The parties separated in January 2008 at which time the Respondent wife moved out of the matrimonial home while the Applicant husband remained in the home with the child. The parties entered into a Consent Order outlining various terms with respect to the sale of the matrimonial home including a term which allowed either party to purchase the other’s interest in the home before it was listed for sale. If either party made an offer to purchase the other’s interest after listing, there would be no right of first refusal.
In October of 2020, the home was listed for $1,275,000. On November 5th, 2020, the parties received an offer to purchase the home for $1,180,000 which was conditional on financing and inspection. The husband wanted to accept this offer but the wife did not. Through her counsel, the wife verbally offered to match the offer but the parties could not reach an agreement.
On November 7, 2020, the parties received an offer from 2782708 Ontario Inc. through an independent agent for $1,285,000 without any conditions. The husband was suspicious of the offer and instructed his lawyer to do a corporate search which satisfied him that the purchaser was an arm’s length third party. The parties signed the Agreement of Purchase and Sale and the closing date was set for March 2021.
Some errors on the Agreement of Purchase and Sale, which the parties agreed were honest mistakes, resulted in the parties having to enter into an Amending Agreement of Purchase and Sale on December 3, 2020. After executing this Amending Agreement, the husband asked his lawyer to complete a new corporate search which revealed that the numbered company was actually owned by the wife’s parents. The husband argued that he was purposely deceived and that the wife and the company conspired in an orchestrated fraud. Rather than closing as scheduled, the husband brought this Motion requesting an Order (a) setting aside the November 7, 2020 Agreement of Purchase and Sale (amended on December 3, 2020) of the jointly held matrimonial home and (b) punitive damages in the amount of $10,000.
The husband attempted to rely on sections 21 and 23 of the Family Law Act which he believed granted the court authority to set aside of the Agreement of Purchase and Sale. While the husband argued that he had not “joined in the instrument” as a result of deceit, the court found that he had signed both the Agreement of Purchase and Sale and the Amended Agreement of Purchase and Sale which signaled his consent. The court relied on the discretionary language in section 23 of the Family Law Act which states that a court “may” set aside a transaction. Justice MacPherson noted that even if he had jurisdiction to set aside the Agreement he would not have done so given the husband’s actions indicated his consent.
The court relied on the fact that the property was originally listed for $1,275,000 and the only offer received was for $1, 180,000 which was conditional on financing and inspection. Therefore, the offer from 2782708 Ontario Inc. was a better offer for more money and without any conditions. The husband’s signing of the Agreement indicated his satisfaction of the terms and the fact that there were no better offers received satisfied the court that the sale was for fair market value. The next consideration the court had to make was determining whether the Agreement could be set aside for fraud or deceit.
The court relied on the decision in Bruno Applicance and Furniture Inc. v. Hryniak in which the Supreme Court of Canada outlined the following elements of common law fraud: (a) a false representation made by the defendant; (b) some level of knowledge of the falsehood of the representation on the part of the defendant whether through knowledge or recklessness; (c) the false representation caused the plaintiff to act; and (d) the plaintiff’s actions resulted in a loss. The court found that there was no false representation which induced the husband to enter into the Agreement. Additionally, relying on Holley v. Norther Trust Co. Canada, the court found that even if there was a misrepresentation there were no damages which meant there could be no cause of action.
The court then considered the test for deceit to involve the following elements: (a) a false statement made by the defendant; (b) the defendant knew that the statement was false or being indifferent to its truth or falsity; (c) the defendant having an intent to deceive the plaintiff, (c) the false statement being material whereby it induced the plaintiff to act; and (e) the plaintiff suffered damages as a result of acting. The court found that there was no false statement here because the Applicant never asked the Respondent whether the buyer was her parents and as such, she did not make a false statement or representation. In fact, the parties never discussed the offer from 2782708 Ontario Inc. at all
The court relied on the fact that there was no condition in the Consent Order which precluded the wife’s parents from purchasing the property. In fact, the Consent Order signed by the parties allowed the wife to purchase the property, including after the property had been listed for sale. There was also the fact that the deposit cheque was signed by the wife’s parents and so the husband should have noticed at that point and raised it as a concern. The court took issue with the fact that the husband had various opportunities to complete further corporate searches to determine the owners of the company including before he signed both Agreements. The court found that the wife’s silence as to who was behind the numbered company did not rise to the level of unconscionable.
The court concluded by finding that the husband had not suffered any damages because he executed the Agreement of Purchase and Sale willingly. The husband’s final argument was that the wife breached her common law duty of good faith by concealing the fact that her parents were the owners of the company. The court disagreed with his argument as it did not find that the purchaser’s identity was material to the sale and there was no evidence that the wife had purposely concealed this information, Furthermore, this information was available to the husband had he looked.
The husband’s motion was dismissed and the purchase of the property by the wife’s parents was allowed to proceed. Weighing heavy in the court’s decision was the fact that the husband could have done his due diligence in determining who was behind the numbered company, the fact that no better offers were received for the home and that the wife did not explicitly make a false representation.
For more information, please call us at Feldstein Family Law Group P.C. or contact our firm online.