CITATION: Romanyszyn v. Baby, 2017 ONSC 6421
COURT FILE NO.: C-3435/14
DATE: 2017-11-03
ONTARIO
SUPERIOR COURT OF JUSTICE
BETWEEN:
Bettina Romanyszyn
Plaintiff
– and –
Gary Baby and Ann Marie Baby
Defendants
Joseph P. Marcuccio, for the Plaintiff
Réjean Parisé, for the Defendants
HEARD: October 23, 24 and 25, 2017
REASONS FOR JUDGMENT
GAUTHIER, J.
Overview
[1] The action arises out of an agreement of purchase and sale between the parties whereby the plaintiff agreed to sell her home located at 3829 Sunvalley Avenue, Sudbury, to the defendants for the price of $926,000, with the transaction to close on September 23, 2013. The defendants were unable to close the transaction and the plaintiff sued the defendants.
[2] The trial proceeded before me on October 23, 24, and 25, 2017. What follows are my reasons for judgment.
Facts
[3] The plaintiff was the owner of 3829 Sunvalley Avenue (“Sunvalley”). On June 18, 2013, the plaintiff entered into a listing agreement for the sale of the property with the Royal Lepage North Heritage Realty Brokerage, the listing agent being Kayla Martell (“Martell”).
[4] The listing agreement provides that the property was to be listed at a price of one million two hundred thousand dollars, ($1,200,000). The listing agreement was to be in effect until December 31, 2013. The real estate commission payable was 5%.
[5] On July 15, 2013, the plaintiff and her spouse purchased a home located at 4805 Long Lake Road, Sudbury. The plaintiff moved into that property on September 22, 2013.
[6] On July 30, 2013, the listing agreement was amended to reduce the listing price to $1,090,000.
[7] The defendants owned and occupied 2398 South Shore Road (“South Shore”), also in the City of Sudbury. They were looking to sell that home and purchase a smaller property requiring less maintenance than the South Shore property. They listed their property with the Property Guys, by way of MLS listing, but the defendants took care of arranging for and conducting the showings of their home.
[8] The plaintiff and the defendants initially met each other when the plaintiff arranged for and visited the defendants’ South Shore property. Although the plaintiff found the South Shore property to be quite appealing, it did not suit her needs given her family situation.
[9] Subsequently, the defendants communicated with Martell to express an interest in the Sunvalley property and made arrangements to view it. They visited the property in the company of Martell, and they liked what they saw.
[10] On August 8, 2013, the defendants accepted an offer to purchase the South Shore property from Barry Fjelheim and Melissa Wice (“Wice”). The agreement of purchase and sale (the “Wice Agreement”) provided for a purchase price of eight hundred and twenty-nine thousand nine hundred dollars ($829,900), a deposit of ten thousand dollars ($10,000), and a closing date of September 26, 2013. It contained no conditions save and except for a home inspection condition as follows:
This offer is conditional upon the Purchasers arranging at the Purchasers own expense, a home inspection satisfactory to the Purchasers in the Purchasers sole and absolute discretion, within 10 business days of execution hereof, failing which the deposit shall be returned to the Purchasers without interest.
[11] According to the defendants’ evidence, they were of the view that the Wice Agreement constituted a “firm” (that is unconditional) offer. They were confident that they could proceed to take the steps necessary to purchase Sunvalley and that they would have enough money on the sale of South Shore, plus personal funds and funds from a line of credit to pay the purchase price for Sunvalley without the need for a mortgage.
[12] At the request of the defendants, Martell prepared an offer to purchase Sunvalley. The agreement of purchase and sale is dated August 10, 2013, and it provided for a price of nine hundred and twenty-nine thousand dollars ($926,000), a one thousand dollar ($1,000) deposit, and a closing date of September 23, 2013.
[13] Schedule A of the agreement of purchase and sale initially contained four conditions: (a) a financing condition, (b) an insurance condition, (c) a seller property information statement, and (d) a home inspection condition. The first three conditions were deleted at some point on August 10, 2013, and those deletions were initialed by all the parties. There is some disagreement about the exact timing of the deletions, but nothing much turns on this.
[14] The agreement of purchase and sale also contained what is referred to as an “Entire Agreement” clause. It is at paragraph 26 of the document and reads as follows:
This Agreement including any Schedule attached hereto, shall constitute the entire Agreement between Buyer and Seller, there is no representation, warranty, collateral agreement or condition, which affects this Agreement other than as expressed herein. For the purposes of this Agreement, Seller means vendor and Buyer means purchaser. This Agreement shall be read with all changes of gender or number required by context.
[15] Also on August 10, 2013, Martell and the defendants executed a confirmation of co-operation and representation, which provides for the realtor (Martell) to represent the interests of both vendor and purchaser, that is both the plaintiff and the defendants. The defendants did not have any other agent assist them with regard to the potential purchase of any property, including Sunvalley.
[16] On August 14, 2013, the defendants waived the inspection condition regarding Sunvalley, by way of a notice of fulfillment of condition. From that point forward, the agreement of purchase and sale for Sunvalley contained no conditions.
[17] According to the evidence of the defendants, and with regard to the Wice Agreement, a home inspection of South Shore was conducted, although no report was shared with the defendants. They were not alerted to any problems or defects in their property.
[18] On August 29, 2013, the defendants received a telephone call from Wice effectively repudiating the agreement of purchase and sale for the South Shore property. She told the defendants that she was not obligated to purchase their home as she had never delivered the deposit. The non-delivery of the deposit is fact.
[19] On August 30, 2013, the defendants’ real estate lawyer, Mr. McAndrew, corresponded with the plaintiff’s real estate lawyer to advise that the defendants “may find themselves unable to close the transaction” as the defendants’ proposed sale of South Shore was falling through. The correspondence offered to release the plaintiff from the August 10, 2013 agreement of purchase and sale, thus permitting the plaintiff to re-market the Sunvalley property.
[20] On September 9, 2013, the plaintiff’s then litigation lawyer wrote to Mr. McAndrew as follows:
While my client regrets the position that your clients find themselves in, she will be insisting upon the closing of this transaction and if it does not close will be seeking damages.
She understands that she is obliged to mitigate her damages and if the transaction does not close on September 23rd, 2013, will be putting her house up for resale and if she sells it for less than your clients were prepared to pay, she will be seeking the difference plus costs.
[21] On September 23, 2013, the plaintiff entered into a new listing agreement with Royal Lepage and Martell to list the Sunvalley property for nine hundred and sixty-nine thousand dollars ($969,000). The new listing agreement provided for a 5% commission and an expiry date of March 24, 2014.
[22] On January 27, 2014, the plaintiff accepted an offer to purchase Sunvalley from Valerie Jane Whitehead (“Whitehead”). The agreement of purchase and sale (the “Whitehead Agreement”) provided for a purchase price of $932,000, a closing date of April 4, 2014, a deposit of $1,000, and contained, in Schedule A, the following condition:
The inspection of the subject property by a home inspector at the Buyer’s own expense and the obtaining of a report satisfactory to the Buyer in the Buyer’s sole and absolute discretion.
[23] There were no other conditions in the Whitehead Agreement. That agreement was not concluded because the purchaser refused to waive the home inspection condition. According to the plaintiff’s evidence, arrangements had been made for an inspection to be conducted. She did not know who the inspector was (if in fact any inspection resulted in a report) or what (if any) fault was found with the home as a result of the inspection. The only information she was provided with mentioned the purchaser’s concern about weeds or algae in the lake water.
[24] The plaintiff did not sue Whitehead as she understood the inspection clause to be an “iron clad” escape clause for the potential purchaser.
[25] The Sunvalley property was continually listed for sale, and ultimately on June 5, 2014, the plaintiff entered into an agreement of purchase and sale with John Bradley (“Bradley”) for the sum of $850,000. That transaction was set to close and did close on July 7, 2014. The mortgage in favour of the Royal Bank of Canada in the amount of $326,952.66 was paid out from the proceeds of sale.
[26] On August 1, 2014, the plaintiff commenced proceedings against the defendants for damages for breach of contract in the amount of $123,437, consisting of (a) the difference between the purchase price the defendants had agreed to pay and the purchase price paid by Bradley, (b) the increased cost of real estate commissions, (c) the carrying costs relating to Sunvalley from September 23, 2013, until July 7, 2014, and (d) miscellaneous costs.
[27] The defendants’ statement of defence was delivered on August 19, 2014. I reproduce the relevant portions of that pleading:
The plaintiff and her agent were aware that in order for the defendants to complete the purchase of the plaintiff’s property the defendants would be required to sell their home located at 2398 South Shore Road.
The defendants state and the fact is that it was an implied term of the contract entered into between the plaintiff and the defendants that the obligation of the defendants to complete the transaction was conditional upon the sale of their property.
The purchase of the defendant’s home did not close. As a result of the failure of the sale of the defendant’s home the implied condition was not satisfied and the defendants were relieved of their obligation to complete the purchase from the plaintiff.
The defendants had caused their solicitor to advise the solicitor for the plaintiff in advance of the closing date that the plaintiffs might find themselves unable to close the sale of their property and the defendants offered to release the plaintiff from the Agreement of Purchase and Sale between them in the event that the plaintiff found another purchaser.
… Having accepted the Whitehead offer the defendants say the plaintiff had substantially eliminated her damages and ought not to have released the purchaser under that offer and in doing so failed to mitigate her damages as she is in law obliged to do.
The defendants state that the offer which was accepted by the plaintiff of $850,000.00 was inordinately low and below market and in accepting such an offer the plaintiff failed to mitigate her damages and alternatively the plaintiff ought to have advised the defendants that she was prepared to accept an offer of $850,000.00 and permitted the plaintiffs to purchase the property at such an inordinately low price.
[28] The plaintiff seeks to recover the sum of $110,588.66 from the defendants, including the carrying costs for the Sunvalley property, as she had relocated from that property on September 23, 2013, in order to provide vacant possession to the defendants.
[29] The sum of $110,588.66 is broken down as follows:
a) Difference in purchase price of the home
$926,000.00 minus $850,000.00 equals: $ 76,000.00
b) Miscellaneous carrying costs: $ 2,932.98
c) Municipal taxes: $ 7,594.66
d) Home Insurance from TD: $ 754.56
e) Union Gas: $ 1,204.96
f) Greater Sudbury Utilities: $ 1,148.96
g) Interest RBC First Mortgage: $ 8,691.54
h) Difference between two real estate commissions: $ 12,261.00
Total: $110,588.66
Issues
[30] Was there a breach of the August 10, 2013, agreement of purchase and sale? The answer to that question will depend on whether or not there was an implied term in the agreement of purchase and sale that that the obligation of the defendants to complete the transaction was conditional on the sale of their own property.
[31] What are the damages if there was a breach? This question engages the issues of (i) mitigation and (ii) timing of the calculation of damages.
Plaintiff’s Position
Breach of Agreement
[32] The plaintiff has discharged her burden of proof to demonstrate that there was a breach of the August 10, 2013, agreement of purchase and sale. On the totality of the evidence, it is established that the defendants were not in a position to, and did not, close the transaction as they were obligated to do.
No Implied Term
[33] Once the failure to close is established, it falls to the defendants to establish, on the evidence, that there was an implied term as described in the pleadings.
[34] The evidence establishes that, at most, the plaintiff was aware that the defendants had sold their home. This does not, however, make it an implied term that if their sale fell through, they would be free of their contractual obligations to close the purchase of Sunvalley.
[35] Both sides entered into the contract in good faith, and the consequences of the unfortunate and unexpected falling through of the defendants’ deal do not lie at the feet of the plaintiff. That eventuality was never contemplated by and was not provided for within the contract. There is no basis upon which the court can release the defendants of their contractual obligations based on the evidence.
[36] The reason for the inability and ultimate refusal to conclude the transaction is neither relevant nor material. The only thing that matters is the refusal itself.
[37] At all times, the parties had a binding agreement as a result of which the plaintiff could not continue to market her property in the hopes of securing a better offer from another purchaser. She was bound by the terms of the agreement. The defendants were as well.
Mitigation
[38] There is no merit to the defendants’ suggestion that they should have been made aware of the subsequent offers, as they could not have matched any such offers until they sold their own property, which did not occur until sometime in 2016.
[39] There is also no merit to the submission that the plaintiff failed to mitigate her damages by releasing Whitehead and not suing her for breach of contract. The Whitehead Agreement was conditional on a home inspection, and this condition was never waived by Whitehead. The plaintiff had no recourse against Whitehead.
[40] Further, there is no evidence to support the allegation that the plaintiff failed to mitigate her damages by selling to Bradley for a price that was too low.
[41] Under ordinary contract law and based on the evidence, there should be a finding that the defendants’ contractual obligations have not been performed through no fault of the plaintiff and that the plaintiff, to the extent possible, ought to be put back into the same position that she would have been in had the contract been honored. The onus is on the defendants to establish that this result ought not to apply as a matter of law.
The Damages
[42] The consequential damages of the defendants’ breach is the difference between the purchase price the defendants should have paid and the price ultimately paid by the subsequent purchaser, Bradley.
[43] The plaintiff also seeks the sum of $12,260.50, which represents the difference between the commission she contracted to pay on the sale of Sunvalley to the defendants, that is the sum of $26,159.50, and the increased commission she ultimately paid on the Bradley transaction. On the former, she was able to negotiate a lower commission because of the mutual representation of the agent. According to the evidence of Martell, the reduced commission was specific to the defendants’ offer. Martell was not the agent involved when Bradley purchased the Sunvalley property.
[44] The balance of the claim for the carrying costs reflect the fact that the plaintiff had to defray expenses relating to the home she was no longer occupying and had planned to no longer occupy as of September 23, 2013, as a result of the agreement between herself and the defendants. The plaintiff’s evidence regarding her carrying costs from September 23, 2013, to July 7, 2014, went completely unchallenged.
Defendants’ Position
[45] I have borrowed liberally from the defendants’ counsel’s submissions, a hard copy of which was provided to me as an aid.
[46] Martell was the plaintiff’s agent. Up until the moment when the confirmation of co-operation and representation document was signed by the defendants and Martell, which was at the same time as the signing of the agreement by the defendants, the only contractual relationship that existed was between the plaintiff and the agent Martell. Therefore, all of the discussions pertaining to the offer and whether or not there should be a clause relating to the sale of South Shore were essentially between the defendants and the plaintiff, through Martell.
[47] The confirmation and co-operation document does not change the primary agent and principal relationship, but rather places a duty of disclosure on the agent. In that context, it is submitted, the material fact pleaded at paragraph 7 of the statement of defence is made out, namely that completion of the South Shore transaction had to occur in order for the defendants to be able to complete the purchase of Sunvalley was a fact known to the plaintiff and her agent. Therefore, “there is an implied underlying condition or circumstance that affects the overall obligation between the parties.”
[48] Put another way, Martell was aware that the defendants’ purchase of the plaintiff’s property could only proceed if the sale of the South Shore property was completed. She knew this because the defendants had explained to her how they were going to finance the purchase of Sunvalley. This information is imparted to the plaintiff as the law deems the knowledge and actions of an agent to be that of the principal. Therefore, the decision to NOT include a condition in the August 10, 2013, agreement of purchase and sale, relating to the sale of the defendants’ property, was the decision of the plaintiff.
[49] Essentially, the defendants submit it was the plaintiff’s decision that an “escape” clause relating to the South Shore property was not required because it was understood by all parties that the defendants could not complete the purchase of Sunvalley without the funds from the sale of South Shore. It was understood that they would be relieved of their contractual obligations if the South Shore deal fell through.
[50] The defendants go further and submit that if that was not the understanding, then the plaintiff should have ensured that the agreement contained a condition that the defendants would be bound by the terms of the agreement, even in the event that their sale of South Shore fell through.
[51] The defendants suggest that the causal factor or factual underpinning to the August 10, 2013, agreement of purchase and sale was the successful sale of South Shore. Expressed another way, everyone was aware that the sole and only reason the defendants made the offer on Sunvalley was because they had a “firm” or unconditional offer on South Shore. All of the parties knew that the defendants’ ability to close the purchase of Sunvalley was premised on the successful closing of their own sale.
Mitigation
[52] It is the defendants’ position that the plaintiff failed to mitigate her damages by not suing Whitehead for backing out of the January 27, 2014, agreement of purchase and sale. The plaintiff should have sued Whitehead for specific performance.
[53] The plaintiff had a duty to ask Whitehead (a) if she had arranged for an inspection, (b) if she had received a report, and (c) explore the reason for Whitehead exercising her “sole and absolute” discretion to not accept the contents of any report. This duty arises, the defendants maintain, because Whitehead had a duty to (a) arrange for an inspection, (b) obtain a report of such inspection, and (c) advise what the report disclosed that was not acceptable to her.
[54] All of this is related to Whitehead’s duty not to act unreasonably or capriciously. Defendant’s counsel referred to the Supreme Court of Canada decision of Bhasin v. Hrynew, 2014 SCC 71, [2014] 3 S.C.R. 494 and one of the principles discussed in that case—that parties are generally required to perform their contractual duties honestly and reasonably. The defendants suggest that Whitehead’s withdrawal from the agreement with the plaintiff was “grossly lacking” in reasonableness.
[55] The plaintiff failed to take reasonable steps to mitigate damages by not (a) asserting the enforceability of the contract or requiring a copy of the home inspection report, (b) requiring “a written clear advisement by Whitehead of her concerns revealed by the alleged home inspection report”, or (c) undertaking any assessment of the reasonableness of Whitehead’s withdrawal from the Whitehead Agreement.
Discharge of Mortgage and the Undertaking
[56] The plaintiff was under an obligation to provide title to the property, free and clear of any encumbrances. The September 19, 2013, requisition letter sent to the plaintiff’s real estate lawyer by Mr. McAndrew required, referring to the plaintiff’s mortgage to the Royal Bank of Canada registered against the title to Sunvalley:
On or before closing, production and registration of a good and valid discharge of this Mortgage.
[57] On September 7, 2013, the plaintiff’s real estate lawyer provided the standard undertaking to forward a certified cheque to the first mortgagee forthwith after closing, and the undertaking to obtain and register a proper form of discharge of mortgage/charge forthwith after closing.
[58] The documents that were tendered on the closing date on behalf of the plaintiff did not include a discharge or charge to show that the plaintiff was able to provide clear title to the property.
[59] According to the defendants, the plaintiff was not able to comply with the agreement of purchase and sale because she did not provide a discharge on closing. The agreement outlines that the defendants agree:
To accept Seller’s lawyer’s personal undertaking to obtain, out of the closing funds, a discharge in registrable form and to register same, or cause same to be registered, on title within a reasonable period of time after completion…
However, the plaintiff did not provide a valid “Seller’s lawyer’s personal undertaking” because the undertaking was not signed. Therefore, the undertaking was void and the agreement was at an end.
Assessment of the Damages
[60] The plaintiff’s claim is based upon a repudiation of the contract by the defendants at the date of closing, that is September 23, 2013. Damages are to be assessed as of the date of the breach.
[61] The plaintiff did not seek specific performance, and instead proceeded on a claim for damages. That being the case, she is not entitled to have her damages assessed as of the date of the sale to Bradley. Assessment of damages for breach of contract as of the date of trial, or any date subsequent to the date of breach, is generally in substitute of a claim for specific performance.
[62] The plaintiff would be entitled to damages to reflect the difference in value of the property as of the date of breach and the agreed purchase price. No appraisal was put into evidence, therefore there is no evidence of the value of the property on September 23, 2013.
[63] The plaintiff would also be entitled to the legal fees incurred on the failed transaction. She would not be entitled to any other damages, including the carrying costs of Sunvalley from September 23, 2013, until the sale to Bradley, because those costs were incurred as a result of the plaintiff’s decision to acquire a new home, together with her spouse, on July 15, 2013, well in advance of the agreement of purchase and sale with the defendants.
Analysis and Conclusion
[64] The defendants breached the agreement by failing to close the transaction on September 23, 2013. The likely inability to close had been conveyed to the plaintiff’s real estate lawyer in advance of the scheduled closing date.
[65] I am unable to accept as correct the defendants’ suggestion that there was an implied term relieving them of their contractual responsibilities as discussed above. That is simply contrary to the law of contract and is not supported by the evidence.
[66] The principles set out in Bhasin do not support the defendants’ position, despite their submission that it does. There is no duty on one party to a contract to protect the interests of the other party.
The organizing principle of good faith exemplifies the notion that, in carrying out his or her own performance of the contract, a contracting party should have appropriate regard to the legitimate contractual interests of the contracting partner. While “appropriate regard” for the other party’s interests will vary depending on the context of the contractual relationship, it does not require acting to serve those interests in all cases. It merely requires that a party not seek to undermine those interests in bad faith. This general principle has strong conceptual differences from the much higher obligations of a fiduciary. Unlike fiduciary duties, good faith performance does not engage duties of loyalty to the other contracting party or a duty to put the interests of the other contracting party first.
See Bhasin, at para. 65
[67] Bhasin goes on to explain that the duty of honest performance is not to be confused with a fiduciary duty or a duty of disclosure. A party to a contract is not subject to a general duty to subordinate his or her interest to that of the other party. That is precisely what the defendants suggest should be imposed on the plaintiff in this case.
[68] I also reject the submission that the decision not to include a clause releasing the defendants from their contractual obligations in the event of their sale falling through was that of the plaintiff, through the agent Martell. The defendants raised the issue of the need for such a condition during their discussions with Martell and are taken to have been content with Martell’s advice that it was not necessary. They did so at their own risk.
[69] While the evidence establishes that the plaintiff was aware that the reason the defendants were entering into the agreement to purchase Sunvalley was because they had previously received an unconditional offer for the sale of their own home, it does not establish that the plaintiff was prepared to release them from their obligation if that deal collapsed. Martell’s evidence does not suggest this. In fact, Martell said that she would not have specified where the defendants’ money was coming from with the plaintiff.
[70] Martell’s evidence does not establish that no escape clause was included in the contract because it was not necessary based on everyone’s understanding and agreement that the agreement would be terminated if the defendants’ own sale transaction did not close. In fact, her evidence is that the reason no such clause was included was:
that in the general practice of real estate, when you have an unconditional offer on your house you would proceed with the paper work as such without including a condition to have to sell your home.
[71] To be clear, any discussion about the escape clause was only between Martell and the defendants and did not include the plaintiff. Even if it had, the decision to include or not include such a clause was that of the defendants. And whether or not the confirmation and co-operation document had or had not been executed at the time of that discussion between Martell and the defendants, Martell was providing advice and acting as their agent.
[72] The agreement was clear. The only condition that remained after the execution of the document by the parties to the contract was the home inspection condition. There is no ambiguity in the agreement. The agreement was in no way subject to the successful closing of the defendants’ sale to Wice.
[73] Terms may be implied in a contract:
(1) based on custom or usage; (2) as the legal incidents of a particular class or kind of contract; or (3) based on the presumed intention of the parties where the implied term must be necessary “to give business efficacy to a contract or as otherwise meeting the ‘officious bystander’ test as a term that the parties would say, if asked, that they had obviously assumed.”
M.J.B. Enterprises Ltd. v. Defence Construction (1951) Ltd., 1999 CanLII 677 (SCC), [1999] 1 S.C.R. 619, at p. 635.
[74] G.H.L. Fridman in The Law of Contract in Canada, 3rd ed., (Scarborough, Ont.: Carswell, 1994), at p. 476:
In determining the intention of the parties, attention must be paid to the express terms of the contract in order to see whether the suggested implication is necessary and fits in with what has clearly been agreed upon, and the precise nature of what, if anything, should be implied.
[75] In the absence of ambiguity in the words of an agreement, parole evidence of the subjective intention of the parties has no place in the interpretation of that agreement: Eli Lilly & Co. v. Novopharm Ltd., 1998 CanLII 791 (SCC), [1998] 2 S.C.R. 129.
[76] In addition to not containing any such clause as the one sought to be read into the contract by the defendants, the agreement contained a standard “entire agreement” clause:
This Agreement including any Schedule attached hereto, shall constitute the entire Agreement between Buyer and Seller, there is no representation, warranty, collateral agreement or condition, which affects this Agreement other than as expressed herein. For the purposes of this Agreement, Seller means vendor and Buyer means purchaser. This Agreement shall be read with all changes of gender or number required by context.
[77] Therefore, there is no ambiguity in the contract, and no implied term can be read in.
[78] I turn now to the assessment of damages.
Assessment of Damages
[79] As stated in Semelhago v. Paramadevan, 1996 CanLII 209 (SCC), [1996] 2 S.C.R. 415, at para. 8:
the object of an award of damages for breach of contract [is] to “put the injured party into the position in which he would have been had the contract been performed, in so far as that is possible by the payment of money.”
[80] Damages for a breach of contract for the sale of goods are generally assessed as at the date of the breach. The rationale for this is “that if the innocent purchaser is compensated on the basis of the value of the goods as of the date of the breach, the purchaser can turn around and purchase identical or equivalent goods. The purchaser is therefore placed in the same financial situation as if the contract had been kept”: Semelhago, at para. 13.
[81] The general rule that damages for breach of contract are assessed as at the date of the breach is not an absolute rule. It will not be followed when to do so would give rise to injustice. In such a case, the court has the power to fix a date that might be appropriate in the circumstances. See Semelhago, at para. 12.; Wilcox Lake Enterprises Inc. v. Starr (1993), 30 R.P.R. (2d) 75 (Ont. Gen. Div.) at paras. 48-49; and Rinzema v. Morrow, 37 R.P.R. (4th) 275 (O.N. S.C.)
[82] The case at bar is not a sale of goods case and the breach was not committed by the vendor, but rather by the purchaser. In these circumstances it is reasonable to assess the damages as at a date subsequent to the date of the breach.
[83] Section 99 of the Court of Justice Act, R.S.O. 1990, c. C.43 confers jurisdiction on the court to award damages in lieu of specific performance:
A court that has jurisdiction to grant an injunction or order specific performance may award damages in addition to, or in substitution for the, the injunction or specific performance.
[84] I do not take the Courts of Justice Act, nor the jurisprudence, to say that an action for specific performance is a pre-requisite to the right to claim and be entitled to damages assessed at a date subsequent to the date of breach.
[85] The case law supports that a plaintiff can claim for one or both (in the alternative). See e.g. Mayson v. Clouet, 1924 CanLII 585 (UK JCPC), [1924] A.C. 980 (P.C.) at 985.
[86] The other party has his option. He may still treat the contract as existing and sue for specific performance; or he may elect to hold the contract as at an end - i.e. no longer binding on him - while retaining the right to sue for damages in respect of the breach committed.
[87] That damages is “one of the options open to a vendor” was also upheld in Passmore Gates Developments Ltd. v. Chung, 1998 CanLII 6883 (ON CA), 116 O.A.C. 120 (C.A.).
[88] In Rinzema v. Morrow, 37 R.P.R. (4th) 275 (O.N. S.C.) there was no mention of specific performance, but damages were awarded that accounted for the resale price being $45,000 lower than the price the original purchaser agreed to pay before the deal fell through.
[89] Because the principle of “uniqueness” is applicable to agreements for the purchase or sale of real estate, different considerations apply in the assessment of damages. See Semelhago, at para. 14.
[90] While the plaintiff may well have had a legitimate claim to specific performance, it likely would have been impractical to proceed with such a claim. There was no way for the plaintiff to effectively insist on the closure of the transaction when the defendants did not have the necessary funds. In that circumstance, she had the option of treating the agreement as being at an end on September 23, 2013, or of proceeding with an action for damages, which is exactly what she did.
[91] Therefore, her damages are properly assessed as of the date of the successful completion of the sale of Sunvalley to Bradley, that is July 7, 2014.
[92] Those damages, including the difference in the sale price between the agreement with the defendants and the agreement with Bradley in the amount of $76,000, is $110,588.66 and includes municipal taxes, insurance, mortgage payments, and miscellaneous carrying and other costs in the amount of $34,588.66, as reflected in exhibit 2 (document brief No. 2).
[93] Other than the issue of mitigation, no issue was taken by the defendants regarding the damages or the evidence in support of same, save and except for the real estate commission. However, the evidence was clear that the reduced commission payable by the plaintiff on the August 10, 2013, agreement was specific to that transaction only. In any event, Martell was ultimately not the selling agent on the Bradley deal. The amount claimed by the plaintiff is proper and is not subject to any reduction.
Mitigation
[94] A plaintiff is not entitled to recover compensation for loss that could, by taking reasonable action, have been avoided. This rule rests partly on the principle of causation: losses that could reasonably have been avoided are caused by the plaintiff’s inaction rather than the by the defendant’s wrong and partly on a policy of avoiding economic waste.
See S.M. Waddams, The Law of Damages, (Toronto: Canada Law Book, 2008) (loose-leaf ed.), at para. 15.70.
See e.g. Dobson v. Winton & Robbins Ltd., 1959 CanLII 19 (SCC), [1959] S.C.R. 775; Wilcox Lake Enterprises Inc. v. Starr (1993), 30 R.P.R. (2d) 75 (Ont. Gen. Div.) (damages owed to the vendor reduced by 25% for failing to mitigate by not promptly putting the property back on the market).
[95] On the evidence, I find as a fact that the plaintiff did everything that she could to mitigate her damages. She relisted the house for sale on the day of the aborted closing. She reduced her price in an effort to secure a sale. She accepted a reasonable offer in January 2014 and that offer was actually for more money than what the defendants were going to pay.
[96] The January 2014 agreement did not conclude, through no fault of the plaintiff. The sole condition regarding a home inspection report was “in the Buyer’s sole and absolute discretion.” Whitehead did not waive the condition and the Whitehead Agreement was not completed.
[97] Ironically, the defendants’ agreement to sell South Shore, the Wice Agreement, contained the exact same home inspection clause which was not waived and resulted in the transaction of sale not closing.
[98] The proposition that the plaintiff was under an obligation to question Whitehead about her failure to discharge her own duty, as described earlier in these reasons at paragraph 53, is simply not tenable. The duty to mitigate involves the taking of reasonable steps to reduce loss. The actions of Whitehead are too remote to make the duties the defendants seek to impose on the plaintiff, and also on Whitehead who is not a party in this action, reasonable.”
[99] As well, the defendants’ contention that the price agreed upon for the plaintiff’s sale to Bradley was too low is not supported by the evidence.
[100] Therefore, the defendants’ arguments regarding mitigation fail.
[101] I turn now to the issues the defendants raised around the discharge of the plaintiff’s mortgage on Sunvalley and the unsigned undertaking.
Discharge of Mortgage and the Undertaking
[102] First, Mr. McAndrew’s letter of August 20, 2013, provides the basis for the plaintiff to find that there was an anticipatory breach of the contract. That being the case, there was no need to tender on September 23, 2013. On that date, the plaintiff was aware that the transaction was not going to close. Tender by her was not necessary. The plaintiff accepted the breach and proceeded to sue for damages for the breach.
[103] That being the case, the complaints about (a) not being in a position to provide clear title, and (b) the seller’s lawyer not providing a binding undertaking, are superfluous. The defendants did not intend to close the transaction, and they did not attempt to do so on September 23, 2013. Any defect in the documentation tendered by the plaintiff is irrelevant.
Conclusion
[104] The plaintiff shall have judgment against the defendants in the amount of $110,588.66, together with interest in accordance with the Courts of Justice Act.
[105] If the parties are unable to agree on costs, counsel may contact the trial coordinator within 20 days to arrange for a hearing before me. I will require bills of costs and copies of all offers of settlement. If an appointment to argue costs is not sought within 20 days, the parties will be deemed to have settled the issue of costs as between themselves.
The Honourable Madam Justice Louise L. Gauthier
Released: November 3, 2017
CITATION: Romanyszyn v. Baby, 2017 ONSC 6421
COURT FILE NO.: C-3435/14
DATE: 2017-11-03
ONTARIO
SUPERIOR COURT OF JUSTICE
BETWEEN:
Bettina Romanyszyn
Plaintiff
– and –
Gary Baby and Ann Marie Baby
Defendants
REASONS FOR JUDGMENT
Gauthier, J.
Released: November 3, 2017