Court File and Parties

COURT OF APPEAL FOR ONTARIO DATE: 20210526 DOCKET: C68570

Juriansz, van Rensburg and Sossin JJ.A.

BETWEEN

Gus Spiridakis and Carmela Spiridakis Plaintiffs (Respondents)

and

Guifang Li, Wanchun Jia, and Zolo Realty, Brokerage Defendants (Appellants)

Counsel: Vivian Leung and Cheryl Lau, for the appellants Alan Price and Mel Aronoff, for the respondents

Heard: May 7, 2021 by video conference

On appeal from the order of Justice R. Cary Boswell of the Superior Court of Justice, dated April 15, 2020, with reasons reported at 2020 ONSC 2173.

Reasons for Decision

[1] At the hearing of the appeal, we dismissed the appeal for reasons to follow. These are our reasons.

[2] The appeal arises out of a failed real estate transaction. On June 14, 2017 the parties entered into an agreement of purchase and sale for a house in Stouffville. The purchase price was $1,162,500 and the closing date was September 14, 2017.

[3] There were several missed closing dates and extensions. After having agreed to an extension to October 26, 2017, the appellants were unable to close on that date, because the purchasers of their own home were unable to close. The closing of the Stouffville property purchase was extended to October 30, and on that date, the appellants advised they could not close. The respondents’ counsel advised that this was an anticipatory breach. The appellants’ counsel requested a further extension, which the respondents accepted, on proposed modest terms. The appellants did not respond and did not complete the purchase.

[4] The respondents relisted the Stouffville property on November 2, 2017. On March 9, 2018, they entered into an agreement to sell the property for $900,000 with a closing date of June 28, 2018. They had agreed to purchase another property, and after the appellants’ default, used bridge financing to complete that purchase.

[5] The respondents sued the appellants for damages for breach of the agreement of purchase and sale. The appellants defended the action and counterclaimed for the return of their deposit and a declaration that the purchase and sale agreement had expired as of October 30, 2017. They also commenced a third party action against their real estate agent and lawyer and the parties who had agreed and then failed to complete the purchase of their home.

[6] The respondents moved for summary judgment on their claim in the main action and to dismiss the appellants’ counterclaim. Judgment was granted for $298,847.67 ($30,000 of which was ordered to be paid by the release of the deposit to the respondents), together with pre-judgment and post-judgment interest on the full judgment amount, and costs of $22,340.18. The motion judge stayed enforcement of the judgment for a period of six months without prejudice to the appellants bringing a motion to extend the stay prior to its expiry.

[7] On their appeal, the appellants raise substantially the same arguments they made in opposition to the summary judgment motion. They assert that the motion judge erred: (a) in concluding that there was no genuine issue requiring a trial with respect to their defences based on non est factum and the respondents’ failure to tender; (b) in granting “partial summary judgment” in the face of an outstanding third party claim; and (c) in his assessment of damages, in particular by concluding that the respondents’ bridge financing costs were foreseeable; and in concluding that the respondents took reasonable steps to mitigate their damages. The appellants also seek to appeal the costs award.

[8] The exercise of powers under Rule 20 attracts deference. Whether there is a genuine issue for trial is a question of mixed fact and law; in the absence of an extricable error in principle or palpable and overriding error, this determination should not be disturbed on appeal: Hryniak v. Mauldin, 2014 SCC 7, [2014] 1 S.C.R. 87, at para. 81. No such error has been demonstrated in this case.

[9] With respect to the non est factum argument, contrary to the appellants’ argument, the motion judge explained his finding that there was no genuine issue for trial concerning what the appellants understood about the purchase and sale transaction. He accepted that each of the appellants had limited education and facility with the English language, and was relatively unsophisticated, but he stated, “there is no evidence before me that the defendants were mistaken, as a result of a misrepresentation or otherwise, as to the nature or character of the agreement to purchase the Stouffville property”. He noted that the only assertion of mistake related to the consequences of breach: according to Mr. Jia’s affidavit, he believed that if he and his wife failed to close the purchase, they would only risk losing their deposit and financing fees.

[10] The motion judge’s findings and his rejection of the defence of non est factum are entirely supported by the record. As he observed, the appellants who had purchased two previous properties, understood they were purchasing the Stouffville property, that there was a financing condition, and that the agreement of purchase and sale would remain binding after they waived that condition.

[11] With respect to the alleged failure to tender, the motion judge noted that, while there was a factual dispute about whether the respondents tendered, this was a case of anticipatory breach. He stated that “the law is quite clear that an innocent party need not go through the meaningless exercise of tendering in circumstances of anticipatory breach”. The parties had agreed that time was of the essence, meaning that “they agreed that the time limit manifested by the fixed closing date was an essential term, such that breach of it would permit the innocent party to terminate the agreement”. When the appellants’ lawyer communicated that they were unable to close on the scheduled date, the respondents’ lawyer correctly identified that communication as an anticipatory breach and the respondents were released thereby from any obligation to tender.

[12] Contrary to the appellants’ argument, the motion judge’s finding that the appellants manifested an intention not to complete the transaction on October 30 was fully supported by the evidence: their lawyer sent a letter advising that they would be unable to close that day, prompting a response by the respondents’ lawyer that this was an anticipatory breach. If, as the appellants contend, they did not know about some of the lawyers’ correspondence at the time, that is a matter for their third party claim, and does not assist in their defence.

[13] As for the argument that the motion judge erred in granting summary judgment in the main action while the third party claim was outstanding, there was no error.

[14] This court has cautioned that a motion for partial summary judgment should be considered to be a rare procedure that is reserved for an issue or issues that may be bifurcated from those in the main action and that may be dealt with expeditiously and readily in a cost effective manner: Butera v. Chown, Cairns LLP, 2017 ONCA 783, 137 O.R. (3d) 561, at para. 34. Since the respondents moved for judgment on their entire claim against the appellants, and dismissal of the counterclaim, their motion was not for partial summary judgment in the sense described in Butera. Although this was not a motion for partial summary judgment, it was nevertheless appropriate for the motion judge to consider whether the issues in the main action and the third party action were intertwined, such that there was a potential for inconsistent findings if judgment were granted in the main action in favour of the respondents, while the third party action proceeded.

[15] The motion judge undertook the appropriate analysis. He concluded that the respondents’ claims against the third parties were distinct and severable from the issues in the main action. Indeed, Mr. Jia’s affidavit in response to the summary judgment motion makes it clear that the appellants’ real concerns are with various alleged acts of misconduct of their real estate agent and lawyer and the people who failed to complete the purchase of their home, that, among other things, led them to believe they would be able to close the purchase of the Stouffville property and prevented them from doing so. Contrary to the appellants’ argument, the defences are not inextricably intertwined with the claims made in the third party action. There is no risk of an inconsistent finding on the issues in the third party claim. The third parties, who did not defend the main action, will be bound by the findings in the main action: r. 29.05(5).

[16] As for the question of damages, there is no error in the motion judge’s conclusion that there was no genuine issue for trial concerning the amount of the respondents’ damages, or the issue of mitigation.

[17] The amount included the minimum monthly payments made by the respondents on two lines of credit they had accessed for bridge financing to complete the purchase of their home at the end of October 2017 until they managed to sell the Stouffville property in June 2018. There is no error in the motion judge’s conclusion that such costs were objectively foreseeable in the particular circumstances, where both the appellants and the respondents were purchasing a new home at the same time that they were selling their respective properties.

[18] As for the question of mitigation, it was not sufficient that Mr. Jia’s affidavit raised a concern that the respondents had not provided “evidence regarding their efforts to sell the property and to mitigate their loss, including listing agreements, marketing materials, offers received, etc.” The only evidence the appellants offered on mitigation was a letter of opinion from Mr. Au, a real estate agent, which spoke to the market value of the Stouffville property at the end of October 2017, in March 2018 and in June 2018 when it sold. The motion judge considered the limitations of this evidence, which did not address the appellants’ main concern – that it took too long to sell the property in a declining market. He reasonably accepted that the price the respondents obtained for the Stouffville property (which was 95% of the fair market value proposed by Mr. Au), considering their ongoing carrying costs for the home and the cost of bridge financing, was reasonable. The motion judge properly considered that the appellants had chosen not to cross-examine the respondents on why the property was listed for so long, when he concluded that mitigation was not a genuine issue for trial.

[19] Finally, no error in principle is alleged or apparent in respect of the motion judge’s determination of costs.

[20] The motion judge’s reasons are a model of clarity. He carefully considered all of the appellants’ arguments opposing summary judgment, made findings of fact based on the record and explained with reference to the applicable legal principles why there was no genuine issue for trial, and why summary judgment should issue in the main action. He reasonably granted a stay of enforcement of the judgment, the terms of which are not questioned in this appeal.

[21] For these reasons the appeal was dismissed. Costs to the respondents are fixed at $10,000, inclusive of HST and disbursements.

“R.G. Juriansz J.A.”

“K. van Rensburg J.A.”

“L. Sossin J.A.”