COURT FILE NO.: CV-17-581271

DATE: 20180914

ONTARIO

SUPERIOR COURT OF JUSTICE

BETWEEN:

Mark Azzarello and Eliza Azzarello Plaintiff

– and –

Ahmed Sabri Shawqi Defendant

Peter D. Woloshyn, for the Plaintiff

Shahzad Siddiqui, for the Defendant

HEARD: June 18, 2018

Reasons for decision

nishikawa J.

Overview

[1] The Plaintiffs, Mark Azzarello and Eliza Azzarello, entered into an Agreement of Purchase and Sale (the “Agreement”) with the Defendant, Ahmed Sabri Shawqi, for their home at 3111 Seabright Drive, Mississauga, Ontario (the “Property”). The Plaintiffs bring this motion for summary judgment against the Defendant, for breach of contract and repudiation of the Agreement.

[2] For the reasons that follow, I grant the Plaintiffs’ motion for summary judgment. The Defendant was unable to complete the transaction, in breach of the Agreement. The Plaintiffs are entitled to the deposit, and to damages caused by the Defendant’s breach.

Factual Background

The Agreement of Purchase and Sale

[3] On March 19, 2017 the Plaintiffs listed their house for sale at a $1,398,000.00 list price.

[4] The Plaintiffs received multiple offers. On March 27, 2017 they entered into an Agreement of Purchase and Sale with the Defendant, Mr. Shawqi, for a price of $1,555,000. The transaction was to close on June 28, 2017. Mr. Shawqi paid a $75,000.00 deposit to Re/Max West Realty on March 28, 2017.

[5] The Plaintiffs also entered into an agreement to purchase a new home near Hamilton, Ontario on March 8, 2017. The purchase price was $1,375,000.00. That transaction was scheduled to close on June 1, 2017. The Plaintiffs took out a bridge loan to complete their purchase and pay for renovations on the new home.

[6] Mr. Shawqi states that he intended the Property to be a wedding gift for his daughter. His real estate agent was Ghassan Saeed from Sutton Group Quantum Realty Inc. Mr. Shawqi has brought a third party claim against Mr. Saeed and a mortgage broker, Noor Yousif, who was working with Mr. Saeed.

Events Leading Up to the Closing Date

[7] On May 30, 2017 the Plaintiffs’ real estate lawyer, Peter Ferreira, received a requisition letter, and other documents from the Defendant’s real estate lawyer, Joshua David. Mr. Ferreira answered the requisition letter the following day.

[8] In June 2017 Mr. Ferreira obtained discharge statements for the first and second mortgages, and the bridge loan on the Plaintiffs’ house. On June 19, 2017 Mr. Ferreira sent Mr. David a closing package by courier, which included a Direction re Funds.

[9] Two days before the closing date, on June 26, 2017, Mr. Ferreira received a call from Sarah Razzouk, who advised that she was taking over from Mr. David and would be representing the Defendant on the Property purchase. That same day, Ms. Razzouk wrote to Mr. Ferreira requesting an extension of the closing date to July 7, 2017. Ms. Razzouk further stated that she would pick up the closing package from Mr. David’s office.

[10] On June 28, 2017 Ms. Razzouk sent a further letter requesting an extension of the closing date to July 10, 2017. The following day, Ms. Razzouk sent Mr. Ferreira a requisition letter and vendor documents relating to the purchase.

[11] On July 1, 2017 the Plaintiffs agreed to extend the closing date to July 10, 2017 on the condition that Mr. Shawqi pay the interest on their existing mortgage, line of credit, and bridge loan. Ms. Razzouk wrote back accepting those terms.

[12] On July 7, 2017 Mr. Ferreira faxed Ms. Razzouk a revised statement of adjustments, a direction, and a request for an update on the status of the closing.

[13] A few days later, on July 10, 2017, Ms. Razzouk sent a fax message stating: “please be advised that I do not have mortgage instructions as of yet. As such we will require an extension until July 13, 2017.” A second fax message sent that day reiterated that she did not have instructions and that “[a]s of yet I do not know when. Client is not communicating with us anymore.”

[14] The Plaintiffs, through Mr. Ferreira, offered to extend the closing date to July 13, 2017 on terms which included payment of the Plaintiffs’ costs and a further $75,000.00 deposit to be received by 4:00 p.m. on July 11, 2017, failing which, the Defendant would be deemed to be in breach of the Agreement. The Plaintiffs received no response.

[15] Mr. Shawqi applied for a mortgage at TD Bank and Scotiabank, but was declined. When it appeared that he would have no financing to complete the purchase, he advised Mr. Saeed that he would not be able to purchase the Property.

[16] The Defendant claims that at some point after he entered into the Agreement and before the closing date, ICICI Bank contacted him to advise that they were investigating a mortgage fraud. Mr. Shawqi alleges that Noor Yousif, the mortgage agent working with Mr. Saeed, submitted fraudulent documents to apply for a mortgage in his name. According to Mr. Shawqi, ICICI Bank advised him that he would be participating in a fraud if he obtained a mortgage from any institution where fraudulent documents were submitted.

The Sale to a Third Party

[17] On July 12, 2017 the Plaintiffs re-listed the Property for sale at a $1,398,000.00 list price. Since Mr. and Ms. Azzarello had moved to their new home, the Property was staged for sale.

[18] On July 27, 2017 Mr. Ferreira received a letter dated July 24, 2017 from a lawyer named Charbel Constantine, who stated that he was acting for Mr. Shawqi. Mr. Constantine stated that Mr. Shawqi received a mortgage approval from CIBC, and that due to an appraisal of the Property he was seeking a ten percent purchase price reduction.

[19] Mr. and Ms. Azzarello did not initially respond to Mr. Constantine’s letter. On August 11, 2017 Mr. Ferreira wrote to Mr. Constantine requesting the Defendant’s position on a potential resolution of the matter.

[20] On September 5, 2017 the Plaintiffs lowered the list price to $1,349,000.00. They entered into a conditional agreement of purchase and sale with a new purchaser for a price of $1,280,000.00 on September 6, 2017. The sale was confirmed on September 15, 2017 and was scheduled to close on November 15, 2017.

Issues

[21] The motion and cross-motion for summary judgment raise the following issues:

(i) Did the Defendant breach the Agreement?

(ii) If the Defendant breached the Agreement, what damages are the Plaintiffs entitled to?

(iii) If the Defendant breached the Agreement, are the Plaintiffs entitled to the deposit?

(iv) Is the Defendant entitled to relief from forfeiture of the deposit?

Analysis

The Plaintiffs’ Position

[22] The Plaintiffs allege that the Defendant breached the Agreement, and that as a result, they are entitled to the amount deposited with Re/Max. In addition, the Plaintiffs seek to recover additional costs that they incurred as a result of the Defendant’s failure to close. These costs include:

• The decrease in the sale price of the Property;

• Amounts incurred to stage the Property for re-sale;

• Interest on both the mortgages and a bridge loan on the Property for the period June 29 to November 15, 2017;

• Interest on a line of credit that they had to obtain to pay for the renovations on their new home;

• The carrying costs of the Property, including utilities, property taxes, insurance premiums; and

• Legal fees and disbursements incurred to address the Defendant’s breach.

The Defendant’s Position

[23] The Defendant alleges that he was unable to close because of fraudulent activity perpetrated in his name. According to Mr. Shawqi, Ms. Yousif applied to ICICI Bank for a mortgage in Mr. Shawqi’s name, and provided false information regarding his and his daughter’s employment and income.

[24] Mr. Shawqi denies having retained both Joshua David and Sarah Razzouk, and denies having applied to CIBC for a mortgage. According to Mr. Shawqi, because of the fraudulent activity he was reluctant to seek a mortgage and was unable to obtain the funds to complete the purchase. He states that he wanted to purchase the Property for cash at a lower price.

[25] The Defendant argues that because of the alleged fraud, there is a genuine issue for trial.

Principles Applicable to Summary Judgment

[26] Rule 20.04(2)(a) of the Rules of Civil Procedure, R.R.O. 1990, Reg. 194, states that a 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 defence.

[27] The Supreme Court of Canada has held that “summary judgment must be interpreted broadly, favouring proportionality and fair access to the affordable, timely and just adjudication of claims” Hryniak v. Mauldin, 2014 SCC 7, [2014] 1 S.C.R. 87, at para. 5. An issue should be resolved on a motion for summary judgment if: (i) the motion affords a process that allows the judge to make the necessary findings of fact, (ii) apply the law to those facts, and (iii) is a proportionate, more expeditious, and less expensive process to achieve a just result than going to trial: Hryniak, at para. 49.

[28] On a motion for summary judgment, the judge must first determine whether there is a genuine issue requiring a trial based only on the evidence before him or her, without using their fact-finding powers. If there appears to be a genuine issue requiring a trial, the judge should then determine if the need for a trial can be avoided by using the powers under rr. 20.04(2.1) and (2.2): Hryniak, at para. 66.

[29] On a motion for summary judgment, the court is entitled to assume that the record contains all the evidence that the parties would present if the matter proceeded to trial: Sweda Farms Ltd. v. Egg Farmers of Ontario, 2014 ONSC 1200, [2014] O.J. No. 851, at paras. 26-27, aff’d 2014 ONCA 878, [2014] O.J. No. 5815, leave to appeal to SCC refused, [2015] S.C.C.A. No. 97. Each party must “put their best foot forward” with respect to the existence or non-existence of material issues to be tried: Sweda, at para. 26.

[30] At the hearing of this motion, counsel advised that late in the proceeding, the Defendant served a Third Party Claim on Mr. Saeed and Ms. Yousif. The Plaintiffs consented to the Defendant’s late filing of a Third Party Claim on the condition that the timetable for the summary judgment motion would not be delayed. Plaintiffs’ counsel stated that he had not been served with the Third Party Claim and no claim was provided to the court. The third parties have not defended the main action.

[31] This court is alert to the Court of Appeal’s caution against ordering partial summary judgment due to the risk of inconsistent findings, and because such motions can lengthen proceedings without disposing of the action on the merits: Butera v. Chown, Cairns LLP, 2017 ONCA 783, 137 O.R. (3d) 561, at para. 25. The Plaintiffs’ counsel advised that the allegations against the third parties are separate and distinct from the allegations against the Defendant. The matter between the Plaintiffs and Defendant is a contractual claim for breach of the Agreement. The Defendant’s counsel confirms that the Third Party Claim contains no allegations against the Plaintiffs. The third parties were served with the material for the summary judgment motion but have chosen not to respond or attend the hearing. Based on counsel’s submissions, and as will be further discussed below, I find that this motion can be determined independently, without raising the risk of re-litigation or inconsistent findings.

(i) Did the Defendant Breach the Agreement?

[32] When a purchaser fails to complete the purchase of a property due to the purchaser’s own reasons, this constitutes a breach of the agreement for purchase and sale: Mikhalenia v. Drakhshan, 2015 ONSC 1048, 53 R.P.R. (5th) 117, at paras. 20-21.

[33] The Agreement required that the purchase be completed on the closing date. The Defendant failed to pay the purchase price on both the original closing date and the extended closing date and failed to complete the purchase, breaching the Agreement. The Defendant has admitted that he could not purchase the Property because the mortgage applications that he submitted to two different banks were denied. He further admits that he advised Mr. Saeed that he could not purchase the Property.

[34] On July 10, 2017 the Defendant’s lawyer, Ms. Razzouk, advised the Plaintiffs’ lawyer that she had no instructions. In response to the request to extend the closing date to July 13, 2017 the Plaintiffs communicated the terms on which they would agree to an extension. They received no response. The Defendant breached the Agreement, and there is no genuine issue requiring a trial as to the Defendant’s breach.

[35] The Defendant’s allegations of fraudulent conduct by Mr. Saeed and Ms. Yousif do not excuse him from completing the Agreement. It was not open to him to simply fail to complete the transaction. There was no further extension of the closing date and no renegotiation of the Agreement. It does not appear from the record that Mr. Shawqi ever communicated the problems he was having to the Plaintiffs, and it is unclear what Mr. Shawqi intended to do about the problem. While Mr. Shawqi claims that he offered to purchase the property for cash at a ten percent discount, there is no evidence that this offer was ever communicated to the Plaintiffs.

[36] The Defendant’s allegation that he never retained Mr. David and Ms. Razzouk, the two lawyers who were communicating with the Plaintiffs’ lawyer, does not assist him. If they were not acting for Mr. Shawqi, then nothing was communicated to the Plaintiffs, because there was no other communication from the Defendant to the Plaintiffs at the time. Even if Mr. David and Ms. Razzouk were acting without authority, there is no way the Plaintiffs or their lawyer could have known. I find it unlikely that two lawyers who were not retained by the Defendant would purport to act for him, especially since Ms. Razzouk had copies of the Defendant’s identification in her file.

[37] The Defendant claims that he wanted to walk away from the transaction and negotiate a resolution but that his real estate agent said there would be a “big problem” if he did not close. Even on cross-examination, Mr. Shawqi was not able to explain what the problem would be. Mr. Shawqi did not report the alleged fraud to the police.

[38] The Defendant relies upon the letter sent by Mr. Constantine to show he made an offer. However, this letter was sent almost a month after the original closing date had passed. The Agreement was already breached at this point. Further, in the letter, Mr. Constantine referred to a mortgage that Mr. Shawqi claims he did not apply for, and not the cash offer alleged by Mr. Shawqi. Moreover, when the Plaintiffs did send a letter to Mr. Constantine on August 11, 2017 they did not receive a response. The fact remains that the Defendant did not complete the purchase and did not make a new offer, whether before the closing date or even after it was re-listed and on the market for a month and a half.

[39] In his defence, Mr. Shawqi argues that the Plaintiffs were not ready, willing and able to close the transaction, since they failed to tender valid documents: see 2628 St-Joseph Boulevard v. Fondation Olangi-Wosho, 2012 ONSC 541, 15 R.P.R. (5th) 275, at para. 57; Sandhu v. Sikh Lehar International Organization, 2017 ONSC 5680, 2017 CarswellOnt 15260, at para. 89. Specifically, the Defendant relies on the fact that the closing package sent to Mr. David did not contain any documents signed by the Plaintiffs, including the Direction re Funds, which was signed by Mr. Ferreira’s office.

[40] The relevant part of paragraph 12 of the Agreement states as follows:

12. Documents and Discharge

If a discharge of any Charge/Mortgage held by a… Chartered Bank and which is not to be assumed by Buyer on completion, is not available in registrable form on completion, Buyer agrees 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, provided that on or before completion Seller shall provide to Buyer a mortgage statement prepared by the mortgagee setting out the balance required to obtain the discharge, and, where a real-time electronic cleared funds transfer system is not being used, a direction executed by Seller directing payment to the mortgagee of the amount required to obtain the discharge out of the balance due on completion.

[41] In respect of tender, the Agreement states:

21. Tender

Any tender of documents or money hereunder may be made upon Seller or Buyer or their respective lawyers on the day set for completion. Money shall be tendered with funds drawn on a lawyer’s trust account in the form of a bank draft, certified cheque or wire transfer using the Large Value Transfer System.

[42] Mr. Ferreira sent the documents to Mr. David in advance of the closing date. If the transaction had proceeded as envisaged, the Defendant might be in a position to argue inadequate tender. However, in the circumstances, the Defendant did not proceed in a manner that would have permitted the transaction to be completed on the closing date.

[43] The Defendant’s argument of inadequate tender of documents by the Plaintiffs is little more than an after-the-fact attempt to excuse the Defendant’s breach. The Defendant cannot rely upon a technical flaw in the Plaintiffs’ documents when the Plaintiffs had otherwise completed their closing obligations and when he was in no position to close. The fact that their lawyer signed the Direction re Funds does not negate that the Plaintiffs were ready, willing, and able to close the transaction. The Defendant made no objection to the execution of the Direction by the Plaintiffs’ lawyer and, in any event, had no mortgage financing in place. If the Defendant had objected, this could have been rectified before the closing date.

[44] It is also difficult to see how the Defendant can argue inadequate tender while denying that Mr. David and Ms. Razzouk were his lawyers. If neither lawyer acted for him, the Plaintiffs could not have properly tendered anything. They would not have known the identity of the Defendant’s lawyer until receiving the letter from Mr. Constantine, weeks after the closing date.

[45] The transaction did not close, not because of inadequate documents from the Plaintiffs, but because the Defendant did not have the funds to complete the purchase, whether on June 28 or July 10, 2017. The Defendant breached the Agreement. The alleged fraud, even if proven, would not excuse the Defendant from his obligations under the Agreement. For this reason, I find it appropriate to determine the issue on summary judgment.

(ii) What Damages are the Plaintiffs Entitled to?

[46] The Plaintiffs claim that they suffered various losses as a result of the Defendant’s breach. In Goldstein v. Goldar, 2018 ONSC 608, 2018 CarswellOnt 844, at para. 25, Morgan J. summarized the framework applicable to determining damages:

The damages amount will be the difference between the price under the Agreement and the price of the new sale of the property once it closes, plus any additional carrying costs incurred by the Vendor in mitigating her loss and dealing with the Purchaser’s breach.

The Difference in Sale Price

[47] After Mr. Shawqi failed to close the transaction, Mr. and Ms. Azzarello were required to re-list the Property. They initially listed the Property at the same price, but later had to lower the list price to $1,280,000.00. They were not able to sell the Property until over a month later. The Plaintiffs are entitled to the difference between the purchase price under the Agreement ($1,555,000.00) and the price for which the Property was sold ($1,280,000.00). The difference is $275,000.00.

[48] The Defendant submits that the Plaintiffs should have sold the Property to him for ten percent less than the original purchase price in cash, or $1,400,000.00. As noted above, the Defendant did not communicate the discounted cash offer to the Plaintiffs. Even if he had, the Plaintiffs would have been justified in choosing not to deal with the Defendant because they had no confidence that the Defendant would exercise diligence in closing the transaction as he had failed to do in the past.

Staging

[49] The Plaintiffs had to stage the Property when they re-listed it for sale because they had already moved out. The staging cost $5,085.00. I find that but for the Defendant’s breach, the staging would not have been necessary, and that the staging cost was reasonably incurred to mitigate the Plaintiffs’ losses. The Plaintiffs are entitled to recover the $5,085.00 staging cost.

Legal Fees

[50] Similarly, the Plaintiffs are entitled to the $1,504.03 in legal fees that they claim from the uncompleted Property sale.

Carrying Costs of the Property

[51] The Plaintiffs incurred additional costs on the Property between the Agreement’s June 29, 2017 closing date, and the subsequent sale’s November 15, 2017 the closing date of the subsequent sale, November 15, 2017. These costs were for property taxes, utilities, insurance premiums, interest on their mortgages, and interest on their bridge loan, as quantified in the table below. The Plaintiffs provided documentation verifying these costs. They are entitled to recover these amounts from the Defendant.

Interest on a Line of Credit

[52] The Plaintiffs claim $6,618.00 in interest on a home-equity line of credit they used to finance the renovations on their new home. The Plaintiffs submit that they were relying on receiving the purchase price of the Property, and would not have needed this line of credit if the Defendant had not breached the Agreement.

[53] The line of credit was not in the Plaintiffs’ names, but was obtained by Ms. Azzarello’s mother. I am not satisfied that this expense was incurred as a result of the Defendant’s breach, or that the Plaintiffs paid the amount they claim. The Plaintiffs are not entitled to recover this amount.

Total Damages

[54] In summary, I find that the Plaintiffs are entitled to the following amounts in damages resulting from the Defendant’s breach:

Item	Cost
Difference in purchase price	$275,000.00
Municipal taxes	$3,846.79
Utilities (gas, hot water, hydro)	$868.77
Insurance premiums	$749.52
Interest on first and second mortgages	$5,700.80
Interest on bridge loan	$15,933.40
Staging	$5,085.00
Legal fees	$1,504.03
Total:	$308,688.31

[55] The Defendant argues that the Plaintiffs did not mitigate their damages. While claiming parties must mitigate their losses after contract repudiation, the onus is on the repudiating party to prove a failure to reasonably mitigate: see O'Hare v. Wyton, 2018 ONSC 3946, 2018 CarswellOnt 10763, at para. 35.

[56] Mitigation need only be reasonable, not flawless: see O’Hare, at para. 36. The Plaintiffs reasonably mitigated their damages. The Plaintiffs initially re-listed the Property at the same list price. They lowered the price when the Property failed to sell. The Plaintiffs did not accept an earlier offer of $1,250,000.00 and attempted to obtain a higher price, which they did. The Defendant has not proved that the Plaintiffs failed to reasonably mitigate.

(iii) Are the Plaintiffs Entitled to the Deposit?

[57] The Agreement required the Defendant to pay a $75,000.00 deposit to Re/Max which was “to be held in trust pending completion or other termination of this Agreement and to be credited towards the Purchase Price on completion.”

[58] In De Palma v. Runnymede Iron & Steel Co., 1949 CanLII 73 (ON CA), [1950] O.R. 1 (C.A.), at p. 8, the Court of Appeal held that where the sale of land does not close due to a default by the purchaser, the vendor is entitled to the deposit without having to prove actual damages. The purpose of the forfeiture of a deposit is compensation to the disappointed vendor “for the fact that his property was taken off the market for a time as well as for his loss of bargaining power resulting from the revelation of an amount that he would be prepared to accept”: Baker v. Wynter (2006), 49 R.P.R. (4th) 134 (Ont. S.C.), at para. 35, citing Leading Investments Ltd. v. New Forest Investments Ltd., [1986] S.C.R. 70 (S.C.C.), at pp. 86-87.

[59] The court must decide whether the parties intended an advance payment to be partial payment or a deposit to be forfeited in the event of non-completion of the transaction: Mikhalenia, at para. 32. The use of the word “deposit” has been interpreted as indicating that the payment was intended to be forfeited in the event of a breach: Mikhalenia, at paras. 32, 35; Iyer v. Pleasant Developments Inc. (2006), 2006 CanLII 10223 (ON SCDC), 210 O.A.C. 90 (Div. Ct.), at para. 8.

[60] As was the case in Mikhalenia, the Agreement is silent on the forfeiture of the deposit in the event of the purchaser’s default. This silence was found to weigh in favour of an interpretation that the deposits are to be forfeited: Mikhalenia, at para. 38. Similarly, in River Oaks Convenience Plaza Inc. v. Al-Qauasmi (2009), 2009 CarswellOnt 91 (S.C.), at paras. 17-18, Daley J. found that the deposits “were paid to secure the performance of the agreement of purchase and sale and as a result of the default by the respondents in completing the transaction, the applicant is entitled to have those funds paid over to it from the trust account where they presently sit.”

[61] Based on the foregoing, and because the Defendant failed to complete the transaction, the Plaintiffs are entitled to the $75,000.00 deposit that Re/Max currently holds in trust.

(iv) Is the Defendant entitled to Relief from Forfeiture of the Deposit?

[62] Relief from forfeiture is an equitable remedy: Redstone Enterprises v. Simple Technology, 2017 ONCA 282, 137 O.R. (3d) 374, at para. 20. A court should consider the factors enunciated in Redstone, at para. 15, when determining whether to grant relief from forfeiture:

(i) Whether the forfeited deposit was out of all proportion to the damages suffered; and

(ii) Whether it would be unconscionable for the seller to retain the deposit.

[63] The Court of Appeal in Redstone noted that unconscionability is an exceptional finding (at para. 25). Relief from forfeiture is not warranted in the circumstances of this case because the deposit was not out of all proportion to the damages suffered and it would not be unconscionable for the Plaintiffs to receive it.

[64] First, while it is possible to establish unconscionability because the forfeited amount is disproportionate to the damages suffered, there is no disproportionality in this case: Redstone, at para. 26. Upon a breach of an agreement of purchase and sale, a vendor’s failure to establish damages does not necessarily render forfeiture of the deposit unconscionable: Redstone, at paras. 17, 38. Courts have allowed parties to retain transaction deposits even when they may not have suffered any damage from failure to close: Hatami v. 1237144 Ontario Inc., 2018 ONSC 668, 2018 CarswellOnt 1740, at para. 57.

[65] In this case, the Plaintiffs have demonstrated that they did suffer damages due to the Defendant’s breach. I see no disproportionality between the deposit and the damages suffered that would warrant relief from forfeiture.

[66] Second, the deposit amount is not disproportionate to the purchase price. Courts have found that deposits in the amount of 4.8 percent, 20 percent, and 25 percent of sale price were not unconscionable: Signal Chemicals Ltd. v. Dew Man Marine Trade Inc., 2011 ONSC 3951, 8 R.P.R. (5th) 151, at para. 16 (citations omitted). The percentage is not determinative, but is merely a factor. In Redstone, the deposit was approximately 7 percent of the purchase price and was found not to be commercially unreasonable. In Mikhalenia, at para. 46, the deposit was $100,000.00 on a total sale price of $1,300,000.00 (6.67 percent) and was found not to be unconscionable. In this case, the $75,000.00 deposit was approximately 4.8 percent of the $1,555,000.00 purchase price. This factor suggests that forfeiture is not disproportionate or unconscionable.

[67] Where there is no gross disproportionality in the size of the deposit, the court must consider other indicia of unconscionability: Redstone, at para. 29. In Redstone, the Court of Appeal identified “inequality of bargaining power, a substantially unfair bargain, the relative sophistication of the parties, the existence of bona fide negotiations, the nature of the relationship between the parties, the gravity of the breach, and the conduct of the parties” as useful factors to assess unconscionability emerging from the case law (at para. 30). The unconscionability indicia are context-specific and non-exhaustive: Redstone, at para. 30. The facts of this case do not suggest the existence of any of the unconscionability indicia, or any potentially new unconscionability factors. The Plaintiffs acted in good faith to attempt to close the transaction. In the circumstances, it would not be unconscionable for the Plaintiffs to receive the deposit.

[68] I find that relief from forfeiture is not warranted in the circumstances of this case. I find no substantial disparity between the forfeited deposit and the damage caused by the Defendant’s breach. As noted above, upon a breach of an agreement of purchase and sale, a vendor is entitled to retain the deposit without having to establish damages. Because the sale to Mr. Shawqi failed, Mr. and Ms. Azzarello had to re-list the property and accept a lower purchase price. They incurred significant expenses to continue to carry the Property, which they had to finance in addition to the new home that they had purchased.

Conclusion

[69] Based on the issues in this case and the evidence before me, I find that this summary judgment motion affords a process that allows the court to make the necessary findings of fact and apply the law to those facts. I also find that a summary judgment motion is a proportionate, more expeditious and less expensive process to achieve a just result than going to trial in this case. There is no genuine issue requiring a trial as to the Defendant’s breach of the Agreement, and to the Plaintiffs’ entitlement to the deposit. I therefore grant the Plaintiffs’ motion and grant judgment in the amount of $383,688.31 plus pre-judgment and post-judgment interest in accordance with the Courts of Justice Act, R.S.O. 1990, c C.43.

Costs

[70] The parties submitted costs outlines at the hearing. The Plaintiffs seek costs of the motion and the proceeding in the amount of $14,543.10 on a partial indemnity basis, including HST, and an additional $2,392.05 for disbursements. Counsel for the Defendant’s costs outline was for a total of $8,329.78, including disbursements but not including HST. This appears to be for the motion only.

[71] Pursuant to the Courts of Justice Act, s. 131(1), the court has broad discretion when determining the issue of costs. The overall objective of fixing costs is to fix an amount that is fair and reasonable for the unsuccessful party to pay in the circumstances, rather than an amount fixed by actual costs incurred by the successful litigant: Boucher v. Public Accountants Council for the Province of Ontario (2004), 2004 CanLII 14579 (ON CA), 71 O.R. (3d) 291 (C.A.). Rule 57.01(1) of the Rules of Civil Procedure sets out the factors to be considered by the court when determining the costs issue.

[72] I have considered these factors, as well as the proportionality principle in r. 1.01(1.1) of the Rules of Civil Procedure, while keeping in mind that the court should seek to balance the indemnity principle with the fundamental objective of access to justice. The issues on the motion were not particularly complex. The Plaintiffs brought the motion promptly. It does not appear that unnecessary procedural steps were taken, and the parties have proceeded in a timely manner to seek a conclusion of the proceeding.

[73] Given the foregoing, I fix costs at $11,000.00, inclusive of disbursements and HST, payable by the Defendant to the Plaintiffs within 30 days of the date of this order.

Nishikawa J.

Released: September 14, 2018

COURT FILE NO.: CV-17-581271

DATE: 20180914

ONTARIO

SUPERIOR COURT OF JUSTICE

BETWEEN:

Mark Azzarello and Eliza Azzarello Plaintiff

– and –

Ahmed Sabri Shawqi Defendant

REASONS FOR JUDGMENT

Nishikawa J.

Released: September 14, 2018