2015 MBCA 10, 2015 MBCA 10

Citation: Vend-All Marketing Inc. v. Hunter et al., Date: 20150126 2015 MBCA 10 Docket: AI14-30-08155 IN THE COURT OF APPEAL OF MANITOBA Coram: Madam Justice Barbara M. Hamilton Mr. Justice Alan D. MacInnes Mr. Justice Christopher J. Mainella BETWEEN : VEND-ALL MARKETING INC. ) ) (Plaintiff) Appellant ) ) - and - ) ) R. P. Sokalski and GEORGE RICHARD HUNTER, DAVID ) J. L. M. Gaba KORN, NORA KAUFMAN AND EVELYN ) for the Appellant RADY AS EXECUTORS UNDER THE ) LAST WILL OF MEYER HARRY ) SILVERBERG, ) J. A. Kagan and ) A. D. F.

Sain (Defendants) Respondents ) for the Respondents ) - and - ) ) Appeal heard: NORA KAUFMAN AND EVELYN RADY ) October 20, 2014 AS EXECUTORS UNDER THE LAST ) WILL OF MEYER HARRY SILVERBERG ) AND DAVID SAMUEL KAUFMAN ) Judgment delivered: ) January 26, 2015 (Plaintiffs by Counterclaim) Respondents ) ) - and - ) ) VEND-ALL MARKETING INC. ) ) (Defendant by Counterclaim) Appellant ) MacINNES J.A. [ 1 ] The appellant, Vend-All Marketing Inc. (Vend-All), appeals the order of a motion judge (the judge).

Among other things, the order granted the respondents leave, under Queen’s Bench Rule 26.01, to amend their statement of defence and counterclaim and denied Vend-All’s motion, by way of

summary judgment, for an order for specific performance and a vesting order in respect of certain real property which formed the subject matter of the litigation between the parties. It is those two aspects of the order that form the subject matter of this appeal. [ 2 ] As did the judge (in para. 4 of her reasons for judgment), I will refer to the respondents as Silpit Industries Co. Ltd. (Silpit). Facts [ 3 ] In late 2007, Silpit offered for sale Lots 1-5, Block 1, Plan 1264 (the commercial lots) which fronted onto Main Street adjacent to Commonwealth Avenue in Winnipeg.

Separately offered for sale at the same time were three additional lots, being Lots 11, 13 and 14, Block 1, Plan 1264 (the residential lots) and a fourth lot owned by David Samuel Kaufman, being Lot 12, Block 1, Plan 1264. The residential lots fronted on Commonwealth Avenue. Relevant for sale signs were posted on the commercial lots and the

residential lots respectively. [ 4 ] On March 10, 2008, a representative of Vend-All approached a representative of Silpit and provided a deposit cheque for $10,000 in respect of the purchase of the commercial lots.

A receipt for the deposit was provided to Vend-All’s representative, and was in the following terms: Received from Vend-All Marketing Inc. the sum of $10,000 being deposit on sale of Main and Commonwealth, Lots 1-5. [ 5 ] On March 10 and 11, 2008, Vend-All made and Silpit accepted an offer to purchase (the Agreement) whereby the property described therein was to be sold to Vend-All for $170,000, namely: LOTS 1 TO 5 AND LOTS 11, 13 AND 14 BLOCK 1 PLAN 1264, WLTO IN RL 31 PARISH OF KILDONAN [ 6 ] Time was to be of the essence and the transaction was to close May 1, 2008.

By agreement, the closing date was postponed to June 1, 2008. [ 7 ] On May 13, 2008, Silpit advised Vend-All of its inadvertence in accepting the offer to purchase which included the residential lots and not just the commercial lots. [ 8 ] Silpit confirmed it would be prepared to conclude the transaction with respect to the commercial lots at the price of $170,000. Vend-All, however, refused and maintained that the offer was for the purchase of both the commercial lots and the residential lots. [ 9 ] As a result, the transaction did not close. Instead, Vend-All sued Silpit.

In its statement of claim, while acknowledging an agreement to postpone the closing date from May 1 to June 1, 2008, it asserted that Silpit had failed and refused to complete the Agreement, that Vend-All was and remained ready, willing and able to perform its obligations thereunder and it sought specific performance and damages for breach of contract. [ 10 ] Silpit filed a statement of defence and a counterclaim.

It denied the allegations of Vend-All in its statement of claim as they pertained to the Agreement and the claim for specific performance and damages. [ 11 ] Silpit also asserted that the transaction pertained only to the commercial lots. It alleged that the Agreement was prepared utilizing, inadvertently, the entire legal description of the real property (i.e., both the commercial and the residential lots) contained in certificate of title number 1217021 rather than solely the commercial lots.

It asserted that on May 13, 2008, its solicitors had advised Vend-All of the inadvertent inclusion of the residential lots into the Agreement and of the fact that it would be prepared to complete the transaction with respect to the commercial lots at and for the purchase price of $170,000.

It alleged that Vend-All had refused to complete the transaction on that basis. [ 12 ] As well, Silpit alleged that, as a result of Vend-All’s refusal to so complete, it had returned all of the monies to Vend- All’s solicitors on May 30, 2008. [ 13 ] In its counterclaim, Silpit relied upon the allegations made in its statement of defence and sought specific performance of the Agreement with respect to the commercial lots for $170,000, together with other relief. [ 14 ] Vend-All filed its reply and defence to counterclaim.

Vend-All denied the allegations made by Silpit in its statement of defence, which were material to the transaction, and in its counterclaim, which were material to Silpit’s claim for specific performance. [ 15 ] As well, Vend-All asserted that Silpit had refused to perform the Agreement and reiterated that it was ready, willing and able to do so. Most importantly, Vend-All expressly denied that the parties intended that the Agreement include only the commercial lots.

Rather, it asserted that the intention of the parties was always to include all lots as described in the Agreement. [ 16 ] While some discussions continued between Vend-All and Silpit, nothing of material significance occurred until November 16, 2011. On that date, Vend-All’s counsel sent an email to Silpit’s counsel, which provided as follows: For the purpose of bringing this matter to closure, my client agrees to the specific performance sought in paragraph 17(

a) of your clients’ Counterclaim. My client is also mindful of the fact that your clients have asserted that they have at all material times been ready, willing and able to complete the sale of lots 1-5, Plan 1264, WLTO at and for the sum of $170,000.00 as described in the Statement of Defence and Counterclaim and therefore, my client will effect tender in order to close in accordance with your clients’ specific performance claim.

Tender will include a duly executed Discharge of the Caveat described in the Counterclaim, along with a duly executed Consent to the Discharge of the Pending Litigation Order that was registered herein. [ 17 ] Thereafter on November 29, 2011, Vend-All’s solicitors wrote to Silpit’s counsel as follows: …. Re: Vend-All Marketing Inc from Silverberg Purchase of Lots 1-5, 11, 13 and 14 Block 1 Plan 1264 I can advise that I was retained by the above-noted buyer in 2008 to handle the purchase transaction. As you know, the matter became the subject of litigation.

I am advised that my client is now ready, willing and able to close the purchase based on the claim for specific performance which your client has brought. I will be handling the closing of the transaction.

Please advise if I am to close with you and if not, which lawyer will handle the closing at which time I would appreciate advice as to a closing date and receipt of a Statement of Adjustments. [ 18 ] On December 23, 2011, Vend-All’s solicitors wrote again to Silpit’s counsel tendering in respect of its proposed purchase of the commercial lots. [ 19 ] On December 29, 2011, Silpit’s counsel wrote to Vend-All’s solicitors as follows: …. Re: Silpit Industries Co. Ltd Property Dispute Our Matter No. 0094005 JK This is further to our voice mail message.

It appears that despite our advice to you that our client under no circumstances was at this stage prepared to close a transaction, you have tendered the necessary documents. We return the documents to you unopened and again confirm our advice that our client is not prepared to close the transaction on the terms proposed by your clients. In the circumstances, our client wishes to complete the examinations for discovery and the matter can proceed through to a trial.

As we advised you, our client Allan Kaufman has now been advised of your client’s unwillingness to cooperate in allowing him to deal with his other issues and as such Mr. Kaufman now prefers to see this matter resolved by way of litigation.

In the circumstances, we intend to file and serve your client with a Notice of Examination early in the new year. [ 20 ] On January 16, 2012, Silpit’s counsel wrote to Vend-All’s solicitors advising of litigation matters involving his client in California and requesting that Vend-All agree to place the within matter in abeyance until such time as the California proceedings were concluded. [ 21 ] On January 27, 2012, counsel for Vend-All responded as follows: I have discussed your January 16, 2012 letter to Mr. Shypit with my client.

Based on what you stated in that letter, my client is prepared to postpone closing as requested in your letter. In anticipation that closing will follow within the time parameters set forth in your letter (targeting March), my client has instructed me to hold off on proceeding with the

Summary Judgment Motion for Specific Performance

that I had referenced earlier. Accordingly, with tender having been made, my client will now place this matter on hold at your client’s request (reserving of course the rights accrued) and we will keep our file in abeyance as requested, in anticipation of receiving further word from you in the weeks ahead as indicated in your correspondence. [ 22 ] There were two subsequent emails from Vend-All’s counsel to Silpit’s counsel expressing Vend-All’s desire to close the transaction for the sale of the commercial lots and advising that, if the transaction was not closed by the end of May, he had instructions to move for

summary judgment for specific performance on the terms set forth in Silpit’s counterclaim. [ 23 ] Ultimately, on February 1, 2013, Vend-All moved for an order for leave to amend its pleadings to accept the position of Silpit as set forth in paras. 11 and 12 of Silpit’s statement of defence and para. 17(

a) of its counterclaim, and for an order of specific performance of the Agreement in respect of the commercial lots. [ 24 ] On February 28, 2013, Silpit moved for an order for leave to amend its statement of defence and counterclaim.

Its proposed amendments were to allege that, up to May 30, 2008, it was ready, willing and able to complete the sale of the commercial lots for the price of $170,000 and to remove from the prayer for relief in its counterclaim, the claim for specific performance of the Agreement with respect to the commercial lots for the sum of $170,000. [ 25 ] The motions of Vend-All and Silpit were argued before the judge who delivered judgment January 10, 2014. [ 26 ] The judge granted the motions to amend of both Vend-All and Silpit. [ 27 ] The judge also dismissed Vend-All’s motion for an order for specific performance and for a vesting order in respect of the commercial lots and directed that both issues proceed to trial. [ 28 ] Vend-All appeals the judge’s order granting Silpit leave to amend its statement of defence and counterclaim, and dismissing Vend-All’s claim for specific performance and a vesting order in respect to the commercial lots and directing that those issues proceed to trial.

Issues on Appeal [ 29 ] Vend-All raises the following issues on appeal: 1) whether the judge made palpable and overriding errors on questions of mixed fact and law in finding that Vend-All was not entitled to an order for specific performance of the Agreement along with a vesting order:

a) in failing to find that it was in the interests of justice to grant all of the relief sought by Vend-All and dismiss Silpit’s motion;

b) in dismissing Vend-All’s motion for specific performance and directing that the issues raised in its motion be directed to trial; and

c) in dismissing Vend-All’s motion for a vesting order in respect of the Agreement and in finding that the claim should be directed to trial; and 2) whether the judge made a palpable and overriding error in declining to find that the amendments sought by Silpit constituted a withdrawal of admissions that would require grounds for leave to be established under Queen’s Bench Rule 51.05 and where no such grounds were established. [ 30 ] Silpit describes the issues on appeal differently than Vend-All. However, as the appeal is that of Vend-All, I will consider the issues on appeal as described by it.

Standard of Review [ 31 ] Vend-All argues that each issue on appeal involves questions of mixed fact and law and says, therefore, that the standard of review with respect to each is that of palpable and overriding error. [ 32 ] Silpit asserts that the question whether its proposed amendment constituted a withdrawal of an admission within the meaning of Queen’s Bench Rule 51.05 does not appear to have been previously decided and thus, it agrees that that issue raises a question of mixed fact and law subject to a standard of review of palpable and overriding error. [ 33 ] As regards each of the other issues on appeal, Silpit says that the judge’s decision is discretionary.

Thus, it relies on Towers Ltd. v. Quinton’s Cleaners Ltd. et al. , 2009 MBCA 81 , 245 Man.R. (2d) 70 , that the standard of review for each is as follows (at para. 28): …. Assuming there have been no reversible errors on fact or law, the appellate judges are not to usurp the trial judge’s role in discretionary matters, barring a decision so “clearly wrong” as to yield a truly unjust result.

[ 34 ] I agree with the position advanced by Silpit’s counsel in respect of the standard of review. [ 35 ] I turn then to consider the issues raised by Vend-All on the appeal. [ 36 ] I propose to deal with the second issue first. I do so because, in my view, as will be seen, determination of that issue is fundamental to the appeal. [ 37 ] The amendments in dispute on this appeal are those sought by Silpit under Queen’s Bench Rule 26.01.

Vend-All, however, argues that the amendments sought by Silpit are not amendments contemplated by Rule 26.01, but are really an attempt to withdraw admissions made by Silpit in its statement of defence and counterclaim and thus engage Queen’s Bench Rules 51.05 and 51.06(2), which provide: 51.05 An admission made in response to a request to admit, a deemed admission under rule 51.03 or an admission in a pleading may be withdrawn on consent or with leave of the court.

Admission in pleading or response to request 51.06(2) Where an admission of the truth of a fact or the authenticity of a document is made by a party in a pleading or is made or deemed to be made by a party in response to a request to admit, any party may make a motion in the same proceeding to a judge for such order as the party may be entitled to on the admission without waiting for the determination of any question between the parties, and the judge may make such order as is just. [ 38 ] Thus, Vend-All submits that Silpit would have to comply not with Queen’s Bench Rule 26.01, but with Queen’s Bench Rule 51.05, i.e., it would be required to establish the existence of certain grounds to permit the withdrawal of the admissions which, Vend-All says, Silpit has failed to do. [ 39 ] The judge found that the proposed amendments did not constitute withdrawal of admissions, and alternatively, if they did, that Silpit had established the necessary grounds.

Vend-All asserts that the judge erred in respect of both conclusions. [ 40 ] Vend-All admits, if it is unsuccessful in its argument that the judge erred in these conclusions, that the amendments could be made by the judge in her discretion under Queen’s Bench Rule 26.01 and it takes no issue with regard to the judge’s decision in that event. [ 41 ] I turn then to consider whether the amendments sought by Silpit constituted a withdrawal of admissions.

Argument [ 42 ] Vend-All argues that Silpit seeks to withdraw the admission which it made in para. 16 of its statement of defence and counterclaim that it had been, at all material times, ready, willing and able to complete the sale of the commercial lots. [ 43 ] It says that Silpit, by its proposed amendment, wants to assert that its willingness to complete the sale of the commercial lots expired on May 30, 2008.

This, argues Vend-All, is despite the fact that Silpit was notified in November 2011 that Vend-All was accepting Silpit’s claim for specific performance of the sale of the commercial lots, that Vend-All tendered the required documents to close that purchase in December 2011 and that Vend-All agreed to hold the closing of the Agreement in abeyance to accommodate Silpit, throughout which Silpit never indicated that it had ceased to be ready, willing and able to complete the transaction on May 30, 2008 (only advising of this latter fact when it filed its motion to amend in February 2013). [ 44 ] In addition, Vend-All asserts that Silpit’s proposed amendment to remove para. 17(

a) of the statement of defence and counterclaim also amounts to a request to withdraw its admission that an order of specific performance is the appropriate remedy to resolve the dispute between the parties. [ 45 ] Vend-All argues that in order to obtain leave of the court to withdraw what it asserts are admissions, Silpit must establish that it would be in the interests of justice to permit such withdrawal.

This, says Vend-All, requires a consideration and weighing of three criteria: 1) whether the proposed amendments would raise a triable issue, that is, is there sufficient evidence available to make the new position which Silpit wishes to take one which will raise a triable issue; 2) whether the admission was inadvertent or the solicitor wrongly instructed or, if not, the explanation offered for the amendment; and 3) whether the withdrawal will prejudice the other party in a manner that cannot be compensated by costs. [ 46 ] Vend-All asserts that it has been Silpit’s position throughout the litigation that the Agreement pertained only to the sale of the commercial lots, that it was binding and enforceable, and that it was ready, willing and able to close that agreement.

It argues that to allow Silpit to withdraw the admissions would result in prejudice to Vend-All, as it will lose the opportunity to close the sale of the commercial lots, which would permit it to expand its business. [ 47 ] Vend-All submits that Silpit is now attempting to resile from its admissions that there is an existing, binding contract

between the parties which the parties are ready, willing and able to close. It says that the judge erred in concluding that the amendments sought did not constitute the withdrawal of admissions and further, if they did, that Silpit had established that it was in the interests of justice to be permitted to withdraw the admissions by way of amendment. [ 48 ] Silpit argues that the amendments sought and ordered were not a withdrawal of admissions within the meaning of Queen’s Bench Rule 51.05.

It submits that the judge did not err when she concluded that the amendments sought by Silpit were best characterized as amendments under Rule 26.01, nor did she err when she concluded that if, in fact, they were amendments under Rule 51.05, the interests of justice were met in permitting such a withdrawal. [ 49 ] Silpit asserts that, in the context of the original pleadings, it is clear that Vend-All and Silpit were advancing entirely different and contradictory positions and were seeking relief substantially at odds with each other.

It argues that, some three years after the fact, Vend-All dramatically changed its position and, for the first time, took the position that it had agreed to purchase only the commercial lots. [ 50 ] It submits, however, that, in the context of the pleadings as originally framed and the litigation as a whole, the relevant sections of the statement of defence and counterclaim were not intended to be, nor could they reasonably be interpreted as, admissions within the meaning of Rule 51.05.

Accordingly, the judge made no palpable and overriding error in concluding that they were not admissions. [ 51 ] Furthermore, it says that, even if they were admissions, the judge exercised her discretion correctly in finding that it was in the interests of justice that the withdrawal of the admissions be granted by way of amendment. Silpit asserts that great deference is owed to the judge’s decision in that regard and that there is no basis for appellate intervention with her decision.

Analysis [ 52 ] Vend-All’s motion for an order for specific performance of the Agreement as it related to the commercial lots (and for the vesting order) was based upon Queen’s Bench Rule 51.06(2). [ 53 ] In order for Vend-All to obtain specific performance either pursuant to Rule 51.06(2) or by way of

summary judgment, it is critical that the portions of Silpit’s pleading, which Vend-All asserts are admissions of fact, be found to be so and not be permitted to be withdrawn. [ 54 ] Queen’s Bench Rule 51.06(2) relates to an admission of the truth of a fact made by a party in a pleading. When that exists, the rule provides that any party may make a motion to a judge for such order as the party may be entitled to on the admission. [ 55 ] Henry Campbell Black et al., Black’s Law Dictionary , 6th ed. (St. Paul: West Publishing Co., 1990), sub verbo “admissions” describes an admission in a pleading as: …. ….

The acknowledgement or recognition by one party of the truth of some matter alleged by the opposite party, made in a pleading, the effect of which is to narrow the area of facts or allegations required to be proved by evidence. …. [ 56 ] It is thus necessary to look at the pleadings between the parties in this litigation. [ 57 ] Vend-All’s statement of claim is straightforward. It alleges that Silpit agreed to sell, and it agreed to buy, both the commercial lots and residential lots for $170,000.

It says that the sale was to be completed on May 1, 2008, and that on April 29, 2008, the parties agreed to delay the closing to June 1, 2008. It asserts that Silpit has failed and refused to complete the transaction despite repeated requests by Vend-All, who was ready, willing and able to close. As a result, Vend-All seeks specific performance of the Agreement together with damages. [ 58 ] Silpit defends Vend-All’s claim and advances a counterclaim. It denies each of the essential allegations in Vend-All’s claim. It asserts that the Agreement was in respect of the commercial lots only.

It says that a deposit of $10,000 had been received on account of the transaction and had been receipted, stating in the receipt that the deposit was on the sale of the commercial lots only.

It alleges that the Agreement described the property incorrectly, including the residential lots with the commercial lots, rather than the commercial lots alone, by reason of the inadvertent reference to the legal description contained in certificate of title number 1217021, which included both the commercial and the residential lots. [ 59 ] Silpit says it advised Vend-All of the inadvertent error on May 13, 2008, and confirmed its willingness to conclude the transaction with respect to the commercial lots for the price of $170,000.

It also alleged that, when Vend-All refused to complete the transaction with respect to the commercial lots only, Silpit returned all of the deposit monies to Vend-All on May 30, 2008. [ 60 ] In its counterclaim, Silpit pled and relied upon the statements which it made in the statement of defence, claimed that it was prepared as of June 1, 2008, to close the sale of the commercial lots and sought specific performance of the Agreement to that extent, together with other relief. [ 61 ] Vend-All filed a reply and a defence to counterclaim.

In that pleading, it denied the allegations made by Silpit in its statement of defence pertaining to the property sale. It reiterated its position that the sum of $170,000 represented appropriate value for

the commercial lots and the residential lots together. It alleged that the deposit was for all of the lots and that it remained ready, willing and able to perform the Agreement for the sale of all of the lots. [ 62 ] Vend-All also denied all of the allegations made by Silpit in its counterclaim. It expressly denied that the intention of the parties was that the Agreement only include Lots 1-5 and sought dismissal of Silpit’s counterclaim. [ 63 ] It is notable that Silpit, in its statement of defence and counterclaim, refers to the content of Vend-All’s statement of claim as allegations which it denies.

As well, in its reply and defence to counterclaim, Vend-All refers to and denies what it describes as the allegations contained in Silpit’s statement of defence. It does so again with respect to what it describes as the allegations made by Silpit in its counterclaim.

Nowhere in the pleadings is there any reference by either of the parties (most particularly by Vend-All in light of its position) to admissions. [ 64 ] As well, I note that, in the email of November 16, 2011, where Vend-All’s counsel first expresses the drastic change of position of Vend-All by now agreeing to specific performance with respect to the commercial lots, he describes Silpit’s position respecting the transaction as being assertions as described in the statement of defence and counterclaim. [ 65 ] While it is clear, therefore, that, at the material time, the parties did not refer to admissions, but rather to allegations in their respective pleadings, of greater importance is the fact that, in my opinion, one could not suggest nor find anything in the statement of defence and counterclaim of Silpit which could be taken as a concession or acknowledgment of the truth of some matter alleged by Vend-All in its statement of claim. [ 66 ] In my view, the statements made by Silpit in its statement of defence and counterclaim clearly were not admissions contemplated under Queen’s Bench Rule 51.06(2).

Rather, they were simply denials of allegations and claims for relief and, therefore, would be subject to amendment under Queen’s Bench Rule 26.01. [ 67 ] In my opinion, the judge made no error, let alone a palpable and overriding error, when she concluded that the amendments to the statement of defence and counterclaim sought by Silpit were not the withdrawal of admissions. [ 68 ] Although I need not deal with the judge’s conclusion that, even if they were admissions, she would have permitted their withdrawal in the interest of justice, I will say that, were I required to do so, I would have agreed with her conclusion and certainly would not have found any basis for appellate intervention with that conclusion. [ 69 ] In light of my conclusion, Vend-All’s appeal must fail without the need to deal with the other grounds of appeal.

That is because, with the amendments granted Silpit, there are clear issues between the parties which go to the root of the transaction; namely, its subject matter, and to the relief which should be granted in order to yield a just result as between them. In my opinion, in the circumstances here,

summary judgment would not produce such a result. [ 70 ] In that regard, I can do no better than refer to the comments of the judge in her reasons for judgment (at paras. 50-51): I have concluded that there are clear issues between the parties with respect to the transfer of property as understood in the 2008 agreement. These issues should not be determined by way of specific performance or on a motion for

summary judgment. A prima facie case for granting

summary judgment has not been met. …. …. However, in these circumstances where significant time has elapsed, where there have been changes of position by both Vend-All and Silpit, where alterations may have taken place in the market, and where there is a necessity of a determination of the “uniqueness issue” have resulted in my conclusion that there are triable issues outstanding in this case that should not be determined by way of affidavit evidence.

These triable issues are based upon a complex and an interrelated fact scenario. …. [ 71 ] In so concluding, I am aware of the admonition of the Supreme Court of Canada in Hryniak v. Mauldin , 2014 SCC 7 , [2014] 1 S.C.R. 87 , which speaks to the need for a culture shift “to create an environment promoting timely and affordable access to the civil justice system” (at para. 2). It encourages a balance between procedure and access and expressly states that

summary judgment motions provide such an opportunity. It, thus, concludes “that

summary judgment rules must be interpreted broadly, favouring proportionality and fair access to the affordable, timely and just adjudication of claims” (at para. 5). [ 72 ] Although

summary judgment was denied and the issues of specific performance and a vesting order were directed to trial, proportionality of process can still be achieved through the use of the pre-trial process available to the parties. [ 73 ] I would therefore dismiss the appeal with costs. J.A. I agree: J.A.

I agree: J.A.