Court File and Parties
Newmarket Court File No.: CV-17-132998-00 Date: 2019-01-08 Ontario Superior Court of Justice
Between: Yaqiong Wang Plaintiff/Applicant – and – Tribute (Grandview) Ltd. Defendant/Respondent
Counsel: Dheeraj Bhatia, for the Plaintiff/Applicant Scott McGrath and James Hardy, for the Defendant/Respondent
Heard: September 12 and October 15, 2018
Ruling on Motion
DE SA J.
Overview
1The plaintiff, Yaqiong (Joan) Wang, agreed to buy a new-build house in Oshawa from the defendant, Tribute (Grandview) Ltd. (“Tribute”) which was scheduled to close in 2019. After the conditional period of the contract expired, the housing market dropped. Ms. Wang sought to get out of the deal. Tribute refused.
2Ms. Wang sued Tribute to get her deposit back. Tribute counterclaimed for specific performance.
3Tribute has brought a motion for summary judgment. It seeks the dismissal of Ms. Wang’s action against it, and judgment against Ms. Wang on its counterclaim. Tribute no longer seeks specific performance. It seeks damages only.
4Having reviewed the record before me, I grant judgment in favour of Tribute. The particulars of my decision are outlined below.
Summary of Facts
Background
5On April 5, 2017, Jenny Liang, a real estate agent from HomeLife Landmark, sent an e-mail to a long-time sales representative with Tribute Communities, Jeffrey Morrison.
6In her email, Ms. Liang informed Mr. Morrison that she had a client for “lot 49 for the Selkirk A”, and identified Ms. Wang as her client. Ms Liang was referring to a lot in the Grandview Community. “Selkirk A” was a particular model of home offered by Tribute.
7Mr. Morrison responded to Ms. Liang and wrote that Lot 49 on William Lott Drive, Oshawa, Ontario (the “Property”) was available.
8Ms. Liang and Ms. Wang attended at Tribute’s sales office to meet with Mr. Morrison.
9Ms. Wang signed an offer to purchase the Property (the “Contract”). The key terms of the Contract included: the model was The Selkirk 19-A GV360419A; the purchase price was $954,990; and the required deposit was $96,000, to be paid in installments. The tentative closing date for the Property was scheduled for March 25, 2019.
10Ms. Wang signed and initialed the Contract on April 5, 2017.
11A representative of Tribute signed the Contract on April 10, 2017.
12A copy of the final contract signed by both Ms. Wang and an authorized agent of Tribute was provided to Ms. Liang.
Schedules in Favour of Ms. Wang
13There were two schedules in the Contract in favour of Ms. Wang that made the Contract conditional until 5:00 pm on April 15, 2017. They gave her time to arrange financing and have the Contract reviewed by her lawyer. If Ms. Wang gave notice to Tribute in writing by 5:00 pm on April 15, 2017 that her lawyer did not approve of the Contract, or that she was unable to arrange financing, the Contract would be deemed null and void.
14Ms. Wang did not send notice to Tribute before that date pursuant to the schedules, nor did anyone do so on her behalf.
15Instead Ms. Wang sent Tribute a Mortgage Approval letter from Mortgage Architects, dated April 10, 2017, approving Ms. Wang for a mortgage for the purpose of the Property.
Amendment to Contract
16Ms. Wang sent an e-mail to Mr. Morrison on April 7, 2017 and asked whether an amendment could be made to the Contract adding an additional bathroom.
17Tribute agreed, and Ms. Wang signed an amendment to the Contract on April 10, 2017, adding an extra bathroom to the second floor at a cost of $5,000 (the Amendment”). Tribute reviewed, accepted and executed the Amendment on April 20, 2017.
Ms. Wang’s failure to pay Deposit
18Ms. Wang provided an initial deposit cheque of $5,000 with the Contract. She also provided post-dated cheques for the remaining $91,000 deposit, which she agreed to pay over six months: May 1, 2017 - $19,000; June 1, 2017 - $24,000; July 1, 2017 $10,000; August 1, 2017 - 10,000; September 1, 2017 - $14,000; and, October 1, 2017- $14,000.
19Ms. Wang’s initial cheque dated May 1, 2017 for $19,000 was honoured and deposited into Tribute’s bank account. However, the check of June 1, 2017 was dishonoured due to non-sufficient funds. Ms. Wang subsequently stopped payment on the following cheques for June, July, August, September and October.
20In total, Ms. Wang paid $24,000 towards the Deposit, leaving $72,000 outstanding.
Attempt to Cancel the Deal
21Throughout May and June 2017, Ms. Wang had e-mail communications with Tribute. In these emails, Ms. Wang expressed concerns about closing on the Property. She made attempts to have Tribute transfer the deposit to a different property with a lower purchase price. She also sought to terminate the agreement with Tribute.
22When the cheque of June 1, 2017 came back NSF, Jeff Morrison from Tribute contacted Ms. Wang and asked her to provide a Money Order or certified cheque for the amount owing.
23On June 26, 2017, Ms. Wang wrote to Tribute:
I don’t think I can buy this house anymore because I have problem closing. I talked to many mortgage brokers and I don’t think I can get any mortgage from bank. Plus I don’t have income right now, I won’t be able to have enough down payment.
I talked to Sharonn Innes before, I asked if I can buy a cheaper property from Tribute, so I can really close my property when it is finished but she said she has no idea.
Now I don’t know what to do. I would appreciate if you can help me. I want to buy a cheaper property from tribute (semi-detached in Chelsea Hills at Whitby) and transfer my deposit there. If the property is under $800,000, then I would be able to get mortgage, otherwise I won’t.
24Sharonn Innes, a representative of Tribute, advised Ms. Wang she could not transfer the deposit to a property in Chelsea Hills as the pricing had not been assigned. Ms. Innes also warned Ms. Wang that she risked losing the deposit.
25On July 27, 2017, Ms. Wang advised Tribute that she had no intention of completing the agreement.
Request to Cancel the Agreement of Purchase and Sale by Counsel and Commencement of Action
26Between July 27, 2017 and August 31, 2017, Ms. Wang retained counsel with a view to recovering her deposit. On August 31, 2017, Ms. Wang had her counsel write to Tribute. In that email, her counsel wrote:
This closing date is at least 2 years away. The buyer has informed your client well ahead of time. No prejudice will be caused to the vendor if the vender releases the buyer from the APS and returns the deposit of the buyer as the vendor has plenty of time to sell the proposed dwelling to another buyer. At the time of the signing of the APS, even the plan was not registered and the construction off course has not been commenced.
The vendor should not look to take advantage of the buyer’s situation and try to enrich itself unjustly at the cost of the buyer.
Kindly thus consult your client and release the buyer from the APS by returning the buyer’s deposit.
27Ms. Wang issued a Statement of Claim against Tribute on October 12, 2017. In her action, Ms. Wang claimed the return of her deposit of $96,000, unspecified “actual damages and costs suffered by the plaintiff”, and punitive damages of $200,000.
28On October 23, 2017, lawyers for Tribute wrote to counsel for Ms. Wang demanding payment for the outstanding amounts. Tribute, through its counsel, also advised that it would not be terminating the APS.
Service of Statement of Defence and Acceptance of Repudiation of Contract
29Tribute served a Statement of Defence and Counterclaim dated November 17, 2017. In its pleading, Tribute sought specific performance to compel Ms. Wang to close on the purchase of the Property. In the alternative, it sought damages for breach of contract.
30Tribute served its notice of motion seeking summary judgment on or about January 26, 2018. In its original notice of motion, Tribute maintained its claim for specific performance, and sought damages only in the alternative.
31However, on March 29, 2018, Tribute served an amended notice of motion and officially accepted Ms. Wang’s anticipatory breach of contract, writing:
To confirm, Tribute is accepting Ms. Wang’s repudiation of the Agreement of Purchase and Sale (“APS”) and terminating the APS. The property has been listed in an effort to mitigate Tribute’s damages.
Our Notice of Motion reflects the termination. Tribute is seeking recovery of the damages caused by your client’s repudiation of the APS plus interest and costs.
Change in Market Conditions and Drop in Value
32An appraisal report was included as part of Tribute’s motion materials. The report estimates the value of the Property as of March 31, 2018 (the date of termination) to be $690,000.
33Despite this estimate, the Property is currently listed at a purchase price of $763,992, before upgrades and adjustments. According to Tribute, the revised purchase price is a reflection of the current state of Oshawa resale housing market which has declined by approximately 20%.
34According to the report filed, prices were increasing rapidly from the end of 2016 to early 2017 until the Ontario government announced the Fair Housing Plan on April 20, 2017. Average prices for detached homes in Oshawa averaged at $660,462 in April 2017 and quickly dropped to $571,550 (15% decline) in May 2017 according to statistics provided by the Toronto Real Estate Board. Prices dropped to a lowest point in July 2017 to an average of $508,590 and then moderately increased up to $532,676 in December 2017. Further increases were recorded in the spring of 2018 up to $566,649.
35According to the report, the number of detached home sales dropped from 277 sales in April 2017 and remained at a similar level in May 2017 but gradually declined to a low of 143 sales in August 2017.
36Overall the market was at a peak in April 2017 with record prices, a high number of homes sold and a short exposure time. The introduction of new policies brought the market down to a low in July 2017 and gradually it rebounded to a more balanced and stabilized level.
Position of the Parties
37Tribute asks that the plaintiff’s claim be dismissed as disclosing no cause of action. Tribute also seeks summary judgment on its counterclaim for breach of contract (related to Ms. Wang’s decision to repudiate the agreement), and for damages.
38Ms. Wang takes the position that the APS was not valid because she was not given a signed copy of the agreement on the date. She also takes the position that if there was an agreement, Tribute agreed to terminate the APS in exchange of forfeiting her deposit. Finally, Ms. Wang takes the position that the builder knew from May 2017 that Ms. Wang was not going to close the purchase, and did nothing to mitigate its losses.
Analysis
Test: Motion for Summary Judgment
39Pursuant to Rule 20.04(1) of the Rules of Civil Procedure, R.R.O. 1990, Reg. 194, the court shall grant summary judgment if it is satisfied there is no genuine issue requiring a trial. Animating the interpretation of 20.04(1) is Rule 1.04 which requires that the rule be liberally construed to secure the just, most expeditious and least expensive determination of a proceeding on its merits having regard to the complexity of the issues and the amounts involved.
40The judge in deciding whether to grant summary judgment must ask: can the full appreciation of the evidence and issues that is required to make dispositive findings be achieved by way of summary judgment, or can this full appreciation only be achieved by way of trial? A trial is not required if the judge on the motion can 1) achieve a fair and just adjudication; 2) make the necessary findings of fact; 3) apply the law to those facts; and 4) the motion is a proportionate, more expeditious and less expensive means to achieve a just result rather than going to trial. As the Supreme Court explained in Hryniak v. Mauldin, 2014 SCC 7 , [2014] 1 SCR 87, at para. 50:
These principals are interconnected and all speak to whether summary judgment will provide a fair and just adjudication. 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 principals so as to resolve the dispute. [Emphasis added.]
Was the Agreement of Purchase and Sale Valid?
41In order to form a contract, the parties must be of one mind as to the essential terms of the contract, namely the parties, the period and the price. To determine whether the parties reached a meeting of the minds, or consensus ad idem, the court applies an objective test. The court considers whether a reasonable person, apprised of all the circumstances, would believe the parties had reached an agreement. J.M.B. Cattle Corp. v. 2144032 Ontario Inc., 2015 ONSC 7372.
42In this case, an agreement to purchase the Property was clearly complete. Even Ms. Wang’s conduct after the APS was signed makes this evident.
43I do not accept the plaintiff’s suggestion that the Contract was invalid because Ms. Wang did not receive a signed copy of it. Even a failure to sign an agreement does not invalidate it, provided that the parties have agreed to its terms. As explained in Kernwood Ltd. v. Renegade Capital Corp., both words and conduct are considered in making the assessment.
With respect, I do not agree that Blair's failure to sign the Share Purchase Agreement establishes that he did not assent to it on November 21, 1989 . It is well-settled law that, except in certain situations, a party's intention to be bound can be manifested by words or conduct: Calvan Consolidated Oil & Gas Company Limited v. M.E. Manning, [1959] S.C.R. 253 at 261 . A manifest intention to be bound can be established by conduct or words where an objective interpretation of the conduct or words of the parties would lead a reasonable person to conclude that the parties intended to be bound: Industrial Tanning Co. v. Reliable Leather Sportwear Ltd., [1953] 4 D.L.R. 522 at 525 (Ont. C.A.) . In such cases, the requirement of a signature is treated as a mere formality.
44I am satisfied that the Contract was completed. It had been settled in all of its material terms. Both the words and the conduct of the parties make this clear.
Was there a Subsequent Agreement to Settle for the Deposit Only
45The Respondent takes the position that even if there was a “contract”, Tribute agreed to terminate the APS in exchange for forfeiting her deposit. Essentially, the Respondent argues that Tribute is precluded from claiming anything further given their agreement to accept the deposit in lieu of any breach. In short, the Respondent’s position is that Tribute, through its agents, entered a settlement agreement which prevents them from pursuing any additional damages.
46As with any other contract, a settlement agreement is binding when the parties have reached an agreement on all essential terms. As explained in Hedayat Amirvar v. Murlee Holdings Limited, 2011 ONSC 5826 at para. 5:
There is a two part test to determine whether a binding settlement agreement exists. First, there must have been a mutual intention to create a legally binding contract; and second, the parties must have reached agreement on all of the essential terms of the settlement. See Olivieri v. Sherman (2007), 2007 ONCA 491 , 86 O.R. (3d) 778 (Ont. C.A.) at para 41 .
47I do not accept the Respondent’s suggestion that Tribute meant to abandon their claim for damages in exchange for a forfeiture of the deposit. Sharonn Innes, a representative of Tribute, warned Ms. Wang that she risked losing the deposit. However, this is hardly an agreement to abandon any other claims for damages in the face of a breach. Even the subsequent letter from Ms. Wang’s counsel requesting that Ms. Wang be released from the APS belies the suggestion that a settlement of the outstanding issues had been negotiated.
Did Tribute fail to Mitigate its Damages?
48The Respondent also takes the position that the Tribute knew Ms. Wang had decided not to go ahead with the purchase of the Property as far back as May 2017. According to Ms. Wang, Tribute did not make any attempt to mitigate its damages or to resolve the issue.
49Ms. Wang also takes the position that Tribute could not have suffered any damages at all since it was only a month since the offer was made and closing was more than 2 years away. Any damages caused are the fault of Tribute through its inaction.
50The law on repudiation of contracts was canvassed by the Ontario Court of Appeal in Brown v. City of Belleville, 2013 ONCA 148 , [2013] O.J. No. 1071,114 O.R. (3d) 561, 2013 CarswellOnt 2605 (C.A.). The basic principles were also summarized by Goldstein J. Prolink Broker Network Inc. v. Jaitley, 2013 ONSC 4497 at para. 46:
- An anticipatory breach does not necessarily terminate a valid contract;
- Whether a party has repudiated a contract is a question of fact;
- The non-repudiating party may still treat the contract as being in effect, in which case each party may sue for past or future damages;
- The contract is terminated if the non-repudiating party accepts the repudiation. The parties have no future obligations but past obligations are not extinguished;
- Where the non-repudiating party elects to be disaffirmed from the contract, that election must be clearly and unequivocally communicated within a reasonable time. The party may communicate by words or the election may be inferred.
51In this case, I find that the repudiation was not accepted until the formal notice of acceptance was given by Tribute on March 29, 2018. Accordingly, Tribute was entitled to seek specific performance of the Contract up until this time.
52Regardless, even if the repudiation had been considered accepted by Tribute when Ms. Wang said she wanted to terminate the Contract, the measure of damages would not be meaningfully different. The record actually indicates that the property value dropped in May of 2017, and has increased marginally since that date.
The Assessment of Damages
53The judgment of Morden J.A. in 100 Main Street Ltd. v. W.B. Sullivan Construction Ltd. (1978), 20 O.R. (2d) 401, 88 D.L.R. (3d) 1 (C.A.) is the principal authority on the assessment of damages for breach of an agreement of purchase and sale. In that case, the court summarized the relevant principles in determining the damages as follows:
(1) The basic principle for assessing damages for breach of contract applies: the award of damages should put the injured party as nearly as possible in the position it would have been in had the contract been performed. (2) Ordinarily courts give effect to this principle by assessing damages at the date the contract was to be performed, the date of closing. (3) The court, however, may choose a date different from the date of closing depending on the context. Three important contextual considerations are the plaintiff's duty to take reasonable steps to avoid its loss, the nature of the property and the nature of the market. (4) Assessing damages at the date of closing may not fairly compensate an innocent vendor who makes reasonable efforts to resell in a falling market. (5) Therefore, as a general rule, in a falling market the court should award the vendor damages equal to the difference between the contract price and the "highest price obtainable within a reasonable time after the contractual date for completion following the making of reasonable efforts to sell the property commencing on that date" (at p. 421 O.R.) (6) Where, however, the vendor retains the property in order to speculate on the market, damages will be assessed at the date of closing.
54Underlying these propositions is the simple notion of fairness. As Professor S.M. Waddams wrote in his text, The Law of Contracts, 4th ed. (Toronto: Canada Law Book, 1999), at p. 518, “[i]t is on general considerations of justice, therefore, that the choice of date must depend.” The date for the assessment of damages is determined by what is fair on the facts of each case. See Rice v. Rawluk (1992), 8 O.R. (3d) 696 (Gen. Div.); Bitton v. Jakovljevic (1990), 75 O.R. (2d) 143, 13 R.P.R. (2d) 48 (H.C.J.).
55In this case, the tentative closing date for the Property was scheduled for March 25, 2019. It would not be possible to calculate damages on the basis of the closing date here. Tribute takes the position that the damages should be calculated based on the difference between the offer price and the estimated value on the date of termination of (March 31, 2018). However, while the appraisal report lists the value at $690,000 on the date of termination, the Property was listed and remains listed at a purchase price of $763,992.
56In my view, Tribute is entitled to the difference between Ms. Wang’s offer and the current listing price. Given the fact that the Property is still unsold, and the market remains in flux, it is uncertain what the ultimate damages will be. In my view, this approximates the fairest way to calculate the damages in the circumstances. This would total $190,998 less the deposit of $24,000 which has already been paid. The total damages awarded to Tribute are $166,998.
Disposition
57Ms. Wang is ordered to pay to Tribute a total amount of $166,998 in damages.
58I will accept submissions on costs from Tribute within 3 weeks of the date of this judgment. Ms. Wang has one week to provide her position in response. Submissions should be no more than 2 pages in length in addition to the bill of costs.
Justice C.F. de Sa
Released: January 8, 2019