ONTARIO

SUPERIOR COURT OF JUSTICE

COURT FILE NO: CV-12-449570
DATE: 20121121

B E T W E E N:

Barbara Kirshenblatt Plaintiff - and - Marsha Gail Kriss and Slavens & Associates Real Estate Inc. Defendants

Philip Sutherland , for the Plaintiff Conor D. O’Hare, for the Defendant, Marsha Kriss

HEARD : November 15, 2012

GOLDSTEIN J.:

[ 1 ] Ms. Kriss agreed to sell 18 Ardmore Road, a house in Toronto, to Ms. Kirshenblatt. Ms. Kirshenblatt provided a deposit of $100,000.00. The deposit is currently held in trust by Slavens and Associates Real Estate Inc. (“Slavens”), the real estate broker. The deal did not close. Ms. Kriss sold the property a short time later. She made $190,000.00 more than she would have if the deal with Ms. Kirshenblatt had closed. Nonetheless, she refused to return the deposit. In my view, she had no right to keep the deposit. At the hearing of the motion I indicated that I was granting summary judgment to Ms. Kirshenblatt for $100,000.00 and that reasons would follow. These are my reasons.

BACKGROUND:

[ 2 ] On November 3, 2011 Ms. Kirshenblatt and Ms. Kriss entered into an agreement of purchase and sale (“the Agreement”) for 18 Ardmore Road, Toronto. The price was $1,700,000. Ms. Kirshenblatt provided a deposit of $100,000, which was paid to Slavens in trust. The deal was to have closed on January 12, 2012 but was extended on Agreement to February 10, 2012.

[ 3 ] At some point Ms. Kriss became aware that Ms. Kirshenblatt and her husband, Eric Kirshenblatt, were going to undertake extensive renovations on 18 Ardmore. She objected strenuously. Steven Kirshenblatt is an architect and Eric Kirshenblatt’s brother. Apparently Steven Kirshenblatt and Ms. Kriss had some kind of friendship or acquaintance. In an email to Steven Kirshenblatt dated December 23, 2011, Ms. Kriss indicated that she did not wish to do the deal if 18 Ardmore was to be demolished. I excerpt the key portions of the email [1] :

As I have now heard from four very reliable sources that my parents’ home is slated for demolition by you, I want it verified from you whether you did in fact change or mind, or was it your intention all along. That would change the whole deal. I did not sign on for demolition. Why, that might shred my very soul after 56 years. You and your agents promised right to my face on my property that only some renovation would occur and your big family would live in it happily for many years. That is what I have been telling my neighbours.

The buyers can not do as they want. That would be buying under false pretences. I sold under duress and the undue influence of Merle. I explicitly stated that I either wanted the house moved or lived in. The Kirshenblatts are going to reno a little then live a long time in it . [That is the basis on which I choose them to be recipients. There was a verbal understanding.]

Why then was the surveyor checking out the front of the property? That I understood they weren’t touching at all. I could not handle the house being knocked down. That is a DEAL BREAKER .

People say walk away. I could physically. I could say it doesn’t matter. But if home, and family, and the environment don’t matter, what does? Would I be rootless, soulless, nowhere?

Please do not keep me in a state of emotional flux. Let’s make arrangements for me to meet with you in your office to view the plans. When I see what others are saying is wrong, that will assuage my anxiety. We can discuss ways for me to take whatever you don’t want in as an intact state as possible.

Alternatively, if your intention is as I have heard, we can discuss those other ventures I wrote about in my first email to you. To you it is just another house , and I have given you an alternative equivalent two doors away. To me it is my parents’ home of 56 years.

[ 4 ] “Merle” is apparently Ms. Kriss’s real estate agent. I note that in the Agreement there is no clause relating to demolition or renovation. In cross-examination on an affidavit, Eric Kirshenblatt indicated that the house was obviously in substantial need of renovations.

[ 5 ] During the months of January and February, 2012, Ms. Kirshenblatt’s lawyer, Jeffrey Silver, corresponded extensively with David McGregor, Ms. Kriss’s solicitor. Ms. Kriss also continued to have email exchanges with Steven Kirshenblatt. It is not necessary to recount all of the correspondence, but some of the key developments are set out below.

[ 6 ] On February 1, 2012, Mr. Silver wrote to Mr. McGregor. In that letter Mr. Silver noted that on January 16, 2012, Mr. McGregor had left a message indicating that Ms. Kriss did not want to complete the closing. According to Mr. McGregor’s message, Ms. Kriss had only sold 18 Ardmore on the understanding that Ms. Kirshenbaltt would never undertake renovation or rebuilding. Mr. Silver took the position that Ms. Kriss was refusing to proceed with the closing unless Ms. Kirshenblatt received assurances regarding possible renovations or demolition. He indicated that Ms. Kriss’s behaviour constituted an anticipatory breach. He proposed simply that the Agreement be considered at an end and that mutual releases be exchanged. Mr. Silver then proposed a possible alternative Agreement between the parties with a later closing date.

[ 7 ] Also on February 1, 2012, Ms. Kriss and Steven Kirshenblatt had an email exchange in which Ms. Kriss stated “I will sign a release only for you – sans reference to my real estate agency.” Steven Kirshenblatt then responded: “I will ask our lawyer to prepare the release. Okay?” Ms. Kriss responded: “No one wants court.” When asked by Steven Kirshenblatt what that meant, Ms. Kriss responded:

I’m going tomorrow at 1 pm.

It doesn’t mean anything that you necessarily have to be concerned about yet.

I am going mainly to keep my options open.

I will let you know after that.

Nitey-night.

[ 8 ] On February 3, 2012, Mr. McGregor confirmed to Mr. Silver that Ms. Kriss was prepared to sign a mutual release. The release would allow Ms. Kirshenblatt to recover the deposit from Slavens.

[ 9 ] On February 8, 2012, Ms. Kriss emailed Steven Kirshenblatt to indicate that she would be signing the release the following day. Steven Kirshenblatt replied that he was glad and asked that she have her lawyer contact Slavens to return Ms. Kirshenblatt’s deposit. On February 9, Mr. McGregor again advised Mr. Silver that his client would be attending that day to sign the release. Ms. Kriss did not sign the release that day.

[ 10 ] On February 10, 2012, Mr. Silver advised Mr. McGregor that the form of release prepared by Mr. McGregor was acceptable and would be signed by his clients. Later that day, Mr. McGregor wrote to Mr. Silver and advised him that there were ongoing discussions between their clients that might result in proceeding with the transaction on February 13, 2012. Mr. McGregor indicated that if the transaction was not completed he assumed that the deposit would simply flow to Ms. Kirshenblatt.

[ 11 ] On February 14, Mr. Silver wrote to Mr. McGregor demanding the return of the deposit as the deal did not close. The deposit was never returned. Ms. Kriss never signed a release.

[ 12 ] On May 2, 2012, 18 Ardmore was sold for $1,800,000.00 to a third party. That was $190,000.00 more than Ms. Kriss and Ms. Kirshenblatt had agreed to.

[ 13 ] On March 21, 2012 Ms. Kirshenblatt issued a statement of claim against Ms. Kriss and Slavens. Ms. Kirshenblatt alleged that Ms. Kriss breached the Agreement, and that she was entitled to the return of the deposit as well as damages and out-of-pocket expenses. On April 20, 2012, Ms. Kriss filed a statement of defence. She denied that she had repudiated the Agreement and pleaded that as a result of the anticipatory breach of the Agreement by Ms. Kirshenblatt the $100,000.00 deposit should be forfeited.

[ 14 ] Ms. Kirshenblatt brought this motion for summary judgment, asking for judgment only in the amount of $100,000.00 representing the deposit.

ANALYSIS:

[ 15 ] There are three issues to be determined on this motion:

1. Is this an appropriate case for summary judgment?
2. Who repudiated the Agreement?
3. If Ms. Kirshenblatt repudiated the Agreement, should the Court nonetheless grant relief from forfeiture of the deposit?

1. Is this an appropriate case for summary judgment?

[ 16 ] The test is set out in Combined Air Mechanical Services Inc. v. Flesch , [2011] O.J. No. 5431 , 108 O.R. (3d), 2011 ONCA 764 (C.A.):

50 We find that the passages set out above from Housen , at paras. 14 and 18, such as “total familiarity with the evidence”, “extensive exposure to the evidence”, and “familiarity with the case as a whole”, provide guidance as to when it is appropriate for the motion judge to exercise the powers in rule 20.04(2.1). In deciding if these powers should be used to weed out a claim as having no chance of success or be used to resolve all or part of an action, the motion judge must ask the following question: can the full appreciation of the evidence and issues that is required to make dispositive findings be achieved by way of summary judgment, or can this full appreciation only be achieved by way of a trial?

[ 17 ] In my view the question of whether the deposit should be returned is a simple one and can be readily answered on the record. The facts are not complicated. Whether the deposit is forfeit or not turns on the question of anticipatory breach. Much evidence has been introduced by Mr. Sutherland on behalf of Ms. Kirshenblatt. Some evidence has been put forward by Mr. O’Hare on behalf of Ms. Kriss. Both parties are required to “put their best foot forward.” If the evidence adduced by Ms. Kriss is the best that she can do, which I must assume, then there is manifestly no need for a trial. Her own words in her emails set out her variously shifting positions. At a trial she would have to repudiate her emails, which are very compelling evidence that she was the party who breached the Agreement. This repudiation would surely not assist her credibility. As I will set out below, there is ample evidence with regard to anticipatory breach.

[ 18 ] There is another compelling reason that the Court is in a position to grant summary judgment: even if the evidence were not clear on the issue of anticipatory breach (which I find that it is) it is uncontroverted that the defendant made a profit. A deposit may be forfeited where the purchaser defaults. In this case, if Ms. Kriss were to keep the deposit it would represent an unjust windfall. A court can exercise its discretion and grant relief from forfeiture of a deposit on an equitable basis: Laredo Construction Inc. et al. v. Sinnadurai , 2005 46934 (ON CA) , [2005] O.J. No. 5429 , 78 O.R. (3d) 321 (C.A.). As I will explain below, it is clear that relief from forfeiture is appropriate.

[ 19 ] I recognize that in cases where an equitable remedy may be granted a court may well have regard to intangible factors that can not readily be deduced from a written record. That said, I can see no principled basis for refusing summary judgment simply because the remedy sought is an equitable one. The Court of Appeal commented in Combined Air Mechanical, supra :

52 In contrast, in document-driven cases with limited testimonial evidence, a motion judge would be able to achieve the full appreciation of the evidence and issues that is required to make dispositive findings. Similarly, the full appreciation test may be met in cases with limited contentious factual issues. The full appreciation test may also be met in cases where the record can be supplemented to the requisite degree at the motion judge's direction by hearing oral evidence on discrete issues.

[ 20 ] In this case, the contentious factual issues can be resolved by way of reference to correspondence and email chains. In her affidavit Ms. Kriss deposes that a trial is necessary because the genuine factual issue in dispute is whether she or Ms. Kirshenblatt breached the Agreement. I agree that who breached is a genuine factual issue, but disagree that a trial is required to resolve the question. As the Court of Appeal further stated in Combined Air Mechanical, supra :

55 Thus, in deciding whether to use the powers in rule 20.04(2.1), the motion judge must consider if this is a case where meeting the full appreciation test requires an opportunity to hear and observe witnesses, to have the evidence presented by way of a trial narrative, and to experience the fact-finding process first-hand. Unless full appreciation of the evidence and issues that is required to make dispositive findings is attainable on the motion record - as may be supplemented by the presentation of oral evidence under rule 20.04(2.2) - the judge cannot be “satisfied” that the issues are appropriately resolved on a motion for summary judgment.

[ 21 ] It is not necessary to have a trial to determine the simple legal issue of whether Ms. Kirshenblatt can keep the deposit as a windfall under these circumstances.

2. Who repudiated the Agreement?

[ 22 ] In Pompeani v. Bonik Inc., 1997 3653 (ON CA) , [1997] O.J. No. 4174, 35 O.R. (3d) 417, 1997 CarswellOnt 3744 (C.A.) Osborne J.A. summarized the law regarding anticipatory breach:

39 An anticipatory breach occurs where one party to a contract repudiates the contract before performance is due: Kloepfer Wholesale Hardware & Automotive Co. v. Roy, 1952 8 (SCC) , [1952] 2 S.C.R. 465.

40 In Cehave N.V. v. Bremer Handelsgesellschaft m.b.H, The Hansa Nord (1975), 1 Q.B. 44, at pp. 59, Denning M.R. defined anticipatory breach in this way:

When one party, before the day when he is obliged to perform his part, declares in advance that he will not perform it when the day comes, or by his conduct evinces an intention not to perform it, the other may elect to treat his declaration or conduct as a breach going to the root of the matter and to treat himself as discharged from further performance ...

41 Professor Waddams referred to anticipatory breach in his text, The Law of Contracts, 3rd ed. paras. 613 and 614 in this way:

Repudiation can be by words or conduct evincing an intention not to be bound by the contract. It was held by the Privy Council in Clausen v. Canada Timber & Lands, Ltd. that such an intention may be evinced by a refusal to perform, even though the party refusing mistakenly thinks that he is exercising a contractual right.

The innocent party is not, however, obliged to bring the action immediately. The party can continue to press for performance and bring the action only when the promised performance fails to materialize. It has been said in many cases that there is an option to “accept” the repudiation and sue at once or to ignore it and press for performance, and that an unaccepted repudiation is of no consequence. [Footnotes omitted.]

See also Perell, Agreements of Purchase and Sale, at p. 30; McCallum v. Zivojinovic (1977), 1977 1151 (ON CA) , 16 O.R. (2d) 721 (C.A.).

42 An anticipatory breach discharges the innocent party of its obligations under the contract and allows it to pursue damages without the need to tender: Bethco Ltd. v. Clareco Can. Ltd. (1985), 1985 2252 (ON CA) , 52 O.R. (2d) 609; McCallum v. Zivojinovic , supra , at 723.

[ 23 ] In Spirent Communications of Ottawa Ltd. v. Quake Technologies (Canada) Inc. , [2008] O.J. No. 444, 2008 ONCA 92 , 88 O.R. (3d) 721 (C.A.) Gillese J.A. stated:

37 I would add this. When considering Spirent's conduct, it was important to keep in mind that what was involved was an anticipatory breach of contract. An anticipatory breach sufficient to justify the termination of a contract occurs when one party, whether by express language or conduct, repudiates the contract or evinces an intention not to be bound by the contract before performance is due. See Pompeani v. Bonik Inc. (1997), 1997 3653 (ON CA) , 35 O.R. (3d) 417 (C.A.). To assess whether the party in breach has evinced such an intention, the court is to ask whether a reasonable person would conclude that the breaching party no longer intends to be bound by it. See McCallum et al. v. Zivojinovic (1977), 1977 1151 (ON CA) , 16 O.R. (2d) 721 (C.A.). Having said that, when determining whether such an intention has been evinced, the courts rely on much the same analysis as they do in respect of claims of fundamental breach. That is, in determining whether the party in breach had repudiated or shown an intention not to be bound by the contract before performance is due, the court asks whether the breach deprives the innocent party of substantially the whole benefit of the contract.

[ 24 ] In my view, a reasonable person would conclude that Ms. Kriss intended to repudiate the Agreement. Indeed, the obvious inference is that Ms. Kriss decided not to close at least as of December 23, 2011 unless Ms. Kirshenblatt complied with new conditions that were not part of the Agreement. On that day, by email, she indicated to Steven Kirshenblatt that it was a deal-breaker, to use her words, if the purchasers demolished or substantially renovated her home. In cross-examination on his affidavit, Eric Kirshenblatt related that Ms. Kriss told him that she would kill herself or chain herself to the house if there was an attempt to renovate or demolish 18 Ardmore. It is difficult to tell whether Ms. Kriss did not want to close the deal because of her sentimental attachment to her parent’s home of 56 years, because she was confused, because she was misguided about the terms of the Agreement, because she couldn’t find movers, or because she thought she could make more money if she re-listed the house. It is possible that she believed all of these things at different points. For example, in her email of March 14, 2012 to Steven Kirshenblatt, Ms. Kriss stated (among other things):

All that added money by the way, means the property was deliberately priced and kept too low in the first place.

[ 25 ] Ms. Kriss deposes in her affidavit that Ms. Kirshenblatt wished to repudiate the agreement. Ms. Kriss points to the mutual releases that were signed by Ms. Kirshenblatt as evidence. In fact, as the correspondence between Mr. Silver and Mr. MacGregor makes clear, there was an agreement that mutual releases be signed. It seems, however, that Ms. Kriss wished to string the process along in order to, as she put it, “keep my options open”.

[ 26 ] She also deposes that Ms. Kirshenblatt’s intention to repudiate the Agreement is set out in an email from Ms. Kirshenblatt’s real estate agent to Ms. Kriss on January 20, 2012:

My buyers are prepared to do an extension or cancel the deal. They don’t want to be involved in anything more complicated than that. What would you prefer?

[ 27 ] That email must be seen in context. Ms. Kriss sent an email inquiring about actual building movers. It is not clear whether she was referring to regular movers or whether Ms. Kriss wanted to physically move the house:

If it isn’t prohibitive to move the whole house and permits can be obtained, we can do the deal . I just don’t know when because it depends on the mover’s schedule. On told me not until June. [Emphasis added]

[ 28 ] A reasonable person would conclude that Ms. Kriss was introducing a new closing condition. That email was forwarded to Ms. Kirshenblatt’s real estate agent, thus precipitating the question “which would you prefer?” Ms. Kriss then responded (I produce an excerpt):

From it I now understand they don’t want to wait for any committee decisions which may come in a few months or more. So let me see if I can speed up the schedules of any of those specialty movers or otherwise handle the situation with this new info. By the end of next week I should know .

[ 29 ] I note that this email exchange occurred after Mr. McGregor apparently told Mr. Silver that Ms. Kriss did not wish to complete the deal. I appreciate that Mr. MacGregor’s comment that his client did not wish to close is double hearsay. Nonetheless, it appears to have been confirmed by Ms. Kriss’s emails and subsequent behaviour.

[ 30 ] Several other emails were produced by both Ms. Kirshenblatt and Ms. Kriss. It is not necessary to set them out in detail here, except to note that in her email correspondence Ms. Kriss appears to believe that there was some kind of oppression and conspiracy regarding 18 Ardmore. She referred to various parties, including her real estate agent and a bank, as “the Pirate Crew” and Eric Kirshenblatt as the “Pirate Captain”, implying that he was involved as leader of the conspiracy.

[ 31 ] It is impossible to know whether Ms. Kriss was using the issue of movers or the issue of renovation and demolition as an excuse to obtain a better price. Her conditions were a moving target. In the end, it scarcely matters. Ms. Kirshenblatt was within her rights to accept what amounted to an anticipatory breach.

[ 32 ] What then, flows from the anticipatory breach by Ms. Kriss? In my view, since it was Ms. Kriss who repudiated the Agreement, it is obvious that Ms. Kirshenblatt is entitled to the return of her deposit: Bonie Construction Ltd. v. Titan Investment Corporation Ltd. and C. Savas Real Estate Ltd., 1962 167 (ON SC) , [1962] O.R. 672 (H.C.).

[ 33 ] Mr. O’Hare, in his submissions, strenuously argued that the plaintiffs were not entitled to their deposit back because Ms. Kriss had suffered damages. Since Ms. Kriss actually made more money selling to the subsequent purchaser, her damages could not have been financial. Mr. O’Hare suggested that such damages were psychological. Unfortunately, Ms. Kriss has not pleaded psychological harm or filed a counterclaim seeking damages for psychological harm. Mr. O’Hare indicated that he intended to do so on her behalf. I found this curious, as Mr. O’Hare has been Ms. Kriss’s litigation counsel from the outset in this matter.

[ 34 ] In effect, Mr. O’Hare asked the Court to have the funds held as security for damages for a lawsuit that had not yet been instituted. When asked to provide authority for the proposition that the Court could make such an order, Mr. O’Hare responded that he did not bring any cases to court because the law on the point was clear and obvious. The basis for Mr. O’Hare’s submission is not clear or obvious to me and I decline to give it effect.

3. If Ms. Kirshenblatt repudiated the Agreement, should the Court nonetheless grant relief from forfeiture of the deposit?

[ 35 ] This Court has jurisdiction to grant relief from forfeiture: Porto v. DiDomizio , [1998] O.J. No. 1580 (C.A.) . Ms. Kriss suffered no financial damages. Accepting for the sake of argument that I am wrong and that it was Ms. Kirshenblatt who repudiated the agreement, there is a basis for granting relief from forfeiture under the circumstances here.

[ 36 ] The facts in Laredo Construction Inc. et al. v. Sinnadurai , supra , bear some similarity to these facts. The plaintiff purchaser and the defendant vendor entered into an agreement of purchase and sale for a home. The plaintiff deposited $15,000.00. After two extensions of the closing date, the vendor refused to grant a third extension when the plaintiff was unable to close. The vendor then sold the property to a third party for $8000 more than the original price. The purchaser sued for the return of the deposit. In determining whether relief from forfeiture was appropriate, Labrosse J.A. stated:

[28] The defence to this action raised by Laredo is that it was entitled to void the agreement and keep the deposit because Sinnadurai was not ready to close on the closing date and that it was not technically or legally obligated to give an extension. However, it will be recalled that Laredo had, in accordance with the agreement, unilaterally extended the closing date on two previous occasions for approximately two and six months, and it then refused Sinnadurai an extension of one week when the earlier arrangements for the mortgage moneys had expired and the arrangements for closing were delayed. Within a few days and [page329] before the expiry of the extension asked by Sinnadurai, Laredo had sold the house for an additional $8,000, and kept Sinnadurai's deposit.

[29] In Saskatchewan River Bungalows Ltd. v. Maritime Life Assurance Co., 1994 100 (SCC) , [1994] 2 S.C.R. 490 , [1994] S.C.J. No. 59 , Major J. wrote, at p. 504 S.C.R., para. 32:

The power to grant relief against forfeiture is an equitable remedy and is purely discretionary. The factors to be considered by the Court in the exercise of its discretion are the conduct of the applicant, the gravity of the breaches, and the disparity between the value of the property forfeited and the damage caused by the breach.

[ 37 ] Even if it had been Ms. Kirshenblatt who repudiated the Agreement, I would still exercise my discretion and grant relief from forfeiture. Ms. Kirshenblatt can be forgiven for thinking that Ms. Kriss was impossible to deal with and that 18 Ardmore was more trouble than it was worth. The emails between Ms. Kriss and Mr. Silver, the constant promises to sign a release and then fail to sign it, the changing conditions, are evidence that Ms. Kriss was either playing a game of some kind or was genuinely distraught over the fate of her parents’ home. Either way, it would be unjust to allow Ms. Kriss to keep the deposit under these circumstances, especially where she was able to make $190,000.00 more than she would have had she sold the house to Ms. Kirshenblatt.

DISPOSITION :

[ 38 ] At the hearing of the motion I granted summary judgment, ordered the return of the deposit forthwith, and granted costs to Ms. Kirshenblatt in the amount of $8,500.00.

GOLDSTEIN, J.

DATE: November 21, 2012

COURT FILE NO: CV-12-449570
DATE: 20121121

ONTARIO SUPERIOR COURT OF JUSTICE B E T W E E N:

Barbara Kirshenblatt Plaintiff - and - Marsha Gail Kriss and Slavens & Associates Real Estate Inc. Defendants

JUDGMENT GOLDSTEIN J.

Released: November 21, 2012

[1] I have retained the original spelling, punctuation, and grammar in each of the emails set out in these Reasons.