Indexed as:

Chain Gate Developments Ltd. v. Elder

Between

Chain Gate Developments Limited, plaintiff, and

Gordon James Elder Sr. and Gordon James Elder Sr. as Executor

and Trustee of the Estate of James Dubois Elder and Alice

Gertrude Elder and Thom Racovitis, defendants

[1977] O.J. No. 836

1 R.P.R. 285

 Ontario Supreme Court - High Court of Justice

Craig J.

July 12, 1977.

(25 pp.)

Counsel:

G.J. Smith, Q.C., for the plaintiff.

T.G. Bastedo, for the defendant Elder.

A. Houston, Q.C. and R. Colautti, for the defendant Racovitis.

1 CRAIG J.:-- This is an action by a purchaser for specific performance of an agreement of purchase and sale of certain lands in the City of Windsor. The agreement was made and accepted September 30th, 1973. The defendant vendor Gordon James Elder Sr. (hereinafter called "Elder") is the executor and trustee of the estates of his father and mother; and he is the beneficial owner of the said lands through the said estates. The purchase price of the said lands was $135,000.00 payable $20,000.00 as a deposit and the balance in cash on closing. The defendant Racovitis is the purchaser of the same lands from his co-defendant Elder under an agreement of purchase and sale dated May 10th, 1974, being a date after Elder had purported to cancel or terminate the agreement of purchase and sale with the plaintiff dated September 20th, 1973. The plaintiff therefore seeks a declaration that any interest the defendant Racovitis may have in the said lands is subject to the plaintiff's interest therein and subject to the plaintiff's right to specific performance. The evidence indicates, and counsel for the defendant Racovitis admits, that the defendant Racovitis had notice at the material time of the existence of the agreement between the plaintiff and the defendant Elder; and that his only defences to this action are those put forward by the defendant Elder. The defendants have therefore put forward a joint defence. The agreement of purchase and sale between Elder and the defendant Racovitis need not be mentioned further, except that it is not without significance that the agreement between Elder and the defendant Racovitis is for $185,000.00 or an amount of $50,000.00 above the first mentioned agreement.

2     The agreement of purchase and sale between the plaintiff and the defendant Elder was drawn by one Dominic J. Rosart who is vice-president of the plaintiff company. Rosart has considerable experience in the purchase and development of real estate, but he is not a solicitor. This agreement contained the usual clause that "time shall in all respects be of the essence thereof". The issues in this case arise out of the interpretation of that clause in the light of the events that happened, and also partly out of a further inartistically worded clause in the agreement, which is as follows:

"THE VENDOR warrants that the lands are zoned for Commercial purposes and the Purchaser agrees that within 30 days from date of acceptance that he will prepare a site plan for acceptance by the City and that he will close the transaction 15 days after Building Permits become available. It is agreed that if after 120 days from the date of acceptance the Purchaser is unable to secure a site plan agreement with the town, then at the Purchaser's option this offer shall become null and void and the deposit monies shall be returned in full without interest."

For identification purposes only this clause will be referred to hereafter as "Clause 1".

3     Rosart represented the plaintiff company throughout the transaction in the dealings with solicitors and the defendant Elder.

4     The defendants allege, among other things, that there are two true conditions precedent contained in Clause 1; and that since they remained unfulfilled on the date fixed for closing the agreement was terminated. I will return to this submission after a recital of the facts.

5     I find that the plaintiff and the defendant Elder were represented by the same solicitor, one Adamson, and this is of considerable significance. Elder testified that Adamson was not representing him and that Rosart had agreed to pay all legal fees. I reject his evidence on this issue and find in fact that he had contemplated retaining Adamson to act for him on the sale of this property when he wrote Adamson some time before September 20th, 1973 (Ex. 8). It is also apparent that he advised at least one of the real estate agents with whom the property was listed that Adamson would be his solicitor for the transaction, because one of these agents had in fact forwarded to Adamson an earlier offer to purchase this property which Elder discussed with Adamson before refusing to accept it because the purchase price was not adequate.

6     Rosart and Elder came to Adamson's office without appointment on September 20th, 1973, with the agreement of purchase and sale and with a cheque for the $20,000.00 payable to James D. Elder Estate to cover the deposit. I find that both Rosart and Elder stated to Adamson in the presence of each other that they wanted him to act for both of them in closing the transaction; that Adamson advised both of them at that time of the possibility of a conflict of interest arising, and in that event he would have to bow out and not act for either one of them. While Rosart was prepared to give Elder the cheque for $20,000.00, Adamson advised both that he should retain the cheque pending closing and this was agreed to by the parties. I find that the agreement (Ex. 1) was executed by the plaintiff (including the affixing of its corporate seal) prior to the time that Rosart and Elder arrived at Adamson's office, and that Elder executed the agreement in the presence of Adamson after the aforesaid discussions. I find that nothing was deleted from or added to the agreement after execution by Elder (as intimated by Elder); except a clause dealing with the right of the vendor Elder to remove all of his equipment and fixtures from the property and then such clause was initialled by Rosart and Elder. On January 3rd, 1974, Elder executed a direction to pay "my solicitor ... Adamson the balance due on closing" and that Adamson would charge him a fee of $1,100.00. I am satisfied that Adamson was clearly Elder's solicitor in connection with the matter. I feel that Elder may be a naive individual, but he was also quite evasive and somewhat contradictory particularly when testifying as to the events surrounding the execution of the agreement and the events that transpired in Adamson's office on September 20th, 1973. I accept the evidence of Adamson in preference to Elder throughout whenever there is conflict in their evidence.

7     Turning back again to Clause 1, it is not drawn with legal precision. To the extent that this clause does not have a plain meaning it is helpful to look at the conduct of the parties Rosart, Elder and their solicitor Adamson, to assist in ascertaining the intention of the parties. I refer to Leitch Gold Mines Ltd. et al. v. Texas Gulf Sulphur Co. (Incorporated) et al., [1969] 1 O.R. 469 where Gale, C.J.H.C., as he then was, stated at p. 545:

"Next, Mr. Robinette relied on the case of Watcham v. A.-G. of East Africa Protectorate, [1919] A.C. 533, and the maxim contemporanea expositio est fortissima in legio, in other words, contemporaneous conduct is very powerful in law. He argued that the method of performance of a contract by the parties is strong evidence as to what they intended by it. With this I agree."

8     Following the execution of the agreement on September 20th, Rosart arranged for the preparation of three alternative site plans by a town planner and architect, Suilio Venchiarutti, who attended at the site, obtained copies of the relevant zoning by-law, health requirements and other data; and he did prepare the site plans within thirty days of the execution of the agreement. He also held discussions with certain City officials. He did not apply to the City for site plan approval; but gave the plans to Rosart. He testified that he was satisfied that the plaintiff company could comply with zoning and existing health unit requirements; and he made the assumption that site plan approval would not be an issue so long as he stayed within the provisions of the zoning by-law. It was also discovered too that some of the lots were zoned 'residential" and not "commercial" as warranted in the agreement of purchase and sale. No one on behalf of the purchaser ever did make formal application to the city for site plan approval or building permits.

9     Adamson wrote to Elder on November 13th, 1973, advising him among other things "that this is a firm and binding offer at this stage" and he testified that this was because Rosart had informed him that the plaintiff was proceeding with the purchase and that "we don't care how it is zoned".

10     At this stage Adamson was preparing to close within 120 days of 20th September or 21st September. He may have been of the impression that January 21st, 1974, would be the closing date and Elder seemed to be of that view too when he executed a direction to pay the proceeds of sale to Adamson. The correct closing date was January 19th, 1974, on the basis of closing within 120 days of September 20th; but in my view the important point is that all parties were treating "120 days" after the execution of the agreement as the operative date and they were working towards that date for closing. On January 10th, 1974, Adamson wrote Elder as follows:

"It is imperative that you attend at my office to sign some documents in connection with the above transaction.

I also require immediately the succession duty releases and estate tax releases in connection with all the above lots. I am in receipt of some of these releases, but not all of them, and you advised that the rest were in your possession.

Please be advised that Mr. Domenic Rosart is placing me in funds Monday or Tuesday, January 14th or 15th, 1974, despite the fact that the property has the alleyways between the lots and the fact that three of the rear lots are zoned residential and not commercial as represented in the Offer to Purchase. Mr. Rosart, on behalf of Chain Gate Developments, still wishes to complete this transaction on schedule."

11     Elder was difficult to contact. He did not receive the letter but attended at Adamson's office, executed the deed, and he was then made aware of the contents of the last mentioned letter.

12     At about this time Adamson received a phone call from Elder's daughter in Windsor which aroused his suspicions about the authenticity of the wills of Elder's father and mother, which wills had been probated and formed the foundation of the titles. He contacted a law firm in Windsor and it was discovered that a will had been executed by Elder's mother which was later in time than the will probated. He then became aware of a problem in connection with Elder's father's will. Adamson was very upset, consulted a Bencher of the Law Society and the Crown Attorney, and decided that he had to cease acting in the transaction. He informed Elder of the problems and arranged that Elder take a long statutory declaration dealing with some of his concerns, but he nonetheless decided that he should withdraw as solicitor for both vendor and purchaser.

13     Adamson wrote to Elder on January 17th, 1974, as follows:

"Because of the serious developments relating to this transaction - to be specific the discovery of a newer Will executed by your Mother in 1968, and the discrepancies in the 1948 Will purported to be that of your Father, I am no longer able to act for you.

Also be advised that Chain Gate Developments new lawyer, Mr. John Ham, Q.C."

14     He had phoned Rosart at about the same time and informed him that it would be necessary for the plaintiff to secure the services of another solicitor. As a result Rosart attended at Adamson's office with a solicitor, John Ham, Q.C. and Adamson dictated a five-page memo to his secretary indicating his reasons for ceasing to act.

15     Adamson testified that it was on the eve of closing that these "startling revelations came to light" - that he met with Elder January 14th to January 21st; that Elder indicated to him (Adamson) that he could "get his son to sign off" which would answer at least one of the problems; and Elder did come to Adamson's office with some kind of a release or quit claim from the son shortly after January 14th which Adamson stated was "not good enough for me". Elder came to Adamson's office on two occasions after January 21st, 1974, for the purpose of getting his documents and these were delivered to him upon payment of a fee of $400.00 or $500.00. The documentation was never completed in a form that the transaction could be completed between January 17th, 1974, and January 21st, 1974, both dates inclusive.

16     It is my opinion that Elder and the plaintiff were both desirous of closing in that period of time (January 17th to January 21st), but when Adamson decided that he could not act further the date for closing went by with neither party prepared to close. In my view this is the classic situation mentioned in King et al. v. Urban & Country Transport Ltd. et al., 1 O.R. (2d) 449, where Arnup J.A., speaking for the Court, stated at p. 455:

"I think it is sufficiently established that a 'time of the essence' provision, and noncompliance with it by a plaintiff, can be set up as a defence only by a party who was himself ready, willing able to close on the agreed date."

And later at p. 456:

"Normally, in this situation, when both parties let the time go by, and one of the parties wishes to reinstate time as of the essence, it is necessary to serve a notice upon the other party, fixing a new date for closing, which must be reasonable, and stating that time is to be of the essence with respect to the new date."

17     After January 19th, 1974, time was no longer of the essence. Elder recognized that the agreement continued to exist thereafter but in any event he never did at any time attempt to reinstate time as of the essence prior to the 14th of March, 1974, when he wrote a nine-page letter to the plaintiff (Ex. 35) indicating that he was no longer bound to the plaintiff. As to events after January 19th, 1974, Elder testified firstly that it was his view that the agreement terminated when it was not closed in January. In a unanimous decision of the Supreme Court of Canada in Nepean Carleton Developments Limited v. Lloyd Alexander Hope et al., (as yet unreported), the integrity of the principle stated by Arnup, J.A. in King v. Urban was approved; and Chief Justice Laskin speaking for the Court stated at pp. 12-13 of the decision:

Assuming that time continued to be of the essence in equity (although not so stated) when the date of closing was postponed to October 3, 1969, there was clearly a waiver of the essentiality of time when October 3 passed without any steps towards completion being taken by either the purchaser or the vendors and when, in his letter of October 8, 1969, the vendors' solicitor stated that his clients were ready to close but fixed no date, and when negotiations continued thereafter directed to completion.

In the result, if there was to be another fixed date for completion, it was incumbent on either the vendors or the purchaser to give notice fixing a reasonable time. A notice, as in the vendors' letter of October 14, calling off the contract without giving the purchaser any time to perform, could not put the purchaser in default. As a consequence of that letter, the vendors became the defaulting parties, and it was open to the purchaser to elect to insist on performance by the vendors, and that is what they did."

18     It is therefore clear on the authorities that, even without the later negotiations hereinafter mentioned, and subject to the question of unfulfilled true conditions precedent, the contract was not at an end.

19     However Elder had advised Adamson in January that he would be consulting a solicitor, William Kerr of Oakville, and he wrote a letter to Adamson dated "February" received by Adamson on February 4th, in which he stated in part as follows:

"Please send the papers over to Mr. Bill Kerr so he can give Mr. Rosart a yes or no answer or some idea how long it will take to complete the extra legal work required. If too much time is necessary to complete the sale perhaps Mr. Rosart will want to buy elsewhere."

20     He had obviously gone to Kerr because a photocopy of a quit claim deed prepared by Kerr and executed by Elder's son was filed as Exhibit 42. This was not completed until January 21st, 1974, and the originals of this document were never produced. As will be seen later it may be of some significance that this is not the document given to Adamson by Elder on or about January 18th.

21     Rosart retained the firm of Page & Kamin to act for the purchaser and on January 25th Mr. Kamin of that firm wrote to Wm. Kerr at Oakville stating he understood that Kerr represented the vendor and asking for a statement of adjustments and draft deed.

22     William Kerr did not reply to that letter and Elder does not appear to have consulted any other solicitor. As to events after January 25th, I make the following findings. Rosart discovered that Elder was at a Bank of Montreal branch at Oakville sometime in February, 1974, and he attended upon Elder at such branch forthwith to discuss closing of the agreement of purchase and sale. He offered to have his solicitor assist Elder - and confirmed that he was not concerned with any conditions. It was a friendly discussion and Rosart added that $135,000.00 would be available in cash on closing. Elder confirms this conversation but claims it was a new agreement. I reject that claim; and find that it was simply a discussion about arrangements to close the existing agreement. Elder then proceeded to Windsor, secured certified copies of title documents at the Registry Office and delivered them to Rosart's office, who in turn gave them to his solicitors, Page & Kamin. On March 6th, Elder attended at Rosart's office wanting to close. To assist him Rosart gave him a cheque for $20,000.00 to replace the original deposit cheque; and they arranged to meet at the offices of Page & Kamin without prior appointment or notice that the deal was to close March 6th. Rosart may have phoned Kamin on the 6th of March after Elder arrived at his office. I am satisfied, and I so find, that both Elder and Rosart were anxious and willing to close on March 6th, 1974. There was some confusion about meeting at Kamin's office, Elder having stopped for lunch before reaching the office. In any event the documentation was not ready at Kamin's office. It is not clear as to exactly what happened on March 6th after Rosart and Elder left Rosart's office. A junior solicitor in the office of Page & Kamin, one Sheldon J. Skryzlo, had been instructed to prepare the documents for closing. Rosart was prepared to close if the documentation was in order but the solicitors were not ready, for reasons which I will mention in a moment. Elder was annoyed that the transaction did not close on March 6th but I do not find any evidence that he took the position the agreement was at an end because Page & Kamin did not have the documentation ready. I find that Elder did not treat time as of the essence or March 6th as a firm date. It should be borne in mind that the plaintiff was offering the services of his own solicitors to the defendant Elder in an effort to close; and the purchaser cannot be said to be in default because his solicitors are not as speedy in accommodating Elder as Elder would have liked. I find no factual or legal basis for finding that such failure would cause the transaction to abort. At or about the closing hour Elder, along with a friend one Verge, attended at the branch of the Canadian Imperial Bank of Commerce at 100 University Avenue where the plaintiff was a substantial customer. Elder was not a customer at the branch. He testified that he brought the $20,000.00 cheque to this branch and gave it to the credit officer, Mrs. Schwagger, to return it to the plaintiff. I do not believe that testimony. He had ample opportunity to return it to Kamin's office earlier. While he was with Mrs. Schwagger at the aforesaid bank he opened a new account, arranged for a certified cheque in the sum of $2,500.00 in a matter unrelated to this transaction, and used the $20,000.00 cheque to provide some additional credit in arranging for the bank to certify his cheque. I also find that he expressed his intention that part of this cheque would be later deposited in a term deposit account. I accept Mrs. Schwagger's evidence as to events that happened at the bank on March 6th including her evidence that Elder advised her to hold the cheque until the closing of a real estate deal with the plaintiff which had been postponed. She later returned the cheque to Elder not Rosart or the plaintiff company. I do not accept the evidence of Verge who arrived in Toronto and saw Elder on the evening before he testified. Notwithstanding an order excluding witnesses, Elder advised Verge in a general way of the evidence that had already been given by Mrs. Schwagger. Verge testified to the effect that Elder had informed Mrs. Schwagger that the transaction relating to the $20,000.00 deposit was "concluded" on that date and that the cheque was to be returned to Rosart. However, Verge also denied that Elder had opened a new account at the bank with Mrs. Schwagger. It is common ground that such an account was opened and that considerable discussion took place between Mrs. Schwagger and Elder.

23     Elder returned to the offices of Page & Kamin on March 7th. He stated that it was for the purpose of getting "tax releases" to sell some of his property in Windsor (not the subject property). He admits to meeting with one of the solicitors in the Page & Kamin office; and that he spent some time with the solicitor who showed him the file on the transaction; and that he received photocopies of tax releases. He admits that he commented on some of the documentation relating to the transaction between the plaintiff and himself. He did not request the return of his file or his documents which is quite inconsistent with a cancellation or termination of the agreement. The solicitor Skryzlo testified that he met with Elder at the office (which I find was on March 7th) because of deficiencies in the documentation; and explained to Elder that estate and succession duty releases were still required in his mother's estate; and also the execution of a new quit claim deed from Elder's son to the plaintiff company which he had prepared. He stated that he gave Elder this documentation and he was to bring back the quit claim deed executed and the releases. Elder stated that he did not contemplate any trouble in getting them. These two requisitions might be described as clearing up loose ends in this real estate transaction. The plaintiff cannot be criticized for relying on his solicitor's advice in connection with the documentation; and the solicitors were proceeding cautiously against an unusual background, bearing in mind that they were not solicitors for the vendor. I accept Skryzlo's evidence. I find that Rosart met Elder again on March 13th and discussed closing. At this date Elder advised that he should "get a little more than $135,000.00". Rosart indicated that delayed closing was not his fault but that he would consider some kind of an "interest factor" due to this delay. No firm arrangement was made but Elder said he would look after the balance of the documentation that day (March 13th, 1974). He did not suggest that he was not obligated to convey the property.

24     The next event is the letter of repudiation written March 14th, 1974, when time was at large. The solicitors for the plaintiff replied to Elder's letter of repudiation rejecting his position and indicating that the plaintiff would sue for specific performance if Elder would not close. The evidence indicates that the defendant Racovitis had come into the picture at about this time and his offer was accepted May 10th.

25     I mention the events of March 6th, 1974, in some detail because the first main argument advanced by counsel for the defence was that the meeting between Rosart and Elder at the bank in February resulted in a new contract identical to the original agreement except that Clause 1 would not be part of the agreement. It was further submitted that if time was of the essence of this new agreement it was never waived and that March 6th was the closing date; and that if time was not of the essence of the new agreement it was reinstated and made of the essence on March 6th with March 6th as closing date. It is clear from the above findings that I reject any possible factual underpinning to support that submission. The same applies to the second main argument which was that the original agreement was rescinded by mid-February, 1974, either by implication or consent, and that an entirely new oral contract was made which the vendor was ready to close on March 6th, 1974, and that default having been made by the purchaser its action fails.

26     Turning again to the interpretation of Clause 1, the third main argument advanced by the defence in the alternative is based upon the submission that there are two unfulfilled true conditions precedent contained in Clause 1, which are said to be firstly the issue of "building permits", and secondly the securing of a "site plan agreement with the town" within 120 days. The submission is that both of these are dependent upon the will of a third party for realization and come within the rule stated in Turney and Turney v. Zhilka, 18 D.L.R. (2d) 447, [1959] S.C.R. 578.

27     I do not accept this third main argument. All of the provisions of Clause 1 must be read together. In my opinion the condition as to securing building permits is not a condition of the agreement but is only intended to fix the time for closing as fifteen days after the issue of building permits if the zoning is as warranted by the vendor, and was a provision for the benefit of the purchaser which it could and did waive; and Clause 1 should also be interpreted to mean that in any event 120 days after execution was the outside date for closing at the option of the purchaser, and that the purchaser could waive any breach of warranty as to zoning. The warranty as to zoning is not expressed in terms of a condition. By their conduct this is the interpretation that the parties placed upon the contract. The purchaser waived the breach of warranty and did not exercise the right to declare the agreement null and void. I do not interpret Clause 1 as containing a true condition precedent.

28     Returning now to the two alleged true conditions precedent outlined by the defence. If the first one providing that the purchaser "will close the transaction within 15 days after building permits become available" is regarded in isolation from the other provisions of Clause 1, then as a matter of academic logic it could be a true condition precedent; but if so then the time for closing has not yet been reached because no building permits have been issued and Elder would not, in these circumstances, have had the right to repudiate on March 14th, 1974. The agreement would still be alive. This interpretation would not offend the rule against perpetuities either because of the "wait and see" provisions contained in s. 4 of The Perpetuities Act, R.S.O. 1970, c. 343. However, to treat that part of Clause 1 in that way would be to ignore completely the intention of the parties.

29     As to the second alleged true condition precedent "the securing of a site plan agreement with the town" within 120 days, this wording is contained in the second sentence of Clause 1 and if there is a condition in that sentence then in my view it is a condition subsequent giving the purchaser the right to exercise a right of cancellation after 120 days.

30     As to waiver, I have interpreted Clause 1 as containing conditions or provisions for the benefit of the plaintiff (purchaser) which in my opinion may be waived unilaterally. If this interpretation of Clause 1 is correct then clearly the plaintiff had done so before January 19th or January 21st, 1974. If it is assumed for the purpose of argument that Clause 1 (properly interpreted) does contain true conditions precedent then they could not be waived unilaterally by the plaintiff. Turney and Turney v. Zhilka, supra; F.T. Developments Ltd. v. Sherman, [1969] S.C.R. 203, 70 D.L.R. (2d) 426; Barnett v. Harrison, 57 D.L.R. (3d) 225.

31     However, as a matter of contract law it appears that the parties to an agreement may mutually agree to waive a true condition precedent. This possibility is contemplated by the decision in F.T. Developments Ltd. v. Sherman, supra. That case dealt with an agreement of purchase and sale containing a true condition precedent which could not be waived unilaterally. Upon appeal to the Supreme Court of Canada it was argued that there was an agreement of waiver of this true condition precedent. Judson, J., speaking for all members of the Court on this point, stated at p. 206:

"Both the trial judge and the Court of Appeal have found that there was no extension of time and no agreement to waive the condition." (Emphasis added).

32     In the instant case I find as a fact that there was a mutual agreement to waive any conditions contained in this agreement, either expressly or by implication, bearing in mind that the solicitor Adamson was acting for both parties. In cross-examination Elder admitted that the transaction was unconditional as of January 14th, 1974.

33     If it should be found that there are true conditions precedent relating to zoning and approval of site plans in the agreement in the instant case and that waiver is not applicable, I would go one step further and find that the purchaser was satisfied that the municipal zoning would permit his contemplated user; also that the purchaser so advised the vendor Elder (by their solicitor) and that all parties were proceeding towards closing on this basis. Under these circumstances and upon the evidence that I have outlined, the reasonable interpretation of Clause 1 is that these conditions precedent were satisfied. This was the interpretation placed upon the condition precedent in the case of Beauchamp et al. v. Beauchamp et al., [1973] 2 O.R. 43, 32 D.L.R. (3d) 693 (C.A.), aff'd [1974] S.C.R. v, 40 D.L.R. (3d) 160n, by Dickson J. in Barnett v. Harrison, supra, at pp. 247-8:

"In Beauchamp the agreement was for the sale of certain lands for the sum of $15,500 payable $500 as a deposit and $15,000 in cash on closing. The sale was conditioned upon the purchasers being able within a period of 15 days, to obtain a first mortgage of $10,000 and a second mortgage of $2,500. Within the 15-day period, the purchasers were able to arrange a first mortgage for $12,000 whereupon they notified the vendors that the condition had been met and the transaction would close 'as per the agreement'. The vendors refused to close on the ground the condition precedent had not been strictly complied with but the position was untenable. The patent purpose of the condition was to afford the purchasers an opportunity of raising the moneys with which to complete the purchase; in this they were successful and so advised the vendors timeously. It was of no importance whatever that the funds required by the purchasers came from a first mortgage for $12,000 rather than a first mortgage for $10,000 and a second mortgage for $2,500. That case should, I think, be regarded as one in which the condition precedent was satisfied and not as one in which it was waived." (Emphasis added).

34     The fourth main argument advanced by the defence in the alternative was that the agreement was in substance an option in favour of the plaintiff and not an agreement of purchase and sale even though so called; and that the plaintiff was not bound to purchase. Reliance was placed on the distinction between options, which involve no mutuality of obligation, as compared to agreements where both parties are bound. Politzer v. Metropolitan Homes Ltd., 54 D.L.R. (3d) 376, [1976] 1 S.C.R. 363. The further submissions were made, firstly that an option to purchase must be exercised strictly within the time limited therefor and that this option would expire on January 19th, 1974, unless the entire sum of $135,000.00 was paid in exercise of the option; secondly, that an agreement to extend the time within which to exercise the option is enforceable only if supported by consideration. The defence therefore submits that since the sum of $135,000.00 was not paid at the time aforesaid the option lapsed; and there was no consideration for any alleged extension of the option.

35     It is my opinion that there is mutuality of obligation in the agreement. It is a firm and binding agreement which specifically provides for payment of a deposit with the balance of the purchase price due on closing subject to adjustments. As stated earlier, it is my interpretation that the conditions in the agreement are not true conditions precedent but were for the benefit of the purchaser and could be waived unilaterally. I have also found mutual waiver. Even if it is assumed that there are true conditions precedent in the agreement, the purchaser "will not be permitted purposely to fail to perform his obligations in order to avoid the contract". This was the language of Dickson J. in Barnett v. Harrison, supra, at p. 247. See also Walton v. Landstock Investments Ltd., 13 O.R. (2d) 693 (C.A.).

36     For these reasons all defence arguments fail and there will be a declaration that the said agreement of purchase and sale is a valid, subsisting and enforceable agreement of purchase and sale; and judgment for specific performance. There will also be a declaration that the defendant Racovitis has no right, title or interest in the said lands. I may be spoken to if there are any matters respecting the basis of closing which are in doubt.

37     The plaintiff, of course, is entitled to its costs of the action. Counsel may make submissions to me as to how and in what proportions such costs should be borne by the defendants.

CRAIG J.

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