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Sale of Merged Lands Complied with Planning Act

Under separate agreements of purchase and sale, the buyers agreed in 2016 to purchase two abutting residential properties, both owned by the seller. The seller had acquired them both in 2013, also under separate agreements that culminated with a single transfer instrument. This was the same method that had been used since 1983 to convey both properties to a succession of owners, the most recent being the seller.

The seller's MLS listing for the properties indicated the properties "Merged Together". Vendor Wants Both Lots to Be Sold Together. The City Has Consent For Subdivision". The standard form agreement contained the customary clause requiring the seller to comply with the subdivision controls of the Planning Act, and to obtain the necessary consents respecting severance. To this end, the buyers' lawyer requisitioned satisfactory evidence of Planning Act compliance, together with a statutory declaration stating that the seller did not retain the fee or equity of redemption in any of the abutting lands. The seller's lawyer declined to provide it, noting the seller owned both properties. However the seller did provide amended statutory declarations for each property, in which she simply blacked out the word "not" to indicate and confirm that, as the seller, she did indeed retain the fee or equity of redemption in the abutting land.

The deal did not close in late 2016 as scheduled, since the buyers did not have the needed funds. After continued negotiation efforts failed, the seller sued the buyers for breach of contract. She asked the court to award her damages, and to declare that the buyers' $100,000 deposit was forfeited.

The seller succeeded in getting partial summary judgment, with damages to be assessed at trial. The buyers' appeal of the summary judgment was unsuccessful.

The Appeal Court found the motion judge was correct to find that the agreements were not rendered void merely because the seller-provided statutory declarations had been amended to confirm the seller's legal interest in the abutting parcel, notwithstanding the subdivision control provisions of the Planning Act.

First, the court examined the context of these transactions. The buyers clearly breached the agreement since they lacked the necessary funds to close. In contrast, the seller expressed that she was ready, willing and able to convey marketable title to the properties in compliance with the Act, in fulfilment of her obligation under both agreements. She did not breach or void the agreements by presenting the buyers with the amended statutory declarations; the changes had been made in the context of the seller's communicated intent to: (1) culminate two agreements with a simultaneous conveyance of the properties; and (2) close the transactions in compliance with the Planning Act.

Furthermore, the evidence showed that both parties considered the deal to be a single transaction that did not sever the lands, even though it involved two properties. This was borne out by the MLS listing; it was also evidenced by the identical execution dates, closing dates and parties on both deals. It was also supported by the buyers' offer, which reflected the intent to buy the properties together in one transaction, and to treat them as merged – as they had been since 1983. This was also in accord with s. 50(15) of the Planning Act, which expressly states that simultaneous conveyances of abutting properties involving the same parties merge those properties for the purposes of the Act.

Finally, the seller blacking out the word "not" on the statutory declaration, effectively acknowledging her retention of the fee or equity of redemption in the abutting land, was not an attempt to close the transactions in violation of the Planning Act. This was again done in the context of her communicated attempt to convey both properties simultaneously. Viewed this way, it could not be characterized as a defect in the tendered documents, or a failure to effectively answer the buyers' requisition. On the contrary, the seller at all times made it clear she was ready and able to convey marketable title in compliance with the subdivision control provisions of the Act. Furthermore, the buyers made the offer to purchase with full knowledge that the properties have merged as abutting lands. The court dismissed the buyers' appeal. See: Malik v. Attia, 2020 ONCA 787.