CITATION: Marshall v. Hall, 2025 ONSC 910
DIVISIONAL COURT FILE NO.: DC-22-064-00
DATE: 20250211
ONTARIO
SUPERIOR COURT OF JUSTICE
DIVISIONAL COURT
Rady, Mew, and Myers JJ.
BETWEEN:
PAUL MARSHALL and DIANE MARSHALL
Appellants (Plaintiffs)
– and –
JAMES HALL and SHERRY HALL
Respondents (Defendants)
Jacob Damstra and Zachary Grace, for the Appellants
Richard Campbell, for the Respondents
HEARD at London: 28 November 2024
MEW J.
Reasons for Decision
(Appeal from a decision of Garson J. dated 26 September 2022)
[1] The respondents, as purchasers, failed to close a residential real estate transaction. The vendors sued for breach of contract. Less than a week before the trial of the action, the respondents conceded that there was no basis in law to justify their failure to close the transaction. Accordingly, the trial proceeded solely on the issue of damages.
[2] The vendors sought damages of $72,496.31, representing the price differential between the price agreed for the original transaction ($701,000) and the final sale price after the house had been remarketed ($635,000), as well as some of the carrying costs incurred and legal costs thrown away.
[3] The purchasers argued that damages should be fixed at $27,625.56. That amount represented the difference between the original sale price and the fair market value of $675,000 as determined by an appraiser called by the defendants to provide opinion evidence.
[4] The trial judge held that the vendors were entitled to recover the reasonably foreseeable losses arising from the purchasers’ breach of the agreement of purchase and sale, and awarded damages in the amount of $27,875.56. In assessing damages, he accepted the appraiser’s evidence on fair market value, and found that the vendors had failed to reasonably mitigate some of their claimed losses.
[5] The vendors now appeal, asserting that the trial judge failed to apply established legal principles for the determination of a property’s market value, made errors of law in his mitigation analysis, made findings of fact that were not based on the evidence, and gave no or insufficient reasons for not awarding or reducing certain fees and other expenses claimed by the vendors as special damages.
[6] For the reasons that follow, I would allow the appeal.
Facts
[7] There is substantial agreement between the parties on the material facts.
[8] On 12 June 2017, the appellants listed their home at 254 Boyce Street in Sebringville, Ontario for sale on the Multiple Listing Service (“MLS”) at a price of $599,900. The appellant Paul Marshall, a real estate agent of 38 years’ standing, acted as his own listing agent.
[9] Mr. Marshall believed $599,900 to be a fair market value at the time based on comparable properties, consultations with his broker and colleagues at his real estate office, and his own experience in the industry (although the trial judge said that he had “great difficulty” with that evidence).
[10] Steps taken by the appellants to market the property included:
a. preparing a four page brochure showcasing the home’s highlights;
b. paying to post the listing on five separate real estate boards to ensure maximum exposure; and
c. advertising the home on social media, including Facebook, Twitter, and YouTube.
[11] No written offers were to be submitted until 24 June 2017, thereby facilitating opportunities to show the home. The respondents and others attended showings.
[12] On 24 June 2017, the appellants received five written offers to purchase: $570,000, $575,000, $627,000, $628,825, and $701,000. The highest offer was submitted by the respondents.
[13] However, assuming no onerous conditions, it was Paul Marshall’s uncontested evidence that the appellants would have accepted an offer as low as $627,000.
[14] The appellants accepted the respondents’ offer on 25 June 2017 and the parties executed an agreement of purchase and sale (“APS”). It contained one condition that was quickly waived. The sale to the respondents was scheduled to close on 31 October 2017.
[15] On 11 July 2017, during a final viewing of the home, the Marshalls commented in passing to the respondents that the home had once been owned by a paedophile. The respondents do not assert that this information gave them grounds to refuse to close the sale.
[16] On 14 July 2017, the respondents delivered a proposed amendment to the APS seeking to reduce the purchase price to $590,000 and to include additional chattels.
[17] The appellants rejected the proposal. They also rejected subsequent attempts by the respondents to repudiate the APS.
[18] On 31 October 2017, the appellants tendered. They also moved into a rental property so as to give the respondents vacant possession to the home, as the APS required.
[19] The respondents refused tender, and the sale did not close despite an offer from the appellants to extend the closing date.
[20] The appellants incurred legal fees of $2,599 in relation to the failed transaction.
[21] On 14 November 2017, the Marshalls relisted their home on the MLS for $701,000 (the agreed upon purchase price in the APS breached by the respondents).
[22] The steps taken by the appellants to market the relisted home included:
a. preparation of a four-page brochure;
b. posting the listing on five real estate boards; and
c. promoting the home through social media.
[23] The appellants also contacted all of the agents who had shown the home to clients when listed in June. They did not, however, delay offers to give out-of-town agents an opportunity to show the property to their clients.
[24] On 21 November 2017, the appellants received two offers on their home: $610,825 and $630,000.
[25] The appellants countered both offers at the full listing price of $701,000. The prospective buyers responded by increasing their offers to $615,825 and $635,000 respectively.
[26] On 23 November 2017, nine days after relisting their home, the appellants accepted the offer of $635,000. The sale closed on 15 December 2017. The buyer was a competitor of Paul Marshall’s in the real estate sales industry. While the respondents challenge the characterisation of that purchaser as an “arm’s length” purchaser, no such finding was made by the trial judge.
[27] The appellants paid moving costs, as well as relisting fees, utility expenses, snow removal costs, septic tank cleanout costs, and property taxes following the respondents’ breach of the APS until the sale of the property to the subsequent purchaser closed. These expenses totalled $5,045.58. In addition, the appellants sought recovery of $2,599 for legal fees and disbursements paid for legal services in relation to the failed transaction.
The Decision of the Trial Judge
[28] The trial judge framed as “the main issue in this case” whether he should accept or reject that the $635,000 resale price was the fair market value of the property at the time of the resale.
[29] The trial judge set out certain applicable legal principles in paragraphs 62 to 64 of his reasons:
[62] It is well recognized law that in these types of failed real estate sales transactions, the plaintiffs owe a duty to the defendants to mitigate their losses through resale. The plaintiffs bear the initial onus of proving their losses, and thereafter, the defendants bear the onus of proving, on a balance of probabilities, that the plaintiffs failed to take reasonable steps to mitigate: 100 Main Street Ltd. v. W.B. Sullivan Construction Ltd. (1978), 1978 1630 (ON CA), 88 D.L.R. (3d) 1 (O.N.C.A.) at paras. 80-81.
[63] The duty to mitigate requires reasonable steps, not perfection, and is assessed on the unique facts of each case and other relevant market conditions: Saramia Crescent General Partner Inc. v. Delco Wire and Cable Limited, 2018 ONCA 519 at para. 80.
[64] If the plaintiffs acted reasonably from the date of the breach to the date of the resale, then the measure of damages will be the difference between the two sales prices: $66,000.
No issue is taken with these paragraphs of the trial judge’s reasons.
[30] In the next paragraph, the trial judge continued:
[65] However, absent exceptional circumstances, a resale below fair market value may not constitute “reasonable steps”, as such would render an unfairness to the defendants.
No authority is cited for that proposition.
[31] On the issue of repudiatory breaches of contract, the trial judge stated that where one party attempts to repudiate an agreement and the non-repudiating party does not accept the repudiation, the attempted repudiation has no legal effect: Brown v. Belleville (City), 2013 ONCA 148, at para. 42.
[32] The trial judge accepted the evidence of Les Otto, a certified real estate appraiser, who had been qualified by the court as an expert witness on the appraised value of real estate. Mr. Otto’s opinion was that the fair market value of the property as of 3 December 2017 was $675,000, and that the sale price to the eventual purchaser of the property of $635,000 was noticeably lower than prevailing market expectations.
[33] Mr. Otto also said that, in his opinion, when the property was remarketed, it may not have been properly exposed to the open market and adequately promoted to the public. The trial judge accepted that evidence, finding that Mr. Marshall had taken insufficient steps, or made insufficient efforts, to market the property. In rejecting Mr. Marshall’s evidence concerning the property’s value, the trial judge found that Mr. Marshall had made fewer inquiries regarding comparable properties at the time of the resale, and had relied on an accepted price that was “clearly an outlier from the four other bids submitted in June”.
[34] The trial judge was clear that where Mr. Marshall’s evidence on fair market value conflicted with Mr. Otto’s, he rejected the evidence of Mr. Marshall. He expressed “great difficulty” with certain aspects of Mr. Marshall’s testimony, including:
a. that Mr. Marshall’s intention in relisting the property at $701,000 was because that was his assessment of fair market value and because he wanted to mitigate the losses for the respondents (who, the trial judge observed, the appellants had already decided to sue);
b. that $599,900 reflected the fair market value of the property in June 2017, or that Mr. Marshall was unaware of a practice in the real estate market of listing a property for below fair market value in order to attract multiple offers;
c. that when he offered the property’s fridge and stove for sale prior to the original closing date, he would have made any such sale conditional on the original deal not closing;
d. his assertion that appliances are rarely included by vendors in the sale price.
[35] In the trial judge’s view, the appellants failed to list the property at a fair market value, using recent comparables, in accordance with established pricing practices and to permit reasonable exposure for a reasonable timeframe. Specifically, he found that:
a. the appellants failed to demonstrate any urgency in having to accept the subsequent purchaser’s offer, which was almost ten percent below asking, and well below Mr. Marshall’s stated view of a fair price in what Mr. Marshall had acknowledged was an “up” market;
b. the appellants held off “only” seven[^1] days, compared to thirteen for the initial sale, before accepting the subsequent purchaser’s offer, and had failed to wait at least ten days (as they had when the property was first marketed) to permit out-of-town agents from four other real estate boards to bring prospective clients through the property;
c. offers were not held over on the resale; and
d. although they wrote back the eventual purchaser’s initial offer, which resulted in a “mere $5,000 increase” (or less than one percent of the earlier price), the appellants failed to wait a reasonable time, consider a drop in price below $701,000, or actively market the property further.
[36] At trial the appellants relied on Palladino v. Durham, 2021 ONSC 4909, at para. 77, which held that that the best indicator of the market value of property is what an arm’s length entity or person will pay on the open market. The trial judge distinguished that case - in which the subject property had been listed for sale for 37 days in a declining market - on its facts.
[37] The trial judge accepted that the appellants were entitled to reject the respondents’ attempted repudiation of the APS, and that they were equally entitled to reject the substantially reduced offer of $590,000 made by the respondents. Having done so, however, the appellants were not entitled to incur expenses unreasonably and then seek reimbursement from the respondents.
[38] The trial judge concluded that many of the expenses claimed by the appellants could, and should, have been avoided and, thus, were unreasonable. The appellants had, he said, “stood silent” for 112 days to the initial closing date after the respondents’ attempted repudiation. They only relisted the property after they tendered and the purchasers refused to close. It was, in the trial judge’s view, unreasonable for them to expect the respondents to reimburse them for expenses that they incurred in the interim. In particular, it was not necessary for the appellants to move out of the property before the closing date and their claims for moving costs, snow blowing before relisting, and some utility costs for carrying the vacant property were unreasonable.
[39] Of the total expenses of $5,045.58 claimed by the appellants, the trial judge allowed $684.86 for listing fees and $440.70 septic cleanout. The other amounts claimed, including a $376 water charge, additional utility charges, snow removal cost after the property was relisted and property taxes, were disallowed. No reasons were given, beyond the trial judge’s general comment that such expenses were unreasonable. Nor was any explanation given limiting the recovery of legal fees thrown away to $750 for, rather than the $2,599 incurred.
Issues
[40] The appellants raise three issues on appeal:
a. Did the trial judge err in law and mixed fact and law in accepting the opinion of the respondent’s appraiser as to the fair market value of the appellants’ home at the time of resale?
b. Did the trial judge err in law in finding that the Marshalls failed to mitigate their damages?
c. Are the trial judge’s reasons concerning the Marshalls’ claims for special damages insufficient or otherwise infected by legal error?
Standard of Review
[41] In Saramia Crescent General Partner Inc. v. Delco Wire and Cable Limited, 2018 ONCA 519, at para. 28, Nordheimer J.A. succinctly stated the applicable standard of review for appeals from a judge’s assessment of damages:
A trial judge’s determination of damages is a question of mixed fact and law. Thus, it attracts deference on review. In order for an appellate court to interfere with a determination of damages, the appellants must generally show that the trial judge committed a palpable and overriding error. However, there is an exception to that standard. Where the determination of damages involves extricable questions of law, those questions are subject to review for correctness.
Analysis
[42] Many of the cases involving the determination of damages when agreements for the purchase and sale of real property are breached take a blended approach to consideration of fair market value and mitigation.
[43] In this case, the respondents say that the resale price of $635,000 did not represent the fair market value of the property. Faced with the divergent views of Mr. Marshall, a licensed realtor of many years’ standing (but clearly not a disinterested witness) and Mr. Otto (who was the only expert witness to testify), the trial judge preferred the evidence of Mr. Otto that the fair market value of the property was $675,000. Not only because, as the judge put it, Mr. Otto was a “straight talker” but because his evidence “made sense in the circumstances”, whereas the trial judge had “great difficulty” with aspects of Mr. Marshall’s testimony.
[44] The trial judge, largely relying on the same evidence from Mr. Otto, but also guided by what he regarded as “common sense” in an upward trending market, concluded that the appellants could have mitigated their loss by relisting the property for sale at a fair market value, using recent comparables and established pricing practices and permitting reasonable exposure for a reasonable timeframe. Had these things been done, it should have produced results more in accordance with the fair market value of the property.
The Best Indicator of Market Value of a Property is what an Arm’s Length Purchaser Will Pay for the Property in the Open Market
[45] The trial judge rejected the proposition that the best indicator of market value of a property is what an arm’s length purchaser will pay for the property in the open market. As I will explain, this is a proposition which should have represented the starting point for the judge’s analysis.
[46] It is well-established that, as a general principle, where a purchaser fails to close a real estate transaction and the vendor takes reasonable steps to sell the property in an arm’s length sale to a third party in mitigation of damages, and there is nothing improvident about the sale, the difference between the two sale prices will be used to calculate the damages: Arista Homes (Richmond Hill) Inc. v. Rahnama, 2022 ONCA 759, at para. 9.
[47] There is no authority for the trial judge’s assertion that “absent exceptional circumstances, a resale below fair market value may not constitute “reasonable steps”, as such would render an unfairness to the defendants”, the effect of which would be to reverse the burden of proof
[48] Rather, as explained by Kimmel J. in Marshall v. Meirik, 2021 ONSC 1687, at para. 29, the onus is on the plaintiff to establish the resale price which will presumptively be the fair market value of the property:
The damages formula is relatively straightforward. It is the original purchase price under the APS (which is known) less the market value of the Property on the assessment date, and then subject to further adjustment to account for mitigation considerations, if applicable. See 100 Main Street [100 Main Street Ltd. v. W.B. Sullivan Construction Ltd. (1978), 1978 1630 (ON CA), 20 O.R. (2d) 401 (C.A.)] at para. 55. In describing the onus on a plaintiff to prove their damages, the Court of Appeal in 100 Main Street said (at para. 81):
Included in the "normal measure" is the difference between the contract price and the market price. Thus, I think that the proper course is for the plaintiff, in presenting its case, to adduce evidence of the contract price and of the market price or resale price upon which he relies in establishing the loss of bargain.
[49] In Palladino v. Durham, Sutherland J. was faced with conflicting expert appraisal evidence on the market value of a property. One appraiser opined that the fair market value of the property in question was $625,000. The other appraiser put the value in a range between $675,000 - $700,000. Following 37 days on the market after the original sale transaction had failed to close, the vendors accepted an offer of $625,000 in what the court described as a “down market”. In concluding that the price paid for the property by an arm’s length purchaser on resale was the best indicator of fair market value, Sutherland J. referred to the decision of the Nova Scotia Court of Appeal in Royal Bank v. Marjen Investments Ltd. (1998), 164 N.S.R. (2d) 293, 491 A.P.R. 293, 155 D.L.R. (4th) 538, 1998 NSCA 37, at para. 31:
When the property has been resold, however, and, particularly, when subjected to vigorous marketing efforts … the Court should generally not depart from the selling price. Appraisal reports are a best guess, albeit by a person experienced in the real estate field. It is the market that actually determines the value of the property.
[50] The trial judge pursued a different approach in his analysis. After framing as “the main issue in this case” whether the court should accept or reject that the $635,000 resale price was the fair market value of the property at the time of the resale, he then engaged in what he described as a credibility assessment between the views of Paul Marshall and Les Otto on fair market value, concluding that he preferred the evidence of Mr. Otto.
[51] The trial judge expressly declined to apply the proposition enunciated in Palladino because he considered the facts and conclusions in that case to be different than the case before him. The decision in Marshall v. Meirik was not referred to by the trial judge at all (the Court of Appeal’s decision in Arista Homes had not yet been released).
[52] The appellants submit that, there being no finding by the trial judge that the sale of the property was not at arm’s length or improvident, the trial judge erred by relying on the opinion of fair market value given by a real estate appraiser called by the respondents to determine damages, rather than the evidence of what an arm’s length purchaser was prepared to pay.
[53] I agree. Unless the defendant can prove that the sale was not to an arm’s length third party, or that it was improvident (i.e., the vendors were thriftless, imprudent, prodigal, careless, wasteful or shortsighted), the resale price is the presumptive fair market value. In such circumstances, there is no need for expert appraisal evidence. This court affirmed that approach in Eyelet Investment Corp. v. Song, 2024 ONSC 2340 (Div. Ct.), at para. 72, citing Arista Homes.
[54] It can readily be seen why the resale price should the “normal measure” of damages in the absence of compelling reasons to do otherwise. In Marshall v. Meirik, Kimmel J. alluded to the “subjective variability of the expert appraisal evidence”, which she attributed to the experts’ “different points of emphasis”. Or, as Bateman J.A. in Marjen put it (at para. 31), “[a]ppraisal reports are a best guess, albeit by a person experienced in the real estate field. It is the market that actually determines the value of the property”.
[55] It was an error of law for the trial judge to bypass the resale value as the presumptive fair market value of the property, and instead to launch into a search for fair market value based on a credibility assessment between Paul Marshall and the respondents’ expert.
[56] As a result, the trial judge’s assessment of fair market value of $675,000 cannot stand: the correct assessment of the appellants’ damages, subject to mitigation, should have been the difference between the price agreed to in the APS ($701,000) and the eventual sale price ($635,000) - namely, $66,000.
Mitigation
[57] As the trial judge correctly articulated, the principle that an award of damages for breach of contract should put the plaintiffs in the same position they would have been in had the breach not have occurred, is subject to the duty of a plaintiff to take all reasonable steps to mitigate the loss consequent on the breach. Jason W. Neyers, ed., Fridman’s The Law of Contract in Canada, 7th ed. (Toronto: Thomson Reuters, 2024) states, at §22:36:
The onus of proving failure to mitigate is on the defendant. The defendant's onus is a heavy one, but if it is discharged the defendant is relieved of liability for such damages as can be traced to the plaintiff's own inactivity or conduct which exacerbates, rather than mitigates, their loss. [Emphasis added]
[58] In Eyelet Investment, this court dealt with mitigation in the real estate context, stating, at para. 73:
In Tribute (Springwater) Limited v. Atif, 2021 ONCA 463, at para. 14, the Court of Appeal held that where a buyer alleges that the vendor failed to mitigate its damages, the buyer bears the onus to prove on a balance of probabilities, “both that the plaintiff failed to make a reasonable efforts to mitigate, and that mitigation was possible: Southcott Estates Inc. v. Toronto Catholic District School Board, 2012 SCC 51, [2012] 2 S.C.R. 675, at paras. 24, 45.”
[59] While the respondents concede that there was some evidence at trial which supported the appellants’ position, they submit that it is not the function of an appeal court to interfere with the trial judge’s assessment and weighing of the evidence on mitigation, absent palpable and overriding errors.
[60] The trial judge’s conclusions on mitigation were heavily influenced by his interpretation of Mr. Otto’s evidence. Mr. Otto was, however, only qualified as an expert to give opinion evidence on determining the value of residential properties. No witness at the trial was qualified to give opinion evidence on real estate marketing practices. Nevertheless, the trial judge held, in rejecting Mr. Marshall’s evidence, that he agreed with Mr. Otto that Mr. Marshall had taken “insufficient steps, or made insufficient efforts, to market the property”, and continued:
He made fewer inquiries regarding comparables at resale and relied on an earlier accepted price that was clearly an outlier from the other four bids submitted in June.
[61] In rejecting Mr. Marshall’s evidence that it would have been mere speculation to conclude that if the relisting had been left running for a longer period of time, more offers may have been forthcoming, the trial judge reasoned “[t]his is what the expert appraiser opined, and I accept his evidence”.
[62] The respondents submit that the trial judge was entitled to accept and rely upon the appraiser’s evidence, even when it exceeded the bounds of the expert’s qualifications, in the absence of objection by the appellants. Furthermore, the respondents point out that some of that evidence was elicited during cross-examination by counsel for the Marshalls (not the same counsel on this appeal). That exchange was as follows:
Q. …. You've indicated the purchase price is deemed to be below the retrospective trend even allowing for stigma impact. This may due - may be due to not having been properly exposed to the open market and adequately promoted to the public. Do you see that conclusion?
A. I see that.
Q. And aside from any information that you might have been provided and - and any information that you discussed today, you - you don't know anything about the marketing efforts made for this property; right?
A. We looked at the MLS. We found very little evidence of any marketing which would be typical of all the other properties.
Q. How do you find evidence of marketing on the MLS listing, sir?
A. You log into the MLS and you look at the properties that are listed.
Q. So for example exposure time is that - is that your issue with this comparable or with the subject?
A. You look at exposure time. You look at pricing. How quick did it sell? How quick did it not sell? How close to the list price did it sell for or how far away. You look at the general trends in the market to see if that may even made sense.
Q. Okay. And you note in your report that the subject was listed and sold in under 20 days on the market. Your comparable one and three were both under 20 days; weren't they?
A. That's correct.
Q. But you didn't deem either of those properties to not be comparable due to a deficiency in marketability; is that right?
A. Correct.
Q. Right. In fact sir, on your report you indicated that a reasonable exposure time based on your market research, which was never provided in these proceedings, you concluded that a reasonable exposure time was less than 90 days; correct?
A. Correct.
Q. And the subject the re-sale of the of the property falls within those parameters. would you agree?
A. It would.
[63] Mr. Otto’s report, referenced in the foregoing extract from his testimony at trial, was included in the Joint Trial Document Brief. However, the trial transcript clearly records that the appraiser’s report was provided to the trial judge as an aide memoire only, and did not form part of the evidentiary record at trial.
[64] Mr. Otto was led through much of the contents of his report by counsel. To the extent that his evidence in chief touched on the sale price, he said:
Q. And you indicated in your report that you were aware that the property sold for $635,000, closing on December 3rd, 2017. Was that in your opinion a sale of this property at its fair market value?
A. Sorry for $635,000?
Q. Yes.
A. We believe that to be noticeably lower than the per daily market expectations. At the same time if they had been listed for much higher, which we suspect was a little aggressive given - even given the market trends but certainly the 635 was definitely below. In other words there was no justification for a sale price at 635 that we could discover.
[65] Mr. Otto was not examined in chief on his opinion regarding the marketing of the property when it was relisted. The extent of the oral testimony that he gave on that issue appears in the above-excerpted portion of his testimony, responding to questions based on Mr. Otto’s report.
[66] Trial judges have an overarching gatekeeper role to prevent the reception of inadmissible opinion evidence. As appears from the extract above, the questions asked by the appellants’ trial counsel did somewhat open the door to an issue that Mr. Otto had not been qualified to give opinion evidence on. Depending on the nature of the evidence elicited as a result, it could have been appropriate to afford a degree of latitude to the use of answers to those questions.
[67] That having been said, the evidence of Mr. Otto on the issue of remarketing, and, hence, the plaintiffs’ failure to mitigate, was limited to his view that the resale price of $635,000 “may be due to not having been properly exposed to the open market and adequately promoted to the public” [emphasis added]. No opinion was offered on what would have amounted to “proper” exposure or “adequate” promotion. Indeed, two of the three comparable properties relied on by Mr. Otto for his opinion on fair market value had, like the appellants’ property, sold with less than 20 days’ exposure to the market.
[68] To similar effect, Mr. Otto testified that the listed resale price of $701,000 was “a little aggressive”. Again, this comment was made in the absence of further expert evidence on established pricing practices, or the merits of different pricing strategies.
[69] What is clear from the evidence is that, save for the original offer made by the respondents, the first offer made by the eventual purchasers of $630,000 was higher than any other offer received by the appellants when the property was listed the first time, including the respondents’ proposed amendment seeking a reduced purchase price at $590,000. No other offer came close to the respondents’ original offer of $701,000.
[70] Mr. Otto did not testify “that leaving a listing running will attract more offers”, an opinion attributed to Mr. Otto by the trial judge at para. 94 of his reasons.
[71] Then, in answer to the rhetorical question, “what more could the [appellants] have done?” the trial judge stated (at para. 95): “list at fair market value using recent comparables and established pricing practices and permit reasonable exposure for a reasonable timeframe”. Yet, other than Mr. Otto’s bald comment that the sale price “may not” have been “properly” exposed to the market or “adequately” promoted, there was nothing - other, perhaps, than what the trial judge referred to as “common sense” - to support his conclusions.
[72] In Marshall v. Meirik, at para. 45, Kimmel J., quoting from Elliott v. Montemarano, 2020 ONSC 6852, at para. 80, stated:
This court has found that “the absence of evidence from a professional which opines that the shortcomings in the sale process alleged by the purchasers actually had an impact on the final sale price…” is fatal to a defendant’s position that a plaintiff (vendor) failed to mitigate the damages. [Emphasis added]
[73] The respondents bore a “heavy onus” to establish that the appellants failed to make reasonable efforts to mitigate, and that mitigation was possible. Yet significant elements of the trial judge’s conclusions on mitigation were not supported by the evidence at all. For example, there was no evidence that another buyer was waiting in the wings to buy the property for more than $635,000, i.e., that another sale was actually possible had more reasonable marketing efforts been undertaken. There were, accordingly, palpable and overriding errors made in the assessment of the evidence, and the resulting decision on the issue of mitigation cannot stand.
[74] Further, in the absence of findings based on admissible evidence that reasonable efforts to market the property would have likely led to a sale at a higher price, there was also no basis for the trial judge to use the expert’s assessment of the fair market value for the damages calculation in substitution for the actual resale price obtained by the vendors.
Expenses
[75] The trial judge held that the appellants’ rejection of the respondents’ repudiation of the APS did not entitle them to incur expenses unnecessarily. After stating, correctly, that the appellants were not obliged to “take active steps to relist at the time, or immediately reach out to other prospective buyers who had earlier expressed an interest” in the property, the trial judge was critical of Mr. Marshall, who had “stood silent for 112 days before relisting” while giving no indication that he planned to “compel the sale through court action” (presumably, specific performance) at that time. Expenses claimed by the plaintiffs to move into temporary rented accommodation prior to the scheduled closing date, so as to provide the respondents with vacant possession in the event that they elected to complete the transaction, were deemed to be unreasonable, as were “some” utility costs while carrying the vacant property. The trial judge continued:
He [Mr. Marshall] incurred numerous expenses and expected that the defendants would reimburse him for them. This expectation was an unreasonable one.
[76] No issue can be taken with the trial judge’s disallowance of expenses claimed for utilities and other carrying costs incurred between the date of the appellants’ rejection of the respondents’ repudiation of the APS and the agreed closing date. Absent some other explanation, they would have been incurred in any event.
[77] In the absence of a better explanation for the claim for moving expenses (the appellants say that the moving costs were incurred when they moved into temporary rented accommodation so as to be able to give vacant possession of the property on the original closing date), there is no basis to interfere with the trial judge’s rejection of that claim either. The appellants would surely have moved out if the transaction had in fact closed on 31 October. Indeed, Mr. Marshall confirmed that the plaintiffs did not enter into an agreement of purchase and sale for their next permanent home until January 2018. This suggests that the respondents were not responsible for the appellants incurring an extra set of moving expenses.
[78] Although the trial judge declined to award any amounts for utility expenses, snow removal costs or property taxes that related to the period between 31 October 2017 (the date of the original closing) and 15 December 2017, he allowed the appellants’ claims for relisting fees and the costs of cleaning out the septic tank on the property. The trial judge also allowed $750 of the total legal fees of $2,599 incurred by the appellants in relation to the aborted sale of the property.
[79] No reasons were given for either the acceptance or rejection of these expenses, as the case may have been, other than a general statement that they were not reasonable, prudent, or necessary in the circumstances (Mr. Marshall’s evidence was that the septic tank cleanout charge was incurred because the eventual purchaser had included having the septic tank cleaned out prior to closing as a term of her offer, which possibly explains why the trial judge allowed the expense, although he did not say so).
[80] While the absence of reasons to explain the trial judge’s rejection of some of the expenses renders it appropriate for this court to review those claims, I would decline to interfere with the trial judge’s disposition, with the exception of the legal expenses claim.
[81] In principle, utility and property tax expenses incurred between 31 October and 15 December 2017 could be recoverable. However, those expenses must be clearly ascertainable and proved by the vendors. Many of the property tax and utilities expenses claimed relate to accounting periods that started before and ended after the closing date. No submissions were made regarding the apportionment of those expenses, and I do not regard it as the function of an appellate court to wade through the evidentiary record to undertake that exercise now. There is also a snow removal expense of $254.25 incurred on 7 November 2017, a week before the property was relisted. No further information about this expense and what it covered has been provided, other than the submission that once the property was relisted “the home needed to be attractive and accessible to prospective buyers”. Again, the court is left to guess in order to fill in the gaps in the evidentiary record.
[82] On the other hand, I see no principled basis for not allowing the appellants the full amount of the legal fees they incurred for the aborted transaction. If there was an argument that some of the expenses incurred would have reduced the legal fees relating to the completed sale in December, it was not reflected in the trial judge’s reasons or the evidentiary record.
Disposition
[83] For the foregoing reasons, I would allow the appeal and award the appellants damages as follows:
Difference between original sale price and eventual sale price $66,000.00
Listing fees $684.86
Septic cleanout $440.70
Legal fees thrown away $2,599.00
TOTAL DAMAGES $69,724.56
[84] There is agreement that the parties succeeding on the appeal should receive trial costs of $25,000 all inclusive, plus costs of the appeal in the all-inclusive amount of $7,500.
Mew J.
I agree _______________________________
Rady J.
I agree _______________________________
Myers J.
Released: 11 February 2025
CITATION: Marshall v. Hall, 2025 ONSC 910
DIVISIONAL COURT FILE NO.: DC-22-064-00
DATE: 20250211
ONTARIO
SUPERIOR COURT OF JUSTICE
DIVISIONAL COURT
Rady, Mew, and Myers JJ.
BETWEEN:
PAUL MARSHALL and DIANE MARSHALL
Appellants (Plaintiffs)
– and –
JAMES HALL and SHERRY HALL
Respondents (Defendants)
REASONS FOR DECISION
MEW J.
Released: 11 February 2025
[^1]: The record reflects that the interval between the date of listing and acceptance of the subsequent purchaser’s offer was, in fact, nine days.