Court File and Parties
Court File No.: 183/18 Date: 2018-06-28 Ontario Superior Court of Justice
Between: Kevin Patrick O’Hare and Karen O’Hare, Plaintiffs – and – Christopher William Wyton and Sutton Group-Heritage Realty Inc., Defendants
Counsel: Joseph J. Neal, for the Plaintiffs Ryan K. Alves, for the Defendant, Christopher William Wyton No one appearing for Sutton Group-Heritage Realty Inc.
Heard: June 22, 2018
Ruling on Summary Judgment Motion
Boswell J.
I. Overview
[1] Mr. Wyton agreed to purchase the O’Hares’ residence in Whitby, Ontario for $760,000. The transaction was to close on July 21, 2017. Mr. Wyton failed to complete the transaction. The O’Hares resold the property on August 30, 2017 for $712,000, with a closing date of October 31, 2017. They sued Mr. Wyton seeking damages representing the difference in the sale price as well as some other incidental expenses they incurred. Their alleged damages total close to $60,000. They move for summary judgment on their claim.
[2] The following reasons explain why I agree that there is no live issue requiring a trial in this case and that summary judgment is appropriate in all the circumstances.
II. The Legal Framework
[3] Once pleadings are closed, a plaintiff may move, on affidavit evidence, for summary judgment under Rule 20 of the Rules of Civil Procedure.
[4] The court is directed by Rule 20 to grant summary judgment where it is satisfied that there is no genuine issue requiring a trial with respect to a claim or defence.
[5] Rule 20.04(2.1) outlines the powers that may be exercised by a judge on a summary judgment motion:
In determining under clause (2)(a) whether there is a genuine issue requiring a trial, the court shall consider the evidence submitted by the parties and, if the determination is being made by a judge, the judge may exercise any of the following powers for the purpose, unless it is in the interest of justice for such powers to be exercised only at a trial:
- Weighing the evidence.
- Evaluating the credibility of a deponent.
- Drawing any reasonable inference from the evidence.
[6] The summary judgment regime was recently considered by the Supreme Court in Hryniak v. Mauldin, 2014 SCC 7. Hryniak expressly recognizes that the jurisdiction to grant summary judgment can significantly aid the court in its aspiration to provide timely and cost-effective justice.
[7] Hyrniak instructs that the court’s analysis on a summary judgment motion must take place in two stages:
(a) First, the motions judge must determine if there is a genuine issue requiring a trial based only on the evidence filed on the motion, without resort to the enhanced fact-finding powers described in Rule 20.04(2.1). No genuine issue requiring a trial will exist if the evidence permits the motions judge to fairly and justly adjudicate the dispute in a timely, affordable and proportionate manner. If no genuine issue requiring a trial exists, judgment should be rendered accordingly; and,
(b) If the motions judge concludes at the first stage that a genuine issue for trial exists, then stage two is triggered. At stage two, the motions judge is directed to consider whether the need for a trial may be avoided by resort to the enhanced fact-finding powers set out in Rule 20.04(2.1). The motions judge may utilize those powers, in his or her discretion, unless doing so would be contrary to the interests of justice.
[8] The summary judgment rule – in one iteration or another – has been around for decades. A number of principles have developed over the years in terms of the approach that litigants and judges should take with respect to these types of motions. For instance, it is well-settled that the motions judge is to take a “good hard look” at the evidence to determine if a genuine issue for trial exists: see Penretail Management Ltd. v. 2380462 Ontario Inc. (o/a Bolton Health Centre), 2016 ONSC 600.
[9] Moreover, each party is required to put their best foot forward in terms of the evidence they rely upon in support of or in opposition to the motion. See for instance Rahimi v Hatami, 2015 ONSC 4266. It is often said that each party must “lead trump or risk losing”: see Sweda Farms v. Egg Farmers of Ontario, 2014 ONSC 1200. The court is entitled – particularly in light of its enhanced fact finding powers as provided for in R. 20.04(2.1) – to assume that each party has led all of its available evidence and is not holding back evidence pending a longed-for trial.
III. The Factual Background
[10] The facts of this case are straightforward in my view.
[11] The O’Hares were the owners of a residential home at 9 Citation Crescent in Whitby, Ontario (“Citation”). They listed the home for sale in late February 2017 for $725,000. In that time period, in the Greater Toronto Area, it was not uncommon for homes to sell quite quickly, and often for more than the list price. It was, as is widely known, a seller’s market at the time.
[12] Mr. Wyton submitted an offer to purchase Citation on February 28, 2017 for the sum of $760,000 - $35,000 above the list price. The O’Hares signed the offer back with some changes, which were accepted by Mr. Wyton. The deal became firm as of March 1, 2017 (the “APS”). A deposit of $8,000 was paid to the O’Hares’ real estate agents and continues to be held in trust by them. The closing date was set for July 21, 2017.
[13] The O’Hares proceeded to purchase another home with a closing date of July 28, 2017. They arranged for bridge financing to cover the period between the sale of Citation to Mr. Wyton and the purchase of their new home a week later.
[14] Mr. Wyton apparently required an appraisal of Citation for financing purposes. Though the APS was not conditional on financing, Mr. Wyton, for reasons best known to him, had not arranged for the appraisal to be conducted until shortly before the scheduled closing date. Though an appraiser was ultimately arranged, he could not attend the property until July 24, 2017.
[15] On July 21, 2017, Mr. Wyton’s lawyer sought an extension of the closing date to July 28, 2017 in order to complete his financing. The O’Hares’ lawyer took the position that Mr. Wyton was in anticipatory breach of the agreement. He confirmed that the O’Hares were ready, able and willing to close the transaction on July 21, 2017. At the same time, the O’Hares’ lawyer also indicated that they would agree to a one week extension of the closing date on certain terms. Those terms were not agreed to by Mr. Wyton.
[16] Mr. Wyton failed to complete the transaction on July 21, 2017. I find that he was in breach of the APS as at that date.
[17] Subsequent to the breach, the parties continued to have discussions in an effort to revive the APS. Mr. Wyton’s appraiser went through Citation on July 24, 2017 and rendered an opinion that it had a market value of $710,000. Mr. Wyton took the position that he was still prepared to purchase Citation, but only with a significant reduction in the purchase price. A new deal was never consummated.
[18] The O’Hares relisted the property on August 4, 2017 for $725,000 – the same amount of the original listing. They received an offer for $715,000 on August 30, 2017 which, after some negotiation, was finalized at $712,000. The new closing date was October 31, 2017.
[19] The O’Hares continued to maintain the carrying costs on Citation until October 31, 2017 when the sale ultimately closed. They also paid for bridge financing until October 31, 2017 with respect to the purchase of their new home.
IV. The Parties’ Positions
[20] The O’Hares take the position that this case is simple. Mr. Wyton repudiated a firm agreement to purchase their home. They used their best efforts to resell the home in a reasonable manner. They suffered losses as a result of the breach that are readily calculable. There is no issue that requires a trial from their point of view. Essentially all of the evidence that will be before a trial judge is before this court now.
[21] Mr. Wyton objects to the summary judgment procedure. He advances both procedural and substantive arguments.
[22] This is a Simplified Rules action. As a result of the operation of Rule 76.04(1) of the Rules of Civil Procedure, no cross-examination is permitted on affidavits filed in support of this motion. Accordingly, Mr. Wyton’s counsel has not had an opportunity to test the evidence submitted by the O’Hares. He argues that it would be unfair to him to have to proceed without an opportunity to test their evidence through cross-examination.
[23] On a substantive level, Mr. Wyton offered a two-pronged argument. First, he said that the agreement did not die on July 21, 2017 because the O’Hares’ real estate agent had extended the closing date to July 28, 2017. Second, he contends that even if he did breach the agreement, the O’Hares have failed to reasonably mitigate their damages.
[24] The parties’ positions leave three principal issues for determination:
(1) Was the closing date extended to July 28, 2017? (2) Did the O’Hares fail to mitigate their damages? (3) What are the appropriate damages?
[25] A common thread runs through each of the three identified live issues. In particular, the ultimate question is whether I am able to fairly and justly determine the issues raised in this proceeding on a summary basis, or whether one or more of these issues requires a trial to resolve.
[26] There was some additional argument made at the hearing of the motion about some of the contents of Mr. Wyton’s affidavit and whether they should be struck out as inadmissible. It is not necessary for me to address those arguments, given my disposition of the motion.
V. Discussion
Issue One: Was the closing date extended?
[27] Two provisions of the APS are of significance with respect to the resolution of this issue:
TIME LIMITS: Time shall in all respects be of the essence hereof provided that the time for doing or completing any matter provided for herein may be extended or abridged by an agreement in writing signed by Seller and Buyer or by their respective lawyers who may be specifically authorized in that regard.
AGREEMENT IN WRITING: …This Agreement, including any Schedule attached hereto, shall constitute the entire Agreement between Buyer and Seller. There is no representation, warranty, collateral agreement or condition, which affects this Agreement other than as expressed herein…
[28] Mr. Wyton argues that the scheduled closing date of July 21, 2017 was extended by the O’Hares’ agent in discussions she had with Mr. Wyton’s agent. Specifically, Mr. Wyton deposed, at para. 14 of his affidavit sworn June 8, 2018 as follows:
I have also been informed by [my real estate agent] and verily believe that prior to arranging the appraisal, [the O’Hares’ real estate agent] informed [my agent] that the Sellers had purchased another property which was not ready for occupancy, and therefore the closing date for the property could be extended to July 28, 2017, if necessary.
[29] Mr. Wyton did not file an affidavit from his real estate agent attesting to the purported conversation with the O’Hares’ agent. The O’Hares’ agent, Ms. Brenda Bryant, swore an affidavit in which she deposed that no such discussion took place.
[30] I am entitled, under Rule 20.02(1) of the Rules of Civil Procedure to draw an adverse inference from the failure of a party to provide the affidavit of a person having personal knowledge of contested facts. The O’Hares’ lawyer urged me to do so. Mr. Wyton’s failure to provide an affidavit from his agent as to the particulars of his purported discussions with Ms. Bryant is unhelpful. But it is not necessary for me to draw an adverse inference in the circumstances of this case.
[31] I have, on the one hand, hearsay evidence that Ms. Bryant told Mr. Wyton’s agent that the closing date could be extended a week. On the other hand, I have direct evidence from Ms. Bryant denying that she said any such thing. Even if I completely reject Ms. Bryant’s evidence – and I have no reason to do so – at its highest and best, Mr. Wyton’s evidence suggests there was an indication that the closing date could be extended. There is no evidence that there was ever an agreement made to actually extend it. Indeed, the evidence is to the contrary.
[32] Mr. Wyton’s lawyer submitted that it would be unfair for the court to render judgment without his having had an opportunity to cross-examine Ms. Bryant on this issue. I disagree. In his best case scenario, counsel would conduct a scathing cross-examination that resulted in the court completely rejecting Ms. Bryant’s evidence. But, as I said, that would not take Mr. Wyton very far. The best he could argue is that the discussion between agents was that the agreement could be extended; not that it was extended.
[33] Time was of the essence. The APS provided that a time limit could be extended by a further written agreement. There is no such further written agreement. In view of provisions found at paragraphs 20 and 26 of the APS, it was incumbent upon Mr. Wyton to ensure that any extension of the closing date be reduced to writing. There is a clear documentary record of the communications between the parties’ respective lawyers. The record demonstrates that an arrangement to extend the closing date was discussed, but not agreed upon. Mr. Wyton’s lawyer requested an extension in writing. An extension was offered, on terms which Mr. Wyton was unwilling to accept.
[34] I find that the closing date was not extended. Mr. Wyton breached the APS by failing to close. The O’Hares were entitled to treat the agreement as at an end and to sue for their expectation damages.
Issue Two: Did the O’Hares reasonably mitigate their damages?
[35] Following a repudiation of a contract, innocent parties have a duty to reasonably mitigate their losses. The onus is on Mr. Wyton, however, to establish, on a balance of probabilities, a failure to reasonably mitigate.
[36] Innocent parties need not demonstrate flawless efforts at mitigation. They need only act reasonably, in view of the prevailing circumstances known at the time to exist. See DHMK Properties Inc. v. 2296608 Ontario Inc., 2017 ONSC 2432, reversed on other grounds, 2017 ONCA 961.
[37] In this instance, the O’Hares relisted their property within about a week of the aborted closing. They listed it for $725,000 – the exact same price it had been listed for back in February 2017, even though the market appears to have softened considerably by August, 2017. They sold it at a price in excess of the appraised value of $710,000.
[38] Mr. Wyton’s lawyer suggested the appraised value is not reliable because the appraisal was done at the behest of a financial institution. There are two problems with such an argument. First, there is no evidentiary basis to support it. Second, there are no other appraisals in evidence to challenge it.
[39] Mr. Wyton also argued that he made an offer on July 27, 2017 to purchase the property for $740,000. He contends that since the O’Hares refused to accept his offer, they are entitled to damages only between $740,000 and $760,000 and are not entitled to their out-of-pocket expenses alleged to have been incurred to October 31, 2017 when the sale of their home finally closed. There are a number of problems with this argument as well.
[40] First, it is not clear that Mr. Wyton made an offer for $740,000. I am not persuaded that he did. His lawyer’s correspondence on July 27, 2017 said as follows:
Thank you for your letter of July 26, 2017. Our client respects your client’s position indicated therein, however we are unable to complete the transaction without an abatement of the purchase price. The highest our client is able to offer now is $720,000, or a $20,000 abatement of the purchase price. Kindly advise if your client is agreeable to the above or what terms your client would require to agree to said abatement, if any.
[41] There is some ambiguity in counsel’s letter. It is not clear whether he was offering a maximum of $720,000, or whether he was prepared to pay $740,000, which would be the amount owing if the original purchase price was abated by $20,000.
[42] Second, the offer, in my view, implicitly suggests a complete resolution of the purchaser’s breach. In other words, it does not contemplate a sale at $720,000 or $740,000 with the O’Hares entitled to sue for any expectation damages. The O’Hares were not required to take a significant loss just so that they could sell to Mr. Wyton.
[43] Mr. Wyton has failed to establish that the O’Hares failed to take reasonable steps to mitigate their damages. To the contrary, I find that they did.
[44] This is not a complicated case. The real estate market was overheated in the spring of 2017. It fell off considerably and quickly. Mr. Wyton found that he overpaid for the property and he was unable or unwilling to close the deal at the price agree upon. The O’Hares have suffered damages in the result. This case is really about assessing what those damages are.
Issue Three: The Assessment of Damages
[45] Damages payable as a result of a breach of contract are calculated according to the well-established rule in Hadley v. Baxendale, (1854) 9 Exch 341. Specifically, the measure of damages is the amount required to put the non-breaching party in the position it would have been in had the contract been performed as agreed: see also BG Checo International Ltd. v. British Columbia Hydro & Power Authority, 1993 SCC 145, [1993] 1 S.C.R. 12, at para. 12.
[46] The O’Hares suffered damages that are relatively straightforward and easily calculated. They include the difference in sale price from $760,000 to $712,000, as well as additional carrying costs that the O’Hares incurred between the original closing date of July 21, 2017 and the ultimate closing date of October 31, 2017. Specifically, I find their damages to be as follows:
A. Difference in sale price: Wyton sale: $760,000.00 Re-sale: 712,000.00 Difference: 48,000.00 Less Commission Savings 2,169.60 Net Difference $ 45,830.40
B. Carrying costs for 103 days Mortgage on Citation: $2,192.87 Bridge Financing Costs: 6,217.08 Taxes on Citation: 1,365.82 Hydro on Citation: 589.45 Insurance for Citation: 187.25 Water on Citation: 133.32 Gas on Citation: 165.71 Net Carrying Costs $10,851.50
[47] I assess the O’Hares’ total damages to be $56,581.90.
[48] A deposit of $8,000 was paid to the O’Hares’ real estate broker in trust. The broker is the defendant, Sutton Group-Heritage Realty Inc. The broker is directed to release that deposit to the O’Hares, or as they may direct. Once the deposit is deducted, the O’Hares’ net damages are $48,581.90. Judgment shall issue in that amount.
VI. Conclusion
[49] In the result, I find that there is no genuine issue requiring a trial in this case. Mr. Wyton clearly breached an agreement he had with the O’Hares to purchase their residence in Whitby. The O’Hares reasonably mitigated their losses, yet incurred damages assessed at $56,861.90.
[50] Liability and damages could both be readily determined summarily in this case, without resort to the court’s enhanced fact-finding powers provided for in Rule 20.04(2.1).
[51] Adjusting for an $8,000 deposit, the O’Hares’ damages are assessed at $48,861.90.
[52] Pre-judgment and post-judgment interest shall be paid on the net judgment from and after July 21, 2017 in accordance with the rates prescribed in the Courts of Justice Act.
[53] If the parties cannot agree on the issue of the costs of this motion and/or the proceeding more generally, they may make written submissions to me, not to exceed two pages in length, not inclusive of any Costs Outlines. The O’Hares’ submissions are to be served and filed by July 13, 2018 and Mr. Wyton’s by July 27, 2018. Submissions should be filed electronically with my assistant, Diane Massey who may be emailed at diane.massey@ontario.ca.
Boswell J.