Kalis v. Pepper, 2015 ONSC 453
COURT FILE NO.: CV-13-484698
DATE: 20150121
ONTARIO
SUPERIOR COURT OF JUSTICE
BETWEEN:
MILAN KALIS and ILJA KALIS
Plaintiffs,
Defendants to the Counterclaim
– and –
JOHN PEPPER, KRISTA MARSHALL and RE/MAX PROFESSIONALS, INC., BROKERAGE
Defendants,
Plaintiffs by Counterclaim
Arnie Herschorn, for the Plaintiffs, Defendants to the Counterclaim
Chris Maggirias, for the Defendants, Plaintiffs by Counterclaim
HEARD: December 4, 2014
LEDERER J.:
[1] Milan Kalis and Ilja Kalis (“the plaintiffs”) sought to sell their home. John Pepper and Krista Marshall (“the defendants”) wanted to buy it. An Agreement of Purchase and Sale was entered into on December 12, 2012. There were no conditions. In particular, the purchase was not contingent on the sale by the defendants of their home. The closing was set for September 10, 2013.
[2] As required by the Agreement of Purchase and Sale, the defendants (“the buyers”) paid a deposit of $100,000 which was to be, and is being, held by the broker.
[3] The defendants delayed any effort to sell their home until the late spring when the garden would look its best. There was an open house in May. The house did not sell.
[4] On May 23, 2013, the defendants wrote a letter to the plaintiffs. It said:
Please be advised we are having some difficulties selling our house. Given the circumstances we are evaluating our options.
Under the circumstances we think it would be prudent to put our house up for sale and we will be prepared to co-operate moving forward. Should another buyer be found.
We are trying to minimize any issues for all of the parties and offer our assistance.
[5] The following day, the plaintiffs wrote a response, but did not address it to the defendants. They sent it to the sales agent:
Based on the letter from John Pepper and Krista Marshall dated June 23, 2013 [sic], we consider the Agreement of Purchase and Sale of our property at an end and therefore we ask to have the buyers [sic] deposit of $100,000 released to us.
Would you kindly advise the Buyer.
[6] When there was no immediate response, the plaintiffs telephoned the agent. It transpired that the letter of May 24, 2013 had not been delivered by the agent to the defendants. It was delivered later, on May 29, 2013. During the telephone conversation, the agent explained that the defendants were having trouble selling their home. They did not want to own two homes at the same time. On the other hand, in giving evidence, the agent acknowledged that the defendants never said they would not close.
[7] On May 28, 2013, which is to say, after the plaintiffs had written saying they took the agreement to be at an end (May 24, 2013), but before that letter had been delivered to the defendants (the buyers), the business partner of the agent wrote to the plaintiffs (the sellers) saying, in part:
We do note, that the buyer’s [sic] have been very positive of late, as to the prospects of eventually selling their existing property, and honestly believe, that they genuinely wish to follow through, on this purchase.
[8] The sale did not close. The deposit of $100,000 remains with the broker. The issue is to determine which of the parties should receive the deposit. To whom should it be released?
[9] For their part, the defendants say they never intended to repudiate the contract. To the contrary, they continued in their efforts to sell their home. The letter of May 23, 2013 was to be a catalyst to look for options, one of which was to allow for a further sale of the property they had agreed to buy; another was to extend the closing. The purpose of the letter was to open a dialogue. It is true that John Pepper, one of the defendants, had said he did not want to own two properties, but he testified this was to instill in the agent the need for action on the sale of their home. This was confirmed by the second defendant, Krista Marshall, who added that the comment was made during a meeting with one of the two sales agents (there was some confusion as to which one) where the defendants indicated they were not happy with how the effort to sell their home was proceeding. Even without the sale, they could have, and intended to, close the transaction and complete the purchase.
[10] The question of who gets the deposit is answered by a determination of whether the defendants repudiated the contract:
[U]pon default or repudiation by the purchaser the vendor may retain the deposit as liquidated damages.
(Victor Di Castri, The Law of Vendor and Purchaser, Volume 2, Carswell, at §805)
[11] When can it be said that a contract has been repudiated? It has been said that:
Repudiation is conduct that demonstrates that a contracting party has absolutely renounced its contractual obligations.
(Paul Perell, Real Estate Transactions, 2nd edition, Canada Law Book, at p. 340, referring to W. J. Crowe Ltd. v. Pigott Construction Ltd., 1961 CanLII 23 (ON CA), [1961] O.R. 305 (Ont. C.A.) affirmed 1963 CanLII 10 (SCC), [1963] S.C.R. 238 (S.C.C.); Guarantee Co. of North America v. Gordon Capital., 1999 CanLII 664 (SCC), [1999] 3 S.C.R. 423 (S.C.C.), at para. 40; Mersey Steel & Iron Co. v. Naylor, Benzon & Co. (1884), 9 App. Cas. 434 (U.K. H.L.); and, D. M. McRae “Repudiation of Contracts in Canadian Law” (1978), 56 Can. Bar rev. 233)
further:
A party to a contract repudiates by clearly stating that he or she does not intend to perform his or her obligations under the contract.
(Paul Perell, Real Estate Transactions, 2nd edition, at p. 340, referring to Netupsky v. Hamilton (1969), 1969 CanLII 50 (SCC), [1970] S.C.R. 203 (S.C.C.)
and:
To constitute repudiation of a contract the conduct of the promisor must show an intention to altogether refuse the performance of the contract and to be no longer bound by it. The intimation must be unequivocal.
(Wilson v. Graydon Hall Pizza and Catering Ltd. (1994) 1994 CanLII 7535 (ON SC), 11 B.L.R. (2d) 266, at para. 48, quoting Ginter v. Chapman (1967), 1967 CanLII 810 (BC CA), 60 W.W.R. 385 (B.C. C.A.), at p. 389)
[12] For any action or statement to be relied on as repudiation, it must be clear, absolute and certain. Otherwise, any expressed uncertainty could be taken as repudiation and it would be impossible (or at least risky) for a party to a contract to express concerns or seek assistance from the other party to address such concerns lest it be taken as repudiation.
[13] In this case, the defendants had specifically acknowledged that the purchase was not conditioned on the sale of their home. They understood that, regardless of whether it sold or not, they were obliged to complete the transaction. The letter of May 23, 2014 does not say that the contract was going to be breached. It identified a concern. It advised that the defendants were “evaluating…options” (see para. [4], above). It proposed a possible solution in an effort to minimize issues for all concerned.
[14] This is not repudiation.
[15] In Wilson v. Graydon Hall Pizza and Catering Ltd., supra, an oral contract was entered into for the sale of a business from the defendant to the plaintiff. The plaintiff (the buyer) was unhappy. He advised the defendants that “…he could not handle The Business and didn’t want any more of it”. This did not signify repudiation. “The statement by Wilson suggested that he was less than enthusiastic about the agreement, but a reasonable person could not conclude that, based on such a statement, Wilson would not close the deal” (Wilson v. Graydon Hall Pizza and Catering Ltd., supra, at para. 48).
[16] In the same case, the trial judge agreed that plaintiff (the buyer) may have attempted to frustrate the contract by not having the written agreements of purchase and sale accurately reflect the oral agreement. This, too, did not amount to repudiation. “[I]t does not necessarily follow that he [the buyer] would not fulfil his contractual obligations when they came due. Again, to amount to a repudiation of the contract the intimation must be unequivocal” (Wilson v. Graydon Hall Pizza and Catering Ltd., supra, at para. 52).
[17] The statement that the defendants (the buyers) were having trouble selling their home, particularly in company with the understanding that they were evaluating options, is not the kind of unequivocal declaration necessary to stand as repudiation:
The law is clear that a mere apprehension that the opposite party will repudiate his obligations does not justify the first party in pursuing remedies available only upon an actual repudiation by the opposite party.
(Wilson v. Graydon Hall Pizza and Catering Ltd., supra, at para. 48, referring to Toronto Type Foundry Ltd. v. Miehle-Goss-Dexter Inc., 1968 CanLII 269 (ON CA), [1969] 2 O.R. 431 (H.C.), at pp. 440-441; Coté v. St.-Fulgenc (Commissaires d’Écoles), [1944] Que. K.B. 103 (C.A.); and, Boon v. Bell, 1932 CanLII 237 (SK CA), [1932] 2 W.W.R. 304 (Sask. C.A.), at p. 310)
[18] As in Wilson v. Graydon Hall Pizza and Catering Ltd., supra, there is nothing in the remarks or statements of the defendants that can be taken as indicating an intention to withdraw and not complete the transaction.
[19] The comment made that the plaintiffs did not want to own two houses does not change this conclusion. For one thing, there was no statement as to what would happen if this occurred. There was no indication as to which home they would prefer to sell and which they would attempt to maintain. Had the plaintiffs not been so fast off the mark, had they taken the time to communicate with the defendants, the circumstances of the comment could have been explained. It is also possible that something more might have been said that would have amounted to repudiation:
In retrospect, when the relationship began to deteriorate, the defendants would have been well advised to notify Wilson that the deal had to close on a certain date and failure to close the deal would be treated as a breach of the contract. When faced with this situation, Wilson may have done or said something which would have amounted to an anticipatory breach of the contract. However, this never happened and all we are left with are the actions and words of Wilson in this case.
(Wilson v. Graydon Hall Pizza and Catering Ltd., supra, at para. 53)
[20] While this may be true, in this case it seems unlikely. The letter of May 28, 2014 makes clear the belief of the sales agent that the defendants (the buyers) “genuinely wished” to complete the purchase of the home (see para. [7], above). Perhaps, if the plaintiffs (the sellers) had paid adherence to this advice and reviewed the situation with the defendants, they would have come to an understanding as to the intentions of the buyers. It is possible they could have come to a resolution that would have accommodated the needs and desires of both sides. As it is, they acted in the absence of the contract having been repudiated.
[21] Judgment is awarded in favour of the defendants. The deposit and any interest it has attracted is to be returned to them.
[22] No submissions were made as to costs. If the parties are unable to agree, I will consider written submissions as follows:
On behalf of the defendants, no later than 15 days after the release of these reasons. Such submissions are to be no longer than 3 pages, double-spaced, not including any Costs Outline, Bill of Costs or case law that may be provided.
On behalf of the plaintiffs, no later than 10 days thereafter. Such submissions are to be no longer than 4 pages, double-spaced, not including any Costs Outline, Bill of Costs or case law that may be provided.
On behalf of the defendants, in reply, if necessary, within a further 5 days. Such submissions are to be no longer than 1 page, double-spaced.
LEDERER J.
Released: 20150121
CITATION: Kalis v. Pepper, 2015 ONSC 453
COURT FILE NO.: CV-13-484698
DATE: 20150121
ONTARIO
SUPERIOR COURT OF JUSTICE
BETWEEN:
MILAN KALIS and ILJA KALIS
Plaintiffs,
Defendants to the Counterclaim
– and –
JOHN PEPPER, KRISTA MARSHALL and RE/MAX PROFESSIONALS, INC., BROKERAGE
Defendants,
Plaintiffs by Counterclaim
JUDGMENT
LEDERER J.
Released: 20150121