end and they are immediately free to sell to someone else.

In view of the foregoing we hold that plaintiff buyer did have the right prior to March 1, 1963, to waive the contract provision with respect to the consummation of the zoning revision by that date. By so doing we do not consider that we have rewritten or reformed the agreement of the parties, but have merely given effect to the well-recognized principle that a party may waive a provision inserted in a contract for his benefit. Defendant sellers contend that such a construction will do violence to their rights, because they relied to their detriment in agreeing to sell to the corporate defendant contingent upon no zoning revision having occurred by March 1, 1963. The answer to this contention is that the contract clause which defendants claim to have relied upon was always open to the contingency that the courts would construe it as we have done. They acted at their

[Page 549]

peril in so acting as not to protect themselves against such a contingency.

The most potent argument advanced by defendants is the fact that the contract between plaintiff and the individual defendants specifically authorized plaintiff to waive title defects, but is entirely silent with respect to its right to waive the consummation of the desired zoning revision. In a close case where the scales are somewhat evenly balanced between one interpretation and another, this might well be the decisive factor in arriving at the court’s decision. We do not consider, however, that this is such a close case. Defendants have failed to point out any way in which the defendant seller’s protection is weakened in the slightest degree by the interpretation adopted by this court.

One of the passages quoted above relates to the reserved point to which I alluded earlier when referring to Heron Garage Properties Ltd. v. Moss, namely, the effect upon a purported waiver of the association with the closing date of the condition sought to be waived. In Godfrey Co. v. Crawford, a fixed date was given, namely March 1, 1963, for obtaining the rezoning approval and for closing. In the Heron Garage case, one where the vendor retained adjoining land on which he proposed to carry on a business (sale of motor vehicles) to a degree related to the business proposed to be carried on by the purchaser (a gasoline station), the provision for completion was one calendar month after receipt by the purchaser of unconditional consent to its planning application or one calendar month after the purchaser approved any conditional planning consent (which he had to do within 28 days thereof), but in either case not before January 1, 1973. The judge in the Heron Garage case, after holding the planning condition to be for the benefit of both parties and hence not to be waived by the purchaser alone, also felt that the nexus between that condition and

[Page 550]

the completion date precluded waiver because it would leave the completion date in the air.

I find no such difficulty in the present case once it is decided, as in my opinion it should be, that on the very face of the site plan condition, it was for the sole benefit of the purchaser. Since it was open to the purchaser to pay cash and he offered to do so, it would follow that a reasonable period following the refusal of site plan approval, a period measured by the sixty days mentioned in the completion condition, would govern completion following waiver of the condition. In fact, nothing turned on the completion date in the present case since the purchaser was ready and willing to complete, with waiver of all conditions save as to title, within sixty days after September 30, 1968, being the date fixed by the contract for the conclusion of the hearings by the Ontario Municipal Board.

Having had the benefit of seeing the reasons prepared by my brother Dickson before completing my own, I would underline two of the points of difference between us. I do not view waiver as involving a rewriting of an agreement any more than I regard estoppel of a party from insisting upon a term of an agreement as a rewriting thereof. A party that is entitled to a range of benefits under an agreement does not rewrite it against the opposite party by forgoing some of those benefits. Second, I find nothing offensive or prejudicial in the fact that a vendor may not know until completion date whether the contract will be performed according to its very terms or whether there will be a waiver so as to give the purchaser a choice to opt out or to insist on performance by the vendor. This is not an uncommon situation in contracts and depends simply on their terms.

In the result, while recognizing the basis upon which Turney v. Zhilka proceeded, I do not find that it precludes a contrary conclusion in the present case, and I would, accordingly, allow the appeal, set aside the judgments below and enter a decree of specific performance in favour of the purchaser with costs throughout.

[Page 551]

The judgment of Martland, Judson, Ritchie, Pigeon, Dickson, Beetz and de Grandpré JJ. was delivered by

DICKSON J.—This case raises once again the question whether a contracting party may waive a condition of the contract on the ground it is intended only for his benefit, and then bring an action for specific performance. The point came before the Court in Turney v. Zhilka[18], and in two later cases F.T. Developments Limited v. Sherman et al.[19], and O’Reilly v. Marketers Diversified Inc.[20] In the Turney case the defendant pleaded that the purchaser had failed to comply with the following condition of the contract:

Providing the property can be annexed to the Village of Streetsville and a plan is approved by the Village Council for subdivision.

Neither party to the contract undertook to fulfill the condition and neither party reserved a power of waiver. The purchaser made some enquiries of the Village Council but with little success. After trouble arose between the parties, the purchaser purported to waive the condition on the ground it was severable and for his benefit. He sued for specific performance. Mr. Justice Judson, delivering the judgment of this Court, said that one party to a contract might forego a promised advantage or dispense with part of the promised performance of the other party which is simply and solely for the benefit of the first party and is severable from the rest of the contract, but that in Turney there was no right to be waived. Then follows the passage to which reference has been frequently made, at p. 583:

The obligations under the contract, on both sides, depend upon a future uncertain event, the happening of which depends entirely on the will of a third party—the Village Council. This is a true condition precedent—an external condition upon which the existence of the obligation depends. Until the event occurs there is no right to performance on either side. The parties have not promised that it will occur. In the absence of such a promise there can be no breach of contract until the event does occur. The purchaser now seeks to make the

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vendor liable on his promise to convey in spite of the non-performance of the condition and this to suit his own convenience only. This is not a case of renunciation or relinquishment of a right but rather an attempt by one party, without the consent of the other, to write a new contract. Waiver has often been referred to as a troublesome and uncertain term in the law but it does at least presuppose the existence of a right to be relinquished.

The law as so expounded was applied and extended in the later cases to which I have referred.

The present case concerns an agreement dated February 10, 1967, for the purchase and sale of 17.669 acres of land in the Town of Stoney Creek, Ontario for $350,000 payable $5,000 as a deposit, $70,000 on closing and the balance of $275,000 by way of mortgage back to the vendors. The agreement provided that:

The purchaser shall prepare and have ready for presentation to the said Town of Stoney Creek (and obtain an appointment from the said Municipality) his site plan within four months of acceptance of this offer.

Then follows this rather lengthy, but important, paragraph:

If this offer is accepted by the vendors, the contract of purchase and sale will be subject to the condition that the necessary approvals of the Ontario Municipal Board and the Town of Stoney Creek to the site plan and proposed changes in zoning, and any approval of the Committee of Adjustment or Planning Board required are given. The applications for and all matters and appearances relating to such approval shall be prepared by and at the expense of the purchaser but may be brought in the names of the vendors. The vendors agree and undertake to give all help and co-operation required by the purchaser and to execute all necessary documents and make all attendances necessary (without costs to the purchaser) to assist in and facilitate the obtaining of the approvals and registrations required by the purchaser. It is agreed between the parties that the Application and hearing before the Ontario Municipal Board shall be completed on or before the 30th day of September, 1968 (without the decision necessarily having been made). Provided however, if any adjournment results from opposition beyond the control of the purchaser, then the said date for completion of the application and hearing shall be extended to the 31st day of January, 1969 at the latest. Provided further, that the purchaser shall within

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two months after all Municipal approvals have been granted, cause an appointment to be obtained for a hearing before the Ontario Municipal Board. In the event that these conditions are not complied with, then notwithstanding anything herein contained, the agreement of purchase and sale shall be null and void and the deposit monies returned to the purchaser.

(Italics added)

The contract of purchase and sale was made subject by that paragraph to approvals being given to (i) the site plan; (ii) proposed changes in zoning, by (a) the Ontario Municipal Board, (b) the Town of Stoney Creek, and (c) the Committee of Adjustment or Planning Board. The paragraph in express terms makes the agreement null and void if the application and hearing before the Ontario Municipal Board is not completed before September 30, 1968.

The agreement also contains this paragraph:

If this Offer is accepted by the vendors, the contract of Purchase and Sale will be conditional upon:

(a) The said lands being serviced with adequate water and adequate sanitary sewer facilities to accommodate the purchaser’s site plan of commercial and residential requirements within the terms of the zoning by-law.

(b) There being no charges for services against the lands other than those charges in existence at the date of acceptance of this agreement.

(c) There being no capital contribution required by the Town of Stoney Creek other than the usual five per cent (5%) for land dedication.

In the event that any of the above conditions are not complied with, the purchaser shall have the option to declare this agreement null and void and to have the deposit returned or to accept the changes and complete the agreement.

It will be observed that the paragraph immediately above quoted gives the purchaser the option to declare the agreement null and void if the conditions therein set forth are not complied with whereas the paragraph quoted earlier contains no such option. Failure of compliance with the conditions detailed in the earlier paragraph renders the agreement null and void.

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The only other paragraph which I would quote reads:

It is understood and agreed that the purchaser shall not be required to make any amendments to his proposed site plan in the event that approval by all necessary persons, departments or agencies is not obtained. In the event that the proposed site plan submitted by the purchaser is not approved by all persons, departments and agencies, then the said agreement shall be null and void and the deposit returned to the purchaser forthwith. Provided, however, the purchaser may at his option, make any necessary amendments to meet the requirements of the persons, departments or agencies. Notice of the exercise of such Option by the purchaser shall be given to the vendors within forty-five days of the said refusal of approval having been communicated to the purchaser.

This paragraph gives the purchaser the right to make, or not to make, as he may wish, amendments to his proposed site plan; subject to this, the point is again made that the agreement is to be null and void if the proposed site plan does not receive all necessary approvals.

The site plan has a bearing upon two other material aspects of the agreement: (i) the agreement makes provision for partial discharges of mortgage; any partial discharge is to be in respect of all the lands in any one parcel as shown on the site plan; (ii) the completion date of the sale and possession date is fixed by the agreement at sixty days after the date the Ontario Municipal Board approves the proposed site plan.

The purchaser intended to construct a multiple apartment house complex on the subject property. This, however, required an amendment of the Zoning By-law of the Town of Stoney Creek from R1, C3 and 01 to “RM5”. The obligation of preparing the applications and all other matters incident to procuring the necessary zoning changes was that of the purchaser although the vendors agreed to render all assistance and co-operation required by the purchaser for that purpose. The purchaser acted with reasonable diligence and the vendors co-operated. Over a period of many months fifteen different plans and a series of applications were submitted to the Town of Stoney

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Creek but things moved slowly, due in part at least to the proposed intrusion of an apartment project into a single-family dwelling neighbourhood. By the deadline date, September 30, 1968, little real progress had been made. The applications were being processed in an orderly but lethargic way by the Town planning authorities. The application to, and hearing before, the Municipal Board were by no means imminent. On the day by which the hearing should have been completed, September 30, 1968, the purchaser, in a last minute attempt to save the agreement, served upon the vendors a form wherein he purported to waive all conditions set forth in the agreement except as to title, and he offered to complete the purchase within sixty days from September 30, 1968, in accordance with the remaining terms of the agreement. The vendors replied on October 1 to the effect that since the condition for completion of the application and hearing before the Ontario Municipal Board before September 30 had not been fulfilled and satisfied the agreement of purchase and sale was therefore null and void. Further correspondence ensued between the solicitors of the parties. The purchaser offered to pay all cash on closing rather than give a mortgage back to the vendors, if the vendors wished, but the latter were obdurate, and the matter went to trial on pleadings in which the parties joined issue on the purchaser’s contention that if there had been non-compliance with the conditions, the conditions were inserted in the agreement solely for his benefit and he had waived compliance therewith.

The trial judge, Thompson J., made these findings:

It becomes very obvious that the conditions of the contract relative to zone changing, including the approvals necessary therefor by law, were made conditions precedent by the very terms of the instrument and from the language of the parties there used, were intended so to be.

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The obligations under this contract on both sides depend upon a future uncertain event, the amendment of the Zoning By-law, the happening of which depends entirely upon the will of third parties—the Town Council, the Planning Board, the Minister and the Municipal Board. This is a true condition precedent—an external condition or conditions upon which the very existence of such obligations depend.

The judge considered Turney v. Zhilka and concluded:

I can see no real distinction between the condition in that case and those in the instant case and must therefore hold that the plaintiff is not entitled to waive the conditions in question without the consent of the defendants, nor to enforce the contract less the conditions.

The action was dismissed with costs and the purchaser appealed.

It would appear from the judgments rendered in the Court of Appeal that the principal issue canvassed in that Court was the force of the proviso reading:

Provided, however, the purchaser may at his option, make any necessary amendments to meet the requirements of the persons, departments or agencies.

On this point Schroeder J.A. said:

It is contended on behalf of the appellant that the provision above set forth giving him the right to revise his application from time to time must be interpreted as conferring upon him the right to withdraw his application in its entirety and that, carrying the interpretation thereof to its extreme length, it bestowed upon him a right to waive performance of the said conditions at his option.

My brother Brooke and I do not agree with this submission. In the view which we take the vendors and the purchaser contemplated an alteration in the zoning provisions affecting the area in question and on a proper construction of the terms of the agreement the conditions above-quoted were true conditions precedent, the non‑fulfilment of which rendered this agreement null and void. In our opinion the case in hand is indistinguishable from Turney v. Zhilka (supra).

Jessup J.A., dissenting, said:

In my view this unlimited right of amendment necessarily includes the right to dispense with any rezoning of

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the property, in other words, a complete capitulation to the requirements of the persons, departments or agencies involved. For that reason I would allow the appeal as I have stated.

I agree with the conclusion of the majority in the Court of Appeal. First, the right to amend is limited to “necessary amendments to meet the requirements” of the planning authorities; it is in my view merely a right to alter or correct or improve the plan in response to the demands of the authorities. Second, the right to amend, it will be observed, relates only to the site plan and there is no mention of amending the proposal for a change in zoning.

It was urged that the provisions in the agreement respecting the proposed site plan and zoning changes were so vague as to afford the purchaser the opportunity of complying by filing any kind of plan and by accepting the existing zoning, and in any event the vendors had no real interest in the site plan or the zoning to be adopted. This is true to a point but it ignores realities, it speaks of what might have happened, not of what did happen. As the trial judge observed, there had been long and protracted negotiations and discussions between the parties as to the purpose to which the lands were to be put by the purchaser. The plans of the purchaser initially contemplated six apartment buildings of nine storeys each or five apartment buildings of twelve storeys each, housing some 3,000 persons. The plans were later modified to four apartment buildings containing 780 apartment units. This proposal was under study by the Town Council and various highway, engineering and other authorities when time ran out on September 30, 1968. The proposal continued under such study until withdrawn by the appellant in a letter dated November 8, 1968. There can be no doubt on the evidence that the purchaser seriously planned and assiduously sought approval of a major housing development. The approval, a future uncertain event, was entirely dependent upon the will of third parties, the Town of Stoney Creek, the Planning Board, the Minister and the Ontario Municipal Board. The factual infrastructure of this case may differ in detail from Turney v. Zhilka and is perhaps more analogous to that of

[Page 558]

the two later cases which came before the Court; in F.T. Developments Limited v. Sherman et al., supra, the offer was conditional upon the purchaser obtaining rezoning on a specified (M‑5) zoning basis. I do not think, however, it can be very seriously questioned that the general principle laid down in Turney v. Zhilka applies.

The Court was invited by counsel for the appellant to reappraise the rule in Turney v. Zhilka if that case was found to be controlling. Counsel cited a number of American and English authorities which support the broad proposition that a party to a contract can waive a condition that is for his benefit. Despite the support elsewhere for such a general proposition, I am of the view the rule expressed in Turney v. Zhilka should not be disturbed for several reasons. First, the distinction made in Turney v. Zhilka between (i) the manifest right of A to waive default by B in the performance of a severable condition intended for the benefit of A, and (ii) the attempt by A to waive his own default or the default of C, upon whom depends the performance which gives rise to the obligation, i.e., the true condition precedent, seems to me, with respect, to be valid. Second, when parties, as here, aided by legal advisors, make a contract subject to explicit conditions precedent and provide therein specifically that in the event of non-compliance with one or more of the conditions, the contract shall be void, the Court runs roughshod over the agreement by introducing an implied provision conceding to the purchaser the right to waive compliance. In the instant case the conditions for water and sewer requirements were expressed to be subject to waiver at the option of the purchaser but the conditions respecting site plan and zoning were not; if all of these various conditions were to be placed on the same footing, the Court would be simply rewriting the agreement. Third, if the purchaser is to be put in the position of being able to rely on the conditions

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precedent or to waive them, depending on which course is to his greater benefit, the result may be that the purchaser has been given an option to purchase, for which he has paid nothing; if the property increases in value, the purchaser waives compliance and demands specific performance but if property declines in value, the purchaser does not waive compliance and the agreement becomes null and void in accordance with its terms. It is right to say that this opportunity to select against the vendors will not arise in every case. The zoning changes or other contingency, the subject-matter of the condition precedent, may be approved by the third party or otherwise satisfied within the purchase. He will not be permitted purposely to fail to perform his obligations in order to avoid the contract. But even when, as here, no question of bad faith arises, approvals may not be forthcoming within the prescribed time, and the vendors, whose lands have been tied up for twenty months, can be in the position where they do not know until the final day whether or not the purchaser will waive compliance and whether or not the sale will be completed. If what has been termed an agreement of purchase and sale is to be in reality an option, the purchaser will take the benefit of the appreciation in land value during the intervening months but if the agreement takes effect in accordance with its terms the vendors will have that benefit. I can see no injustice to the purchaser if the contract terms prevail and possible injustice to vendors if they do not. Fourth, application of the rule in Turney v. Zhilka may avoid determination of two questions which can give rise to difficulty (i) whether the condition precedent is for the benefit of the purchaser alone or for the joint benefit and (ii) whether the conditions precedent are severable from the balance of the agreement. I am inclined to the view in the present case that they are not. Finally, the rule in Turney v. Zhilka has been in effect since 1959, and has been applied many times. In the interests of certainty and predictability in the law, the rule should endure unless compelling reason for change be shown. If in any case the parties agree that the rule shall not apply, that can be readily written into the agreement. Genern

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Investments Ltd. v. Back et al.[21] and Dennis v. Evans[22] are examples of cases in which the contract expressly provided that a condition could be waived by the party for whose benefit it had been inserted.

The case of Beauchamp et al. v. Beauchamp et al.[23], appeal dismissed in this Court, was cited by counsel for the appellant. In Beauchamp the agreement was for the sale of certain lands for the sum of $15,500 payable $500 as a deposit and $15,000 in cash on closing. The sale was conditioned upon the purchasers being able, within a period of fifteen days, to obtain a first mortgage of $10,000 and a second mortgage of $2,500. Within the fifteen day period, the purchasers were able to arrange a first mortgage for $12,000 whereupon they notified the vendors that the condition had been met and the transaction would close “as per the agreement”. The vendors refused to close on the ground the condition precedent had not been strictly complied with but the position was untenable. The patent purpose of the condition was to afford the purchasers an opportunity of raising the moneys with which to complete the purchase; in this they were successful and so advised the vendors timeously. It was of no importance whatever that the funds required by the purchasers came from a first mortgage for $12,000 rather than a first mortgage for $10,000 and a second mortgage for $2,500. That case should, I think, be regarded as one in which the condition precedent was satisfied and not as one in which it was waived.

I would dismiss the appeal with costs.

Appeal dismissed with costs, LASKIN C.J. and SPENCE J. dissenting.

Solicitors for the appellant: Levinter, Whitelaw, Dryden, Bliss & Hart, Toronto.

Solicitors for the respondent: White & Swaye, Hamilton.