As the title says, a recent decision by the Ontario Court of Appeal came with a simple and straightforward message.
In Downey v. Arey, Heather Downey and her partner, Frank Marchese, sought to enforce an oral agreement with Ms. Downey’s father, Douglas Arey, to sell them the family home in Mississauga. The trial judge found that there was no enforceable agreement because one fundamental term—the purchase price—was uncertain. And even if the parties had agreed on the purchase price, the trial judge found there was no agreement regarding the extension of the closing date.
The home was Mr. Arey’s most significant asset. When asked why there was no written contract for the transfer of the home, Mr. Arey said, first, that he trusted his family. Second, he said, “That’s a good question.”
Mr. Arey was 80 years old at the time of trial. Sadly, he passed away before the appeal could be heard.
On appeal, Ms. Downey and Mr. Marchese argued that the trial judge made a palpable and overriding error by finding that there was no agreement on the purchase price. They alleged that the parties had agreed to a purchase price of $850,000, and that the dispute was in relation to a $100,000 adjustment on closing that they characterized as a “gift” from Mr. Arey to his children. They further argued that the trial judge erred in law by considering whether the parties were subjectively, not objectively, of one mind regarding the purchase price.
The Court of Appeal dismissed the appeal. On the alleged palpable and overriding error, the court said that the record supported the trial judge’s conclusions that the purchase price was uncertain. On the alleged error in law, the court held that the trial judge had in fact applied the correct test: whether an objective, reasonable bystander would conclude that the parties had agreed on the issue of price.
Ordinarily, the Statute of Frauds requires agreements for transfers of land to be evidenced in writing. However, at trial, the parties acknowledged that the renovations to the home made by Ms. Downey and Mr. Marchese constituted part performance of the contract. Therefore, equity would relieve against any failure to comply with the Statute of Frauds, and the written requirement would be waived.[1]
Nonetheless, this decision highlights a common problem with oral contracts: uncertainty. It is always prudent to capture agreements in writing, particularly where significant assets, like land, are at stake.
[1] The trial judge cited Erie Sand & Gravel v. Seres’ Farms Ltd, 2009 ONCA 709 at para 70.
