2012 NBCA 40, 2012 NBCA 40

COURT OF APPEAL OF NEW BRUNSWICK 115-11-CA KELTY DRUET APPELLANT KELTY DRUET APPELANTE - and - - et - MARC GIROUARD RESPONDENT MARC GIROUARD INTIMÉ Druet v. Girouard, 2012 NBCA 40 Druet c.

Girouard, 2012 NBCA 40 CORAM: The Honourable Justice Turnbull The Honourable Justice Robertson The Honourable Justice Richard CORAM : L’honorable juge Turnbull L’honorable juge Robertson L’honorable juge Richard Appeal from a decision of the Court of Queen’s Bench: August 9, 2011 Appel d’une décision de la Cour du Banc de la Reine : Le 9 août 2011 History of Case: Historique de la cause : Decision under appeal: 2011 NBQB 204 Décision frappée d’appel : 2011 NBBR 204 Preliminary or incidental proceedings: Court of Appeal: [2011] N.B.J. No. 354 [2011] N.B.J.

No. 385 Procédures préliminaires ou accessoires : Cour d’appel : [2011] A.N.-B. n o 354 [2011] A.N.-B. n o 385 Appeal heard: November 15, 2011 Appel entendu : Le 15 novembre 2011

Judgment rendered: April 26, 2012 Jugement rendu : Le 26 avril 2012 Reasons for judgment by: The Honourable Justice Robertson The Honourable Justice Richard Motifs de jugement : L’honorable juge Robertson L’honorable juge Richard Concurred in by: The Honourable Justice Turnbull Souscrit aux motifs : L’honorable juge Turnbull Counsel at hearing: Kelty Druet appeared in person For the respondent: Christian Girouard Avocats à l’audience : Kelty Druet a comparu en personne Pour l’intimé : Christian Girouard THE COURT The appeal is allowed and the motion judge’s order is set aside. The amended motion for

summary judgment is dismissed. The appellant is entitled to costs of $3,500 on the motion in the Court of Queen’s Bench. With respect to the application for leave to appeal and the appeal, the appellant is entitled to disbursements only, fixed at $1,500. LA COUR L’appel est accueilli et l’ordonnance du juge qui a entendu la motion est annulée. La motion modifiée en vue d’obtenir un jugement

sommaire est rejetée. L’appelante a droit à des dépens de 3 500 $ relativement à la motion devant la Cour du Banc de la Reine. En ce qui concerne la demande en autorisation d’appel et l’appel, l’appelante n’a droit qu’aux débours, dont le montant est fixé à 1 500 $. The judgment of the Court was delivered by ROBERTSON and RICHARD JJ.A. I. Introduction [ 1 ]

Section 1 (

d) of the Statute of Frauds , R.S.N.B. 1973, c. S-14, provides that no contract for the sale of land is enforceable unless the agreement is in writing and signed by the party to be charged (typically the defendant). Correlatively, s. 7 of the Electronic Transactions Act , S.N.B. 2001, c. E-5.5, provides that if New Brunswick law imposes a requirement that information be in writing, the requirement can be satisfied if the Act’s definition of “electronic information” is met. Similarly, s. 10 states that a legal requirement to provide a signature may be met if the definition of “electronic signature” is satisfied.

This appeal was precipitated by a series of seven emails and a motion judge’s ruling that the electronic exchanges, authored by two non-commercial parties, resulted in a binding contract for the purchase and sale of a residential condominium unit. The motion judge concluded the emails contained the

essential terms of the agreement. He also ruled that the purchaser’s offer to have a formal agreement prepared for the vendor’s review did not impact on the enforceability of their agreement. With leave of this Court, the vendor and owner of the condominium unit, Kelty Druet, appeals the motion judge’s ruling, which is now reported as 2011 NBQB 204 , 379 N.B.R. (2d) 1. [ 2 ] Undoubtedly, the non-lawyer will view the decision as authority for the proposition you can sell your home by email, even though the parties had not signed a formal agreement of purchase and sale.

Many a consumer and real estate agent still mistakenly believe there can be no binding agreement without that formal contract. Hence, the proposition is daunting for those addicted to modern modes of instantaneous communication, but whose responses are not always informed by slowness of thought. From a lawyer’s perspective, the precedential significance of this case is potentially broad. The interplay between contracts, emails, writing requirements and electronic signatures extends beyond the realm of curiosity when the Statute of Frauds is placed alongside the Electronic Transactions Act .

The fact the latter Act was recently repealed and replaced with the Electronic Transactions Act , R.S.N.B. 2011, c. 145, is of no moment, as there has been no change to the provisions relevant to this appeal other than numbering. [ 3 ] As a matter of general principle, we accept that an exchange of emails can satisfy the writing requirement under the Electronic Transactions Act and, correlatively, the Statute of Frauds . Of course, to reach this conclusion, one must apply the principle of “joinder”.

We also accept that the parties reached an agreement with respect to the essential terms (the 3 P’s, namely, price, parties and property) and two other matters: the assumption of the existing mortgage and payment of closing fees. This leads us to ask whether Ms. Druet’s method of identifying herself on one or more of the emails meets the definition of “electronic signature” set out in the Electronic Transactions Act . The issue is one of first impression for this Court and there is a dearth of Canadian or English jurisprudence on point.

To complicate matters, the issue was not dealt with in the court below and only superficially in this Court. Hence, we restrict our analysis to offering a general outline of the issue and the identification of basic questions for future consideration (see paras. 24-30). For the moment, it is sufficient to understand that, even if the signing requirement were satisfied, the alleged agreement remains unenforceable through the application of established contractual principles.

The reference in one of the emails to the drafting of an agreement of purchase and sale for the review of the vendor triggers a fundamental question: Was there an intention to create legal relations? Of course, intention is to be measured objectively, having regard to the totality of the evidence. [ 4 ] This is not a commercial transaction where the law imposes a rebuttable presumption of an intention to establish a binding relationship. This is a consumer transaction involving the sale of residential property and negotiations conducted in cyberspace without the intervention or assistance of professionals.

In these circumstances, we believe the law is better served by a rebuttable presumption against the intention to establish legal relations. That presumption accords with what we perceive to be the populist view that generally an exchange of emails is to be regarded as a preliminary negotiation that may lead to the signing of a formal contract.

The notion that a person can sift through a series of emails, identify the 3 P’s, find a signature which satisfies the Electronic Transactions Act and, correlatively, the Statute of Frauds , and then have the court fill in any necessary contractual terms is simply out of step with the reasonable expectations of today’s typical consumer. There are still instances where formalities count. The purchase of a home is one of them. However, we wish to reinforce the obvious.

Rarely are cases decided on the basis of presumptions alone. [ 5 ] It is settled law that the legal effect of an agreement which is “subject to contract” is a question of construction. However, we also agree with the prevailing view that, in the context of real estate transactions, the qualification is normally interpreted to mean the preliminary agreement is not enforceable until such time as the formal agreement is signed.

Aided by the presumption and the law surrounding conditional agreements, we conclude the series of emails, when viewed collectively from the vantage point of a disinterested bystander, does not reveal an intention to be contractually bound. This is an easy case because it was the respondent purchaser, Mr. Girouard, who offered to have a formal agreement prepared for Ms. Druet’s consideration. This is understandable because neither he nor his wife had ever set foot in the condominium and, thus, had no idea as to its state of repair or disrepair. While these matters may not have been of concern to Mr.

Girouard, they are in the eyes of the disinterested bystander who, in the absence of special circumstances, must view the issue from the perspective of the typical vendor and purchaser. The typical purchaser does not buy existing properties sight unseen and the typical vendor does not expect otherwise. Even those who buy or sell goods on Kijiji appreciate the practical significance of these observations. On the facts of this case, there was never an intention to create a binding relationship; a fact which was confirmed by Mr. Girouard’s offer to have a formal contract prepared for Ms. Druet’s consideration.

Accordingly, she was entitled to withdraw from the negotiations three hours after she had agreed with Mr. Girouard on the sale price. This leads to the conclusion the appeal should be allowed. II. Background [ 6 ] The accepted facts are as follows. The respondent, Marc Girouard, was interested in purchasing a condominium unit in the same building in which Ms. Druet owned and rented a unit (#203). The unit is located in Moncton, where Mr. Girouard resides. Ms. Druet lives in Halifax. Mr.

Girouard saw that a condo unit in the building was being advertised for rent on Kijiji, and, on October 22, 2010, he tracked down the owner, Ms. Druet, to discuss the possibility of purchasing it for $150,000. It was agreed they would continue negotiations by email. The first of the relevant emails was sent by Ms. Druet to Mr. Girouard on October 24, 2010, at 11:56 a.m. It reads as follows:

From: Kelty Druet [email address omitted] Sent: October 24, 2010 11:56:21 AM To: Marc Girouard [email address omitted] Hi Marc, After giving the idea of selling my condo some more thought I have come to a decision. I would sell it to you for $160,000 conditional that you take over the current mortgage and pay the legal fees associated with the purchase. (I estimate about $800) The condo next door to me sold for 142K at the first of the year however it is a bachelor (smaller unit). Please let me know your decision. Kind regards, Kelty Druet [ 7 ] A few moments later, Mr. Girouard responded to Ms.

Druet’s email: From: Marc Girouard [email address omitted] Sent: October 24, 2010 12:16:59 PM To: Kelty Druet [email address omitted] Thank you Kelty, I will meet you half way @ 155000.00 and pay legal fees and assume existing mortgage. [ 8 ] Ms. Druet did not immediately respond to this email. On October 25, 2010, Mr. Girouard emailed Ms. Druet again, this time at 1:12 p.m., asking whether it would be possible for Mrs. Girouard to visit the unit in question, while providing Ms. Druet with Mrs. Girouard’s phone number. The email reads as follows:

From: Marc Girouard [email address omitted] Sent: October 25, 2010 1:12:48 PM To: Kelty Druet [email address omitted] Hi Kelty, would it be possible for my wife to visit the condo at your tenants discretion. She is flexible for day and time. You can let me know or have [tenant] contact her when it would be convenient for him. Her cell is [….] [ 9 ] At 2:59 p.m., Ms. Druet responded by email stating that she would ask the tenant to phone Mrs. Girouard. However, two minutes earlier, Ms. Druet had sent an email to Mr.

Girouard worded as follows: From: Kelty Druet [email address omitted] Sent: October 25, 2010 2:57:01 PM To: Marc Girouard [email address omitted] Hi Marc, Sorry for the late reply – I’ve been thinking about it. I will accept your offer. How would you like this to go? Thanks, Kelty [ 10 ] It is important to note the parties appear to have agreed on an amount, but no information whatsoever has been exchanged about the outstanding mortgage Mr. Girouard was to assume, nor had Mr. Girouard or his wife viewed the unit in question.

It is also noteworthy that, after they agreed on the amount, arrangements were still being made for Mrs. Girouard to view the unit. This is seen from the email which Ms. Druet sent to Mr. Girouard two minutes after the email reproduced above:

From: Kelty Druet [email address omitted] Sent: October 25, 2010 2:59:03 PM To: Marc Girouard [email address omitted] Yes I will contact [the tenant] and ask him to give her a call. Kelty think globally act locally [ 11 ] Within a half hour of the above emails, Mr. Girouard replied to Ms. Druet and introduced the understanding that a draft agreement of purchase and sale would be prepared and suggested a possible closing date for the transaction.

The email reads as follows: From: Marc Girouard [email address omitted] Sent October 25, 2010 3:33:11 PM To: Kelty Druet [email address omitted] Great, are you in moncton any time soon? I can have a sales and purchase agreement drafted for your review. Is a 15 nov. closing acceptable so not interfere with your tenants, that I am told are vacating on that date. Is the mortgage holder a moncton or halifax bank? [ 12 ] Approximately three hours later, Ms. Druet sent another email to Mr.

Girouard in which she indicates that, after speaking with her partner who had just returned from Peru, she was not prepared to sell because of the price. The email reads as follows:

From: Kelty Druet [email address omitted] Sent: October 25, 2010 6:37:54 PM To: Marc Girouard [email address omitted] Hi Marc, My partner has been in Peru the last few days and I just got to speak with him tonight about the condo. He was not agreeing with the price so I am sorry but I cannot sell to you. If your wife would still like to see the condo I have asked [the tenant] to call her. Kelty’s iPhone [ 13 ] Parenthetically, Ms. Druet does not deny she is the sole owner of the unit in question. The next day, Mr. Girouard wrote to Ms.

Druet informing her that he considered her to be contractually bound to sell him the condo unit. Eventually, he commenced an action against Ms. Druet, seeking specific performance or damages for breach of contract. III. Motion Decision [ 14 ] Following the examination for discovery, Mr. Girouard brought a motion, under Rule 23.01(1)(

a) of the Rules of Court, for the determination as to whether the exchange of emails resulted in a binding agreement of purchase and sale. The main question was broken down into three parts: (1) was there an agreement on all of the essential terms; (2) are email exchanges considered a written document for the purpose of s. 1 (

d) of the Statute of Frauds ; and (3) is an email signature considered a signature for the purpose of that section? [ 15 ] The motion judge’s analysis starts by asking whether the emails qualified as a binding agreement of purchase and sale, irrespective of whether they satisfied the writing and signing requirements set out in the Statute of Frauds . In addition to the legal requirement that there be an offer and an acceptance, the motion judge acknowledged there must be an agreement on three essential terms: the parties, the price and a sufficient description of the property.

He also acknowledged that if other terms have been agreed upon, so too must they be capable of identification. The motion judge then concluded the parties had entered into a binding agreement. The parties were identified and the emails make reference to the condo unit in question and a purchase price of $155,000.

The emails also make reference to two other terms: assumption of the existing mortgage on the property and payment of the vendor’s legal fees. [ 16 ] The motion judge went on to consider whether the emails constituted a written memorandum or note, signed by the party to be charged, as required under s. 1 (

d) of the Statute of Frauds . The motion judge referred to authorities such as Sopinka, The Law of Evidence in Canada , 2 nd ed. (Toronto: Butterworths, 1999), acknowledging the legislative and judicial trend to broadly define documents to include modern methods of communicating and storing information (see also the definition of “writing” at s. 38 of the

Interpretation Act , R.S.N.B. 1973, c. I-13). This led the motion judge to conclude the emails satisfied the writing requirement under the Statute of Frauds .

In his view, the emails were admissible for the proof of what is stated in them, having regard to the fact there was no issue as to the identity of the senders, whether the emails were actually sent, or any allegation of the emails having been altered. [ 17 ] The motion judge turned to the argument that, as the emails contemplated the signing of a formal agreement of purchase and sale, they had to be regarded as evidence of a non-binding consensus in the same way as an “agreement to agree” is regarded in contract law. The motion judge cited two cases in support of his rejection of this argument: Wood v.

Advanced Systems Technology Inc. , 2008 NBQB 155 , 325 N.B.R. (2d) 123 and Dominion Stores Ltd. v. United Trust Co. et al , [1973] O.J. No. 2259

(H.C.J.) (QL). Prior to addressing this issue, however, the motion judge cited and quoted relevant passages from Victor Di Castri, Law of Vendor and Purchaser, 3rd ed. (Toronto: Carswell, 1988), including the following: Where there is a memorandum evidencing a final and complete agreement, the mere fact that the parties have also expressly stipulatedfor a more formal document being prepared and executed later does not, by itself, and in the absence of any uncertainty as to the essentialterms of the contract, manifest an intention to continue negotiations.

As stated by the Alberta Court of Appeal, [Wild Rose Properties Ltdv. Latour (1985), 1985 ABCA 79 , 59 A.R. 95 at 96] [p. 4-29 of text, cited at para. 16 of judgment] [18] The motion judge determined the reference in the email from Mr. Girouard to Ms. Druet in which the drawingof a formal agreement is raised was not an indication of an “agreement to enter into another contract” (para. 26).

With respect to thefailure of the parties to agree to a closing date, the motion judge ruled it was reasonable to infer a date based on real estate practice thatclosings occur in the middle or end of the next following month and the same understanding should apply to the case at hand. [19] Curiously, the motion judge does not squarely address the impact of the Electronic Transactions Act and theapplication of s. 10 to the signing requirement. Instead, he simply rules that the signatures as indicated on the emails constitute asignature for purposes of the Statute of Frauds.

However, earlier in his reasons, the motion judge refers to s. 7 of the ElectronicTransactions Act, which provides that “[a] legal requirement that information be in writing is satisfied by electronic information that isaccessible so as to be usable for subsequent reference.” IV. Issues [20] After the granting of Mr. Girouard’s motion, Ms. Druet entered the ranks of the self-represented and set out onher own to obtain the leave necessary to appeal an interlocutory decision. Obviously, she succeeded. Ms. Druet remains self-representedand has raised three grounds of appeal in the form of questions:

(1) Did the motion judge err in concluding Ms. Druet’s emails containedan electronic signature?;

(2) Did the motion judge err in concluding the parties had reached an agreement for the purchase and sale of thecondo unit?; and

(3) Did the motion judge err in determining whether there was adequate consideration to support a binding agreement?In our view, there is no merit to the third ground. The enforceability of an agreement to buy and sell land is not dependent on whether thepurchaser pays a deposit. The deposit serves other purposes which need not be explored in these reasons. With respect to the first groundof appeal, we have elected not to answer that question because of our ruling with respect to the second.

However, we are prepared tomake some observations with respect to the type of arguments and analysis that would have to be pursued in regard to the signingrequirement in light of the Electronic Transactions Act. Also, we must address a procedural issue tied to the application of Rule 23 of theRules of Court. V. The Procedural Issue – Rule 23 [21] Assuming for the moment there is merit in Ms. Druet’s second ground of appeal, a procedural matter must beaddressed.

This matter came to the Court of Queen’s Bench as a plaintiff’s motion for the determination of a question of law prior to trial.On motions of this kind, evidence is generally not admitted, except as provided for by Rule 23.02 of the Rules of Court. This is becausethe scope of Rule 23.01(1)(

a) is limited to the determination of questions of law and, therefore, does not contemplate factualdeterminations or determinations of mixed law and fact. In the present case, Mr. Girouard asked the Court to determine (1) whether therewas a binding agreement between the plaintiff and the defendant; (2) whether email exchanges can be considered a written document forthe purposes of the Statute of Frauds; and (3) whether an email signature could be considered a signature for the purpose of the Statuteof Frauds.

Admittedly, the last two questions lend themselves to a Rule 23 application, as they raise pure questions of law. On the otherhand, one would think the first question is one of mixed law and fact, even though there appears to be some support for the view thatwhere a contract is based on a written document only, it still involves a question of law. [22] In reality, Mr. Girouard’s motion sought not only a determination with respect to questions of law, but alsosummary judgment.

The very nature of the principal question raised and of the issues to be determined by the motion judge reveals anintention to have the ultimate merits of the liability issue determined on

summary judgment. Both the parties and the motion judgeproceeded on that basis. The arguments both in support of and against the motion, as well as the motion judge’s decision, stray muchfarther than simply determining questions of law. In our view, there was in fact an evidentiary foundation for the judge to rule on amotion for

summary judgment. The essential facts are not in dispute. Had the motion judge and counsel reflected further, a request tohave the Rule 23.01(1)(

a) motion converted to a motion for

summary judgment under Rule 22.01, would have been granted, as permittedby Rule 37.10(a) (see Norris v. Lloyd's of London (1998), (NB CA), 205 N.B.R. (2d) 29, [1998] N.B.J. No. 351(C.A.) (QL), at para. 21).

[ 23 ] Where the relevant facts are uncontested, and since both the motion and the appeal were argued as though dealing with a motion for

summary judgment, we will exercise our power under Rule 62.21(1) and make the order that should have been made, thereby converting Mr. Girouard’s motion into one for

summary judgment. This enables us to rule on the question of whether or not the judge erred in ruling there was a legally-binding agreement between Ms. Druet and Mr. Girouard. This is the most just, least expensive and most expeditious determination of the proceeding. Otherwise, we would be limited to ruling that the judge’s decision exceeds the ambit of what is permissible on a Rule 23.01(1)(

a) motion. Hence, one of the parties would have to bring a motion for

summary judgment relying on the same factual matrix. VI. The Non Issue – The Signing Requirement & Electronic Signatures [ 24 ] As much as the signature issue is certain to attract the intellectual curiosity of the lawyer and non-lawyer alike, this is not the case to venture into uncharted waters unsupported by lifejackets infused with cogent submissions. From a legal standpoint, we note that the Electronic Transactions Act was not pled, but was raised in both of the pre-hearing briefs submitted to the motion judge. Ms.

Druet’s submission focused on s. 10 (today s. 11) of that Act , which is discussed shortly. [ 25 ] For the record, the 2001 Electronic Transactions Act was repealed and replaced in 2011 by R.S.N.B. 2011, c. 145 . However, ss. 7 and. 10 of the former legislation are replicated in ss. 8 and 11, respectively of the present Act . The genealogy of the legislation leads us back to the 1996 United Nations’ UNCITRAL Model Law on Electronic Commerce . Moving forward, the UN model was subsequently endorsed by the Uniform Law Conference of Canada and promulgated as the Uniform Electronic Commerce Act in 1999.

In turn, that model legislation has been adopted with variations in Atlantic Canada and beyond: see Angela Swan, Canadian Contract Law , 2 nd ed. (Markham, Ont.: LexisNexis, 2009) at 340 and, in particular, note 90. So far as the New Brunswick legislation is concerned, the variations are substantial if one compares the uniform legislation with what the New Brunswick Legislature first adopted in 2001. In particular, the provisions of the uniform legislation touching on the matter of electronic signatures should be contrasted with the New Brunswick

definitions. We would also draw attention to the Discussion Paper issued by the Legislative Services Branch of the Department of Justice in December of 2000, prior to the adoption of the Electronic Transactions Act , which occurred in June of 2001. It is rare for the Legislature to provide us with a blueprint and insight, albeit non-binding, as to the intent behind

an Act and each of its provisions. [ 26 ] The starting point of any analysis is the Electronic Transactions Act . As the 2001 version was employed at trial, we shall cite the sections of that version. Section 10(1) provides that: “A legal requirement for the signature of a person is satisfied by an electronic signature”. By virtue of s. 1(1), “electronic” includes “digital and optical”. As to the use of digital signatures, see Mark Lewis, Digital Signatures: Meeting the Traditional Requirements Electronically – A Canadian Perspective (2002), 2 Asper Rev. of Int’l Bus & Trade Law 63. Section 1(1) also defines “legal requirement” to mean “a requirement of

an Act of New Brunswick, of a regulation or other subordinate legislation under

an Act of New Brunswick, or of the common law”. As the Statute of Frauds does require a signed writing, it is trite to conclude the Electronic Transactions Act applies. While s. 4(2) provides that the Act does not apply to legislation excluded by regulation, the regulation in question does not mention the Statute of Frauds : Exclusion Regulation – Electronic Transactions Act , N.B. Reg. 2002-24 . That being so, the Act’s definition of “electronic signature” comes into play. The definition has two sources.

The first is found in s. 1(1): “‘electronic signature’ means electronic information that a person has created or adopted in order to sign a document and that is in, attached to or associated with the document”. The second source of the definition is found in s. 10(2). It provides that, without limiting the generality of the definition found in s. 1 , an electronic signature may include one of the following two scenarios. According to s. 10(2)(a), an electronic signature may be an electronic representation of the signor’s manual signature.

According to s. 10(2)(b), an electronic signature may be electronic information by which the signor provides his or her name and indicates clearly the name is being provided as his or her signature to the document. [ 27 ] Before the motion judge, counsel for Ms. Druet appears to have focused on electronic signatures in which the signor has clearly indicated his or her name is being provided as a signature (s. 10(2)(b)). In other words, counsel was arguing that had Ms. Druet concluded her emails with “signed Kelty Druet”, the signing requirement under the two statutes would have been satisfied.

Admittedly, none of Ms. Druet’s emails ended with that closing. But the flaw in the argument is that s. 10(2) (

b) of the Electronic Transactions Act does not limit the generality of the definition found in s. 1 of that Act . In other words, the ambit of the definition of “electronic signature” found in s. 1 is broader than that outlined in s. 10(2)(b). Pursuant to the definition

section of the Act , s. 1(1): “‘electronic signature’ means electronic information that a person has created or adopted in order to sign a document and that is in, attached to or associated with the document”. Against this synoptic background, the following analysis provides an outline of issues upon which we express no opinion. [ 28 ] As a matter of statutory

interpretation, one must seek out the legislative purposes underscoring the Electronic Transactions Act and, in particular, the provisions relating to electronic signatures. This leads one to ask whether the legislative objectives underscoring the signature requirement under the Statute of Frauds are relevant to the application of the Electronic Transactions Act . It is generally accepted that signatures serve two purposes. One is to identify the person who is signing; that is to say, to identify the source and authenticity of the document.

The other purpose is to establish the signatory’s approval of the document’s contents. Admittedly, these purposes are well-documented in the jurisprudence and by commentators. We also know the signature requirement under the Statute of Frauds has long been a topic of discussion in the law. As a general proposition, the concept of signature

under that legislation has been interpreted loosely: see Durrell v. Evans (1862), 158 E.R. 848 , per Blackburn J., at 855 (C.A.) and Goodman v. J. Eban Ld., [1954] 1 Q.B. 550 . Several Canadian Law Reform agencies have dealt with the signature requirement under the Statute of Frauds : e.g ., see Joseph T. Robertson, Discussion Paper on the Statute of Frauds, 1677 (St. John’s, NL: Newfoundland Law Reform Commission, March 1991) and the reference to the Ontario Law Reform Commission, Report on Amendment Of The Law Of Contrac t (Toronto: Ministry of the Attorney General, 1987).

See also Angela Swan at 335-336 and cases collected at note 65. [ 29 ] There is one recent English decision dealing with electronic signatures, outside the context of the statutory equivalent of the Electronic Transactions Act , which warrants brief consideration. It shows there are limits as to what the common law will accept as an electronic signature. In Mehta v. J.

Pereira Fernandes S.A. , [2006] EWHC 813 (Ch.), the Court was asked whether the automatic insertion of a person’s email address in the header, after the document has been transmitted by either the sending and/or receiving ISP, constituted a signature for the purpose of s. 4 of the English Statute of Frauds [our s. 1 (d)]. Mr. Mehta’s name or initials did not appear at the end of the email or indeed, anywhere else in the body of the email. The appeal judge answered “no” to the question. His analysis, found at paragraph 26 of his reasons, is of interest, as is the case law cited throughout the decision.

Apparently there are American decisions that take a contrary view: see, e.g. , JSO Associates, Inc. v. Price , 2008 N.Y. Slip Op 30862 (U). Indeed, there does not appear to be consistency in the treatment of email signatures. [ 30 ] As an aside, one has to wonder whether legal determinations regarding satisfaction of the signature requirement are strongly influenced by the merits or so-called “equities” of a particular case. This leads us to pose another question: Will satisfaction of the signing requirement in electronic form be dependent on the circumstances of each case?

For example, would it make a difference that the parties downloaded from the internet a standard form agreement of purchase and sale and used that document to circumscribe their negotiations, as opposed to an exchange of quick-fire emails? In the case of the electronic standard form agreement, would the law accept as a valid signature the person’s first or last name only? By contrast, would the law reach the same conclusion if the facts involved a series of email exchanges? The questions posed lead one to ask whether the form of the writing is as important, or more important, than the form of the signature.

In turn, we cannot help but ask whether there is an overlap between the intention to authenticate a document and its contents and the intention to create legal relations. The present case poses another legal conundrum. There was an exchange of seven emails. In order to cobble together a binding contract, the plaintiff, Mr. Girouard, had to invoke the principle of “joinder”, which is explained below. Are we to assume the signing requirement applies only to the email in which Ms. Druet conveyed her willingness to accept Mr.

Girouard’s offer of $155,000, or does the requirement apply to the other emails or, alternatively, only those which set out the essential terms? These are the types of questions we leave for another day. VII. The Writing Requirement, Essential Terms & the Principle of Joinder [ 31 ] It is often said there are only two certainties in life: death and taxes. In the law there are many uncertainties, one of which involves the enigmatic Statute of Frauds .

The jurisprudence spans 335 years and apparently there is no end in sight for those jurisdictions who cannot agree on the fate of the statute: see the Newfoundland Law Reform Commission’s Discussion Paper on the Statute of Frauds, 1677 . To the legal historian and student of Sullivan on the Construction of Statutes , the statute is a testament to the resolve of courts to recast the meaning of words that admit of no apparent ambiguity.

From the outset, courts have spent more time devising rules and doctrines to avoid the inequitable results often flowing from the strict enforcement of the writing requirement and have done so without condemnation from those who classify themselves as originalists or textualists. Yet, there are occasions when the writing requirement serves a valid purpose, even in modern times. Much of the jurisprudence engages the subsection dealing with contracts involving land, which, if read literally, refers to all contracts. The essential parts of s. 1 (

d) read as follows: “No action shall be brought […] upon any contract, or sale of lands, or of any interest therein […] unless the agreement upon which the action is brought, or some memorandum or note thereof, is in writing and signed by the party to be charged therewith, or some other person authorized by him.” The underlined word “or” has been read as “for”, without generating controversy. See generally Martins v. 601360 N.B. Inc. , 2010 NBCA 16 , 356 N.B.R. (2d) 68; McKnight et al. v. Grant , 2009 NBCA 4 , 340 N.B.R. (2d) 386 at para. 16 ; Town of Nackawic v.

Safeway Shouldering , 2001 NBCA 14 , 234 N.B.R. (2d) 356 at para. 24 , and also Swan, Canadian Contract Law , supra , at 328. [ 32 ] This case offers challenges not typically encountered in the jurisprudence. The first relates to the writing requirement set out in s. 1 (

d) of the Statute of Frauds . Like the motion judge, we see no legal impediment to the proposition that emails so qualify. If legal authority were needed, we cite Mehta v. J. Pereira Fernandes S.A ., supra , while relying on s. 38 of the

Interpretation Act , which provides in part: “In every enactment […] ‘writing’ […] includes words printed […] or reproduced by any mode of representing or reproducing words in a visible form”. As one would expect, the legal conclusion is the same under the Electronic Transactions Act .

Section 7 (now s. 8 ) provides that a legal requirement for information to be in writing is satisfied “by electronic information that is accessible so as to be usable for subsequent reference”. No one had alleged that the emails in question failed to qualify. [ 33 ] The finding that emails may satisfy the writing requirement under the Statute of Frauds and the Electronic Transactions Act leads us to consider another aspect of the writing requirement. We are not dealing with one email but rather seven.

Commentators believe that the drafters of the original Statute of Frauds clearly contemplated the inclusion of all the contractual terms in a single document. However, by the beginning of the nineteenth century, courts would allow plaintiffs to rely on two or more documents to prove their case under the “joinder” principle. But it was still necessary that one document should specifically and on its face refer to the other (see O’Donohoe v. Stammers (1884), 1884 CanLII 4 (SCC) , 11 S.C.R. 358). Oral evidence was not permitted for the purpose of connecting the two: Boydell v. Drummond (1809), 103 E.R. 958 (K.B.) .

In short, the law required an internal and express reference in

one document to the other. But in the latter half of the nineteenth century, the law became even more accommodating. A sufficientreference could arise by implication: Timmins v. Moreland Street Property Co. Ltd. (1957), [1958] 1 Ch. 110 (C.A.). English writerssummarize the law in terms of the law reports revealing a “progressive laxity of

interpretation”: M.P. Furmston, Cheshire, Fifoot and Furmston’s Law of Contract, 11th ed. (London: Butterworths, 1986) at 204. [34] The lead Canadian case on the issue of joinder is Doran v. McKinnon (1916), (SCC), 53S.C.R. 609, [1916] S.C.J. No. 47 (QL). In that case, it was held: “parol evidence may be given to connect two documents together whichdo not expressly refer to each other, but which connection and reference is a matter of fair and reasonable inference” (at 611). Theinference drawing power of judges is significant. The Alberta Court of Appeal applied this principle in Harvie et al. v.

Gibbons, 1980ABCA 38 , [1980] A.J. No. 951 (C.A.) (QL). In that case, the Court allowed oral evidence to connect documents where anincomplete reference on a cheque was supplemented by a map drawn by the purchaser and an unsigned note of a conversation with thevendor’s executrix. Other courts appear to take a less flexible approach when it comes to the joinder issue: e.g., Canadian Imperial Bank of Commerce v. Titus et al., [1980] O.J. No. 3546 (H.C.J.) (QL) and see cases collected in S.M.

Waddams, The Law of Contracts, 6th ed.(Toronto: Canada Law Book, 2010) at 168, note 60. [35] We must decide whether the emails may be properly joined and, therefore, fall within the Statute’s writingrequirement. The record on motion contains seven emails that reflect what occurred over a two day period. The first is Ms. Druet’s offerto sell her condo for $160,000, provided Mr. Girouard is willing to “take over” the existing mortgage and pay the legal fees for thetransfer, estimated at $800. The second email is a counteroffer from Mr.

Girouard for $155,000 and an indication of his willingness toassume the existing mortgage and pay Ms. Druet’s legal fees on the transaction. The third email is from Mr. Girouard asking whether itwould be possible for his wife to visit the unit in question. The fourth email is from Ms. Druet to Mr. Girouard in which she accepts Mr.Girouard’s counteroffer for $155,000. The fifth email relates back to Mr. Girouard’s wife visiting the property. The sixth email comes anhour later and is from Mr. Girouard to Ms.

Druet and expresses his satisfaction with respect to the transaction, while stating that he wasprepared to have a sales agreement drafted for her review. A closing date is mentioned and an inquiry is made to identify the mortgageholder. The seventh email comes three hours later. Ms Druet now indicates she is not prepared to sell the unit to Mr. Girouard. [36] In our view, the emails constitute a sufficient memorandum within the meaning of s. 1(

d) of the Statute ofFrauds. While the emails do not make specific reference to one another, the reference arises as a “matter of fair and reasonableinference”. Parol evidence is not needed, except perhaps with respect to one of the three essential terms. None of the emails identifies thecondominium unit which is the subject matter of the sale (unit #203). They simply refer to a condo. However, we agree with the motionjudge that the reference to the tenant and the fact the unit was owned by Ms.

Druet is sufficient for purposes of the Statute of Frauds. [37] We also agree that, when read collectively, the emails outline the essential terms of the underlying consensus,the 3 P’s, so to speak, and other terms unique to the transaction, namely, the terms respecting the assumption of the existing mortgageand the undertaking to pay up to $800 towards the vendor’s legal fees. Finally, as the motion judge quite rightly concluded, the law iswilling to fill in any gap in the contract which can arise by reasonable implication.

The most cited and non-controversial example is withrespect to implying a reasonable date for the closing. We pause here, however, to note that the apparent willingness of the law to fillcontractual gaps so as to find the necessary certainty or definitiveness must have some limits. One marvels at how the typical contract forthe purchase and sale of residential property can reach two or more pages of single-spaced type, and yet the common law requires onlythe 3 P’s on a napkin. On this point, see the incisive comments of Angela Swan at 335-336. VIII.

Intention to Create Legal Relations [38] Assuming without deciding the signing requirement has been satisfied and accepting that the writingrequirement and the essential terms had been agreed to, we must return to the question originally posed. Was there an intention to createlegal relations? Admittedly, the question is not one which typically arises in contract cases. When it does, the pathway to the answer isaided by presumptions. As well, the objective theory of contract formation tells us that intention is to be determined objectively and,hence, without reference to what each party may have actually intended.

Thus, the question focuses on what a reasonable bystanderwould have concluded having regard to the totality of the circumstances. A. The Presumptions [39] Prior to 1980, text writers addressed the intent issue by differentiating between two general classes of contract:domestic and commercial agreements. With respect to the first class, there was no presumption of an intention to create legal relations.With respect to commercial arrangements, the requisite intention was presumed. That is the approach this Court adopted in Dugas v.Dugas Estate (1978), (NB CA), 23 N.B.R. (2d) 199, [1978] N.B.J.

No. 217 (C.A.) (QL), with Hughes C.J.N.B.quoting from Cheshire and Fifoot's Law of Contract (9th ed.) at 103:

The cases in which a contract is denied on the ground that there is no intention to involve legal liability may be divided into two classes. On the one hand there are social, family or other domestic agreements, where the presence or absence of an intention to create legal relations depends upon the inference to be drawn by the court from the language used by the parties and the circumstances in which they use it. On the other hand there are commercial agreements where this intention is presumed and must be rebutted by the party seeking to deny it.

In either case, of course, intention is to be objectively ascertained. [para. 11] [ 40 ] In recent years, Canadian text writers have expanded upon the intent issue by isolating several contractual scenarios in which an intent to enter into legal relations has caused difficulty in the law. For example, Professor Waddams writes of: (1) comfort letters; (2) social engagements and jests; (3) family agreements; (4) government contracts; (5) business promotions and lotteries; and (6) non-justiciable agreements (Waddams, The Law of Contracts , supra , at 110 et seq ).

Professor McCamus, in his text The Law of Contracts (Toronto: Irwin Law, 2005), provides a similar approach to the question of contractual intent. There is also authority for the proposition that the law will examine the issue of intention to create legal relations having regard to the distinction between formal and informal agreements. The proposition is explained in Massey Ferguson Ltd. v. Canada , [1976] F.C.J.

No. 196 (C.A.) (QL) : Speaking generally, an agreement whether formally documented or evidenced in some other fashion, is not enforceable unless the parties evince an intention to create legal relations.

Where there is a formal contract, it would be unusual to find that there was no intention to create such legal relation but where, as in this case, there is no formal contract, regard must be had to all of the evidence to ascertain whether or not the parties intended such relations to be created and whether or not they were successful in doing so. [para. 12] [ 41 ] This is not a commercial transaction where the law recognizes a rebuttable presumption of an intention to establish a binding relationship.

But this leads us to ask whether the law would be better served by recognizing a rebuttable presumption against such an intention in circumstances where there is an exchange of rapid-fire emails between two consumers acting on their own. In our view, a positive response is warranted. Such a presumption accords with what we perceive to be the populist view that, generally, an exchange of emails qualifies as preliminary negotiations that may lead to the signing of a formal and binding contract. We recognize there are two ways of approaching the issue. One is to look at the issue from a classical perspective.

The emails represent a series of letters that are delivered by a highly efficient postal system. This enables the court to sift through a series of emails, indentify the 3 P’s, find something which satisfies the signature requirement of the Electronic Transactions Act and then have the court fill in any necessary contractual terms. The other approach is to view the emails as the equivalent of recorded telephone conversations which reveal the extent to which the parties have engaged in informal discussions that could lead to a formal and binding contract.

In our view, the latter perspective is more in line with the reasonable expectations of today’s consumer. And to go back to what was said earlier, one marvels at how the typical contract for the purchase and sale of residential property can reach two or more pages of single-spaced type and yet the common law requires only the 3 P’s on a napkin and the courts still remain confident they can fill any perceived gap.

If the air-of-reality approach to legal adjudication makes sense, the law should recognize a presumption against the intent to create a binding contract in circumstances such as those with which we are faced. [ 42 ] As noted at the outset, rarely are cases decided on the basis of a presumption alone. Presumptions are rebuttable. For example, this is a not a transaction where the parties had downloaded a standard form agreement of purchase and sale and proceeded to fill in the blanks. Nor is this a transaction where the parties have closed their emails with “signed Marc Girouard” or “signed Kelty Druet”.

These are the types of cases where the presumption loses its allure as a guide post. Finally, we have not lost sight of the fact that we are not dealing with a transaction between family members, a common source of s. 1 (

d) litigation. Many of the reported cases involve a promise to convey property in return for services to be rendered. Such transactions are marked by informality and courts will often strive to find a binding agreement and, if unable to do so, will ask whether there was reliance which would bring into play the ever elusive doctrine of part performance. This is not a transaction where there has been subsequent reliance by a party. B. “Subject to Contract” [ 43 ] This case is not going to be decided on the basis of a rebuttable presumption. All of the surrounding circumstances must be examined.

This includes the email from Mr. Girouard to Ms. Druet indicating that he was prepared to have a draft agreement of purchase and sale prepared for her consideration. Putting the matter in Ms. Druet’s best light, the relevant email could be equated with a term which reads “subject to a formal contract being drafted for the vendor’s review”. This type of clause leads one to ask whether the preparation of the formal contract indicates an intention to defer the enforceability of an agreement until such time as the formal document is signed.

The motion judge framed the issue in terms of whether the qualification resulted in an “agreement to agree”. We prefer to avoid that characterization because it could lead to the mistaken belief the common law recognizes a general duty to bargain in good faith. This case is not about good faith. [ 44 ] Ignoring the rebuttable presumption discussed above, the insertion of the phrase “subject to contract” is

sufficient to raise the issue of whether there was an immediate intention to establish a binding relationship. The alternative is to view thepreparation of a formal document as a mere formality and, therefore, the initial agreement is enforceable from the outset, provided othercontractual requirements are met. The lead decision of the Supreme Court of Canada is Calvan Consolidated Oil & Gas Co. v. Manning, (SCC), [1959] S.C.R. 253, [1959] S.C.J. No. 9 (QL), relying on a well-known English case authored by Parker J.: VonHatzfeldt-Wildenburg v. Alexander, [1912] 1 Ch. 284.

Here is how our Supreme Court framed the issue: This is not a case of acceptance qualified by such expressed conditions as "subject to the preparation and approval of a formal contract","subject to contract" or "subject to the preparation of a formal contract, its execution by the parties and approval by their solicitors". Herewe have an unqualified acceptance with a formal contract to follow. Whether the parties intend to hold themselves bound until theexecution of a formal agreement is a question of construction and I have no doubt in this case.

The principle is well stated by Parker J. inHatzfeldt-Wildenburg v. Alexander [[1912] 1 Ch. 284 at 288-9, 81 L.J. Ch. 184.], in these terms: It appears to be well settled by the authorities that if the documents or letters relied on as constituting a contract contemplate theexecution of a further contract between the parties, it is a question of construction whether the execution of the further contract is acondition or term of the bargain, or whether it is a mere expression of the desire of the parties as to the manner in which the transactionalready agreed to will in fact go through.

In the former case there is no enforceable contract either because the condition is unfulfilled orbecause the law does not recognise a contract to enter into a contract. In the latter case there is a binding contact and the reference to themore formal document may be ignored. [pp. 260-261] [45] In brief, the question to be addressed is whether the reference to the preparation of a formal document is to betreated as a condition which must be fulfilled before the agreement becomes enforceable or whether it is a mere expression of a desire toclothe a binding agreement with an air of formality.

The answer to that question is a matter of construction. As Professor Swan explainsby example in her text: A statement in an agreement that it is “subject to contract” will often be taken to require a formal, signed agreement before either partymay enforce it, even though the terms have been settled by oral or even written communications. This position is not, however, withoutexceptions. [at 4.139] [46] The last sentence in the quote is important. For example, in England, conveyancing practice is such that theinitial document signed by the parties is made “subject to contract” and is not considered binding.

As we understand it, the title search isdone before the parties exchange formal contracts and that is why the phrase “subject to contract” is generally accepted as a sign of nointent to be bound. This leads us to ask whether the reference to the preparation of a formal document in documents involving the sale ofland is more likely to be given effect than in other commercial arrangements.

So too does Professor McCamus offer an incisive opinion: This suggestion by Parker J. to the effect that the use of conditional language will be an important signal that the creation of anenforceable agreement is dependent upon or contingent upon the eventual formalization of the agreement has been widely accepted.Thus, it has generally been held that where the preliminary agreement is expressly stipulated to be “subject to contract”, a devicecommonly used in the context of real estate transactions, this provision is normally interpreted to mean that the formation of theagreement is postponed until such time as the formal contract is agreed to by the parties.

Accordingly, at any time prior to execution ofthe formal agreement, either party is entitled to withdraw from the proposed transaction. The question is, however, one of constructionand in circumstances where the preliminary arrangements are very extensive and detailed, the presence of conditional language of thiskind may not preclude the preliminary agreement from constituting an enforceable agreement. [p. 127] [47] We caution that the jurisprudence dealing with cases involving other conditional phrases has met with greatresistance.

For example, there are cases where the agreement stipulates it is “subject to solicitor’s approval”. A case on point is adecision of the late McEachern C.J.B.C. in Langley Lo-Cost Builders Ltd. v. 474835 B.C. Ltd., 2000 BCCA 365, [2000] B.C.J. No. 1187(QL). The case dealt with a settlement agreement related to a mortgage foreclosure and an exchange of faxed documents.

One of thefaxed documents signed by both parties stated the settlement was “subject to approval by the [mortgagee’s lawyer] of legal documentsacting reasonably.” The trial judge rejected the mortgagee’s argument the settlement was binding on the ground the alleged agreementwas too vague to be enforced. The Court of Appeal reversed. One of the issues addressed by that Court was whether there was anintention to create legal relations. On this issue McEachern C.J.B.C. applied the decision rendered by Parker J. in Von Hatzfeldt-Wildenburg v.

Alexander to support the conclusion the “subject to” clause was a “mere expression of the desire of the parties as to themanner in which the transaction already agreed to will in fact go through” (para. 35). For purposes of deciding this appeal, it isMcEachern C.J.B.C.’s approach to the question of intention to create legal relations which is important: One of the leading cases is Smith v. Hughes (1871), L.R. 6 Q.B. 597 at 607, where Blackburn J. wrote:

If whatever a man's real intention may be, he so conducts himself that a reasonable man would believe that he was assenting to the termsproposed by the other party, and that other party upon that belief enters into the contract with him, the man thus conducting himselfwould be equally bound as if he had intended to agree to the other party's terms. This dictum is often quoted as authority for the proposition succinctly stated by McLachlin J. (now C.J.

C) in Osorio v. Cardona (1984), (BC SC), 15 D.L.R. (4th) 619 that, "The test for intention to create legal relations is objective." It is stated in S.M.Waddams, The Law of Contracts, 4th ed. (Toronto:Canada Law Book Inc., 1999), at 106 that "it is not what the signer inwardly intendsbut what he appears to a reasonable promisee to do that is relevant." There is very little authority about the basis upon which intention to contract should be found. In Tilden Rent-A-Car Co. v. Clendenning(1978), (ON CA), 83 D.L.R. (3d) 400 (Ont.

C.A.), it was suggested at 405, that a person "who attaches his signatureto the contract intends by doing so to acknowledge his acquiescence to its terms, and that the other party entered into the contract uponthat belief." In A.G. Guest, ed., Chitty on Contracts, 27th ed. (London:Sweet and Maxwell, 1994), it is noted at 152 that in normalcommercial transactions, where the intention to be contractually bound is at issue, the onus of proving that such an intention did not exist"is on the party who asserts that no legal effect is intended, and the onus is a heavy one": Edwards v.

Skyways Ltd., [1964] 1 W.L.R. 349.Those, however, were cases where the form of the documentation was clearly contractual. The circumstances in the instant case were farmore informal. Most authorities suggest that the Court is not confined to the four corners of the alleged agreement, but may look at all thecircumstances. In Osorio v. Cardona (supra) McLachlin J. considered evidence of past agreements involving other parties, thecircumstances in which the alleged agreement was made, and future actions and representations by both parties.

The investigation is todetermine whether a reasonable observer would think that [the mortgagee] in signing the faxed document in these circumstances,intended to be contractually bound when he signed and delivered the faxed documents. [paras. 18-21] [Emphasis added.] [48] McEachern C.J.B.C. concluded the “subject to” clause could not be read to give the lawyer the right toapprove or disapprove of an agreement already reached.

The clause was a “mere expression of the desire of the parties to the manner inwhich the transaction already agreed to will in fact go through.” Chief Justice McEachern goes on to observe: “A consideration of theauthorities indicates that the courts of this province have been more likely than courts in other provinces to give legal effect toagreements reached through negotiation and discussion” (para. 38). [49] We would point out that the observations of Chief Justice McEachern were made in the context of a detailedsettlement document, drafted with the assistance of legal counsel.

Those certainly are not the facts of our case. However, the late ChiefJustice also indicated that the question of intention is to be decided by reference to all of the surrounding circumstances, includingmatters that occurred after the making of the agreement. That ruling is important to the present case because Mr. Girouard’s offer to havea draft contract prepared for Ms. Druet’s consideration was made after she had signaled her agreement to the purchase price. ApplyingLangley Lo-Cost Builders Ltd., the search for intention is not restricted to the four emails that end with Ms. Druet’s willingness to acceptMr.

Girouard’s counteroffer. We must look to all seven emails to determine, on an objective standard, whether the reference to thepreparation of a formal document indicated an intention the parties were not yet contractually bound to one another. C. Resolving the Intention to Create Legal Relations Issue [50] We have already decided the facts of the present case support the imposition of a rebuttable presumption thatthe parties did not intend the exchange of emails to create a binding contract for the purchase and sale of land. Moreover, we haveconcluded Mr.

Girouard’s reference to the future preparation of a draft agreement for Ms. Druet’s review is normally interpreted to meanthat the parties did not intend to create a binding contract until such time as a formal agreement was prepared and executed. Thereasonable bystander also knows that the exchange of emails represents a skeletal contractual framework worked out without theassistance of professional advice.

In short, the emails do not represent the type of detailed agreements which have propelled some courtsto conclude the execution of a formal document would serve no valid purpose other than to provide one of the parties with a feeble legalexcuse for reneging on an agreement. [51] More importantly, neither Mr. Girouard nor Mrs. Girouard had ever viewed Ms. Druet’s condominium unit.Mr. Girouard was still seeking to make arrangements to have his wife view the unit at the time Ms. Druet withdrew from the transaction.

To the disinterested bystander, the typical purchaser does not buy existing properties sight unseen. As the Girouards had no knowledge of the unit’s state of repair, it would only make sense that the agreement would be subject to the execution of a subsequent formal document. The reasonable bystander would know that Mr. Girouard had yet to explore the obligations to be assumed on “taking over” the existing mortgage. Specifically, he was unaware of the amount to be assumed or the onerousness of the mortgage terms.

Moreover, nothing was said with respect to legal issues that are peculiar to transactions involving the sale of condominiums. All of those facts, when viewed collectively, reinforce the presumption that there was never an intention to create a binding relationship over the internet. If there were any doubt on this issue, Mr. Girouard’s offer to have a formal agreement of purchase and sale drafted for Ms. Druet’s review is conclusive.

Admittedly, on discovery, both parties acknowledged that without a formal contract of purchase and sale, the existing mortgage holder was not likely to accept the emails as evidence of a binding contract, and, therefore, a formal document would have to be prepared for the mortgagee. In our view, however, this fact does not outweigh or negate the fact there are other valid and compelling reasons why neither party would want to become contractually bound once Ms. Druet accepted Mr.

Girouard’s counteroffer. [ 52 ] If there were any doubt as to the correctness of the above analysis, we offer the following reasoning in further support of our ultimate conclusion. The reasonable bystander might well proceed on the assumption that the search for the requisite intention to create legal relations is a search for mutual intention, in the sense that both parties intended to be bound by the exchange; not just one of the parties. It would seem to make little sense to hold, for example, that the parties intended Ms. Druet would be bound, but not Mr. Girouard. Curiously, Mr.

Girouard did not close any of his emails with an acknowledgment of his first or last name. Thus, if he had decided to withdraw from the transaction, he could have arguably done so without incurring liability to Ms. Druet by pleading s. 1 (

d) of the Statute of Frauds . Failing that defence, Mr. Girouard could plead no intention to create legal relations because of his offer to have a formal contract prepared for Ms. Druet’s review. Had Mr. Girouard subsequently inspected the condominium with his wife and had they found the unit in need of repairs or unsuitable, their plea of no intention would have an air of reality, so far as our reasonable bystander is concerned. Had Mr. Girouard inspected the terms of the mortgage and found them outside the expected norm, he could have once again turned to the offer to have a formal contract of sale drawn up.

In brief, to the extent that the facts support the understanding that Mr. Girouard did not possess the requisite intent to enter into a binding contract, there is no reason why our reasonable bystander should not also deem Ms. Druet to lack the requisite intent. [ 53 ] In our view, the reasonable bystander, presented with the facts of this case, would be driven to conclude there was no intent to create legal relations.

As stated at the outset, the reasonable bystander knows the typical residential purchaser does not buy existing properties sight unseen and the reasonable person does not do so without the approbation of his or her spouse or partner, in circumstances where their opinion or approbation is being sought. People who agree to buy and sell goods on Kijiji do not normally expect to be bound until they have the opportunity to inspect the goods, even though they may have agreed to the essential terms. The general understanding is that the first person to make it to the door with cash in hand is the buyer.

People who buy goods on eBay know well the risks of buying without an inspection, but are provided with ways of evaluating the trustworthiness of the vendor before pushing the enter key to confirm a bid or to exercise the “Buy it Now” option. Frankly, there is more legal formality surrounding the millions of transactions that occur daily on eBay than what occurred in the present case.

Parties to a real estate transaction who are strangers usually fix a closing date, obtain a deposit and, most importantly, sign a formal purchase and sale agreement. [ 54 ] Based on the objective standard of the typical or reasonable bystander, we conclude the parties lacked the requisite intention to enter into a binding contract for the purchase and sale of the condominium unit. Accordingly, even though Ms. Druet accepted Mr. Girouard’s counteroffer of $155,000, she could withdraw from the negotiations without incurring liability and, therefore, the appeal should be allowed. VIII.

Disposition [ 55 ] We would allow the appeal and set aside the motion judge’s decision. The record before the motion judge disclosed no binding agreement of purchase and sale. The motion, as amended, should be dismissed. Had Ms. Druet also applied for

summary judgment for dismissal of the action under Rule 22.01(3), she would have succeeded. Unfortunately, that issue was not before the motion judge, nor is the issue before us. However, unless the matter is otherwise discontinued, nothing currently prevents Ms. Druet from bringing a motion before the Court of Queen’s Bench under that Rule. If this occurs, a judge will have to determine the matter in a manner consistent with these reasons. [ 56 ] As Ms. Druet was represented by legal counsel on the motion in the Court of Queen’s Bench, she is entitled to costs which we would fix at $3,500. As Ms.

Druet was self represented on the hearing with respect to the leave application and the subsequent hearing on the appeal, she is entitled to disbursements only, which we would fix at $1,500, for a total of $5,000. ____________________________________ J.T. ROBERTSON, J.A.

____________________________________ J.C. MARC RICHARD, J.A. I CONCUR: ___________________________________ WALLACE S. TURNBULL, J.A.