Court of Appeal for Ontario

Date: 2022-11-23 Docket: C70443

Before: Simmons, van Rensburg and Favreau JJ.A.

Parties

BETWEEN

Rosehaven Homes Limited and Bram-Rose Homes Inc. Plaintiffs (Respondent)

and

Flora Temitayo Aluko and Maxwell Olugbenga Aluko Defendants (Appellants)

Counsel

David Milosevic and Arad Moslehi, for the appellants Wei Jiang and Sukhdeep S. Gill, for the respondent

Heard: October 28, 2022

On appeal from the order of Justice Phillip Sutherland of the Superior Court of Justice, dated February 23, 2022, with reasons reported at 2022 ONSC 1227.

Reasons for Decision

[1] The appellants appeal from a summary judgment requiring them to pay damages to the respondent, Rosehaven Homes Limited (“Rosehaven”) [1], arising from their failure to complete an agreement of purchase and sale for the purchase of a new home. At the appeal hearing, the appellants abandoned their ground of appeal relating to unconscionability/inequality of bargaining power. We dismissed the appellant's remaining grounds of appeal for reasons to follow. These are our reasons.

[2] On April 13, 2017, the appellants entered into an agreement of purchase and sale with Rosehaven to purchase a new home (the “Property”) to be constructed. Rosehaven was unwilling to accept any conditions in the agreement of purchase and sale concerning financing. Accordingly, no financing condition was included.

[3] The purchase price for the Property was $1,523,162.00, including requested upgrades of $6,723.40. At the outset, the appellants paid an initial deposit of $20,000.00 plus the cost of the upgrades. Later, they paid further deposits, totaling $70,000.00, in accordance with a schedule set out in the agreement of purchase and sale.

[4] The original closing date was November 6, 2018. The appellants were unable to close on that date. They sought, and were granted, two extensions of the closing date, first to November 29, 2018 and, ultimately to December 20, 2018. In each case, the appellants paid an additional $20,000.00 deposit to obtain the extension.

[5] The appellants failed to close the transaction on the December 20, 2018 extended closing date because they were unable to obtain sufficient financing. Rosehaven declined the appellants’ request that it accept a vendor-take-back mortgage for a portion of the purchase price. Rosehaven eventually resold the Property on July 10, 2019 for the sum of $1,060,000.00.

[6] The motion judge granted summary judgment to Rosehaven for $331,922.27, being the difference between the original sale price of $1,523,162.00 and the resale price of $1,060,00.00, plus carrying costs of $5,483.67, less a credit of $136,723.40 for the deposits and the cost of the upgrades.

[7] The appellants advance two main issues on appeal.

[8] First, the appellants argue that the motion judge erred in admitting and relying on Rosehaven’s rule 53.03 litigation expert report (“Rosehaven’s expert report”) concerning the value of the Property. Rosehaven’s expert report assessed the Property’s value at $1,510,000.00 as of April 13, 2017 and at $1,050,000.00 as of June 4, 2019 (the date of the agreement of purchase and sale under which the Property was resold). In his reasons, the motion judge observed that the appellants did not provide a litigation expert report. Rather, Mr. Aluko attached as an exhibit to his affidavit filed on the summary judgment motion a draft report obtained by one of the appellants’ prospective lenders (the “Draft Report”), which was clearly marked “Draft Copy – Not To Be Relied Upon”.

[9] Beginning with the admissibility issue, the appellants argue that rule 53.03 governs the exchange of expert reports prepared for trial. Relying on Karami v. Kovari, 2019 ONSC 637, at para. 29, they say the motion judge erred in admitting Rosehaven’s expert report on a summary judgment motion. In addition, the appellants point out that the author of Rosehaven’s expert report failed to sign a Form 53 Acknowledgment of Expert’s Duty and failed to enumerate the instructions received from Rosehaven concerning preparation of the report. The appellants say these are mandatory requirements prescribed by rule 53.03(2.1) to support the admissibility of a litigation expert’s report.

[10] We are not persuaded that the motion judge erred in admitting Rosehaven’s expert report as evidence on the summary judgment motion. Rosehaven’s expert report was appended as an exhibit to an affidavit sworn by one of its co-authors. The deponent stated: “I confirm that I adopt and agree with the contents of the Reports [2] as drafted.”

[11] The fact that rule 53.03 sets out rules for the exchange of expert reports for the purposes of a trial does not undermine the ability of a party to introduce expert evidence on a motion, provided that the rules relating to the admissibility of evidence, in general, and expert evidence, in particular, are respected. This case is distinguishable from Karami, because, in that case, the expert’s report was not verified by an affidavit from the expert. Moreover, the motion judge in Karami was not satisfied that the expert had been properly qualified: Karami, at paras. 27 and 29.

[12] We acknowledge that Rosehaven’s expert report may not have been in perfect compliance with all the requirements specified in rule 53.03(2) to support its admissibility. However, we are not persuaded that any failure to comply was material.

[13] Concerning the Form 53 issue, we note that Rosehaven’s expert swore that, on October 8, 2021, she executed the Acknowledgment of Expert Duty Form attached as an exhibit to her affidavit sworn October 12, 2021. However, the Form 53 appended to her affidavit is not signed. Although there is no explanation for this discrepancy on the record, there was at least an available inference that Rosehaven’s expert was familiar with Form 53 and intended to sign a Form 53 in relation to this matter if in fact she did not do so. As we will explain, the appellants had the opportunity to clarify the discrepancy or object to the admissibility of Rosehaven’s expert report if they were concerned about it. They did not do so.

[14] Concerning the instructions issue, Rosehaven’s expert report does not include a separate section entitled, “Instructions”. Nonetheless a review of the report and accompanying covering letter reveals at least some of the instructions that were given. For example, the first and second sentences of the covering letter state:

In accordance with instructions received, please be advised that an exterior viewing of the [Property] was completed on September 22, 2021 and investigations carried out into the area market for the purpose of providing two retrospective Opinions of Market Value, namely as of April 13, 2017, being the date of the original Agreement of Purchase and Sale for the [Property] and June 4, 2019, being the date of resale to a new purchaser. The intended use of this Appraisal Report is to assist the Ontario Superior Courts of Justice in asset valuation/litigation related matters.

[15] The appellants exercised their right to cross-examine Rosehaven’s expert and could have raised any issues concerning non-compliance with specific aspects of rule 53.03(2.1) on such cross-examination. The appellants did not file a transcript of the cross-examination on the summary judgment motion [3]. Most importantly, the appellants did not object to the admissibility of Rosehaven’s expert report on the summary judgment motion. In his reasons, the motion judge stated that the appellants “indicated no objection to the report or the contents contained therein”. In all the circumstances, we are not satisfied the motion judge made any error in admitting Rosehaven’s expert report.

[16] As for the motion judge’s reliance on Rosehaven’s expert report, on appeal the appellants point to various alleged deficiencies in the report, which they contend should have precluded reliance on it or diminished the weight afforded to it.

[17] For example, as we have said, the appellants rely on the fact that Rosehaven’s expert report does not enumerate the instructions received from Rosehaven. Further, they say the valuation dates chosen by Rosehaven’s expert were inappropriate. According to the appellants, the April 13, 2017 valuation date used by Rosehaven’s expert was inappropriate because the house had not yet been built. The June 4, 2019, date was inappropriate because it was the date Rosehaven entered into the agreement of purchase and sale to resell the Property, rather than the date on which the resale closed. Further, Rosehaven’s expert(s) viewed the Property on September 22, 2021, and simply assumed it was in the same state then as it had been on the two valuation dates. In addition, Rosehaven’s expert report compared only “[s]ales of competing detached residential properties within the more immediate area of the [Property], within the same development and by the same builder” and did not examine other potentially comparable sales.

[18] We do not accept these submissions. The appellants did not object to Rosehaven’s expert report or its contents before the motion judge. Nor did they file a transcript of their cross-examination of one of the co-authors. They could have raised the alleged deficiencies on cross-examination and the motion judge would then have had the opportunity to evaluate the deponent’s response. Equally important, the appellants did not file admissible competing expert evidence which could have challenged or undermined the methodology and conclusions in Rosehaven’s expert report.

[19] As the motion judge said in his reasons, he was left in a “quandary” because of the absence of admissible evidence from the appellants. He was required to do the best he could to assess damages and mitigation efforts based on the evidence led. The appellants were required “to put their best foot forward” on the motion. In the absence of admissible evidence challenging or undermining Rosehaven’s expert report, we are not persuaded the motion judge made any error in his treatment of Rosehaven’s expert report.

[20] The appellants’ second argument on appeal is that the motion judge erred in law and made palpable and overriding errors regarding Rosehaven’s mitigation efforts and the quantification of damages. The appellants allege many shortcomings in Rosehaven’s mitigation efforts, which they say should have led the motion judge to reduce the damages he awarded.

[21] For example, the appellants say Rosehaven failed to provide any adequate explanation for its delay in reselling the Property or for its failure to list the Property on the Multiple Listing Service (“M.L.S.”), as opposed to marketing it in-house. The appellants also say the motion judge failed to consider Rosehaven’s own marketing material, which the appellants filed on the motion, and which they say showed that, earlier in 2019, comparable properties in the same development were being marketed for more than the Property was resold. The appellants also assert that the motion judge erred by failing to consider the Draft Report. Although it may have had certain evidentiary flaws, it should have at least caused the motion judge to question Rosehaven’s evidence and actions. In any event, the valuation dates relied on in Rosehaven’s expert report were flawed.

[22] We do not accept these submissions. As we have said, the motion judge found himself in a quandary. He recognized there had been delay in reselling the Property and that it had not been marketed using M.L.S. services: at para. 82. Significantly, however, he found that there was no evidence before him to show that the Property “would have received more and better offers to purchase if [Rosehaven had] conducted the sale in a certain way.” We see nothing unreasonable about the valuation dates relied on in Rosehaven’s expert report. They reflect the dates on which Rosehaven became legally bound to sell the Property, first to the appellants, and, later, to the subsequent purchasers. As for the Draft Report proffered by the appellants, it clearly stipulated it was not to be relied upon. Contrary to the appellants’ submissions, it was not entitled to any weight. The motion judge concluded:

Given this lack of evidence on the part of the [appellants] and the evidence provided by [Rosehaven], the Court can only conclude that the price obtained by [Rosehaven] on an arms length sale was reasonable.

[23] We see no basis on which to interfere with this conclusion.

[24] The appeal is dismissed with costs to Rosehaven on a partial indemnity scale fixed in the amount of $10,000.00 inclusive of disbursements and HST. Rosehaven’s request for costs of a motion that did not proceed is denied.

“Janet Simmons J.A.”

“K. van Rensburg J.A.”

“L. Favreau J.A.”

Notes

[1] In his reasons, the motion judge noted that the respondent’s counsel at trial agreed that any judgment granted should be in favour of Rosehaven only, as it was the sole vendor named in the agreement of purchase and sale. Counsel asserted that Bram-Rose Homes Inc. had an interest in the Property, but no evidence was led on the motion in that respect. The formal judgment grants summary judgment to the moving parties on the motion but the judgment for payment is in favour of Rosehaven only.

[2] The “Reports” consisted of an Appraisal Report and Valuation Analysis and a “Response Letter”.

[3] Rosehaven ordered the transcript of its expert’s cross-examination, apparently for the purposes of this appeal, and included it in the respondent’s compendium filed on appeal. As the transcript was not part of the record before the motion judge, absent a fresh evidence motion, it should not have been included in the appeal material.