2174372 Ontario Ltd. v. Akbari, 2023 ONSC 6047

Court File and Parties

Court File No.: 3604/18 Date: 2023-10-25 Superior Court of Justice – Ontario

Between: 2174372 Ontario Ltd., Plaintiff And: Lena Akbari and Robina Omari, Defendants

Counsel: Avinaash Laljie, for the Plaintiff Robina Omari, Self-Represented

Heard: October 19, 2023

Reasons for Decision

Before: Charney J.

1The Plaintiff, 2174372 Ontario Ltd., brings this motion for summary judgment against the Defendant, Robina Omari. The motion relates to the Plaintiff’s action for damages arising out of the Defendant’s failure to close the purchase of a property pursuant to an Agreement of Purchase and Sale (APS) dated April 3, 2017.

2The Plaintiff seeks damages in the amount of the difference between the agreed purchase price and the appraised value of the property on the date of the failed closing, November 23, 2018. As will be discussed below, this is an unusual basis upon which to calculate damages in a failed real estate transaction. In such cases, damages are usually calculated on the basis of the difference between the agreed purchase price and the final sale price (less the deposit), if the final sale price is less than the agreed purchase price. The Plaintiff’s proposed use of an appraisal value raises red flags and presents several challenges.

Facts

3The Plaintiff is a corporation carrying on business as a builder.

4On April 3, 2023, the Defendant Lena Akbari entered into an APS with the Plaintiff as vendor. The Defendant agreed to purchase a property municipally known as 40 Bruce Cameron Drive, Clarington, Ontario (the Property). In the original APS Lena Akbari was the only purchaser. The Defendant Robina Omari was added as a purchaser by an amendment to the APS on April 13, 2023.

5The Defendant Lena Akbari has filed a consumer proposal and actions against her have been stayed. Accordingly, the Plaintiff is proceeding only against the Defendant Robina Omari.

6Pursuant to the APS, the final purchase price of the Property was $722,990 and Akbari and Omari paid deposits totalling $50,000. After several amendments to the APS, the final closing date was November 23, 2018.

7Akbari and Omari failed to close the transaction on November 23, 2018. In failing to close, Akbari and Omari breached the APS. The vendor accepted the repudiation of the APS and declared the APS terminated.

8The Plaintiff informed the Defendants that by failing to close, the Defendants had forfeited their deposit money “in addition to and without prejudice to any other remedy available to the Vendor arising out of such default”.

9The Plaintiff issued its Statement of Claim on December 12, 2018. The Statement of Defence was filed on July 13, 2020.

10As indicated, on January 20, 2022, the Defendant Akbari filed a consumer proposal, and, on April 14, 2022, Akbari’s bankruptcy trustee provided a notice of stay of proceedings.

Motions for Summary Judgment

11Rule 20.04(2)(a) of the Rules of Civil Procedure, R.R.O. 1990, Reg. 194 provides: “The court shall grant summary judgment if the court is satisfied that there is no genuine issue requiring a trial with respect to a claim or defence.”

12Rule 20.04(2.1) sets out the court’s powers on a motion for summary judgment:

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.

13These powers were extensively reviewed by the Supreme Court of Canada in Hryniak v. Mauldin, 2014 SCC 7, where it laid out a two-part roadmap for summary judgment motions at para. 66:

On a motion for summary judgment under Rule 20.04, the judge should first determine if there is a genuine issue requiring trial based only on the evidence before her, without using the new fact-finding powers. There will be no genuine issue requiring a trial if the summary judgment process provides her with the evidence required to fairly and justly adjudicate the dispute and is a timely, affordable and proportionate procedure, under Rule 20.04(2)(a). If there appears to be a genuine issue requiring a trial, she should then determine if the need for a trial can be avoided by using the new powers under Rules 20.04(2.1) and (2.2). She may, at her discretion, use those powers, provided that their use is not against the interest of justice. Their use will not be against the interest of justice if they will lead to a fair and just result and will serve the goals of timeliness, affordability and proportionality in light of the litigation as a whole.

14Even with these extended powers, a motion for summary judgment is appropriate only if the material provided on the motion “gives the judge confidence that she can find the necessary facts and apply the relevant legal principles so as to resolve the dispute” (Hryniak, at para. 50).

15In Hryniak, the Supreme Court held (at para. 49) that there will be no genuine issue for trial when the summary judgment 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.”

16To defeat a motion for summary judgment, the responding party must put forward some evidence to show that there is a genuine issue requiring a trial. A responding party may not rest on mere allegations or denials of the party’s pleadings, but must set out—in affidavit material or other evidence—specific facts establishing a genuine issue requiring a trial.

17It is well settled that “both parties on a summary judgment motion have an obligation to put their best foot forward” (see Mazza v. Ornge Corporate Services Inc., 2016 ONCA 753, at para. 9). Given the onus placed on the moving party to provide supporting affidavit or other evidence under Rule 20.01, “it is not just the responding party who has an obligation to ‘lead trump or risk losing’” (see Ipex Inc. v. Lubrizol Advanced Materials Canada, 2015 ONSC 6580, at para. 28).

18A plaintiff or defendant bringing a motion for summary judgment has the initial onus of proving that there is no genuine issue for trial and must file some affidavit evidence to support that position. See for example, Sanzone v. Schechter, 2016 ONCA 566, at paras. 30-32, confirming the initial evidentiary obligation borne by the moving party (in that case the defendant) on a summary judgment motion:

First, the evidentiary burden on a moving party defendant on a motion for summary judgment is that set out in rule 20.01(3) – “a defendant may… move with supporting affidavit material or other evidence.” As explained in Connerty, at para. 9, only after the moving party defendant has discharged its evidentiary burden of proving there is no genuine issue requiring a trial for its resolution does the burden shift to the responding party to prove that its claim has a real chance of success.

19If the moving party meets the evidentiary burden of producing evidence on which the court could conclude that there is no genuine issue of material fact requiring a trial, the responding party must either refute or counter the moving party’s evidence or risk a summary judgment.

20While Rule 20.04 provides the court hearing a summary judgment motion with “enhanced forensic tools” to deal with conflicting evidence on factual matters, the court should employ these tools and decide a motion for summary judgment only where it leads to “a fair process and just adjudication”: Mason v. Perras Mongenais, 2018 ONCA 978, at para. 44; Eastwood Square Kitchener Inc. v. Value Village Stores, Inc., 2017 ONSC 832, at paras. 3-6 (and cases cited therein).

21In the present case, the Plaintiff relies on the affidavit evidence of Domenic Tassone, the director of the corporate Plaintiff.

22The Defendant has not filed any evidence to support her position.

Legal Principles Applicable to Failed Real Estate Transactions

23There are numerous cases dealing with summary judgment motions by vendors following a purchaser’s failure to close the transaction on the date set out in the agreement of purchase and sale. These cases are frequently amenable to a motion for summary judgment.

24Where the purchaser is in default of the APS, the plaintiff is entitled to retain the deposit paid, although the deposit must be credited against any other damages claimed: Pleasant Developments Inc. v. Iyer, at paras. 7-8; Azzarello v. Shawqi, 2019 ONCA 820, at paras. 45, 53-54.

25The vendor has a duty to mitigate its damages: Bang v. Sebastian, 2018 ONSC 6226 at para. 42, (aff’d on appeal, 2019 ONCA 501). Generally, this is accomplished by the arm’s length sale of the property at market value, Bang, at para. 46.

26The damages amount is the difference between the price under the APS and the price of the new sale of the property once it closes, plus any additional carrying costs incurred by the vendor in mitigating its loss and dealing with the purchasers’ breach: Goldstein v. Goldar, 2018 ONSC 608, at para. 25. This, of course, assumes that the subsequent sale is an arm’s length market value transaction.

27See also: Park Avenue Homes Corp. v. Malik, 2022 ONSC 973, at paras. 38-39:

Against a purchaser who aborted an agreement of purchase and sale, the plaintiff vendor is entitled to its loss of bargain, which is the difference between the original sale price and the re-sale price for which the property was eventually sold. 767804 Ontario Limited v. Bartoletti, 1998 CarswellOnt 1567; Azzarello v. Shawqi, 2018 ONSC 5414; Bang v. Sebastian, 2019 ONCA 501; Victorian Homes (Ont.) Inc. v. DeFreitas, 1991 CarswellOnt 414, at para. 20; Briscoe-Montgomery v. Kelly, 2014 ONSC 4240, at para. 22.

In addition, the jurisprudence recognizes that a Plaintiff can claim interest and interim financing costs, real estate commissions, legal fees, and other carrying costs associated with the breach. Briscoe-Montgomery v. Kelly, supra, at para. 23; Fang v. Peroff, 2014 CarswellOnt 3800, at para. 51; Azzarello v. Shawqi, supra, at para. 54.

28While the onus is on the Defendant to prove that the Plaintiff failed to make reasonable efforts to mitigate and that mitigation was possible:

[T]he plaintiff must prove his or her calculation of damages. Thus, the plaintiff must adduce evidence of the contract price and of the market price or resale price upon which he or she relies in establishing the loss of bargain and then the onus is on the defendant to show, if he or she can, that if the plaintiff had taken certain reasonable mitigating steps, then the innocent party’s losses would be lower.

Deco Homes (Richmond Hill) Inc. v. Serikov, 2021 ONSC 2079, at para. 7.

Calculation of Damages

29In a declining market, an arm’s length sale at market value may result in damages above the amount of the forfeited deposit; where house prices are constant or increasing, there may not be any additional damages.

30In the present case, the Plaintiff’s affidavit, sworn by Domenic Tassone on July 18, 2022, does not indicate when or for how much the property was sold after the Defendants’ failure to close in November 2018.

31That omission is odd, and I daresay, unique among all the failed real estate transaction cases I have reviewed.

32Instead, Mr. Tassone states:

In the summer of 2021, the plaintiff retained the services of D. Bottero & Associates, an appraiser, to provide an appraisal of the Property as of the date of the breach. The property was appraised at $580,000 as of the date of the breach of contract.

33A copy of the appraisal report dated August 18, 2021 is appended to Mr. Tassone’s affidavit.

34The Plaintiff’s primary head of damages is the difference between the appraised value ($580,000) and the agreed purchase price of $722,990. This totals $142,990, less the $50,000 deposit already forfeited, or $92,990 for “loss of bargain”.

35To this amount, the Plaintiff has also added some additional development charges ($2,385) which it alleges were the responsibility of the Purchasers, for total damages of $95,375 in excess of the forfeited deposit.

36The affidavit is silent regarding any subsequent sale or purchase of the property.

37I asked Plaintiff’s counsel why the Plaintiff did not have any evidence about the subsequent sale or purchase.

38Plaintiff’s counsel explained that the property was subsequently sold for even less than the appraised value, and the Plaintiff’s reliance on the appraised value was to the Defendant’s benefit.

39Plaintiff’s counsel indicated that evidence regarding the subsequent sale of the property could be found in the appraisal report appended as an exhibit to the Tassone affidavit. That report states:

A review of the TRREB MLS records has indicated that the Subject Property was later exposed to the market for sale related purposes through Royal LePage Citizen Realty on February 12, 2019 with a listing price of $629,990. It was exposed to the market for 78 days before being terminated.

A Geowarehouse search that revealed the 24174372 Ontario Ltd. subsequently sold the Subject Property to Ottavio Tassone for a total consideration of $473,511. The transaction formally closed on June 4, 2019.

40The report does not identify Ottavio Tassone, but counsel acknowledges that he is related to Domenic Tassone, and that the transaction was not an arm’s length sale.

41The appraisal report also gives an appraisal value as of June 4, 2019, the date of the sale to Ottavio Tassone. That appraisal value is $560,000, or approximately $100,000 more than the non-arm’s length sale to Ottavio Tassone.

42The appraisal report states that the property was leased to third parties for $2,000 per month on May 8, 2019 – the month before the property was transferred to Ottavio Tassone for below market value. This rental income is not included in the Plaintiff’s damages calculation.

43I am troubled by the fact that the information relating to the sale of the property to Ottavio Tassone was not referenced in Domenic Tassone’s affidavit, but is buried in the appraisal report. The appraiser did not provide an affidavit, and, as far as I can determine, did not sign a Form 53, acknowledgment of expert’s duty.

44In any event, the information relating to the non-arm’s length transfer at below market value raises a number of questions that undermine my confidence that I “can find the necessary facts and apply the relevant legal principles so as to resolve the dispute”.

45These questions are:

a. The property was listed for 78 days at $629,990. Did the Plaintiff receive any offers during this period? b. What were the total lease payments at $2,000 per month while the property was owned by Ottavio Tassone? c. Is the property still owned by Ottavio Tassone or has it since been transferred to a third party at fair market value? If so, what was the purchase price of the subsequent sale?

46As indicated above, a party bringing a motion for summary judgment must “put their best foot forward”. In my view, the Plaintiff has failed to do this, even in the absence of any evidence from the Defendant. The affidavit evidence filed by the Plaintiff leaves too many unanswered questions about the subsequent sale of the property, the Plaintiff’s efforts to mitigate damages, and the proper calculation of damages in this case.

Conclusion

47I am, therefore, not satisfied that this is an appropriate case in which to grant summary judgment, and the Plaintiff’s motion for summary judgment is dismissed.

48If the parties are not able to agree on costs, the Defendant may file costs submissions of no more than 3 pages, plus costs outline and any offer to settle, within 20 days of the release of this decision, and the Plaintiff may file responding costs submissions on the same terms, within a further 15 days.