D.J. BROWN QUEEN’S BENCH FOR SASKATCHEWAN Citation: 2018 SKQB 209 Date 2018 07 24 Docket: QBG 43 of 2015 Judicial Centre: Yorkton and GARRY PETRIE Counsel: David K. Rusnak, Q.C. for the applicant Jay D. Watson for the respondent JUDGMENT LAYH J. July 24, 2018 [1] Dan Ziola and Garry Petrie live approximately 15 miles from each other and have known each other for several years. As stated at the conclusion of the trial, in the court’s view, Mr. Ziola and Mr. Petrie are equally credible witnesses. They are equally sophisticated in business affairs and equally likely to take umbrage if anyone were to suggest they deliberately set out to deceive or manipulate another person in business transaction. Two reasonable and honest men can easily disagree on what one may have said to the other or what one meant when they said something to the other. Such circumstances have led Mr. Ziola and Mr. Petrie to become entangled in lawsuit respecting the sale of three quarters of land in the Rural Municipality of Hazel Dell. [2] In the fall of 2014, Garry Petrie and his wife wanted to retire after career in farming. Apparently none of their three daughters wished to take over the farm. Succession plans were different with Dan Ziola and his wife, Donna. Their son, Clarke, was keen to take over the Ziola farm and expand the farm operations by acquiring more land. [3] In November 2014 Mr. Petrie listed his farmland for sale on an online auction platform that his daughter, Jennifer Petrie, and her husband had created, intending to create an open bidding system to allow farmers to explore the market but not necessarily conclude with sale of land. Regrettably, notwithstanding the good intentions of the Petrie and Ziola families, their interaction through the bidding and post-bidding process has entangled them in three and one-half year disagreement, resulting in this lawsuit. [4] Mr. Ziola maintains that after the bidding process closed Mr. Petrie agreed to sell him three quarters of land; Mr. Petrie denies such deal was struck. Mr. Ziola has sued for specific performance and damages. Mr. Petrie has pleaded, in reply, that no agreement was created and, regardless, even if an agreement existed, it was not in writing as required by The Statute of Frauds, 1677, 29 Cha II, c 3 [Statute of Frauds]. [5] The parties have brought before the court the initial question of liability. Proof of damages will follow if the court finds that an agreement was created. Both parties agree that if an agreement was created it was breached. [6] Mr. Ziola states that the central issue in this lawsuit is the application of the Statute of Frauds to the land sale agreement. He states that contract was created and that it complied with the Statute of Frauds because the offer was in writing via the exchange during the internet-based land auction and the acceptance was orally communicated via telephone conversation. Mr. Ziola states that all the requisite elements of valid land sale are present. [7] Mr. Petrie refutes the creation of any contract. Additionally, if contract was created, Mr. Petrie states that the Statute of Frauds has not been satisfied. ISSUES 1. Was There any Agreement Respecting the Sale and Purchase of Land? The Burden of Proof [8] As the plaintiff, Mr. Ziola must prove on balance of probabilities that contract existed between him and Mr. Petrie and that the formalities of the Statute of Frauds have been satisfied. Introduction: The Essential Elements of Contract Formation [9] Both parties agree that the requirement of writing under the Statute of Frauds is an additional requirement to the usual essential elements of valid contract. These elements include an intention to create legal relations, the presence of offer, acceptance, consideration and consensus ad idem. The Statute of Frauds is formalization requirement needed to make the contract enforceable. Compliance with the Statute of Frauds does not make an otherwise unenforceable contract enforceable, any more than non-compliance with the Statute of Frauds does not make an otherwise enforceable oral contract unenforceable. [10] Given these essential elements of contract formation, the court must make critical determinations of fact to decide whether or not contract respecting the sale and purchase of land was created between Mr. Petrie and Mr. Ziola. The Relevant Facts [11] The facts relevant to this inquiry play out in few days in mid-December 2014 and essentially are not in dispute, save for brief few words concluding telephone conversations between Dan Ziola and Garry Petrie on December 12 and December 14, 2016. What those words were, what they were intended to mean, and how they were received is at the heart of this lawsuit. [12] In December 2014, Garry Petrie’s daughter and son-in-law launched, with Mr. Petrie’s input, website called the Farmers Post, intended to connect sellers of farmland with interested buyers in type of “non-binding auction” to permit sellers to gauge interest in their land, seek out the best possible price and avoid the costs of realtor’s commissions if sale completed. Farmers Post explicitly provided the following terms and conditions of the bidding process: Sellers: You must have full intention of selling your property if reasonable offer is received with terms that can be agreed upon, but you are not obligated to sell to the highest bidder, or any bidder, if acceptable deal terms cannot be negotiated. While Farmers Post introduces you to potential buyers, we accept no responsibility for verifying the bid or for ensuring the deal closes it is up to the buyer seller to negotiate all terms and close the deal with proper legal counsel. Note: you are free to advertise your items with any other service or agent, but you must notify this third party of your cross-listing on Farmers Post. Buyers: You must have full intention of buying the item at the price you bid, and have sufficient funds to make reasonable deposit (amount timing to be agreed upon with the seller). By making bid, you agree to let Farmers Post share your contact information directly with the seller and the seller is free to contact you about your offer. [13] Clarke Ziola read these terms and conditions of Farmers Post. The Ziolas did not question or criticize how the bidding would unfold. [14] Mr. Petrie’s land was the first implementation of the Farmers Post platform. He listed 17 quarters of land for sale, including six quarters of relevance to this action within the Rural Municipality of Hazel Dell, namely: a. three adjoining quarters, namely the SE, SW and NE 30-36-9 W2 [Subject Quarters]; b. the NW 30-36-9 W2 and its north-adjoining quarter, SW 31-36-9 W2 [Adjacent Quarters]; and c. the SW 19-36-9W2 [Unsold Quarter]. [15] To bid on Mr. Petrie’s land, Mr. Ziola registered for Farmers Post account. In response to the listing, and over the course of the bidding period that ended at 11:59 pm on December 11, 2014, Mr. Ziola bid on each of the above parcels. At the end of bidding, Mr. Ziola had the highest bid on the Subject Quarters and the Unsold Quarter. Although Mr. Ziola had previously stated in the comments section of the bidding solicitation “Gerry we want all five! Ziolas,” (consisting of the Subject Quarters and the Adjacent Quarters) he discontinued bidding on the Adjacent Quarters because he felt they had become overpriced. Other bidders continued to bid on the Adjacent Quarters after Mr. Ziola withdrew from bidding, including Mr. Cawkwell and Mr. Elmy. At the end of bidding, Mr. Ziola was the highest bidder on the Subject Quarters at $625,000.00. He was not the highest bidder on the Adjacent Quarters respecting which he had bid $375,000.00 before he stopped bidding. (Although Mr. Ziola was the highest bidder respecting the Unsold Quarter, Mr. Petrie would later explain to Mr. Ziola that he had chosen not to sell the Unsold Quarter and no issue has arisen respecting the Unsold Quarter.) [16] At 11:59 pm., December 11, 2014 the bidding ended. Mr. Ziola received an automated email message from Mr. Petrie. It stated, “[t]he seller will contact you within 48 hours if the seller wishes to accept your bid(s).” No mention was made of the method by which Mr. Petrie would “contact” any of the bidders. [17] After midnight, early in the morning of December 12, Garry Petrie consulted with his two daughters via Skype. They were in the Cayman Islands. Principally, he spoke to Jennifer, who testified at trial. Because the website stated to sellers, “you are under no obligation to sell to the highest bidder, or any bidder,” Mr. Petrie had to decide whether to pursue sale given circumstances he considered significant. As Farmers Post advised sellers, “Farmers Post sends you the name contact information for each bidder on your listings and it’s up to you to directly negotiate with your choice of bidders.” As Mr. Petrie and Jennifer Petrie testified, the nature of their lengthy consultation was to determine with whom, among the various bidders, sale negotiations might proceed. They identified certain issues, setting the stage for the conversation Mr. Petrie would instigate with Mr. Ziola later that morning. Those issues included concern about the Unsold Quarter, which, if sold, would sever it from the home quarter respecting which they had received no bids. They also had concerns about separating the Adjacent Quarters from the Subject Quarters because of issues of accessibility if the two blocks were owned by different individuals. [18] Given their concern about the accessibility of the Adjacent Quarters if separated from the Subject Quarters, and because Mr. Ziola had previously stated keen interest in acquiring all five quarters, Mr. Petrie and his daughter decided that Mr. Petrie would telephone Mr. Ziola and give him two options [the Package Offers]. [19] As the first option, Mr. Petrie would sell to Mr. Ziola all five quarters (the Subject Quarters and the Adjacent Quarters) for $1,050,000.00. This price was five percent higher than Mr. Ziola’s highest bid of $625,000.00 on the Subject Quarters and the bid of $375,000.00 that Mr. Ziola had last bid on the Adjacent Quarters. Characterized another way, this price was $5,000.00 higher than the total of Mr. Ziola’s bid on the Subject Quarters and the highest bids of $185,000.00 and $220,000.00 that Mr. Petrie had received on the Adjacent Quarters from other bidders. [20] As the second option, Mr. Petrie would sell to Mr. Ziola the Subject Quarters plus the NW 30-36-9 W2 of the Adjacent Quarters for $840,000.00. [21] Mr. Ziola produced records of the time of telephone calls he and Mr. Petrie exchanged on December 12, 2014. At 8:45 am Mr. Petrie telephoned Mr. Ziola and laid out the Package Offers in conversation that lasted five minutes. In their respective testimonies, both Mr. Ziola and Mr. Petrie clearly understood the terms of the Package Offers. However, as this call was ending, Mr. Ziola asked Mr. Petrie question. Mr. Petrie gave brief answer, the content of which is the sole point of material factual dispute between the parties. [22] Mr. Ziola testified that at the end of the conversation he wanted to be “absolutely sure” that regardless of his response to the Package Options, he would be able to buy the Subject Quarters for $625,000.00. Mr. Ziola testified that he was absolutely sure of his understanding with Mr. Petrie: the Package Options would not prevent Mr. Ziola from purchasing the Subject Quarters for $625,000.00. When asked in examination-in-chief whether he had any concerns whether he would be able to buy the Subject Quarters, Mr. Ziola testified he had none because Mr. Petrie said “we had them.” [23] Mr. Ziola had the telephone on speaker mode so that Mrs. Ziola could hear the conversation. Mrs. Ziola confirmed that she, too, understood that minimally the Ziolas would be able to buy the Subject Quarters even if they rejected the Package Offers. [24] Mr. Ziola interpreted the first telephone conversation as Mr. Petrie’s willingness to accept his bid of $625,000.00 on the Subject Quarters. According to Mr. Ziola, Mr. Petrie also offered to Mr. Ziola two more independent offers that Mr. Ziola could accept and if Mr. Ziola accepted either of these two offers to buy four quarters for $840,000.00 or five quarters for $1,050,000.00 then either of the newly accepted offers would replace the agreement respecting the Subject Quarters. In his brief of law, this is how Mr. Ziola’s counsel characterized Mr. Ziola’s understanding at the end of the first telephone conversation: 11. Within 48 hours of the end of the bidding process, Garry [Petrie] contacted Dan [Ziola] via telephone. During this phone call Garry made offers for Dan to purchase two additional quarter sections on which Dan had been outbid during the online auction process. Dan informed Garry that he would need to discuss this with his son, Clarke. Dan was aware that he was the high bidder on the Subject Land. Dan was also aware of the email message he had received earlier that morning at 2:29 a.m., which stated the seller would contact him within 48 hours if he wished to accept Dan’s bid. [TAB 13 of Joint Book of Exhibits]. Dan and Donna Ziola testified that, during this phone call with Garry, with respect to Dan’s offers on the Subject Land, Dan told Garry it needed to be perfectly clear whether he “had” the three parcels of land. Dan and Donna both deposed that Dan asked Garry if he “had the 3” even if he did not purchase the additional parcels of land, to which Garry responded “yes”. Dan testified that he had no concerns at the end of the phone call because Garry had told him he had the three quarter sections. [25] Mr. Petrie takes different view of that crucial first telephone conversation. He states that he declined to accept Mr. Ziola’s offer on the Subject Quarters as separate sale until he heard back from Mr. Ziola respecting the Package Options and then he would decide whether or not he would sell the Subject Quarters. That was the nature of the discussion he had had with Jennifer. Mr. Petrie states that the Package Offers were counteroffer to Mr. Ziola’s bid respecting the Subject Quarters. Mr. Petrie states that he either misunderstood or misheard Mr. Ziola’s final question about the Subject Quarters or Mr. and Mrs. Ziola misunderstood or misheard his answer to their question. Mr. Petrie denies that he gave any assurance that the Subject Quarters were sold to Mr. Ziola regardless of Mr. Ziola’s response to the Package Offers. He testified that he did not accept any offers to purchase respecting the Subject Quarters and only presented counter-offers to Mr. Ziola that morning. He testified that his response to Mr. Ziola’s question was “not at this time,” or “not yet,” and that his intention was to require Mr. Ziola to respond to the Package Offers before any consideration might be given to selling the Subject Quarters on their own. [26] At the end of this first telephone conversation, little did Mr. Ziola and Mr. Petrie know that the stage had been set for this lawsuit. [27] During the conversation with Mr. Petrie, Mr. Ziola told Mr. Petrie that he would have to speak to Clarke since the land was for Clarke’s farming operation. When Mr. Ziola asked Mr. Petrie when he should call him, Mr. Petrie said he would expect call from Mr. Ziola that evening. [28] After his conversation with Mr. Petrie, Mr. Ziola telephoned Clarke at 8:57 am. Clarke was on his way to Saskatoon with his then-girlfriend (now his wife). Their discussion focused on whether they should accept either offer within the Package Offers. Mr. Ziola testified that Clarke asked him whether or not they were assured that they could buy the Subject Quarters in the event that they chose not to buy the Adjacent Quarters. Mr. Ziola testified that he told Clarke that Mr. Petrie assured him that the Subject Quarters were theirs, regardless. Mr. Ziola and Clarke Ziola decided that the Adjacent Quarters were too highly priced and they wished only to buy the Subject Quarters. This call lasted approximately 25 minutes. [29] Mr. and Mrs. Ziola were planning to go to Moose Jaw that Friday. So, although Mr. Petrie told him he could call in the evening about the Package Offers, he called Mr. Petrie at 10:06 am. The call was brief, lasting four minutes and 42 seconds. Both Mr. Ziola and Mr. Petrie agree that Mr. Ziola clearly stated that he would not be accepting either of the Package Offers that much is certain. Mr. Ziola offered to bring to Mr. Petrie the appropriate deposit respecting the purchase of the Subject Quarters. But at this point, yet again, critical divergence arises respecting the significance of the remaining conversation. Mr. Ziola testified that in response to his willingness to immediately bring the deposit, Mr. Petrie told him to “hold off.” However, Mr. Ziola points out that Mr. Petrie’s response did not indicate that holding off on the deposit meant he was not accepting the offer on the Subject Quarters, as one might have expected him to say. Mr. Ziola did not take Mr. Petrie’s comment to “hold off” as indicative that there existed no agreement respecting the Subject Quarters, but merely that there was no urgency in receiving the deposit. Mr. and Mrs. Ziola then left for Moose Jaw. [30] Mr. Petrie takes different view of this second telephone conversation, not surprising difference if he and Mr. Ziola were already at odds in the interpretation of the first telephone conversation. Mr. Petrie states that during this conversation he and Mr. Ziola did not discuss the purchase of the Subject Quarters, but only that Mr. Ziola was not interested in the Package Options and was prepared to immediately bring the deposit on the Subject Quarters, to which Mr. Petrie replied “not at this time.” To Mr. Petrie, “not as this time” meant he was not prepared to accept the $625,000.00 bid on the Subject Quarters. [31] One might have expected that when Mr. Ziola told Mr. Petrie that neither of the Package Offers was acceptable and when Mr. Ziola offered to bring the deposit on the Subject Quarters, they would have inquired further and identified any misunderstanding. However, they blithely moved forward and this the court accepts Mr. Ziola believing he had purchased the Subject Quarters and Mr. Petrie believing that, since the Ziolas had rejected both offers, he had yet to decide whether he would accept Mr. Ziola’s bid on the Subject Quarters. [32] After the second call on Friday morning, three days passed without any action by either party. Then, on Monday, December 14 Mr. Petrie emailed Mr. Ziola stating, “I won’t be accepting you [sic] bid in the land on section 30. Thank you for participating in the sale. [33] Clarke was at his parents’ house that morning and read the email. Perplexed, he initiated call to Mr. Petrie, reaching him either that day or the next. According to Clarke’s testimony, Mr. Petrie apologized that the Ziolas did not get any of his land and told him that he had received better offer from someone else. The Analysis Was Contract Created Between Mr. Ziola and Mr. Petrie? [34] The court must determine whether a contract was created between Mr. Petrie and Mr. Ziola respecting the Subject Quarters. The court must first find, as matter of fact, what was the content of the telephone conversations at 8:45 am and 10:06 am on December 12, 2014 between Mr. Ziola and Mr. Petrie. Then, having made this factual determination, the court must decide the legal characterization of these telephone conversations question of law. [35] What did Mr. Ziola and Mr. Petrie say during the two seminal telephone conversations? This determination is the initial and critical starting point. As Professor M.P. Furmston stated in Cheshire, Fifoot and Furmston’s Law of Contract, 14th ed (New York Oxford University Press, 2017) [Cheshire] at 134: If the extent of the agreement is in dispute, the court must first decide what statements were in fact made by the parties either orally or in writing. If the contract is wholly by word of mouth, its contents are matter of evidence normally submitted to judge sitting as jury. It must be found as fact exactly what it was that the parties said…. [36] But it is not only the words that Mr. Ziola and Mr. Petrie might have exchanged that will decide whether their conversation created contract. Geoff R. Hall in Canadian Contractual Interpretation Law, 2d ed, (Markham LexisNexis Canada, 2012) explained at page that words must be considered in context. He wrote: Accuracy in interpretation requires consideration of two things, namely the words selected by the parties to set out their agreement, and the context in which those words have been used. Words and their context, therefore, are the primary theme of the law of interpretation of contracts, and set the parameter for the interpretative exercise. Interpretation therefore involves search for meaning within the constraints of the words and their context. An ideal interpretation is one which accords with both. [37] Although the author states that both words and context must be considered in the interpretation of an existing contract, am of the view that whether or not contract was created may be equally dependent upon an examination of the words used and the context in which they were used. As one would expect, to initially determine whether or not contract has been created is rooted in the parties’ language. If the parties’ words are objectively clear, it may be unnecessary to go beyond the words. However, if the words are unclear or uncertain, then, just as in contract interpretation, the court can and should look to the context in which the parties’ words were used. In terms of contract interpretation, the Newfoundland Court of Appeal in Eco-Zone Engineering Ltd. Grand Falls Windsor (Town), 2000 NFCA 21 (CanLII) at para stated, “[R]arely is it truly possible to interpret document without any knowledge of the context and the parol evidence rule does not prohibit court from admitting evidence of contextual nature.” [38] At page 13, the author, Geoff Hall in Canadian Contractual Interpretation Law, explains that “there is always background to contract” and the factual matrix must be considered when interpreting contract. In support of this premise, the author refers to the statement in White Central Trust Co. (1984), 1984 CanLII 3002 (NB CA), DLR (4th) 236 (CanLII) at para 33 [White] as instructive: 33. …[I]n determining what was contemplated by the parties, the words used in document need not be looked at in vacuum. The specific context in which document was executed may well assist in understanding the words used. It is perfectly proper, and indeed may be necessary, to look at the surrounding circumstances in order to ascertain what the parties were really contracting about. [Emphasis added] [39] This logic applies with equal vigour to determining whether or not contract was created. Accordingly, it may be necessary to look at the surrounding circumstances of the bidding process and the two telephone conversations in order to ascertain whether contract was created. [40] By inquiring into the words used by Mr. Petrie and Mr. Ziola and the context in which those words were used, the court is not opening the door to considering evidence of what was actually going on in these men’s minds. What may have been meant by Mr. Ziola’s question and Mr. Petrie’s answer whether the two created contract respecting the Subject Quarters or did not is not subjective test; it is an objective test. Gerald H. L. Fridman, in The Law of Contract in Canada, 4th ed (Scarborough Carswell, 1999) at 16 and 17 [The Law of Contract], describes the objective test to be applied to determining whether contract was formed, stating: It is not what an individual party believed or understood was the meaning of what the other party said or did that is the criterion of agreement; it is whether reasonable man in the situation of that party would have believed and understood that the other party was consenting to the identical terms. ... [Footnotes omitted] [41] The Saskatchewan Court of Appeal in Tether Tether, 2008 SKCA 126 (CanLII), 314 Sask 121 [Tether], also cited the same author. At para 55 the court stated: Constantly reiterated in the judgments is the idea that the test of agreement for legal purposes is whether parties have indicated to the outside world, in the form of the objective reasonable bystander, their intention to contract and the terms of such contract. The law is concerned not with the parties’ intentions but with their manifested intentions. It is not what an individual party believed or understood was the meaning of what the other party said or did that is the criterion of agreement; it is whether reasonable man in the situation of that party would have believed and understood that the other party was consenting to the identical terms. [Emphasis added] [42] What was reasonably understood between Mr. Petrie and Mr. Ziola must be gleaned from the two telephone conversations they had on December 12, 2014. The germane portions of those telephone conversations were only brief minutes, probably even seconds, in duration. These snippets of conversation are all that possibly created contract of purchase and sale respecting $625,000.00 worth of farm property. Both men agree that in the first telephone conversation Mr. Petrie first explained that the offer respecting the “Unsold Quarter” would not be accepted. Then he detailed the two components of the Package Offer. These two topics, necessarily, must have taken the bulk of the five minutes, leaving what would turn out to be the most significant part of the conversation as very brief exchange. [43] The court finds as fact that Mr. Ziola did ask Mr. Petrie using words to the effect that, notwithstanding the Package Options, he “had the three.” However, neither these words, nor Mr. Petrie’s response, nor the surrounding circumstances prior to and after the telephone conversation lead the court to conclude that contract was formed. Several explanations might account for how things went wrong in the understanding between Mr. Petrie and Mr. Ziola, other than the inaccurate and dishonest testimony of any of the parties. Above all, the court accepts that Mr. Petrie, Mr. Ziola and Mrs. Ziola were truthful and credible witnesses. In this specific instance, the court is unwilling to ascribe to dishonesty, embellishment or frailty of memory, that which is explained by miscommunication or misunderstanding. Looking to the words exchanged and the context of the bidding process following Mr. Petrie’s conversation with Jennifer Petrie, the court finds that a misunderstanding could readily and objectively characterize the nature of the telephone conversations so that no consensus ad idem was ever reached between Mr. Petrie and Mr. Ziola. [44] Even if Mr. Petrie and Mr. Ziola each testified identically to the words that each used, each could easily have taken starkly different meaning from those words. In Cheshire, Professor Furstrom wrote at page 135; Of course, there may be no effective dispute as to what was said but still fundamental disagreement as to what it meant. [45] John D. McCamus, The Law of Contracts, 2d ed (Toronto Irwin Law, 2012) describes what happens when the court finds that the words and their context lead to misunderstanding between the parties. At pages 526-527 he describes misunderstanding as to contract formation as follows: misunderstanding occurs where one party is not clear about the correct meaning of term or terms of the agreement or where both parties understand the meaning of term or terms differently, neither understanding being, in the requisite sense, the correct meaning of the agreement. In case of misunderstanding the critical question is whether the parties have reached true consensus ad idem. [Emphasis added.] [46] Professor McCamus states that correctly identified misunderstanding prevents formation of an agreement. At pages 524 525 he writes: [T]here is broad consensus that there exists basic division between mistakes that prevent formation of the agreement, here referred to as “misunderstandings,” and mistakes concerning some matter relevant to the decision to enter the agreement, here referred to as “mistaken assumptions.” In some contexts, the two categories are referred to, respectively, as mistakes as to “terms” and mistakes as to “motive.” In cases of misunderstanding, the parties have failed to reach an adequate consensus ad idem. The parties may, for example, have different ideas about what the terms of the contract mean. There is, one might say, no genuine or true agreement between the parties. [47] Following are the reasons why the court finds that Mr. Petrie and Mr. Ziola failed to reach an adequate consensus ad idem respecting the sale of the Subject Quarters during the first telephone conversation on December 12, 2014. [48] First, at the end of the first telephone conversation, after Mr. Petrie had explained that he was not going to sell the Unsold Quarter and after he explained the details of the Package Options, Mr. Ziola asked if he still “had the three” if he did not accept either offer in the Package Options. The verb “to have” is vague at best. The question is, “What did Mr. Ziola ‘have’ if he did not accept either of the Package Option?” An objective observer, hearing the conversation, could reasonably understand that Mr. Ziola, person interested in purchasing land, was asking if he “had” purchased the Subject Quarters. On the other hand, an objective observer could just as reasonably understand that Mr. Petrie, person interested in gathering bids, was confirming that Mr. Ziola still “had” an effective (but unaccepted) bid on the Subject Quarters. The court accepts that in the brief question posed by Mr. Ziola and the brief response provided by Mr. Petrie, the two men were simply “not on the same page.” They were at cross-purposes, each purpose readily understandable, logical and without malice or deceit. [49] Second, to an objective observer, Mr. Ziola’s last inquiry must be considered in light of the entire telephone conversation. The court sees nothing in the conversation between Mr. Petrie and Mr. Ziola before Mr. Ziola posed his seminal question that suggests Mr. Ziola “had” an agreement for sale respecting any land. What Mr. Ziola “had” at the outset of the telephone conversation and during the telephone conversation was the highest bid on the Subject Quarters. Nothing said during the telephone conversation altered Mr. Ziola’s legal position as only being the highest bidder on the Subject Quarters, so that his concluding question whether he still had the three cannot objectively be seen as confirming an agreement for sale of the Subject Quarters. [50] Third, on an objective inquiry, why would Mr. Petrie have stood prepared to accept the bid on the Subject Quarters if he had seconds earlier provided two offers for different (and higher) price which included the same land? According to Mr. Ziola’s interpretation, at the end of the telephone conversation he had concluded an agreement for sale respecting the Subject Quarters but could walk away from that agreement and, instead, accept one of two other offers. The court finds that such an arrangement would have been extraordinarily unusual. Instead, the court finds that Mr. Petrie did not accept Mr. Ziola’s bid respecting the Subject Quarters but rather was presenting two counteroffers. Mr. Petrie would have been acting contrary to his own intentions to bind himself to the sale of the Subject Quarters while he waited for Mr. Ziola’s decision respecting the Package Offers. [51] Fourth, Mr. Petrie’s primary objective in inaugurating the online service of Farmers Post, and indeed the primary objective of anyone selling farm land using this service, was to explore the market to secure the highest possible price for farm land. In his counteroffers, Mr. Petrie offered land for sale, including the Subject Quarters, for an effectively higher price than Mr. Ziola’s offer of $625,000.00. Jennifer Petrie testified that she, her sister and Mr. Petrie had protracted Skype conversation during which they strategized how to maximum the price beyond what had been offered by either Mr. Ziola or the competing bids on the two Adjacent Quarters. To accept Mr. Ziola’s position would require the court to accept that Mr. Petrie had accepted an effectively lower price for the Subject Quarters while simultaneously offering to sell the same land for an effectively higher price. The court is unable to accept this logic. [52] Fifth, based on two findings of the court Mr. Petrie had reasonable expectation that Mr. Ziola would likely accept one of the counteroffers. First, the price in one counteroffer for the five quarters was only marginally over the highest bids Mr. Ziola had already offered respecting all five quarters. In offering to sell the five quarters for $1,050,000.00, Mr. Petrie was seeking $50,000.00 more than Mr. Ziola had previously bid on the five quarters, five percent increase. Second, given Mr. Ziola’s earlier and emphatic comment that he wished to purchase all five quarters, the counteroffer seemingly would have struck favourable chord with Mr. Ziola. The court accepts the testimony of Jennifer Petrie that she and her father were confident that Mr. Ziola would accept one of the counteroffers. see nothing in the evidence to suggest that Mr. Petrie was enticing Mr. Ziola with the counteroffers but simultaneously had accepted Mr. Ziola’s bid for different land at lower price. At best, Mr. Petrie agreed that if Mr. Ziola did not accept one of the counteroffers, Mr. Petrie would still consider Mr. Ziola’s bid respecting the Subject Land. [53] Sixth, the conversation between Jennifer Petrie and Mr. Petrie earlier that morning provides an important context to the words used during the telephone conversation. Jennifer testified that she and Mr. Petrie had strategized how to deal with matters of accessibility to the NW quarter of section 30 and how to maximum the price beyond what had been offered by either Mr. Ziola or the competing bidders on the two Adjacent Quarters. Either of the two counteroffers would alleviate the access problems that might arise and also maximize price, while at the same time accommodating Mr. Ziola’s previous statement that he wanted all five of the quarters and encouraging him to marginally increase his bid. [54] Having found no consensus ad idem was reached between Mr. Petrie and Mr. Ziola during the first telephone conversation, the court finds that the second telephone conversation did nothing to alter this finding. During that conversation, Mr. Ziola first told Mr. Petrie that he was unprepared to accept either of the offers within the Package Options. He then offered to bring the deposit for the Subject Quarters to Mr. Petrie who told him to hold off. An objective view of this exchange shows that the misunderstanding of the earlier telephone conversation tainted the perceptions of both Mr. Petrie and Mr. Ziola as to the meaning of what was being said and heard during the second telephone conversation. Such is nature of many misunderstandings. frame of reference, once established, is not easily altered. The court finds that Mr. Ziola reasonably believed that by stating his willingness to bring the deposit he was performing the contract of sale respecting the Subject Quarters. The court also finds that Mr. Petrie reasonably believed that he was telling Mr. Ziola that he was not prepared to accept his bid on the Subject Quarters and to hold off until he further considered his options. Again, in colloquial language, the two men were simply not on the same page; in legal language there was no consensus ad idem and, therefore, no contract. [55] Finally, as further support for the finding that the parties had reached no agreement at the conclusion of the two telephone conversations on December 12 is Mr. Petrie’s email of December 14. He stated he was not accepting Mr. Ziola’s bid and thanked him for participating in the sale. To accept Mr. Ziola’s characterization of this email as Mr. Petrie reneging on completed contract of sale would require the court to ascribe deceitfulness to Mr. Petrie. The court finds no evidence and is unprepared to cast this aspersion upon Mr. Petrie when benign and reasonable explanation is far more likely. The Statute of Frauds [56] As Justice Wilkinson explained in Tether, the formation of contract is dependent upon three lines of inquiry, all of which must be present. [62] In summary, there can be three distinct lines of inquiry. Firstly, was there “meeting of the minds”, or consensus ad idem, that was manifest to the reasonable observer. Secondly, was there consensus on all the essential terms of the agreement, for if material term is not resolved, and is left vague and imprecise, without the tools to refine it, the agreement is illusory and the parties are simply asking the court to make an agreement for them. Thirdly, did the parties make their agreement conditional upon, and subject to, execution of formal document. [57] Missing from Justice Wilkinson’s list in this action is consensus ad idem manifest to reasonable observer. Since the court has found that no contract was formed between Mr. Petrie and Mr. Ziola, the additional formality of writing – imposed by the Statute of Frauds rather than by the parties’ express condition – is not determinative. As stated earlier in this judgment, even if the requirement of writing was established, an otherwise unenforceable contract cannot be made enforceable only because it is in writing rather than oral. Conclusion [58] Mr. Ziola has not established on a balance of probabilities that he and Mr. Petrie were parties to a valid and enforceable agreement of sale respecting the Subject Quarters. His action is dismissed. [59] Given the results, the court orders costs in Mr. Petrie’s favour based on column two of the Tariff of Costs.
Contract Law – Sale of Land – FormationReal Property – Sale of Land – Oral Contract The plaintiff brought an action against the defendant for specific performance and damages. The plaintiff claimed that the defendant agreed to sell him three quarters of land. The defendant’s position was that there was no agreement and if there was, it was not in writing as required by The Statute of Frauds. The plaintiff made this application for a resolution of the initial question of liability as to whether an agreement was created and if it was, then proof of damages would follow. The plaintiff argued that a contract was created and that it complied with the statute because he made his offer in writing, via an internet-based land auction program, and the acceptance was orally communicated by a telephone conversation. Therefore, all the requisite elements of a valid land sale were present. The defendant had used a website to list 17 quarters of land for sale, including six quarters of relevance to the action. The website was intended to connect sellers of farmland with interested buyers in a type of “non-binding auction” to permit sellers to gauge interest in their land, find the best possible price and avoid realtor’s commissions if a sale were completed. The listing showed three groups of the farmland for sale, described as 1) three adjoining quarters (the subject quarters); 2) two quarters (the adjacent quarters) and 3) one quarter (unsold quarter). In his online comments to the defendant during the auction, the plaintiff said that he wanted all five quarters (the subject and adjacent quarters). The plaintiff bid on each of the above parcels and had the highest bid on the subject quarters, but that in itself did not guarantee the purchase under the terms of the online auction program. He stopped bidding on the adjacent quarters because he thought they were becoming overpriced. After the auction, the plaintiff consulted with family members regarding whether to pursue negotiations with any of the bidders. They discussed the problems that would occur if the subject quarters were separated from the adjacent quarters because the two blocks were owned by different individuals. The defendant then telephoned the plaintiff and gave him two package options for the sale, both of which resolved the identified problem by including the purchase of the adjacent quarters. The package options were to purchase the subject and the adjacent quarters for $1,050,000 (which was 5 percent more than the $625,000 the plaintiff offered for the subject quarters and his last bid of $375,000 on the adjacent quarters) or the subject quarters and one of the adjacent quarters for $840,000. At the end of the conversation, the plaintiff testified that he wanted to be sure that regardless of his response to the package option offers, he would be able to buy the subject quarters for $625,000. The plaintiff did not have concerns about the purchase because he said that the defendant told him that “we had them”. He believed that this indicated the defendant’s willingness to accept his bid on the subject quarters and that if he accepted either of the two options, then either of the newly accepted offers would replace the agreement respecting the subject quarters. The defendant’s interpretation of the conversation was that he declined to accept the offer on the subject quarters until he heard back from the plaintiff respecting the package options and then he would decide whether or not he would sell the subject quarters. He either misheard or misunderstood the plaintiff’s question about the subject quarters and denied that he gave any assurance that he would sell them to him regardless of his response to the package offers. The plaintiff called the defendant shortly after the first conversation and advised that he would not accept either of the package option offers but would immediately bring the deposit for the purchase of the subject quarters. The defendant told him to “hold off”. The plaintiff interpreted that to mean that there was no urgency regarding the deposit rather than that no agreement existed respecting the subject quarters. The defendant testified that he said he was not prepared to accept the deposit at this time, which meant that he was not prepared to accept the plaintiff’s bid on the subject quarters. Three days later, the defendant emailed the plaintiff and said that he would not be accepting the bid. The issues were: 1) whether a contract was formed; 2) if so, did the Statute of Frauds apply.  HELD: The plaintiff’s action was dismissed. He had not established on a balance of probabilities that he and the defendant were parties to a valid and enforceable agreement of sale regarding the subject quarters. The court found with respect to each issue that: 1) there was no contract. In interpreting the words of the first telephone conversation and the context of the bidding process, using the standard of the reasonable bystander, there was no consensus ad idem between the parties. The second telephone conversation had done nothing to alter that finding. Both the plaintiff and the defendant reasonably believed different things; and 2) the Statute did not apply as there was no contract.