NEWMARKET COURT FILE NO.: CV-11-107449-SR
DATE: 20151126
ONTARIO
SUPERIOR COURT OF JUSTICE
BETWEEN:
I TZU LAI
Plaintiff
– and –
CHIA-LING TENG and HUSSEIN SORKHABI also known as NICK SORKHABI
Defendants
Jonathan Miller, for the Plaintiff
Colin Brown, for the Defendants
HEARD: at Barrie on November 23 and 24, 2015
REASONS FOR JUDGMENT
DiTOMASO J.
INTRODUCTION
[1] On consent, the Title of Proceedings was amended at trial to describe the Defendant Hussein Sorkhabi as “Hussein Sorkhabi also known as Nick Sorkhabi”.
[2] The Plaintiff I Tzu Lai (“Ms. Lai”) claims that the Defendants Chia-Ling Teng (“Ms. Teng”) and Hussein Sorkhabi also known as Nick Sorkhabi (“Mr. Sorkhabi”) purchased property municipally known as 12 Megarry Court, Richmond Hill, Ontario.
[3] Ms. Lai entered into an Agreement with Ms. Teng and Mr. Sorkhabi whereby she loaned them $80,000 for the purchase of household goods/contents of 12 Megarry Court by Ms. Teng and Mr. Sorkhabi who are spouses of one another.
[4] Ms. Teng and Mr. Sorkhabi paid interest on the loan in the amount of $4,800 in 2007, 2008, 2009 and 2010. The loan in the amount of $80,000 plus interest in the amount of $4,800 for the period September 21, 2010 to September 21, 2011 came due and payable on September 21, 2011. Ms. Teng and Mr. Sorkhabi refused to pay the sum of $84,800 on September 21, 2011.
[5] Ms. Lai commenced this action claiming that Ms. Teng and Mr. Sorkhabi breached the Loan Agreement and that they are jointly and severally liable to pay Ms. Lai her damages.
[6] Ms. Teng and Mr. Sorkhabi denied they owe any money to Ms. Lai. They assert that Ms. Lai misrepresented to them the value of certain household contents namely spheres or stones associated with certain Feng Shui beliefs. They maintain that they trusted Ms. Lai, a fortune teller and Feng Shui Master, who was in an alleged fiduciary relationship with them.
[7] Not only do they claim misrepresentation on the part of Ms. Lai but they also allege that the Agreement was drafted by Ms. Lai without providing Ms. Teng and Mr. Sorkhabi the opportunity to obtain independent legal advice. Ms. Teng and Mr. Sorkhabi also rely upon the doctrine of contra proferendum. They submit that the alleged contract is invalid and unenforceable.
OVERVIEW
[8] At issue is the Contract of Purchase and Sale between Ms. Lai and Ms. Teng and Mr. Sorkhabi dated September 21, 2006 and marked as Exhibit 1 at trial. Ms. Teng and Mr. Sorkhabi had purchased 12 Megarry Court, Richmond Hill from Ms. Lai. The sale price of 12 Megarry Court (“the property”) was $528,000 with a closing date of September 18, 2006.
[9] Ms. Lai agreed to lend Ms. Teng and Mr. Sorkhabi the sum of $80,000 so they could purchase all of the household goods “as is” from Ms. Lai for the purchase price of $80,000 with Ms. Teng and Mr. Sorkhabi (the purchasers) having inspected all of the household goods at the property on September 16, 2006.
[10] Ms. Teng and Mr. Sorkhabi offered to purchase all of the household goods “as is” and as inspected for the price of $80,000. In order to facilitate this transaction, Ms. Lai gave Ms. Teng and Mr. Sorkhabi a personal loan of $80,000 payable upon the following conditions:
(i) Ms. Teng and Mr. Sorkhabi would pay simple interest on the loan at the rate of six percent for three years with an option to renew for two additional years at maturity date; and
(ii) the loan would be due and payable at the end of the five (5) years from September 21, 2006 i.e., on September 21, 2011. However, the loan was open for repayment at any time before the due date without penalties. The minimum payment at each anniversary date was the interest portion.
[11] The amount due and owing on September 21, 2011 was the sum of $84,800 comprised of $80,000 plus interest in the amount of $4,800 for the period September 21, 2010 to September 21, 2011.
[12] The Contract of Purchase and Sale was signed by all of the parties and witnessed by a solicitor, Rufus Ho. Mr. Ho witnessed the signatures only and was not responsible for the content of the document in any way.
[13] The document was drafted by Ronald Wu, a real estate agent and friend of Ms. Lai.
[14] Ms. Teng and Mr. Sorkhabi refused to pay the sum of $84,800 on maturity of the loan. They allege that Ms. Lai misrepresented the value of the spheres or stones. In so doing, they overpaid for the household goods. As a result of the fraudulent misrepresentation/misrepresentation on the part of Ms. Lai, Ms. Teng and Mr. Sorkhabi claim that the contract is invalid and unenforceable. Further, they submit that they owe Ms. Lai nothing.
ISSUES
[15] Five issues have been identified by defence counsel as follows:
As the Feng Shui advisor and friend of Ms. Teng and Mr. Sorkhabi, did Ms. Lai owe them a fiduciary duty?
Did Ms. Lai misrepresent the value of certain spheres or stones to Ms. Teng and Mr. Sorkhabi?
Did Ms. Lai’s misrepresentations induce Ms. Teng and Mr. Sorkhabi to enter into the Contract to purchase the household contents for $80,000?
If Ms. Lai did so induce Ms. Teng and Mr. Sorkhabi to enter into the contract to purchase the household goods for $80,000, should Ms. Lai be allowed to benefit from the Contract?
Should the court enforce the Contract drafted by Ms. Lai’s friend and real estate agent, Mr. Ronald Wu?
[16] There is one other issue dealing with the Contract being “under seal” which relates to the issue of contract consideration.
THE EVIDENCE
[17] Ms. Lai, Ms. Teng and Mr. Sorkhabi testified at trial. Marked as Exhibit 3 on consent was an expert’s report as to the value of the stones prepared by Christopher Fouts. This report is dated September 5, 2015. Mr. Fouts is a self-employed mineral dealer and geologist.
The Evidence of I Tzu Lai
[18] Ms. Lai gave evidence with the assistance of an accredited Mandarin interpreter. She does not speak English. She is not able to read English. She testified that she sold her house to Ms. Teng and Mr. Sorkhabi in 2006. She also sold household contents of 12 Megarry Court to them for $80,000. They all signed a document regarding the sale of the contents.
[19] Marked as Exhibit 1 was a document titled Contract of Purchase and Sale signed on September 21, 2006 by Ms. Lai as Vendor and Ms. Teng and Mr. Sorkhabi as Purchasers.
[20] The Contract was signed in the offices of Mr. Ho’s law firm. At the time Ms. Lai was accompanied by her friend and real estate agent, Ronald Wu. Mr. Ho was present as well as Ms. Teng and Mr. Sorkhabi.
[21] She was asked to describe how Ms. Teng and Mr. Sorkhabi were to pay the $80,000. She outlined the terms set out in the Contract. She testified that she had received interest for four years in the amount of $4,800 per year.
[22] When asked to describe what contents were sold, she testified that “many, all of them” were sold. This included the contents of four bedrooms, including beds, cabinets and blankets. Also sold to Ms. Teng and Mr. Sorkhabi were the contents of the living room and dining room as well as the contents of the family room and den. She testified that in the living room was a genuine leather sofa imported from Italy. In the dining room was a handmade wood dining room table which could seat eight people along with a hand carved wood cabinet. Also left were eight pieces of crystal and some jade stone and some ivory.
[23] In cross-examination, she testified that she was a Feng Shui expert for some 37 years and also a fortune teller. She was involved in a business that sold stones and crystals mainly to “set up” for Feng Shui. She continues to sell these stones in Taiwan.
[24] She testified that Ms. Teng and Mr. Sorkhabi were her clients for Feng Shui. She holds a PhD and is a doctor of traditional Chinese medicine. She would give them advice on what to eat and what to wear and how to organize their house so that they would have good fortune. It was expected that Ms. Teng and Mr. Sorkhabi would trust her advice.
[25] She was questioned in respect of the spheres or stones. Marked as Exhibit 2 is a newspaper article showing a photograph of Ms. Lai with some spheres or stones. She testified that she had been involved in the business selling spheres related to Feng Shui since 1978.
[26] She also testified that on a yearly basis she would give Ms. Teng and Mr. Sorkhabi an “analysis” for the coming year for which she was paid. The analysis for the coming year would tell Ms. Teng and Mr. Sorkhabi how to organize their lives to prevent any tragedy. She believes that she did this for them commencing in 2003.
[27] She testified about the sale of 12 Megarry Court in Richmond Hill. She and her husband had separated and they were in the process of obtaining a divorce. They were moving back to Taiwan. She had no intention to bring the furniture with her and, in the end, sold the furniture to Ms. Teng and Mr. Sorkhabi together with the house.
[28] Regarding Exhibit 1, there are three red seals opposite the names of Ms. Lai, Ms. Teng and Mr. Sorkhabi. When the document was signed, the red seals did not appear on it. Mr. Ho took the document to another room and when he returned the red seals were affixed. There was no discussion as to what the red seals meant. She believed that the document was notarized and that Ms. Teng and Mr. Sorkhabi actually owed her the money.
[29] When asked whether or not the document was read to her before she signed it, Ms. Lai testified that she listened to Mr. Wu and what was said by Mr. Ho. Mr. Ho told her that the document protected her. She agreed that Mr. Ho did not act for any of the parties but only signed as a witness. She testified that he acted as a notary. She did not know who typed up the document. She did not remember who paid Mr. Wu’s bill.
[30] Although she did not know when she first met Mr. Wu, she did testify that Ms. Teng and Mr. Sorkhabi met Mr. Wu regarding the purchase of 12 Megarry Court in August of 2006. She testified that they had already met Mr. Wu many times before and were friends. As for Exhibit #1, she only knows that she saw it at Mr. Ho’s office on the occasion it was signed.
[31] Exhibit 3, Mr. Fouts’ report was tendered on consent for the truth of its contents except regarding items 9 and 10 which referred to the ivory items.
[32] She was cross-examined in respect of item #1 being the sphere referred to in Mr. Fouts’ report. It was put to Ms. Lai that she told Ms. Teng that this sphere cost $30,000. Ms. Lai testified that all of the stones were worth $30,000. She was asked questions about evidence that she gave on her examination for discovery on January 11, 2013. She could not remember telling Ms. Teng that the stone was worth $30,000. She only remembers Ms. Teng that all of her belongings were being sold and Ms. Lai was asking for $80,000. She could not remember questions asked in respect of this particular stone. Again, she could not remember telling Ms. Teng that this stone was worth $30,000. Again, she remembers saying that all of the stones were very important to her and all of the stones were very expensive for her. She did not remember telling defence counsel that they were very expensive. She maintained that the stones or spheres were genuine. When put to her that the value of the stone was $30 or $40, she testified she did not know that and all of the stones were very expensive for her.
[33] She was asked whether or not in respect of item #1 in the Fouts’ report she told Ms. Teng and Mr. Sorkhabi that this stone was very valuable before they agreed to pay anything. She testified that this stone depicted on the right was not related to the household furniture. It was one of the items used to organize the house. This item along with everything else in the house was sold to the Defendants. Ms. Lai did tell Ms. Teng that this stone was very valuable and showed how it glowed in the dark.
[34] In respect of item 4 in the Fouts’ report, she did not recognize this stone as one sold to the Defendants. She had not seen the Fouts report before. She did not really know if she told Ms. Teng that the stone was worth $15,000.
[35] She testified that she had conversations only with Ms. Teng and not with Mr. Sorkhabi. Mr. Sorkhabi did not speak Mandarin and he did not speak with her. She only spoke with Ms. Teng who speaks Mandarin. She did not know whether or not what she said to Ms. Teng would be relayed to Mr. Sorkhabi. She only knows that all of the stones were very valuable and this she told to Ms. Teng. She never had the stones appraised and she has no receipts for these stones as they were all collected at different points in time from mainland China. The stones were never insured.
[36] She was questioned about item #6 in the Fouts report which related to another sphere. She could not remember if she told Ms. Teng that it was worth $15,000 because everything was included in the sale of the household contents. She mentioned to Ms. Teng that the stone was very valuable but not any amount. As for the other stones, she only knew that all of the stones were very valuable and were collected by Ms. Lai from many locations. When asked as to what the value of all of the stones, she said they were priceless.
[37] Ms. Lai also testified that stones would be placed in the customer’s house because they would help with the energy of the house and she would be paid for them.
[38] Ms. Lai testified that she was paid interest payments in the amount of $4,800 for four years by the Defendants. During this time she continued to be their Feng Shui advisor. She had no discussions with Ms. Teng after the payments stopped. She did not know why the payments stopped as she could not locate the Defendants although she knew that they still lived at the 12 Megarry Court address.
Evidence of Chia-Ling Teng
[39] Ms. Teng and Mr. Sorkhabi gave evidence for the defence.
[40] In-chief, Ms. Teng testified that she is 55 years old and came to Canada from Taiwan in 1991. She is married to Mr. Sorkhabi. She is a university graduate. She met Ms. Lai in response to an advertisement in the paper. She went to see Ms. Lai’s exhibition regarding her stones or spheres.
[41] Ms. Lai introduced herself as a famous fortune teller and very professional Feng Shui advisor. She first met Ms. Lai in late 2000.
[42] She retained Ms. Lai in 2003 regarding a family issue. Ms. Lai said that she could be a fortune teller for Ms. Teng and her husband and Ms. Lai did perform a life analysis for both Ms. Teng and Mr. Sorkhabi. This analysis concerned character, personality, colours, what jewellery to wear and matters concerning diet. They took the Plaintiff’s advice. Both Ms. Teng and Mr. Sorkhabi are Feng Shui believers. Mr. Sorkhabi did not consult Ms. Lai but would follow the Feng Shui advice which was translated by Ms. Teng for her husband.
[43] Later, every two weeks she was called by Ms. Lai. She went to see Ms. Lai once a month and sometimes she would buy jewellery from her.
[44] She was asked questions about the $80,000 payable for household items. She was asked why she entered into this contract. She testified that Ms. Lai’s husband returned to Taiwan. Ms. Lai was in the process of selling the house. As for the contents, Ms. Teng testified that she really did not need the contents. However, Ms. Lai’s husband called the Defendants. They had been good friends and he wanted the Defendants to help out Ms. Lai. She testified that Ms. Lai’s husband “kept bugging” the Defendants. Ms. Teng testified that Ms. Lai told her the stones were very valuable and that she would be given a discount. Ms. Lai showed her the “main stone” in the centre of the house and was told that it was worth $30,000 and was very important. This stone was identified as item #1 in Exhibit 3. Ms. Lai even demonstrated how important the stone was by using a flashlight pointed at the stone. The stone emitted a green light representing energy which would be a benefit to whomever lived in the house.
[45] She was also told about two giant crystal spheres which were also represented by Ms. Lai as being very expensive and very rare. Ms. Lai told her that these stones were worth $15,000 each. These stones were identified as items that were 4 and 6 in the Fouts report.
[46] Item 3 was valued by Ms. Lai at $6,800. She said other stones were very valuable between $1,500 to $2,000.
[47] As for the red seals on Exhibit 1, (the Contract) Ms. Teng testified that Ron Wu prepared this document but the seals were placed on the document maybe by Mr. Ho at Mr. Ho’s law office after the document was signed. Ms. Teng had an opportunity to review the document before signing. Also prior to signing, all parties were asked whether or not there was anything wrong with the document and everyone said that it was alright after which the document was signed. Mr. Ho left the room and returned to the room with the document affixed with three red seals. No independent legal advice was obtained by Ms. Teng or Mr. Sorkhabi regarding the Contract. Ms. Lai paid Mr. Ho’s bill.
[48] After the contract was signed, Ms. Lai was paid four installments of $4,800. Ms. Lai returned to China but returned to Canada three or four times every year. On one of those occasions she would collect her interest payment. They would meet for lunch, money would be paid and Ms. Lai would be consulted about Feng Shui.
[49] In the fifth year, the Defendants stopped making payments. She testified that a few days before September 20, 2011, Ms. Lai’s sister-in-law, Joanne Wong told the Defendants not to pay the balance plus interest to Ms. Lai for reasons not relevant. It was after this conversation with Ms. Wong that the Defendants started to have doubts about Feng Shui and the spheres. The Defendants caused certain investigations to take place which resulted in doubts about the value of the spheres according to what they were told by Ms. Lai. She testified that it was important to her as to what the stones were worth.
[50] In cross-examination, Ms. Teng testified that she was comfortable giving her evidence in English. She testified that she graduated with a Bachelor of Arts in Business in Taiwan with a major in international trade. She also took courses in accounting, insurance and management. She studied jewellery for a year at George Brown College in Toronto and she has some knowledge regarding jewellery. She also took a mortgage agent course from Seneca College in 2002.
[51] In addition, she had purchased two residential investment properties with Mr. Sorkhabi before the purchase of the 12 Megarry Court property. She confirmed that Ms. Lai does not speak English and that Mr. Sorkhabi did not speak to Ms. Lai as he does not speak Mandarin.
[52] Ms. Teng confirmed that she and her husband both signed Exhibit 1 – the Contract of Purchase and Sale. She confirmed that she and her husband were purchasers of all of the household goods at 12 Megarry Court, Richmond Hill and that all of the goods had been inspected by them. She knew and understood that this was a contract. She testified that there was an agreement to purchase the household goods “as is” and in the condition found at the time. She confirmed that Mr. Ho asked if there was anything wrong with the contract before it was signed and she said there was nothing wrong. She confirmed that the Defendants took time to read the contract before it was signed at Mr. Ho’s office.
[53] She agreed that the terms of the contract related to the purchasers paying $80,000 for all of the household contents and that in order to facilitate the transaction Ms. Lai loaned Ms. Teng and Mr. Sorkhabi $80,000 on terms.
[54] She testified about the personal loan bearing interest at six percent interest for three years with an option to renew for an additional two years at the maturity date. The loan was fully due and payable at the end of the five year term. She admitted that in years 2007, 2008, 2009 and 2010 the Defendants paid the sum of $4,800.
[55] She agreed that the first reason to buy the household contents was because Ms. Lai’s husband had called and begged her to buy the contents.
[56] When asked to specify the date upon which Ms. Lai told her that the stone was worth $30,000, Ms. Teng could not remember. She said it was more than once – a few times.
[57] Ms. Teng testified that she was told by Ms. Lai that the stones were special and very good for house Feng Shui. Ms. Lai had sold some of the stones to other clients. Ms. Lai also told her that these stones could not be found in the market.
[58] In September of 2011 the Defendants began to doubt the value of the stones. They thought that they had paid $30,000 for the main stone and $15,000 each for the two crystals for a total of $60,000. Ms. Lai testified that she really had no understanding of the value of rare stones. She only knew about jewellery fundamentals. She did not obtain an appraisal of the contents or the stones because she trusted Ms. Lai as a lifetime advisor. She agreed that the Defendants had purchased two investment properties before purchasing 12 Megarry Court. She admitted that she was not buying the stones for retail value.
[59] Although she really did not need the contents, Ms. Teng testified that she trusted Ms. Lai very much who was a good friend. Ms. Teng testified that she wanted to help out Ms. Lai so she agreed to buy the contents. She admitted in cross-examination that she was not buying the stones because they were worth $60,000. She did not a obtain professional appraisal in respect of the stones until she obtained Exhibit 3, the Fouts appraisal dated September 5, 2015.
[60] In re-examination she was asked how the $80,000 figure was arrived at. She testified that the number came from Ms. Lai and that $80,000 made sense.
Evidence of Nick Sorkhabi
[61] Mr. Sorkhabi is 48 years old and graduated from the University of Toronto with a Bachelor of Science degree. He works for Scotiabank in the mortgage department. He has been married for 22 years to Ms. Teng.
[62] He believes that he met Ms. Lai at one of her exhibitions a long time ago. As for Ms. Lai’s credentials, he understood that she was a Feng Shui Master and expert Chinese fortune teller.
[63] He described Feng Shui as a science relating to human energy and how that energy can be aligned with environmental energy to improve one’s life, job and wealth. He is a believer in Feng Shui and had retained Ms. Lai to provide an annual analysis and advice over many years. He followed her advice as to how to dress, how to wear certain colours and advice as to diet.
[64] He was asked about purchasing certain items from Ms. Lai. He testified that he and Ms. Teng discussed buying certain items from Ms. Lai being the contents of 12 Megarry Court, Richmond Hill. He had visited the property with Ms. Teng and had seen the furniture and stones prior to purchase. He believed that the stones were very valuable, rare and worth thousands of dollars. It was his wife who told him that the stones were worth approximately $60,000.
[65] He was questioned about Exhibit #1 and how he came to sign that document on September 21, 2006 at the offices of Mr. Ho. The document was prepared by Ron Wu. Mr. Sorkhabi had no discussion with Mr. Ho about the contract. He read the contract, was content with it, made no changes and was prepared to sign it. He signed the document which was taken away by Mr. Ho. When Mr. Ho returned there were three red seals on the signed document. Mr. Ho had not explained what the seals meant. Mr. Sorkhabi was not told to see his own lawyer regarding the document. After the document was signed, Mr. Sorkhabi did not attach any special significance regarding the seals that were affixed.
[66] He agreed that for four years the sum of $4,800 was paid. The Defendants still had contact with Ms. Lai once in a while. She continued to provide Feng Shui advice and they continued to follow her advice. Later, Mr. Sorkhabi came to believe that the stones were not worth the value initially represented by Ms. Lai. They came to be worth significantly less than what was originally represented. As a result, he and Ms. Teng decided not to make any further payments.
[67] In cross-examination, Mr. Sorkhabi testified that he does not speak Mandarin and had no conversations with Ms. Lai. The only information about the stones or spheres did not come directly from Ms. Lai.
[68] In addition to his Bachelor of Science degree, Mr. Sorkhabi holds a Certificate in Financial Underwriting specializing in mortgages. He has been in this field for about 17 years. He confirmed that prior to September 21, 2006 he had invested in two residential rental properties.
[69] He confirmed his signature on Exhibit 1. He confirmed that he was a purchaser and had inspected all the household goods at 12 Megarry Court before signing the Agreement. He confirmed that he was buying “as is” being the condition in which the goods existed, whatever condition that condition was.
[70] Before signing the Agreement he was asked if there was anything wrong and he said that there was nothing wrong with the Agreement.
[71] He had used lawyers when he purchased his two rental properties and when he bought the Lai house at 12 Megarry Court.
[72] He agreed and was aware of the purchase price for the contents at $80,000 and the terms of the contract in respect of repayment. Interest was paid for four years at $4,800 per year for the years 2007, 2008, 2009 and 2010.
[73] At the time that Exhibit 1 was signed, there had been no appraisal obtained in respect of the stones until this court action started. The appraisal report of Christopher Fouts is dated September 5, 2015.
FINDINGS
The Parties
As the Feng Shui advisor and friend of Ms. Teng and Mr. Sorkhabi, did Ms. Lai owe them a fiduciary duty?
[74] For these reasons, I would answer this question in the negative.
The Parties
[75] For many years, Ms. Lai has been a fortune teller and Feng Shui Master. Whether Feng Shui is considered a science or an art or something else, there are many Feng Shui believers, including all of the parties in this case. As I understand it, the purpose of Feng Shui is to align human energy with the energy of the surrounding environment so as to generate things positive such as good health and good fortune.
[76] Ms. Lai, who speaks only Mandarin, often would put on Feng Shui exhibitions which featured the use of certain stones or spheres. The Defendants came to meet Ms. Lai at one of these exhibitions. They later became clients and were provided an analysis of their lives on a number of occasions together with Feng Shui advice on such matters concerning colours, manners of dress, and diet. The Defendants first met Ms. Lai sometime late 2000 and retained her professionally sometime in 2003.
[77] All of the parties are sophisticated individuals. All of the parties hold university degrees and post-university certificates. Ms. Lai has purchased and sold stones related to Feng Shui and has been in this business for 37 years. She continues to be involved in such business and also continues to sell these stones or spheres in Taiwan. She is also a fortune teller. She is a doctor in complimentary medicine which means traditional Chinese medicine also related to Feng Shui. She holds a PhD. She testified that she gave Feng Shui advice to the Defendants. She never spoke with Mr. Sorkhabi because he did not speak Mandarin. She did speak with Ms. Teng because Ms. Teng is fluent in Mandarin. She did provide the Defendants with the “analysis” which told them for the coming year how to organize their lives in a Feng Shui way to prevent any tragedy.
[78] The Defendant Ms. Teng and Mr. Sorkhabi are sophisticated persons. Ms. Teng speaks English and Mandarin. She holds a Bachelor of Arts and Business degree from Taiwan. She majored in international trade. She took accounting, insurance and management courses. She studied jewellery for a year at George Brown College in Toronto. She took a mortgage agent course at Seneca College in 2002. She purchased two residential investment properties with Mr. Sorkhabi and in 2006 purchased from Ms. Lai the property located at 12 Megarry Court, Richmond Hill.
[79] Mr. Sorkhabi holds a Bachelor of Science degree from the University of Toronto. He works for Scotiabank in the mortgage department. In addition to his Bachelor of Science degree, he holds a Certificate of Financial Underwriting, specializing in mortgages. He has been in this field for about 17 years. Prior to September 21, 2006 he and Ms. Teng had acquired two residential rental properties and then purchased the property located at 12 Megarry Court, Richmond Hill. So far as I am aware, they continue to reside there.
The Relationship
[80] The Defendants submit that because of their relationship with Ms. Lai who was there Feng Shui advisor and a fortune teller, they had a special relationship with her based on trust. They contend this relationship based on trust and confidence was so close that a fiduciary relationship existed between them and Ms. Lai when it came to the purchase of the household items. I disagree.
[81] The relationship between these parties does not rise to some higher relationship or situation where a fiduciary relationship existed between them. I find they were not obliged to show the utmost good faith towards each other.
[82] The Defendants assert that they relied on and trusted Ms. Lai with respect to daily living decisions and the items being sold to them associated with Ms. Lai’s Feng Shui business. They trusted her representations that the items were valuable. It is alleged that these representations turned out to be false and, accordingly, Ms. Teng and Mr. Sorkhabi are entitled to a rescission of the contract. Unfortunately, Ms. Teng and Mr. Sorkhabi have not pleaded or sought the remedy of rescission in their Statement of Defence. I find they are not entitled to the remedy of rescission which is something which they have not asked for prior to submissions made by defence counsel.
[83] Notwithstanding the relationship based on Feng Shui enjoyed by the parties, that relationship did not impose upon Ms. Lai the fiduciary duty or obligation to deal with the Defendants with the utmost good faith. As close as their Feng Shui relationship brought them together, I find that the parties are dealing with a commercial transaction where Ms. Lai was the seller of the household contents of 12 Megarry Court in Richmond Hill, a house which was purchased by the Defendants from her. Ms. Teng and Mr. Sorkhabi were purchasers of the household contents reflected in the Contract of Purchase and Sale executed by the parties on September 21, 2006. Ms. Teng and Mr. Sorkhabi are described as purchasers and they knew that they were purchasing all of the contents being household goods and the stones for the sum of $80,000 financed by a loan in that amount on terms by Ms. Lai. The evidence supports that the vendor Ms. Lai wanted to sell the contents of her home at 12 Megarry Court as she wished to return to Taiwan. She and her husband Mr. Wong had a marital breakup. The house was sold and the contents needed to be sold as well. Ms. Teng and Mr. Sorkhabi purchased the house and, in the end, agreed to purchase the household contents for $80,000.
[84] Although at first they did not wish to purchase the contents, they agreed to do so after a number of entreaties by Mr. Wong who begged that they should purchase the contents to help out Ms. Lai. It was the evidence of both Ms. Teng and Mr. Sorkhabi that they agreed to purchase the contents to help out Ms. Lai and that the stones were not purchased for retail. Ms. Teng testified in cross-examination the stones were not purchased because they were worth $60,000. They were not purchased for their retail value.
[85] I conclude that ultimately the parties engaged in a commercial transaction where Ms. Lai was the vendor and Ms. Teng and Mr. Sorkhabi were purchasers of the household contents of 12 Megarry Court.
Did Ms. Lai misrepresent the value of certain spheres or stones to Ms. Teng and Mr. Sorkhabi?
[86] For the following reasons, I would also answer this question in the negative.
[87] The Defendants take the position that Ms. Lai misrepresented either fraudulently or innocently the value of the stones in order to persuade Ms. Teng and Mr. Sorkhabi to purchase the contents of 12 Megarry Court. Although Ms. Lai had indicated to them that the stones were valuable and at one point she described them as priceless, I do not find that she had misrepresented either in a fraudulent or innocent manner that the stones in total were valued at $60,000 and that the $80,000 purchase price was broken down in any way so as to allocate $60,000 for the purchase of the stones (main stone and two crystal stones) and $20,000 for everything else.
[88] I find that Ms. Teng and Mr. Sorkhabi purchased the household contents of 12 Megarry Court “as is” after inspecting the contents on September 16, 2006. The contents included the furnishings of four bedrooms, a living room, a dining room, a family room and a den. Everything in those rooms were included in the sale of contents. The rooms were fully furnished. There were items of value such as the Italian leather sofa and the wood carved dining room table and cabinet, just by way of example. The transaction also included the sale of all of the spheres and stones which had a monetary value and some inherent Feng Shui value. The items for sale were not broken down by anyone. There was no value allocated to any specific item. There was no appraisal of the contents. The lump sum offered for sale by Ms. Lai as vendor was $80,000. That is where the number came from and the Defendants accepted this number without any negotiation.
[89] The evidence of the Defendants and Ms. Lai clearly indicates that Ms. Lai and Mr. Wong were involved in a marital breakup and that they both intended to return to Taiwan. It was for this reason that the house was sold and for this reason that the contents also needed to be sold. Neither one of them wanted to move all of the contents of 12 Megarry Court to Taiwan. One solution to the problem would be to sell the contents to the purchasers of the house, namely, the Defendants. Mr. Wong persisted in contacting the Defendants with a view to their purchasing the contents. According to the evidence of the Defendants, he was begging them to buy the contents in order to help out Ms. Lai. Both Ms. Teng and Mr. Sorkhabi agreed that in the end, even though they did not need the contents, they agreed to purchase the household contents to help out Ms. Lai.
[90] I find that Ms. Teng and Mr. Sorkhabi entered into an agreement with Ms. Lai to purchase the household contents not founded on misrepresentation, either fraudulent or innocent, or that the stones or spheres were worth thousands of dollars. While Ms. Lai always held the belief that the stones were valuable, rare and important, the root of the transaction was not the sale of the stones as the Defendants maintain. Rather, I find that at the root of this agreement was the sale of all the household goods at 12 Megarry Court in an “as is” condition previously inspected by the purchaser Defendants on September 16, 2006.
[91] Mr. Fouts authored an appraisal report of the stones dated September 5, 2015 marked as Exhibit 3 which was generated some four years after the loan became due on September 21, 2011. Certain items described in the report have all been ascribed a retail value. I find that Ms. Teng and Mr. Sorkhabi did not purchase the household contents because the stones had any particular retail value. In fact, it was the evidence of Ms. Teng that she did not purchase the stones for any retail value. She did not buy the stones because they were worth $60,000 or valued at any particular amount. Exhibit 3 being the expert report is of no use to the court as it expresses value for certain items based on retail value. Once again, none of the items constituting the household goods were broken down in terms of value. By Ms. Teng’s own admission the stones or spheres were not purchased for their retail value. Accordingly, I would reject the evidence of Mr. Fouts. It is not relevant, material or necessary in assisting this court in determining any of the issues in this case.
Did Ms. Lai’s misrepresentations induce Ms. Teng and Mr. Sorkhabi to enter into the Contract to purchase the household contents for $80,000?
[92] The answer to this question is no.
[93] The evidence of Ms. Lai and the Defendants support the finding that she and Mr. Wong wanted to sell all of the household goods at 12 Megarry Court because they were both returning to Taiwan after their marriage had broken up. All of the household goods at 12 Megarry Court were being sold “as is” and inspected by the purchasers Ms. Teng and Mr. Sorkhabi on September 16, 2006. They both knew that they were entering into a contract for the purchase of all of these goods. They both knew from inspecting the goods that they were buying all of the contents of various rooms in the house together with some of the stones said to possess Feng Shui properties. None were itemized and allocated a value for the purposes of price. Ms. Teng and Mr. Sorkhabi were buying everything for $80,000 and they knew it.
[94] I find that Ms. Lai’s representations to the Defendants to purchase all the household goods did not induce them to enter into the contract to purchase these goods for $80,000. Rather, I find that the Defendants wanted to help out Ms. Lai who needed to sell all of the contents of the house because she and Mr. Wong were returning to Taiwan after their marriage had broken up. The Defendants did not need any of the contents of the house which included the stones or spheres. I find that they decided to purchase all the household items, including the stones or spheres, only to help out Ms. Lai – only to do her a favour. This was the primary reason as indicated in the evidence of the Defendants to acquire household goods, including the stones or spheres, that they really did not need.
[95] As for the price of $80,000, it came from Ms. Lai and was readily accepted by Ms. Teng and Mr. Sorkhabi without negotiation.
[96] This leads us to the Contract of Purchase and Sale marked as Exhibit 1 and dated September 21, 2006.
[97] In respect of the formation and execution of the Contract, the evidence of the parties is consistent. They all attended at the offices of Mr. Ho on September 21, 2006. Mr. Ho is a solicitor who acted only as witness and was not responsible for the content of the Agreement in any way. Rather, the Agreement was prepared by Mr. Ronald Wu, a real estate agent and friend of Ms. Lai. It is my understanding that he also was the real estate agent involved in the sale of 12 Megarry Court, Richmond Hill.
[98] In the Contract of Purchase and Sale, Ms. Teng and Mr. Sorkhabi are described as purchasers. They both acknowledge that they were purchasers having inspected all of the household goods at 12 Megarry Court, Richmond Hill on September 16, 2006. They also acknowledge in their evidence that they offered to purchase all the household goods “as is” from Ms. Lai for $80,000. All of the parties agree that in order to facilitate this transaction, Ms. Lai gave Ms. Teng and Mr. Sorkhabi a personal loan of $80,000 payable with the following conditions:
The personal loan is at 6% simple interest rate for 3 yrs term with an option to renew for 2 additional years at maturity date. This loan is fully open for repayment at any time without any penalties. The loan will be due at the end of 5 yr term. The payments will be lump sum annually at each anniversary date. The minimum payment at each anniversary date is interest portion.
[99] Ms. Teng and Mr. Sorkhabi signed as purchasers. Ms. Lai signed as vendor. All of the signatures were witnessed by Mr. Ho who left the room only to return with the document which bore three red seals next to the names of the purchasers and vendor. The evidence is consistent on this point. Mr. Ho did not explain what the red seals were about. Ms. Lai testified that Mr. Ho told her that this document protected her. Ms. Teng and Mr. Sorkhabi knew that they were signing a contract. They knew that they were buying all of Ms. Lai’s household goods “as is” and as inspected by them. They knew that they were purchasing these goods financed by a loan of $80,000 from Ms. Lai on terms. They knew that they were bound by this contract because they took possession of the household goods and as far as I am aware those goods remained at 12 Megarry Court where the Defendants continued to reside. They have had the enjoyment of those goods on a continuous basis since September 2006.
[100] Further, in accordance with the Contract, they continued to make interest payments for four years (2007, 2008, 2009 and 2010) until September 21, 2011 when the loan matured at the end of the stipulated five year term.
[101] I do not accept the evidence of Ms. Teng and Mr. Sorkhabi regarding some conversation with Ms. Lai’s sister-in-law which would cause them to question the value of the stones or spheres. This evidence is hearsay and irrelevant to the issues in this case. Rather, I find that the refusal to pay accrued interest and the principal amount of the loan by the Defendants in September of 2011 was based on no good reason. At no time between September 21, 2006 and September of 2011 had Ms. Teng or Mr. Sorkhabi ever complained to Ms. Lai that they had overpaid in any way for all the household contents which included everything as well as the stones or spheres. There was never any complaint about the efficacy or lack thereof pertaining to the Feng Shui properties of the stones or the advice given by Ms. Lai. Before Ms. Teng had a conversation with Ms. Wong, that is before September 2011, the Defendants enjoyed good Feng Shui and good fortune. After their conversation with Ms. Wong, there is no evidence that they did not continue to have good Feng Shui or good fortune. They only came to doubt the value of the stones according to what they were allegedly told by Ms. Lai.
[102] Further, all three witnesses agreed that they were asked by Mr. Ho whether there was anything wrong with the Contract and every one of them said that there was nothing wrong.
[103] I find that any issue in respect of consideration regarding the red seals and lack of explanation about them is not a real issue and is of no consequence.
[104] In my view, it was always the intention of the parties to enter into this contract where the Defendant purchasers acquired all the household goods at 12 Megarry Court, previously inspected by them, in an “as is” condition for the purchase price of $80,000 financed by a loan from Ms. Lai on the terms contained in that contract.
[105] The intention of the parties is reflected by the document marked Exhibit 1, Contract of Purchase and Sale. The fact that there was no provision indicating that the terms of the contract reflected the entire agreement is also of no importance. I find that Exhibit 1 is the entire contract and there is no other contract between the parties that deals with the subject matter at hand. There is no reason to infer that there ought to be some other term that the court should read into this contract as suggested by defence counsel. I reject the submission entirely.
[106] Further, the evidence is not in dispute. The Defendants have had the benefit and enjoyment of all of the household contents for over nine years. They have paid four years’ worth of interest at $4,800 per year. They knew that they were entering into a binding contract to purchase all of the household goods from Ms. Lai for $80,000 and they agreed upon the sale price in that amount. They further agreed as evidenced by their repayment of interest over four years as to the terms of repayment.
[107] I find the dispute raised by the Defendants over the value of the stones or spheres is a bald pretext without merit to somehow escape paying what they owed Ms. Lai.
[108] For these reasons, I conclude that Ms. Teng and Mr. Sorkhabi of their own accord willingly agreed to enter into the Contract of Purchase and Sale marked Exhibit 1 and were not induced to do so by any alleged misrepresentations on the part of Ms. Lai. The Defendants being sophisticated purchasers could have rejected the draft Contract of Purchase and Sale. They did not. They could have insisted upon their own solicitor reviewing the Agreement before signing. They did not. They could have insisted upon obtaining independent legal advice. They did not and neither did Ms. Lai. They could have negotiated for a lower purchase price. They did not. They simply accepted the purchase price of $80,000 which came from Ms. Lai. They could have obtained their own appraisal of the household goods including the stones prior to November of 2014 or the date of the report of Mr. Fouts of September 5, 2015. They did not.
[109] Rather, they were willing purchasers and Ms. Lai was a willing vendor regarding the purchase and sale of the household goods set out in the Contract of Purchase and Sale. There was no itemization of goods or their values. The purchase price was a lump sum for everything “as is”, inspected by the Defendants which amount they readily accepted.
[110] I find that the Defendants Ms. Teng and Mr. Sorkhabi are bound by the Agreement of Contract of Purchase and Sale.
[111] I further find that the doctrine of contra proferendum does not apply in this case. The contract does not contain any ambiguity whatsoever. It is clear on its face what obligations bind Ms. Lai and bind Ms. Teng and Mr. Sorkhabi. I find all parties knew what they were getting as a result of this Contract. I find each side obtained what they bargained for.
If Ms. Lai did so induce Ms. Teng and Mr. Sorkhabi to enter into the contract to purchase the household goods for $80,000, should Ms. Lai be allowed to benefit from the Contract?
[112] I have found that Ms. Lai did not misrepresent or induce the Defendants to enter into the Contract of Purchase and Sale for $80,000. All parties were bound by this Contract which was breached for no reason by the Defendants Ms. Teng and Mr. Sorkhabi. It would not be immoral or in any way offensive in law to enforce this Contract. The answer is simply yes. Ms. Lai is allowed to benefit from this Contract which Ms. Teng and Mr. Sorkhabi breached.
Should the court enforce the Contract drafted by Ms. Lai’s friend and real estate agent, Mr. Ronald Wu?
[113] This question is answered in the affirmative. This court finds that the Agreement drafted by Mr. Wu was not objected to by the Defendants. When asked by Mr. Ho whether there was anything wrong with it, all of the parties agreed that there was nothing wrong with this Agreement. The fact that it was drafted by Mr. Wu is of no consequence. Mr. Ho witnessed the parties executing the Agreement. The parties received what they bargained for except, in the end, Ms. Teng and Mr. Sorkhabi breached the Contract by not paying the full amount of the loan plus interest on September 21, 2011.
[114] I find that the Contract is enforceable against Ms. Teng and Mr. Sorkhabi on a joint and several basis.
DISPOSITION
[115] For the reasons given, Ms. Lai shall have judgment for the principal amount of $80,000 together with interest due in the amount of $4,800 to September 21, 2011 jointly and severally against Chi-Ling Teng and Hussein Sorkhabi also known as Nick Sorkhabi. Interest thereon is hereby calculated from September 21, 2011 to November 26, 2015 being the date of judgment at the rate of 1.3 percent per annum being $4,348.06 for a total judgment in the amount of $89,148.06.
[116] I accept the alternative calculation presented by Plaintiff’s counsel with the applicable interest rate of 1.3 percent per annum on the basis that the Contract does not provide for interest at the higher rate of six percent after the date of maturity.
[117] Accordingly, there shall be judgment in the amount of $89,148.06 jointly and severally against Chia-Ling Teng and Hussein Sorkhabi also known as Nick Sorkhabi payable by them jointly and severally to the Plaintiff I Tzu Lai.
[118] As for costs, the parties have agreed that costs should be determined by way of written submissions. Counsel shall exchange written submissions on costs together with a concise statement as to costs no longer than two pages in length, a Costs Outline, a Bill of Costs and any supporting cases within 21 days of this judgment. They are also to submit to my Judicial Assistant at Barrie their written submissions no later than 21 days after the date of this judgment.
DiTOMASO J.
Released: November 26, 2015