Court File and Parties
Court File No.: C-504-17 Date: 2017/06/27 Ontario Superior Court of Justice
Between: Michael Frank Kitchen, Plaintiff – and – Silver Heights Developments Inc., Defendant
Counsel: Joseph Figliomeni, for the Plaintiff Steven D. Gadbois, for the Defendant
Heard: June 21, 2017
The Honourable Mr. Justice G.E. Taylor
Reasons for Judgment
Introduction
[1] The plaintiff brings this motion for summary judgment seeking specific performance of an Agreement of Purchase and Sale (“the Agreement”) for the purchase of residential property municipally known as 350 Fisher Mills Road, Unit 3, Cambridge, Ontario (“the Property”).
[2] The parties agree that it is appropriate to resolve this action by way of a motion for summary judgment.
Facts
[3] The Agreement was executed on June 30, 2015. The plaintiff agreed to purchase and the defendant agreed to sell the Property for $257,900 which included one parking space. By way of an addendum to the Agreement dated July 27, 2015, the plaintiff agreed to purchase and the defendant agreed to sell a second parking space for $5,000.
[4] Paragraph 1(a) of the Agreement required the plaintiff to provide three deposits to the solicitors for the plaintiff to be credited to the purchase price as follows:
i. $1,000 to be submitted at the time of the Agreement;
ii. $12,895 to be submitted by way of a cheque dated 15 days following the execution of the Agreement; and,
iii. $11,895 to be submitted by way of a cheque dated 120 days following the execution of the Agreement.
The plaintiff submitted the initial deposit of $1,000 and the second deposit of $12,895, as required, by the Agreement. The plaintiff did not provide a cheque for $11,895 dated 120 days after the date of execution of the Agreement (“the third deposit”).
[5] The real estate agent representing the defendant for the purpose of the sale of the Property to the plaintiff was Patrick Kozierowski of RE/MAX Real Estate Center Inc.. The parties agreed that Patrick Kozierowski would represent them both for the purpose of the transaction and executed the appropriate written Confirmation to that effect.
[6] The plaintiff and Patrick Kozierowski agreed that the verbal agreement between them was that the plaintiff would be required to provide a deposit of five percent only of the total purchase price. Therefore, the deposit of five percent would be made up of the initial deposit of $1,000 and the second deposit of $12,895. They both agreed that the plaintiff was not required to provide the third deposit.
[7] The plaintiff and Patrick Kozierowski acknowledged that the plaintiff reviewed and initialed every page of the Agreement. Neither the plaintiff nor Patrick Kozierowski, both of whom were cross-examined on their respective affidavits filed in support of this motion, provided any explanation as to why the Agreement, which clearly provided for the third deposit, was executed, when that was not a term of the agreement negotiated between them.
[8] Paragraph 33 of the Agreement states:
The Vendor and the Purchaser agree that there is no representation, warranty, collateral agreement or condition affecting this Agreement or the Property or supported hereby other than as expressed herein in writing.
[9] The plaintiff submitted the Agreement to his lawyer, Robert McMaster, prior to signing it because he wanted to ensure that he understood the Agreement.
[10] The Agreement provided that June 15, 2016 was the First Tentative Occupancy Date which was the date anticipated for the Property to be ready for occupancy by the plaintiff. The Agreement also provided for a procedure for the defendant to postpone the First Tentative Occupancy Date and provided for compensation to be paid to the plaintiff should that occur.
[11] In February, 2016, the plaintiff began to make inquiries about the closing date. In an email dated March 21, 2016, Patrick Kozierowski advised the plaintiff that the Agreement would not be completed by the First Tentative Occupancy Date. The email did not specify a Subsequent Tentative Occupancy Date, a Final Tentative Occupancy Date or a Firm Occupancy Date as required by the terms of the Agreement. On April 1, 2016, the plaintiff received a letter from the defendant dated March 11, 2016 stating that the new closing date would be September 29, 2016. On June 25, 2016, the plaintiff received a letter from the defendant advising that the closing date would be further delayed to November 28, 2016.
[12] In a letter dated March 29, 2016, Robert McMaster advised Jeffrey Silver, the defendant’s solicitor, that the plaintiff would be seeking compensation pursuant to the Agreement for the failure to complete the agreement on the First Tentative Occupancy Date and for failing to comply with the notice requirements for extending the closing date. On May 25 and June 2, 2016, the plaintiff sent emails to the defendant inquiring about compensation for the failure to complete the agreement on the First Tentative Occupancy Date without proper notification. On June 2, 2016, Jeff Zhang, president of the defendant, responded to the plaintiff’s emails saying that he would have to deal with Jim DiSapio, one of the directors of the defendant.
[13] On May 20, 2016, the plaintiff sent an email to the defendant inquiring about when he could arrange an appointment to select the finishes for the unit. Jeff Zhang responded on the same day instructing the plaintiff to contact one Ina DiSapio to arrange an appointment to select the finishes for the unit.
[14] On July 20, 2016, the plaintiff received an email from Patrick Kozierowski advising him that the third deposit was required and asking that it be delivered to his office. Similar demands were made to seven or eight other purchasers. Jim DiSapio testified that in July, 2016, it was brought to the attention of the defendant, by its solicitor, that there were a number of purchasers, including the plaintiff, who had not paid the third deposit as required. By way of a letter dated August 10, 2016, Jeffrey Silver advised Robert McMaster that the third deposit was required to be paid within five days failing which the defendant would exercise its rights under the Agreement to terminate the transaction without further notice. The plaintiff’s evidence is that he did not become aware of this letter until sometime after February 10, 2017. Jim DiSapio testified that all purchasers, with the exception of the plaintiff and one other, who had not paid the third deposit, did so promptly upon receiving the demand letter. The other purchaser signed a release and the deposit was returned.
[15] Robert McMaster sent an email to Jeffrey Silver on September 6, 2016 advising that the plaintiff was prepared to tender “the second deposit” less the amount of compensation to which he claimed entitlement as a result of the delayed closing. On October 25, 2016, the plaintiff delivered a bank draft to Robert McMaster in the amount of the third deposit. On October 28, 2016, Robert McMaster sent an email to Jeffrey Silver stating: “I confirm that my buyer clients still wish to proceed with this transaction, and I confirm that I have in my trust account the full amount of the second deposit. I am happy to send this to your office in trust; however, I wish to confirm that your client intends to close this transaction still”. There was no response to this email.
[16] On November 13, 2016, the plaintiff sent an email to the defendant confirming that the sale of the Property would be completed by November 28, 2016. There was no response to this email.
[17] On January 6, 2017, the plaintiff sent an email to the defendant advising that he wanted to complete his purchase of the Property but that he would proceed to litigation if there was not a quick resolution. By way of an email dated January 9, 2017, Jeff Zhang responded to the plaintiff advising that the options were to sign a Mutual Release and have the deposit returned or to proceed with legal process in which case his deposit would be retained. The plaintiff immediately responded to Jeff Zhang stating that he refused to sign a Mutual Release and he intended to complete the purchase of the Property pursuant to the Agreement.
[18] Paragraph 25(a) of the Agreement reads in part as follows:
In the event that the Purchaser is in default with respect to any of his or her obligations contained in this Agreement… and fails to remedy such default forthwith, if such default is a monetary default… then the Vendor… may… unilaterally declare this Agreement… to be terminated and of no further force or effect. All monies paid hereunder…shall be forfeited to the Vendor. The Purchaser agrees that the forfeiture of the aforesaid monies shall not be a penalty and it shall not be necessary for the Vendor to prove it suffered any damages in order for the Vendor to be able to retain the aforesaid monies.
[19] The plaintiff presented evidence that the Property is unique for the following reasons:
a) it is a three minute drive from his workplace;
b) it is a three minute drive from the home of the plaintiff’s wife who will provide child care assistance when the plaintiff and his wife begin a family;
c) it is a two minute drive from major highways and the plaintiff is required to travel from London, Ontario to Burlington, Ontario for work; and,
d) it is close to conservation areas which is important to the plaintiff because he is a dog owner.
[20] The defendant presented evidence that there is a development directly across the road from the Property which from time to time has condominium units for sale similar in size and design to that of the Property. These are resale units however.
[21] The plaintiff presented a copy of the defendant’s website as of February, 2017, showing that as of that date, the same model unit as the Property was selling for $348,700. The website indicated that a five percent deposit was required with a tentative occupancy date of March 7, 2017. The plaintiff also led evidence from the defendant’s website that as of February, 2017, the cost of a second parking space was $25,000. Jim DiSapio testified that when the tentative occupancy date is four months or less after the date an Agreement of Purchase and Sale is entered into, there is no requirement for a third deposit. The defendant presented evidence that from May to August, 2016, units in the development were selling for $285,000 although there is no evidence about the selling price for the same model as the Property during that time period.
[22] At no time did the plaintiff or Robert McMaster forward the amount of the third deposit as required by the Agreement to the defendant, Patrick Kozierowski or Jeffrey Silver.
[23] The plaintiff commenced the present action on February 7, 2017.
The Position Of The Plaintiff
[24] The plaintiff submits that the actual agreement between he and the defendant was the verbal agreement between he and Patrick Kozierowski which required a deposit of five percent only. The plaintiff submits that the Agreement is not the actual agreement and therefore he was never under any obligation to pay the third deposit. Furthermore, the plaintiff submits that the principle of estoppel prevents the defendant from relying on the clear wording of the Agreement because no request or demand was made for the third deposit to be paid until approximately nine months after it was required to be paid pursuant to the terms of the Agreement.
[25] The plaintiff submits that the appropriate remedy is specific performance because of the uniqueness of the Property.
Discussion And Analysis
[26] In Maracle v. Travellers Indemnity Co. of Canada, [1991] 2 S.C.R. 50, the Supreme Court of Canada described promissory estoppel as follows at paragraph 13:
The principles of promissory estoppel are well settled. The party relying on the doctrine must establish that the other party has, by words or conduct, made a promise or assurance which was intended to affect their legal relationship and to be acted on. Furthermore, the representee must establish that, in reliance on the representation, he acted on it or in some way changed his position. In John Burrows Ltd. v. Subsurface Surveys Ltd., [1968] S.C.R. 607, Ritchie J. stated, at p. 615:
It seems clear to me that this type of equitable defence cannot be invoked unless there is some evidence that one of the parties entered into a course of negotiation which had the effect of leading the other to suppose that the strict rights under the contract would not be enforced, and I think that this implies that there must be evidence from which it can be inferred that the first party intended that the legal relations created by the contract would be altered as a result of the negotiations.
[27] In Burrows, the Court went on to say at page 616:
With the greatest respect for the reasoning of the majority of the Court of Appeal, I prefer the interpretation placed on the evidence by the learned trial judge and by Chief Justice Bridges in his dissenting reasons for judgment where he said:
For estoppel to apply, I think we must be satisfied that the conduct of Burrows amounted to a promise or assurance, intended to affect the legal relations of the parties to the extent that if an interest instalment became in default for ten days the plaintiff would not claim the principal as due unless it had previously notified the defendants of its intention to do so or, if it had not so notified them, that notice would be given them the principal would be claimed if such instalment so in default were not paid. This is, I think, a great deal to infer.
I do not think that the evidence warrants the inference that the appellant entered into any negotiations with the respondents which had the effect of leading them to suppose that the appellant had agreed to disregard or hold in suspense or abeyance that part of the contract which provided that:…
[28] In the present case, the plaintiff seeks to rely on the failure of the defendant to assert the position that it required the plaintiff to pay the third deposit strictly in accordance with the terms of the Agreement. The plaintiff relies on the evidence that the defendant twice extended the closing date and that the defendant was prepared to meet to discuss finishes when contacted for that purpose. Both of these events occurred well after the date on which the third deposit was due.
[29] I do not interpret the failure of the defendant to assert the position that it would require strict compliance regarding the due date for payment of the third deposit as being “a promise or assurance which was intended to affect their legal relationship”. Furthermore, there is no evidence that the plaintiff relied on the alleged representation by the defendant to his detriment. As in Burrows, I do not think that the evidence in this case warrants a conclusion that the defendant entered into negotiations with the plaintiff which had the effect of leading the plaintiff to believe that the defendant had agreed to disregard or hold in abeyance the term of the Agreement providing for payment of the third deposit. Rather than making a promise or assurance to the defendant that the third deposit would not be required, I find that the defendant was simply unaware that the plaintiff had failed to make the third deposit as per the Agreement until that fact was brought to its attention by Jeffrey Silver in July, 2016.
[30] It is significant, in my view that the position asserted by the plaintiff is not that he was told that the term of the Agreement providing for the third deposit would not be strictly enforced, but rather that the Agreement does not accurately record the true terms of the contract negotiated by he and Patrick Kozierowski. That is a position I am not able to accept. Robert McMaster reviewed the Agreement as the solicitor for the plaintiff before it was executed. The wording of the Agreement relating to the third deposit is clear. I conclude that the plaintiff and Patrick Kozierowski both knew at the time of the execution of the Agreement that it contained a term regarding the third deposit which was not a term which they had negotiated. There is no explanation put forward as to why, in the circumstances, the plaintiff, without objection, signed the Agreement.
[31] Accepting, as I do, that the plaintiff and Patrick Kozierowski agreed during the course of negotiations for a deposit of five percent of the purchase price only, that term could only be described as a representation or collateral agreement which the plaintiff acknowledged by executing the Agreement, did not exist. Paragraph 33 of the Agreement makes it clear that there is no representation or collateral agreement affecting the Agreement other than what is contained in the Agreement.
[32] The plaintiff wishes to rely on the negotiations and agreement reached between he and Patrick Kozierowski before the Agreement was signed. The Ontario Court of Appeal has held that an entire agreement clause applies to representations made prior to the signing of the written contract and is intended to lift and distill the parties' bargain from the “muck of the negotiations”: Soboczynski v. Beauchamp, 2015 ONSC 2055 at paragraph 43. Accordingly, I find that paragraph 33 of the Agreement applies to preclude the plaintiff from relying on what was agreed upon between he and Patrick Kozierowski before the Agreement was signed.
[33] The plaintiff was in default of the Agreement for failing to provide a cheque for the third deposit dated 120 days after execution of the Agreement. The plaintiff was given notice of this default by way of Patrick Kozierowski’s email of July 20, 2016 to the plaintiff and Jeffrey Silver’s letter to Robert McMaster dated August 10, 2016. In the letter from Jeffrey Silver to Robert McMaster, the defendant provided the plaintiff with five days to provide the third deposit failing which the defendant would terminate the transaction without further notice. I find the defendant was entitled to take this position pursuant to paragraph 25(a) of the Agreement.
[34] I therefore conclude that the plaintiff was in breach of the Agreement by failing to pay the third deposit, and the defendant was accordingly entitled to terminate the Agreement and retain the plaintiff’s deposits.
Specific Performance
[35] In Semelhago v. Paramadevan, [1996] 2 S.C.R. 415, the Supreme Court of Canada wrote at paragraphs 21 and 22:
It is no longer appropriate, therefore, to maintain a distinction in the approach to specific performance as between realty and personalty. It cannot be assumed that damages for breach of contract for the purchase and sale of real estate will be an inadequate remedy in all cases.
Specific performance should, therefore, not be granted as a matter of course absent evidence that the property is unique to the extent that its substitute would not be readily available.
[36] The plaintiff maintains that the Property is unique for the following reasons:
a) it is a three minute drive from his workplace;
b) it is a three minute drive from the home of the plaintiff’s wife who will provide child care assistance when the plaintiff and his wife begin a family;
c) it is a two minute drive from major highways and the plaintiff is required to travel from London, Ontario to Burlington, Ontario for work; and,
d) it is close to conservation areas which is important to the plaintiff because he is a dog owner.
[37] The defendant submits that the property is not unique as there are other available condominium units of similar size and design in close proximity to the Property.
[38] I am not convinced that the Property is sufficiently unique that specific performance should be ordered if I had concluded that the plaintiff was entitled to a remedy. The Property is a condominium unit in a condominium/townhouse development. There is a similar development across the road. I am therefore of the view that the plaintiff could have purchased a similar condominium unit when he learned that the defendant was taking the position that the Agreement was at an end.
Damages
[39] The evidence with respect to damages is inadequate. However, because the parties have agreed that the action should be determined on a motion for summary judgment, I will assess damages on the available evidence.
[40] Because I have found that specific performance is not a remedy which is available to the plaintiff, damages are to be assessed at the date of the breach: Semelhago at paragraphs 12 and 13.
[41] There is some evidence that a unit, called the “Sheffield”, in the same development as the Property was selling for $285,000 in August, 2016 but this unit is not the same model as the Property. There is no evidence as to the selling price for the Sheffield in June, 2015. There is evidence that in early 2017 the same style unit as the Property was selling for $348,700. The purchase price for the Property was $257,900 in June, 2015. By January of 2017 the same style of unit was selling for $348,700. I therefore am able to conclude that over a period of approximately 18 months there was a price increase for the same style unit as the Property of approximately $90,000.00, or an average increase of approximately $5,000.00 per month. Using this methodology, I calculate that the Property had increased in value by August, 2016 by about $70,000. I therefore find that the loss suffered by the plaintiff to August, 2016 was $70,000.00.
[42] The plaintiff purchased a second parking space for $5,000. The cost of a second parking space in August, 2016 was $25,000. The plaintiff is also entitled to compensation for the failure to complete the transaction by the First Tentative Occupancy Date in the amount of $7,500.
[43] I therefore calculate the plaintiff’s damages as follows:
Increase in value of the property $70,000 Increase in value of the parking space $20,000 Compensation for delayed closing $ 7,500 Total $97,500
Conclusion
[44] There will be judgment dismissing the action and releasing the deposit in the amount of $12,895 to the defendant.
[45] If counsel are unable to agree on the appropriate disposition as to costs they may make written submissions. The written submissions on behalf of the defendant are to be delivered to my office within 14 days of the release of these Reasons, not to exceed three pages in length exclusive of a Bill of Costs and Costs Outline. Responding submissions are to be delivered to my office within 28 days of the release of this these Reasons, not to exceed three pages in length. Counsel are directed to file electronic copies of their cost submissions at Kitchener.Superior.Court@ontario.ca to my attention.