Shaneka Shaw Taylor

Shaneka Shaw Taylor is the Founder of Taylor’d Litigation Professional Corporation where she practices real estate litigation, commercial litigation and product liability litigation. She is also a licensed real estate salesperson with Forest Hill Real Estate. She has authored several articles and speaks locally and internationally on topical civil litigation matters. She is the author of The Annotated Real Estate and Business Brokers Act, 2002 and Regulations LexisNexis Canada). Phone 416-628-9830; email.

The post How a summary judgment offers a faster path to resolving real estate conflicts appeared first on REM.

Shaneka Shaw Taylor

Shaneka Shaw Taylor is the Founder of Taylor’d Litigation Professional Corporation where she practices real estate litigation, commercial litigation and product liability litigation. She is also a licensed real estate salesperson with Forest Hill Real Estate. She has authored several articles and speaks locally and internationally on topical civil litigation matters. She is the author of The Annotated Real Estate and Business Brokers Act, 2002 and Regulations LexisNexis Canada). Phone 416-628-9830; email.

The post Court orders builder to return deposit following “misleading conduct” appeared first on REM.

Specifically, the court has recognized that in order to prevent a partition or sale, there must be conduct that undermines the reasonable expectations of the parties. In Green et al. v. Gardeazabal, the court clarified what constitutes “reasonable expectations” in this regard.  

Facts 

In mid-2021, the applicants, Ms. Green and Mr. Dutra, and the respondent, Ms. Gardeazabal, contemplated purchasing an investment property together. Prior to their purchase, the parties had discussed achieving a return on investment within two years of owning the property. Green and Dutra had also inquired with a mortgage broker and real estate agent about the possibility of a return on investment within one to two years. 

The parties then purchased a property in Severn, Ont., in April 2022, and each held a 50 per cent share as tenants in common, with Green and Dutra holding their 50 per cent share as joint tenants. There were no written contracts or agreements among the parties governing their joint venture. 

Shortly after the purchase, Green and Dutra told Gardeazabal that they wished to sell the property. Green and Dutra gave Gardeazabal a number of options, including a potential buy-out of their interests. Instead of doing so or presenting a counteroffer, Gardeazabal indicated she would simply allow the mortgage to renew automatically to prevent Green and Dutra from getting out of it. Green and Dutra then brought an application for the sale of the property. Gardeazabal sought a dismissal of the application and an interim injunction preventing the sale until the end of April 2024.  

Gardeazabal’s position 

Gardeazabal opposed the sale of the property on the basis that Green and Dutra’s conduct and representations before the purchase created a reasonable expectation that the parties would hold the property for at least two years. She had formed a company with Green and Dutra to handle property management and rentals and had rented the property for the summers of 2022 and 2023. 

Gardeazabal stated that she relied on reasonable expectations to secure her portion of the down payment, which amounted to her life savings, and that after the parties purchased the property, Green and Dutra wanted to purchase other properties but could not finance these projects while they owned the subject property. She submitted that, as a result, Green and Dutra’s conduct was coercive and abusive and unfairly disregarded her interests.  

Green and Dutra’s position 

Green and Dutra submitted that the evidence did not support Gardeazabal’s reasonable expectation claims, as there was no formal agreement as to how long the parties would own the property. They argued that any references to this timeline in their discussions were projections subject to the ordinary considerations of real estate investment. 

Further, any communication done prior to purchasing the property was done for the purposes of planning or due diligence. Finally, Green and Dutra argued that neither of them acted in a coercive/abusive/unfair manner, and they no longer trusted Gardeazabal as they were concerned she did not account for all the funds she received from vacation renters.  

Rights under the Partition Act 

Justice Harper first canvassed the legal considerations governing the partition and sale of land pursuant to the Partition Act. Per sections two and three of the act, all tenants in common have a prima facie statutory right to compel a partition or sale. 

The presumption is in favour of partition, although a sale will be ordered if found to be more advantageous to the parties or if the land is not suitable for partition. The court has the discretion to refuse either a partition or sale; however, the party resisting the request has the onus of demonstrating the other party’s malice, oppression, or vexatious intent, such that the remedy sought would cause them hardship. In exercising this discretion, the court should account for any agreements between the parties about the land in question.  

Oppressive conduct and reasonable expectations 

Justice Harper then reviewed the legal concepts surrounding oppressive/coercive conduct and reasonable expectations within the context of the Partition Act. 

The oppression remedy, as it appears in corporate law, contains two elements: 

1) Conduct that undermines the reasonable expectations of the parties; 

2) Conduct that is coercive/abusive/unfairly disregards a party’s interests. 

A claimant’s reasonable expectations to be treated a certain way will depend on the facts of the case, the relationship at issue, and the entire context of the matter. A party’s oppressive conduct is also usually merged or tied up with conduct that may defeat the reasonable expectations of the parties. 

The court found this contextual approach should be considered when deciding whether or not to grant a remedy under the Partition Act, as a determination of oppressive conduct requires an examination of the relationship between the parties, their reasonable expectations, the nature of the conduct, and the impact on the person seeking to avoid a sale.  

Application of the law to the facts

Justice Harper found that while the parties embarked on an investment venture, there was never any agreement among them on the terms of this venture, and any conversations, planning, or due diligence leading up to the purchase of the property did not amount to establishing a reasonable expectation to hold the property for at least two years. 

While he noted that Gardeazabal did have an expectation of the length of time the property was to be held, this expectation was subjective, as setting a minimum time to hold an investment is not a reasonable expectation, given the nature of investing in real estate. 

Justice Harper then went on to find that Green and Dutra did not act in a manner that was oppressive or in bad faith. They no longer saw the property as profitable, it did not suit their needs, and they had lost confidence in Gardeazabal’s ability to manage it. He further noted that when Green and Dutra communicated this to Gardeazabal, she did not consider any of the options Green and Dutra had given her to retain the property. In the end, Justice Harper ordered the sale of the property, 

Summary 

Parties wishing to purchase an investment property together should document their expectations and intentions in writing and have such documentation reviewed by a lawyer before execution. Even with such documentation governing the relationship between parties, a court will take a contextual approach when assessing whether or not one party has behaved in an oppressive manner outside of another party’s reasonable expectations. 

This context will include the nature of the real estate market, which means that any expectations the parties may have about a minimum amount of time to hold a real estate property will likely not be considered valid by the court. 

Shaneka Shaw Taylor

Shaneka Shaw Taylor is the Founder of Taylor’d Litigation Professional Corporation where she practices real estate litigation, commercial litigation and product liability litigation. She is also a licensed real estate salesperson with Forest Hill Real Estate. She has authored several articles and speaks locally and internationally on topical civil litigation matters. She is the author of The Annotated Real Estate and Business Brokers Act, 2002 and Regulations LexisNexis Canada). Phone 416-628-9830; email.

The post Balancing rights and expectations: A case study on joint property ownership appeared first on REM.

In this case, the buyer, Sheik, entered into an APS with the seller, Lebovic, a new home builder. The APS was scheduled to close on August 19, 2021. The APS provided that Lebovic would install a door from the garage into the home, subject to the grade being permitted by the municipality. At the time the APS was signed, the grade had not been determined. The APS also contained a provision barring the buyer from visiting the site, prior to closing, due to safety and insurance reasons.

In mid-July 2021, the buyer visited the site and found that there was no door from the garage to the home. He inquired with the municipality and took measurements of the as-built garage. Shortly after his site visit, the buyer emailed his measurement and the information he obtained from the municipality about the permitted grading to Lebovic. The next day, the buyer personally called Harry Lebovic to discuss the lack of door. After the phone call, Mr. Lebovic emailed Mr. Sheik and advised that their site superintendent had determined that more than three steps would be required to access the door (which was more than the municipality would permit), so therefore, the grading did not allow for a door to be installed.

The following week, Mr. Sheik took some more measurements and photographs, sent those to Lebovic and requested the “legal reason and measurement details” that informed the site engineer’s decision. When Mr. Sheik did not hear back from Lebovic, he sent another email to Lebovic, claiming unfair treatment and discrimination. In this further email, Mr. Sheik stated he was going to go “knock on the justice door of legal”.

A few days later, Lebovic’s lawyer wrote to Mr. Sheik’s lawyer informing him Mr. Sheik was in breach of the APS, and further advised that he will no longer be representing Lebovic in that transaction. Shortly thereafter, Mr. Sheik’s lawyer wrote to Lebovic’s lawyer, confirming that the buyer was ready and willing to close the transaction. Mr. Sheik’s lawyer further requested the contact information for the new lawyer for Lebovic. No response was provided.

Two days before the scheduled closing, Lebovic transferred title to the property to a third party. Unaware of the transfer, the following day Mr. Sheik emailed Mr. Lebovic, apologizing for his previous email and further confirmed his ability and willingness to close the transaction. Again no response was provided. It was not until well after the closing date that Mr. Sheik learned that Lebovic had transferred title to the property to a third party.

Repudiation of the agreement

Upon learning of the transfer, Mr. Sheik brought a claim against Lebovic, seeking damages for breach of contract. Lebovic defended the claim on the basis that Mr. Sheik had an anticipatorily breach of the APS. Anticipatory breach occurs when a party repudiates a contract prior to the date that performance is due or shows an intention not to be bound by the contract before performance.

The test is whether a reasonable person would conclude that the breaching party no longer intends to be bound by it. In applying this test, the court found that at no point did Mr. Sheik show an intention to repudiate the contract. His intention was merely to get to the bottom of the issue relating to garage door access to the home. Further, at the time, Lebovic did not take Mr. Sheik’s action to be a repudiation of the contract.

The court rejected Lebovic’s reliance on Mr. Sheik’s failure to tender on the closing date as repudiation because Lebovic had failed to respond to Mr. Sheik and his lawyer’s communications and had not provided a statement of adjustments or other information required by Mr. Sheik’s lawyer.

These failures, the court noted, amounted to Lebovic’s repudiation of the agreement before closing.

Finally, Lebovic’s action of transferring title to a third party made it clear that it was not ready, willing and able to complete the agreement on the closing date.

Breach of good faith

In recognizing the general principle of good faith in contract, the court determined that parties must generally perform their contractual duties honestly and reasonably, and not capriciously or arbitrarily. The court concluded that nothing in Mr. Sheik’s conduct was dishonest. Therefore, he did not breach his duty to act in good faith.

In determining the damages payable by Lebovic to Mr. Sheik, the court relied on the presumption that damages are assessed as of the date of the breach, except in certain special circumstances.

There was nothing before the court to show any special circumstance to deviate from this norm, therefore damages for breach were calculated based on the value of the property at the date of closing. The court ordered Lebovic to pay the buyer $94,682 in damages.

Nkiru Nwabudike is a student-an-law at Boghosian + Allen LLP in Toronto. She is an internationally trained lawyer with several years experience in corporate commercial, regulatory compliance, real estate and personal injury law.

Shaneka Shaw Taylor

Shaneka Shaw Taylor is the Founder of Taylor’d Litigation Professional Corporation where she practices real estate litigation, commercial litigation and product liability litigation. She is also a licensed real estate salesperson with Forest Hill Real Estate. She has authored several articles and speaks locally and internationally on topical civil litigation matters. She is the author of The Annotated Real Estate and Business Brokers Act, 2002 and Regulations LexisNexis Canada). Phone 416-628-9830; email.

The post Anticipatory breach in an Agreement of Purchase and Sale appeared first on REM.

Editor’s note: Specific performance is a court order to compel the non-compliant party to carry out their obligations under the agreement.

In this case, the buyer, Thillairajan, entered into an Agreement of Purchase and Sale with the seller, Sivasubramaniam, with a closing date of February 24, 2021. On February 16, 2021, the seller’s real estate agent informed the buyers that they no longer wished to sell the property. The next day, the buyer’s lawyer wrote to the sellers that the buyers were ready, willing and able to close the transaction as scheduled. The lawyer confirmed her client’s intention to seek specific performance if the defendant did not comply with the terms of the APS. On the closing date, the buyer’s lawyer again emailed the seller that the buyers were ready willing and able to close in accordance with the terms of the APS. The seller advised that she was not going to sell her house.

On March 4, 2021, the buyers issued their Statement of Claim claiming specific performance. The seller was later noted in default on April 16, 2021.

The three factors in the test for specific performance are:

1. The nature of the property involved
2. The related question of the inadequacy of damages as a remedy
3. The behaviour of the parties, having regard to the equitable nature of the remedy

The Superior Court of Justice evaluated the buyer’s evidence and concluded specific performance was an appropriate remedy in these circumstances.

Most significant in their decision was the court’s conclusion that 1) it was no longer accurate to assume that residential properties are “mass produced”, when the housing market has an increasingly limited supply of homes; and 2) subjective elements of a property are also highly relevant and important in establishing uniqueness.

In this case, the court accepted the buyers’ evidence that the seller’s property was purchased for significantly less money than properties in the same area and that the property was very close to the buyers’ place of employment. These two factors made the property sufficiently unique to the buyers.

The court added that the question of uniqueness did not merely contemplate whether there are other similar homes in the same neighbourhood but whether those homes were “readily available” for the buyers to purchase when the seller breached the APS. Because the prices of the houses in the neighbourhood were going for nearly $100,000 more, damages would not be an adequate remedy. Therefore, specific performance was an appropriate remedy since there were no other homes available on the date of the breach that could have been obtained at a comparable price.

What does this mean for future sellers?

While this case may be considered an outlier to the well-established principles articulated by the Supreme Court of Canada in Semelhago v. Paramadevan, sellers should be aware that in a hot housing market, specific performance is a remedy available to purchasers. In addition, a hot housing market will assist a purchaser’s case because whether a house is unique is not merely contingent on the house itself, but also if there are similar houses readily available at the time a seller has breached the APS.

Christina Wang is at Boghosian + Allen LLP while completing her J.D. at Queen’s University. During her time at Queen’s, she was president of the Queen’s Environmental Law Club and a student researcher for Pro-Bono Canada.

Shaneka Shaw Taylor

Shaneka Shaw Taylor is the Founder of Taylor’d Litigation Professional Corporation where she practices real estate litigation, commercial litigation and product liability litigation. She is also a licensed real estate salesperson with Forest Hill Real Estate. She has authored several articles and speaks locally and internationally on topical civil litigation matters. She is the author of The Annotated Real Estate and Business Brokers Act, 2002 and Regulations LexisNexis Canada). Phone 416-628-9830; email.

The post Specific performance in a hot housing market appeared first on REM.

The seller, Ye Zhuoqi entered into an Agreement of Purchase and Sale (APS) with the buyer, Sative Yan-Ling Tsui and set the closing date for January 10, 2020. The APS contained a standard “substantial damage” clause, which stated that in the event of substantial damage to the property, a buyer may terminate the agreement and all deposit monies paid by the buyer would be refunded. On January 9, 2020, the buyer attended the property for a final inspection and discovered extensive water damage.

On January 10, 2020, the buyer’s real estate agent sent an email notifying the seller’s real estate agent of the damage, with photos, stating that it was not sufficient to merely replace the flooring. The buyer’s agent provided the seller with two options:

1. Allow the buyer’s own contractor to fix the damage while a holdback of $100,000 was kept with all living expenses covered by the seller or
2. The parties would sign a mutual release with the sellers paying $25,000 to cover expenses of renting a new place and repurchasing another property.

The seller’s agent responded that the water damage was not as significant as the buyer alleged and denied the first option. The seller proposed the closing be extended to January 13, 2020 in order for the parties to have a more accurate assessment of damage and cost. There were further communications regarding the holdback amount but the seller rejected those subsequent offers and the sale did not close.

On January 13, 2020, the seller obtained a report estimating repairs at $10,000 and conveyed to the buyer that the seller would agree to fix damages and a holdback of $10,000. The buyer rejected this offer and requested that they have their own engineer inspect the property. This request was rejected by the seller, who advised that they would be re-listing the property.

On January 17, 2020, the seller’s agent notified the buyer’s agent that the seller had agreed to have the buyer’s engineer inspect the property. That inspection took place and the engineer stated in his report that “every property is different including the extent of damage from flood or fire, costs will vary considerably…consequently it is rarely possible to provide an accurate cost estimate for the emergency cleanup and dry-out services until after the work is well underway.”

The seller subsequently repaired the damage at a cost of $6,893, relisted the property and sold it to another buyer.

The Superior Court of Justice evaluated the evidence and arguments advanced and found the following:

Substantial damage

When assessing whether damage is substantial, the cost of the repair and the quality, character and consequences of the damage must all be considered. In this case, evidence from the experts and the photos indicated damage on at least two floors. As such, the buyer reasonably concluded that the damage was substantial. After receiving the expert report, the buyer was also reasonable in concluding that the cost of repairs could well exceed $10,000.

Good faith

The “substantial damage” clause in the APS is intended to protect the buyer. Parties must act in good faith and take all reasonable steps to ensure a real estate transaction is completed. Here, the seller lacked good faith by unreasonably denying the buyer’s own engineer an opportunity to assess the scope of the water damage given that it occurred approximately 24 hours before the scheduled closing date and there was real disagreement as to whether the damage was substantial. The buyer was thus entitled to independently assess the scope of damages.

In addition, the seller also failed to exercise good faith and to take all reasonable steps to complete the sale when he demanded the damage be fixed at $10,000 even after the expert report noted that further damage could not be assessed until the renovation work began. Consequently, the buyer was entitled to terminate the APS and have their deposit returned.

What does this mean for future sellers?

Agreements containing a “substantial damage” clause, or a similar clause entitles a buyer to independently inspect damage that has occurred on the property so that they may determine how they would like to proceed with the transaction. In performing this obligation, sellers are expected to act reasonably and in good faith by allowing the buyer to retain independent inspectors and to reasonably and in good faith negotiate with the buyer the cost of repairing the damage.

Christina Wang

Christina Wang is currently summering at Boghosian + Allen LLP while completing her J.D. at Queen’s University. During her time at Queen’s, she was president of the Queen’s Environmental Law Club and a student researcher for Pro-Bono Canada.

Shaneka Shaw Taylor

Shaneka Shaw Taylor is the Founder of Taylor’d Litigation Professional Corporation where she practices real estate litigation, commercial litigation and product liability litigation. She is also a licensed real estate salesperson with Forest Hill Real Estate. She has authored several articles and speaks locally and internationally on topical civil litigation matters. She is the author of The Annotated Real Estate and Business Brokers Act, 2002 and Regulations LexisNexis Canada). Phone 416-628-9830; email.

The post Fulfilling purchase agreements in good faith appeared first on REM.

On March 23, 2021, the buyers (the Nellipudis) and the sellers (the Feynes) entered into an APS for a $2.5-million property in Coboconk, Ont. The terms of the APS stated that the buyers would pay a $100,000 deposit to Kawartha Waterfront Realty, the real estate company representing both parties in a multiple representation agency.

The APS contained two conditions in favour of the buyers: (1) a satisfactory home inspection and (2) obtaining a mortgage. The APS was conditional until the end of business on April 2, 2021 (10 calendar days). If the 10 calendar days passed without written notice or waiver, the offer was then considered null and void and the deposit would be returned to the buyers.

The buyers paid the real estate company the deposit and the two parties subsequently commenced further email negotiations, which culminated in the buyers sending over an amendment deleting the inspection and mortgage conditions and adding in clauses about furniture removal and work to be completed prior to closing. The amendment was delivered to the sellers on April 2 and was to be accepted by 11:59 p.m. that day. The sellers refused to sign it.

On April 3, at 9:01 a.m., the real estate agent (who acted for both the buyer and seller) emailed the sellers telling them the buyers decided not to improve the terms of the APS. Later that day, the sellers entered into a second APS with a different set of buyers, which did not contain any conditions. The sellers then sent a Mutual Release to the buyers so that their deposit could be returned. The buyers refused to sign it. Instead, they maintained that there was a legally enforceable APS and that the unsigned amendment constituted a waiver of the conditions or notification for the purposes of the 10-day period. They also claimed that the sellers violated their duty to act in good faith.

The sellers took the position that the buyers failed to waive or fulfil the conditions within the 10-day period and the APS was therefore null and void as of April 2. They claimed the proposed amendment was not a waiver or notification of fulfilment because they did not agree to the terms and did not sign it. They also maintained that they not only acted in good faith, but when they did not sign the amendment, they gave the buyers an opportunity to revise the proposed amendment in order to rectify the problem but they did not do so by the following morning. The buyers later registered a Notice of a Purchaser’s Lien on the title of the property.

The court had to address three issues: 1) whether there was a valid legally binding APS, 2) whether the Purchaser’s Lien should be discharged and 3) whether the sellers had breached a duty to act in good faith.

Regarding the first issue, Justice Sutherland found that there was a clear, unambiguous and binding written APS between the parties, which was executed and fully accepted on March 23.  There was no question that the two conditions about the home inspection and mortgage were for the benefit of the buyers and were required to be confirmed or waived by April 2.

While there were several emails back and forth between the two parties about additional conditions as part of the APS, none of these emails amounted to a new APS and waived the old one. Justice Sutherland found that the buyers were hedging their bets that the sellers would accept the terms of the proposed amendment as it was set to expire one minute before the expiry of the APS conditions. However, since the sellers did not sign the proposed amendment and the buyers did not provide written notice regarding the conditions of the original APS, it then became null and void.

Justice Sutherland clarified that an agreement requiring the signatures of all parties, such as the amendment, did not constitute a waiver, but instead simply represented an offer to amend the agreement, which required the acceptance of all parties concerned. Additionally, the buyers had it within their power to send the required written notification and subsequently request the proposed terms of the amendment. By not proceeding in this manner, the buyers demonstrated they did not want to be bound by the terms of the APS whether the sellers accepted the terms of the proposed amendment or not.

Justice Sutherland further noted that in accordance with precedent, evidence was needed to determine whether the buyers had the intent and ability to close the transaction. They had not provided any evidence in this regard. Taken all together, this meant that the APS was null and void and the buyers no longer had an interest in the property as of April 3 at 12:00 a.m.

Regarding the second issue, because the buyers no longer had an interest in the property, the Purchaser’s Lien was to be discharged and deleted from the property title. Regarding the third issue, Justice Sutherland found that there was no evidence indicating that the sellers acted dishonestly, and the buyers had the onus of waiving the terms and conditions of the APS but chose not to do so. If the court were to find that the sellers breached their duty of good faith, it would confer an “unbargained benefit” to the sellers outside the terms of the APS. The buyers were unable to purchase the property in the eyes of the court and their $100,000 deposit was returned to them since the APS was null and void.

In sum, attention to and communication regarding the conditions of an APS are of the utmost importance when working with such agreements. Parties need to be mindful of expiration periods for conditional offers and remember that any new agreements or additions they wish to make are signed and agreed upon in writing by both parties. If a seller is not prepared to amend an agreement during the conditional period, the buyer has to decide whether he/she wants to proceed with the agreement (and property) as is and potentially try to negotiate for changes later, all the while being fully aware that the seller may not agree to any further amendments. If that risk is too great for the buyer, he/she may wish to consider walking away from the transaction and getting back their deposit.

Final thought – a proposed amendment deleting conditions in an APS does not constitute waiver of those conditions nor is it notice of fulfilment of the condition(s).

Maya Koparkar is a second-year student at the University of Windsor, Faculty of Law. She is currently summering at Boghosian + Allen LLP. In conjunction with her studies, she has worked at Legal Aid of Windsor, and is a mentor as part of the Peer Mentorship Program and a contributing writer to the student newspaper Headnotes. Prior to law school she worked in public affairs in Washington, D.C. She holds Bachelor of Arts from McGill University in International Development Studies, where she graduated with honours.

Shaneka Shaw Taylor

Shaneka Shaw Taylor is the Founder of Taylor’d Litigation Professional Corporation where she practices real estate litigation, commercial litigation and product liability litigation. She is also a licensed real estate salesperson with Forest Hill Real Estate. She has authored several articles and speaks locally and internationally on topical civil litigation matters. She is the author of The Annotated Real Estate and Business Brokers Act, 2002 and Regulations LexisNexis Canada). Phone 416-628-9830; email.

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In the hopes of better defining such boundaries, some owners have taken it upon themselves to build fences down the property lines of their shared driveways, at times to the detriment of their neighbour. This was the kind of dispute the Ontario Court of Appeal grappled with in the case of English v Perras, 2018 ONCA 649.

The two parties were next-door neighbours who shared a 14-foot wide driveway that they both used to access their respective garages. The property line ran down the middle of this driveway. The Perrases decided to build a fence just inside their side of the property line down the length of the driveway. Unfortunately, the fence prevented the Englishes from accessing the driveway and their garage. The Englishes had a retaining wall on their house, which also contributed to the narrow driveway on their side, but no one knew when the retaining wall was built and for what purpose. In order to regain access to their driveway, the Englishes applied for a prescriptive easement to confirm their rights to the space and get the Perrases to take their fence down.

The application judge found that the Englishes were entitled to the prescriptive easement because of the historical use of the shared driveway and ordered the Perrases to remove their fence. The Perrases appealed, arguing that an easement had not been made out. The Court of Appeal agreed, overturning the order of the application judge. The Court of Appeal held that the Englishes had not made out a prescriptive easement based on two important grounds: land use as of right, and reasonable necessity for enjoyment.

In Ontario, prescriptive easements started being phased out as properties became registered in the Land Titles system. These days, a prescriptive easement can still be obtained by following the Doctrine of Lost Modern Grant (although this is a very strict threshold to meet). To prove the doctrine, it must be shown that an easement existed prior to the property being converted from registry in the Land Titles system.

Unless the current owner seeking to obtain the easement has lived at the property for decades, this will often involve seeking out evidence from previous owners of the properties in question. To obtain the easement, it must be proven that there was a period of 20 years of uninterrupted, unchallenged use of the property in question and that use was not done with permission. In other words, if there is evidence that the party seeking the easement had expressly asked the other party for permission to use their property, an easement cannot be made out.

In this case, the Court of Appeal followed this logic to determine that an easement did not exist. While the shared driveway had been used mutually by the previous owners of the properties, they had created an agreement that noted the rights of each property owner and also gave permission for the use of the shared driveway by both parties. This differed from “use as of right,” which is an unspoken and unacknowledged but continuous use of the shared driveway for the 20-year period prior to Land Titles registry.

Next, the Court of Appeal looked to the four essential characteristics of an easement to see whether they existed in this case:

1. There must be a dominant and servient tenement (the dominant tenement is the one who gains the benefit of the easement);
2. The dominant and servient owners must be different persons;
3. The easement must be capable of forming the subject matter of a grant; and
4. The easement must be reasonably necessary for the enjoyment of the dominant tenement.

The onus to prove these elements rests on the party seeking the easement. While the first three elements are mostly straightforward, courts will assess the final element on a case-by-case basis. In order for the fourth element to be made out, there must be a connection between the easement and the normal use of the property by the applicant.

In this case, the Perrases’ fence in combination with the retaining wall on the Englishes’ property narrowed the Englishes’ access to the driveway. The application judge mistakenly reversed the onus for the final stage of analysis. She required the Perrases to show that an easement was not necessary and that the retaining wall could be taken down. The Court of Appeal held that it was in fact the Englishes’ responsibility to show that an easement was necessary because the retaining wall could not be taken down, which they did not fulfil. Without this information, the court could not conclude that the easement was reasonably necessary for their normal use of the driveway.

In sum, prescriptive easements in Ontario have been harder to come by since the advent of the Land Titles registry. While the requirements for a prescriptive easement might seem straightforward on paper, the standard that courts require to establish one via the Doctrine of Lost Modern Grant is high. Driveways, parking spaces and similar spaces might seemingly lend themselves well to the establishment of a prescriptive easement, but it is crucial that the applicant ensures they are prepared to demonstrate why it is necessary.

Maya Koparkar is a second-year student at the University of Windsor, Faculty of Law. She is currently summering at Boghosian + Allen LLP. In conjunction with her studies, she has worked at Legal Aid of Windsor, and is a mentor as part of the Peer Mentorship Program and a contributing writer to the student newspaper Headnotes. Prior to law school she worked in public affairs in Washington, D.C. She holds Bachelor of Arts from McGill University in International Development Studies, where she graduated with honours.

Shaneka Shaw Taylor

Shaneka Shaw Taylor is the Founder of Taylor’d Litigation Professional Corporation where she practices real estate litigation, commercial litigation and product liability litigation. She is also a licensed real estate salesperson with Forest Hill Real Estate. She has authored several articles and speaks locally and internationally on topical civil litigation matters. She is the author of The Annotated Real Estate and Business Brokers Act, 2002 and Regulations LexisNexis Canada). Phone 416-628-9830; email.

The post Sharing is caring: Prescriptive easements of shared driveways appeared first on REM.

The case of Naghshineh v. Zadeh, 2021 ONSC 1132 provides an interesting perspective. This case does not deal with the actual merits of the claim between the parties; rather, it is a procedural motion that addresses the interesting issue of whether the words “signed, sealed and delivered”, which appears on the standard form OREA Agreement to Purchase and Sale, meets the “sealed contract” rule in law, which prevents liability from being found against a principal who is being represented by an agent.

In Naghshineh v. Zadeh, the defendant, Barati, brought a motion to strike the Statement of Claim on the basis that it disclosed no reasonable cause of action against him as he is not named as a party to the Agreement of Purchase and Sale that is at the heart of the lawsuit.

A bit of background: the plaintiffs (Naghshineh and Saeedi) are owners of a property on Burbank Drive in Toronto. They had entered into an Agreement of Purchase And Sale with the defendant, Zadeh. The APS only listed Zadeh as a purchaser (not Barati). When the deal failed to close on the assigned closing date, Naghshineh and Saeedi sued both Zadeh and Barati for their losses. The sellers claimed that even though Barati’s name is not listed in the APS, he was the true purchaser of the property and Zadeh was merely his agent.

Barati brought a procedural motion seeking to dismiss the claim against him since he was not a party to the APS. Barati sought to rely on the “sealed contract” doctrine, which states that where a contract is signed under seal, only the parties to the contract have the rights and obligations under it. Under this doctrine, a principal who allows an agent to sign a contract on his behalf cannot be sued under the contract.

The court took the opportunity in this case to reiterate what the words “signed, sealed and delivered” mean in the case of a pre-printed contract. Does it really signify that the agreement was signed under seal (as those words would appear to suggest)?

The court concluded that it does not.

In order for a contract to considered to have been signed under seal, there must be a statute or legal precedent (that is, common law) to support it. For example, the Land Registration Reform Act stipulates that certain instruments, such as transfers and mortgages, are registered under seal. If there is no legislation that applies to the contract at issue, one has to turn to the common law for assistance.  In common law, there is a long-standing principle, reiterated by the Supreme Court of Canada in Friedman Equity Developments Inc. v. Final Note1, that states:

“Today, while the creation of a sealed instrument no longer requires a waxed impression, there are still formalities which must be observed. At common law, a sealed instrument, such as a deed or a specialty, must be signed, sealed and delivered. The mere inclusion of these three words is not sufficient, and some indication of a seal is required. To create a sealed instrument, the application of the seal must be a conscious and deliberate act. At common law, then, the relevant question is whether the party intended to create an instrument under seal (emphasis added).

This means that simply because parties to a contract sign next to an area that says “signed, sealed and delivered” does not mean that the contract is actually signed under seal. There has to be more. There needs to be a conscious and deliberate act on the part of the parties to create a contract under seal.

While the court in Naghshineh v. Zadeh does not explicitly spell out what a conscious and deliberate act can look like, one can imagine, for example that it can be evidenced by one party requesting their lawyer to affix an actual seal to the contract or the parties engaging in discussions prior to the contract being signed specifically addressing that it be signed under seal.

In any event, this case is a necessary reminder that absent the finding that a contract is actually signed under seal, a principal can be held liable for the actions of its agent, even where the principal is not formally named in the contract.

Shaneka Shaw Taylor

Shaneka Shaw Taylor is the Founder of Taylor’d Litigation Professional Corporation where she practices real estate litigation, commercial litigation and product liability litigation. She is also a licensed real estate salesperson with Forest Hill Real Estate. She has authored several articles and speaks locally and internationally on topical civil litigation matters. She is the author of The Annotated Real Estate and Business Brokers Act, 2002 and Regulations LexisNexis Canada). Phone 416-628-9830; email.

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However, even when provided, many listings will include a disclaimer that “buyer and buyer’s agent to verify all measurements.” So what happens when a buyer purchases a property under the mistaken belief that it measures 2,000-2,500 square feet, and later finds out, before closing, that is it actually only 1,450 square feet? The Ontario Court of Appeal in Issa v. Wilson, 2020 ONCA 756 answered that question.

The buyer, Hassan Issa, a 26-year-old, first-time homebuyer, enlisted the services of real estate agent Wasim Jarrah of Keller Williams Realty Centres to assist him in buying a property. Issa was told by Jarrah that the home he was interested in buying, in Stouffville, Ont., was about 2,100 square feet. The agent had obtained this information from the seller as well as from a previous listing for the home. Neither the agent nor Issa had verified the measurement themselves.

Prior to making an offer, Issa visited the home twice. During his second visit, he met with the seller, John Wilson, who told him that the property was about 2,000 square feet.

Issa made an offer to purchase the property and that offer was accepted.

When Issa’s bank did an appraisal of the property, he learned that the property was actually 1,450 square feet. He immediately communicated to the seller that he did not want to complete the purchase of the home and requested the return of his $50,000 deposit.

When the seller refused, Issa commenced legal proceedings seeking a declaration that the Agreement of Purchase And Sale was null and void and requested the return of his deposit.

The case proceeded to a one-day trial. After hearing the evidence of the parties, the trial judge found in favour of the buyer, Issa. She wrote: “In this case I do not find that Mr. Issa’s inspection of the subject property determined his expectations. He was given representations from both Messrs. Jarrah and Wilson that the property was 2,000 or greater than 2,000 square feet and as well relied upon the MLS agreement, which set out 2,000 to 2,500 square feet. His inspections did not override his expectation that this was the size of the property. (I take his young age, inexperience with square footage, and being a first-time homebuyer into account when considering the reasonableness of his belief.)”

Keller Williams Realty Centres appealed to the Ontario Court of Appeal. The court agreed with the trial judge for four reasons:

1. Both the real estate agent and the seller had made explicit representations to the buyer about the size of the property. Further, the agent agreed that he was negligent in making the statement;
2. The size discrepancy between what Issa thought he was buying (2,000-2,100 square feet) versus the actual size (1,450) was significant – it represented a 42 per cent difference;
3. The buyer’s actions showed that he was ready to close the transaction up until the time he discovered that the representation was incorrect and when he found that out, he immediately communicated his intention to the seller; and
4. There was no error made by the trial judge in referring to the buyer’s age and inexperience with buying a home.

The court went on to say that there is no absolute certainty that just because a buyer personally inspects a property, that he or she cannot rely on a representation made to him/her about an aspect of that property, by the seller or an agent. That inspection, in and of itself, does not displace any representations made.

Further, where there is a misrepresentation, a contract can be rescinded if the false statement was material and enticed the innocent party into signing the contract. In this case, the court found that information about the size of the property was material to the bargain and was a big factor in Issa’s decision to purchase. The court ruled in favour of the buyer, rescinded the agreement of purchase and sale and awarded the return of the deposit to the buyer.

Lessons learned: It is crucial that any statements made about a property be independently verified, particularly where such verification can be done with relative ease by the party making the representation.

Failing which, the party to who the representation is made may be able to rely on the veracity of the statement provided, particularly if that statement was material in their decision-making.

Shaneka Shaw Taylor

Shaneka Shaw Taylor is the Founder of Taylor’d Litigation Professional Corporation where she practices real estate litigation, commercial litigation and product liability litigation. She is also a licensed real estate salesperson with Forest Hill Real Estate. She has authored several articles and speaks locally and internationally on topical civil litigation matters. She is the author of The Annotated Real Estate and Business Brokers Act, 2002 and Regulations LexisNexis Canada). Phone 416-628-9830; email.

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