DATE: 20041027
DOCKET: C41176
COURT OF APPEAL FOR ONTARIO
RE:
TIBOR SAMU and SAMU & SONS INVESTMENTS LIMITED (Defendant/Appellant) – and LEO ARTS and FRANCIEN ARTS (Plaintiffs/Respondents)
BEFORE:
McMURTRY C.J.O., MACPHERSON and ARMSTRONG JJ.A.
COUNSEL:
A. F. Gerald Kelly
for the appellant
Aaron A. Blumenfeld
for the respondents
HEARD:
October 6, 2004
On appeal from the judgment of Justice Donald S. Ferguson of the Superior Court of Justice dated December 2, 2003.
E N D O R S E M E N T
[1] The appellant, Tibor Samu (“Samu”), appeals from the judgment of Ferguson J. dated December 2, 2003. The motion judge granted summary judgment in favour of the respondents, Leo and Francien Arts, in the amount of $1,413,198.93 and costs.
[2] In 1989, the appellant purchased property from the respondents near Sarnia. On closing, the respondents received a vendor take‑back mortgage from Samu, as well as a guarantee by Samu. The appellant intended to develop the property into about 30 residential lots.
[3] The appellant did not develop the lots for three years. In 1992, the municipality transferred its sewer allocation capacity to a different development project. This made it impossible for the appellant to proceed with his proposed subdivision.
[4] In June 1992, the appellant defaulted in his obligation under the mortgage, which he admits. The respondents commenced power of sale proceedings, commissioned an appraisal of the property, and retained, serially, several real estate agents to market the property. A sale for about $500,000 was achieved in 1999.
[5] The main issue on the motion for summary judgment was whether the respondents acted improvidently in listing the property for sale for $750,000 when they had obtained an appraisal for $395,000. On that issue the motion judge reasoned:
The position of the defence at its best is that there is evidence that the plaintiffs listed the property at a price much higher than the appraisal and did not obtain or rely on another opinion in setting the listing price.
The plaintiffs rely on the list of principles in Oak Orchard Developments v. Iseman and in particular on the requirement that even if the seller was in breach of its duty, the mortgagor must prove that a higher price would have been obtained but for the breach.
The only evidence before the court to support such a finding is the difference between the list price and the appraisal price. That evidence is not sufficient to support a rational finding that a higher price would have been obtained for the alleged breach. There are many reasons why a property might not sell. There is evidence of relevant factors before the court. It is commonplace for persons to make offers for much less than the list price. Indeed, offers were received for prices much lower than the listing price.
The defendant is obliged to put evidence before the court now which raises a triable issue. There is none here. There is only a theory.
[6] We cannot fault this reasoning. Although the difference between the appraised value of the property and its initial listing price was striking, the respondents offered an explanation for their choice of a listing price of $750,000 (the advice of real estate agents and a desire to be fair to both themselves and Samu, who would be liable for the shortfall). In contrast, the appellant did not offer any evidence from anybody about the value of the property throughout the six‑year period it was listed. Accordingly, as the motion judge noted, the appellant did not comply with the requirement to “show that a higher price would have been obtained but for the breach in order to be compensated in damages”: see Oak Orchard Developments Ltd. v. Iseman, [1997] O.J. No. 361 (H.C.J.), aff’d [1999] O.J. No. 2394 (C.A.).
[7] For the sake of completeness, we see no merit in the appellant’s arguments about frustration, limitation period and laches.
[8] The appeal is dismissed, with costs fixed at $7000, inclusive of disbursements and GST.
“R. Roy McMurtry C.J.O.”
“J. C. MacPherson J.A.”
“Robert P. Armstrong J.A.”