CITATION: Shah v. Southdown Towns Ltd., 2017 ONSC 5391
COURT FILE NO.: CV-17-1646-00
DATE: 2017 09 11
ONTARIO
SUPERIOR COURT OF JUSTICE
BETWEEN:
AMEE GOKULESH SHAH, GOKULESH KUMAR SHAH, JAIGOPAL KALRA, BHARAT KALRA and INDU SHARMA
Amandeep Sidhu, for the Applicants
Applicants
- and -
SOUTHDOWN TOWNS LTD.
Q. Ryan Hanna, for the Respondent
Respondent
HEARD: July 18, 2017
REASONS FOR DECISION
EMERY J
[1] The applicants each entered an Agreement of Purchase and Sale to purchase a pre-construction condominium unit and a parking unit from the respondent Southdown Towns Ltd. (“Southdown”), a developer. Southdown ultimately terminated those Agreements of Purchase and Sale (collectively, “the Agreements”), relying upon an option it was given under section 34 of those Agreements. The applicants seek an order for relief from forfeiture of their contractual rights under the five Agreements as the sole remedy on this application.
Background
[2] On November 30, 2016, the applicant Gokulesh Kumar Shah entered an Agreement of Purchase and Sale with Southdown to purchase unit 47 and parking unit 135 for the purchase price of $599,900.
[3] On December 1, 2017, the applicant Amee Gokulesh Shah entered an Agreement of Purchase and Sale with Southdown to purchase unit 43 and parking unit 130 for the purchase price of $699,900.
[4] On November 30, the applicant Jaigopal Kalra entered an Agreement of Purchase and Sale with Southdown to purchase unit 44 and parking unit 131 for the purchase price of $679,900.
[5] On November 30, 2016, the applicant Bharat Kalra entered an Agreement of Purchase and Sale with Southdown to purchase unit 50 and parking unit 138 for the purchase price of $709,900.
[6] On November 30, 2016, the applicant Indu Sharma entered an Agreement of Purchase and Sale with Southdown to purchase unit 45 and parking unit 133 for the purchase price of $599,900.
[7] Each Agreement provided that the occupancy date for that unit would be July 31, 2018, with the closing date to be set by the vendor’s solicitor within 24 months of the Firm or the Delayed occupancy date.
[8] Each purchaser paid a deposit of $10,000 under his or her Agreement, and agreed to provide four post-dated cheques in the amount of $10,000 payable on each 30, 60, 90 and 120 days after submitting that Agreement as further deposits, with the balance payable on closing. Each Agreement was subsequently amended on December 10, 2016 (the “Amendment Agreement”) that effectively doubled the time frames in which that purchaser would provide the four additional deposits.
[9] Each Agreement of Purchase and Sale consisted of one page and an attached Schedule A1. The parties agreed in each Agreement of Purchase and Sale that Schedule A1 would form a part of the Agreement.
[10] The terms of the Agreements were otherwise identical. Included in Schedule A1 to each Agreement of Purchase and Sale is section 34 regarding Financing. Section 34 is central to the issues on this application, and I therefore set it out in its entirety:
The Purchaser acknowledges that the Vendor and/or the financial institution(s) providing funding to the Vendor for the installation of service/construction of the house (Vendor’s mortgagee) requires certain financial information with respect to the Purchaser to ensure that the Purchaser shall be in a position to complete the transaction, and the Purchaser hereby covenants and agrees to provide all information and documentation as may be required by the Vendor or the Vendor’s mortgagee, including confirmation of income, employer’s letters to confirm income, back verifications, tax information and credit checks. If the Purchaser is a married person then his or her spouse may also be required to provide the financial information referred to above.
The Purchaser agrees to provide all such information and documentation concerning the Purchaser and the Purchaser’s spouse to the Vendor or the Vendor’s mortgagee within ten (10) days of date of acceptance of this Agreement. If the Purchaser does not provide such information within such ten (10) day period then the Vendor at its sole option may terminate this Agreement and the Deposit shall be returned to the Purchaser with interest at the prescribed rate and this Agreement shall be null and void. If in the opinion of the Vendor and/or the Vendor’s mortgagee, the information provided by the Purchaser does not indicate that the Purchaser will be able to complete this transaction, then the Vendor at its sole option may terminate this Agreement and the Deposit shall be returned to the Purchaser with interest at the prescribed rate and this Agreement shall be null and void. The Purchaser hereby authorizes the Vendor and/or the Vendor’s mortgagee and their agents to obtain such credit information for the purposes stated above as they may require, and acknowledges that a consumer report containing credit and person information may be referred to in this transaction.
[11] Dan Welton is the President of Southdown. On February 13, 2017, Mr. Welton sent an email to Mr. Shah requesting confirmation of mortgage approval from his lendor. Mr. Shah admitted that he received this email on cross-examination. At the end of the email, Mr. Welton expressed the expectation that Southdown would receive this information within a couple of weeks.
[12] Mr. Shah acknowledges that he was dealing with Southdown on behalf of all five purchasers.
[13] David Meirovici, the lawyer representing Southdown on the transactions, sent a letter dated March 24, 2017 to each of the purchasers by email and by regular mail. Mr. Meirovici advised the purchasers in that letter that proof of their mortgage approvals required under section 34 of their respective Agreements remained outstanding. He gave each purchaser notice that if proof of mortgage approval was not received by 4:00 p.m. on March 30, 2017, that purchaser would be deemed to be in breach of his or her Agreement, in which event Southdown would exercise its rights to terminate the Agreement.
[14] Mr. Shah gave evidence in his affidavit that he enclosed proof of mortgage approvals on behalf of all purchasers in a letter to Mr. Meirovici dated March 28, 2017. He enclosed a broker’s approval form from Universal Mortgage Corp. (“Universal”) for each purchaser. He has sworn in his affidavit that he sent that letter by regular mail. There is no evidence before this court that Mr. Shah’s letter and enclosed documents were received by, or after March 30, 2017.
[15] The affidavit of Mr. Meirovici filed in response to the motion states that Southdown never received any proof of mortgage approval for any of the applicants by 4:00 p.m. on March 30, 2017.
[16] Mr. Shah had spoken previously to Salley and to Cathey, sales representatives of Southdown at its sales centre. Mr. Shah deposes that he called Salley and Cathey on March 31, 2017 and left a message for one of them to confirm that the mortgage approvals he had sent in his letter dated March 28, 2017 had been received. Mr. Shah further deposes that he never received a call back from either Salley or Cathey, or anyone else at Southdown.
[17] On March 31, 2017, Mr. Shah delivered copies of the mortgage approvals to Southdown on behalf of all purchasers by personally dropping them off at the sales centre.
[18] On March 31, 2017, Mr. Shah also emailed copies of the mortgage approvals to Connie Campanella, a law clerk to Mr. Meirovici.
[19] Southdown advised each purchaser in a letter dated March 31 that his or her Agreement of Purchase and Sale was terminated for failure to satisfy the conditions under section 34 of the Agreement. A Mutual Release and Termination Agreement was enclosed in each letter.
[20] On or about April 4, 2017, Mr. Shah received another letter from Mr. Meirovici. In that letter, Mr. Meirovici advised Mr. Shah that, among other things, the mortgage approvals he had provided did not meet the requirements under section 34 of the Agreements, or the terms of his letter dated March 24, 2017. He stated that “specifically, these letters are not mortgage approvals from a financial institution.”
[21] Notwithstanding the language in section 34, each purchaser subsequently obtained mortgage approvals from CIBC. Their lawyer provided those mortgage approvals to Mr. Meirovici on April 17, 2017.
[22] On April 17, 2017, Mr. Meirovici wrote to the purchasers’ lawyer to state, among other things, that his clients had failed to provide the financing information within the timeframe required under their Agreements. This letter gave notice that Southdown had elected to terminate those transactions.
[23] On or about June 8, 2017, the applicants also received mortgage approvals for their respective transactions from National Bank of Canada. Those mortgage approvals were delivered to Southdown.
[24] According to the applicants, the purpose of obtaining mortgage approvals from CIBC and National Bank of Canada was to show Southdown they had complied with the requirements under section 34 of the Agreements.
[25] The applicants have also filed evidence that Mr. Sidhu, their solicitor, advised Southdown to deposit all post-dated cheques that have been provided under each Agreement of Purchase and Sale, despite the litigation with Southdown. Mr. Sidhu advised Southdown’s counsel that Southdown could deposit those cheques as his clients have every intention of proceeding with the transactions.
[26] At the motion, counsel for Southdown advised the court that if the application is dismissed, it will return the initial deposit made and the post-dated cheques supplied under each Agreement of Purchase and Sale to that purchaser.
Analysis
[27] The applicants seek an order from this court relieving them from the forfeiture of their respective Agreements of Purchase and Sale under section 98 of the Courts of Justice Act. Section 98 reads as follows:
A court may grant relief against penalties and forfeitures, on such terms as to compensation or otherwise as are considered just.
[28] The fact that the applicants have requested relief from forfeiture as the sole remedy on this application is a telling admission that each of them acknowledge he or she has breached the terms of his or her Agreement. The applicants do not seek a declaration that the demand made in Mr. Mierovici’s letter dated March 24, 2017 was unreasonable in nature, or because of the time given to provide mortgage approvals. They have not brought an action for breach of contract against Southdown for terminating the Agreements. Instead, they seek relief from forfeiture.
[29] In Liscumb v. Provenzano et al., 1985 2051 (ON SC), 51 O.R. (2d) 129, Justice McKinlay explained that:
… the Courts of Justice Act … gives the court broad jurisdiction to relieve against forfeiture, and that jurisdiction is in no way restricted to preclude relief from forfeiture of interests in land.
[30] The court in Liscumb was called upon to adjudicate between competing interests in land arising out of a complicated fact situation involving multiple transactions. In the case before this court, construction has not yet started and the closing date for the five units is at least one, if not two or more years away. While the applicants argue that the Agreements give them an interest in land, the rights at issue are more contractual than corporeal in nature. Accordingly, I find the reasons in Liscumb to have limited utility on the application before this court.
[31] The applicants correctly point out that the power of the court to grant relief from forfeiture is a discretionary power. The applicants rely on Kozel v. The Personal Insurance Company, 2014 ONCA 130, in which the Court of Appeal restated the three factors the court must consider when exercising its discretion to grant relief from forfeiture:
(a) the conduct of the applicants;
(b) the gravity of the breach; and
(c) the disparity between the value of the property forfeited and the damage caused by the breach.
[32] There is no dispute that the court in Kozel has set out the test for me to apply in this case. Each party has argued that the other side has acted unreasonably, and that the equities should be applied in their favour.
[33] The position the parties have taken on this application have practical implications. The applicants seek an order that will effectively resurrect and reinstate the Agreements in their favour. Southdown seeks a dismissal of the application. A dismissal of the application will effectively confirm the termination of the five Agreements. The outcome is of crucial importance to each side because the fair market value of each condominium unit and related parking unit will likely increase significantly before any closing date, which will benefit the party able to sell, or re-sell that unit again.
a) Conduct of the Applicants
Position of the Parties
[34] The applicants submit that Mr. Shah’s conduct in the steps he took to comply with Southdown’s requirements under section 34 of the Agreements on their behalf were reasonable. They argue that the court should consider the reasonableness of that conduct to find that this factor should be considered in their favour. They rely upon the evidence given by Mr. Shah:
that he responded promptly to the letter of Mr. Meirovici dated March 24, 2017 when he obtained mortgage approvals from Universal Mortgages Brokerage dated March 25, 2017 for each of them, and mailed copies of those mortgage approvals to Southdown on March 28, 2017.
that he tried to call the sales representatives on March 31, 2017 to confirm that the mortgage approvals had been received; and
that he delivered copies to Southdown on March 31, 2017, and emailed copies of those mortgage approvals to Mr. Meirovici on March 31, 2017 as a precaution.
[35] The applicants disagree with the letter from Mr. Meirovici dated April 4, 2017 putting them on notice that Southdown was terminating the Agreements of Purchase and Sale because the mortgage approvals had not been obtained from a financial institution. They submit that the mortgage documents provided by March 31, 2017, even if the day late, was reasonable to meet Southdown’s requirements under the Agreements. They further submit that their position is reinforced by the fact mortgage approvals for each of the five transactions from CIBC were delivered them to Mr. Meirovici on April 17, 2017, and from National Bank is June, 2017.
[36] The applicants take the position that Southdown has failed to show it has suffered prejudice as a result of any delay. It is the further position of the applicants that as relief from forfeiture is an equitable remedy, they have come to court with clean hands.
[37] Southdown takes a different approach. Southdown argues that upon the applicants’ failure to comply with section 34 of each Agreement, a condition of the Agreement was not satisfied and either no binding agreement was formed, or they expired on their own terms. Southdown relies upon Thompson v. Parkes, [1996] O.J. No. 1222 as authority for this position. The Agreements therefore came to an end when the purchasers did not provide mortgage approvals to Southdown under section 34, or to satisfy the letter from Mr. Meirovici dated March 24, 2017.
[38] Southdown argues that the agreement expired either ten days after each agreement was accepted, or when the time extended for delivery of mortgage approvals to March 30, 2017 expired under the principals set out in Thompson v. Parkes. Southdown was careful to argue that it does not take the position that delivery of mortgage approvals was a true condition precedent, as that term is defined and applied in true condition precedent cases such as Turney v. Zhilka, 1959 12 (SCC), [1959] SCR 578.
[39] Southdown also takes the position that, although it did not insist on obtaining mortgage approvals and other financial documents from a particular purchaser within 10 days of accepting the offer, the letter from its counsel, Mr. Meirovici dated March 24, 2017 was sufficient to make known to each applicant that those documents were required under section 34 of each Agreement.
Financial Disclosure Required
[40] The rights and obligations of each applicant as a purchaser and Southdown as the vendor under section 34 of each Agreement is made up of three parts:
An acknowledgment by the purchaser that Southdown or its financial institutions require certain financial information with respect to a purchaser to ensure that the purchaser shall be in a position to complete the transaction. In this regard, the purchaser therefore agrees to provide all information and documentation as may be required by Southdown or its lender.
The purchaser agrees to provide all such information and documentation concerning the purchaser and the purchaser’s spouse to Southdown within ten days of acceptance of the agreement.
The second paragraph in section 34 furthermore provides that if the purchaser does not provide such information within the ten day period, then Southdown at its sole option may terminate the agreement and the deposit shall be returned to the purchaser with interest at the prescribed rate, and that particular agreement shall be null and void.
[41] Mr. Shah conceded on cross-examination that the letter from Mr. Meirovici dated March 24, 2017 was not the first time Southdown had asked him for section 34 documentation for each of the applicants. Mr. Shah had been asked for these documents by Salley and Cathey at Southdown’s sale centre on December 10, 2016 and January 17, 2017. Mr. Welton had also sent Mr. Shah an email dated February 13, 2017 to remind him in writing that this disclosure was required.
[42] Mr. Shah stated in his affidavit that he had purchased pre-construction homes in the past. He stated that this was the first occasion in which a builder sought to enforce a covenant requiring early financial disclosure. I find this evidence was contradicted by Mr. Shah’s answers on cross-examination that he had been reminded by Southdown to provide this information more than once. I also find it curious in view of the fact he was reminded about providing this disclosure on December 10, 2016, the same day the Amendment Agreements were signed. Clearly, financing was on the minds of all parties that day, and the subject of further discussion.
Legal Principles
[43] In Kozel, Justice Laforme defines relief from forfeiture as “the power of the court to protect a person against the loss of an interest or a right because of a failure to perform a covenant or condition in an agreement or contract.”
[44] Justice Doherty held in Ontario (Attorney General) v. 8477 Darlington Crescent, 2011 ONCA 363, [2011] O.J. No. 2122 that relief from forfeiture is to be granted sparingly. The onus rests upon the party seeking the relief to make the case for it.
[45] It therefore follows that the onus is on the applicants to satisfy the court on the evidence why this relief should be granted in order to restore each purchaser to his or her original position prior to the breach.
[46] The applicants submit if Mr. Shah did not comply strictly with the Agreements on their behalf, they complied nonetheless in a manner that was reasonable when Mr. Shah delivered mortgage approval documents to Southdown. They take the position that this constituted imperfect compliance, and that imperfect compliance allows the court to exercise its discretion to grant relief from forfeiture.
[47] Justice Moldaver, as he then was, in Stuart v. Hutchins (1998), 1998 7163 (ON CA), 40 O.R. (3d) 321 (Ont. C.A.) explained, in the context of an insurance case to which section 129 of the Insurance Act applied, that where the breach of an insured constituted imperfect compliance with a term of the policy, relief from forfeiture under section 129 was available.
[48] Justice Moldaver went on to explain that where a breach constituted non-compliance with a condition precedent to coverage, relief from forfeiture under section 129 of the Insurance Act was foreclosed as a remedy. Without specifically deciding whether section 98 could be invoked in the circumstances, Justice Moldaver did not accept the general proposition that section 98 was available on the same grounds where section 129 was not.
[49] If the issue is whether the applicants here provided imperfect compliance in order to qualify for relief from forfeiture as a remedy, one need look no further than the decision of Justice McLachlin (as she then was) in Falk Bros. Industries Ltd. v. Elance Steel Fabricating Co., 1989 38 (SCC), [1989] 2 S.C.R. 778 to define imperfect compliance. There, Justice McLachlin described the distinction between imperfect compliance and non-compliance as being “akin to the distinction between breach of a term of the contract and breach of a condition precedent”. Justice Weiler in Canadian Newspapers Co. v. Kansa General Insurance Co. (1996), 1996 2482 (ON CA), 30 O.R. (3d) 257, again within an insurance context, considered the distinction to turn on whether the breach in question was more than mere “imperfect compliance”, and rather a substantial breach of the policy to make relief from forfeiture unavailable on the facts.
Discussion
[50] In my view, the applicants cannot succeed on their claim for relief from forfeiture for two reasons. One is specific on the facts, the other of a general nature.
[51] I find that the applicants cannot succeed on the facts because they failed to provide the information that Southdown required to give effect to the contractual language in section 34 of each Agreement. The applicants knew from the first part of section 34 that Southdown required the mortgage approvals to satisfy its own lender for construction purposes. It was a term of each Agreement for the purchaser to provide such documentation as Southdown may require. Each of the applicants knew that the agreement would be binding upon them upon acceptance of their offer under section 22 of Schedule A1. Each purchaser also knew by section 23 that time was of the essence.
[52] The clause that required the applicants to make financial disclosure within 10 days under section 34 of the Agreements required that disclosure by December 10, 2016. The obligations of the purchasers, reinforced by Mr. Welton’s email dated February 13, 2017 were all subject to the terms of each Agreement that time was of the essence. The applicants, through their agent, Mr. Shah, or on their own account chose either to ignore that contractual requirement, or did not give it the serious attention it deserved. This created a vacuum of reliable information for Southdown to use and to rely upon for its own financing purposes. This amounted to a substantial breach of the Agreements.
[53] I consider the evidence given by Mr. Shah on behalf of the applicants to be dubious in nature. To risk repetition, Mr. Shah all but ignored all requests for the mortgage approvals prior to receiving Mr. Meirovici’s letter dated March 24, 2017. Mr. Shah was then motivated by the letter dated March 24, 2017, to obtain mortgage approval forms from Universal on March 25, 2017, but not enough to deliver them in person to the sales centre he has obviously visited several times before, or to Mr. Meirovici directly. The letter of March 24, 2017 told Mr. Shah precisely what Southdown required for financing disclosure from the purchasers.
[54] Rather than taking issue with this letter, Mr. Shah allegedly mailed those documents on March 28, 2017 but has given no evidence other than a bald assertion in his affidavit that he did so. His affidavit fails to attach crucial evidence of the documents he mailed, including a copy of a cover letter, details of where and when he put them in the mail, or any other evidence that would support his efforts to comply.
[55] Mr. Shah was sufficiently concerned about how the mortgage forms he allegedly put in the regular post on March 28, 2017 would not arrive on time to check with Cathey and Salley at Southdown’s sales centre on March 31, 2017. When he did not hear back from either of them, it was then that he made sure that he delivered those documents from Universal in person.
[56] Once the applicants failed to comply, Southdown was in a position to terminate the Agreements when it gave 5 days’ notice under section 18 of Schedule A1 to cure their default. That 5 day period elapsed on March 30, 2017. Southdown was in a position to exercise its option under the Agreements to terminate each transaction on March 31, 2017.
[57] It is clear from a plain reading of section 34 of the Agreements that mortgage approvals need not come from a financial institution. However, section 34 requires certain financial information with respect to the purchaser to ensure that the purchaser shall be in a position to complete the transaction. In section 34, the purchaser agrees to provide all information and documentation as may be required by the vendor.
[58] The tenuous nature of Mr. Shah’s evidence is compounded by his production of mortgage approvals from CIBC in April 2017 and from National Bank later in June 2017. The production in each instance is an apparent attempt to fortify the applicants’ position that they are in compliance with section 34 of the Agreements.
[59] I therefore make the following findings of fact, on the evidence filed, which I reach on the balance of probabilities:
Mr. Shah ignored the contractual obligations of each applicant under section 34 of their respective Agreements of Purchase and Sale to provide financial disclosure until he received the letter from Mr. Meirovici dated March 24, 2017.
Mr. Shah did not mail the mortgage approvals from Universal on March 28, 2017.
Mr. Shah delivered the mortgage approvals from Universal for each applicant signed by Ms. Shah and her broker on March 31, 2017 to comply with the deadline set by Mr. Meirovici after the fact.
The mortgage approvals from Universal were not evidence of actual mortgage approvals as required by Mr. Meirovici’s letter dated March 24, 2017; and
The mortgage approvals from the proposed lenders dated March 26, 2017, produced to supplement Ms. Shah’s cross-examination evidence did not exist, or were not in the possession of Mr. Shah or Ms. Shah on March 30, 2017.
[60] I disagree with Southdown’s argument that the Agreements came to an end when the purchasers did not satisfy their obligations to make financing disclosure under section 34. This is not a case to which Thompson v. Parkes applies. The Agreements did not come to an end because they were conditional on receiving proof of mortgage approvals. They came to an end because Southdown exercised its option under section 34 to terminate those Agreements.
[61] The second reason is general in nature, but just as compelling. Justice Akbarali in North Elgin Centre Inc. v. McDonald’s Restaurants of Canada Ltd., 2017 ONSC 3306, [2017] O.J. No. 3121 held that one of the conditions necessary for the court to exercise jurisdiction to grant relief from forfeiture is that the applicant has made diligent efforts to comply with the terms of the agreement which it could not comply with through no default of his or her own. See also: 120 Adelaide Leaseholds Inc. v. Oxford Properties Canada Ltd., 1991 CarswellOnt 2200, affirmed at [1993] O.J. No. 2801 (Ont. C.A.).
[62] Evidence of that nature is not only lacking, but is conspicuously absent from the applicants in this case. Relief from forfeiture is a form of equitable relief the court may grant to remedy unfairness or misfortune where the justice of the case requires. It is not available as an excuse for the non-performance of contractual obligations within the control of the defaulting party.
[63] For these reasons, I find that the applicants do not come to court seeking an equitable remedy with clean hands. They have not exercised reasonable diligence to comply with the Agreement of Purchase and Sale between Southdown and each applicant. Each purchaser in this application has breached his or her Agreement of Purchase and Sale with Southdown in a substantial way, amounting to non-compliance with his or her contractual obligation. Accordingly, relief from forfeiture is not available to any of them.
b) Gravity of the Breach
[64] Although I have decided that relief from forfeiture is not available to any of the applicants as a remedy, I proposed to consider each of the two other factors for the court to consider when exercising to grant relief from forfeiture or not.
[65] The applicants argued that the gravity of their breach of the Agreements was trivial, or minor in nature. They argue that the respondent Southdown has not provided evidence of any prejudice or damage suffered as a result.
[66] There are cases where the courts have held that where a breach is minor or trivial, relief from forfeiture is available: Owners, Strata Plan, VIS 2030 v. Ocean Park Towers Ltd., 2015 BCSC 146. In Niagara Falls (City) v. Diodati, 2011 ONSC 2180 a trivial breach that is quickly corrected, such as delivery of the mortgage approvals on March 31, 2017, was found to be imperfect compliance and relief from forfeiture was granted: Dube v. RBC Life Insurance Company, 2015 ONCA 641.
[67] The applicants further argue that the court should order relief from forfeiture in circumstances where a respondent has suffered no serious financial loss or prejudice because of the breach: York Condominium Corp. No. 26 v. Becker Milk Co. Ltd. (1982), 1982 2119 (ON SC), 37 O.R. (2d) 679.
[68] The applicants rely upon the Baldassare v. Lakeview Homes (East Brampton) Inc., [2005] O.J. No. 3149 decision to support their position that a short delay in delivery of the mortgage approvals was a minor breach that would not constitute prejudice to Southdown. The court in Baldassare did not find that it would have been reasonable to treat a delay of nine days for paying a deposit installment as a fundamental breach under the contract, even though time was of the essence under the Agreement of Purchase and Sale.
[69] In Baldassare, Master McLeod (as he then was) determined that by contrasting the prejudice the plaintiff would suffer in that case if he was not reinstated to his previous position under the contract, the prejudice to him in losing both his deposit and the opportunity to purchase the subject lands in dispute was extreme.
[70] I would distinguish the Baldassare decision on its facts. First, in Baldassare, Master McLeod had made an order on consent granting relief from forfeiture, rather than on contested evidence to make that decision. Second, in Baldassare the purchaser was at risk to lose both a deposit as well as the transaction for the purchase of a home that had already been constructed. In the case before this court, the applicants will each recover their deposit and the return of post-dated cheques.
[71] The applicants have no pre-constructed home at risk of losing here. All they have at risk are contractual rights to purchase a residential unit to be built, along with a related parking unit. That right was contingent upon the fulfillment of contractual terms and compliance with occupancy requirements prior to a closing date to be determined at a time after July 31, 2018. For the reasons I have already given, I find that the breach of those contractual terms amounted to a substantive breach of the Agreements.
[72] In the final analysis, I find that the gravity of the breach, to be significant. On balancing the consequences of that breach to the applicants with the prejudice to Southdown caused by that breach, this factor favours Southdown.
c) Disparity Between the Contractual Interest Forfeited and the Damage Caused by the Breach
[73] The applicants submit that each of them will lose between $150,000 and $200,000 in potential increases to the fair market value of each unit if relief from forfeiture is not granted. This submission is based on the belief that the estimated value of each unit will increase by approximately $150,000 to $200,000 before July 31, 2018. The Applicants jointly submit the combined risk to them is therefore $750,000 to $1 million dollars if relief from forfeiture is not granted.
[74] The applicants further submit that Southdown has not provided any evidence about what damage or prejudice it will suffer if relief from forfeiture is granted.
[75] I find there is no evidentiary basis to weigh the disparity between the value of the properties on either March 30, 2017 or July 31, 2018 if the Agreements remain terminated. The applicants have provided no independent evidence on which to base their assertion of loss. The only places where an increase in the estimated value of each property by July 31, 2018 can be found are in mortgage approval statements from Aditya Financial Services Inc. These mortgage approvals were provided by Ms. Shah in her answers to undertakings from her cross-examination on July 6, 2017. It is only in paragraph 10 of each mortgage approval that Aditya gives the estimated market value for that unit at the time of the anticipated advance on July 31, 2018.
[76] Ms. Shah provided the mortgage approvals from a proposed lender purporting to answer a question asked at her cross-examination. This production does not mean that the document is admissible, or that any statement made in that document is admissible with respect to the fact that it was made, or as to the truth of its contents. The question asked of Ms. Shah at her cross-examination required her to produce emails under which mortgage approvals had been provided to her from proposed lenders, and not the mortgage approvals themselves. Those mortgage approvals are therefore not a proper part of the evidentiary record.
[77] There is no affidavit evidence from an expert setting out an opinion, or attaching an appraisal to give evidence of estimated value of the kind suggested by paragraph 10 of the mortgage approvals. The applicants failed to provide expert evidence in this respect. The statement made by the proposed lender in paragraph 10 of the mortgage approval for each applicant is hearsay evidence, and is inadmissible.
[78] As a result, there is no evidence of the disparity between the damage caused by the breach and the value of the property or the contractual right forfeited. This factor cannot be considered in favour of the applicants.
Conclusion
[79] For the reasons I have given relating to the conduct of the applicants, the application is dismissed. Even if I had found on the evidence that the applicants had acted reasonably, or that their breach amounted only to imperfect compliance, when considering all three factors together, I would exercise my discretion to dismiss the application.
Costs
[80] If Southdown seeks costs, its counsel may file written submissions, consisting of no more than three pages, not including a Bill of Costs or any offer to settle by September 21, 2017. The applicants shall then have until October 2, 2017 for counsel to file responding submissions limited to the same extent. No submissions in reply may be filed without leave. A copy of those submissions may be faxed to my judicial assistant, Kimberly Williams, at 905-456-4834 in Brampton.
EMERY J
Released: September 11, 2017
CITATION: Shah v. Southdown Towns Ltd., 2017 ONSC 5391
COURT FILE NO.: CV-17-1646-00
DATE: 2017 09 11
ONTARIO
SUPERIOR COURT OF JUSTICE
BETWEEN:
AMEE GOKULESH SHAH, GOKULESH KUMAR SHAH, JAIGOPAL KALRA, BHARAT KALRA and INDU SHARMA
Applicants
- and -
SOUTHDOWN TOWNS LTD.
Respondent
REASONS FOR DECISION
EMERY J
Released: September 11, 2017