Court File and Parties
COURT FILE NO.: CV-17-132541 DATE: 20181221 ONTARIO SUPERIOR COURT OF JUSTICE
BETWEEN: Donald Miller and Tina Miller, Plaintiffs – and – Xiangying Wang, Defendant
Counsel: Charles Baker, for the Plaintiffs Lorne Levine, for the Defendant
HEARD: September 27, 2018
Reasons for Decision
MCKELVEY J.:
[1] This action appears to be one of a number of lawsuits that were commenced arising out of a very hot real estate market in the spring of 2017 which was followed by a significant slowdown and a decline in home prices. See for example, Gamoff v. Hu, 2018 ONSC 2172.
[2] The plaintiffs in this action sold their family home to the defendant, who was one of seven bidders for the property. The defendant says that she was urged to submit an unreasonably high offer for the property by a real estate agent and told that she could re-sell the property for at least $100,000 more. The defendant further asserts that she is of modest means. The sale was scheduled to close on July 31, 2017. On June 19, 2017 the defendant’s counsel wrote a letter to the plaintiffs which advised as follows:
On February 13, 2017, Ms. Wang signed an agreement of purchase and sale to purchase the above property from Donald Miller and Tina Miller with a closing scheduled for July 31, 2017.
This letter is to advise you that Ms. Wang will not be completing this purchase.
Please have the Millers re-list their property immediately.
[3] The Millers proceeded to re-list the property on June 29, 2017. Unfortunately, although the property was initially re-listed for the original sale price, the market by that point had retreated. No offers were received. The asking price was reduced on several occasions until finally on September 17, 2017 the asking price was reduced to $689,000. On September 18, 2017, the home was finally re-sold for the sum of $650,000 or $201,000 less than the original sale price with the defendant.
[4] The plaintiffs commenced this action to recover the difference between the agreed upon purchase price and what the property ultimately sold for. The defendant has brought a third party action against the real estate agent. In the third party claim it is alleged that the agent wrongly pressured and induced the defendant to purchase the property and was in breach of their fiduciary obligations. The third parties have not entered a defence to the main action.
[5] The plaintiffs seek summary judgment on their claim against the defendant. The third parties did not participate on the hearing of this motion.
The Plaintiffs’ Position
[6] The plaintiffs argue that this court should grant summary judgment. They assert the terms of the purchase and sale agreement are clear, nor is there any dispute about the fact that the defendant aborted the transaction on June 19, 2017. They further submit that the quantum of the plaintiffs’ damages are easily quantified by the difference in the original sale price and the subsequent sale price, together with the other out of pocket expenses incurred as a result of the delay and resale of the property.
The Defendant’s Position
[7] The defendant has raised a number of defences in the action as follows:
- The defendant has pleaded that the plaintiffs did not tender the required closing documentation on the closing date.
- The defendant pleads that the plaintiffs concocted a false “bidding war” to artificially inflate the value of the property by “advising the defendant’s agent that there were at least six other offers being contemplated by the plaintiffs at the same time the defendant’s offer to purchase was submitted”.
- The defendant argues that the plaintiffs have been unjustly enriched as the property was sold over its original asking price.
- The defence argues that the plaintiffs have failed to mitigate their damages.
- The defence argues that even if this court is prepared to grant summary judgment, it should stay enforcement of the judgment in accordance with Rule 20.08.
Rule 20 – Summary Judgment
[8] This is a motion for summary judgment under Rule 20 of the Rules of Civil Procedure. In 2014, the Supreme Court of Canada released its decision in Hryniak v. Mauldin, 2014 SCC 7, which considered when it is appropriate to grant summary judgment under Rule 20 of the rules. Rule 20.04(2) provides that,
The court shall grant summary judgment if,
(a) the court is satisfied that there is no genuine issue requiring a trial with respect to a claim or defence.
[9] Rule 20.04(2.1) provides that,
In determining under clause (2) (a) whether there is a genuine issue requiring a trial, the court shall consider the evidence submitted by the parties and, if the determination is being made by a judge, the judge may exercise any of the following powers for the purpose, unless it is in the interest of justice for such powers to be exercised only at a trial:
- Weighing the evidence.
- Evaluating the credibility of a deponent.
- Drawing any reasonable inference from the evidence.
[10] In its decision in Hryniak, the Supreme Court of Canada notes that there will be no genuine issue requiring a trial when a judge is able to reach a fair and just determination on the merits of a motion for summary judgment. This will be the case when the process allows the judge to make the necessary findings of fact, allows the judge to apply the law to the facts, and is a proportionate, more expeditious, and less expensive means to achieve a just result. The question a court must consider is whether the judge has confidence that he or she can find the necessary facts and apply the relevant legal principles to fairly resolve the dispute.
[11] In the present case I have concluded that the issues raised in the summary judgment motion do not require a trial. For the following reasons, I believe I am in a position to make the necessary findings of fact and apply those facts to the law in a way that will reach a fair and just determination on the merits of this case.
Analysis
[12] While the plaintiffs did not formerly tender the required documents at the time scheduled for closing, the case law clearly establishes that this is not required where the defendant has previously repudiated the agreement.
[13] In Spirent Communications of Ottawa Limited v. Quake Technologies (Canada) Inc. (2008), 2008 ONCA 92, 88 OR (3d) 721, the Ontario Court of Appeal states at para. 37,
An anticipatory breach sufficient to justify the termination of a contract occurs when one party, whether by express language or conduct, repudiates the contract or evinces an intention not to be bound by the contract before performance is due.
[14] In the text, Bruce H. Engell, Paul M. Perell, Remedies and the Sale of Land, 2nd ed. (Toronto: LexisNexis Canada, 1998), the authors note at p. 48 that tender is not required from a party when the other party has clearly repudiated the agreement. Numerous cases have held that the law does not require what would be a meaningless or futile gesture.
[15] In the present case, the letter from the lawyer for the defendant makes it clear that the defendant was repudiating the agreement and was not prepared to close the transaction. The failure by the plaintiffs to tender documents on the closing date is not a viable defence in this action.
[16] The defence also argues that the plaintiffs concocted a false bidding war to artificially inflate the price of the property.
[17] In the affidavit of the plaintiff, Donald Miller, he states that on February 13, 2017, he and his wife were presented with seven offers ranging from $704,000 to $851,000. These offers are set out and attached to his affidavit. Mr. Miller and his wife decided to take the highest offer which was the defendant’s offer. It is therefore clear that there were no false representations by the plaintiffs to the defendant. There is no evidence adduced by the plaintiffs of any other misrepresentation to the defendant. There is, therefore, no evidence of unfair dealing or a “false bidding war”. Mr. Miller and his wife reasonably accepted the defendant’s offer which was the highest offer presented amongst all of the offers.
[18] For the same reasons I reject the defence argument that the plaintiffs were unjustly enriched because the property was sold over the asking price. The asking price for the property was $689,000. It was Ms. Wang’s decision to offer an amount significantly more than the listing price as she understood that multiple offers had been received for the property. Having elected to present an offer well above a listing price on the advice of her own real estate agent, I fail to understand how the defendant can successfully argue that the plaintiff has been unjustly enriched.
[19] The defence also argued that the plaintiffs failed to mitigate their damages. The steps taken by the plaintiffs to mitigate their damages are set out in the affidavit of Donald Miller and are outlined above. In his affidavit, Mr. Miller notes that the real estate market in this jurisdiction took a downward turn in April or May of 2017. They promptly re-listed the property after receiving the letter of June 19 from the lawyer for the purchasers. They attempted to re-sell the property at the original price but were unsuccessful and ultimately had to sell the property at a significantly reduced price approximately 3 months later.
[20] The defence argues that the plaintiffs have failed to adduce any expert evidence to support a conclusion that the steps taken by the plaintiffs to re-sell the property were reasonable. However, the defendants have failed to adduce any evidence calling into question the adequacy of the mitigation efforts outlined by the plaintiffs in their affidavit.
[21] The legal onus is on the defence to establish a failure to mitigate as set out in numerous authorities. For example in Southcott Estates Inc. v. Toronto Catholic District School Board, 2012 SCC 51, the Supreme Court of Canada notes,
Where it is alleged that the plaintiff has failed to mitigate, the defendant bears the burden of proving that the plaintiff has failed to make reasonable efforts to mitigate and that mitigation was possible.
[22] This principle is also referenced in John D. McCamus, The Law of Contracts, 2nd ed. (Toronto: Irwin Law, 2012), at p. 928.
[23] The obligation on a responding party in the summary judgment motion is to put their best foot forward by submitting relevant evidence. As the defence has not introduced any evidence to call into question the adequacy of mitigation, I find that there is no basis to reduce the plaintiffs’ damages on this basis.
[24] This leaves the final issue raised by the defence who have requested a stay of execution of the judgment. Rule 20.08 provides as follows:
Where it appears that the enforcement of a summary judgment ought to be stayed pending the determination of any other issue in the action or a counterclaim, crossclaim or third party claim, the court may so order on such terms as are just.
[25] The defence argues that any court judgment should be stayed pending disposition of the third party claim.
[26] The case law establishes that whether or not a stay should be granted is an exercise of discretion taking into account the nature of the claims and the equities between the parties. Counsel referred to the decision in Zucchetti Rubinetteria S.P.A. v. Natphil Inc., 2011 ONSC 2275. This case refers to some of the factors that have been taken into account in the context of counterclaims. Counsel were not able to refer me to any cases dealing with third party claims which by their nature are quite different than counterclaims and could result in a set-off against the plaintiffs’ claim. In this regard, however, I have reviewed the decision of this Court in Faithshire Leasing Corp. v. 1589630 Ontario Inc., [2009] O.J. No. 4266 (affirmed on appeal, [2010] O.J. No. 1986](https://www.canlii.org/en/on/onca/doc/2010/2010onca349/2010onca349.html)). In that decision the relationship between the parties in question is considered to be an important factor. The court also recognizes the discretionary nature of this relief.
[27] In the context of a third party claim, I am of the view that there are a number of factors which can properly be taken into account in deciding whether a court should exercise its discretion under Rule 20.08. These include:
- How closely connected are the main and third party actions?
- Is there a risk of inconsistent findings in the third party claim?
- Is the third party claim meritorious or has it been brought for tactical reasons?
- Have the plaintiffs’ actions in the main action been influenced by improper motives?
- What is the potential prejudice to the successful party on the motion for summary judgment if a stay is granted?
[28] In the present case, both the main and third party claims arise out of the same transaction. However, the third party action is focused solely on the alleged improper conduct by the real estate agent, which is alleged to have induced the defendant to make the offer to purchase the plaintiffs’ property. In this regard, the issues in the third party action are distinctly different from those in the main action and there does not appear to be a risk of inconsistent findings in the third party claim. There is, in summary, no significant overlap in the issues to be decided in the main and third party actions.
[29] It is difficult to draw any firm conclusions about the merits of the third party claim. As noted previously, the third party has not entered a defence in the main action and has not made submissions on this motion for summary judgment.
[30] There is no evidence that the plaintiffs’ decision to bring a motion for summary judgment has been influenced by improper motives. In my view, this motion for summary judgment is entirely appropriate in the circumstances of the case.
[31] It is clear that the defendant would benefit from a stay of the judgment in the main action. This would mean that the third party action would be tried and if the defendant is successful, she would have the benefit of a recovery from the third party at the point in time when she becomes obligated to pay the plaintiffs in the main action. This, however, must be considered together with the potential prejudice to the plaintiffs of a stay. Although the defence maintains that they will move the third party action along promptly, there will inevitably be a significant delay before the third party action is tried. During the period of this delay, the plaintiffs will be deprived of the opportunity to execute on their judgment. The plaintiffs will therefore be forced to run a risk that the defendant’s financial circumstances could deteriorate over the period of the delay, and their ability to collect on the judgment could be significantly compromised as a result of the stay. The plaintiffs in this action are innocent of any wrongdoing. There has been a clear breach of the agreement by the defendant. In the circumstances of this case, taking all the circumstances into account, including the potential prejudice to the plaintiffs position on enforcement of the judgment, I have concluded that the interests of justice do not support the imposition of a stay. I am therefore not prepared to grant the defence request in this regard.
Conclusion
[32] For the above reasons, I grant summary judgment to the plaintiffs. In addition to the loss in the purchase price of $201,000, the plaintiffs shall be entitled to the out of pocket expenses set out in para. 42 of Donald Miller’s affidavit and which were not opposed by the defence on this motion. If there are any other issues remaining other than costs, counsel may make an appointment through the trial coordinator within 30 days of the release of this decision.
[33] This case represents a very unfortunate result for the defendant, Ms. Wang. She is not alone in being caught up in a real estate market which quickly turned from a hot market into a slumping one. It stands as a cautionary tale for many who have only experienced increasing real estate property values. Markets can and do change suddenly. These changes carry with them not only the potential for significant gain, but also for very significant financial losses.
[34] If counsel cannot agree on the costs of this motion, then an appointment should be taken out with the trial coordinator within 30 days of the release of this decision to address the issue of costs. In such event, the parties will deliver concise briefs at least two days before their attendance. If no arrangements are made within 30 days for an appointment to speak to costs, there will be no order for costs.
Justice M. McKelvey
Released: December 21, 2018
ONTARIO SUPERIOR COURT OF JUSTICE BETWEEN: Donald Miller and Tina Miller, Plaintiffs – and – Xiangying Wang, Defendant
REASONS FOR DECISION Justice M. McKelvey