CITATION: Ren v. Zhang, 2017 ONSC 7434
COURT FILE NO.: CV-17-576614
DATE: 20171213
ONTARIO
SUPERIOR COURT OF JUSTICE
BETWEEN:
HAO REN and XIUMEI YU
Plaintiff
– and –
HUI ZHANG
Defendant
Monica Peters, for the Plaintiffs
Anna Wong, for the Defendant
HEARD: December 8, 2017
ENDORSEMENT
DIAMOND J.:
[1] In or around January, 2017, the plaintiffs and the defendant entered into an Agreement of Purchase and Sale (“the Agreement”). Under the Agreement, the plaintiffs agreed to purchase the defendant’s property municipally known as 1773 Pilgrims Way, Oakville, Ontario (“the Property”) for the sum of $1,128,000.00. The closing date was April 14, 2017, and the plaintiffs agreed to pay a $75,000.00 deposit.
[2] The transaction never closed. By Statement of Claim issued on June 6, 2017 the plaintiffs sued the defendant for specific performance of the Agreement, or in the alternative, damages for breach of contract in the amount of $250,000.00.
[3] Since the aborted closing of the transaction, the parties (through their respective lawyers) attempted to negotiate a resolution of the dispute. On April 28, 2017, counsel for the plaintiffs delivered a Without Prejudice letter to counsel for the defendant which enclosed a “final offer to settle this matter”. The relevant excerpts from that correspondence are as follows (my emphasis in bold):
“I write in response to your letter of April 27, 2017. We can continue to debate the merits of the action, although I expect that we will have ample opportunity to do so in court. My client maintains that there is clear evidence in the WeChat history that the parties reached an agreement with respect to my client moving into the property. Your client agreed to waive the rental fee in exchange for my client paying property taxes and utilities. They did not specify a certain move in date but by no means did my client move in without your client’s permission.
My client has incurred damages as well in that my client was forced to take an advance of the mortgage proceeds in order to tender those funds and has incurred legal costs and interest associated therewith. If my client is awarded damages instead of specific performance, given the rising market, the cost of my client to find a replacement property could escalate as well. Furthermore, there is a potential of my client to be exposed to the new non-residence speculation tax if my client enters into a new Agreement of Purchase and Sale at his time, which will escalate his damages.
In a final offer to settle this matter, we are willing to agree to the following:
(a) The purchase price in the existing Agreement of Purchase and Sale shall be amended to be increased by $25,000.00;
(b) The deposit cheque shall be returned to your office within 3 days of acceptance of the Offer;
(c) The requisition date shall be May 15, 2017;
(d) The closing date shall be amended to be May 30th, 2017;
(e) The balance of my client’s $10,00.00 deposit which is in your trust account shall be applied to any outstanding rental obligations for the month April and May and any amount remaining thereafter shall be applied as a credit on the Statement of Adjustments;
(f) My client will not execute any indemnification; and
(g) We are agreeable to the parties executing Mutual Releases as part of the closing documentation. My client’s Release will be limited to matters to the date of closing. We cannot recommend a Release with respect to such matters as, for example, latent defects or misrepresentations with respect to the property.
I will await your response before moving forward with any materials for a Certificate of Pending Litigation.”
[4] As set out above, the terms of that “final offer to settle” included an increased purchase price, a new requisition date and a new closing date. It was not accepted by the defendant.
[5] By letter dated June 28, 2017, counsel for the plaintiffs withdrew the previous “final offer to settle”. The entire text of that June 28, 2017 is reproduced below (my emphasis in bold):
“Further to our telephone conversation on June 6, 2017, I’ve now had the opportunity to speak with my client regarding your client’s offer to sell the Property to Mr. Ren in exchange for payment in the amount of $45,000.00 in addition to the agreed-upon purchase price of $1,128,000.00. My client rejects Ms. Zhang’s proposal on the basis that your client has no legal entitlement to said payment, and zero quantifiable damages. Your claim that the housing prices in the area have increased since the scheduled closing date is both inaccurate, and irrelevant. Ms. Zhang is not entitled to any increase in the value of the Property after March 14, 2017, since, had Ms. Zhang fulfilled her terms of the contract, she would have transferred her interest in the property as of that date.
Your client’s threat to commence an Eviction Application with the Landlord and Tenant Board is without merit. The Landlord and Tenant Board is restricted from accepting applications of disputes already commenced in Superior Court. In addition, the within dispute clearly lies outside the jurisdictions of the Landlord and Tenant Board since the issue of eviction cannot be considered in isolation of the enforceability of the Agreement of Purchase and Sale.
I further confirm that my client’s previous offer to pay an additional $25,000.00 to purchase the Property is withdrawn. My client remains ready, willing and able to purchase the Property for $1,128,000.00, and we continue to encourage said resolution of the within dispute. Alternatively, my client has agreed to vacate the Property and dismiss his claim against Ms. Zhang in return for a settlement payment in the sum of $45,000.00.
Our proposed settlement offer of payment to Mr. Ren represents only a fraction of the damages Mr. Ren has and will incur as a result of Ms. Zhang’s breach of the Agreement of Purchase and Sale. Mr. Ren sustained losses by hastily selling his property and accepting a reduced purchase price in order to have sufficient funds to purchase the Property on the scheduled closing date of March 14, 2017. Had Mr. Ren known Ms. Zhang would refuse the sale, Mr. Ren would have carried out his original plan to keep his property for an additional year in order to perform renovations and upgrades which would have yielded a higher purchase price. Mr. Ren has also incurred extensive legal fees as a result of having to bring a motion to register a Certificate Pending Litigation due to imminent threat of your client relisting and selling the property.
Please advise your client that if she fails to accept the within offer to settle, Mr. Ren intends to vigorously pursue his claim for specific performance or in the alternative damages in the amount of $250,000.00 plus legal fees which are equal to $20,000.00 and continue to accrue.
We appreciate your stated intention to resolve this matter amicably, and without the parties incurring further legal fees; however, we feel that a settlement will only be possible if your client first accepts the real confines to her legal entitlement, the financial consequences of opposing the Claim, and her paltry gain in the improbable event she successfully defends the within Action.
I have attached our Statement of Claim, and ask that you please confirm acceptance of same on behalf of your client and email the back page to us. We look forward to working with you to resolve this matter; however, if a settlement cannot be reached we expect you to deliver a defence by July 10, 2017, given that your client has had the Claim since June 14, 2017.”
[6] By letter dated July 11, 2017 (the day after the deadline set by counsel for the plaintiffs for the delivery of a Statement of Defence), counsel for the defendant advised as follows (my emphasis in bold):
“Our client accepts your offer to settle the action on a without costs basis by selling the subject property to your client for $1,128,000.00.
We propose that the transaction close on August 8, 2017, and that the Plaintiffs will take out an order to dismiss the action forthwith after closing.
Please provide the name and contact information of your clients’ real estate lawyer who will act on the transaction.”
[7] Counsel for the defendant did not hear anything further from counsel for the plaintiffs until July 28, 2017 when counsel for the plaintiffs delivered an email stating, inter alia, as follows (my emphasis in bold):
“The statement in my July 5th letter that “my client remains ready, willing and able to purchase the Property for $1,128,000.00, and we continue to encourage said resolution of the within dispute”, is not a settlement offer, and is certainly one that cannot be enforced by the courts for the following reasons:
(1) The statement lacks sufficient terms necessary to constitute a binding agreement, such as the closing date.
(2) The statement does not offer your client a release of our claim in exchange for the sale of the property.
(3) This statement does not take into account the extensive legal fees my client has incurred as a result of your client refusal to close on April 14, 2017. In addition, it also does not take into account the damages incurred by my client as a result of the increased cost of lending since March 2017. If your client sincerely wishes to settle this matter, my client requires set off for his above-mentioned costs and damages.
(4) Enforcement of the settlement is tantamount to specific performance which the court would NEVER award in these circumstances.
Given the negativity and ill will that has gone on for the past five months, my client has decided he is no longer willing to purchase the property. My client is prepared to remove the CPL and dismiss the claim against your client on a without costs basis, on consent of the parties.”
[8] The defendant now brings a motion under Rule 49.09 of the Rules of Civil Procedure for an order granting judgment in accordance with what the defendant submits is a binding settlement agreement between the parties.
[9] The plaintiffs resist the motion on two primary grounds:
(a) The June 28, 2017 correspondence did not amount to an offer to settle capable of being accepted and binding the parties to a settlement agreement; and
(b) If the June 28, 2017 letter did constitute an offer to settle, it was not open for acceptance after July 10, 2017 and was accepted after the offer to settle had expired.
[10] Starting with the latter argument, I do not agree with the defendant. If the June 28, 2017 letter did contain an offer to settle, that offer did not expire on July 10, 2017. There was no formal expiry date set out in the letter, and the fact that counsel for the plaintiffs demanded the delivery of the Statement of Defence did not impact the validity or time limit of any purported offer. Litigation may always continue even though settlements are not reached. A demand to deliver a Statement of Defence does not, in and of itself, cause an offer to settle to expire.
[11] Dealing with the first argument, there is no dispute that it remains sound judicial policy to promote resolution between parties and enforce the principle of finality, as it contributes to the administration of justice. As held by Justice Karakatsanis (as she then was) in Donaghy v. Scotia Capital Inc. 2004 CanLII 7702, appeal dismissed, 2009 ONCA 40, “the principle of finality is an important principle. Settlements entered into with the assistance of counsel should be upheld except in the clearest of cases and in exceptional cases.”
[12] The difficulty I have with the defendant’s position is that the wording chosen by counsel for the plaintiffs in her June 28, 2017 letter is not clear enough to form the basis of a precise, unambiguous offer to settle. There is no dispute that the plaintiffs’ previous offer was withdrawn, and the plaintiffs remained “ready, willing and able to” buy the defendant’s property for $1,128,000.00. The defendant argues that the terms of the plaintiffs’ offer to settle were two-fold and in the alternative: either (i) the defendant would agree to sell the property for the original $1,128,000.00 purchase price, or (ii) the defendant would pay the plaintiffs the sum of $45,000.00 in exchange for them vacating the property and dismissing the proceeding.
[13] While I am sympathetic to the defendants’ position, I believe that the wording used by counsel for the plaintiffs (while arguably poorly chosen) does not amount to a two-fold, alternative offer to settle. The plaintiffs remained “ready, willing and able” to purchase the property for $1,128,000.00, and “continue to encourage said resolution of the dispute”. What was proposed in the alternative was a “settlement payment in the sum of $45,000.00”.
[14] In my view, the $45,000.00 payment was the only term of an offer to settle open for and capable of acceptance. This is highlighted by the fact that counsel for the plaintiffs referred to her clients’ “proposed settlement offer of payment to the defendant” representing only a fraction of the damages the defendant would incur if the proceeding continued. If the defendant wished to sell the property to the plaintiffs for $1,128,000.00, further discussions were necessary.
[15] For these reasons, the defendant’s motion is dismissed. I would urge the parties to try and resolve the costs of this motion. If such efforts prove unsuccessful, the plaintiffs may serve and file written costs submissions (totaling no more than four pages including a Costs Outline) within 10 business days of the release of this Endorsement.
[16] The defendant shall thereafter serve and file responding costs submissions (also totaling no more than four pages including a Costs Outline) within 10 business days of the receipt of the respondents’ costs submissions.
Diamond J.
Released: December 13, 2017
CITATION: Ren v. Zhang, 2017 ONSC 7434
COURT FILE NO.: CV-17-576614
DATE: 20171213
ONTARIO
SUPERIOR COURT OF JUSTICE
BETWEEN:
HAO REN and XIUMEI YU
Plaintiff
– and –
HUI ZHANG
Defendant
ENDORSEMENT
Diamond J.
Released: December 13, 2017