Court File and Parties

COURT FILE NO.: CV-16-3724-00 DATE: 2018 10 16 ONTARIO SUPERIOR COURT OF JUSTICE

BETWEEN:

DEVINDER SINGH RAYAT, and PARMJEET KAUR RAYAT, also known as PARAMJIT KAUR RAYAT Plaintiff

– and –

WILLIAM HUGH SALMON, AMANDA ELZABETH KITSON, and HARINDER SINGH GAHIR Defendants

COUNSEL: Justin Baichoo, for the Plaintiff Charles Amissah-Ocran, for the Defendants

HEARD: April 16, 2018

Summary Judgment

L. Shaw J.

Overview

[1] The Plaintiffs bring this summary judgment motion seeking damages and costs as against the Defendants, William Hugh Salmon (“Mr. Salmon”) and Amanda Elizabeth Kitson (“Ms. Kitson”). The action as against Mr. Harinder Singh Gahir has been discontinued.

[2] The claim for damages arises from the failure to close an agreement to purchase property municipally known as 9 Pika Trail, Brampton, Ontario, (the “Property”). The closing date was July 29, 2016, and the agreed price was $763,000. The transaction did not close on that date and the Plaintiffs commenced an action on August 22, 2016, seeking specific performance of the agreement and damages. They secured a Certificate of Pending Litigation on September 26, 2016.

[3] Each Defendant delivered a Statement of Defence and Crossclaim against Mr. Gahir on November 29, 2016. They did not file a Counterclaim against the Plaintiffs.

[4] The court heard a summary judgment motion on May 16, 2017. On consent, that motion was resolved and the Defendants agreed to sell the Property to the Plaintiffs for $763,000, the original purchase price. Pursuant to the Order of Ricchetti J. the proceeds of sale were to be used to pay the existing first, second and third mortgages registered on title, with the balance to be paid into court pending a determination of all damages and costs. Pursuant to the Order of LeMay J. dated September 12, 2017, the sum of $163,112.56 was paid into court.

[5] Ms. Kitson filed an affidavit dated April 6, 2018, in response to this motion. In her affidavit she itemized various damages she claims the Defendants have incurred as a result of the failure to close. As noted above, however, the Defendants have not filed a Counterclaim, nor is there a motion before this court for summary judgment in connection with these damages. Accordingly, I cannot consider the Defendants’ claim for damages.

[6] Ms. Tejinder Rayat filed an affidavit in support of the Plaintiffs’ motion for summary judgment. She is the Plaintiffs’ daughter. According to Rule 20.02, an affidavit for use on a summary judgment motion may be made on information and belief, but the court may, if appropriate, draw an adverse inference from the failure of a party to provide the evidence of any person having personal knowledge of contested facts. In this matter, I do not draw any such adverse inference. Firstly, Ms. Rayat filed the affidavit because her parents have a limited ability to speak English. Secondly, and more importantly, much of the affidavit attaches various letters, emails and documents exchanged by the parties or their lawyers. It is those documents on which I rely to reach my decision, rather than any evidence about what the Plaintiffs may have said or done.

Issues

[7] Both parties agree that the issue of damages and costs should be resolved by way of this summary judgment motion. In order to make that finding, the first issue is to determine who was in breach of the contract to purchase the Property. If the Defendants breached the contract, the Plaintiffs are entitled to damages as a result of that breach. The second issue is the quantification of those damages.

Background

[8] Hindsight is 20/20. Given the course of this litigation I am certain that the parties would agree that the original dispute surrounding the close of the real estate transaction ought to have been resolved in July or August 2016. Since that time, the parties have incurred significant legal fees and the issues in dispute have morphed into something more significant than the original rather innocuous dispute.

[9] In order to determine who was in breach of the original agreement of purchase and sale, it is necessary to review, in some detail, the unfortunate history of this real estate transaction.

a) Failure to Close the Purchase and Sale of the Property

[10] The Plaintiffs entered into an Agreement of Purchase and Sale with the Defendants dated June 2, 2016. The agreed purchase price was $763,000. The transaction was scheduled to close on July 29, 2016. The Plaintiffs paid a $20,000 deposit to Remax West Realty Inc. Brokerage.

[11] At the time, Mr. Salmon held legal title to the Property. According to Ms. Kitson, her mother, Lavern Kitson, had transferred the Property to her brother, Mr. Salmon, to hold in trust for Ms. Kitson. On or about May 9, 2016, Ms. Kitson’s mother moved to Jamaica for a work opportunity. It was at that time she decided to sell the Property. Ms. Kitson was residing in the Property at the time it was listed and sold. According to Ms. Kitson, her uncle, Mr. Salmon, executed a Power of Attorney authorizing her to deal with the sale of the Property.

[12] The Plaintiffs retained Mr. Harinder Singh Gahir (“Mr. Gahir”) as legal counsel to represent them in the transaction. The Defendants retained Mr. Jagmonhan Singh Nanda (“Mr. Nanda”).

[13] Ms. Kitson’s evidence was that on July 25, 2016, the Plaintiffs attended at the Property for a final inspection. Following that attendance, on July 28, 2016, at 5:31 p.m., Mr. Gahir emailed Mr. Nanda as follows:

My client advised me that the sellers have damaged the property and the estimated expense for fixing is $5,000. The sellers also did not clear the garbage from the property. The attached photograph show the damage.

I shall appreciate if you could talk to your clients regarding the damage and advise if you clients would agree to provide a credit of $5,000 to my clients towards repairs. My clients are not willing to close the transaction until this matter is sorted out.

I look forward to hearing from you.

[14] Mr. Gahir followed up with a second email to Mr. Nanda on July 29, 2016, at 12:55 p.m. asking for a response to his email from July 28, 2016.

[15] Mr. Nanda emailed Mr. Gahir on July 29, 2016, at 4:10 p.m. stating as follows:

We are given to understand that the vendor will attend to removing [sic] garbage from the property this weekend. Kindly confirm that we may extend closing to Tuesday August 2, 2016 so that this may be attended to by the vendor over the course of the long weekend.

[16] On that same day, the scheduled closing date, $743,486.84 was deposited into Mr. Nanda’s trust account. In his correspondence enclosing the funds, Mr. Gahir stated:

Please do not release funds until the matter of damage done to the property by the seller is resolved, the garbage removed from the property is cleared and transfer registered.

The funds are sent to you in the trust condition that you shall not release the funds until we have confirmed that:

1. Keys in your closing documents have been delivered to me and are satisfactory.
2. The transfer has been released to me for registration.
3. The transfer has been registered free and clear of all encumbrances.

[17] Thus, on July 29, 2016, despite Plaintiffs’ counsel’s email on July 28 that his clients were not willing to close the transaction if the matter of the damage and garbage was not resolved, Mr. Gahir sent purchase funds to the Defendants’ lawyer intending to close the transaction. It is not clear if Mr. Gahir sent the funds before or after Mr. Nanda’s email requesting an extension to the closing date to August 2, 2016. There is no evidence that Mr. Gahir responded directly to Mr. Nanda regarding that request. It is not in dispute, however, that Mr. Nanda was in receipt of funds to complete the closing. Neither party tendered on the other.

[18] The next contact between the lawyers occurred on August 2, 2016, at 6:20 p.m. In an email to Mr. Nanda, Mr. Gahir stated as follows:

I am writing to you with lot [sic] of frustration. Therefore, please excuse my tone.

My clients are more frustrated as we are not getting a response from your office with respect to the status of this transaction.

My clients think that I am giving them the run around and are threatening that they will file a complaint against me with the law society.

This transaction was scheduled to close on Friday and we deposited the funds into your trust account on Friday to close this transaction. My clients are frustrated that the property is full of litter and your client has not fixed the damage and additionally did not know the status of this transaction. They have spent considerable time, effort and money in arranging the move and have reason to be frustrated.

The most frustrating part is that your office is not responding to the calls or messages from our office. You promised me earlier that our clients will have the keys today and as of yet we have not received the keys. All calls to your office are unanswered.

I shall appreciate if you could respond to my email and advice [sic] of the status of the keys.

[19] Based on this email, it can be inferred that the Plaintiffs had agreed to extend the closing date to August 2, 2016, as Plaintiffs’ counsel was asking to close that day. Furthermore, there must have been some contact between the lawyers as Mr. Gahir refers to Mr. Nanda’s earlier promise that his clients would have the keys that day. As of August 2, 2016, the Plaintiffs were ready, willing and able to close the transaction.

[20] In the following email, sent to Mr. Gahir at 7:26 pm on August 2, 2016, Mr. Nanda explains why he had not responded to Mr. Gahir:

We have not received any instructions from the vendor whatsoever and due to this breakdown in our relationship with the vendor, we are not acting for the vendor any longer and closing our file.

Please provide your void cheques so that we may return the funds to you.

[21] Mr. Nanda returned the purchase funds to Mr. Gahir on August 3, 2016. A copy of the cheque dated August 3, 2016, was filed as evidence.

[22] At this point, the Plaintiffs had a problem. They had sold their home and were set to vacate by August 8, 2016. Accordingly, they entered into a month-to-month lease agreement on August 12, 2016, to rent premises located at 14 Algebury Crescent in Brampton. The lease started on August 15, 2016. Monthly payments were $2,600. A copy of the lease agreement was filed as evidence.

[23] The Plaintiffs retained new counsel, Mr. Gerald Wise (“Mr. Wise”), at some point after the transaction did not close. The parties agree that he wrote to Mr. Salmon on August 12, 2016. Although no copy of the letter was attached by either parties, both acknowledge that the letter was sent.

[24] In Ms. Kitson’s affidavit she deposed that the letter said the following:

Before my clients commence legal action against you, they have asked me to advise that they remain willing to complete with [sic] this transaction. Their hope is that you will consider your position and that this transaction can be completed on a cooperative basis within the next few days.

I would ask that you please confirm by 5:00 pm on Monday August 15 that you will agree to complete the above transaction in accordance with the APS between the parties.

[25] On that same day, Mr. Wise wrote to Ms. Rayat confirming that he had written to Mr. Salmon, with a copy of the letter to Ms. Kitson. He also indicated to Ms. Rayat that her parents had to decide whether they wished to register a caution against the Property to give notice of their claim to anyone who may be interested in purchasing or taking a mortgage against the Property. He also indicated as follows:

I confirm your advice that you will review this matter with your parents over the weekend and let me know on Monday how they wish to proceed.

[26] In that same letter, Mr. Wise confirmed that Ms. Rayat had mentioned that her parents had determined that they were looking to purchase a new home. He indicated that this suggested that they would not be looking for specific performance to enforce the purchase of 9 Pika Trail and therefore they may not want to register a caution against the Property, but rather pursue a claim for damages only.

[27] On August 12, 2016, at 4:51 p.m., Mr. Wise emailed Ms. Kitson informing him that he now represented the Plaintiffs. He confirmed that Ms. Kitson held a Power of Attorney for Mr. Salmon and that he had attached a copy of his letter to Mr. Salmon.

[28] Three days later, on August 15, 2016, at 7:44 p.m., Ms. Kitson responded to Mr. Wise by email as follows:

In response the house did not close as there is a matter with Canadian Tire and the lien against the house. As you are aware, the house is being held in trust for me and does not belong to my uncle. I have lived in this home since June 2003 and upon to [sic] this date. We cannot afford to pay for this lien and as such must have it resolved.

[29] Mr. Wise responded to Ms. Kitson on August 16, 2016, at 10:51 a.m. He stated as follows:

Thank you for your response. However, your explanation for failing to complete this transaction is not sufficient. The vendor has an obligation to pay off any debt against the property and to convey clear title on closing. It appears that the vendor here has simply chosen to ignore that obligation and refused to complete the transaction.

Without limiting my comment above, I note that the Canadian Tire lien that you referred to appears to be a writ of execution filed against the property at 9 Pika Trail in the amount of $22,254.11. Further, the title abstract for the property indicates that there are two mortgages outstanding in the amounts of $452,000 (Hope Trust) and $32,000 (Ester Gretl Inc.) The total debt against the property is therefore $506,254.1, while the purchase price in the above transaction is $763,000 providing, it appears, more than enough money to pay off the debt.

I was not aware of a trust relationship between you and the named vendor and registered owner, William Hugh Salmon. However, if you are the person who has authority to deal with this matter than you need to be aware that my clients intend to pursue their legal remedies due to the failure of the vendor to complete this transaction. Having said that, Mr. and Mrs. Rayat remain willing and able to complete this transaction and ask that you reconsider your position on refusing to close.

I am willing to speak with you about this matter, or alternatively, with your lawyer if you have one.

I require that I hear from you by 12:00 noon on Wednesday August 17 failing which my clients will proceed with litigation without further notice to you or Mr. Salmon.

[30] Ms. Kitson responded to Mr. Wise by email on August 17, 2016, at 12:04 p.m. as follows:

I am in receipt of your letter dated August 12, 2016 and as such will advise that a decision on the close will be made once the Ontario Court of Justice rules on the motion that was filed on the Canadian Tire matter.

A trust was put in place for me by my deceased father and my mother and to now have that taken away from me I have no rights is in no way right or correct. I trust that the decisions that are being made on my side are now more salient.

Once the representative dealing with this matter has provided us with the satisfactory answer then we can cleanly and clearly move forward.

I trust that this is sufficient and clarifies for both yourself and your clients.

[31] Mr. Wise responded to Ms. Kitson by email on August 18 2016 at 9:16 a.m. as follows:

Thank you for your response. However, as I note in my letter on August 16, the vendor cannot use the Canadian Tire writ of execution as an excuse to avoid completing this transaction. There are legal steps that can be taken to address the writ that would allow you to complete this transaction. You do not seem willing to consider these steps, or to take legal advice that would allow this matter to be resolved without litigation.

I repeat that I am willing to speak with you or your lawyer to discuss completion of this transaction. Please contact me if you are serious about doing so. My clients will at this point be proceeding with litigation.

[32] Ms. Kitson responded by email on August 18 at 1:33 p.m. stating that legal actions were being taken by a motion in court in the Canadian Tire matter.

[33] Four days after this exchange of emails, on August 22, 2016, the Plaintiffs issued a Statement of Claim seeking specific performance of the Agreement of Purchase and Sale or, in the alternative, a declaration that the agreement was at an end and requesting the return of the deposit and damages. The Plaintiffs also requested a Certificate of Pending Litigation.

[34] The Defendants each delivered a Statement of Defence and Crossclaim dated November 29, 2016.

b) Negotiations after the Action Was Commenced

[35] After issuing the Statement of Claim, Mr. Wise corresponded with another lawyer, Mr. Swayne, who practices with Mr. Nanda’s firm.

[36] On September 9, 2016, Mr. Swayne responded to a letter from Mr. Wise dated September 1, 2016. A copy of that letter was not filed as evidence. In his letter, Mr. Swayne stated that his clients were willing and able to complete the transaction but were not agreeable to giving the Plaintiffs a price abatement of $40,000 as demanded. (Presumably that request was made in Mr. Wise’s letter of September 1, 2016.) Mr. Swayne asked for documentation to substantiate any out-of-pocket loss due to the late closing. He stated: “If the claimed losses are legitimate and substantiated, our client is willing to provide an adjustment on closing and to complete the sale”. He also stated:

Please note that this property is fully mortgaged, and the mortgages are in danger of going into default. Should that occur because the property is being tied up in litigation, the mortgagees will exercise their power of sale and your client will also lose the opportunity to purchase the property.

[37] In response to that letter Mr. Wise wrote to Mr. Swayne on September 12, 2016, enclosing a number of documents which he said supported his clients’ claim for an abatement. Those documents included a copy of the lease signed by the Plaintiffs for alternative living arrangements, a mover’s invoice for moving into the rented property, and accounts with respect to legal fees. According to Mr. Wise the total additional costs incurred by the Plaintiffs, including legal fees, was $36,875.57, which supported the claim for a $40,000 abatement.

[38] Mr. Wise wrote to Mr. Swayne on September 15, 2016, responding to a letter from Mr. Swayne dated September 14, 2016, a copy of which was not filed as evidence. Presumably there was a counter-proposal made in that letter as Mr. Wise informed Mr. Swayne that his clients were rejecting the Defendants’ offer of $5,800. Mr. Wise informed Mr. Swayne that his clients were prepared to accept an abatement of the purchase price of $35,000 and asked for a response the following day.

[39] Mr. Swayne wrote to Mr. Wise on September 16, 2016, advising that Mr. Salmon rejected the offer for an abatement of $35,000 but made a new counter-proposal to adjust the closing price by $8,000. That offer was open for acceptance until September 19, 2016.

[40] There was no response to that offer and it appears that ended the negotiations.

[41] On September 22, 2016, without notice to the Defendants, Emery J. ordered that a Certificate of Pending Litigation would be issued against title to the Property.

[42] Based on this exchange of correspondence, both the Plaintiffs and Defendants appeared to be willing and prepared to complete the transaction but could not agree on an appropriate abatement.

[43] This is the second opportunity where, in hindsight, it would have been in the parties’ best interest to agree on an appropriate abatement and complete the transaction. Unfortunately, that did not occur. As a result, further legal fees were incurred to deal with another series of unfortunate events.

[44] Ms. Kitson attached to her affidavit a letter from Mr. Gahir to Mr. Nanda dated August 5, 2016, upon which she places a great deal of reliance to support her position that the Plaintiffs were in fact not ready, willing and able to close the transaction. That letter was about the Plaintiffs’ sale of their home, which was scheduled to close on August 8, 2016. Mr. Nanda, the Defendants’ lawyer on the sale of the Property, also acted for the purchasers of the Plaintiffs’ home. In that letter, Mr. Gahir informed Mr. Nanda that his clients did not know if they could close the sale of their home as the purchase of the Property did not close. In her affidavit, Ms. Kitson incorrectly interpreted this letter as the Plaintiffs stating that they did not want to close the purchase of her home. This letter had nothing to do with that. This letter dealt with the Plaintiffs’ sale of their own home. This was not a letter indicating that the Plaintiffs were unwilling to complete the purchase of the Property, as alleged by Ms. Kitson.

c) Events that Transpired after Negotiations Failed

[45] As the Property was vacant, Ms. Kitson entered into a lease to rent the Property to a third party for $1,200 per month. A copy of the lease agreement was filed as evidence. The tenant vacated the Property in March 2017.

[46] In or about February 2017, the Plaintiffs became aware that the Defendants were attempting to sell the Property although a Certificate of Litigation was registered on title. This evidence was not disputed by the Defendants.

[47] At that time, the Plaintiffs had again retained new counsel, who wrote to the real estate agent at Remax on February 21, 2017, indicating that it had come to his attention that a listing agent at Remax was attempting to sell the Property. Plaintiffs’ counsel informed the real estate agent that the Property was subject to a Certificate of Pending Litigation, which prohibited the sale. He requested that the agent remove the listing. A copy of this correspondence was sent to Ms. Kitson by email.

[48] In February 2017, the Plaintiffs had originally scheduled a summary judgment motion returnable in July 2017 seeking specific performance of the sale of the Property. As a result of being served with a Notice of Power and Sale dated March 16, 2017, from the first mortgagee as the mortgage was in default, the Plaintiffs had to schedule a new date for that motion on an urgent basis. The new date for the summary judgement motion was scheduled for May 16, 2017.

[49] After being served with the Notice of Power and Sale, there was an exchange of correspondence between the Plaintiffs’ lawyer and the lawyer for the mortgagee about the sale of the Property as the mortgagee’s position was that the Property could be sold under the Power of Sale and requested that the Certificate of Pending Litigation be vacated.

[50] On the May 16, 2017, summary judgment motion, the Defendants consented to an order transferring the Property to the Plaintiffs. The Order provided that the three mortgages registered on title would be paid and that all excess funds from the sale proceeds would be paid into court until a decision on damages and costs.

[51] Following that Order, and in the process of securing mortgage funds, the Plaintiffs arranged for an appraiser to attend at the Property. At that time, the Plaintiffs were informed that the Defendants had defaulted on the second and third mortgages and the second mortgagee had taken possession of the Property. This had occurred before the summary judgment motion.

[52] Throughout the month of May, Plaintiffs’ counsel engaged in negotiations with the lawyers for the first and second mortgagee so that his clients could complete the purchase of the Property and take possession. During that time, the second mortgagee was attempting to sell the Property as that mortgage was also in default. Fortunately, the parties were able to come to a resolution and agreed that the purchase of the Property could proceed and the mortgages would be paid as per Ricchetti J.’s Order.

[53] When the sale of the Property finally closed on May 31, 2017, the Defendants paid the following amounts from the proceeds of sale, in addition to discharging the three mortgages registered on title:

Real estate fees $5,029.32 Additional closing costs $141.25 Canadian Tire $29,027.55 Fourth mortgage $2,431.68 Total $36,629.80

[54] On closing, the Plaintiffs were not given credit for the $20,000 deposit paid to Remax one year earlier when they signed the original Agreement of Purchase and Sale.

Position of the Parties

[55] The Plaintiffs’ position is that the Defendants were in breach of the contract. The Plaintiffs seek the following damages for the delayed closing:

Date	Items	Cost
August 1, 2016	Legal Fees – Mr. Wise	$ 2,147.00
	Legal Fees – Mr. Gahir	$ 2,694.62
September 1, 2016	Legal Fees – Mr. Wise	$ 1,672.40
	Moving Expenses	$ 564.72
	Rental Home	$ 18,200.00
December 1, 2016	Legal Fees – Mr. Wise	$3,390.00
January 1, 2017	Deposit to Realtor	$20,000.00
	Garbage Removal from Pika Trail	$ 65.00
June 13, 2017	Legal Fees – Malhi Law	$ 1,849.46
July 4, 2017	Move to Pika Trail	$ 723.50
	Outstanding Property Taxes	$6,453.24
Total		$57,759.94

[56] The Plaintiffs also seek full indemnity for legal costs incurred since commencing this action. The amount claimed for those costs, including HST but not disbursements, is $142,802.62.

[57] The Defendants’ position is that it was the Plaintiffs who breached the original Agreement of Purchase and Sale and failed to close and that as a result they have incurred damages of $335,491.98, for which they are seeking payment. As indicated above, I have already found that the Defendants cannot seek damages as they have not filed a Counterclaim and there is no motion before the court seeking any relief.

Summary Judgment – Review of the Law

[58] Although the parties consent to determining this motion on summary judgment, the court must still determine whether this is an appropriate case for summary judgment.

[59] The test for summary judgment is set out in Rule 20.04(2) in the Rules of Civil Procedure, R.R.O. 1990, Reg. 194 (“the Rules”). Summary judgment is to be granted where the court is satisfied that there is no genuine issue requiring a trial with respect to a claim or defence, or where the parties agree to have all or part of the claim determined by summary judgment and the court is satisfied that granting summary judgment is appropriate. Rules 20.04(2.1) and 20.04(2.2) provide the court additional fact-finding powers. Specifically, Rule 20.04(2.1) permits the court to weigh evidence, evaluate the credibility of a deponent, and draw any reasonable inferences from the evidence in order to consider whether there is a genuine issue requiring a trial.

[60] In Hryniak v. Mauldin, 2014 SCC 7, [2014] 1 S.C.R. 87, at para. 66, the Supreme Court of Canada held that, on a motion for summary judgment, the court should first determine if there is a genuine issue requiring trial based only on the evidence in the motion record without using any of the enhanced fact-finding powers. The court should review the record and grant summary judgment if there is sufficient evidence to fairly and justly adjudicate the dispute. The court should also consider if summary judgment would be a timely, affordable, and proportionate procedure. The Supreme Court specifically found that summary judgment rules are to be interpreted broadly; the focus must be on providing access to justice in a timely manner. At para. 50, Karakatsanis J. wrote:

When a summary judgment motion allows the judge to find the necessary facts and resolve the dispute, proceeding to trial would generally not be proportionate, timely or cost effective. Similarly, a process that does not give a judge confidence in her conclusions can never be the proportionate way to resolve a dispute. It bears reiterating that the standard for fairness is not whether the procedure is as exhaustive as a trial, but whether it gives the judge confidence that she can find the necessary facts and apply the relevant legal principles so as to resolve the dispute.

[61] In Sweda v. Egg Farmers of Ontario, 2014 ONSC 1200, affirmed 2014 ONCA 878, leave to appeal to the Supreme Court of Canada refused July 9, 2015, No. 36341, Corbett J. reviewed the process by which the court considers the appropriateness of summary judgment. At para. 33 he found:

…the court on a motion for summary judgment should undertake the following analysis:

1. The court will assume that the parties have placed before it, in some form, all of the evidence that will be available for trial;

2. On the basis of this record, the court decides whether it can make the necessary findings of fact, apply the law to the facts, and thereby achieve a fair and just adjudication of the case on the merits;

3. If the court cannot grant judgment on the motion, the court should:

a. Decide those issues that can be decided in accordance with the principles described in 2), above;

b. Identify the additional steps that will be required to complete the record to enable the court to decide any remaining issues;

c. In the absence of compelling reasons to the contrary, the court should seize itself of the further steps required to bring the matter to a conclusion. [Footnotes omitted.]

[62] In Sweda, Corbett J. noted at paras. 27-28 that on a motion for summary judgment, the court is entitled to assume that the record contains all of the evidence the parties would present at trial. If there is evidence that one of the parties alleges is necessary, the burden rests on that party to show that it has taken reasonable steps to obtain the evidence it needs on the motion for summary judgment and that the missing evidence would be material to the disposition of this motion.

Analysis

[63] There were no cross-examinations conducted on the affidavits filed in support of and in response to the motion for summary judgment. Nonetheless, based on the evidence before the court and considering that the parties have agreed to have this motion determined on summary judgment, I find that this is an appropriate case for summary judgment. Other than one of the amounts claimed as damages, based on the evidence presented, I am able to fairly and justly adjudicate on the issues in dispute.

[64] In her affidavit, Ms. Kitson deposed that at all times she was ready and willing to close the transaction. She stated that by the closing date all of her possessions had been moved into storage, the premises had been cleaned and she had moved to live with her aunt. Mr. Salmon was not living in the home.

[65] In these reasons, I have reviewed in detail the correspondence between counsel and with Ms. Kitson. That correspondence contradicts Ms. Kitson’s assertion that she was ready, willing and able to close the transaction.

[66] The email from Ms. Kitson’s own lawyer on August 2, 2016, is significant. On that date he informed the Plaintiffs’ lawyer that he could not secure instructions, was closing his file and would be returning the purchase proceeds. This was after Plaintiffs’ counsel had made attempts to contact Mr. Nanda throughout the day on August 2, 2016.

[67] In addition, subsequent emails from Ms. Kitson clearly indicate that she was not prepared to close the transaction because of the writ of execution filed by Canadian Tire. She informed Plaintiffs’ counsel that she was not willing to pay that debt and that issue first had to be resolved before she would close the transaction.

[68] The emails between Mr. Nanda and Mr. Gahir and then between Mr. Wise and Ms. Kitson clearly contradict Ms. Kitson’s affidavit evidence. She did not intend to close the transaction.

[69] Furthermore, Ms. Kitson has misconstrued the contents of a letter from Mr. Gahir to Mr. Nanda dated August 5, 2016, wherein Mr. Gahir stated that his clients did not know they could close the transaction. That transaction was the sale of their own home and not the purchase of Ms. Kitson’s home. Ms. Kitson may have been confused as the same lawyers were acting on both transactions. It is clear, however, that the letter had nothing to do with the purchase of the Property and was not any indication that the Plaintiffs were not ready, willing and able to complete the purchase.

[70] The Defendants were, therefore, in breach of the contract of purchase and sale. A trial is not necessary to make that determination. The Plaintiffs are entitled to damages for breach of contract in an amount that would put them into the position they would have been in had the contract been performed, insofar as that is possible by the payment of money: Semelhago v. Paramadevan, 1996 SCC 209, [1996] 2 S.C.R. 415 at para. 12.

[71] The Plaintiffs are entitled to receive payment of $20,000 for the credit they ought to have received for the deposit they paid to Remax on the initial offer to purchase. They are also entitled to receive payment of $6,453.24 for the property taxes that ought to have been paid by the Defendants when the Property sold. The Plaintiffs are entitled to $564.72 for expenses incurred moving to their rental accommodation. These amounts should be paid from the funds paid into court.

[72] They are not entitled to $723.50 for expenses incurred moving to the Property. They would have incurred that expense even if the transaction closed as scheduled. For the same reason, they are not entitled to the garbage removal fee of $65. That amount may have been incurred had the transaction closed as scheduled.

[73] The Plaintiffs are also entitled to claim the additional cost of living in a rental property until the transaction closed in May 2017. The Plaintiffs attached the lease agreement and are seeking damages of $18,200. However, they have not accounted for the offsetting living expenses – such as property taxes and mortgage payments – they would have incurred had the sale closed on time. That evidence is not before this court and I therefore cannot assess damages which would be the net additional living expenses. If the parties cannot agree upon an amount for those additional expenses, they are to schedule a half-day trial before me for the purpose of assessing damages for additional living expenses. The parties shall file and serve affidavits with supporting documentation, which shall be used as examination-in-chief. Counsel will then be able to conduct cross-examination on those affidavits, if required. I will then hear further submissions on this issue.

[74] The balance of the damages sought are for legal fees. The Plaintiffs’ position is that they ought to be indemnified for all legal fees, which total $152,197.01.

[75] In 394 Lakeshore Oakville Holdings Inc. v. Misek, 2010 ONSC 7238, Perrell J. stated the following at para. 10:

Modern costs rules are designed to advance five purposes in the administration of justice: (1) to indemnify successful litigants for the costs of litigation, although not necessarily completely; (2) to facilitate access to justice, including access for impecunious litigants; (3) to discourage frivolous claims and defences; (4) to discourage the sanctioning of inappropriate behaviour by litigants in their conduct of the proceedings; and (5) to encourage settlements.

[76] In Boucher v. Public Accountants Council for the Province of Ontario, 2004 ONCA 14579, [2004] 71 O.R. (3d) 291 (C.A.), and Davies v. Clarington (Municipality), 2009 ONCA 722, 100 O.R. (3d) 66, the Court of Appeal for Ontario held that the overall objective of fixing costs is to determine an amount that is fair and reasonable for an unsuccessful party to pay in the particular circumstances, rather than an amount that represents the actual costs incurred by the successful litigant.

[77] Generally, costs should follow the event. As the successful party, the Plaintiffs are entitled to costs. The issue is the quantum of those costs and whether the Plaintiffs are entitled to indemnity for their full legal fees.

[78] Conduct of the parties is relevant where it deserves sanction of the court. The Plaintiffs submit that the Defendants should be sanctioned for their inappropriate behaviour in their conduct of these proceedings.

[79] While the Defendants were in breach of contract for failing to close the sale of the Property, they subsequently entered into negotiations that included an offer for an abatement of the purchase price. Above, I reviewed the September 2016 correspondence between counsel regarding these negotiations. The Plaintiffs’ last offer was for an abatement of $35,000. The Defendants’ last offer was to adjust the closing price by $8,000. The Plaintiffs did not respond to that offer, which is unfortunate as this was an opportunity to resolve the matter in a timely and cost-effective manner. The parties would have been best-served by reaching a compromise to resolve the matter at that time. The failure to settle and the actions taken by the mortgagees after defaults resulted in a significant escalation in legal fees.

[80] I do not consider the Defendants’ mortgage defaults to warrant any sort of sanction by way of a full indemnity award for the Plaintiffs’ costs. Ms. Kitson had moved out of the house in August 2016. She was a student at the University of Toronto. Her evidence, which was not contradicted, was that she could not maintain the mortgage payments and the mortgages fell into arrears. There is no evidence that this was any sort of deliberate action taken by Ms. Kitson to frustrate the sale of the Property.

[81] Furthermore, both parties made good-faith efforts to close the transaction in September 2016. Those efforts came to an end when the Plaintiffs did not respond to the Defendants’ last offer.

[82] The Plaintiffs also alleged that the Defendants did not comply with Ricchetti J.’s order and, in addition to paying the three mortgages registered on title, also use the proceeds of sale to pay a fourth mortgage, legal fees, and the Canadian Tire lien. To deliver clear title, those amounts, other than legal fees, had to be paid to complete the transaction. I do not consider that to be conduct warranting sanction for inappropriate behaviour.

[83] The Plaintiffs are entitled to recover some of their legal fees. Their first lawyer was Mr. Gahir. His account was for $2,694.62 for work performed up to the date the matter did not originally close. Mr. Wise, the second lawyer, rendered three invoices that totaled $5,537.40 for work performed between August 9, 2016, and October 21, 2016, when there were ongoing negotiations regarding the abatement of the purchase price. They also incurred fees of $1,849.46 when the transaction eventually closed in May 2017. The Plaintiffs’ legal fees incurred, excluding the litigation fees associated with this action, total $10,081.48. The Plaintiffs would have incurred the legal fees to complete the transaction in any event, so those are not recoverable. Excluding those fees ($1,849.46) brings the costs to $8,232.02, which shall be paid to the Plaintiffs from the funds currently paid into court.

[84] I am troubled by the litigation fees set out in the Bill of Costs for work done since the litigation commenced in August 2016. Including HST, but not including disbursements, the full indemnity amount claimed is $142,802.62. The substantial indemnity amount is $115,614.14, while the partial indemnity amount is $85,605.98. The disbursements total $3,330.46. This covers the drafting of the Statement of Claim, the motion for the Certificate of Pending Litigation, the summary judgment motion resolved on consent, the discontinuance of the action against the co-defendant, the motion for payment of funds into court, and this summary judgment motion for damages and costs. Keeping in mind the principles from Boucher and Davies, this is not a fair and reasonable amount that an unsuccessful party would expect to pay.

[85] Firstly, the time claimed is excessive. For example, Plaintiffs’ counsel claims 14.7 hours for drafting the Statement of Claim; 18.1 hours for preparing the without notice motion for the Certificate of Pending Litigation; and 6.9 hours for the discontinuance of the claim against Mr. Gahir.

[86] The total time recorded for the summary judgment motion ultimately resolved on consent is 222.5 hours. That works out to 27.8 days, assuming an eight-hour work day. I note that no parties conducted cross-examinations on any affidavits. For closing the sale of the Property, Plaintiffs’ counsel recorded 23.6 hours. For the motion to pay the proceeds from the sale into court, counsel recorded 12.7 hours. For this summary judgment motion for damages, counsel recorded 74.5 hours.

[87] While the Plaintiffs were successful on this motion, these hours and fees exceed a fair and reasonable amount that an unsuccessful party would expect to pay. Costs are not a blank cheque. They must be proportional to the amount in dispute: Marcus v. Cochrane, 2014 ONCA 207 at para. 15. Furthermore, the Plaintiffs had an opportunity to resolve this matter in September 2016 but failed to respond to the Defendants’ last offer.

[88] While proportionality is one of the key principles in assessing costs, it must not prevail over all other considerations (Aacurate General contracting Ltd. v. Tarasco, 2015 ONSC 45980 (S.C.J.) at para. 13 to 17). Ultimately, the award of costs must be fair and appropriate and balance all of the principles.

[89] Taking into account the purpose of cost orders and the factors set out in Rule 57.01 of the Rules of Civil Procedure, the Plaintiffs are entitled to costs of this litigation of $50,000 plus HST of $6,500 and disbursements of $3,330.46 for a total of $59,830.46 which is to be paid from the funds currently paid into court. This is in addition to the legal fees of $8,232.02 incurred prior to this action. The Plaintiffs are further entitled to $27,017.96, representing the original deposit on the Property, unpaid taxes on the Property, and moving expenses to the Plaintiffs’ rental accommodation.

[90] Accordingly, from the total currently paid into court, the Plaintiffs shall be paid $95,080.44. The balance of funds shall remain paid into court pending resolution of the net amount owing to the Plaintiffs for the net additional living expenses they incurred while living in rental premises pending the completion of the sale of the Property.

L. Shaw J.

Released: October 16, 2018