COURT FILE NO.: 2338/17
DATE: 20180409
ONTARIO
SUPERIOR COURT OF JUSTICE
BETWEEN:
Kimko Inc.
Plaintiff
– and –
Marlena Abuaita
Defendant
Stephen Choy and Kwan Kit Mok, for the Plaintiff
Robert A. Haas, for the Defendant
HEARD: April 4, 2018
RADY J.
[1] This claim arises from an aborted real estate purchase and sale transaction. The plaintiff alleges that the defendant committed an anticipatory breach of an agreement of purchase and sale; it accepted the breach; and is now entitled to damages or specific performance. The defendant counterclaims for a declaration that the plaintiff breached the agreement and for damages.
[2] Both parties move for summary judgment – the plaintiff on the issue of liability and damages; the defendant on the issue of liability only, with damages being remitted to trial.
[3] Both parties filed affidavits. The plaintiff relies on the affidavit of Cheong Meng Ko, an officer and director of the plaintiff. The defendant filed an affidavit sworn by Ayman Elkhabaty, the defendant’s husband. I was also provided transcripts of the deponents’ cross examinations.
[4] Both parties rely particularly on correspondence that passed between their respective solicitors in support of their positions.
[5] At the outset of oral argument, I raised with counsel for the plaintiff a concern whether summary judgment would be appropriate on the issue of damages (assuming success on liability). By way of background, the plaintiff is seeking damages in the range of $200,000 comprised of:
• a loss of opportunity to resell the property at a higher price than it paid; and
• a loss of rental income and other consequential damages.
[6] In support of its damage claim, the plaintiff relies on the sale prices of properties it says are comparable to the subject property. It relies as well on information from the London and St. Thomas Association of Realtors respecting the brisk London market at the relevant time. It says that this evidence demonstrates that it could have flipped the property for a profit and estimates this loss to be between $165,000 and $195,000.
[7] With respect to the loss of rental income and other damages, the plaintiff’s representative deposes:
Additionally, as a result of Taiwo and Marlena’s anticipatory breach, Kimko has suffered consequential damages not only in relation to the loss of resale value of the Subject Property, but also in loss of tenants, present and future rental income, corporate advantage, opportunity over other owners contemplating or presently renting accommodations to students or other individuals, travel expenses, and legal fees. The total value of these consequential damages are difficult to calculate and require an evaluation of Kimko’s current, as well as future, losses, the full particulars of which will be disclosed during the course of this action. However, a reasonable estimate of said damages ranges from between $5,000 and $35,000.
[8] In response to the plaintiff’s alleged damage claim, the defendant filed her own list of properties that she said are more accurately comparable.
[9] The proffered evidence of damages struck me as inadequate. Expert opinion would undoubtedly be necessary on the issue of the property’s value on the retail market and whether the comparables are truly accurate. Further, reliance on comparables alone could be misleading – there are other methods for the valuation of real estate that provide necessary cross-checks. Moreover, the loss of rental income and other consequential damages are, by the plaintiff’s own admission, difficult to quantify and the particulars of which have yet to be disclosed. Further, if the plan was to resell the property, the claim for a future loss of rental income would have no basis.
[10] In any event, Mr. Choy conceded that the issue of damages must be left to trial, as the defendant had obviously already recognized. However, both parties urged me that the issue of liability could be determined summarily. Consequently, argument focused on it only.
[11] For the reasons that follow, I have concluded that it is inappropriate to grant partial summary judgment to either party.
[12] The Supreme Court of Canada in Hryniak v. Mauldin, 2014 SCC 7 signalled a culture change and encouraged a different approach to litigation through the expanded use of summary judgment and the court’s enhanced powers conferred by Rule 20. The power to grant summary judgment is discretionary, however, and requires an assessment of proportionality, efficiency and cost effectiveness.
[13] On this latter point, the recent decision of the Court of Appeal in Butera v. Chown, Cairns LLP, 2017 ONCA 783 is particularly instructive. The court noted that Hryniak did not address partial summary judgment except in the context of the expanded fact finding powers in the Rule.
[14] The court observed that pre-Hyrniak, partial summary judgment had limited availability and cited Corchis v. KPMG Peat Marwick Thorne, 2002 41811 (ON CA), [2002] O.J. No. 1437 (C.A.) and Gold Chance International Ltd. v. Daigle and Hancock, [2001] O.J. No. 1032 (S.C.J.). Justice Pepall writing for the court said:
29 The caution expressed pre-Hryniak in Corchis is equally applicable in the post-Hryniak world. In addition to the danger of duplicative or inconsistent findings considered in Baywood and CIBC, partial summary judgment raises further problems that are anathema to the stated objectives underlying Hryniak.
30 First, such motions cause the resolution of the main action to be delayed. Typically, an action does not progress in the face of a motion for partial summary judgment. A delay tactic, dressed as a request for partial summary judgment, may be used, albeit improperly, to cause an opposing party to expend time and legal fees on a motion that will not finally determine the action and, at best, will only resolve one element of the action. At worst, the result is only increased fees and delay. There is also always the possibility of an appeal.
31 Second, a motion for partial summary judgment may be very expensive. The provision for a presumptive cost award for an unsuccessful summary judgment motion that existed under the former summary judgment rule has been repealed, thereby removing a disincentive for bringing partial summary judgment motions.
32 Third, judges, who already face a significant responsibility addressing the increase in summary judgment motions that have flowed since Hryniak, are required to spend time hearing partial summary judgment motions and writing comprehensive reasons on an issue that does not dispose of the action.
33 Fourth, the record available at the hearing of a partial summary judgment motion will likely not be as expansive as the record of trial therefore increasing the danger of inconsistent findings.
[15] While there may be some attraction to essentially bifurcating the issues of liability and damages, in my view, it would be unwise in this case for many of the reasons articulated in Butera.
[16] Summary judgment in favour of one party or the other would undoubtedly delay the case, given their rights of appeal. It is entirely possible that there could be two appeals: one on the issue of liability; and later on damages. This cannot be said to be the most expeditious and least expensive way to proceed.
[17] Second, the determination of liability would not bring the litigation to an end. Another trial would be necessary – again, hardly expeditious and less expensive. Scheduling is also a challenge in the post-Jordan environment.
[18] Finally, as Justice Pepall noted, the record available may not be as expansive as at trial. I recognize that I am entitled to assume that I have all of the evidence before me on this motion that would be available at trial. However, that confidence would be misplaced here.
[19] I note that the essence of the dispute is whether the defendant repudiated the contract and the plaintiff accepted it. The determination of this issue will derive in part from an interpretation of counsel’s correspondence. The focus is necessarily on intention and justification.
[20] In Remedy Drug Store Co. v. Farnham, 2015 ONCA 576, the court reviewed the relevant principles as follows:
42 Repudiation occurs by the words or conduct of one party to a contract that show an intention not to be bound by the contract: Guarantee Co. of North America v. Gordon Capital Corp., 1999 664 (SCC), [1999] 3 S.C.R. 423 (S.C.C.), at para. 40. Anticipatory repudiation is essentially the same as repudiation simpliciter – the only different is timing. In her treatise, Canadian Contract Law, 3d ed. (Markham: LexisNexis Canada, 2012), at para. 618, Angela Swan begins her discussion of anticipatory repudiation by helpfully outlining the circumstances in which this issue typically arises:
The phrases “anticipatory breach” or “anticipatory repudiation” refer to the situation created when, before the time of performance has arrived, one party to a contract tells the other, either explicitly or as an inference from something said or done by the party, that, despite having no justification for its position, it is no longer prepared to perform its obligations under the contract. The statement may be made in a letter by any party’s solicitor to the other, by an oral statement by a party himself or herself to the other, or in any form of communication. [Emphasis original]
45 The test for anticipatory repudiation is an objective one: S.M. Waddams, the Law of Contracts, 6th ed. (Toronto: Canada Law Book, 2010), at para. 620. As Gillese J.A. wrote for this court in Spirent Communications of Ottawa Ltd. v Quake Technologies (Canada) Inc., 2008 ONCA 92, 88 O.R. (3d) 721 (Ont. C.A.), at para. 37: “To assess whether the party in breach has evinced such an intention [to repudiate the contract], the court is to ask whether a reasonable person would conclude that the breaching party no longer intends to be bound by it.”
46 In objectively construing the purported breaching party’s intention, the surrounding circumstances must be considered. In White v. E.B.F. Manufacturing Ltd., 2005 NSCA 167, 239 N.S.R. (2d) 270 (N.S. C.A.), Saunders J.A. wrote, at para. 89: “Proof of such an intention requires an investigation into the nature of the contract, the attendant circumstances, and the motives which prompted the breach.” Earlier this year, Cromwell J., in his concurring opinion in Potter, confirmed the importance of considering the surrounding circumstances. At para. 164, Cromwell J. wrote: “As Lord Scarman put it in Woodar Investment Development Ltd. v. Wimpey Construction U.K. Ltd., [1980] 1 A11 E.R. 571 (U.K. H.L.), at p. 590, the trial judge and the Court of Appeal in this case were ‘concentrating too much attention on one act isolated from its surrounding circumstances and failing to pay proper regard to the impact of the party’s conduct on the other party’.”
[21] In this case, there is little evidence regarding the surrounding circumstances. And notably, there are no affidavits from either solicitor on the issue. I was told during the course of oral submissions that the solicitors had conversations respecting the situation but any detail is not found in the evidentiary record. Consequently, there is no evidence before me about the nature or content of those conversations, which might bear on the outcome at trial.
[22] Further, there is inadequate evidence on the issue of justification. Prior to closing, the defendant properly disclosed to the plaintiff that the property had sustained water damage, the nature and extent of which is unclear. Defendant’s counsel advised counsel opposite that her client could not close the transaction. The plaintiff purported to accept what it characterized as anticipatory breach. There followed a series of correspondence in which the defendant advised that she was in fact ready and willing to close the transaction. The plaintiff subsequently seemed amenable to inspecting the property, presumably in contemplation of closing. Consequently, there are genuine issues about intention and justification.
[23] Finally, having determined that there are genuine issues, I do not have the necessary confidence that the expanded fact finding powers under the Rule, including a mini-trial, would be the fair and just approach.
[24] For all of these reasons, partial summary judgment in favour of either party is not appropriate. The motion and cross motion are dismissed.
[25] The parties will undoubtedly recognize that neither was successful. If they wish to address costs, however, I will receive brief written submissions by April 30, 2018.
“Justice H.A. Rady”
Justice H. A. Rady
Released: April 9, 2018
COURT FILE NO.: 2338/17
DATE: 20180409
ONTARIO
SUPERIOR COURT OF JUSTICE
BETWEEN:
Kimko Inc.
– and –
Marlena Abuaita
REASONS FOR JUDGMENT
Rady J.
Released: April 9, 2018