Court File and Parties

COURT FILE NO.: CV-18-0134012 DATE: 20200415 ONTARIO SUPERIOR COURT OF JUSTICE

BETWEEN:

GUS SPIRIDAKIS and CARMELA SPIRIDAKIS Plaintiffs – and – GUIFANG LI, WANCHUN JIA and ZOLO REALTY, BROKERAGE Defendants – and – MICHAEL MAO, HOMELIFE LANDMARK REALTY INC., BROKERAGE, DIANA YOUNG, JIA YONG WANG also known as JIAYONG WANG and MIN WANG

Counsel: Alan S. Price for the Plaintiffs Vivian Leung and Cheryl Lau for Guifang Li and Wanchun Jia Bernd Hahn for Zolo Realty, Brokerage No one appearing for the Third Parties

HEARD: March 12, 2020

RULING ON SUMMARY JUDGMENT MOTION

BOSWELL J.

Introduction

[1] The real estate market in the Greater Toronto Area was red hot in the spring of 2017. But almost as quickly as it heated up, it cooled down. Some people made a lot of money. Others got in over their heads. The defendants, Ms. Li and Mr. Jia, regrettably fell into the latter category. They agreed to buy the plaintiffs’ home in Stouffville. They were unable to complete the purchase because of difficulties they encountered selling their own home. The plaintiffs subsequently resold their home, but at a price roughly $260,000 less than the defendants had agreed to pay.

[2] The plaintiffs sued the defendants for their expectation damages, which include not only the price difference, but tens of thousands of dollars of carrying costs which they claim they would not have incurred had the sale to the defendants been completed as agreed.

[3] The plaintiffs move for summary judgment on their claim, arguing that there is no genuine issue in this case requiring a trial to resolve.

[4] The defendants demur. They assert that there are live and very triable issues relating to the validity of the agreement of purchase and sale. Moreover, they have issued a third party claim against, amongst others, their realtor, their lawyer and the folks who had agreed to purchase their home but failed to do so. They argue that what the plaintiffs are proposing is only partial summary judgment – something that our Court of Appeal has signaled a general disapproval of.

Issues

[5] The positions of the parties raise five broad issues for resolution:

(i) Whether the defendants have raised a genuine issue with respect to liability that requires a trial to resolve. Two are suggested: the plea of non est factum and the claim that the plaintiffs failed to tender on the defendants;

(ii) If the answer to question (i) is no, whether partial summary judgment is appropriate in this case having regard to the litigation as a whole and the objectives of proportionality, efficiency and cost-effectiveness;

(iii) Whether the defendants have raised a genuine issue with respect to damages that requires a trial to resolve. Again, two principal issues are raised: the failure to mitigate and the foreseeability, or lack thereof, of the plaintiffs’ need for bridge financing;

(iv) If the answer to question (iii) is no, what are the plaintiffs’ damages? And,

(v) Should the enforcement of any damage award be stayed pending resolution of the defendants’ third party claim?

[6] I will review these issues in turn. Before doing so, however, I will set out enough of the background facts to put the issues into perspective.

Overview

[7] The evidentiary record filed on this motion is quite limited. It consists of two sworn affidavits: one from Mr. Spiridakis sworn December 5, 2018 and the other from Wanchun Jia, sworn May 6, 2019. There were no cross-examinations on the affidavits filed.

The Agreement of Purchase and Sale

[8] Mr. Jia deposed that he and his wife, Ms. Li, are people of modest means. He said they immigrated to Canada from China in 2002. Neither was educated beyond junior high school. Their first language is Mandarin. Neither is fluent in English. He said that he works as a home renovator and earns roughly $35,000 per year. Ms. Li is a homemaker. Until the spring of 2017, they were living comfortably in a home on Lavron Court in Markham, with their 30 year old son and 4 year old grandson.

[9] According to Mr. Jia, a real estate agent they had used in the past, Mr. Michael Mao, approached them in the spring of 2017 about an opportunity to acquire a newer home on Sunnyridge Avenue in Stouffville. The property was listed for about $1.2 million. They were told by Mr. Mao that their Markham home, which they had bought in 2011 for $465,000, could be sold for $1.1 million and the difference could be financed.

[10] On June 14, 2017 they entered into an agreement to purchase the plaintiffs’ Stouffville property at a price of $1,162,500. A deposit in the amount of $30,000 was paid. The transaction was conditional on financing. The condition was waived on June 21, 2017. The scheduled closing date was September 14, 2017.

[11] I note that the $30,000 deposit was paid to, and is currently being held in trust by, Zolo Realty, Brokerage. Zolo is a party to these proceedings only with respect to the deposit. Going forward, when I refer the “the defendants” I mean only Ms. Li and Mr. Jia.

Extending the Closing Date

[12] The evidence surrounding what happened with respect to the closing date is somewhat muddled.

[13] The agreement of purchase and sale was prepared on the standard Ontario Real Estate Association form. It contained the usual clause that time was of the essence.

[14] As I noted, the scheduled closing date was September 14, 2017. That date came and went. There is no evidence in the record as to what happened on September 14, 2017 regarding any extension of the closing.

[15] On October 2, 2017, the parties agreed to extend the closing date to October 26, 2017. The defendants agreed to pay $4,000 as compensation for the delay. It was confirmed that time continued to be of the essence.

[16] On October 26, 2017 the defendants’ counsel, Diane Young, wrote to the plaintiffs’ counsel, Shannon Durno, to ask for a further extension, this time to October 30, 2017. The extension was again agreed to, with some modest financial compensation being paid to the plaintiffs. This further extension was sought because, according to Ms. Young, the defendants’ purchasers were unable to close on their purchase of the defendants’ home. Time remained of the essence.

[17] It is not contested that the defendants failed to complete the transaction on October 30, 2017 as agreed. At some point during the day, Ms. Young notified Ms. Durno that the defendants were not going to be in a position to complete the transaction. In their Amended Statement of Defence and Counterclaim, the defendants explain that they were unable to obtain financing.

[18] Ms. Durno faxed a letter to Ms. Young advising her that the plaintiffs were treating Ms. Young’s notification of the defendants’ inability to close as an anticipatory breach of contract. She confirmed that the plaintiffs were ready, willing and able to complete the transaction.

[19] At 4:38 p.m. on October 30, 2017, Ms. Young wrote to Ms. Durno and asked for an extension to November 1, 2017. She said the defendants had been unable to close the sale of their home. They needed the sale proceeds from their home in order to fund the purchase of the plaintiffs’ home.

[20] On October 31, 2017, Ms. Durno sent a letter to Ms. Young, dated October 30, 2017, and said that the plaintiffs were willing to extend the closing date to November 1, 2017 on certain, modest conditions. She asked that Ms. Young sign and return a copy of her letter confirming that the defendants were agreeable to the proposed terms of the extension. Ms. Young did not return the letter.

[21] Later that same day, Ms. Durno again wrote to Ms. Young. Her letter was inadvertently dated November 1, 2017 but it is not disputed that it was sent on October 31, 2017. Ms. Durno noted that she had not received a response from Ms. Young regarding the proposed terms of an extension to November 1, 2017. She said that if she did not hear back from Ms. Young by 4:00 p.m., the plaintiffs would consider the non-response to be an anticipatory breach of contract.

[22] Ms. Young did not reply. The deal was never completed.

The Alleged Damages

[23] The plaintiffs relisted their home for sale on November 2, 2017. They entered into an agreement of purchase of sale on March 9, 2018 for $900,000, closing June 28, 2018. In the meantime, they had agreed to purchase another property based on their anticipated sale of the Stouffville property to the defendants. Mr. Spiridakis deposed that he and his wife arranged for bridge financing to allow them to complete the purchase. He did not mention when that purchase closed. It appears, however, from the records of the plaintiffs’ bridge financing, that they had already purchased their new home before October 1, 2017. Accordingly, they would have anticipated paying out their bridge financing with the proceeds of their sale to the defendants.

[24] The plaintiffs claim, as damages, the difference between the amount the defendants agreed to pay for their home and the amount they were ultimately able to sell it for, the costs associated with their bridge financing, the carrying costs of the Stouffville property between October 26, 2017 and June 28, 2018, legal feels and the $4,000 the defendants had agreed to pay for the initial extension to October 26, 2017.

[25] The breakdown of the damages claim is as follows:

Loss on Sale Price $262,500.00 Bridge Loan Costs 36,249.42 Realty Taxes 3,232.80 Hydro 617.00 Enbridge Gas 1,512.30 Water 452.43 Insurance 439.20 Extension Fee 4,000.00 Legal Fees 1,706.00 Total $310,709.15

The Pleadings

[26] The plaintiffs’ claim is straightforward. They allege that the defendants entered into a binding agreement to purchase their home and failed to close. They seek their expectation damages arising from the breach.

[27] The defendants filed a defence and counterclaim. They seek, by way of counterclaim, a declaration that the agreement of purchase and sale with respect to the plaintiffs’ home expired and they ask that their $30,000 deposit be returned to them.

[28] By way of defence, the defendants assert the doctrine of non est factum and argue that their agreement with the plaintiffs should be declared void because they did not understand the full consequences of breaching it. In the alternative, they say the agreement expired – became null and void – because of the plaintiffs’ failure to tender on them on October 30, 2017.

[29] The defendants have also initiated a third party claim. The third party defendants are their realtor, Mr. Mao and the brokerage he works for, their lawyer, Ms. Young, and the parties who had agreed to purchase their Markham home, Mr. and Mrs. Wang.

[30] In the third party claim, the defendants allege, amongst other things, that:

• But for the Wangs’ failure to complete the purchase of their home on October 30, 2017 they would have been able to complete their purchase of the plaintiffs’ home;
• Mr. Mao breached a fiduciary duty owed to them to act in their best interests and not expose them to any risks that would have “shocked their lives”;
• Mr. Mao negligently misled them into believing that they could enter the agreement to purchase the plaintiffs’ home without worry of affordability; and,
• Ms. Young negligently failed to disclose to them the risks, costs and consequences of failing to close the purchase transaction with the plaintiffs and she failed to discuss with them the terms upon which they could extend the closing date to November 1, 2017.

[31] Having provided that general overview, I will turn now to the issues raised by the positions taken by the parties.

Analysis

(i) Have the defendants raised a genuine issue with respect to liability that requires a trial to resolve?

[32] I intend to approach the analysis of this issue in two parts. First, by setting out the general legal principles that govern motions for summary judgment. Second, by addressing the issues the defendants say require a trial. As I said, there are two of them: the assertion that the agreement of purchase and sale is void ab initio based on the plea of non est factum and the assertion that the agreement of purchase and sale became null and void as a result of the plaintiffs’ failure to tender on the defendants.

The Governing Principles

[33] Access to justice in the court’s civil area of responsibility has been a pressing concern for a number of years. Civil lawsuits have become prohibitively expensive. They can take years to reach a conclusion. Those without significant resources and staying power are at a real disadvantage.

[34] The administration of justice has responded through a number of initiatives to improve access to justice. For instance, the monetary limit of the small claims court has been increased; the rules that govern civil proceedings have been simplified for cases under $200,000; and greater emphasis has been placed on earlier resolution through mediation and judicial pre-trial conferences.

[35] One of the more significant initiatives aimed at reducing the cost of litigation, both in terms of time and money, was a 2010 amendment to Rule 20 of the Rules of Civil Procedure.

[36] Rule 20 is one in a suite of rules collected under the heading, “Disposition Without Trial”. It permits a party to move for summary judgment in cases where, in that party’s opinion, the full machinery of a trial is not required to determine the live issues in a case fairly and justly. If the moving party satisfies the court that there is no genuine issue requiring a trial, then the court is directed, by r. 20.04(2)(a), to grant that party summary judgment.

[37] Rule 20 is not new. It has been around for decades. In 2010, however, it was amended to enhance the ability of the motions judge to make findings of fact on contested evidence. Prior to that time motions judges were constrained by appellate authority from weighing evidence or making credibility determinations on summary judgment motions.

[38] Rule 20.04(2.1) now provides as follows:

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:

1. Weighing the evidence.
2. Evaluating the credibility of a deponent.
3. Drawing any reasonable inference from the evidence.

[39] The Supreme Court had an opportunity to consider the amendments to r. 20 in the case of Hryniak v. Mauldin, 2014 SCC 7. Justice Karakatsanis described the amendments as being grounded in the “recognition that a culture shift is required in order to create an environment promoting timely and affordable access to the civil justice system.” (Para. 2).

[40] The “culture shift” identified by Justice Karakatsanis reflects the principle of proportionality and the recognition that fair and just adjudication may often be accomplished without resort to the most painstaking procedures available.

[41] Hryniak confirms that r. 20 is no longer simply a mechanism to weed out clearly unmeritorious claims and defences. It now represents what the court described as a “significant alternative model of adjudication”. (Para. 45).

[42] Hryniak provides guidance about the circumstances in which a motions judge might determine that there is no genuine issue requiring a trial. At para. 49, Justice Karakatsanis provided the following instructions:

There will be no genuine issue requiring a trial when the judge is able to reach a fair and just determination on the merits on a motion for summary judgment. This will be the case when the process (1) allows the judge to make the necessary findings of fact, (2) allows the judge to apply the law to the facts, and (3) is a proportionate, more expeditious and less expensive means to achieve a just result.

[43] Although the rule does not, on its face, appear to require a staged analysis, Hryniak instructs that rule 20.04(2) should, in fact, be applied in two stages.

[44] 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.

[45] 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.

[46] The 2010 amendments to r. 20 were significant in their scope and effect. But that does not mean that all of the court’s prior jurisprudence on r. 20 became meaningless. Many of that law remains just as vital. For instance:

(a) The moving party continues to bear the legal and persuasive burden to establish that there is no genuine issue requiring a trial to resolve; (b) The responding party continues to bear an evidentiary burden to establish that there is a genuine issue requiring a trial; (c) Each party must “put their best foot forward”. Neither may rest on the allegations in their pleadings; and, (d) The court is entitled to assume that the record before it contains the core substance of the evidence that the parties will present at trial.

See Dawson v. Rexcraft Storage & Warehouse Inc., 1998 ONCA 4831, [1998] O.J. No. 3240 (C.A.) at para. 17; Sweda Farms Ltd. v. Egg Farmers of Ontario, 2014 ONSC 1200 at paras. 26 and 32; and Penretail Management Ltd. v. 2380462 Ontario Inc. (o/a Bolton Health Centre), 2016 ONSC 600, at para. 10.

The Triable Issues Identified by the Defendants

[47] Counsel to the defendants argued that it would not be just and fair to award the plaintiffs summary judgment on their claim for two reasons. Their first reason is rooted in the principles underlying the Hryniak decision. They contend that the plaintiffs’ motion is properly characterized as one for partial summary judgment. They say that granting partial summary judgment in the circumstances of this case would not advance the interests of proportionality, affordability, justice or fairness.

[48] I will come to the argument about partial summary judgment momentarily. For now, I will address the second reason why the defendants say summary judgment is not appropriate. They argue that there are two genuine issues that will require a trial to resolve. Issue one is the plea of non est factum. They claim that the validity of the agreement of purchase and sale is in question because they were mistaken about the nature of the agreement they entered into. Issue two is whether the agreement of purchase and sale became null and void as a result of the plaintiffs’ failure to tender on the scheduled closing date. I will address each assertion in turn.

The Plea of Non Est Factum

[49] In their initial Statement of Defence and Counterclaim, the defendants did not plead non est factum. That plea was added by a subsequent amendment. Their Fresh as Amended Statement of Defence and Counterclaim pleads, at para. 21:

The Purchasers rely on the doctrine of non est factum with respect to all documents related to the Stouffville APS signed on or about June 14, 2017 and thereafter.

[50] Non est factum is a defence of mistake. Its translation from Latin means “it is not his deed”. It has been described more colloquially as “the mind not following the hand”. See Marvco Colour Research Ltd. v. Harris, 1982 SCC 63, [1982] 2 S.C.R. 774. If successful, it renders an instrument signed by the party asserting the defence void ab initio.

[51] The Court of Appeal for Ontario succinctly described the essential elements of the plea in Bulut v. Carter, 2014 ONCA 424, at para. 18:

The defence of non est factum is available to someone who, as a result of misrepresentation, has signed a document mistaken as to its nature and character and who has not been careless in doing so.

[52] The mistake must be as to the nature and character of the instrument and not merely its contents: Marvco, as above.

[53] In my view, the plea of non est factum must fail.

[54] I accept for the purposes of this motion that each of the defendants has limited education, limited facility with the English language, and is relatively unsophisticated.

[55] Having said that, 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. This was not the first home purchase the defendants have been involved in. In fact, it is the third.

[56] The evidence makes it clear that the defendants understood they were agreeing to purchase the plaintiffs’ home. They understood that the purchase price was $1,162,500 and that they were required to pay a $30,000 deposit. They understood that there was a condition regarding financing. They understood they were waiving that condition and they understood that the agreement was binding after their waiver.

[57] There is no dispute that the defendants understood that they were listing their own home for sale and there is no suggestion that they did not understand the nature or character of the agreement of purchase and sale with respect to the sale of their home. There is no plea of non est factum with respect to any of the documents associated with the sale of the defendants’ home. Indeed, the defendants rely on the validity of those documents in their third party claim against the Wangs.

[58] A successful plea of non est factum requires the defendant to establish that she or he was mistaken as to the nature or character of an instrument. The only assertion of mistake identified in Mr. Jai’s affidavit relates to the consequences of breach. He said his understanding was that the only financial downside the defendants faced if they failed to close was the loss of their deposit. This, in my view, is not a mistake as to the nature or character of the agreement of purchase and sale.

[59] I find that the defendants clearly understood the nature of the documents they signed. While they may have limited facility with English, their real estate agent, Mr. Mao, and their lawyer, Ms. Young, are both fluent in Mandarin and there is no dispute that they were able to communicate freely with both.

The Alleged Failure to Tender

[60] The defendants concede that they failed to close the purchase of the plaintiffs’ home on October 30, 2017 as scheduled. But they assert that the plaintiffs failed to tender on them – to demonstrate that they were ready, able and willing to close the deal.

[61] Tendering is not a prerequisite to an entitlement to damages for breach of an agreement of purchase and sale. But where a plaintiff relies on a defendant’s failure to close as the breach giving rise to the entitlement of damages, the plaintiff must be able to demonstrate that he or she was ready, willing and able to close. Tendering is generally considered to be the best evidence of that readiness, willingness and ability.

[62] Having said that, the law is quite clear that an innocent party need not go through the meaningless exercise of tendering in circumstances of anticipatory breach.

[63] The phrase “anticipatory breach” was explained by Justice Cromwell in dissenting reasons in Potter v. New Brunswick Legal Aid Services Commission, 2015 SCC 10 at para. 149:

An anticipatory breach "occurs when one party manifests, through words or conduct, an intention not to perform or not to be bound by provisions of the agreement that require performance in the future": McCamus, at p. 689; see also A. Swan, with the assistance of J. Adamski, Canadian Contract Law (2nd ed. 2009), at s. 7.89. When the anticipated future non-observance relates to important terms of the contract or shows an intention not to be bound in the future, the anticipatory breach gives rise to anticipatory repudiation.

[64] As I noted above, the parties agreed that “time was of the essence” in relation to the performance of their respective obligations under the agreement of purchase and sale. In other words, they agreed that the time limit manifested by the fixed closing date was an essential term, such that the breach of it would permit the innocent party to terminate the agreement. When the defendants manifested an intention not to complete the transaction on October 30, 2017, the plaintiffs were released from any obligation to tender in order to prove that they were ready, willing and able to close. See Di Millo v. 2099232 Ontario Ontario Inc., 2018 ONCA 1051, at paras. 31 and 49.

[65] In this case there is a factual dispute about whether the plaintiffs in fact tendered. It does not matter. The defendants’ lawyer undeniably communicated to the plaintiffs’ lawyer that the defendants were not in a position to close on the scheduled closing date. The plaintiffs’ lawyer correctly identified that communication as an anticipatory breach. The plaintiffs were relieved of any obligation to tender in order to establish that they were ready, willing and able to close.

[66] I conclude that the “tender issue” does not require a trial to resolve. The plaintiffs were not required to tender.

[67] I am satisfied that the defendants have not demonstrated that there is any issue requiring a trial with respect to the issue of liability. I have been able to reach that conclusion without having to resort to the enhanced fact-finding powers contained in r. 20.04(2.1). This conclusion does not end the matter, however, because the defendants raise two other potential bars to summary judgment: (1) the assertion that partial summary judgment is not appropriate in the context of the case as a whole; and (2) the assertion that there are genuine issues with respect to damages that will require a trial to resolve.

(ii) Is partial summary judgment appropriate in the context of this case as a whole?

[68] Rule 20.01(1) provides that following the close of pleadings a plaintiff may move for summary judgment on all or part of its claim. The language of the rule obviously contemplates partial summary judgment.

[69] Partial summary judgment may, as the rule suggests, involve some, but not all, of a plaintiff’s claims. It may also involve the resolution of all of the claims of some parties, but not others. In cases like the present one, where there is a third party claim, a judgment that resolves the entirety of the main action but none of the third party action still results in partial summary judgment.

[70] It is necessary to consider the impact that granting partial summary judgment will have on the litigation as a whole in order to ensure that the process in fact serves the purposes it is meant to.

[71] Recall the Supreme Court’s instruction in Hryniak: the amendments to r. 20 are rooted in the concept of proportional justice and the recognition that fair and just adjudication may often be accomplished without resort to the full machinery of a trial.

[72] Sometimes the time and expense associated with a summary judgment motion have a tendency to undermine, rather than further the just, most expeditious and least expensive determination of an action. This concern is particularly acute in the case of motions for partial summary judgment.

[73] At para. 60 of Hryniak, Justice Karakatsanis cautioned that partial summary judgment “may run the risk of duplicative proceedings or inconsistent findings of fact.” At the same time she added that, “on the other hand, the resolution of an important claim against a key party could significantly advance access to justice, and be the most proportionate, timely and cost-effective approach.”

[74] In Butera v. Chown, Cairns LLP, 2017 ONCA 783, the Court of Appeal for Ontario confirmed that its pre-Hryniak jurisprudence on the advisability of partial summary judgment continued in the post-Hryniak world. That jurisprudence is perhaps best reflected in Corchis v. KPMG Peat Marwick Thorne, 2002 ONCA 41811, [2002] O.J. No. 1437 (C.A.) where it was held that partial summary judgment should “only be granted in the clearest of cases where the issue on which judgment is sought is clearly severable from the balance of the case.” (Para. 3).

[75] In addition to the risks of duplicative proceedings and inconsistent findings of fact, as identified in Hryniak, the court in Butera identified further problems that they described as “anathema to the stated objectives underlying Hryniak.” (Para. 29). These include causing delay to the main action; expense; and the burden on the justice system. The court cautioned that motions for partial summary judgment should be rarely brought and only when the issues involved are readily bifurcated and may be dealt with expeditiously and in a cost-effective manner.

[76] The appropriateness of an award of partial summary judgment must be considered in the context of the litigation as a whole and measured against the objectives identified in Hryniak: proportionality, efficiency and cost-effectiveness. Considering this case in such a light, I am satisfied that it is one of those rare instances where partial summary judgment will further the goals the rules are meant to serve.

[77] This action really consists of three distinct parts. First, there is the plaintiffs’ claim against the defendants for damages arising from the failure of the defendants to complete a binding real estate transaction. This is a straightforward claim and of a type the court regularly sees.

[78] The defendants clearly failed to close the purchase of the plaintiffs’ home. The only defences they advance in response to the plaintiffs’ claim are the plea of non est factum and the assertion that the plaintiffs failed to tender on them. I have dealt with those defences above and I have concluded that neither is viable. Moreover, the defendants’ counterclaim cannot succeed because it is based on their assertion that the agreement of purchase and sale became null and void as a result of a failure to tender.

[79] The second part of the action is the defendants’ claim over against the Wangs. Like the plaintiffs’ claim, the defendants’ claim is based on an alleged breach of a binding agreement of purchase and sale. The defendants allege that the Wangs’ breach caused them to breach their agreement with the plaintiffs. If their claim is successful, then the plaintiff’s damages – or at least a good portion of them – will presumably be visited upon the Wangs.

[80] The third part of the action consists of the defendants’ claims against its realtor and lawyer for professional negligence, breach of fiduciary duty and misrepresentation.

[81] The first part of the action is reflected in the main claim. The second and third parts are reflected in the third party claim. In my view, the issues in the main action are clearly severable from the issues in the third party claim. They can be dealt with expeditiously, justly and cost-effectively on this motion. Indeed, it makes no sense to me to force the plaintiffs to “go along for the ride” while the third party claim is adjudicated. They would be forced to endure substantial, additional pre-trial procedures and a lengthy trial of issues that have nothing to do with them. Given the impact that the COVID-19 pandemic has had on the court system, that trial is likely to be at least two years down the road.

[82] The defendants’ counsel referred me to the case of Vandenberg v. Wilken, 2019 ONCA 262, a recent decision of the Court of Appeal for Ontario in which a partial summary judgment was overturned because there were overlapping issues between the main action and a third party claim. Counsel expressed the view that the circumstances her are similar to those in Vandenberg and that Vandenberg should serve as a caution against granting partial summary judgment in cases where third party claims will be left to go on to trial.

[83] Vandenberg involved a commercial real estate transaction. The same realtors acted for both the vendor and purchasers. Although the vendors signed an agreement of purchase and sale to sell their property to the purchasers, they did not go through with the sale, asserting unconscionability, non est factum, collusion and conspiracy against both the purchasers and the real estate agents.

[84] The purchasers sued for specific performance. The vendors filed a defence and counterclaim in which they asserted unconscionability. They issued a third party claim against the agents, advancing the same assertion of unconscionability.

[85] The purchasers moved for partial summary judgment and were successful in obtaining a declaration that the agreement of purchase and sale was valid. The Court of Appeal set aside the declaration, finding that the vendor’s assertions of unconscionability in the main action and the third party claim were inextricably intertwined and not readily bifurcated. The relationship between the purchasers and the real estate agents was at the core of both the main action and the third party claim. There was a real risk of either constraining the trial judge or of inconsistent findings of fact going forward if the declaration was permitted to stand. Moreover, the award of partial summary judgment did not serve the purposes of expediency and cost-effectiveness.

[86] In my view, Vandenberg is distinguishable from the case at bar. In this case, although there is certainly a narrative that is common to both the main action and third party claim, the live legal and factual issues are quite distinguishable.

[87] The defendants have alleged that they were pressured by their real estate agent to sell their home and to purchase the plaintiffs’ home. They have further alleged that the agent made false or misleading representations to them about the likely sale price of their home and the availability of affordable financing. But they have not linked those representations to the plaintiffs. Their claims against the realtor, and their lawyer for that matter, sound only against those parties and not the plaintiffs.

Conclusion on the Issue of Liability

[88] I am satisfied that the defendants have not raised a genuine issue with respect to liability that requires a trial to resolve. I am able make the necessary findings of fact and to apply the law to the facts. I am able to do so without resort to the enhanced fact-finding powers set out in r. 20.04(2.1). The summary judgment procedure, even though it may be partial summary judgment only, is still in my view a proportionate, more expeditious and less expensive means of justly resolving the plaintiffs’ claims against the defendants than a full trial would be.

[89] I have said very little to this point about the counterclaim. I mentioned that the defendants seek a declaration that the agreement of purchase and sale “expired”, which I understand to mean it became null and void. The basis for that claim is that the plaintiffs failed to tender on the defendants on the scheduled closing date. I have rejected that argument for the reasons set out above. The counterclaim is therefore dismissed.

[90] I will turn now to the issue of damages.

(iii) Have the defendants raised a genuine issue with respect to damages that requires a trial to resolve?

[91] The plaintiffs seek a total of $310,709.15 in damages. I provided a breakdown above, but will repeat it here for ease of convenience:

Loss on Sale Price $262,500.00 Bridge Loan Costs 36,249.42 Realty Taxes 3,232.80 Hydro 617.00 Enbridge Gas 1,512.30 Water 452.43 Insurance 439.20 Extension Fee 4,000.00 Legal Fees 1,706.00 Total $310,709.15

[92] The defendants dispute all but one of the plaintiffs’ claimed amounts. Their arguments include the following:

(a) The plaintiffs failed to reasonably mitigate their damages, or to provide evidence of reasonable mitigation. They claim the property was re-listed at too high a price; that it took too long too sell; and, in the end, sold for too little. There is no evidence that the price ultimately obtained was reasonable; (b) The expenses incurred by the plaintiffs for bridge financing were not foreseeable and are therefore not recoverable; (c) The plaintiffs should have been able to re-sell their property and close by December 31, 2017, based on average listing times for residential properties in Stouffville at that time. Therefore, any of the claimed carrying costs should been limited to the period between October 26, 2017 and December 31, 2017; (d) The plaintiffs have allegedly claimed realty taxes for two properties; (e) The hydro and water charges should be minimal because the home was not occupied; and, (f) There is no evidence of any legal fees incurred and any claim for them should be disallowed.

[93] The defendants accept that they owe the $4,000 extension fee previously agreed upon.

[94] Only the first two of the enumerated arguments have any traction as potential genuine issues for trial. The balance are minor tinkering with the amounts as claimed. I will therefore limit my analysis in this section to the issues of mitigation and foreseeability.

The Alleged Failure to Mitigate

[95] Expectation loss is the normal measure of damages payable as a result of a contractual breach. The rule was established over 150 years ago in Hadley v. Baxendale, (1854) 9 Exch 341. Expectation loss is the amount required to put the innocent 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.

[96] Expectation losses are qualified by a number of factors. One is foreseeability, which I will come to shortly. Another is the duty to mitigate. The law requires innocent parties to take all reasonable steps to mitigate the losses caused by a breach. Any failure to do so will bar any part of the damages which are due to the plaintiffs’ failure to take such steps. See Asamera Oil Corp. v. Seal Oil & General Corp., 1978 SCC 16, [1979] 1 S.C.R. 633, at pp. 660-61.

[97] What efforts to mitigate are reasonable, in any specific case, is a question of fact to be decided on the basis of all relevant market circumstances: 100 Main Street Ltd. v. W.B. Sullivan Construction (1978), 1978 ONCA 1630, 20 O.R. (2d) 401.

[98] The defendants assert that the plaintiffs failed to take reasonable steps to market the property and ultimately sold it for an unreasonably low price. They contend that the plaintiffs’ damages should be based on the highest price obtainable within a reasonable time after October 30, 2017 following the making of reasonable efforts to sell the property commencing on that date. Again, see 100 Main Street, as above. They submit that had the plaintiffs made reasonable efforts to remarket the property, they would have achieved a sale price of $1,030,000.

[99] Amongst other criticisms, the defendants point to the following failures on the part of the plaintiffs:

• They re-listed the property at too high a price in view of the falling market conditions;
• They listed the property for an unreasonably long time – 134 days – when the average time on the market for homes listed for sale in Stouffville ranged from 33 days in November 2017 to 27 days in March 2018;
• They sold the property at a price below its fair market value;
• They have failed to produce evidence of what marketing they employed;
• They have failed to produce evidence of what offers were received for the property and when; and,
• They have failed to produce expert evidence that $900,000 was a reasonable selling price.

[100] It is well-settled that the onus of proof to establish a failure to mitigate is on the defendants. See, for instance, Southcott Estates Inc. v. Toronto Catholic District School Board, 2012 SCC 51 at para. 24.

[101] In support of their allegation of a failure to mitigate, the defendants filed a letter from a real estate agent which contains an opinion as to the value of the Stouffville property. The agent, Patrick Au, opined that the property was worth $1,030,000 on October 30, 2017; $984,000 in March 2018; and $950,000 in June 2018 when it sold.

[102] Mr. Au also provided some statistics suggesting that the average list time for residential homes in Stouffville in November 2017 was 32 days. The average in March 2018 was 27 days. He could offer no explanation as to why the plaintiffs’ home took 134 days to resell.

[103] There are a number of problems with Mr. Au’s evidence.

[104] First, it is hearsay. Mr. Au set out a number of statistics apparently relevant to the 2017/18 real estate market in Stouffville. The source documents for those statistics were not supplied and Mr. Au did not provide a sworn statement in relation to that data. Hearsay evidence is not presumptively inadmissible on summary judgment motions, but the failure to provide sworn factual evidence may certainly be taken into account by the motions judge.

[105] Second, it is presumptively inadmissible opinion evidence. Mr. Au is a real estate agent and not a certified appraiser. His qualifications to give the evidence in issue have not been made out and are not accepted by the plaintiffs. I have no basis upon which to make a finding that he is qualified to offer the opinions that he has.

[106] Assuming for the moment, however, that Mr. Au is adequately qualified to render the opinions he has, he has not rendered the opinion that the plaintiffs’ efforts to market and sell their property were unreasonable. Based on the content of his letter, I am certainly not prepared to draw the inference that the plaintiffs’ efforts at mitigation were unreasonable.

[107] Mr. Au said the property had a fair market value of $1,030,000 at November 1, 2017. The plaintiffs listed it for $1,168,888, which was very close to the amount the defendants agreed to pay for it on June 21, 2017. There is nothing inherently unreasonable about that price.

[108] I would think, as a matter of common sense, that the plaintiffs would have been motivated to obtain the highest and best value for their property. They had it listed continuously until it eventually sold in the spring of 2018.

[109] The price obtained was $900,000. Mr. Au suggests that the fair market value of the property at the closing date – June 28, 2018 – was $950,000. On those figures, the plaintiffs obtained 95% of fair market value after a listing of 134 days. Considering their ongoing carrying costs for the home and the cost of bridge financing, I would have no hesitation finding that their sale price was reasonable.

[110] The defendants’ criticisms of the absence of evidence from the plaintiffs about their efforts to mitigate misplace the onus. The defendants could have cross-examined the plaintiffs prior to this motion to question them about why the property was listed for so long, when reductions in the sale price where implemented and why, and what, if any, offers were received and rejected along the way. They chose not to do so.

[111] Recall that each party to a motion for summary judgment must put their best foot forward. The court is entitled to proceed on the basis that the evidence before it on the motion is the core substance of what will be presented at trial.

[112] The minimal evidence adduced by the defendants on the issue of mitigation does not raise a triable issue in terms of the calculation of damages in my view. It is woefully short of what would be necessary to establish a failure to mitigate.

The Foreseeability of Bridge Financing

[113] The defendants assert that the plaintiffs’ need for bridge financing to purchase their new home is not recoverable because it was not foreseeable.

[114] As I noted above, expectation damages are qualified by, amongst other factors, the foreseeability of those damages. Cases from Hadley v. Baxendale to the present limit damages to amounts that would fairly and reasonably be considered to arise naturally from the breach (an objective standard) or which may reasonably have been in the contemplation of the parties themselves (a subjective standard).

[115] In this case, only the objective standard is in issue.

[116] In Canlin Ltd. v. Thiokol Fibres Canada Ltd. (1983), 1983 ONCA 1603, 22 B.L.R. 193, Justice Cory explained that the question to be asked with respect to the objective standard of foreseeability is the following:

[A]re the consequences of the breach of contract such that a reasonable man at the time of the making of the contract would contemplate them as being liable to result or to be a serious possibility? (Para. 30).

[117] It is a very common experience for people to sell one home and buy another. Indeed, in this case, both the plaintiffs and defendants were selling and buying on the same day. It would have been, in my view, entirely foreseeable to a reasonable person that the plaintiffs would be purchasing another home at the same time they were selling the Stouffville property.

[118] It is also a very common experience for people to require the equity from the home they are selling in order to fund the purchase of their new home. Again, it would have been entirely foreseeable to a reasonable person that the plaintiffs would need the sale proceeds from the Stouffville home in order to purchase their new home.

[119] All this is to say that it was, in my view, objectively foreseeable that if the defendants did not complete their purchase of the plaintiffs’ home, the plaintiffs would either have to breach their agreement to buy their new home or find bridge financing to complete it.

[120] In my view, the defendants have not raised a genuine issue with respect to damages that requires a trial to resolve. Without resorting to the enhanced fact-finding powers set out in r. 20.04(2.1) I am able to conclude, and do so conclude, that the defendants’ arguments on both the mitigation and foreseeability issues fail.

[121] I will proceed, therefore to assess the plaintiffs’ damages.

(iv) The Assessment of Damages

The Drop in Market Value

[122] In view of my findings with respect to mitigation, I am satisfied that the highest value the plaintiffs could achieve through reselling their home in a reasonable period of time after the breach was $900,000. Accordingly, the difference in value is $262,500.

Bridge Financing

[123] I find that the defendants are entitled to their costs of bridge financing, for the reasons I set out above. They claim $36,249.42. I do not, unfortunately, know how that figure was arrived at.

[124] To support their claim, the plaintiffs filed bank statements from two lines of credit at National Bank of Canada. I have reviewed the statements they provided and I have inferred that their bridge financing was arranged through two substantial lines of credit. The first was for about $440,000. The second was for about $670,000. Each required minimum monthly payments.

[125] The statements provided cover the period of October 4, 2017 through June 4, 2018.

[126] I have calculated the minimum monthly payments due for the period October 26, 2017 to June 4, 2018 from the statements provided. On the first line of credit those payments total $9,738.97. On the second, they total $15,506.34. The sum of the two is $25,245.31. The plaintiffs are entitled to that sum for their bridge financing costs.

Utilities and Insurance

[127] From the invoices filed in evidence I have calculated the Enbridge Gas charges between October 26, 2017 and June 28, 2018 to be $1,097.44. [1]

[128] The hydro invoices filed for the same period are $617.77.

[129] The water bills filed in evidence do not relate to the relevant time period, so I am not including any water charges in the calculation of damages.

[130] The annual cost of home insurance on the Stouffville property was $666.36, which is the equivalent of $1.83 per day. The period October 26, 2017 to June 28, 2018 is 245 days. The cost of insurance over that period was, accordingly, $448.35.

Taxes

[131] The plaintiffs filed evidence that the 2018 realty tax levy for the Stouffville property was $4,917.26. They did not file any evidence about what the 2017 levy was. I expect it was very similar. Calculated daily it works out to $13.47. Over 245 days, the total taxes incurred were, by my calculation, $3,300.15. The plaintiffs have claimed $3,232.80. I attribute the difference to the fact that the tax levy was lower in 2017 than in 2018. I allow them the $3,232.80 as claimed. These taxes relate only to the subject premises and not to a second property.

Legal Fees

[132] The defendants complained that the plaintiffs failed to provide any evidence of the legal fees they incurred. I agree that the plaintiffs failed to provide an invoice. But Mr. Spiridakis did depose, in his affidavit sworn December 5, 2018, that they incurred legal fees of $1,706.00 in relation to the aborted sale. That figure strikes me as reasonable in all the circumstances and I accept that it was incurred.

Total Damages

[133] Based on the foregoing analysis, I fix the plaintiffs’ damages at $298,847.67 which is comprised of the following elements:

(a) Loss on the sale price $262,500.00 (b) Bridge financing 25,245.31 (c) Extension fee 4,000.00 (d) Realty Taxes 3,232.80 (e) Enbridge Gas 1,097.44 (f) Hydro 617.77 (g) Insurance 448.35 (h) Legal Fees 1,706.00

(v) Should Enforcement be Stayed?

[134] The last issue raised by the defendants is their request to stay the enforcement of any damages awarded, pending the outcome of their third party claim.

[135] Rule 20.08 provides as follows:

Where it appears that the enforcement of a summary judgment ought to be stayed pending the determination of any other issue in the action or a counterclaim, crossclaim or third party claim, the court may so order on such terms as are just.

[136] There is no question, in light of r. 20.08, that the court has the discretion to stay enforcement of the judgment. In Miller v. Wang, 2018 ONSC 7668, at para. 27, McKelvey J. listed a number factors that may properly be considered when deciding whether to exercise the discretion to stay enforcement of a summary judgment granted in the face of an ongoing third party claim. They include:

(a) The connectedness of the issues in the main and third party actions; (b) Any risk of inconsistent findings in the third party action; (c) The merits of the third party action; and, (d) The balance of prejudice.

[137] I have already determined that the issues in the third party action were readily severable from the issues in the main action and that there is no serious risk of inconsistent findings of fact. I do not have sufficient evidence before me to determine the merits of the third party action, even from a preliminary vantage point. I would say, however, that it does not appear to be without merit.

[138] In my view, the key determinant in most cases will be the balance of prejudice. I would certainly think that determination will govern in this instance. Unfortunately, I am not able to make that determination on this record for two reasons.

[139] First, I do not have a sufficient evidentiary basis for it. Neither party has addressed the relative prejudice in their affidavits.

[140] Second, I do not know yet what the impact of the COVID-19 shut down will be on the third party claim. Undoubtedly one of the principal drivers of prejudice to each of the parties is how long it will take for the third party claim to be adjudicated. I have the discretion to order that the trial of that claim be expedited, but what that means in the current context is anyone’s guess.

[141] On May 15, 2020 the operations of the court were suspended, save for the hearing of limited urgent matters. There will likely be no civil trials heard in 2020. It will be some time before even a tentative estimate can be made as to when the third party claim might reach trial.

[142] In my view, in the interests of justice and fairness, it is appropriate to order a six month stay on enforcement of the summary judgment, save for the payment of the deposit of $30,000 being held by Zolo Realty. Those funds should be paid to the plaintiffs forthwith.

[143] The temporary stay is intended to be without prejudice to any arguments that either side may wish to advance at a later date in terms of whether the stay should be extended. Prior to the expiration of the stay, the defendants must bring a motion to extend it. Each side must file evidence of any prejudice inuring to them as a result of the stay being extended or not, as the case may be.

[144] To be clear, I order as follows:

(a) The plaintiffs shall have judgment against the defendants, Guifang Li and Wanchun Jia, in the amount of $298,847.67; (b) The counterclaim is dismissed; (c) The defendant, Zolo Realty, is directed to forthwith pay to the plaintiffs the deposit of $30,000 plus all accumulated interest; and, (d) The enforcement of the balance of the judgment is stayed for a period of 6 months, unless extended by further court order.

Costs

[145] The parties may address the issue of costs in writing, if they are not able to agree on the issue. Submissions are to be delivered electronically to my assistant at jennifer.smart@ontario.ca on a 14 day turnaround. The plaintiffs’ submissions shall be served and filed by April 29, 2020 and the defendants’ by May 13, 2020. Submissions should not exceed 2 pages in length, not including Cost Outlines.

Boswell J. Released: April 15, 2020

[1] Enbridge Gas charges were: $6.81 from October 26-30, 2017; $72.90 from October 30-November 16, 2017; $135.44 to December 14, 2017; $247.28 to January 17, 2018; $193.10 to February 14, 2018; $180.95 to March 16, 2018; $184.79 to April 18, 2018; $95.21 to May 16, 2018; and a $19.04 credit thereafter.