Basi v. Levert

2007 BCSC 196 Basi v. Levert IN THE SUPREME COURT OF BRITISH COLUMBIA Citation: Basi v. Levert, 2007 BCSC 196 Date: 20070212 Docket: S93958 Registry: New Westminster Between: Sohan Basi and Sarjit Basi Plaintiffs And Stephan Levert and Valley Pacific Realty Ltd. Defendants Before: The Honourable Mr. Justice Cole Reasons for Judgment Counsel for the Plaintiffs Graham B. Walker Counsel for the Defendant Levert Patrick L. Staplin Date and Place of Trial/Hearing: December 7 and 8, 2006 New Westminster, B.C. Introduction [1] This is a summary trial pursuant to Rule 18A. The plaintiffs ask for a declaration that the defendant, Mr. Levert, has no right, title or interest in lands and premises more particularly described as PID: 006-544-789: Lot B, Section 12 Township 1, New Westminster District, Plan 73905 (the "Property"). The plaintiffs also seek an order discharging the September 7, 2005 caveat registered under number BX564750 against the Property, and an order discharging the November 4, 2005 Certificate of Pending Litigation registered under number BX016401 against the Property. [2] The plaintiffs ask that the matter of damages and other relief be adjourned. Background [3] On or about November 13, 2002, the plaintiffs granted Mr. Levert a lease which would run from November 1, 2002 to October 31, 2005. At or about the same time, the plaintiffs granted to Mr. Levert an option to purchase the Property, and the option was to expire no later than December 4, 2005. The option agreement was a separate document and was signed a day or two later, after the signing of the lease. [4] It was a term of the option that the completion date of the sale would be the fifth business day following the delivery of notice exercising the option. The purchase price was $445,000. It would appear that by the middle of 2005 the value of the Property was more than $100,000 greater than the purchase price. [5] In January 2005 Mr. Levert indicated to the plaintiffs that he wished to exercise the purchase option, but he did not complete the purchase. [6] In June 2005 the plaintiffs discovered that the premises were in complete disarray and subsequently learned that the property had seemingly been abandoned and the hydro had been disconnected. After viewing the photographic evidence attached to the affidavit material, I agree with the plaintiffs that the Property was in an intolerable state of disorder and filth. The plaintiffs' subsequent actions to clean up and protect the Property were not unreasonable in the circumstances. [7] Mr. Levert indicated to the plaintiffs that he was willing to exercise the purchase option by August 16, 2005 and would pay the price of the purchase option and assume the Property in its present condition. Final terms, however, were never agreed to. [8] On August 17, 2005, the plaintiffs received a letter from the City of Surrey requiring that the Property be cleaned up within 7 days upon receipt of the letter. The letter warned that if the plaintiffs did not comply, the City would clean the Property and then charge the plaintiffs for costs. [9] On August 19, 2005, the plaintiffs commenced an action alleging that Mr. Levert had no intention to exercise the purchase option and asking for an order for a termination of the purchase option, the costs of cleaning up the premises, and costs. The plaintiffs, however, had difficulty serving Mr. Levert. [10] In late August, it would appear that Mr. Levert, through the assistance of his father, had secured the necessary financing. Mr. Levert notified the plaintiffs that he was in a position to purchase the Property, but the plaintiffs were no longer interested in selling. In Mr. Basi's examination for discovery, he was asked: Q. All right. Your position at that time though, as of August 25, 2005, was it you were not going to sell this property to Mr. Levert: Is that correct? A. Yes. [11] Due to the fact that the plaintiffs believed that the Property had been abandoned and because of the chaotic state of the premises which clearly indicated that no one was living there, the plaintiffs took possession of the Property on September 1, 2005. On September 2, 2005, the plaintiffs' solicitor wrote to Mr. Levert's solicitor and stated: I wish to confirm my advice to you given orally earlier in respect to the transaction between your client, Stephan Levert, and mine, Sohan and Sarjit Basi, to the effect that on advice from me they take the following position: (a) The option has been exercised by your client but not performed according to the terms of the option and the same is therefore void. [12] On September 7, 2005, Mr. Levert registered a caveat against the Property. [13] On November 4, 2005, Mr. Levert entered a counterclaim alleging that the purchase option agreement was a valid and subsisting obligation of the plaintiffs and asked for an order for specific performance and, in the alternative, damages. [14] On December 3, 2005, at approximately 3:55 p.m., Mr. Levert's solicitor, Mr. Rosberg, wrote to the plaintiffs' solicitor enclosing a notice of option to purchase dated December 2, 2005. The notice of exercise of option to purchase was subject to the following conditions: This Notice is exercised subject to the express proviso that the undersigned, his agents, and/or his assigns, shall be granted unrestricted access to the Property for the purposes of inspection between the hours of 9:00 a.m. and 8:00 p.m. on Tuesday, December 6, 2005, Wednesday, December 7, 2005, and/or Thursday, December 8, 2005, on six (6) hours notice delivered or provided by facsimile transmission to Mr. Graham B. Walker, the solicitor for Mr. Sohan Basi and Mrs. Sargit Basi. [15] The plaintiffs made no response to the December 3, 2005 letter which purported to exercise the option. I am satisfied that the attempt to exercise the option to purchase was defective because of the terms added by Mr. Levert. [16] At no time did Mr. Levert tender the purchase price. Submissions [17] The plaintiffs argue that they are entitled to their declaration because Mr. Levert failed to exercise the option in accordance with the terms and conditions of the purchase option agreement. In particular, Mr. Levert added a condition when he purported to exercise the option, and he failed to tender funds as required. [18] The plaintiffs do not strongly contest that their August 19 action repudiated the contract. However, they maintain that Mr. Levert did not accept that repudiation when he continued to seek specific performance. Because the repudiation was not accepted, the plaintiffs argue that Mr. Levert was still required to perform his contractual obligations. The plaintiff relies in part on Howard v. Pickford Tool Co. Ltd., [1951] 1. K.B. 417 (C.A.) where at 420 - 421 Evershed, M.R., states: It is quite plain (and I refer, if it be necessary, to quote authority, to the speech of Lord Simon, L.C. in Heyman v. Darwins Ld. (8), that if the conduct of one party to a contract amounts to repudiation, and the other party does not accept it as such but goes on performing his part of the contract, and affirms the contract, the alleged act of repudiation is wholly nugatory and ineffective in law. [19] Later in that decision, Asquith, L.J. at 421 states: I agree. An unaccepted repudiation is a thing writ in water and of no value to anybody: it confers no legal rights of any sort or kind. Therefore, a declaration that the defendants have repudiated the contract of the plaintiff would be entirely valueless to the plaintiff if it appeared at the same time, as it must appear in this case, that it was not accepted. [20] Mr. Levert relies upon Lam v. Sumner Estate, 2006 BCCA 427 and Laredo Development Ltd. v. I.R. Capital Corp. (1993), 87 B.C.L.R. (2d) 170 (C.A.) to support the proposition that after a vendor repudiates, there is no requirement for the purchaser to tender. In both of those cases, the repudiating vendors somehow prevented the innocent parties from being able to perform their contractual obligations. [21] In Lam, the trial judge [2006 BCSC 280] held as follows at para. 61: Until they had reason to believe that the sale might complete, there was no reason why they would have applied for further financing, nor is there reason to think a lender would have considered an application for financing in circumstances where it was known the sale would not be completed. It was for this reason, as well, that tender could not have been made in October 2005. It was the actions of the defendants that precluded the plaintiff from being able to tender. [22] In Laredo, the purchaser was planning to immediately resell the property and use those funds to finance the original purchase. The court stated at para. 58: In the circumstances of the present case the purchaser cannot be required to prove readiness, willingness and ability to perform. It was known to both parties that the vendor's unwillingness to observe the terms of their agreement, by providing evidence of completion of construction at least a week prior to the date of closing, and insisting instead that the purchase money be paid forthwith on the day of delivery of the certificate, made it impossible for the purchaser to place itself in a position to close, and the vendor was unwilling thereafter to complete their agreement in accordance with its terms. [23] Mr. Levert takes the position that exercising the option and tendering were futile and therefore unnecessary. The "futility" is evidenced by the action commenced by the plaintiffs, by the September 2 letter stating that the option was void, and by Mr. Basi's discovery evidence which indicates that by late August the plaintiffs were not going to sell the property to Mr. Levert. That latter statement by Mr. Basi however was not conveyed to Mr. Levert until well after the option had expired. Analysis [24] I am satisfied that the notice given by Mr. Levert dated December 2, 2005 did not constitute a valid exercise of the option agreement because the notice attaches terms dealing with unrestricted access by specified dates. Since the option agreement was not exercised the defendant's claim for specific performance fails. [25] If I am wrong in this conclusion, however, I am also satisfied that the defendant cannot succeed in respect to his argument of having his ability to finance the project because of the failure of the plaintiffs to agree to the inspection of the subject property. [26] Mr. Levert, at para. 44(d) of his affidavit of March 24, 2006, stated that he "...overlooked the fact that in exercising the Option, I would have to tender prior to the documents being lodged for registration." His failure to understand the necessity to tender the purchase funds cannot be laid at the feet of the plaintiffs. Furthermore, Mr. Levert is in a very weak position when he argues that it was futile to tender because of the lawsuit that was commenced by the plaintiffs and the plaintiffs' letter of September 2, 2005. I am satisfied that the facts in Lam and Laredo are clearly distinguishable. Here, the lease agreement expired on the 31st of October, 2005 and the defendant knew that he would have to either obtain the consent of the plaintiffs or obtain a court order if he wished to inspect the property after that date. It was obvious from the conduct of the plaintiffs that they treated the option agreement to have expired or was of no effect. In addition, it was Mr. Levert's conduct of abandoning the property that led to the plaintiffs' early possession order, which order the defendant never attempted to set aside. Finally, Mr. Levert left it to the very last moment to exercise the option agreement and he could, if he wished to, have applied to the court in this action on short notice to give him the right to have the property inspected. Mr. Levert did not take those steps and can not now blame the plaintiffs for what is in effect his failure to take all reasonable steps necessary to obtain the financing and to tender the purchase price. [27] I therefore grant the declaration sought by the plaintiffs that Mr. Levert has no right, title or interest in the lands and premises in question. The caveat and the certificate of pending litigation will be discharged without further order of this court. The plaintiffs' claim for damages can be spoken to at a time convenient to all parties. "F.W. Cole, J." The Honourable Mr. Justice F. W. Cole