Legal Blog

Performance

The Statute of Frauds and the concept of part performance has always been vexing to judges who hear cases that arise from disputes regarding oral contracts dealing with land. The latest case dealing with a plaintiff’s part performance allegation, which arose out of  a Statute of Frauds defence, is Stack v. Zizman [2007] O.J. No. 1462 (SCJ). Unfortunately, in this case, the reasons for decision were short on the facts and long on the law, so that we do not have the full benefit of its application.

Deal or No Deal

Wife and defendant were workplace friends. Because of a workplace reorganisation, the defendant discussed with wife the possibility of the defendant selling her home. Wife and husband alleged that the defendant orally agreed to sell her home to them; the defendant disagreed.

Wife and husband brought an action against the defendant claiming damages that they incurred as a result of the defendant’s failure to sell the home to them; the defendant brought a motion for summary judgment, arguing that there was no genuine issue for trial.

The reasons for decision noted that the plaintiffs listed and sold their home, allegedly because of the impending purchase from the defendant. The judge also tersely stated, “The plaintiffs allege other actions were taken as well referable to the oral contract to their detriment.” The judge did not burden the reader with any other facts.

Tests

After dealing with the facts in two paragraphs, the judge then dealt with the law in another 32 paragraphs. We will spare you the full analysis.

The judge needed to decide whether the evidence to support part performance had to meet a balance of probabilities test or a more stringent test.

The stringent test requires the plaintiffs to prove that the acts must have resulted in the complaining parties acting to their detriment and that the acts, at face value, must unequivocally refer to the alleged contract (i.e. the acts could be done with no other view or design than to perform the agreement).

The alternative test requires the plaintiffs to prove that: (i) on the balance of probabilities they acted to their detriment (ii) it was more probable than not that they so acted because they were contractually obliged to the defendant to do so; and (iii) their actions were consistent with the alleged oral agreement. Oral testimony may be used to prove the first branch of the test, but not to prove the second and third branches; these must be answered solely from the evidence proving the first branch.

Line-Up

The stringent test was propounded in a House of Lords case in 1883 and was adopted by the Supreme Court of Canada in Degelman v. Brunet Estate [1954] S.C.R. 725.

The alternative test was propounded in Steadman v. Steadman (1974) 2 All E.R. 977 (H.L.). Both DiCastri and Waddams, in their texts, support the alternative test.

The judge opted to apply the stringent test. He felt that until the Supreme Court of Canada revisited the situation, he was bound to follow Degelman and ignore Steadman, DiCastri, and Waddams.

Application

The judge’s application of the facts to the law was as enigmatic as his listing of the facts. He stated, “The acts here, whether taken separately or cumulatively but in isolation from oral evidence, cannot be said to meet this test though they may well meet the Steadman test. A review of the various acts alleged does not produce any that could be said to be such that the defendant could say if they had not been performed were a breach of any alleged agreement. The acts are more properly said to be acts preparatory to entry into an agreement. In this respect, indeed they seem to be preparatory to the respondents’ admitted attempt to have signed a formal written Offer to Purchase.”

This, of course, tells us almost nothing. In effect, the judge must have reasoned that the act of selling a home did not irresistibly lead to a conclusion that there was another agreement to purchase a home. What then would lead to that irresistible conclusion? The following could be possibilities:

a)   a mortgage application proposing to use the new home as security with up front expenses paid to the proposed mortgagee.

b)   an application by the prospective purchasers to re-zone the land.

The judge took the allegations of the plaintiffs at face value and determined that there was no genuine issue for trial. Accordingly, he dismissed their action.

Unfortunately, this case is not going to the Supreme Court of Canada. We doubt that an aborted sale of a residence in Sudbury would lead to the type of damages that would make appeals to the Supreme Court financially worthwhile.