Jedfro Investments (U.S.A.) Ltd. et al. v. Jacyk Estate et al., (2007) 232 O.A.C. 385 (SCC)

• Judge: McLachlin, C.J.C., Bastarache, Binnie, LeBel, Deschamps, Charron and Rothstein, JJ.
• Court: Supreme Court (Canada)
• Case Date: October 11, 2007
• Jurisdiction: Canada (Federal)
• Citations: (2007), 232 O.A.C. 385 (SCC);2007 SCC 55

Jedfro Inv. Ltd. v. Jacyk Estate (2007), 232 O.A.C. 385 (SCC)

MLB headnote and full text

[French language version follows English language version]

[La version française vient à la suite de la version anglaise]

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Temp. Cite: [2007] O.A.C. TBEd. DE.083

Jedfro Investments (U.S.A.) Limited and Elsie Iwasykiw, in her capacity as Litigation Administrator for the estate of Morris Iwasykiw (appellants) v. Nadia Jacyk, in her capacity as Litigation Administrator for the estate of Peter Jacyk, Prombank Investment Limited, Prombank International (U.S.A.) Limited, Louis V. Matukas and Gramat Investments (U.S.A.) Limited (respondents)

(31561; 2007 SCC 55; 2007 CSC 55)

Indexed As: Jedfro Investments (U.S.A.) Ltd. et al. v. Jacyk Estate et al.

Supreme Court of Canada

McLachlin, C.J.C., Bastarache, Binnie, LeBel, Deschamps, Charron and Rothstein, JJ.

December 20, 2007.

Summary:

Iwasykiw and Jacyk were parties to a land development agreement. Their lender called its loan. Iwasykiw did not pay his proportionate share. Jacyk, through his company Prombank, purchased an assignment of the loan and foreclosed on the land. Iwasykiw sued the defendants for breach of the agreement, submitting that rather than buying out his interest under the agreement's default provision, Jacyk had used a non arm's length company to expropriate his interest without compensation.

The Ontario Superior Court, in a decision reported at [2005] O.T.C. Uned. 133, dismissed the action. Iwasykiw appealed.

The Ontario Court of Appeal, in a decision reported at 210 O.A.C. 153, dismissed the appeal. Iwasykiw appealed.

The Supreme Court of Canada dismissed the appeal.

Contracts - Topic 3523

Performance or breach - Breach - What constitutes a breach - Iwasykiw and Jacyk were parties to a joint venture land development agreement - Their lender called its loan - Iwasykiw did not pay his proportionate share ($900,000) - Jacyk purchased an assignment of the loan and foreclosed - Iwasykiw's initial investment of $1.4 million (US) was lost - Iwasykiw sued for breach of the agreement - The action and Iwasykiw's appeal were dismissed - Iwasykiw appealed, submitting that Jacyk was bound by s. 4.02(a) of the agreement to advance funds on behalf of defaulting parties and, if they failed to repay their debts, to buy out their interests under s. 7.05 - The Supreme Court of Canada dismissed the appeal - Section 4.02(a) provided only a right to a non-defaulting party to advance funds on behalf of a defaulting party and, eventually, to buy out that party's interest - Section 4.02(a) did not oblige Jacyk to do anything - Rather, Jacyk did what any third party could have done - i.e. purchase the note - Therefore, it could not be said that s. 4.02(a) was breached - See paragraph 24.

Contracts - Topic 3523

Performance or breach - Breach - What constitutes a breach - Iwasykiw and Jacyk were parties to a joint venture land development agreement - Their lender called its loan - Iwasykiw did not pay his proportionate share ($900,000) - Jacyk purchased an assignment of the loan and foreclosed - Iwasykiw's initial investment of $1.4 million (US) was lost - Iwasykiw sued for breach of the agreement - The action and Iwasykiw's appeal were dismissed - Iwasykiw appealed, submitting that Jacyk, in both purchasing the note and in foreclosing, had breached s. 8.03 of the agreement which required the consent of all members in the joint venture in order to make decisions or take actions relating to the project or affecting the lands - The Supreme Court of Canada dismissed the appeal - Under the agreement, where a member of the joint venture was in default, s. 4.02(d) authorized a non-defaulting member to make decisions and take action without the approval or consent of the defaulting member - Jacyk was entitled to act unilaterally - Further, in foreclosing, Jacyk was simply exercising his legal rights - There was no breach - See paragraphs 25 to 28.

Contracts - Topic 3664

Performance or breach - Repudiation - What constitutes repudiation - Iwasykiw and Jacyk were parties to a joint venture land development agreement - Their lender called its loan - Iwasykiw did not pay his proportionate share ($900,000) - Jacyk purchased an assignment of the loan and foreclosed - Iwasykiw's initial investment of $1.4 million (US) was lost - Iwasykiw sued for breach of the agreement, submitting that Jacyk should have bought out his interest under the agreement's default provision - The action and Iwasykiw's appeal were dismissed - The Ontario Court of Appeal held that enforcing the written agreement would have been contrary to the parties' intentions, as evidenced by their conduct - Iwasykiw appealed - At issue was whether the joint venture agreement, which was clearly a valid contract, had been repudiated - The Supreme Court of Canada held that the contract remained in force - Although Iwasykiw could not or did not wish to comply with his obligations, the evidence showed that he still wanted to keep the agreement on foot - Ordinary, non-repudiatory breach was consistent with ignoring an agreement's terms - More was required to establish repudiation - Here, the evidence was problematic - To conclude that Iwasykiw's failure to pay his share of the debt constituted repudiation, it would be necessary to establish that the other parties elected to treat that breach as ending the agreement - On the evidence, this was not clear - See paragraphs 20 to 23.

Contracts - Topic 4554

Discharge and termination - By agreement - Abandonment by agreement of the parties - Iwasykiw and Jacyk were parties to a joint venture land development agreement - Their lender called its loan - Iwasykiw did not pay his proportionate share ($900,000) - Jacyk purchased an assignment of the loan and foreclosed - Iwasykiw's initial investment of $1.4 million (US) was lost - Iwasykiw sued for breach of the agreement, submitting that Jacyk should have bought out his interest under the agreement's default provision - The action and Iwasykiw's appeal were dismissed - The Ontario Court of Appeal held that enforcing the written agreement would have been contrary to the parties' intentions, as evidenced by their conduct - Iwasykiw appealed - At issue was whether the joint venture agreement, which was clearly a valid contract, had been discharged by agreement - The Supreme Court of Canada disagreed with the appeal court's opinion that the parties' obligations under the contract had come to an end - The contract remained in force - In order to discharge the joint venture agreement, a new agreement had to be established - The fact that both parties acted as if they were not bound by the agreement did not establish a new contract - Further, abandonment only discharged a contract if it amounted to a new contract in which the parties agreed to abandon the old one - See paragraphs 12 to 19.

Contracts - Topic 4555

Discharge and termination - By agreement - Termination by new agreement - [See Contracts - Topic 4554 ].

Contracts - Topic 4558

Discharge and termination - By agreement - Termination by conduct of parties - [See Contracts - Topic 4554 ].

Equity - Topic 1068

Equitable relief - Relief from forfeiture - Grounds for relief - Iwasykiw and Jacyk were parties to a joint venture land development agreement - Their lender called its loan - Iwasykiw did not pay his proportionate share ($900,000) - Jacyk purchased an assignment of the loan and foreclosed - Iwasykiw's initial investment of $1.4 million (US) was lost - Iwasykiw sued for breach of the agreement, submitting that Jacyk should have bought out his interest under the agreement's default provision - The action and Iwasykiw's appeal were dismissed - Iwasykiw appealed, asserting that, in any event, the initial investment should be returned - The Supreme Court of Canada dismissed the appeal - Iwasykiw failed to meet his liability - When the foreclosure took place, his interest in the joint venture was terminated - Under the principles of mortgage law, the investment was lost - The monies were forfeited - There was no legal basis on which to revive that interest - See paragraph 29.

Joint Ventures - Topic 6

General principles - Interpretation of joint venture agreement - [See both Contracts - Topic 3523 ].

Restitution - Topic 62

Unjust enrichment - General - What constitutes - Iwasykiw and Jacyk were parties to a joint venture land development agreement - Their lender called its loan - Iwasykiw did not pay his proportionate share ($900,000) - Jacyk purchased an assignment of the loan and foreclosed - Iwasykiw's initial investment of $1.4 million (US) was lost - Iwasykiw sued for breach of the agreement - The action and Iwasykiw's appeal were dismissed - Iwasykiw appealed, seeking return of the initial investment on the basis of unjust enrichment - The Supreme Court of Canada dismissed the appeal - The first two requirements of unjust enrichment were present - Jacyk enjoyed the benefits of Iwasykiw's investment money and Iwasykiw had suffered an uncompensated loss of those funds when the foreclosure occurred - However, the agreement, under which the parties voluntarily contracted to invest money without providing for any right to have the money repaid under such circumstances, provided a juristic reason for the enrichment - The foreclosure proceedings might also provide a juristic reason for Iwasykiw's "deprivation" - The doctrine of unjust enrichment did not apply - See paragraphs 30 to 36.

Restitution - Topic 64

Unjust enrichment - General - Juristic reason for enrichment - [See Restitution - Topic 62 ].

Cases Noticed:

Wilson (Paal) & Co. A/S v. Blumenthal, [1983] 1 All E.R. 34 (H.L.), refd to. [para. 17].

Shelanu Inc. v. Print Three Franchising Corp. (2003), 172 O.A.C. 78; 64 O.R.(3d) 533 (C.A.), refd to. [para. 18].

Becker v. Pettkus, [1980] 2 S.C.R. 834; 34 N.R. 384, refd to. [para. 30].

Garland v. Consumers' Gas Co., [2004] 1 S.C.R. 629; 319 N.R. 38; 186 O.A.C. 128; 2004 SCC 25, refd to. [para. 32].

Pacific National Investments Ltd. v. Victoria (City) et al., [2004] 3 S.C.R. 575; 327 N.R. 100; 206 B.C.A.C. 99; 338 W.A.C. 99; 2004 SCC 75, refd to. [para. 34].

Authors and Works Noticed:

Chitty on Contracts (29th Ed. 2004), vol. 1, c. 21 to 25 [para. 14].

Counsel:

James C. Orr and Kenneth A. Dekker, for the appellants;

Benjamin Zarnett and Julie Rosenthal, for the respondents, Nadia Jacyk, in her capacity as Litigation Administrator for the Estate of Peter Jacyk, Prombank Investment Limited and Prombank International (U.S.A.) Limited;

Andrew J. Macdonald, for the respondents, Louis V. Matukas and Gramat Investments (U.S.A.) Limited.

Solicitors of Record:

Affleck Greene Orr, Toronto, Ontario, for the appellants;

Goodmans, Toronto, Ontario, for the respondents, Nadia Jacyk, in her capacity as Litigation Administrator for the Estate of Peter Jacyk, Prombank Investment Limited and Prombank International (U.S.A.) Limited;

Markson Macdonald, Toronto, Ontario, for the respondents, Louis V. Matukas and Gramat Investments (U.S.A.) Limited.

This appeal was heard on October 11, 2007, by McLachlin, C.J.C., Bastarache, Binnie, LeBel, Deschamps, Charron and Rothstein, JJ., of the Supreme Court of Canada. McLachlin, C.J.C., delivered the following reasons for judgment for the court in both official languages on December 20, 2007.