Brady (Matthew) Self Storage Corp. v. InStorage Limited Partnership et al., (2014) 327 O.A.C. 313 (CA)

• Judge: Doherty, Blair and Tulloch, JJ.A.
• Court: Court of Appeal (Ontario)
• Case Date: October 29, 2014
• Jurisdiction: Ontario
• Citations: (2014), 327 O.A.C. 313 (CA);2014 ONCA 858

Brady Self Storage v. InStorage (2014), 327 O.A.C. 313 (CA)

MLB headnote and full text

Temp. Cite: [2014] O.A.C. TBEd. DE.016

Matthew Brady Self Storage Corporation (plaintiff/respondent) v. InStorage Limited Partnership and InStorage Trustee Corp. (defendants/appellants)

(C57707; 2014 ONCA 858)

Indexed As: Brady (Matthew) Self Storage Corp. v. InStorage Limited Partnership et al.

Ontario Court of Appeal

Doherty, Blair and Tulloch, JJ.A.

December 3, 2014.

Summary:

The parties entered into a "put/call" agreement for the purchase and sale of a warehouse. The plaintiff purchased the property and performed a retrofit of it, converting it to a self-storage facility. Under the agreement, the plaintiff could exercise its "put", which required the defendant to purchase the property, beginning one year after the retrofit. When the plaintiff did so, the defendant refused to abide by the agreement. The plaintiff sued for specific performance of the agreement.

The Ontario Superior Court, in a decision reported at [2013] O.T.C. Uned. 4345, allowed the action. Specific performance of the put/call agreement was ordered. The trial judge also awarded the plaintiff costs of $415,000 plus HST on the basis of partial indemnity up to the plaintiff's offer to settle (not accepted) and substantial indemnity thereafter. The defendant appealed.

The Ontario Court of Appeal dismissed the appeal.

Contracts - Topic 4110

Remedies for breach - Specific performance - Sale or lease of land - The parties entered into a "put/call" agreement for the purchase and sale of a warehouse - The plaintiff purchased the property and performed a retrofit of it, converting it to a self-storage facility - Under the agreement, the plaintiff could exercise its "put", which required the defendant to purchase the property, beginning one year after the retrofit - When the plaintiff did so, the defendant refused to abide by the agreement - The trial judge awarded the plaintiff, as vendor, specific performance of the agreement - The Ontario Court of Appeal dismissed the defendant's appeal - This case was unusual because the vendor sought specific performance, rather than the purchaser - In the context of vendor claims, it was the subject matter of the contract, rather than the land alone, that had to be unique or unusual - The focus was on the transaction as a whole - Key factors were whether (i) damages would afford an adequate and complete remedy or whether a money award would be sufficient to purchase substitute performance; (ii) there was some "fair, real and substantial justification" for granting specific performance; and (iii) the equities favoured granting specific performance - There was no error in the trial judge's conclusion that those criteria were met - Ample circumstances justified the award - That being so, the plaintiff had no obligation to mitigate by selling the property - See paragraphs 26 to 42.

Courts - Topic 586

Judges - Duties - Duty to hear evidence and submissions on behalf of a litigant - The parties entered into a "put/call" agreement for the purchase and sale of a warehouse - The plaintiff exercised its "put", which required the defendant to purchase the property - The parties were unable to agree on a purchase price - In that event, the agreement provided that a certain appraiser (Telford) was to determine the purchase price and "in the absence of manifest error", Telford's determination of "fair market value" as defined in the agreement would bind the parties - Telford concluded that the property's fair market value was $7.3 million - The defendant refused to accept the appraisal - At trial, the defendant asserted that Telford had made a manifest error in failing to found his conclusion on the income approach to valuation, ignoring the agreement's requirement that the "primary consideration" in establishing fair market value was to be "the net cash flow being generated from the Property" - The defendant sought to introduce an appraisal by Bower, who valued the property at less than $5 million using the income approach - In a mid-trial ruling, the trial judge excluded the Bower appraisal and found that Telford had made no "manifest error" - The plaintiff was awarded specific performance of the agreement - On appeal, the defendant asserted that the trial judge had erred in determining the manifest error issue mid-trial, depriving the plaintiff of the opportunity to make full submissions on the issue - The Ontario Court of Appeal dismissed the appeal - The court "was prepared to assume" that the trial judge should not have made a manifest error finding in the course of determining the Bower appraisal's admissibility - However, there was no error in the finding and the "procedural failing" had not resulted in any prejudice to the defendant at trial - See paragraphs 17 to 25.

Damages - Topic 1043

Mitigation - In contract - Where specific performance claimed - [See Contracts - Topic 4110 ].

Damages - Topic 1065

Mitigation - In particular matters - Sale of land - [See Contracts - Topic 4110 ].

Practice - Topic 6931

Costs - General principles - Discretion of court - [See Practice - Topic 7241 and Practice - Topic 7402 ].

Practice - Topic 7241

Costs - Party and party costs - Offers to settle - General (incl. what constitutes and validity) - The parties entered into a "put/call" agreement for the purchase and sale of a warehouse - The plaintiff purchased the property and performed a retrofit of it, converting it to a self-storage facility - Under the agreement, the plaintiff could exercise its "put", which required the defendant to purchase the property, beginning one year after the retrofit - When the plaintiff did so, the defendant refused to abide by the agreement - The plaintiff sued successfully for specific performance of the agreement - The trial judge awarded the plaintiff costs of $415,000 plus HST on the basis of partial indemnity up to the plaintiff's offer to settle (not accepted) and substantial indemnity thereafter - The Ontario Court of Appeal dismissed the defendant's appeal from the costs award - The court rejected the defendant's assertion that the offer to settle did not qualify as a rule 49 offer for costs purposes because it was never served on the defendant's solicitors as required under rule 16.01(4)(a) - There was no evidence that the defendant's solicitors were unaware of the offer - The lack of formal service did not render the offer a nullity for rule 49 purposes - Even if it had, the trial judge was entitled to take the offer into account in determining costs - See paragraphs 43 to 48.

Practice - Topic 7243

Costs - Party and party costs - Offers to settle - Effect of failure to accept - [See Practice - Topic 7241 ].

Practice - Topic 7402

Costs - Solicitor and client costs - General principles - Definition - The parties entered into a "put/call" agreement for the purchase and sale of a warehouse - The plaintiff purchased the property and performed a retrofit of it, converting it to a self-storage facility - Under the agreement, the plaintiff could exercise its "put", which required the defendant to purchase the property, beginning one year after the retrofit - When the plaintiff did so, the defendant refused to abide by the agreement - The plaintiff sued successfully for specific performance of the agreement - The trial judge awarded the plaintiff costs of $415,000 plus HST on the basis of partial indemnity up to the plaintiff's offer to settle (not accepted) and substantial indemnity thereafter - The defendant appealed from the costs award, asserting, inter alia, that the substantial indemnity costs exceeded the 1.5 times multiplier provided for in the definition of "substantial indemnity costs" found in rule 1.03(1) - The Ontario Court of Appeal dismissed the appeal - The trial judge was alive to the 1.5 multiplier and took it as a starting point - However, he exercised his discretion to increase that amount, based on the defendant's conduct that had unnecessarily prolonged the trial, a trial adjournment and the pursuit of an unmeritorious claim for deficiencies - The trial judge was entitled to take this approach in the exercise of his discretion - Nor was the award "simply too high" as asserted by the defendant - See paragraphs 49 to 53.

Practice - Topic 7423

Costs - Solicitor and client costs - Measure of solicitor and client costs - Relevant considerations - General - [See Practice - Topic 7402 ].

Practice - Topic 7470.20

Costs - Solicitor and client costs - Entitlement to solicitor and client costs - Offer to settle - [See Practice - Topic 7241 ].

Practice - Topic 8809

Appeals - General principles - Duty of appellate court respecting conduct of trial - [See Courts - Topic 586 ].

Sale of Land - Topic 7408

Remedies - General - Specific performance - When available - [See Contracts - Topic 4110 ].

Sale of Land - Topic 7414

Remedies - General - Mitigation - Duty of injured party - [See Contracts - Topic 4110 ].

Sale of Land - Topic 7651

Remedies of vendor - Specific performance and payment of purchase price - When available - [See Contracts - Topic 4110 ].

Specific Performance - Topic 5

General - Specific performance v. mitigation - [See Contracts - Topic 4110 ].

Specific Performance - Topic 506

When available - General principles - Contractual obligations - [See Contracts - Topic 4110 ].

Cases Noticed:

Adderley v. Dixon (1824), 57 E.R. 239 (Ch.), refd to. [para. 29].

Semelhago v. Paramadevan, [1996] 2 S.C.R. 415; 197 N.R. 379; 91 O.A.C. 379, refd to. [para. 31].

Landmark of Thornhill Ltd. v. Jacobson (1995), 85 O.A.C. 179; 25 O.R.(3d) 628 (C.A.), refd to. [para. 32].

Dick v. Dennis (1992), 20 R.P.R.(2d) 264 (Ont. Gen. Div.), refd to. [para. 33].

Westwood Plateau Partnership v. WSP Construction Ltd. et al., [1997] B.C.T.C. Uned. 780; 37 B.C.L.R.(3d) 82 (S.C.), refd to. [para. 34].

Comet Investments Ltd. et al. v. Northwind Logging Ltd, [1998] B.C.T.C. Uned. 952; 22 R.P.R.(3d) 294 (S.C.), refd to. [para. 34].

Dodge (John E.) Holdings Ltd. v. 805062 Ontario Ltd., [2001] O.T.C. 803; 56 O.R.(3d) 341 (Sup. Ct.), affd. (2003), 168 O.A.C. 252; 63 O.R.(3d) 304 (C.A.), leave to appeal refused (2003), 326 N.R. 195 (S.C.C.), refd to. [para. 35].

Monson v. West Barrhaven Development Inc. et al., [2000] O.T.C. Uned. D68 (Sup. Ct.), refd to. [para. 35].

1174538 Ontario Ltd. v. Barzel Windsor (1984) Inc. et al., [1999] O.T.C. Uned. C01; 29 R.P.R.(3d) 256 (Sup. Ct.), refd to. [para. 35].

365733 Alberta Ltd. et al. v. Tibero et al. (2008), 440 A.R. 177; 438 W.A.C. 177; 2008 ABCA 341, refd to. [para. 35].

Igbokwe v. HB Group Insurance Management Ltd. et al. (2001), 148 O.A.C. 222; 55 O.R.(3d) 313 (C.A.), leave to appeal refused (2002), 293 N.R. 196; 166 O.A.C. 200 (S.C.C.), refd to. [para. 45].

Lawson v. Viersen (2012), 287 O.A.C. 107; 108 O.R.(3d) 771; 2012 ONCA 25, refd to. [para. 48].

Authors and Works Noticed:

Sharpe, Robert J., Injunctions and Specific Performance (2012) (Looseleaf), paras. 7.210, 7.220; 8.100 to 8.220 [para. 33].

Counsel:

Robert Malen and Robert Drake, for the appellants;

Clifford Lax, Q.C., and Shaun Laubman, for the respondent.

This appeal was heard on October 29, 2014, by Doherty, Blair and Tulloch, JJ.A., of the Ontario Court of Appeal. On December 3, 2014, the court released the following judgment.