Court File and Parties
COURT FILE NO.: FC-20-1952 DATE: 2024/03/05 ONTARIO SUPERIOR COURT OF JUSTICE
BETWEEN:
Samar Rastkar Applicant – and – Nadia Soltani Respondent
Counsel: Jonathan Solomon, for the Applicant Ronan Blake, for the Respondent
HEARD: November 30, 2024
REASONS FOR DECISION ON MOTION
Somji J
OVERVIEW
1This motion addresses a dispute over the sale of the parties’ matrimonial home.
2The court ordered the matrimonial home to be listed and sold. The Applicant Mr. Rastkar takes the position that the Respondent Ms. Soltani is occupying the matrimonial home rent free and therefore, looking to prevent him from bidding on the matrimonial home and delay its sale. He bases this on Ms. Soltani’s late notification of repairs and her refusal to accept either his offer of $650,000 or a third party offer of $680,000. He argues Ms. Soltani’s conduct breaches the terms of the court order regarding the sale as well as the parties’ agreement to a closed bidding process. Mr. Soltani seeks an order that his purchase offer of October 17, 2023, be deemed a valid fair market offer and binding on them as sellers. Alternatively, he seeks that the matrimonial home be listed without Ms. Soltani’s involvement and that a date be set for a blind auction with a requirement that the parties accept any offer over the agreed minimal listing price.
3Ms. Soltani opposes the application. She takes the position that Mr. Rastkar’s conduct in suspending the sale of the matrimonial home after her refusal to accept his offer that was less than the $799,000 valuation by the listing agent has resulted in an interference with the free market sale of the property. Ms. Soltani argues that she was entitled to follow the advice of the listing agent and refuse offers below the listing price. Furthermore, after she rejected Mr. Soltani’s purchase offer, both parties entertained other offers and jointly made counter offers to third parties. She argues it was Mr. Soltani’s service of a Notice of Motion on October 20, 2023, and email to the real estate agent directing suspension of the sale until the motion was heard that resulted in delay. Ms. Soltani seeks a dismissal of Mr. Rastkar’s motion. She seeks an order that she be able to proceed with the sale of the property, that she have sole authority to instruct the listing agent, and that the Mr. Rastkar’s consent for the listing and sale be dispensed with.
4The issues to be decided are: i) Is Mr. Rastkar entitled to bid on the matrimonial home and did Ms. Soltani obstruct that right? ii) Did Ms. Soltani breach the terms of a court order or Schedule A of the parties’ listing agreement? and iii) What is a fair and reasonable path forward in the circumstances of this case?
FACTS
5The parties separated on July 30, 2020. Ms. Soltani has continued to live at the matrimonial home with the parties’ two children since October 2020.
6In mid-May 2023, the parties completed a trial before Shelston J on various issues including the sale of the matrimonial home (“home” or “property”). Both parties wished to sell the home, but disagreed on when that should be. Mr. Soltani requested it be listed by June 26, 2023, and that he would provide child and spousal support without prejudice pending Shelston J’s decision. Ms. Soltani sought to list the home only 30 days after Shelston J’s rendered his decision. On August 10, 2023, as part of his trial decision, Shelston J ordered the matrimonial home to be listed no later than September 9, 2023, and that that the sale be conducted in accordance with the terms agreed to by the parties at paragraph nine of the draft consent order submitted by counsel on May 26, 2023 (“consent order”).
7Ms. Soltani’s lawyer produced a draft Final Order on August 29, 2023, for review by opposing counsel. Further discussions ensued between the parties on the language of the draft Final Order, and it was signed and confirmed by Shelston J on November 14, 2023. The Final Order reflected both the trial judge’s findings as well as the parties’ consent order on the listing and sale of the home (“Final Order”). With respect to the terms for the sale of the home, the Final Order stated:
a. that the minimal listing price for the sale would be $630,000;
b. that the matrimonial home was to be listed no later than September 9, 2023;
c. that Mr. Soltani’s expert from trial, Mr. Siyamak Sasani, would have the listing for 60 days after which Ms. Alyssa Massia, Mr. Rastkar’s agent, would have the listing for 60 days at the same minimum listing price of $630,000; and
d. how the sale proceeds would be distributed between the parties.
8While the home was to be listed by September 9th as ordered by Shelston J, Ms. Soltani took the position for reasons explained below that the home should not be listed until the Final Order was issued. Ultimately, she did agree to list it before the Final Order was signed.
9Ms. Soltani informed Mr. Rastkar on September 18, 2023, that repairs were required before the home could be sold. Mr. Rastkar argues that Ms. Soltani knew of the necessary repairs two months prior from the listing agent and failed to communicate this to Mr. Rastkar. He argues that the house should sell as is while Ms. Soltani argues that Mr. Rastkar is reluctant to invest in repairs so as to minimize the value of the home so he can purchase it for himself.
10On October 2, 2023, the parties signed an agreement with the listing agent (Form 810) both agreeing to list the house for $799,000. In addition, the parties agreed that there would be a closed bidding process for the sale of the home that would take place on October 17, 2023 and executed Schedule A to the listing agreement with terms of that closed bidding process. The salient term of Schedule A is as follows:
Once signed by all parties, listing will become an exclusive listing and will be activated on MLS on October 11, 2023. Offers presentation is set to take place at 6 pm on October 17, 2023. In case of any potential conflict of interest, like a seller offers, resolution will be deferred to legal counsel as and when such situations arise.
11On October 17, 2023, the closed bidding proceeded. The only offer made on the matrimonial home was by Mr. Rastkar for $650,000. While Mr. Rastkar’s offer was over and above the minimum listing price of $630,000, it was well under the valuation of $799,000 provided by Mr. Sasani. Consequently, Ms. Soltani refused the offer.
12After the bidding process terminated, Mr. Rastkar’s counsel pointed to Schedule A of the listing agreement which indicated that if there were a dispute regarding a seller’s offer, the matter would be deferred to counsel for resolution.
13On October 18, 2023, Mr. Rastkar served a Notice of Motion on Ms. Soltani’s lawyer and the listing agent Mr. Sasani. Mr. Rastkar requested that the sale be suspended pending the outcome of the motion. Nonetheless, there was an open house on October 21, 2023, and the parties received an offer for purchase for $680,000. Ms. Soltani rejected the offer with a counter proposal of $789,000.
14Since the fall of 2023, there have been three valuations for the home:
a. In October 2023, Mr. Sasani valued the home for $799,000, emphasizing that the home adjoins a sizable empty piece of land bordering the Greenbelt which warrants a higher value. In his November 20, 2023, affidavit, Mr. Sasani has re-assessed the value of the home to be between $720,000 and $750,000.
b. Ms. Alyssa Massani advised Mr. Rastkar in the fall of 2023 and upon which he made his offer that she viewed the minimal listing price of the home to be $630,000. On November 17, 2023, as part of her affidavit, she prepared report on the property valuation. Based on sales of comparable homes in the area, she estimated the value of the home to be between $630,000 to $650,000. In her view, the adjoining property is of little value because i) it contains utility easements; ii) a buyer cannot separate the land or erect a pool without additional costs; and iii) the adjoining lot would at most be comparable to a builder’s premium lot valued between $25,000 to $40,000.
c. Mr. Gord Owens provided an affidavit dated November 20, 2023, indicating he viewed the home in July 2023. Based on a comparative market analysis, he views the valuation of property between $675,000 and $700,000.
Issue 1: Is Mr. Rastkar entitled to bid on the property, and if so, did Ms. Soltani obstruct that right?
15Counsel for Mr. Rastkar relies on the decision in Martin v Martin (1992), 38 R.F.L. (3d) 217 (Ont. C.A.) to argue that once a court makes an order that a jointly owned matrimonial home is to be sold, the court cannot grant either owner a right of first refusal without the consent of the other. This applies equally to a matrimonial home. Once the home is ordered to be sold, each spouse is entitled to receive a fair market value for his or her interest in it.
16In other words, if either Mr. Rastkar or Ms. Soltani wish to purchase the matrimonial home from the other, each must compete with other interested purchasers and do so without any inside information as to the other offers made. The caselaw makes clear that the owner must participate in the bidding process and comply with all the formalities of that process as would any other third party bidder and the home should be sold to whoever makes the highest offer within that fair process: Howard v Howard, 2022 ONSC 6915 at para 50.
17In this case, I agree with counsel for Mr. Rastkar that the parties agreed to a closed bidding process as referenced in Schedule A and that Mr. Rastkar competed in good faith with any other potential bidders. Mr. Ratskar waited until the closed bidding process ended and then chose to make a counter offer the following day.
18There is no dispute that Mr. Rastkar was entitled to participate in that bidding process. The issue which arises, however, is whether Ms. Soltani was obliged to accept his offer. Mr. Rastkar argues that Ms. Soltani breached her duties of honesty and good faith under the principles of contract by entering into a closed bidding process to allow for seller offers and then rejecting Mr. Rastkar’s offer based on a flawed and unrealistic market valuation. Ms. Rastkar argues that Ms. Soltani further breached Schedule A by failing to comply with the process set out therein which was that in the event of a potential conflict of interest such as a seller’s offer, the parties were to defer to counsel. Instead, Ms. Soltani continued on with the sale process.
19Based on the evidence presented, I do not find Ms. Soltani thwarted Mr. Rastkar’s ability to genuinely participate in the bidding process. While Schedule A sets up a process for seller offers, it does not specify that those offers have to be accepted by the joint owner and if so, within what price point of the listing price. Indeed, as per caselaw cited above, Ms. Soltani is entitled as a joint owner to hold out for the highest fair market value of the property available. In this case, both Mr. Rastkar and Ms. Soltani agreed to list the property at $799,000 and in that respect, agreed that was a price the market could bear. Just because Mr. Rastkar made an offer to purchase above the minimum price of $630,000 does not oblige Ms. Soltani to accept that price.
20Mr. Rastkar argues that the valuation presented by Mr. Sasani was excessive. That may be the case, but he accepted that valuation. He did so in part because Mr. Sasani had indicated to him in text messages that he believed he had potential buyers at that price point. While it may have been unrealistic, Mr. Rastkar both accepted to use Mr. Sasani as the listing agent and agreed to the listing price of $799,000.
21I do not find that Ms. Soltani’s rejection of Mr. Rastkar’s offer which was significantly lower than what he himself agreed to was a fair listing price constitutes disingenuous conduct on her part to thwart Mr. Rastkar’s participation as a purchaser. Ms. Soltani was entitled based on the information provided to her to hold out for a higher offer particularly given the $150,000 gap between Mr. Rastkar’s offer and the listing price. That gap, if received and divided in two, would yield Ms. Soltani another $75,000 in proceeds of sale. I do not find on this evidence that Ms. Soltani was looking to mislead Mr. Rastkar about his ability to fairly purchase the home, but simply trying to maximize as a joint owner the price she could get for the property. While Mr. Sassani may have been mistaken in his appraisal and has since revalued the home to be worth between $720,000 to $750,000, Ms. Soltani was not aware of this at the time.
Issue 2: Did Ms. Soltani breach the terms of a court order or Schedule A of the parties’ listing agreement?
22Mr. Rastkar alleges that Ms. Soltani breached Shelston J’s Order by delaying the sale of the home and failing to comply with Schedule A warranting a remedy under Rule 1(8) of the Family Law Rules, O. Reg. 114/99. I disagree.
23First, I do not accept that Ms. Soltani was looking to delay the sale because she was living in the home rent free as suggested by Mr Rastkar. Shelston J considered and found that Ms. Soltani did not have to pay occupation rent given her personal circumstances. Furthermore, Ms. Soltani has been foregoing a portion of child and spousal support payments until the home is sold as contribution to the carrying costs of the home, and hence, this is not a situation where she is getting a free ride as suggested by Mr. Rastkar.
24Second, while I agree that Shelston J ordered that the house be listed by September 9, 2023, Ms. Soltani had fair reasons for not wanting to list the house before the Final Order was signed which should not have taken as long as it did. As Ms. Soltani explained, once the house was listed and sold, she would have to relocate with the children by the closing period which can be within 90 days. Ms. Soltani did not want to move to a rental unit and then incur further costs to move into a purchased home. However, Ms. Soltani was informed by her bank(s) that she would be unable to obtain financing to purchase a new home without a formal court order confirming the sale of the home, the proceeds of which would form the equity she needed to purchase a new home. It was for this reason that her counsel after sending a draft Order for approval to opposing counsel was anxious to keep the matter moving forward.
25That draft Final Order, however, was not approved or finalized until November 2023. Upon review of the email exchanges between counsel, I find that much of this delay was due to Mr. Rastkar’s attempt to relitigate certain issues or add terms to the draft Final Order which did not form part of Shelston J’s decision or the terms of the consent order. Ultimately, Ms. Soltani proceeded to list the house even without the signed Final Order.
26Third, the evidence establishes that in the intervening period while awaiting this draft Final Order, Ms. Soltani was diligent in advancing the sale of the home. She took steps to obtain a real estate lawyer and prepared the home for sale including painting various rooms and doors, changing parts of appliances, purchasing a chandelier, undertaking minor landscaping, and extensively cleaning the home.
27Fourth, the ultimate delay of the sale of the home rests largely on Mr. Rastkar’s own conduct in filing a Notice of Motion and ordering the real estate agent Mr. Sasani to suspend the listing until the motion was heard. At that time, the house had only been listed for 20 days. Ms. Soltani was prepared to continue with the listing after she rejected Mr. Rastkar’s offer.
28Fifth, it is unclear what the parties expected from deferring the matter back to counsel. Schedule A did not set out a clear and timely process for settling any dispute over a seller’s offer. Even had Ms. Soltani agreed to stop the listing and returned the matter to counsel because of a “potential conflict of interest” with a seller’s offer as per the terms of Schedule A, it is unclear what resolution process counsel contemplated and how long it would take.
29Furthermore, I do not find that the situation the parties found themselves in was indeed a “potential conflict of interest” of a seller’s offer warranting the matter to return to counsel but rather a case of one joint tenant rejecting the seller’s offer because it was far below the agreed upon fair market value.
30Finally, despite the terms of Schedule A indicating that the process should return to counsel if there was a potential conflict of interest with a seller’s offer, Mr. Rastkar continued to participate, at least for a brief period, with the listing of the home. Both parties not only entertained a further third party offer of $680,000, but also jointly counter-offered for $799,000. Hence, Ms. Soltani was not alone with forging ahead with the sale contrary to Schedule A.
31For all these reasons, I find that Ms. Soltani did not breach either Shelston J’s decision or the terms of Schedule A.
32Mr. Rastkar’s application is accordingly dismissed.
Issue 3: What is a fair and reasonable path forward?
33Mr. Soltani argues that Mr. Rastkar should not be entitled to bid on the home and seeks an order to proceed with the sale without his involvement. I do not find the law entitles her to exclude Mr. Soltani from bidding in the open market nor do I find Mr. Soltani’s conduct, while having contributed to delay, warrants his exclusion from the listing and sale process.
34The parties have received three valuations indicating that the fair market value of the home in the fall of 2023 ranged between $630,000 to $750,000. The parties agreed that Mr. Sasani would be the listing agent for 60 days, and this was cut short in the fall. There is no reason Mr. Sasani should not continue as listing agent and be provided an opportunity to sell the home uninterrupted for 60 days. If the home is not sold within 60 days, Ms. Massia shall take over as the listing agent as agreed upon. If for whatever reason Mr. Sasani refuses to be the listing agent, then as previously agreed upon by the parties, Ms. Massia will be the listing agent.
35Ms. Soltani is entitled to have the property sold at fair market value. That fair market value was deemed to be as high as $750,000 in November 2023. Going into the spring of 2024, the market will determine if the value will be lower or higher. However, rather than having the parties spend more funds obtaining another valuation or returning to the negotiation table to determine a new listing price, there will be an order that the home will be listed by April 3, 2024, at the price of $750,000 and that listing price will be reduced by a minimum $20,000, unless the parties jointly agree to a lesser amount, every 30 days until such time as the home is sold.
36Should either party wish to bid on the house, they may do so any time at the listing price. This ensures each party has a reasonable opportunity to bid on the house as any other purchaser while also ensuring that neither is obliged to accept an offer below fair market value.
37Counsel for the parties shall forward me a draft order approved in form and content by March 12, 2024.
Costs
38Ms. Soltani is the successful party on this motion. However, the parties have had divided success with respect to the remedies requested. The parties are encouraged to resolve the issue of costs. If the parties cannot resolve the issue of costs for this proceeding, they may file brief written submissions not exceeding two pages exclusive of Bills of Costs. Ms. Soltani shall file her submissions by March 20, 2024. Mr. Soltani shall file his submissions by April 3rd and Ms. Soltani will have until April 10th for a brief reply. Costs submissions are to be sent to scj.assistants@ontario.ca and to my attention.
Somji J.
Released: March 5, 2024