Court of Appeal for Ontario

Date: 2019-09-09

Docket: C66433 & C66434

Judges: Strathy C.J.O., MacPherson and Tulloch JJ.A.

C66433

Between

Xiao Qing Lin, Applicant (Appellant)

and

Brookfield Homes (Ontario) Limited, Respondent (Respondent)

C66434

And Between

Brookfield Residential (Ontario) Limited, Applicant (Respondent)

and

Xiao Qing Lin, Respondent (Appellant)

Counsel

Rebecca Huang and Zina Rita, for the appellant

Neil G. Wilson and Yolanda Song, for the respondents

Heard: September 6, 2019

On appeal from the judgment of Justice Harriet Sachs of the Superior Court of Justice, dated December 21, 2018, with reasons reported at 2018 ONSC 7682.

Reasons for Decision

[1] On November 2, 2016, the appellant Xiao Qing Lin signed an Agreement of Purchase and Sale ("APS") to buy a pre-construction condominium detached house unit from the respondent Brookfield Homes (Ontario) Limited. The purchase price was $1,657,107.86 and Ms. Lin made a deposit of $133,031.09. The closing date was December 13, 2017, later amended on consent to December 20, 2017 and then, again on consent, to December 21, 2017.

[2] On December 21, 2017, Ms. Lin's real estate solicitor wrote to Brookfield's solicitor:

My client has advised that construction of a number of common elements has not begun …, including the parkette and the entrance/exit gates, contrary to the Disclosure Statement provided to my client, which explicitly states that a parkette is to be constructed, and that the project is to be a gated community….

In the event that the Vendor no longer intends to construct the parkette or entrance/exit gates, my client reserves the right … to rescind the agreement as a result of the material change to the disclosure documentation, of which the Vendor has failed to give my client notice. [Emphasis in original.]

[3] On December 22, 2017, Brookfield's solicitor advised that there was no material change in the disclosure statement and that, as a result of Ms. Lin's failure to complete the transaction on the closing date, Brookfield was terminating the APS, forfeiting Ms. Lin's deposit, and reserving its right to exercise other remedies.

[4] On January 2, 2018, Ms. Lin's solicitor again "reserved" her client's right to rescind the agreement. On January 3, 2018, Ms. Lin herself explicitly rescinded the agreement and demanded the return of her deposit.

[5] On January 18, 2018, Ms. Lin commenced an application, seeking return of her deposit. On January 30, 2018, Brookfield commenced an application, seeking, inter alia, a declaration that Ms. Lin breached the APS by failing to close, that Ms. Lin is not entitled to a return of her deposit, and that Brookfield is entitled to claim additional damages for that breach (Brookfield sold the property on June 22, 2018 for $1,300,000, a loss of $357,107.86).

[6] The two applications were heard by Sachs J. who decided in favour of Brookfield. The application judge concluded:

[32] For these reasons, I am dismissing the Purchaser's application for a return of her deposit. I am allowing the Vendor's application to the extent that based on an interpretation of the Agreement of Purchase and Sale between the parties, the Purchaser breached that Agreement, entitling the Vendor to terminate the Agreement, keep the Purchaser's deposit and sue for damages. I am ordering a trial of an issue with respect to the issue of the quantum of damages over and above the forfeited deposit suffered by the Vendor as a result of the Purchaser's breach.

[7] Ms. Lin appeals on four grounds.

First Ground of Appeal: Interpretation of Rescission Rights Under the Condominium Act

[8] First, Ms. Lin contends that the application judge erred in her interpretation of the purchaser's right of rescission under the Condominium Act, S.O. 1998, c.19.

[9] We do not accept this submission. We agree with the application judge that the issue raised by Ms. Lin to justify her refusal to complete the purchase on the contractual closing date – the non-construction, at that point, of the parkette and entry and exit gates – was not a material change in circumstances within the meaning of s. 74 of the Condominium Act.

Second Ground of Appeal: Classification of Gates as Amenities

[10] Second, Ms. Lin asserts that the application judge erred by finding that the entry and exit gates were "amenities", rather than essential features of the community.

[11] We are not persuaded by this submission. Again, Ms. Lin raises this issue in an attempt to bring herself within the "material change" language of the Condominium Act. The timing of the construction of the gates was not a material change, as reflected by s. 2 of Schedule G of the APS:

In any event, the Purchaser acknowledges that failure to complete other units within the Condominium in which the Unit is located, or the common elements on or before the Occupancy Date shall not be deemed to be a failure to complete the unit. [Emphasis added.]

[12] The gates were common elements. In addition, we note that the gates, and the parkette, were constructed and are part of the development.

Third Ground of Appeal: Palpable and Overriding Error

[13] Third, Ms. Lin asserts that the application judge committed a palpable and overriding error in finding that Brookfield intended to build a gated community "as of the closing date" – i.e. December 20, and then December 21, 2017.

[14] We disagree. In response to a comment by Ms. Lin's solicitor in her letter to Brookfield's solicitor on December 21, 2017 – "In the event that the Vendor no longer intends to construct the parkette or entrance/exit gates …" – Brookfield's solicitor replied: "The parkette and entrance/exit gates do not need to be installed in order to complete this transaction." Given the relevant language of the APS, this was a correct response: time was not of the essence with respect to their construction.

Fourth Ground of Appeal: Reliance on Section 21 of the APS

[15] Fourth, Ms. Lin contends that the application judge erred by relying on section 21 (Default) of the APS to allow Brookfield to retain Ms. Lin's deposit after Ms. Lin refused to close the transaction. Ms. Lin says that Brookfield did not plead section 21 of the APS.

[16] We do not accept this submission. Brookfield pleaded the APS, of which section 21 is an obvious provision in a residential property case.

Disposition

[17] The appeal is dismissed. Brookfield is entitled to its costs of the appeal fixed at $15,000, inclusive of HST and disbursements.

"G.R. Strathy C.J.O."

"J.C. MacPherson J.A."

"M. Tulloch J.A."