COURT FILE NO.: CV-17-572841
DATE: 20180530
ONTARIO
SUPERIOR COURT OF JUSTICE
BETWEEN:
ROBERT MAGGIACOMO and GRETNA JOHANNE MAGGIACOMO
Plaintiffs
– and –
MAZLUM YUMUSAK and HASAN YUMUSAK
Defendants
Bradley Phillips, for the Plaintiffs
David S. Steinberg, for the Defendants
HEARD: May 11, 2018
reasons for decision
W. MATHESON J.
[1] The defendant Hasan Yumusak moves for summary judgment, dismissing this action as against him. The underlying dispute arises from a failed agreement to purchase the plaintiffs’ real property. The named purchaser is the moving party’s son, the defendant Mazlum Yumusak. The son concedes breach of the agreement of purchase and sale and he has already forfeited his $100,000 deposit. The only remaining issue is damages.
[2] The plaintiffs attest that they are concerned that the defendant son does not have the funds to pay the ultimate judgment arising from the breach of the agreement of purchase and sale. The plaintiffs have also sued his father.
Events giving rise to breach of the APS
[3] By agreement of purchase and sale dated April 29, 2017 (the “APS”), the plaintiffs agreed to sell their real property on Rockview Gardens in Vaughan for $2,300,000. The named purchaser was the defendant Mazlum Yumusak and he paid the deposit of $100,000.
[4] There is no issue that it was the moving party’s intention to help his son with the funds needed to complete the purchase. The moving party put his plan forward in his affidavit in support of this motion. He planned to sell his own house, taking advantage of the rise in real estate prices, and lend a significant portion of the proceeds to his son so that his son could buy his first house. However, the Toronto housing market experienced a sharp decline in 2017 and, despite a price reduction, the moving party’s house did not sell. As a result, the son did not have the necessary funds to close. Ultimately, the plaintiffs sold to someone else at a lower price.
Condition added to the APS
[5] When the plaintiffs were negotiating with Mazlum, they were concerned that he was young and single and still living at home. This would be his first house. They were concerned that he might not be able to get the financing needed to close. The plaintiffs raised their concern with their real estate agent, who told them that Mazlum’s father was planning to sell his house and help his son with the financing.
[6] After receiving the information about the father’s involvement, the plaintiffs remained concerned about the son as purchaser. They added a condition to the APS so they could address their concern by getting legal advice from their lawyer. The condition was as follows:
This offer is conditional upon the approval of the terms and conditions in this agreement of purchase and sale, by the Seller’s solicitor, within 2 (two) banking days following the acceptance of this offer. Unless the Seller gives notice in writing to the buyer that this condition has been fulfilled, this offer shall be null and void and the deposit will be returned to the buyer in full without deductions. This condition is included for the sole benefit of the Seller and may be waived by the Seller at the Seller’s sole option within that time period stated herein. [Emphasis added.]
[7] The plaintiffs admit that under this condition they had the right to terminate the APS if they did not want to proceed with the son as the purchaser. They did not do so.
[8] Pursuant to this condition, the plaintiffs discussed their concerns about the son as purchaser with their lawyer. They told their lawyer what they had learned about the father’s role. Afterward, they did not terminate the APS or ask for any changes. Instead, they waived the above condition after obtaining the legal advice.
Two proceedings
[9] After the APS did not close, the plaintiffs commenced not one but two proceedings:
(i) The plaintiffs commenced a proceeding against the son only, for the $100,000 deposit. Mazlum agreed that those funds be released to the plaintiffs.
(ii) The plaintiffs also commenced this separate action against both father and son.
[10] In this action, breach of the APS is now admitted and the only issue remaining in the breach of contract claim against Mazlum is the quantification of damages above and beyond the $100,000 the plaintiffs have already received from him.
[11] The plaintiffs attest on this motion that they are concerned that the son does not have the funds to pay the ultimate judgment. They claim against the moving party father, alleging that his son was acting as his agent and he is the true purchaser. In the alternative, they claim that he induced the breach of the APS.
[12] On this motion for summary judgment, all of the parties have delivered affidavits and all have been cross-examined.
Analysis
[13] The core principles applicable to motions for summary judgment are not disputed. The relevant portion of subrule 20.04(2) of the Rules of Civil Procedure provides that the court shall grant summary judgment if the court is satisfied that there is no genuine issue requiring a trial with respect to a claim or a defence. As set out in Hryniak v. Mauldin, 2014 SCC 7, [2014] 1 S.C.R. 87, at para. 49, there will be no genuine issue requiring a trial when the judge is able to reach a fair and just determination on the merits using the summary judgment process. This will be the case when the process: “(1) allows the judge to make the necessary findings of fact, (2) allows the judge to apply the law to the facts, and (3) is a proportionate, more expeditious and less expensive means to achieve a just result.”
[14] On a motion for summary judgment, the judge should first determine if there is a genuine issue requiring a trial based only on the evidence before him or her without using the fact-finding powers in subrule 20.04(2.1). If there appears to be a genuine issue requiring a trial, then the motion judge may, at his or her discretion: (1) weigh the evidence, (2) evaluate the credibility of a deponent, or (3) draw any reasonable inference from the evidence unless it is in the “interest of justice” for these powers to be exercised only at trial: Hryniak, at para. 66. The proportionality principle means that “the best forum for resolving a dispute is not always that with the most painstaking procedure”: Hryniak, at para. 28.
[15] To defeat the use of Rule 20, the responding parties must show that there is a genuine issue that requires a trial. The responding parties must put their best foot forward: Sweda Farms Ltd. v. Egg Farmers of Ontario, 2014 ONSC 1200, at para. 26, aff’d 2014 ONCA 878.
[16] Where the motion is for partial summary judgment, the court should also consider the risk of duplicative or inconsistent findings, and consider the litigation as a whole and whether partial summary judgment would serve the objectives of proportionality, efficiency and cost effectiveness: Butera v. Chown, Cairns LLP, 2017 ONCA 783, 137 O.R. (3d) 561, at para. 38. In Butera, the Court of Appeal observed that motions for partial summary judgment should be rare.
[17] Within the context of these general principles, the issues on this motion are as follows:
(1) is there a genuine issue requiring a trial of the claims against the moving party defendant based on agency or inducing breach of contract; and,
(2) are those claims intertwined with the claims against the other defendant such that there is either a real risk of duplicative or inconsistent findings, or, considering the litigation as a whole, partial summary judgment would not serve the objectives of proportionality, efficiency and cost effectiveness.
Agency
[18] The main claim against the moving party is based on agency. There is no dispute about the applicable agency law. The following excerpt from 1196303 Ontario Inc. v. Glen Grove Suites Inc., 2015 ONCA 580, 337 O.A.C. 85, cited by the plaintiffs, is a helpful summary:
[69] An oft-cited definition of agency comes from Gerald Fridman, in Canadian Agency Law, 2d ed. (Markham: LexisNexis, 2012), at p. 4:
Agency is the relationship that exists between two persons when one, called the agent, is considered in law to represent the other, called the principal, in such a way as to be able to affect the principal’s legal position by the making of contracts or the disposition of property.
[70] In order for a consensual agency relationship to exist, both principal and agent must agree to the relationship, and the principal must give the agent the authority to affect the latter’s legal position:
[71] While agency is often created by an express contract, setting out the scope of the agent’s authority, the creation of an agency relationship may be implied from the conduct or situation of the parties. Whether an agency relationship exists is ultimately a question of fact, to be determined in the light of the surrounding circumstances:
[Emphasis added; citations and footnote omitted.]
[19] The plaintiffs further rely of the following statement from Bowstead on Agency, noted with approval in Rockland Industries Inc. v. Amerada Minerals Corp. of Canada Ltd., 1980 CanLII 188 (SCC), [1980] 2 S.C.R. 2, at p. 15:
Where a principal, by words or conduct, represents or permits it to be represented that an agent is authorized to act on his behalf, he is bound by the acts of the agent, notwithstanding the determination of authority otherwise than by the death or bankruptcy of the principal, to the same extent as he would have been if the authority had not been determined, with respect to any third person dealing with the agent on the faith of any such representation, without notice of the determination of his authority.
[20] In this case, there were no express representations that the son was acting as agent, made by father or son, before or after the APS was signed.
[21] The plaintiffs admit they knew who they were dealing with as purchaser, so much so that they inserted a special condition in the APS to obtain legal advice in that regard. After that legal advice was received, they waived the condition. The plaintiffs submit, however, that an agency relationship should be implied between the father and son, based upon conduct. They submit that the son was purchasing as agent for his father. Both father and son attest that the son was the intended purchaser.
[22] The relationship between principal and agent is contractual. A finding of agency may be implied “where the circumstances clearly indicate that the principal has given authority to another to act on his behalf”: Fridman, Canadian Agency Law, at p. 40.
[23] The plaintiffs rely on 1196303 Ontario Inc. v. Glen Grove Suites Inc. as an illustration of a case in which agency was implied by conduct. I agree that agency can be implied by conduct, but there is a marked difference between the conduct at issue in 1196303 Ontario Inc. and this case. 1196303 Ontario Inc. addressed a very complex set of relationships involving many legal entities, interrelated corporate steps, multiple transactions, related estates issues and insolvency proceedings and a specific settlement and court approval. In contrast, this case relates to a standard type of residential real estate transaction between a seller and purchaser.
[24] With respect to the conduct relied upon by the plaintiffs in this case, most of the relevant facts are not disputed. There is no issue that the father intended to provide substantial financing for his son’s purchase. He acknowledges that his son was only able to enter into the agreement as a result of his willingness to lend him money. Further, he acknowledges most of the conduct the plaintiffs rely on beyond providing financing, including attending to view the house with his son before the APS, attending on and paying for the home inspection post-APS and being involved when his son was seeking an extension. The father and son used the same real estate agent. The father provided advice to his son and planned to provide financial help. The evidence is that it is commonplace in the defendants’ traditional Kurdish culture for a son to consult with his father when making important decisions.
[25] It is also not disputed that it was the son who paid the $100,000 deposit, not the father, and it was the son who entered into the Buyer Representation Agreement, not the father.
[26] Although the father had come to see the plaintiffs’ house with his son and a real estate agent at a pre-sale viewing, the plaintiffs did not speak with him pre-APS. It is agreed that there were no representations by the father at all pre-APS and none by either the father or the son that the son was acting as his father’s agent on the purchase, pre- or post-APS.
[27] Although the two real estate agents involved do not confirm the complete course of communications, there is no dispute that the plaintiffs were told, pre-APS, that the father was providing substantial financing. The plan to provide financing is also admitted. I do not agree with the suggestion that the court should imply that someone who agrees to provide debt financing to a purchaser of a real property is, therefore, the principal, and hence the actual purchaser of the property.
[28] The above undisputed facts do not demonstrate that the father and son intended to create an agency relationship between them.
[29] There are some factual disputes on this motion. The plaintiffs say that the defendants were planning to move the whole family in to the property, which is denied. The father says he planned to buy another smaller house for the rest of the family. He did make an offer on another house in the neighbourhood, albeit unsuccessfully. As well, at the inspection the plaintiffs say that the father discussed making changes within the house itself and wanted the outdoor firewood removed and early access to the property regarding trees for the property. The father agrees that he discussed trees on the property because, given his background as a landscaper, he planned a gift of trees.
[30] For the purpose of this summary judgment motion, and the decision about whether a trial is required to fairly and justly decide the claims against the father, I have given the plaintiffs the benefit of accepting their account of any disputed facts regarding conduct that they submit amounts to agency. I have considered whether, on that basis, the claim for agency would be successful. I conclude that it would fail. There is therefore no need for a trial or other process to determine the disputed facts that have been put forward as relevant to agency.
[31] An agency relationship should not be implied in the circumstances of this case. The facts not only fail to support that conclusion, they amply support the straightforward roles as set out in the APS. It was the son who paid the deposit, which was substantial, from his own funds. It was the son who entered into the Buyer Representation Agreement. There were no representations that it was an agency relationship. The father’s financing role falls well short of what would be required to imply agency. I agree that post-APS conduct is also relevant as is the intention to move in the home, but this conduct does not establish that an agency relationship should be implied. Nor does a father attending to view a house with his son and otherwise assisting his son with advice on his first home purchase. The conduct relied upon by the plaintiffs does not indicate that the alleged principal had given authority to another to act on his behalf.
Inducing breach of contract
[32] Again, there is no issue about the applicable law with respect to this alternative claim against the moving party father. The four-part test for this intentional tort was set out in Persaud v. Telus Corporation, 2017 ONCA 479, at para. 26, as follows:
Four elements must be established by the plaintiff:
The defendant had knowledge of the contract between the plaintiff and the third party;
The defendant's conduct was intended to cause the third party to breach the contract;
The defendant's conduct caused the third party to breach the contract; and
The plaintiff suffered damages as a result of the breach.
See Correia v. Canac Kitchens, 2008 ONCA 506, 91 O.R. (3d) 353, at para. 99; 1670002 Ontario Limited (Canadian Professional Recruiters) v. Redtree Contract Carriers Ltd., 2014 ONCA 501, 323 O.A.C. 128, at para. 14.
[33] The intentional component of the tort is the focus of the argument before me. As set out in Correia v. Canac Kitchens, above, at para. 100, “it is not enough that the loss was a foreseeable consequence of the defendant’s conduct; to be actionable under this tort, the loss must have been the intended result.”
[34] The plaintiffs have not been able to point to any evidence showing that the plaintiffs’ loss was the father’s intended result. On the contrary, the father intended to provide the financing and it was the downturn in the real estate market that caused the problem. I reject the suggestion that where financing does not come through, that is sufficient to make the planned lender liable for inducing breach of contract.
Summary judgment
[35] For the reasons set out above, I conclude that I can fairly and justly decide the issues on this summary judgment motion, without either exercising the extended powers under Rule 20 or requiring a trial. There remains the issue of whether I should dismiss this motion because the action against the son is still going forward.
[36] The claim against the son is for breach of contract, specifically breach of the APS. There is no longer any issue that the APS was breached. The breach is admitted. The only issue that remains is the quantification of damages.
[37] The plaintiffs submit that there is a risk of inconsistent factual findings because the post-APS discussions regarding an extension agreement may be relevant to mitigation of damages and the father was part of those steps. However, accepting the plaintiffs’ sworn testimony about those negotiations for the purposes of this motion, there is no material risk of inconsistent findings. The plaintiffs’ evidence is not inconsistent with the finding that the son was not acting as his father’s agent.
[38] In accordance with Butera, I have also considered the litigation as a whole. I conclude that in this case granting summary judgment would serve, not defeat, the objectives of proportionality, efficiency and cost effectiveness. This is not a case where a defendant is seeking to dismiss only one of several claims against the defendant, who would nonetheless remain in the action. Here, a defendant would be removed, resulting in a more focused and efficient action, going forward on the issue of damages only. For better or worse, it is not unusual for a plaintiff to sue more defendants in the hopes that there will be more financial resources available to pay a damages award. But it is not efficient nor cost effective to keep additional defendants in an action despite having losing claims against them. In this case, the claims against the father can be bifurcated and dealt with now.
[39] The dismissal of the action against the moving party at this stage is fair and just, as well as proportional, efficient and cost-effective.
Order
[40] The motion for summary judgment is therefore granted.
[41] If the parties are unable to agree on costs, they shall make their submissions in writing as follows: the moving party’s brief written submissions plus a costs outline shall be delivered by June 11, 2018; the plaintiffs’ brief written submissions plus a costs outline, if any, shall be delivered by June 21, 2018.
Justice W. Matheson
Released: May 30, 2018
COURT FILE NO.: CV-17-572841
DATE: 20180530
ONTARIO
SUPERIOR COURT OF JUSTICE
BETWEEN:
ROBERT MAGGIACOMO and GRETNA JOHANNE MAGGIACOMO
Plaintiffs
– and –
MAZLUM YUMUSAK and HASAN YUMUSAK
Defendants
REASONS FOR decision
MATHESON J.
Released: May 30, 2018