Court File and Parties

COURT OF APPEAL FOR ONTARIO DATE: 20231108 DOCKET: C69953

Hourigan, Roberts and Coroza JJ.A.

BETWEEN

Pomata Investment Corp. c.o.b. Treasure Hill Homes Plaintiff (Respondent)

and

Fuxiang Yang and Xiye Zhao Defendants (Appellants)

Counsel: Fuxiang Yang and Xiye Zhao, acting in person Stephen Brunswick and Victoria Ostrovsky, for the respondent

Heard: November 7, 2023

On appeal from the judgment of Justice James F. Diamond of the Superior Court of Justice, dated November 1, 2021, with reasons reported at 2021 ONSC 6786.

Reasons for Decision

[1] The parties entered into an Agreement of Purchase and Sale (the “Agreement”) on September 26, 2016 for the pre-construction sale of a residential property in Vaughan, with a total purchase price of $2,214,813.70 (the “Property”). Six weeks prior to closing, the appellants advised the respondent that they were unable to close. The respondent accepted this anticipatory breach and initiated proceedings seeking forfeiture of the appellants’ $150,000 deposit and general damages for breach of contract.

[2] The respondent brought a motion for summary judgment. The appellants’ defence was that, from the first meeting, the respondent was aware that they were financially unable to close. According to the appellants, there was a separate oral contract with the respondent to the effect that the Agreement would be assigned. They claimed that they were approached by a family friend named Joyi Zhang (“Joyi”), who is a real estate agent, and were promised that they would never have to close the sale and could assign the Agreement at a profit. The appellants brought a counterclaim seeking damages in the amount of $150,000 – the amount paid in deposit – for breach of the oral contract and issued a third party claim against Joyi claiming fraudulent misrepresentation, gross negligence, and breach of fiduciary duty.

[3] The respondent put the Property up for sale privately and received one offer in the amount of $1,500,000. That transaction closed in January 2019.

[4] The motion judge found that the respondent had its own real estate agent and Joyi was the appellants’ real estate agent. Consequently, the respondent could not be held responsible for any failings on the part of Joyi. Further, he found that the respondent complied with all the terms and obligations under the Agreement and that the appellants failed to adduce any evidence to support their claim of an oral contract. Summary judgment was granted and, in light of the lack of evidence proffered by the appellants, enforcement was not stayed pending the disposition of the third party claim against Joyi.

[5] Regarding damages, the appellants took issue with the respondent’s decision to put the Property up for sale privately and argued that it did not fulfil its duty to mitigate damages because it sold the Property for 30 percent less than the original sale price in the Agreement. The motion judge accepted the respondent’s evidence that the real estate market had cooled from the time the Agreement was executed and observed that there was no evidence tendered by the appellants to support their claim that $1,500,000 was inconsistent with market prices.

[6] This appeal is restricted to the motion judge’s damages award. The appellants submit that the motion judge erred in principle in finding that the respondent was entitled to the difference between the original sale price “and Pomata’s average reselling price of nine houses of $1.5 million.” In addition, they point to one of the comparable properties, which had a list price of $2,070,000, and argue that the respondent may not have suffered any loss if they resold the Property at that price. We do not give effect to these arguments.

[7] First, we observe that the appellants adduced no evidence as to the value of the Property at the date of the breach or as to the reasonableness of the resale price. The only evidence on mitigation and damages came from the respondent in the form of a listing of comparable properties.

[8] The submission that the motion judge awarded damages based on the difference between the sale price of the Property and the average resale price of comparable homes is incorrect. In fact, the motion judge awarded damages representing the differential in the ultimate sale price and the original sale price of the Property. He simply referenced the comparable properties that the respondent provided to support a finding that its mitigation efforts were reasonable and that the ultimate sale price was in line with the average resale prices of similar properties.

[9] Regarding the submission based on the $2,070,000 comparable property, the appellant’s reliance on that property is misplaced. It had to be relisted at a significantly lower price and ultimately sold for only $3,000 more than the sale price of the Property.

[10] In our view, the appellants have failed to establish any basis for interference with the motion judge’s damages analysis. The appeal is dismissed. The appellants shall pay the costs of the appeal to the respondent, which we fix in the all-inclusive sum of $1,500. This figure is in addition to the $5,000 in costs awarded to the respondent by this court on May 27, 2022.

“C.W. Hourigan J.A.”

“L.B. Roberts J.A.”

“S. Coroza J.A.”