COURT FILE NO.: CV-19-619759 DATE: 20220502
ONTARIO SUPERIOR COURT OF JUSTICE
RE: HAI NGUYEN, Plaintiff -and- SHAOJUN HU, Defendant
BEFORE: FL Myers J
COUNSEL: Gregory P. Weedon, for the Plaintiff Ran Tao, for the Defendant
HEARD: April 22, 2022
ENDORSEMENT
The Motion
[1] The plaintiff seeks summary judgment for damages as a result of a failed real estate transaction.
[2] The defendant Shaojun Hu bought a condominium unit that was under construction. Closing was some years off.
[3] Mr. Hu assigned the agreement of purchase and sale to the plaintiff.
[4] Mr. Hu changed his mind shortly after and repudiated the assignment agreement.
[5] Mr. Nguyen, as assignee purchaser, accepted the termination of the assignment agreement by demanding and taking his deposit back. He never sought to enforce the assignment agreement by claiming title to the unit or seeking specific performance.
[6] Mr. Nguyen asks the court to assess damages at the date that the condominium sale from the builder to Mr. Hu eventually closed. That was nearly two years after Mr. Hu repudiated the assignment and over a year after Mr. Nguyen received his deposit back.
[7] On closing, the builder conveyed title to the condominium unit to Mr. Hu. That would have been the date that title would have been conveyed to Mr. Nguyen under the assignment agreement.
[8] Mr. Nguyen submits that he was going to flip the unit on closing so that he should be entitled to the profit that he lost by the defendant’s breach of the assignment agreement. He claims $195,000 being the increase in the value of the unit from the price he agreed to pay for it until the closing date nearly two years later.
[9] Mr. Nguyen also claims interest on his deposit for the months that it was wrongfully withheld by Mr. Hu and the real estate agents. He says he was earning 2% on his savings at the time and he has been deprived of that alternative use of his funds.
The Outcome
[10] For the reasons that follow, I find that Mr. Hu breached the assignment agreement.
[11] I assess the damages suffered by Mr. Nguyen as at the date of the breach. At that time, he had not paid the purchase price and was free to invest his capital elsewhere if he chose to do so.
[12] Mr. Nguyen does not claim that he could not re-invest until he received his deposit back and provided no evidence justifying a delay of the assessment of damages form the date of the breach of contract committed by Mr. Hu.
[13] It follows that Mr. Nguyen is entitled to nominal damages only.
[14] I do not accept that Mr. Nguyen is entitled to interest on the deposit. The assignment agreement specifically provided that the deposit was to be held without interest. Had the agreement been performed Mr. Nguyen had no reasonable expectation of receiving interest.
[15] Mr. Nguyen’s request to assess his damages at the date of the ultimate closing of the initial sale from the builder to Mr. Hu to try to give Mr. Nguyen the same result as if the assignment agreement was performed and he flipped the unit does not entitle him to interest on his deposit. To reach closing to flip the unit, the deposit would have remained with the agent without interest.
Procedural Issues
[16] The defendant Mr. Hu has been in China since shortly after signing the assignment agreement. However, he has been represented by counsel here throughout. He delivered a statement of defence in this action.
[17] Mr. Hu and his prior lawyer, Mr. Wenus, ignored the plaintiff’s repeated efforts to communicate about a reasonable schedule for the hearing of this motion. Mr. Weedon was more than civil in repeated efforts to engage Mr. Wenus in discussions of scheduling and efforts to schedule Civil Practice Court appearances. Mr. Wenus ignored communication from his colleagues opposite and when Mr. Weedon finally set unilateral dates for attendance, Mr. Wenus asked for adjournments.
[18] Mr. Weedon and the plaintiff have more than ample reason to be exasperated with the failure of Mr. Hu to participate and cooperate in scheduling appropriately. No matter what the client’s position may be on a proposed motion, it should not take months for two Ontario counsel to communicate and agree on a date for an attendance in Civil Practice Court.
[19] At CPC, I set a schedule for the hearing of the motion. Mr. Hu ignored it. A judge at CPC then ordered a case conference to determine what was required to get this motion heard. The judge set a second schedule to accommodate Mr. Hu. He ignored it too.
[20] For many months, Mr. Wenus advised that Mr. Hu might change counsel. He did so just days before the motion hearing.
[21] Despite claiming to have technological difficulties in China, it seems that Mr. Hu was able to communicate and provide all of his documents and evidence to his new lawyer Mr. Tao within a few days of retaining him. Mr. Tao delivered lengthy and complete material on April 21, 2022 – the day before the motion hearing. This was months after the materials were due.
[22] This is no criticism of Mr. Tao. Once Mr. Hu decided to participate, at his own timing, Mr. Tao moved very quickly and comprehensively.
[23] Mr. Weedon consented to the late filing of material to avoid an adjournment. I therefore do not have to deal with the question of whether Mr. Hu should be allowed to file his evidence at this time or to cross-move for summary judgment of his own without leave and a schedule being set at CPC. That permission was by no means assured.
[24] Ultimately, the decision I am making comes from the failure of the plaintiff’s motion and plaintiff’s inability to prove that fairness requires damages to be assessed at the final closing of the sale from the builder to Mr. Hu. I do not need to deal with any consequences of Mr. Hu’s failure to meet court ordered schedules.
The Facts
[25] By agreement of purchase and sale dated November 24, 2014, Mr. Hu purchased a condominium unit to be built by AQUAVISTA Bayside Toronto Inc, an affiliate of Tridel. The purchase price was $606,000.
[26] The agreement provided a schedule of critical dates with a first tentative occupancy date of April 25, 2018. The final deadline for the builder to provide occupancy was April 26, 2021.
[27] Article 2.01 of the agreement prohibited the purchaser from assigning the agreement without the consent of the builder.
[28] Article 2.04 of the agreement required Mr. Hu to retain an Ontario lawyer to represent him in connection with the completion of the purchase.
[29] Article 5.01 (f) anticipated the possibility of documents being provided by Mr. Hu with foreign language signatures:
In the event that any of the documents delivered by the Vendor’s solicitor to the Purchaser or the Purchaser's solicitor for execution by the Purchaser are signed in foreign characters or lettering (which bears no relation to the Purchaser's name in English, as same appears in the documents being executed), then the Purchaser agrees to ensure that his or her signature is duly witnessed, and that a statement is added in English by such witness confirming that the witness saw the Purchaser sign the document after same had been read to the Purchaser and the Purchaser appeared to fully understand same.
[30] By assignment agreement dated April 14, 2018, Mr. Hu assigned the agreement of purchase and sale to Mr. Nguyen. Mr. Nguyen agreed to pay $715,000 for the unit including a deposit of $160,000.
[31] Paragraphs 15 and 16 of the assignment agreement provide:
APPROVAL OF THE AGREEMENT: In the event that consent to this Assignment is required to be given by the seller in the Agreement of Purchase and Sale attached hereto in Schedule C, the Assignor will apply, at the sole expense of the Assignor, forthwith for the requisite consent, and if such consent is refused, then this agreement shall be null and void and the deposit monies paid hereunder shall be refunded without interest or other penalty to the Assignee.
AGREE TO CO-OPERATE: Except as otherwise expressed herein to the contrary, each of the Assignor and Assignee shall, without receiving additional consideration therefor, co-operate with and take such additional actions as may be requested by the other party, acting reasonably, in order to carry out the purpose and intent of this Assignment,
[32] The pre-printed form of assignment agreement contained terms providing that the assignee could cancel the agreement after obtaining legal advice within five days. The following term was added in handwriting to the assignment agreement to specifically provide Mr. Hu, the assignor, with the right to show the agreement to a lawyer and cancel it within five days:
This Agreement of Assignment is conditional upon the approval of the terms hereof by the Assignor's solicitor. Unless the Assignor gives notice in writing no later than 10:00 pm within five business days upon the Acceptance of this Assignment of Agreement of Purchase and Sale that this condition is fulfilled, this offer shall be null and void. This condition may be waived at the Assignor's sole option by notice in writing to the Assignee or his agent as aforesaid within the time period stated herein.
[33] The assignment agreement also provided that Mr. Hu would obtain the consent of the builder to the assignment by May 24, 2018 failing which the assignment agreement would be null and void and the deposit returned without interest or deduction.
[34] The builder provided its draft application for consent forms to the parties. Mr. Nguyen signed them and dealt directly with the builder concerning how he proposed to pay the purchase price on closing.
[35] Just one week after signing the assignment agreement, on April 21, 2018, Mr. Hu had his agent advise Mr. Nguyen’s agent that Mr. Hu did not want to proceed with the assignment. Mr. Nguyen insisted that the transaction proceed. On April 24, 2018, Mr. Hu’s agent advised Mr. Nguyen’s agent that "as I said on the phone, [my clients] have some specific reason that they can't sell."
[36] Somewhere in this period, Mr. Hu left for China due to the illness of relatives overseas. But he knew that he would be leaving before he signed the assignment agreement. He says in his affidavit:
- This trip was not an attempt to frustrate the deal (as the Plaintiff might allege). Prior to signing of the Assignment Agreement, I had already advised the Plaintiff that I would be returning to China soon.
[37] Faced with Mr. Nguyen’s insistence that the transaction proceed, Mr. Hu says he relented and agreed to continue with the assignment:
Despite my initial desire to cancel the assignment agreement (on or about April 21, 2018), once I learned the Plaintiff was not agreeable to cancelling the Agreement, I decided that I will honour the Assignment Agreement and will fulfill my contractual obligations therein.
I believe my Agent advised the Plaintiff of my intention to proceed with the Assignment at around the end of April, 2018.
[38] Neither party gave evidence of providing a waiver of the mutual conditions for lawyers’ approval of the assignment terms within five business days. But, even if the agreement terminated under those clauses, both parties affirmed that the agreement remained in force thereafter.
[39] Mr. Hu gives evidence of efforts to obtain the builder’s consent. All he had to do was to sign two forms provided by the builder. One was an addendum to the initial agreement of purchase and sale to add Mr. Nguyen as a purchaser. The other was a FINTRAC confirmation of identification form.
[40] The builder required the FINTRAC form to be completed by a lawyer. It is a form in which a lawyer confirms the identity of the client signing the addendum of the initial agreement of purchase and sale.
[41] The builder required original signatures on notarized documents. In instructions dated May 8, 2018, the builder told Mr. Hu:
All of the documents that I have sent need to be notarized. Please note the Addendum Confirming New Purchaser requires an initial on the first page and a signature on the second page. We also require that the FINTRAC form be filled out by the lawyer witnessing your signatures. The first portion of this form is to have your lawyers information, the middle will have your information and the last portion will be your lawyer signing.
[42] Mr. Hu went to his lawyer in China and had them witness his signature. He says that there was confusion between his agent and builder as to whether the documents needed to be witnessed or notarized.
[43] On May 22, 2022, the builder rejected the documents sent by Mr. Hu. According to inadmissible double hearsay provided by Mr. Hu, the builder initially told his agent that it wanted the documents witnessed and then changed to notarized. Neither the agent nor the builder’s representative gave admissible evidence to contradict the clear terms of the May 8, 2018 email from builder to Mr. Hu.
[44] It is apparent from text messages between Mr. Hu and his agent that Mr. Hu was having problems finding people in China who could notarize his documents and also attest to his identify as witness for the FINTRAC form. He also noted that the Chinese lawyers only signed in the Chinese language. He did not have them add the statement in English required by Art. 5.01 (f) of his agreement of purchase and sale with the builder.
[45] On May 24, 2018. the parties amended the assignment agreement to extend the time for Mr. Hu to obtain the builder’s consent to the assignment to June 24, 2018.
[46] Mr. Hu also had a lawyer in Hong Kong already. In late May he went to Hong Kong by car (a two or three hour trip) and signed the documents with his Hong Kong lawyer. He says the lawyer sent them to the builder but they were not received. So he went to Hong Kong again on June 14, 2018 and re-signed the documents. Once again, despite testifying that his lawyer couriered the documents, Mr. Hu says they were not received by the builder.
[47] Mr. Hu says that the builder wrongly failed to accept his documents. He swears:
I verily believe the Vendor unreasonably refused my signed documents which they did receive. The Vendor should already have copies of my identifications already on file, from the original Agreement of Purchase and Sale. Via my Agent, I communicated with the Vendor extensively to confirm my decision to assign the Property. I produced the documents, which was commissioned by my lawyer in China as initially required by the Vendor.
As I was required to attend to my mother and grandmother and other family affairs, I was quite overwhelmed. I simply did not have the free time to visit Hong Kong for the commissioned documents, as the Vendor requirements would entail.
[48] The assignee, Mr. Nguyen, offered a further extension of the time for Mr. Hu to obtain the builder’s consent to the assignment. Mr. Hu refused. He believed he did all that he reasonably could do including travelling to Hong Kong twice to try to satisfy the builder.
[49] On June 25, 2018, the builder advised Mr. Nguyen’s agent:
Unfortunately, there is nothing that we can do if the seller will not cooperate. The Fintrac paperwork was filled out wrong and the notary stamp is not in English. The Fintrac paperwork needs to be filled out by the lawyer it has nothing to do with the agent. If he would like to assign his suite he will have to get the paperwork done properly.
[50] I do not accept this email for the truth of its content as it too was double hearsay. But it sets the stage for the next step.
[51] By email dated June 28, 2018, Mr. Wenus advised Mr. Nguyen’s real estate lawyer:
We understand that the transaction is at an end and your client's deposit will be returned to him.
[52] Mr. Nguyen has submissions about there being an anticipatory breach. That is not an issue. Mr. Hu made a clear election to repudiate by refusing to extend the agreement and declaring the transaction at an end. In light of this definitive notice from Mr. Hu, there is no need to search for anticipatory breaches or to deal with tendering by Mr. Nguyen.
[53] Despite Mr. Wenus’s notice however, Mr. Hu did not return the deposit. The agents demanded a release of themselves and as between the parties. Mr. Nguyen was not prepared to agree to release anyone. Nor was he required to do so.
[54] In November, 2018, Mr. Nguyen commenced an application in this court for the return of his deposit. He sued the agents and Mr. Hu.
[55] Mr. Hu swears that he did not oppose the application. But, by letter dated November 28, 2018, Mr. Wenus wrote to Mr. Nguyen’s counsel:
It appears to me that your client's conduct and intentional breach of his own obligations contained in the Agreement of Purchase and Sale, may well result in the total forfeiture of his deposit. Certainly, there is a triable issue on that point alone in addition to the other triable issues mentioned above.
[56] On December 4, 2018, the Court ordered the release of the deposit to Mr. Nguyen. It also awarded costs against Mr. Hu. The judge wrote, in part:
The applicant contends that Hu failed to satisfy the conditions of obtaining the builder's consent and in doing so acted in bad faith. The condition remains unfulfilled, notwithstanding extensions. The builder, Aquavista, advised the parties it would not consent until the documentation was properly received by the respondent.
There is an aura of bad faith on the part of the respondent. Hu requires a mutual release on a with prejudice basis to any claim of damages by the applicant. The applicant seeks a return of the deposit. The respondent takes [no] position on the application and defers to the Court to determine the matter. The condition is unfulfilled, the assignment of agreement of purchase and sale has not been completed as a result of the inactions of the respondent, whether the applicant pursues a claim for damages is left to the applicant. [Emphasis added.]
[57] It is apparent from this endorsement that it was the agent that took no position on the application. Mr. Hu required a release of any damages claim on a “with prejudice” basis as a condition of returning the deposit and hence costs were awarded against him.
[58] The judge also found expressly that it was the inaction of Mr. Hu that caused the agreement not to be completed.
The Law
[59] I am prepared to accept for the purposes of this motion that the condition requiring the builder’s approval of the assignment was a true condition precedent. The builder is a third party and was entitled to make a decision to refuse the assignment no matter what Mr. Hu may have said or done.
[60] But the builder never made that decision. Rather, Mr. Hu never submitted the documents required to ask it to do so. There is no evidence that Mr. Hu ever sent the builder signed documents with a witness’s attestation in English as expressly required by Art. 5.01 (f) of his agreement of purchase and sale with builder under which the consent was sought.
[61] In Dynamic Transport Ltd. v. O.K. Detailing Ltd. the Supreme Court of Canada described the vendor’s obligation to try to bring about the fulfilment of a true condition precedent in these circumstances as follows:
The vendor is under a duty to act in good faith and to take all reasonable steps to complete the sale. I cannot accept the proposition that failure to fix responsibility for obtaining planning approval renders a contract unenforceable. The common intention to transfer a parcel of land in the knowledge that a subdivision is required in order to effect such transfer must be taken to include agreement tha t the vendor will make a proper application for subdivision and use his best efforts to obtain such subdivision. This is the only way in which business efficacy can be given to their agreement. In the circumstances of this case, the only reasonable inference to be drawn is that an implied obligation rested on the vendor to apply. [Emphasis added.]
[62] In Dynamic Transport, the issue of whether a vendor was obliged to apply for the needed approval was left to an implied term. In this assignment agreement, the obligations on the vendor to apply for the builder’s consent and to provide further assurances are express.
[63] Mr. Hu cannot be obliged to actually obtain the builder’s consent as the decision of whether to consent or not is beyond his control. But he was at least required to make a proper application. In the words of Mackenzie J. in Horth v Slokker Canada Corp., (1998) CarswellOnt 465, the vendor was required “to take the steps necessary to attempt to bring about the event constituting the condition precedent”.
[64] Mr. Hu relies on confusion and undelivered courier messages. As noted above, there is no admissible evidence of either. But assuming there was, Mr. Hu knew that he bore the obligation to obtain the builder’s consent before he left Canada. He says he left Canada urgently due to illnesses of relatives in China. But, as cited above, he knew he was leaving before he signed the assignment agreement. Under the initial agreement of purchase and sale with the builder, Mr. Hu had had already committed to retain a lawyer to represent him on the sale. In addition, he specifically added a condition into the assignment agreement to allow him five business days to get legal advice on the agreement. In other words, Mr. Hu anticipated obtaining legal advice before he left.
[65] There is no admissible evidence of any confusion in how the builder insisted upon completion of its documents. Of course the builder knew who Mr. Hu was already. But before it would accept Mr. Nguyen as an assignee/purchaser from Mr. Hu, it required proof that it was indeed Mr. Hu purporting to sign the documents while abroad. That is sensible from a business perspective irrespective of FINTRAC requirements. Moreover, the requirement of witness attestation to be in English is in the initial agreement of purchase and sale and was known to Mr. Hu at the time (as he mentioned it to his agent in contemporaneous text messages).
[66] I do not need to find bad faith to find that Mr. Hu did not make reasonable efforts to try to fulfil the condition that he obtain the builder’s consent to the assignment. He did not seek consent before he left Canada. There is no evidence that he tried or that he instructed his real estate lawyer to take steps to help him do so. Mr. Hu never delivered forms to the builder in the manner required by his agreement of purchase and sale.
[67] In addition, Mr. Hu’s evidence of not having time to spend on traveling to meet the builder’s requirements simply ignores his own contractual obligations. He was obliged to apply for the consent. He was required to submit documents properly attested. In addition, he was required to cooperate “and take such additional actions as may be requested by the other party, acting reasonably, in order to carry out the purpose and intent of this Assignment.”
[68] Moreover, the Court of Appeal has ruled that a party who has yet to meet its obligations to try to fulfil a true condition precedent cannot terminate the transaction relying on the time of the essence clause. Southcott Estates Inc. v. Toronto Catholic School Board, 2010 ONCA 310 at paras. 13 and 14.
[69] What Mr. Hu could not do was (a) decide he did not have to submit forms in the manner required by the contracts and by the builder acting reasonably (as I find it was); (b) rely on the time of the essence clause to terminate the assignment agreement when he had yet to properly request the builder’s consent; and (c) refuse to return the deposit if he relied on the true condition precedent as the basis for his termination of the agreement.
[70] Even accepting all of Mr. Hu’s evidence of his trips to Hong Kong and courier problems, he submits no evidence of actually submitting correctly completed forms. I do not know if Mr. Hu went to Hong Kong to see his lawyer for other business or just for this issue. I am not finding that he tried to fail or that he did not make any reasonable efforts. But I find his failure to exhibit copies of forms properly executed as allegedly sent to the builder by Hong Kong counsel very telling.
[71] This is not a case where a third party has made an independent decision where the parties have done all they can reasonably do to obtain a positive outcome. Mr. Hu did not do the one thing he was positively required to do – submit required documents. This was not an onerous task. Mr. Hu did not see to the documents before he left Canada despite building right into the assignment agreement his anticipation of seeing a lawyer before he left. On leaving the documents to be signed abroad, he required an English attestation that he never obtained. He ultimately decided that he had done enough and that he could terminate the transaction on that basis.
[72] Mr. Hu was required to do all that he reasonably could do to try to obtain the builder’s consent. The issue here is just filling out two forms. Perhaps he was confused with language and legal systems abroad. But he had real estate counsel here Ms. Doi. Mr. Wenus arrived on the scene in late June, 2018 as well. This is not a case of requiring a person to be perfect or to do more than take reasonable steps. Had Art. 5.01 (f) of his own agreement with the builder not already told Mr. Hu what he needed to do, the issue might be less straightforward. The FINTRAC form is plainly drafted for a third party to confirm Mr. Hu’s identity. It does not appear to be tricky or onerous to fill out.
[73] I do not accept Mr. Tao’s submission that Mr. Hu fulfilled his obligation to try to obtain the builder’s consent reasonably. Voluntarily complicating a simple process does not make the failure to fulfil the process reasonable. Accordingly, Mr. Hu breached the assignment agreement when Mr. Wenus purported to terminate it rather submitting two simple documents in the required form or extending the time for Mr. Hu to perform his obligation to do so.
[74] There are no disputed facts to be resolved in coming to this conclusion. I can apply the applicable law to the undisputed facts adduced in evidence by Mr. Hu. This is a proper case to resolve on the record before the court in an expedient, affordable, and fair resolution process as requested by both parties.
[75] Even if Mr. Hu or his agent were confused, it was not open to Mr. Hu to take the position that the agreement was terminated due to his own failure to fulfil his obligation to take all reasonable steps to try to obtain the builder’s consent to the assignment. If Mr. Hu or his agent were confused, Mr. Hu had counsel available in Ontario to advise on the completion of the two forms.
[76] It also was not open to Mr. Hu to refuse to return the deposit in light of his claim that he was entitled to terminate the agreement due to the failure of the true condition precedent. This too was a breach of the assignment agreement.
Damages
[77] Damages for breach of contract are designed to put the innocent party in the position in which he or she would have stood had the contract been performed as agreed.
[78] In cases involving the sale of land, where a vendor wrongfully refuses to transfer title to the property to the purchaser, the purchaser can claim specific performance of the agreement of purchase and sale. In a decree of specific performance, the court can order the transfer of the land as agreed. But a purchaser is not required to seek specific performance. He or she can also elect to claim money damages as compensation for the vendor’s breach of contract.
[79] In 306793 Ontario Ltd. v. Rimes, 1979 CarswellOnt 617 the Court of Appeal discussed the relationship between the two forms of remedies for breach of contract in this context:
The plaintiff, on the other hand, is to be placed so far as money may do so " ... in the same position as he would have enjoyed had the breach not occurred": per Estey J., in Asamera Oil Corpn. v. Sea Oil & Gen. Corpn.; Baud Corpn., N.V. v. Brook, [1979] 1 S.C.R. 633, 5 B.L.R. 225, [1978] 6 W.W.R. 301, 89 D.L.R. (3d) 1 at 16, 23 N.R. 181, 12 A.R. 271. Supplementary reasons given, [1979] 1 S.C.R. 677. [1979] 3 W.W.R. 93, 14 A.R. 407. (sub nom. Baud Corpn., N. V. v. Brook (No. 2)) 25 N.R. 451. To the same effect is Lord Wilberforce's statement in Johnson v. Agnew, supra, at p. 499 where he said [All E.R. at p. 896]:
The general principle for the assessment of damages is compensatory, i.e. that the innocent party is to be placed, so far as money can do so, in the same position as if the contract had been performed. Where the contract is one of sale, this principle normally leads to assessment of damages as at the date of the breach - a principle recognised and embodied in section 51 of the Sale of Goods Act 1893. But this is not an absolute rule: if to follow it would give rise to injustice, the court has power to fix such other date as may be appropriate in the circumstances.
[80] Like this case, the defendant in Rimes argued that the plaintiff should have its damages assessed as at the date of the breach. Here, Mr. Hu says that Mr. Nguyen had funds to invest and bank loan approval. There is nothing unique about the condominium unit in play. On learning that Mr. Hu was not going to close, Mr. Nguyen was not out any money apart from the deposit that remained with the agents. Mr. Hu has not adduced any evidence suggesting that he was disabled at all from investing in another condominium.
[81] Mr. Nguyen says that he was going to flip the condominium i.e. sell it as soon as he could after he took title on closing. He gives no evidence that he told Mr. Hu of this intention. He also provided no evidence that he could not have bought another condominium in the same building or nearby that could have ridden the same bullish wave of price inflation that happened here between 2018 and closing in 2020.
[82] In Rimes, and other cases, the court has recognized that it can, in appropriate cases, move the date of assessment of damage to a later date where it is fair to do so. In effect the court is asked to give damages in lieu of specific performance (i.e. as if title had been transferred at a later date). Whether that is a form of equitable damages and must be claimed as such was not argued before me.
[83] In Rimes, the Court of Appeal awarded damages as at the closing date for the following reasons:
20 In arguing for an award limited to out-of-pocket expenses, counsel for the defendant suggested that the plaintiff could have invested the money it had committed to this purchase for the approximately two and one-half years it was kept out of possession. To allow it to earn income on this money and at the same time receive a "windfall" profit on the notional sale to it as of the date of trial would be inequitable. However, the plaintiff appears to be a shell company which was to hold the land as bare trustee. It would be the purest speculation to consider that the plaintiff first of all had any investment moneys; and secondly, that it would be at an interest rate greater than that which it would be paying for the money. Without any evidence to support the proposition argued, it is not persuasive. I may say that at trial the defendant abandoned any claim to interest on the moneys due on closing, it having had possession of the land from the agreed closing date.
[84] This case is different. Mr. Nguyen is not a shell company bare trustee with no resources. He admits to purchasing the condominium as a speculative investment. He gives no evidence of his resources. The defendant points to the mortgage approval obtained by Mr. Nguyen on the proposed purchase to suggest he had the financial ability to buy elsewhere.
[85] The plaintiff relies on Douse v. Mascioli, 1997 CarswellOnt 2435 in which this court assessed damages at the closing date for a speculative investor. Grossi J. did so on the following basis:
29 In my view this is an appropriate case to exercise my discretion to assess damages as of a date other than the time fixed for completion of the contract. The function of an award of damages in contract is to put the plaintiff in as good a position as if the contract had been performed. The plaintiff's evidence was that she was considering flipping the property if she could find a buyer. I find that it was more likely than not that Douse would have sold the property. Her financial situation at the time indicates that she needed the cash. Further, the evidence shows Douse had already taken steps to sell the property, even before she acquired it. To that end she had discussed listing the property with a real estate agent. When the defendant vendors breached the contract by failing to close this opportunity to sell the land at a profit was lost. The vendors subsequently entered into contracts to sell the property for $165,000 and $230,000. It is the date of the $165,000 offer that represents a fair date by which to assess costs, as this represents an adequate amount of time for Douse to have resold the land if she had acquired it under the original contract. [Emphasis added.]
[86] There is no similar evidence here that the vendor re-sold the property at a profit or that the purchaser had actually taken steps to take that profit for herself. Here Mr. Hu took title on closing in June, 2020.
[87] In Akelius Canada Ltd. v. 2436196 Ontario Inc., 2022 ONCA 259, the Court of Appeal recently reiterated the applicable principles. The presumptive date for assessing damage is the date of the breach of contract. Usually in sales of land, that is the day on which closing was due. Here however, the breach occurred well before the closing.
[88] Mr. Hu repudiated the agreement by no later than June 28, 2018 when Mr. Wenus wrote the letter stating that the agreement was at an end. Faced with a breach by Mr. Hu, Mr. Nguyen had the right to affirm the contract to insist on performance or, alternatively, to elect to terminate the contract and sue for his loss. He chose the latter. Mr. Nguyen never sought specific performance. Rather, he sued for the return of his deposit within a few months of the repudiation by Mr. Hu.
[89] Suing for the return of the deposit was an unequivocal election by Mr. Nguyen to accept the end of the transaction. It was an act that was inconsistent with the continuation of the transaction under the assignment agreement.
[90] In Akelius, the Court of Appeal reiterated that the date for the assessment of damages is a search for what is fair in the circumstances. It relied on the words of Laskin JA from 6472047 Ontario Ltd. v. Fleischer that, “underlying these propositions is the simple notion of fairness”.
[91] Then, after considering various precedent cases, the Court of Appeal summarized the state of the law as follows:
[27] In all these cases, the date of breach remains a starting point for the assessment of loss, modified only to the extent that the innocent party satisfies the court that a later date is appropriate on the grounds that it is the first date upon which the party could reasonably have been expected to re-enter the market and mitigate its damages. [Emphasis added.]
[92] In para. 29 of the decision, the Court of Appeal affirmed that the same principles apply to an innocent purchaser in a rising market – as is the case here. It held:
…the fact that a party is innocent does not displace the date of breach as the presumptive date for the measure of damages in a real estate case.
[93] This is not an issue of mitigation of damages. I agree with Mr. Weedon that Mr. Hu would bear the burden to establish that Mr. Nguyen failed to mitigate his loss.
[94] Here, it is Mr. Nguyen who is trying to defer the presumptive date of the assessment of his damages for almost two years after the date of the breach and some 18 months after he elected to terminate the assignment agreement. At para. 31 of Akelius, the Court of Appeal discussed the burden on the innocent party applicant to defer the presumptive date of assessment of damages:
[31] Even if the appellant could have shown that it could not have bought other buildings that would have appreciated as much over the next two and a half years, the appellant has not established why it could not have re-entered the market over that period or why, for the purpose of mere capital speculation, it was necessary to purchase six buildings close to one another in Parkdale.
[95] In a rising market, deferring the date of assessment of loss maximizes the claim. This approach to assessment of damages has been consistently rejected since the decision of the Supreme Court of Canada in Asamera Oil Corporation Ltd. v. Sea Oil & General Corporation et al. if not before.
[96] It was incumbent on Mr. Nguyen to establish why he could not re-enter the market at the date of the breach if he sought to establish that fairness requires that the date for assessing his loss should be deferred.
[97] Mr. Nguyen included in his affidavit a copy of an appraisal of the unit dated March 6, 2019. The appraisal was conducted as at December 4, 2018 the date of the hearing of the prior application. The appraiser apparently valued the unit at $810,000 as at that date.
[98] There is no affidavit of the appraiser nor a Form 53 as required. See: Sanzone v. Schechter, 2016 ONCA 566, at para. 16. Of greater significance, the appraisal shows that there were numerous comparable condominium units for sale in the same development at and around the date of the breach.
[99] Mr. Nguyen adduced no evidence as to why he did not re-enter the market and buy another condominium to catch the bull market on repudiation by Mr. Hu. I therefore find that he has failed to establish any basis for me to find that it is fair to move the date for the assessment of damages from the date of the breach.
[100] There is no evidence that Mr. Nguyen suffered any loss as at June 28, 2018. In the circumstances, I fix damages in the nominal sum of $5,000 payable by Mr. Hu to Mr. Nguyen. Mr. Nguyen’s evidence that he incurred legal fees on the aborted transaction of $1,000 plus HST is not contested. He is therefore entitled to $1,130 in special damages as well.
[101] As to the deposit, as I note above, the assignment agreement provides that the deposit was to be retuned without interest. Any delay in payment by Mr. Hu ought to have been the subject of an award of pre-judgment or post-judgment interest under ss. 128 and 129 of the Courts of Justice Act, RSO 1990, c 43 in the prior application. While the application judge left open Mr. Nguyen’s right to sue for damages for breach of contract, I do not see how the issue of interest on the deposit already ordered returned in that application can be characterized as damages in this action. Interest on the deposit is not a measure of putting Mr. Nguyen in the position as if the agreement had been performed.
[102] Perhaps there could be a motion under Rule 59.06 to try to re-open the prior judgment if interest was claimed but not adjudicated upon.
[103] Mr. Nguyen shall have judgment against Mr. Hu for payment of $6,130.
[104] Mr. Nguyen may deliver no more than three pages of costs submissions by May 10, 2022. Mr. Hu may respond with no more that three pages of submissions by May 17, 2022. The parties shall also deliver their respective Costs Outlines and copies of any offers to settle on which they rely.
FL Myers J Date: May 2, 2022