Lee v. 1435375 Ontario Ltd., (2013) 310 O.A.C. 187 (CA)

• Judge: Goudge, Simmons and Strathy, JJ.A.
• Court: Court of Appeal (Ontario)
• Case Date: May 15, 2013
• Jurisdiction: Ontario
• Citations: (2013), 310 O.A.C. 187 (CA);2013 ONCA 516

Lee v. 1435375 Ont. (2013), 310 O.A.C. 187 (CA)

MLB headnote and full text

Temp. Cite: [2013] O.A.C. TBEd. AU.011

Chang Yong Lee (plaintiff/respondent) v. 1435375 Ontario Ltd. (defendant/appellant)

(C56363; 2013 ONCA 516)

Indexed As: Lee v. 1435375 Ontario Ltd.

Ontario Court of Appeal

Goudge, Simmons and Strathy, JJ.A.

August 15, 2013.

Summary:

The purchaser of a dry cleaning business claimed rescission of the purchase agreement based on a mistake about the zoning of the property on which the business was situated. The motions judge agreed and the purchaser's funds were returned to him. The vendor appealed, arguing that the motions judge made a palpable and overriding error in finding common mistake.

The Ontario Court of Appeal allowed the appeal.

Contracts - Topic 1598

Formation of contract - Mistake, misunderstanding or misrepresentation - Unilateral mistake - A motions judge allowed the purchaser of a dry cleaning business to rescind the agreement based on a mistake regarding zoning - The vendor appealed - The Ontario Court of Appeal allowed the appeal - The motions judge erred in finding that the parties had a common assumption that a dry cleaning business was a "permitted use" under the zoning bylaw - She also erred in law by putting an onus on the vendor to demonstrate that the business was able to continue operating as a dry cleaning business - In so doing, she erroneously reversed the caveat emptor rule and put the risk of mistake on the vendor instead of the purchaser - Those errors affected her conclusions on both common and equitable mistake - If there was any mistake here, it was a unilateral mistake on the purchaser's part, and it was not at all unjust that he should bear the consequences - See paragraphs 49 to 85.

Contracts - Topic 1600

Formation of contract - Mistake, misunderstanding or misrepresentation - Common mistake - [See Contracts - Topic 1598 ].

Land Regulation - Topic 2661

Land use control - Zoning bylaws - Permitted uses - General - The Ontario Court of Appeal reviewed the law on non-conforming use - See paragraphs 44 to 48.

Mistake - Topic 1

General - General principles - General - The Ontario Court of Appeal reviewed the law with respect to common mistake and equitable mistake - See paragraphs 37 to 46.

Mistake - Topic 704.1

Mistake of fact - Mistake as to nature or existence of rights - Respecting land - Zoning - [See Contracts - Topic 1598 ].

Sale of Land - Topic 3757

Contract - Discharge, rescission or annulment - Grounds - Mistake - [See Contracts - Topic 1598 ].

Sale of Land - Topic 8107

Defences of vendor - Caveat emptor - General - [See Contracts - Topic 1598 ].

Cases Noticed:

Ghitter (Ron) Property Consultants Ltd. v. Beaver Lumber Co. (2003), 330 A.R. 353; 299 W.A.C. 353; 2003 ABCA 221, refd to. [para. 28].

Eastern Canada Coal Gas Venture Ltd. v. Cape Breton Development Corp. (2001), 200 N.S.R.(2d) 201; 627 A.P.R. 201; 2001 NSSC 196, refd to. [para. 29].

Solle v. Butcher, [1950] 1 K.B. 671 (C.A.), refd to. [para. 31].

Bell v. Lever Bros. Ltd., [1932] A.C. 161 (H.L.), refd to. [para. 38].

R. v. Ontario Flue-cured Tobacco Growers' Marketing Board, [1965] 2 O.R. 411 (C.A.), refd to. [para. 39].

Miller Paving Ltd. v. Gottardo (B.) Construction Ltd. (2007), 227 O.A.C. 45; 2007 ONCA 422, refd to. [para. 41].

Great Peace Shipping v. Tsavliris Salvage (International) Ltd., [2003] Q.B. 679 (C.A.), refd to. [para. 42].

Ottawa (City) v. Capital Parking Inc. (2002), 158 O.A.C. 174; 59 O.R.(3d) 327 (C.A.), refd to. [para. 44].

Feather v. Bradford-West Gwillimbury (Town) et al. (2010), 268 O.A.C. 239; 2010 ONCA 440, refd to. [para. 46].

Saint-Romuald (Ville) v. Olivier et al., [2001] 2 S.C.R. 898; 275 N.R. 1; 2001 SCC 57, refd to. [para. 46].

Rotstein v. Oro-Medonte (Township) et al., [2002] O.T.C. 1011; 34 M.P.L.R.(3d) 266 (Sup. Ct.), refd to. [para. 46].

Sindall (Wm.) Plc v. Cambridgeshire C.C., [1994] 1 W.L.R. 1016 (C.A.), refd to. [para. 79].

0707448 B.C. Ltd. v. Cascades Recovery Inc., [2011] B.C.T.C. Uned. 1065; 2011 BCSC 1065, refd to. [para. 79].

Authors and Works Noticed:

Anson, W.R., Principles of the English Law of Contract and of Agency in Relation to Contract (21st Ed. 1959), generally [para. 39].

Cheshire, Geoffrey Chevalier, and Fifoot, Cecil Herbert Stuart, The Law of Contract (9th Ed. 1976), pp. 206 to 220 [para. 28].

Cheshire, Geoffrey Chevalier, Fifoot, Cecil Herbert Stuart, and Furmston, Michael P., The Law of Contract (14th Ed. 2001), generally [para. 37].

McCamus, John D., Mistaken Assumptions in Equity: Sound Doctrine or Chimera? (2004), 40 Can. Bus. L.J. 46, p. 47 [para. 83].

Counsel:

Jordan Goldblatt, for the appellant;

Julian Heller and Zabihullah Yaqeen, for the respondent.

This appeal was heard on May 15, 2013, before Goudge, Simmons and Strathy, JJ.A., of the Ontario Court of Appeal. The following decision was delivered for the court on August 15, 2013, by Strathy, J.A.