Court File and Parties

COURT FILE NO.: CV-18-586 DATE: 20190307 SUPERIOR COURT OF JUSTICE - ONTARIO

RE: Brian Li Yen Pin and Sarah-Jill Li Yen Pin, Applicants/Responding Party AND: Yang Qi Wang, Respondent/Moving Party

BEFORE: Barnes J.

COUNSEL: Timon Sisic, for the Applicants/Responding Party Young H. Lee, for the Respondent/Moving Party

HEARD: February 20, 2019

ENDORSEMENT

INTRODUCTION

[1] The Respondent’s (Yang Qi Wang) application to convert this application into an action is dismissed. Ms. Wang may seek leave of the application judge to cross-examine the affiants on the issue of mitigation of damages. Ms. Wang’s request to add her realtors as third party defendants is dismissed.

BACKGROUND FACTS

[2] The Applicants, Brian and Sarah-Jill Li Yen Pin, were owners of a property with a municipal address of 4064 Trapper Crescent, Mississauga, Ontario, L5L 3A9 (the “property”).

[3] On April 27, 2017, they entered into an Agreement of Purchase and Sale (the “Agreement”) with Ms. Wang. Ms. Wang’s offer to purchase the property for $1,098,000 was accepted.

[4] The Agreement included an inspection clause which required inspection of the property to take place within one business day of the offer. On April 27, 2017, Ms. Wang had the property inspected and provided the vendors, Sarah-Jill and Brian Li Yen Pin, with a “Notice of Fulfillment of Condition” (the “Notice”). The Notice cited the inspection clause.

[5] Ms. Wang received the Home Inspection Report on April 28, 2017. The report noted significant defects with the property. She informed the vendors that she was reconsidering the purchase due to the defects. The vendors conveyed their willingness to assume the cost of any remedial work. Ms. Wang sought and was granted an extension of the deadline for providing the deposit.

[6] On April 29, 2017, Ms. Wang’s realtor told the vendors that she did not intend to purchase the property. On April 30, 2017, Ms. Wang entered into an agreement with another vendor to purchase a property in Hamilton/Ancaster.

[7] On May 2, 2017, the vendors’ lawyer informed Ms. Wang that her failure to pay the deposit was a breach of the Agreement and the vendors would be seeking a new buyer.

[8] The transaction had been scheduled to close on July 5, 2017. It did not close on that date. The vendors relisted the property three times and sold it on August 17, 2017. The property sold for $845,000.

[9] The vendors claim damages for the difference between the agreed price and the price realized when the property was sold. The vendors’ application is premised on breach of contract.

ISSUES

1. Should the application be converted to an action?

2. Can Ms. Wang add her realtors as third party defendants?

ANALYSIS

1) Should the application be converted to an action?

[10] The application will not be converted into an action. The legal prerequisites for such a conversion have not been met. A proceeding may be commenced by application where:

1. Authorized by the Rules of Civil Procedure, R.R.O. 1990, Reg. 194, r. 14.05(3); or

2. Authorized by another statute: Rule 14.05(2).

[11] The vendors rely on Rule 14.05(3)(d) which permits proceeding via application where “the determination of rights … depend on the interpretation of … a contract” The dispute between the parties will be resolved by the court’s interpretation of the Agreement and the Notice. The vendors also assert that they may proceed by way of application because, pursuant to rule 14.05(3)(h), “it is unlikely that there will be any material facts in dispute”.

[12] Pursuant to Rule 38.10 a party may seek to convert an application to an action when there is good reason to do so. For example where:

1. there are material facts in dispute;

2. there are issues of credibility and viva voce evidence is required;

3. a proper determination of the issues cannot be made on the basis of the application record: Metropolitan Toronto Condominium Corp. No. 747 v. Korolekh, 2010 ONSC 4448, 95 R.P.R. (4th) 198, at paras. 56-57; Collins v. Canada (Attorney General), 76 O.R. (3d) 228 at paras. 29-32.

[13] An application is not converted to an action simply because there is a factual dispute. The factual dispute must be material to the issues to be determined and be such that the dispute cannot be fairly resolved by affidavits and cross-examination on affidavits: Metropolitan Toronto Condominium Corp. No. 747 v. Korolekh, 2010 ONSC 4448, 95 R.P.R. (4th) 198, at paras. 54-57.

[14] Should the court determine a discrete issue can be resolved on the basis of undisputed facts, the court can resolve that issue on application and order other issues, with disputed facts, be resolved at trial. Such action can be taken when the court determines that such action would be more expeditious and would increase the likelihood of resolution: E.J. Hannafin Enterprises Ltd. v. Esso Petroleum Canada, 17 O.R. 3d 258 Ont. Gen Div. para. 16 to 19.

[15] Ms. Wang submits that there are material facts in dispute and the record before the court is inadequate for these reasons:

(a) There are differing interpretations of the inspection condition in the Agreement and the significance of the Notice. The parties attribute different motivations for their conduct.

(b) Weighing of evidence is required because the terms of the Agreement must be interpreted in the context of the communications between the realtors and the subsequent conduct of the parties.

(c) The issues are complex. Expert evidence is required to help determine whether the vendors took reasonable steps to mitigate their damages and also to help decide whether the defects with the property meet the threshold required by the inspection condition to terminate the transaction without liability.

(d) Pleadings and discoveries are necessary because negotiations took place through the parties’ realtors. Ms. Wang dealt with her realtor in Chinese and had a limited grasp of English. There is a material dispute of fact about the conversations between the parties and their realtors. Such conversations are relevant to the liability of the vendors, Ms. Wang and Ms. Wang’s realtors.

(e) Ms. Wang’s realtors are potentially liable to her. They have relevant evidence to give. Proceeding by application saddles Ms. Wang with the expense of preparing extensive affidavits from the realtors. This process is problematic and unfair to Ms. Wang.

(f) Since Ms. Wang’s realtors are potentially liable to her, to preclude her from adding the realtors as third party defendants in an action, prevents her from adducing relevant evidence and also introduces multiplicity of proceedings, res-judicata and inconsistent judgments.

[16] Ms. Wang also submits that credibility assessments are required. Ms. Wang is recently married and a new immigrant to Canada. A finding in favour of the vendors would have a profound impact on her. She submits that these are additional factors in support of an order converting the application to an action.

[17] The vendors reject Ms. Wang’s arguments and oppose her request. I conclude that Ms. Wang is overly complicating the issue to be decided on the application.

[18] The main issue to be decided at the application is whether Ms. Wang waived the inspection clause. The two issues previously identified stem from this issue. The resolution of this issue is dependent on the interpretation of the Agreement, the Notice, and the impacts of the Notice on the Agreement.

[19] The parties agree that the Agreement contains an “entire agreement clause”. Ms. Wang has raised the prospect that conversation with realtors will shed light on the intentions of the parties. She has not disputed the Vendors’ assertion that the parties’ intent was to give the “entire agreement clause” its literal meaning. Thus, the written agreement between the parties governs the contractual relationship: Gutierrez v. Tropic International Limited (2002), 63 O.R. 3d 63 (Ont. C.A). Ms. Wang may have a potential case against her realtors, however, the evidence of her realtors are not germane to the resolution of this dispute.

[20] There are no material facts in dispute. Both parties agree on the following:

1. the Agreement was signed;

2. the Notice was signed;

3. Ms. Wang obtained an inspection report;

4. she communicated deficiencies/defects identified in the report to the vendors;

5. the vendors agreed to cover remediation costs;

6. Ms. Wang requested a delay to a specific date for payment of the deposit; and

7. Ms. Wang decided not to pursue the agreement because of the defects.

[21] Ms. Wang failed to point out any real ambiguities in the Agreement and the Notice. No ambiguities are apparent at this time. I make this observation subject to the decision of the application judge who will have the benefit of the fulsome submissions of counsel and must deal with the crux of the dispute on the merits.

[22] Ms. Wang has failed to demonstrate why the advice she received from her realtors has any bearing on the issues on the application. Advice she may have received from her realtors do not form any part of the vendors’ case against her.

[23] A potential area of dispute in the vendors’ claim is that Ms. Wang failed to tell them that she was purchasing another property in Hamilton. On this basis, the vendors allege bad faith. The vendors have since invited the court to strike this claim. This claim is struck at the request of the vendors. Thus, no credibility findings are required on this issue.

[24] Issues of the reasonableness of the vendors’ efforts to mitigate damages focus on their efforts to relist their property, as well as evidence about available prices at the time of listing of comparable properties. The dates when the vendors listed the property, the prevailing prices at the time, and the prices at which the property was finally sold are not matters in dispute.

[25] Ms. Wang has the onus to demonstrate failure of the vendors to mitigate: Dobson v. Winton & Robbins Ltd., [1959] S.C.R. 775, at para. 15. These are factual findings that do not require the assistance of an expert. The record is sufficient to resolve the issue. Ms. Wang has the option of seeking leave of the application judge to cross-examine the vendors on the issue of mitigation of damages.

[26] Should the application judge determine that cross-examination on the issue of mitigation of damages is insufficient to amplify the record such as to permit a fair and just resolution of the issue of mitigation of damages, it is open to the application judge to direct that the discrete issue of mitigation of damages be set down for trial.

[27] There is no disagreement that there was an inspection or about the defects noted. Nor is there disagreement about the nature of the defects, the vendors’ willingness to pay for remediation, or Ms. Wang’s decision to reject the offer and not pursue the contract. There is also an “entire agreement” clause. Within this context, expert evidence is not required to assist the court in determining whether the defects justified the termination of the contract.

2) Can Ms. Wang add her realtors as third party defendants?

[28] Ms. Wang cannot add her realtors as third party defendants. For reasons previously articulated, while Ms. Wang may have a potential action against her realtors, the actions of her realtors are not relevant to the resolution of her dispute with the vendors.

[29] Ms. Wang submits that her realtors dealt with the vast majority of the negotiations because she speaks limited English. She submits that a third party claim is the only means for her to provide evidence on material issues in dispute. She submits that the realtors are potentially liable to her and this would introduce duplicate proceedings.

[30] I have already concluded that this matter shall not be converted into an action and, therefore, there is no basis to add third parties as defendants in a non-existent action. My finding on the conversion to application issue effectively resolves this matter. Subject to limitation period concerns, it is open to Ms. Wang to commence an action against her realtors.

[31] The bad advice she alleges they gave her is not germane to the resolution of her dispute with the vendors and, therefore, issues of multiplicity of proceedings, res-judicata and inconsistent judgments do not arise. For example, should the vendors be unsuccessful in the application, Ms. Wang may have no claim against the realtors. Also, while not determinative, I observe that, at this time, Ms. Wang is not sure of the location of her realtor and only refers to him as “Eddie”. My decision that this application shall not be converted into an action is determinative. However, Ms. Wang’s inability to successfully locate and identify her realtor raises the spectre of additional delay and the resulting prejudice to the vendors is obvious.

COSTS

[32] Should the parties be unable to agree on costs, the vendors shall submit a cost outline within 15 days. Ms. Wang will submit her reply within 15 days thereafter. Cost outlines may not be more than three pages double spaced.

Barnes J. Date: March 7, 2019