NEWMARKET COURT FILE NO.: CV-19-142866-00 DATE: 20220223 ONTARIO SUPERIOR COURT OF JUSTICE

BETWEEN:

Rosehaven Homes Limited and Bram-Rose Homes Inc. Plaintiffs – and – Flora Temitayo Aluko and Maxwell Olugbenga Aluko Defendants

Counsel: Wei Jiang and Sukhdeep Gill for the Plaintiffs Martin Zatovkanuk for the Defendants

Heard: January 24, 2022, virtually

DECISION FROM MOTION FOR SUMMARY JUDGMENT

SUTHERLAND J.:

Overview

[1] The plaintiffs have brought a motion for summary judgment. The plaintiffs seek damages in the sum of $331,022.27, plus prejudgment interest at the rate of 12% per annum being $97,121.37 for a total of $429,043.64. The plaintiffs also seek post judgment interest at the rate of 12% per annum.

[2] The defendants did not bring a motion.

[3] The proceeding arises from an aborted real estate transaction on the purchase of a family residence built by Rosehaven Homes Limited (the Plaintiff).

[4] For the reasons to follow, I grant summary judgment in favour of the Plaintiff. [1]

Factual Background

[5] The Plaintiff and the defendants entered into an Agreement of Purchase and Sale dated April 13, 2017 (the APS) for the defendants to purchase a residential built by the Plaintiff municipally located at 15 Smallwood Road, Brampton, Ontario, more particularly described as Lot 238, Plan 43M-2043, City of Brampton (the Property). The defendants provided an Offer to Purchase which was executed by them on April 10, 2017 and accepted by the plaintiff on April 13, 2017.

[6] The terms of the APS included:

1. The purchase price was $1,502,990, with deposits: $20,000 by April 10, 2017, $30,000 by June 10, 2017 which was amended on April 24, 2017 to July 7, 2017 and $40,000 by August 10, 2017.
2. The purchase price was amended on April 16, 2018 to $1,523,162 to include requested upgrades of $6,723.40.
3. Time was of the essence.
4. Irrevocable date of April 13, 2018.
5. First Closing date as per Tarion Addendum of November 6, 2018.
6. Conditions concerning financing and solicitor review were waived in that the Plaintiff was not willing to accept those conditions.
7. The defendants agreed, on closing, to pay the purchase funds, subject to adjustments, by way of a bank draft or certified cheque.

[7] The APS was negotiated as a “take it or leave it” contract concerning terms outside of price, deposits and closing dates.

[8] The Plaintiff’s sales office was by appointment only and at the time the defendants were in the sales office, there were approximately 20 to 30 people in the sales office looking to purchase residential homes.

[9] At the time the APS was signed by the defendants, the Plaintiff did not obtain copies of photographic identification of the defendants. This information was requested and received days after the signing.

[10] Prior to signing the APS, the defendants had written mortgage approval of $960,000 to purchase a property up to $1.2 million.

[11] A residential occupancy permit was received from the City of Bampton that the Property may be occupied as of October 10, 2018 for use as a residential occupancy.

[12] The real estate transaction pursuant to the APS did not close.

[13] On October 29, 2018, the defendants informed the plaintiffs that they were unable to obtain financing and consequently, the defendants failed to close.

[14] At the request of the defendants, the plaintiff allowed the APS to be reinstated upon a payment of $20,000 deposit, as well as administration fees. The defendants paid the deposit and fees and the new closing date was November 29, 2018.

[15] The defendants could not close on November 29, 2018 and requested a further extension. The plaintiff agreed to extend the closing date to December 20, 2018 upon payment of a further deposit of $20,000. The defendants paid the further deposit and the closing date was extended. The defendants could not close on December 20, 2018.

[16] By letter date December 20, 2018, the plaintiff’s solicitor sent a letter to defendants’ solicitors advising that the plaintiffs have accepted the defendants’ repudiation of the APS. The Plaintiff will attempt to resell the property and will hold the defendants responsible for “any and all damages suffered as a consequence of the breach of the Agreement of Purchase and Sale and will seek judgment in connection therewith.” In that letter there was no demand for interest at 12% per annum on any damages incurred.

[17] The defendants proposed that the APS be closed with the Plaintiff accepting a vendor take back mortgage (VTB) for the deficiency between the purchase price and the mortgage amount. The Plaintiff did not accept this proposal.

[18] The Plaintiff thereafter commenced this proceeding on November 29, 2019.

[19] The Plaintiff resold the Property on July 10, 2019 for the price of $1,060,000.

[20] The Plaintiff and the defendants agree that the deposits of $130,000 plus the amount paid for the upgrades should be credited against any damages that are found owing by the defendants.

The Pleadings

[21] The Statement of Claim was issued on November 29, 2019 (the Claim). The Claim seeks damages in the amount of $468,408.83 plus punitive, exemplary, and aggravated damages in the sum of $100,000. The Claim also requests pre and post judgment interest at the rate of 12% per annum and costs. The Plaintiff’s claim is based on breach of contract.

[22] The defendants served a Statement of Defence and Counterclaim dated January 30, 2020. The defendants claim in their Statemen of Defence that the Plaintiff failed to mitigate its damages and misrepresented the market value of the Property and induced the defendants to make an offer to purchase the Property in the amount of $1,523,162. The defendants did not plead that the APS was null and void nor did the defendants plead that the Plaintiff breached a legal obligation to them either in contract or through a duty of care. The defendants did not plead unconscionability or that the APS was a contract of adhesion.

[23] The defendants claimed in their counterclaim for return of the deposits paid, the amount paid for the upgrades along with pre and post judgment interest.

Legal Principles of Summary Judgment

[24] Pursuant to r. 20.01 of the Rules of Civil Procedure [2] (the Rules ), after the close of pleadings, the Court must grant summary judgment if it is satisfied there is no genuine issue requiring a trial.

[25] There will be no genuine issue requiring a trial when a Court is able to reach a fair and just determination on the merits. A fair and just determination on the merits is achieved when:

(a) The process allows the judge to make necessary findings of fact; (b) The process allows the judge to apply the law to the facts; and, (c) It is a proportionate and more expeditious and less expensive means to achieve a just result. [3]

[26] On a motion for summary judgment, the Court must first determine if there is a genuine issue requiring a trial based on the evidence given on the motion. If there appears to be a genuine issue requiring a trial, the Court would then determine if the need for a trial can be avoided using the powers under r. 20.04 (2.1) of the Rules weighing the evidence, evaluating the credibility of the deponents, and drawing any reasonable inference from the evidence unless it is in the interest of justice for these powers to be exercised only at a trial. These powers are presumptively available to the judge to give effect to the goals of timeliness, affordability, and proportionality in review of the litigation. [4]

[27] In contrast, the responding party must put their “best foot forward” or risk summary judgment being awarded against them. The responding party bears the evidentiary burden to present affidavit material or other evidence to support the allegations or denials in their pleading. Absent this evidence, an adverse inference can be drawn. [5]

Issues

[28] The issues are of mixed fact and law. The issues are:

1. Is there a genuine issue requiring a trial?
2. Did the plaintiffs reasonably mitigate their damages by selling the Property on July 10, 2019 in the amount of $1,060,000?
3. What is the quantum of the damages, if any?

A. Is there a genuine issue requiring a trial?

[29] The defendants argue that there are genuine issues requiring a trial. They contend that these issues include whether the APS is a legally valid and enforceable Agreement because the evidence indicates that:

1. The Plaintiff did not check the defendants’ ID prior to signing the APS or accepting the deposits.
2. The Plaintiff did not review the APS with the defendants nor direct the defendants to the repercussions of a breach of the APS.
3. The APS was a contract of adhesion.
4. The defendants did not have access to legal counsel at the sales office.
5. The defendants were dissuaded from obtaining independent legal advice.
6. Whether the defendants’ pre-approval for financing was not verified by the Plaintiff prior to entering into the sales office.
7. The APS is not valid for being unconscionable and that the Plaintiff was wilfully blind.

[30] I am cognizant that the issues argued by the defendants for this summary judgment motion are not issues raised in the pleadings. Full argument and responding material were presented by both parties on this motion.

[31] Considering the submission made and the evidence presented on this motion, I am not persuaded that there is a genuine issue requiring a trial on the issues put forth by the defendants, as outlined above.

[32] Putting aside the fact that the issues were not pleaded by the defendants, the defendants have not provided any legal basis that imposes a legal obligation on the Plaintiff that it should have:

a) directed the defendants to the terms of the APS that deal with repercussions for failing to close the transaction; b) inquired with the defendants if they had pre-approved financing and review the amount of the financing with the defendants; c) offered or made available independent legal advice at the sales office.

[33] The defendants have not provided the Court with any legal principle, be it a duty of care or a contractual obligation, that imposes an obligation upon the Plaintiff to perform any of the three obligations presented above. From my review of the APS, there is no contractual obligation. From the circumstances, the defendants have not provided any foundation, in law, for a duty of care that is owed by the Plaintiff to the defendants, the purchasers.

[34] The APS included conditions for financing and the for defendants to obtain independent advice. However, both those conditions were waived by the defendants since the Plaintiff was not agreeable to including those two conditions in the APS. The defendants knew that the Plaintiff was not agreeable to any condition concerning financing and independent solicitor review before attending at the sales office. The Plaintiff will only accept a firm Offer to Purchase. On April 5, 2017 at 5:01 p.m., an email was received by the defendants setting the date of the sales office appointment and noting the following:

TO AVOID DISAPPOINTMENT, PLEASE NOTE THESE IMPORTANT BUYING PROCEDURES

• Remember to bring your cheque book - you’ll need a minimum of FOUR cheques.
• You will be required to provide your government-approved Photo -ID (i.e. Driver’s Licence). This is required for all those who will be listed on the Agreement of Purchase and Sale.
• Arrange for Pre-approval with the Financial Institution-Only accepting FIRM DEALS

[35] Moreover, the evidence put forth by the defendants is that if they did not sign the APS that day, they would not be able to do so later. The evidence is that the Plaintiff’s representative indicated that if the defendants do not sign an APS today there is no guarantee that the lot they desire, or any other lots will be available later. The purchase demand for the lots from the number of people attending was high. Thus, it appears to me that the defendants were concerned that if they did not sign the APS as presented by the Plaintiff, with no conditions, they would lose the lots they desire or would not be able to purchase a lot in the Plaintiff’s development.

[36] This inference is supported by the evidence of the defendants that they wanted the Property because it was close to the place of work of Ms. Aluko and the defendants’ actions later in paying an additional $40,000 in deposits for two extensions of the closing dates. Further, the defendants later requested that the Plaintiff agree to a second mortgage to make up the difference between the financing that the defendants secured from a lending institution and the purchase price. In a nutshell, the defendants wanted the Property. They took a risk of signing the APS for a price that exceeded their financing approval and with no conditions. Also, during this period of extension, there was no allegation presented by the defendants that the APS was not legally binding.

[37] The APS also includes the clause, at paragraph 9(a) in Schedule X, that there are no representations or warranties outside of the terms of the APS. This paragraph negates any claim for warranties or representations that are not written in the APS as being part of the APS and binding upon the signatories.

[38] Consequently, I am not persuaded on the facts and contentions of the defendants that the Plaintiff owed a legal obligation to the defendants, either in contract or through a duty of care, to perform the obligations outlined above.

Contract of Adhesion

[39] In dealing with the submission of contract of adhesion, I am not persuaded by this argument.

[40] In SR Petroleum Sales Ltd. v. Cdn. Turbo [6], the Court was concerned whether a lease agreement was a contract of adhesion. In that case, the lease agreement was a “take it or leave it” contract. The Court described a contract of adhesion as follows:

[33] The expression "contract of adhesion" has been used by the Supreme Court of Canada, by Lord Diplock, and by the American courts; in Canada, it is more familiar to civilians in Quebec than to common law lawyers in the rest of Canada. The term has been explained in Brissette Estate:

"The American courts have reasoned that insurance policies are contracts of 'adhesion' and therefore ambiguities contained in them should be resolved in favour of the insured. A contract of 'adhesion' has been defined as a written contract with the following characteristics:

1. drafted by one party to the transaction;
2. on a form regularly used by the drafter;
3. presented to the adherent on a take-it-or-leave-it basis;
4. one in which the adherent enters into relatively few such transactions as compared with the drafting party;
5. one in which the principal obligation of the adherent is the payment of money.

[41] The Court in SR Petroleum Sales Ltd. further stated at paragraph 34:

[34] The effect of designating a contract as a contract of adhesion is that the contract will be interpreted strictly against the dominant party. This is, of course, a slightly different notion than that of "contra proferentum". Ambiguity or no, this contract will be interpreted strictly against Turbo because it is a contract of adhesion….

[42] The defendants argue that whether there is an ambiguity in the APS or not, the APS is a contract of adhesion and all its terms must be interpreted strictly against the Plaintiff.

[43] The defendants argue that paragraph 7 of the APS, ‘Breach of Contract’, should be strictly construed against the Plaintiff and the Plaintiff is limited to only the amount of deposits and upgrades paid as damages. Paragraph 7 reads:

a) Any breach by the Purchaser of any of the provisions (including but not limited to non-payment of deposits as per agreed upon schedule, non-payment of extras/upgrades contracted for by the Purchaser and NSF cheques) of this Agreement shall entitle the Vendor, in addition to any rights or remedies that the Vendor may have in law or otherwise, to give notice to the Purchaser declaring this Agreement void, whereupon all deposit monies paid hereunder, and any monies paid for extras, shall be forfeited to the Vendor as liquidated damages and not as a penalty.

[44] In interpreting a contract, the Court must review the whole of the Agreement. The Court must examine the ordinary meaning of the wording to determine if the wording is clear and ambiguous. There is no reason to go outside the terms of the Agreement. If the terms are not clear and unambiguous, the Court may go outside the terms of the Agreement to ascertain the intention of the signatories to the Agreement and the meaning of provisions in the Agreement.

[45] Justice Doherty in Glimmer Resources Inc. v. Exall [7] states at paragraphs 16 and 17:

16. When interpreting the provisions of a written contract, the court must look first at the language used in that contract. If the language reveals no ambiguity, there is no need to go outside of the agreement for assistance in the interpretive exercise. As Iacobucci J. recently said in Eli Lilly and Co. v. Novopharm Ltd. 1998 SCC 791, 161 D.L.R. (4th) 1 at 27:

The contractual intent of the parties is to be determined by reference to the words they used in drafting the document, possibly read in light of the surrounding circumstances which were prevalent at the time. Evidence of one party's subjective intention has no independent place in this determination.

[46] The Supreme Court of Canada in British Columbia Hydro and Power Authority v. BG Checo International Ltd [8], a case concerning contract interpretations, sets out the general principles of contract interpretation as follows:

It is a cardinal rule of the construction of contracts that the various parts of the contract are to be interpreted in the context of the intentions of the parties as evident from the contract as a whole. (Citation omitted) Where there are apparent inconsistencies between different terms of a contract, the court should attempt to find an interpretation which can reasonably give meaning to each of the terms in question. Only if an interpretation giving reasonable consistency to the terms in question cannot be found will the court rule one clause or the other ineffective. (Citation omitted) In this process, the terms will, if reasonably possible, be reconciled by construing one term as a qualification of the other term. (Citation omitted) A frequent result of this kind of analysis will be that general terms of a contract will be seen to be qualified by specific terms - or, to put it another way, where there is apparent conflict between a general term and a specific term, the terms may be reconciled by taking the parties to have intended the scope of the general term to not extend to the subject-matter of the specific term.

[47] Paragraph 9(a) in Schedule X indicates that the Plaintiff shall have the right to recover all additional losses and damages arising out of a default on the part of the Purchaser pursuant to any provision contained in the APS.

[48] In reviewing the APS as a whole, and in particular paragraphs 7(a) and 9(a) in Schedule X, the wording and intention is clear. Without determining whether the APS is a contract of adhesion, I determine that even if the paragraph should be strictly interpreted, it is clear to me that the paragraph in question permits the Plaintiff to seek damages over and above the amounts paid by the defendants in deposits and /or the upgrades. The Plaintiff is not so limited as argued by the defendants. The wording “ in addition to any rights or remedies that the Vendor may have in law or otherwise” in paragraph 7(a) and right to recover all damages arising from a default in paragraph 9(a), I interpret as providing the Plaintiff with the right, if it so desires, to seek damages for breach of contract over and above the amount of the deposits and extras paid by the defendants. In addition, the issue of forfeiture of the deposits is not a live one in this proceeding. The Plaintiff has not sought forfeiture of the deposits and amount paid for the upgrades as relief claimed in its motion.

[49] I do not accept this contention by the defendants and conclude that the terms of the APS are clear and in particular paragraph 7(a) quoted above. The Plaintiff may claim for damages over and above the amounts paid by the defendants in deposits and upgrades.

Photo Identification

[50] The defendants allege that the plaintiffs breached section 6.1 of the Proceeds of Crime (Money Laundering) and Terrorist Financing Act [9] (the Act). Section 6 reads:

Verifying identity 6.1 Every person or entity referred to in section 5 shall verify the identity of a person or entity in accordance with the regulations.

[51] Section 5 lists numerous entities and persons to which the obligation set out in the statute applies. This includes:

(i) persons and entities engaged in a prescribed business, profession or activity; (j) persons and entities engaged in a prescribed business or profession, while carrying out a prescribed activity;

[52] By regulation, Parliament has listed the prescribed business, profession, or activity. The real estate professions, including real estate developers, real estate brokers and sales representatives constitute a business, profession or activity that are subject to the requirements of the Act. [10] Real estate brokers and sale representatives are defined as a person or entity that are authorized under provincial legislation to act as an agent for purchasers or vendors in respect of a purchase or sale of real property. They are subject to the Act. Real estate developers are defined as a person or entity that in or after 2007 have sold to the public five or more new houses or condominium units. They are also subject to the Act.

[53] The defendants allege that the plaintiffs failed to comply with the Act.

[54] The evidence provided is not clear that the Plaintiff failed to comply with the Act. The evidence does indicate that the Plaintiff’s representative did request from the defendants, again, a copy of their photo identification. The evidence does not indicate that the Plaintiff did not obtain the necessary identification information of the defendants at the time of their signing of the APS.

[55] The evidence does indicate that the salesperson who dealt with the defendants, Anna Sasanov, is no longer employed by the real estate broker firm that handled the sales for the Plaintiff (Spectrum Realty). There is no evidence provided by the Plaintiff on what took place during the execution of the APS by the defendants. There also is no evidence from the defendants on whether any identification information was obtained by the Plaintiff at the time of execution and whether the sales representative viewed the defendants’ photo identification at that time.

[56] There is a gap in the evidence.

[57] The defendants are obligated to put their best foot forward. The defendants are the ones arguing that the Plaintiff failed to comply with the Act. The onus is on the defendants to meet the burden of providing evidence to convince the Court that there is a genuine issue requiring a trial.

[58] I am of the view that the defendants have failed to meet that burden. The best foot forward of the defendants does not meet their burden of convincing the Court that there is a genuine issue requiring a trial concerning the failure to comply with the Act.

[59] Furthermore, even if the Plaintiff did not have the photo identification at the time of execution of the APS, I am not convinced that the Plaintiff did not have the identification information of the defendants. The failure to not have photo identification at the time of execution but obtained that information days later, in my opinion, does not reach the realm that the APS is null and void. [11] At best, it is a marginal error. The purpose of the Act is satisfied. The prevention of money laundering. In the circumstances of this matter, I agree with the Plaintiff, there was no factual basis to believe that the defendants were attempting to money launder. And if they were, the Plaintiff obtained the photo identification and information of the defendants as obligated by the Act long before any purchase of the Property or the payment of monies. This complies with the purpose and intention of the Act.

Unconscionability and Wilful Blindness

[60] Though not pleaded, the defendant submits that the APS is not legally valid for being unconscionable and that the Plaintiff was wilfully blind.

[61] As I understand the argument, the defendants contend that the terms and settings of the execution of the APS are unconscionable and that the Plaintiff was wilfully blind in not determining whether or not the defendants received prior financial approval that would allow them to purchase the Property.

[62] The defendants contend that based on Wescom Solutions Inc. v. Minetto [12], the Plaintiff’s wilful blindness in not inquiring the defendants if they had prior financing approval to purchase the Property. The defendants base this argument on the email sent to the defendants that they should arrange for pre-approval of financing for acceptance of deals with conditions for financing will not be accepted. All Offers will have to be firm.

[63] First, I do not agree that Wescom applies in these circumstances. In Wescom, a purchaser obtained Apple products valued at $6.2 million from a vendor who obtained these products fraudulently through Wescom’s credit card. Wescom sued the purchaser for the cost of the Apple products received. In defining wilful blindness, the Court of Appeal stated:

…As stated by this court in R. v. Malfara (2006), 2006 ONCA 17318, 211 O.A.C. 200 (C.A.), at para. 2, “Where wilful blindness is in issue, the question is not whether the accused should have been suspicious, but whether the accused was in fact suspicious.” In short, a finding of wilful blindness, which is the same standard in criminal law and civil proceedings, involved a subjective focus on the workings of a defendant’s mind. [13]

[64] I fail to grasp how the mind of the Plaintiff falls within the realm of wilful blindness. First, I have already found that there is no obligation on the Plaintiff to ascertain that the defendants obtained financing to purchase the Property. The email makes clear that that defendants should have their approval ready. The Plaintiff will only accept firm deals. The Plaintiff will not accept any conditions on financing. The onus is on the defendants to make sure that they have the necessary money to purchase the property they wish. The email, in my view, makes that clear.

[65] How is the Plaintiff wilfully blind by not enquiring of the defendants if they obtained prior financial approval and to the amount of that approval? Where is the need for the Plaintiff to make such an inquiry? Where is the suspicion that would lead the Plaintiff to make such an inquiry? There was no evidence lead on the subjective mind of the Plaintiff. Nor was there any evidence lead that would make the Plaintiff inquire of the financial approval obtained by the defendants.

[66] I fail to see the relevance of wilful blindness in the circumstances of this case. This is not an issue requiring a trial.

[67] On unconscionability, I do not find that this is an issue requiring a trial. For unconscionability, the Court must determine that the agreement in question is unreasonable and the unreasonableness stems from inequality of bargaining power. [14] As the Supreme Court of Canada stated in Uber Technologies:

Unconscionability is an equitable doctrine that is used to set aside “unfair agreement [that] resulted from an inequality of bargaining power.” Initially applied to protect young heirs and the “poor and ignorant” from one-sided agreements, unconscionability evolved to cover any contract with the combination of inequality of bargaining power and improvidence. This development has been described as “one of the single accomplishments of modern contract law, representing renaissance in the doctrinal treatment of contractual fairness.”

[68] The defendants argue that they were in an inequitable bargaining power situation. The Plaintiff is an experienced developer and they are schoolteachers. The APS was a “take it or leave it” agreement. The APS is unfair, and they should not be legally bound by their terms.

[69] I do not accept this submission. I do not find an inequality of bargaining power that resulted in improvidence. The defendants were aware of what they were doing. They took steps to purchase the Property. They paid further deposits to allow them time to attempt to obtain the required financing to purchase the Property. They knew the extent of their financing approval when they executed the APS. There was no evidence presented that persuades me that the defendants were, in effect, taken advantage of. The defendants did not have to purchase the Property. They could have simply walked out of the sale office or purchased a residential property that was not as expensive, without the lot upgrades and interior upgrades they desired.

[70] On the facts of this case, there is no unconscionability that compels the Court to exercise its equitable discretion.

B. Did the plaintiffs reasonably mitigate their damages by selling the Property on July 10, 2019 in the amount of $1,060,000?

[71] It is not disputed that on a breach of contract action, the innocent party is entitled to be put in the position they would have been had the contract not been breached and was performed. The assessment of the damages that may be due to the innocent party do not include avoidable losses which would increase the amount of the damages assessed and payable to the innocent party. The innocent party has a duty to mitigate. The duty encompasses that the innocent party must take reasonable steps to avoid the accumulation of damages. In effect, the innocent party should not receive more than they would have received if they acted reasonably. [15]

[72] The Court is focused on quantifying damages for the innocent party for the wrongs of the party that breached the contract and not for the unreasonable steps or inaction of the innocent party. [16]

[73] In the circumstances of failure to close a real estate transaction, the Court reviews the circumstances of the transaction, the failure to close, the party that breached the contract and the circumstances and conduct of the innocent party and the defaulting party after the breach. The courts have reviewed numerous factors that determine whether the innocent party took reasonable steps to minimize the losses incurred. These factors include:

a) What was the circumstances of the real estate market at the time? b) How long did it take for the innocent party to put the property up for sale? c) How long was the property up for sale before it was sold? d) Was the property marketed and how was it marketed? e) What was the price that the property was relisted for sale? f) How was the property exposed for sale? g) Were there any price reductions? If so, how many and what were the price reductions? h) Were there any other offers to purchase the property? i) How many offers were made and what were the particulars of those offers? [17]

[74] The onus is on the party disputing the damages claimed to provide evidence to prove on the balance of probabilities that the innocent party has failed to mitigate their damages and did not act reasonably in that the damages sought do not reasonably flow from the breach. The onus remains upon the innocent party to provide evidence that proves on the balance of probabilities that the damages sought are reasonable and flow from the breach claimed. In an aborted real estate transaction, this can include the difference between the purchase price by the defaulting party and the final market value of the property when that property is sold by the innocent party to an arms length purchaser at the time the innocent party seeks assessment of damages, along with any reasonable carrying costs. [18]

[75] The innocent party does not have a positive duty to mitigate but failure to do so is to be taken into consideration when the Court determines damages. [19]

[76] The defendants argue that the Plaintiff did not act reasonably and did not mitigate their damages when they refused to accept the proposal of the defendants to accept a vendor take back mortgage to purchase the Property at the full price. The defendants argue that the Plaintiffs are not entitled to any damages for decrease in the selling price for the defendants were agreeable to purchase the Property at the price in the APS with a vendor take back mortgage provided by the Plaintiff. The defendants argue that the cases provided by the Plaintiff are factually distinguishable because in none of the cases provided did the non-innocent party offer to purchase the property at the same price as in the APS.

[77] In response, the Plaintiff directs the Court to the decision of Azzarello v. Shawqi [20]. In Azzarello, the Ontario Court of Appeal dealt with a situation of a failure to close by the purchaser of a residential home in Mississauga pursuant to an APS. The vendor relisted and sold the property at a price less than was agreed upon in the APS. The purchaser offered to purchase the property with a 10% reduction, more than the vendor received on the re-sale of the property. In addressing the mitigation of damages, the Court stated:

[39] The duty to mitigate is derived from the proposition that the wronged party cannot recover from the defaulting party losses that could reasonably have been avoided: (citation omitted). It cannot be reasonable for the vendor to be obliged to reduce the loss it claims from the defaulting party by reselling the property to that party, then suing him or her for the difference. This would offer no financial advantage to the defaulting party as that party would be obliged to pay the same amount, either way. Yet the defaulting party would secure a significant tactical and procedural advantage over the innocent vendor.

[40] The effect of endorsing the proposition advanced by the appellant would be to undermine the sanctity of the bargain by encouraging purchasers to default, particularly in a falling market, and to offer a lower price for the same property, leaving vendors with the risk and expense of recovering the balance of the original contract price in an action. The duty to mitigate does not go that far.

[78] I find the statement of the Court of Appeal instructive. Even though in these circumstances there was no decrease in the price of the Property sought, the sanctity of the bargain is undermined. The Plaintiff entered a no conditions bargain for the defendants to purchase the Property at a price for cash. There was no financing involved. The Plaintiff, by seeking all cash, made it clear it had no intention to be a financier on the purchase. If the Court adopts the reasoning of the defendants, the Plaintiff would be forced to accept a bargain as a financier when the Plaintiff, in the APS accepted by the defendants, had no intention to do so. This would, in my view, put the Plaintiff into a precarious position: either be a financier or be penalized by the Court by a reduction in damages even though you had no intention to be a financier in the original bargain. It is not the role of the Court to redefine the bargain that has been accepted by the parties where it is the party in default that wishes the change. As the Court of Appeal stated: “The duty to mitigate does not go that far.”

[79] Thus, I do not accept the submission of the defendants that failure of the Plaintiff to accept the defendants’ proposal that the Plaintiff provide financing is a failure of the Plaintiff to mitigate. To do so would penalize the innocent party and undermine the sanctity of the bargain.

[80] I will now turn to the damages claimed by the Plaintiff.

C. What is the quantum of damages?

[81] The Plaintiff is entitled to reasonable damages that flow from the default of the defendants. There is no dispute that the defendants failed to close and that they are in default of the APS.

[82] The Plaintiff put the Property back up for sale but did not put the property on the Multiple Listing System (MLS). The Property was sold to an arms length third party approximately two years later.

[83] No evidence has been provided by the Plaintiff on the steps taken to sell the Property. Whether the Property was advertised in any way. Whether there was more than one offer provided to purchase the Property. Before the sale of the final Property, was there any other reductions in the price to get to the sale price?

[84] The Plaintiff has presented a valuation report from D. Bottero & Associates dated October 7, 2021. In that report, it is opined that at the time of the execution of the APS, the market value of the Property was $1,510,000 and on June 4, 2019, the market value of the Property was $1,050,000. This report was presented by the Plaintiff as a litigation expert report pursuant to Rule 53 of the Rules of Civil Procedure. The defendants indicated no objection to the report or the contents contained therein including the opinion of D. Bottero.

[85] The defendants did not provide a litigation expert report. The defendants provided a draft report that was used by the financing company performed by Home Value Inc. It was not a report obtained for the purpose of litigation as clearly indicated in the watermark on the report which states: Draft Copy Not To Be Relied Upon.

[86] The quandary of the Court is that the defendants have not provided any evidence to contradict the expert report provided by the Plaintiff nor has the defendants provided any evidence, expert or otherwise, to opine that the conduct of the Plaintiff in selling the Property was not reasonable or negatively affected the price that the Plaintiff obtained. There was no evidence to indicate that the Property should have been on the MLS or that the Property should have been marketed in a particular way. There was no evidence that the Property would have received more and better offers to purchase if the Plaintiff conducted the sale in a certain way.

[87] Given this lack of evidence on the part of the defendants and the evidence provided by the Plaintiff, the Court can only conclude that the price obtained by the Plaintiff on an arms length sale was reasonable.

[88] The Plaintiff also seeks damages for carrying costs in the amount of $5,483.67. The defendants did not indicate any dispute with the damages claimed and the amount sought. Having reviewed the amounts claimed and the invoices provided, I find the damages for carrying costs flow from the failure of the defendants to close the transaction and are reasonable.

[89] Accordingly, I find that there is no issue requiring a trial on the assessment of the damages claimed by the Plaintiff.

[90] I assess the damages as follows:

Purchase price of the Property: $1,523,162.00 Less Sold Price: $1,060,000.00 Less deposits and upgrades paid: $136,723.40 Plus carrying costs: $5,483.67 Total: $331,922.27

D. Interest

[91] The Plaintiff seeks pre and post judgment interest pursuant to the terms of the APS. Schedule X, paragraph 1(g) of the APS reads:

…Any monies owing to the Vendor pursuant to such readjustments or as a result of any expenses incurred by the Vendor arising from a breach by the Purchaser of any of the Purchaser’s obligations described in this Agreement shall be payable upon written demand by the vendor and shall bear interest from the date of written demand at the rate of twelve (12%) per cent per annum, calculated daily, not in advance and shall be a charge on the Property until paid and such charge shall be enforceable in the same manner as a mortgage in default. (emphasis added)

[92] By letter dated December 20, 2018, the Plaintiff did not provide a written demand for damages or interest pursuant to the APS. The Plaintiff accepted the repudiation and that all monies paid are forfeited. The only written demand for monies, damages and interest pursuant to the APS presented to this Court was in the Statement of Claim. The Statement of Claim was issued on November 29, 2019.

[93] The defendants submitted that the rate of interest in the APS was punitive for the rate exceeds the bank rate by three to four times.

[94] I do not accept this submission. But I do agree that the rate is three to four times the prevailing bank rate.

[95] I accept that the Plaintiff is entitled to the prejudgment rate prescribed in the APS, but I exercise my discretion and fix the post judgment rate as prescribed by the Courts of Justice Act [21].

[96] The calculation of prejudgement interest at the rate of 12% per annum, as requested by the Plaintiff from issuance of the Statement of Claim to the date of this Decision, is to be provided by the Plaintiff in its submissions for costs.

Conclusion and Disposition

[97] I find in favour of the Plaintiff. I do not accept that there are issues requiring a trial. I am satisfied that I am able to make a just determination on the merits based on the evidence presented.

[98] I therefore grant the following judgment:

1. The defendants, Flora Temitayo Aluko and Maxwell Olugbenga Aluko shall pay to the plaintiff, Rosehaven Homes Limited, the sum of $331,922.27 plus prejudgment interest.
2. The action and claims of the plaintiff, Bram-Rose Homes Inc. are hereby dismissed.
3. Post judgment interest as prescribed in the Courts of Justice Act.

Costs and Prejudgment Interest

[99] If the parties cannot agree on costs or the calculation of prejudgment interest, the Plaintiff to serve and file its submissions for costs and prejudgment interest within 30 days from the date of this Decision, and the defendants will have 30 days thereafter to serve and file their submissions. The submission to be no more than five pages, double spaced, exclusive of any cost outline and offers to settle. Any case law to be hyperlinked in the submissions. There is no right to reply. Submissions are to be filed with the court. If no submissions are received within the time set out herein, an order will be made that there will be no costs.

Released: February 23, 2022

NEWMARKET COURT FILE NO.: CV-19-142866-00 ONTARIO SUPERIOR COURT OF JUSTICE BETWEEN: Rosehaven Homes Limited and Bram-Rose Homes Inc. Plaintiffs – and – Flora Temitayo Aluko and Maxwell Olugbenga Aluko Defendants DECISION FROM MOTION FOR SUMMARY JUDGMENT Justice P.W. Sutherland

Released: February 23, 2022

[1] The plaintiffs conceded that only Rosehaven Homes Limited entered into the APS with the defendants and agree that any judgment granted should be in the name of that plaintiff only. Given that Bram-Rose Homes Inc. is not a signatory to the APS, the plaintiff’s counsel indicated that Bram-Rose Homes Inc. was added as a named plaintiff, if the Court understands correctly, as having an interest in the Property. However, no title search or indication is in the Statement of Claim or any of the material filed on this motion to support that representation of plaintiff’s counsel.

[2] R.R.O. 1990, Reg. 194.

[3] Hryniak v. Mauldin, 2014 SCC 7, at para. 49.

[4] Ibid at para. 65; and Canaccord Genuity Corp. v. Pilot, 2015 ONCA 716, at para. 31.

[5] Vincorp Financial Ltd. et al. v. Hope’s Holdings Inc., 2010 ONSC 6819, at para 17.

[6] SR Petroleum Sales Ltd. v. Cdn. Turbo

[7] Glimmer Resources Inc. v. Exall.

[8] British Columbia Hydro and Power Authority v. BG Checo International Ltd., 1993 SCC 145, 99 D.L.R. (4th) 577 (SCC) at paras. 581-582; see also Sattva Capital Corp v. Creston Moly Corp., 2014 SCC 53, at paras. 45-50.

[9] S.C. 2000, c.17. Amendments came into effect in June 2021, after the date of the APS.

[10] SOR/2002-184, s. 1(2). Also see explanatory information from the Government of Canada: Real estate brokers or sales representatives, and real estate developers (fintrac-canafe.gc.ca)

[11] Beer v. Townsgate I Ltd

[12] Wescom Solutions Inc. v. Minetto, 2019 ONCA 251

[13] Ibid. at para. 10.

[14] Uber Technologies Inc. v. Heller, 2020 SCC 16.

[15] Michaels v. Red Deer College, 1975 SCC 15, [1975] 5 W.W.R. 575, [1976] 2 S.C.R. 324, at paras. 9 and 10; Asamera Oil Corporation Ltd. v. Sea Oil & General Corporation, 1978 SCC 16, [1979] 1 SCR 633, pp. 646-648; Southcott Estates Inc. v. Toronto Catholic District School Board, 2012 SCC 51, at paras. 23 and 24.

[16] British Columbia v. Canadian Forest Products Ltd., 2004 SCC 38, [2004] 2 SCR 74 at para. 176.

[17] Cuero Lorens v. Carpenter, 2017 ONCA 109; Hargreaves v. Barr, 2010 BCCA 489; Gamoff v. Hu, 2018 ONSC 2172; Zou v. Sanyal, 2019 ONSC 738;

[18] McKnight v. Morrison, 2019 ONSC 552, at paras 46 and 47. Also see Asamera, note 15 and Gamoff, supra, note 17; Deco Homes (Richmond Hill) Inc. v. Serikov, 2021 ONSC 2079; Chang v. Hung, 2021 ONSC 8208

[19] Ibid.

[20] Azzarello v. Shawqi, 2019 ONCA 820

[21] RSO 1990 c. C.43, including sections 129 and 130.