Introduction

[1] The Appellants Sadrudin B. Hirji and Roshanali B. Hirji (the “sellers”) appeal the Order of Justice A. Pollak dated April 18, 2017, in which she ordered Homelife/Miracle Realty Ltd. (“Homelife”) to release a $50,000.00 deposit to the Respondent, 2071111 Ontario Inc. (the “purchaser”).

[2] The sellers and the purchaser entered into an agreement of purchase and sale dated July 11, 2016 in which the sellers agreed to sell commercial property to the purchaser. The sale price was $1.75 million and the purchaser placed a $50,000.00 deposit that was held by the parties’ mutual real estate broker, Homelife.

[3] The closing date was originally September 15, 2016 and pursuant to an amendment to the agreement of purchase and sale, was changed to September 29, 2016 on agreement of the sellers and purchaser.

[4] The agreement of purchase and sale contained a schedule that made the offer conditional on the purchaser’s lawyer reviewing the agreement within seven days and required the sellers to provide certain documents, one of those being a survey of the property.

[5] There was an amendment to the agreement of purchase and sale in which the paragraph that provided a condition for the lawyer’s review of documents was deleted from the agreement. The date that this occurred is uncertain because it is not dated; however, there is nothing that turns on that date.

[6] The list of documents the sellers were to provide, which included the survey, was not deleted by the amendment.

[7] The purchaser, through its solicitor, sent a requisition letter to the sellers’ solicitor on August 24, 2016 seeking, among other things a survey of the property prior to closing. The sellers’ lawyer never responded to the requisition letter. Between August 24, 2016 and September 29, 2016, correspondence was exchanged between the sellers’ and the purchaser’s lawyers regarding various issues.

[8] On September 23, 2016, the purchaser’s lawyer advised the sellers that the purchaser was seeking an extension of the closing date in order to obtain further study because “the Site Plan for the property indicates more limited use of the property than would appear visually.” The purchaser’s lawyer wanted to review the survey in order to ascertain whether the property was suitable for their purposes.

[9] On September 24, the realtor who was acting for both the sellers and the purchaser sent an email to the sellers that the purchaser was not going to close on September 29, 2016.

[10] On September 26, 2016, the sellers’ lawyer wrote to the purchaser’s lawyer agreeing to extend the closing date if the purchaser would provide an additional deposit and compensation to the sellers for lost rent.

[11] On September 29, 2016, the purchaser’s lawyer wrote to the lawyer for the sellers in which he referenced telephone discussions that had occurred between counsel. The purchaser’s lawyer agreed to provide some compensation to the sellers, but not the amount sought by the sellers, in exchange for an extension to October 10, 2016 for the purposes of confirming if the site was suitable at which time a firm closing date would be scheduled.

[12] At approximately 5:14 pm on September 29, 2016 counsel for the sellers sent a letter to counsel for the purchaser setting out the terms they required to extend the closing to October 10, 2016. The letter ended with a paragraph that stated:

We reiterate, our client is ready, willing and able to close this transaction and that your client is in breach of the Agreement of Purchase and Sale.

[13] The agreement of purchase and sale stipulated that closing was to occur on or before 6:00 pm on the closing date.

[14] On September 30, the purchaser’s lawyer wrote to the sellers’ lawyer claiming that the sellers were not ready, willing and able to close on September 29 because they had not provided any of the usual closing documents. The purchaser’s lawyer set out a list of those documents.

[15] The purchaser’s lawyer ended that correspondence stating that they considered the transaction to be cancelled and rescinded and requested the return of their deposit.

[16] On November 4, 2016, the purchaser advised the sellers that it was ready, willing and able to close the transaction and alleged that the sellers were in breach of the agreement of purchase and sale. The sellers responded on November 9, 2016 informing the purchaser that the agreement was null and void and claiming it was the purchaser who had breached the agreement by failing to close the transaction. At that point, the sellers had sold the property to another party for $1.8 million.

Jurisdiction

[17] Because this Application was regarding a final order for a single payment of $50,000.00, exclusive of costs, the appeal lies to this court, the Divisional Court (Courts of Justice Act, RSO 1990, c. C.43, s. 19).

[18] Also, a judge’s findings of mixed fact and law should not be overturned absent a palpable and overriding error. Where the judge applies an incorrect principle of law, or errs with regard to a purely legal question, the decision is reviewed on a correctness standard (see, Housen v. Nikolaisen, 2002 SCC 33 at para. 36 and Hryniak v. Mauldin, 2014 SCC 7 at paras. 81-84).

Decision of the application judge

[19] In the proceeding before the application judge, the sellers argued that the email from the parties’ joint realtor on September 24 that stated the purchaser would not be closing the transaction on September 29 constituted proof of an anticipatory breach by the purchaser and acceptance by the vendor of that repudiation. The application judge rejected this argument.

[20] The application judge then found that there was no evidence that the sellers had accepted “the alleged repudiation” of the agreement by the purchaser. She also rejected the sellers’ argument that they had no obligation to tender because of the purchaser’s anticipatory breach.

[21] In this appeal, counsel for the sellers argued that the application judge made palpable and overriding errors when she found that there was no evidence that the sellers had accepted repudiation of the agreement and by failing to analyse the evidence that was before her.

[22] He submitted that the correspondence between the lawyers discussing an extension of the closing date and the email from the realtor were clearly evidence that the transaction would not close on September 29 and as such this was evidence of both repudiation and acceptance of repudiation. Therefore when the application judge said there was no evidence she was clearly wrong.

[23] Counsel for the sellers also argued that the application judge was incorrect when she found that the sellers should have tendered and that this was an error in law. It was the sellers’ position that tender was not required when there was evidence of repudiation and acceptance of the repudiation.

[24] Counsel for the purchaser argued that the application judge correctly found that the ongoing negotiations to extend the closing date demonstrated there had not been repudiation of the agreement by the purchaser. In the alternative, even if there had been repudiation, the ongoing negotiations demonstrated there had not been acceptance of the repudiation by the sellers.

[25] Counsel for the purchaser noted that at 5:14 pm on September 29, forty-six minutes prior to the deadline for closing, the purchaser could not have not breached the agreement because the time for closing had not yet passed. He argued that it was not enough to state that the purchaser had breached the agreement and that the sellers were ready, willing and able to close when the evidence did not demonstrate that the sellers were in fact ready, willing and able to close or that there had been either repudiation or acceptance of repudiation in the face of what had transpired up to that time.

[26] While we agree with counsel for the Appellants/sellers that the reasons of the application judge were lacking, in particular as they pertain to a review of the evidence and an analysis flowing from that evidence, we conclude that there is no basis upon which to set her decision aside.

[27] The application judge rejected the argument that the email from the realtor could constitute both repudiation and acceptance of same.

[28] The application judge found that absent there having been repudiation by the purchaser that the sellers accepted, the sellers should have tendered upon the purchaser on September 29, 2016. Having failed to tender, in essence to prove that the sellers were ready, willing and able to close, she determined that the purchaser was entitled to the return of its deposit because the transaction was at an end.

[29] In our view, the application judge was entitled to find that the email from the parties’ joint realtor did not constitute repudiation of the agreement particularly in the face of ongoing negotiations between the parties’ lawyers to extend the closing date and in the absence of a demand by the sellers that the transaction was required to close on September 29 as set out in the terms of the agreement. The parties were represented by lawyers, therefore, it would be treacherous ground for the court to accept an email from a realtor as evidence of repudiation in the absence of other evidence.

[30] On the record before us, notwithstanding the application judge failed to set out her analysis of the evidence, we rely on the evidence that is not in dispute, the ongoing negotiations to extend the closing date and the failure by the sellers to respond to the purchaser’s requisition letter or to provide any of the usual draft closing documents for the purchaser’s review before closing. This evidence leads to the conclusion that there never was repudiation or even if there was, there was no acceptance.

[31] Therefore the sellers were required to tender if they wanted to enforce the agreement.

[32] As a result, we see no error in the order returning the deposit to the purchaser.

Conclusion

[33] For these reasons, the appeal is dismissed. The Respondent is entitled to its costs of this appeal, which we fix in the amount of $5,000.00 inclusive of disbursements and HST.

[34] I have endorsed the Appeal Book and Compendium of the Respondents (Appellants) as follows: “For oral reasons given, the Appeal is dismissed with costs to the Respondent of $5,000.00.”

___________________________ WAREKENTIN R.S. J.

I agree

SWINTON J.

I agree

HORKINS J.

Date of Reasons for Judgment: January 10, 2018

Date of Release: January 11, 2018

CITATION: 2071111 Ontario Inc. v. Hirji, 2018 ONSC 291

DIVISIONAL COURT FILE NO.: 252/17 DATE: 2018 01 10

ONTARIO

SUPERIOR COURT OF JUSTICE

DIVISIONAL COURT

WARKENTIN R.S.J., SWINTON and C. HORKINS JJ.

BETWEEN:

2071111 ONTARIO INC.

Applicant (Respondent in Appeal)

– and –

SADRUDIN B. HIRJI, ROSHANALI B. HIRJI and HOMELIFE/MIRACLE REALTY LTD.

Respondents (Appellants)

ORAL REASONS FOR JUDGMENT

WARKENTIN R.S.J.

Date of Reasons for Judgment: January 10, 2018

Date of Release: January 11, 2018

2071111 Ontario Inc. v. Hirji, 2018 ONSC 291

Case Summary

Introduction

Jurisdiction

Decision of the application judge

Conclusion

Judges

Counsel

Parties

Areas of Law

Fact Patterns

Financial Outcomes

Issues

Legal Tests 1

Legislation 1