Brown v. Belleville,

• Jurisdiction: Ontario
• Judge: Cronk, Armstrong and Epstein, JJ.A.
• Neutral Citation: 2013 ONCA 148
• Citation: 2013 ONCA 148,(2013), 302 O.A.C. 354 (CA),114 OR (3d) 561,359 DLR (4th) 658,[2013] CarswellOnt 2605,[2013] OJ No 1071 (QL),302 OAC 354,(2013), 302 OAC 354 (CA),[2013] O.J. No 1071 (QL),359 D.L.R. (4th) 658,114 O.R. (3d) 561,302 O.A.C. 354
• Date: 07 December 2012
• Court: Court of Appeal (Ontario)

Brown v. Belleville (2013), 302 O.A.C. 354 (CA)

MLB headnote and full text

Temp. Cite: [2013] O.A.C. TBEd. MR.022

Graeme Brown and Monica Brown (plaintiff/respondents) v. The Corporation of the City of Belleville (defendant/appellant)

(C55618; 2013 ONCA 148)

Indexed As: Brown v. Belleville (City)

Ontario Court of Appeal

Cronk, Armstrong and Epstein, JJ.A.

March 12, 2013.

Summary:

Under an agreement entered into in 1953 between a municipality and Sills, the municipality agreed to perpetually maintain and repair part of a storm sewer drainage system on and near Sills' lands. Sills died in 1966. The affected lands were sold to the Pleiziers. When the Pleiziers sought in 1980 to hold the municipality to its obligations under the agreement, the municipality unilaterally repudiated the agreement. As a result of a corporate amalgamation, the Corporation of the City of Belleville stepped into the shoes of the original municipality under the agreement. The Browns purchased the lands in 2003. They requested the City to honour its maintenance and repair obligations under the agreement. The City refused and, in December 2004, again unilaterally repudiated the agreement. The Browns sued the City for specific performance of the agreement or damages for its breach. The City asserted that the agreement was unenforceable on numerous grounds. The parties stated a Special Case under rule 22 of the Rules of Civil Procedure, seeking the court's opinion on 14 questions concerning the agreement.

The Ontario Superior Court, in a decision reported at [2012] O.T.C. Uned. 2554, answered the questions stated on the Special Case. The City had conceded that six of the questions should be answered in favour of the Browns and the motion judge's answers to those questions proceeded on consent. The motion judge granted various declarations of right in favour of the Browns in relation to the remaining eight questions. The City appealed, arguing that: (1) the Browns' claims concerning the agreement were statute-barred; (2) the Browns had no standing to enforce the agreement since they had no privity of contract with the City; and (3) the agreement was contrary to public policy and unenforceable.

The Ontario Court of Appeal dismissed the appeal.

Contracts - Topic 521

Parties - Who constitutes a party - General - [See Contracts - Topic 1165 ].

Contracts - Topic 1161

Formation of contract - Privity of contract - [See Contracts - Topic 1165 ].

Contracts - Topic 1165

Formation of contract - Privity of contract - What constitutes - Under an agreement entered into in 1953 between the Township of Thurlow and Sills, Thurlow agreed to perpetually maintain and repair part of a storm sewer drainage system on and near Sills' lands - Sills died - The lands were sold to the Pleiziers and then to the Browns in 2003 - By a corporate amalgamation, the Corporation of the City of Belleville had stepped into Thurlow's shoes under the agreement - The City refused to honour its obligations under the agreement - The Browns sued the City for specific performance of the agreement or damages for its breach - The Ontario Court of Appeal held that the Browns had standing to enforce the agreement - The enurement clause in the agreement unequivocally confirmed that the contracting parties intended that the benefit of the agreement would extend to an aggregation or class of persons that included successor landowners of Sills - The Browns stepped into Sills's shoes and had standing to enforce the agreement as against the City as if they were the original covenantee(s) to the agreement - Were it necessary to do so, the court would also have held that the test for the application of the principled exception to the privity of contract rule was met - The court also rejected the City's argument that the Browns' entitlement to enforce the agreement was defeated by laches - These claims related to the alleged contractual entitlement to specific performance or damages - They were founded in law rather than equity - Further, there was no evidence that the Pleiziers' or the Browns' conduct resulted in prejudice to the City - See paragraphs 73 to 111.

Contracts - Topic 2058

Terms - Implied terms - Termination (incl. notice of) - [See Contracts - Topic 3666 ].

Contracts - Topic 3662

Performance or breach - Repudiation - Effect of - [See Contracts - Topic 3666 ].

Contracts - Topic 3666

Performance or breach - Repudiation - What constitutes acceptance of repudiation - Under an agreement entered into in 1953 between the Township of Thurlow and Sills, Thurlow agreed to perpetually maintain and repair part of a storm sewer drainage system on and near Sills' lands - Sills died in 1966 - The lands were sold to the Pleiziers - When the Pleiziers sought in 1980 to hold Thurlow to its obligations under the agreement, Thurlow unilaterally repudiated the agreement - As a result of a corporate amalgamation, the Corporation of the City of Belleville stepped into Thurlow's shoes under the agreement - The Browns purchased the lands in 2003 - They requested the City to honour its obligations under the agreement - The City refused and, in December 2004, again unilaterally repudiated the agreement - The Browns sued the City for specific performance of the agreement or damages for its breach - The City contended that the Pleiziers accepted Thurlow's unilateral 1980 repudiation of the agreement by their inaction - As a result, the applicable six-year limitation period under the 1980 Limitations Act began to run in December 1980 and expired in 1986 - Alternatively, the City argued that based on the City's 2004 repudiation of the agreement and its alleged acceptance by the Browns, the limitation period expired either in 2010 under the 1990 Limitations Act (six-year limitation period) or in 2006 under the current Limitations Act (two-year limitation period) - The Ontario Court of Appeal rejected the arguments - The Pleiziers' silence or inaction did not satisfy the requirement of clear and unequivocal communication to the repudiating party of the adoption of a repudiatory breach or anticipatory repudiation of contract - Absent an election by the Pleiziers to disaffirm the agreement and thereby adopt or accept Thurlow's repudiation of it, the agreement continued in full force and effect - The City's suggestion that the agreement contained, by implication, a termination on notice term was inconsistent with the City's concession that the agreement imposed perpetual obligations on the City - It was also inconsistent with the parties' intentions as reflected in the express provisions of the agreement - Accordingly, the City's limitation period argument concerning the 1980 repudiation failed - The City's limitation period argument in respect of the 2004 repudiation also failed - There was no evidentiary foundation for the contention that the Browns, by their conduct, adopted or affirmed that repudiation, thereby terminating the agreement - The City failed to prove facts regarding conduct by the Browns from which it could reasonably be inferred that they elected to disaffirm the agreement in the face of the City's repudiation - See paragraphs 49 to 72.

Contracts - Topic 4654

Discharge and termination - By breach - Acceptance of repudiation of contract - [See Contracts - Topic 3666 ].

Contracts - Topic 6741

Illegal contracts - Contracts contrary to public policy - General - At issue was the enforcement of an agreement entered into in 1953 between the Township of Thurlow and a local farmer - Under the agreement, Thurlow agreed to perpetually maintain and repair that part of a storm sewer drainage system that it had constructed on and near the farmer's lands - As a result of a corporate amalgamation in the 1990's, the Corporation of the City of Belleville stepped into Thurlow's shoes under the agreement - The City said the enforcement of perpetual obligations of the kind created under the agreement offended public policy because it fettered the City's discretion regarding the future use of public roads and road allowances - The Ontario Court of Appeal rejected the argument - There was no evidence or agreed facts to support the City's assertion that its discretion regarding the future use of public roads and road allowances would be fettered or impeded if it was held to its obligations under the agreement - See paragraphs 112 to 116.

Contracts - Topic 9001

Rights and liabilities of strangers to contract - Privity of contract - Exceptions - [See Contracts - Topic 1165 ].

Equity - Topic 2061

Equitable defences - Laches - General (incl. when applicable) - [See Contracts - Topic 1165 ].

Limitation of Actions - Topic 2023

Actions in contract - Actions for breach of contract - When time commences to run - [See Contracts - Topic 3666 ].

Municipal Law - Topic 1586

Powers of municipalities - Exercise of powers - Prohibition against fettering of - [See Contracts - Topic 6741 ].

Municipal Law - Topic 2425

Contracts by a municipality - Illegal contracts - Contracts contrary to public policy - [See Contracts - Topic 6741 ].

Cases Noticed:

Guarantee Co. of North America v. Gordon Capital Corp., [1999] 3 S.C.R. 423; 247 N.R. 97; 126 O.A.C. 1, refd to. [para. 42].

Canada Egg Products Ltd. v. Canadian Doughnut Co., [1955] S.C.R. 398, refd to. [para. 42].

Place Concorde East Limited Partnership et al. v. Shelter Corp. of Canada Ltd. et al. (2006), 211 O.A.C. 141; 270 D.L.R.(4th) 181 (C.A.), refd to. [para. 42].

American National Red Cross v. Geddes Bros. (1920), 61 S.C.R. 143, reving. 47 O.L.R. 163 (C.A.), refd to. [para. 46].

Kamlee Construction Ltd. v. Oakville (1960), 26 D.L.R.(2d) 166 (S.C.C.), refd to. [para. 47].

White v. E.B.F. Manufacturing Ltd. et al. (2005), 239 N.S.R.(2d) 270; 760 A.P.R. 270; 2005 NSCA 167, refd to. [para. 48].

Ginter v. Chapman (1967), 60 W.W.R.(N.S.) 385 (B.C.C.A.), affd. [1968] S.C.R. 560, dist. [para. 55].

Picavet v. Salem Developments Ltd., [2000] O.J. No. 2806 (Sup. Ct.), refd to. [para. 56].

1397868 Ontario Ltd. v. Nordic Gaming Corp. et al. (2010), 258 O.A.C. 173; 2010 ONCA 101, refd to. [para. 64].

G. Ford Homes Ltd. v. Draft Masonary (York) Co. Ltd. (1984), 2 O.A.C. 231; 43 O.R.(2d) 401, refd to. [para. 66].

Neuzen v. Korn, [1995] 3 S.C.R. 674; 188 N.R. 161; 64 B.C.A.C. 241; 105 W.A.C. 241, refd to. [para. 66].

Ter Neuzen v. Korn - see Neuzen v. Korn.

Greenwood Shopping Plaza Ltd. v. Beattie and Pettipas, [1980] 2 S.C.R. 228; 32 N.R. 163; 39 N.S.R.(2d) 119; 71 A.P.R. 119, dist. [para. 73].

London Drugs Ltd. v. Brassart and Vanwinkle, [1992] 3 S.C.R. 299; 143 N.R. 1; 18 B.C.A.C. 1; 31 W.A.C. 1, refd to. [para. 73].

Dunlop Pneumatic Tyre Co. v. Selfridge & Co., [1915] A.C. 847 (H.L.), refd to. [para. 73].

Fraser River Pile & Dredge Ltd. v. Can-Dive Services Ltd., [1999] 3 S.C.R. 108; 245 N.R. 88; 127 B.C.A.C. 287; 207 W.A.C. 287, refd to. [para. 79].

Tony and Jim's Holdings Ltd. et al. v. Silva (1999), 118 O.A.C. 236; 43 O.R.(3d) 633 (C.A.), refd to. [para. 90].

Madison Developments Ltd. et al. v. Plan Electric Co. et al. (1997), 104 O.A.C. 194; 36 O.R.(3d) 80 (C.A.), leave to appeal refused (1998), 228 N.R. 97; 111 O.A.C. 199 (S.C.C.), refd to. [para. 97].

Authors and Works Noticed:

Chitty on Contracts (28th Ed. 1999), vol. 1, p. 25-012 [paras. 48, 52].

McCamus, John D., The Law of Contracts (2005), pp. 296 to 301 [para. 79]; 654 [para. 44]; 658 [para. 43, footnote 1].

Swan, Angela, and Adamski, Jakub, Canadian Contract Law (3rd Ed. 2012), pp. 163 to 226 [para. 84]; 229 [para. 79].

Counsel:

R. Benjamin Mills, for the appellant;

Robert J. Reynolds, for the respondent.

This appeal was heard on December 7, 2012, before Cronk, Armstrong and Epstein, JJ.A., of the Ontario Court of Appeal. The following judgment of the Court of Appeal was delivered by Cronk, J.A., and was released on March 12, 2013.