Court File and Parties

COURT FILE NO.: CV-16-551360 DATE: 2019-05-02

ONTARIO SUPERIOR COURT OF JUSTICE

BETWEEN:

ZONGMEI WANG Plaintiff – and – CHARLENE DE SILVA Respondent

COUNSEL: Andrew Ostrom, for the Plaintiff Andrew Wray & Robert Tarantino, for the Respondent

HEARD: March 4, 2019

S.M. O’Brien, J.

Reasons for Decision

[1] By this motion for summary judgment, the Plaintiff, Zongmei Wang, seeks to enforce the terms of an Agreement of Purchase and Sale that she believes she entered into with the Defendant, Charlene De Silva. The dispute relates to a residential property located at 1521 Lorne Wood Road, in Mississauga (the “Property”). The Plaintiff claims that the Defendant breached the Agreement of Purchase and Sale for the Property and seeks specific performance. In its responding materials, the Defendant seeks summary judgment in her favour. She seeks to have both the motion and the action dismissed, broadly on the basis of her position that the parties never reached a deal with respect to the sale of the Property.

[2] In my view, summary judgment is appropriate in this case. Further, in my opinion, the parties did not reach an agreement on the purchase and sale of the Property. The parties were never ad idem with respect to an essential term of the agreement, which the parties referred to as the “renovation clause.” Because they were not ad idem on this key term, they never had an agreement. If I am wrong in this conclusion and there was an agreement, I would order specific performance of the agreement in favour of the Plaintiff.

Summary Judgment is Appropriate

[3] Rule 20.04(1)(b) of the Rules of Civil Procedure provides that the Court shall grant summary judgment if “the parties agree to have all or part of the claim determined by a summary judgment and the court is satisfied that it is appropriate to grant summary judgment”. The parties have agreed to summary judgment in this case, but, nevertheless, I must be satisfied that it is appropriate to decide the issues by summary judgment: Anjum v. John Doe and State Farm, 2016 ONSC 7784, aff’d 2017 ONCA 821; Ahmed v. Elmarsafy, 2019 ONSC 388.

[4] On a motion for summary judgment, the Court is required to determine whether, on the basis of the record before it, 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. Each party must “put its best foot forward.” A court is entitled to assume that the record contains all the evidence that the parties would present if the matter proceeded to trial: Sweda Farms Ltd. v. Egg Farmers of Ontario, 2014 ONSC 1200, aff’d 2014 ONCA 878, at paras 26-27, 33.

[5] In this case, I conclude that summary judgment is appropriate. The parties have provided a fulsome record regarding their dealings with respect to the Agreement. Much of the key evidence is found in written exchanges between the parties. Moreover, much of the evidence is not in dispute. While the parties had differing understandings of the terms of the Agreement, as further discussed below, the evidence for the most part does not challenge the content of each party’s individual understanding. They each believed something different, but there is clear evidence of each party’s belief. The only conflict I identified in the evidence, as detailed below, is found in the single paragraph of the affidavit of Baolin Zhu. I have determined that this evidence has little bearing on the ultimate question, as it does not detract from Ms. De Silva’s understanding of the Agreement. As she was the party to the Agreement, the important question is what she, and not others, understood the renovation clause to mean. I conclude that proceeding by way of summary judgment is appropriate, as it provides a more proportionate, more expeditious and less expensive means to achieve a just result: Hryniak v. Maudlin, 2014 SCC 7, [2014] 1 S.C.R. 87, at para 28.

Negotiations and Renovation Clause

[6] In early March 2016, Ms. Wang, together with her son, Han Wang (whom I shall refer to as “Han,” as that is how he is referred to in Ms. Wang’s materials), visited and viewed the Property. Ms. Wang then directed Han to inquire with her realtor, Baolin Zhu, as to a suitable price to offer. Ms. De Silva initially advised Mr. Zhu that she was asking $980,000 for the Property. However, she also communicated to Mr. Zhu that she would be willing to reduce the sale price to $950,000 on the following conditions: that she could continue to live in the house after closing for six months rent-free and that the deal would be structured such that $150,000 of the purchase price would be paid directly to her father, Clifford De Silva. Mr. Zhu conveyed this information to Han and Han in turn relayed these terms to Ms. Wang.

[7] On March 4, 2016, on Ms. Wang’s instructions, Han informed Mr. Zhu that Ms. Wang was prepared to offer $950,000, including $150,000 paid in cash, but she was not willing to allow Ms. De Silva to live at the Property rent-free. Based on these instructions, Mr. Zhu, together with his agent, Chenghao Zhao, prepared an offer, which was provided to Ms. De Silva on March 6, 2016. Ms. Wang then instructed Mr. Zhu to prepare an Agreement of Purchase and Sale. The offer, set out in an Agreement of Purchase and Sale, was for a purchase price of $800,000, including a deposit of $75,000 and a further payment as set out in the renovation clause, found in Schedule A. The renovation clause read as follows:

The Buyer agrees to give the Seller’s dad $150,000 for his renovation work in the house on completion date of this transaction. The Seller’s dad agrees to provide proper receipt for this to the buyer on completion date of this transaction.

[8] Schedule A also included a term that Ms. De Silva could reside in the house but at a monthly rent of $1,500.

[9] In response to Ms. Wang’s offer, Ms. De Silva provided a counteroffer on the same terms, except for the term which would require her to pay $1,500 in rent, which she removed. Ms. Wang then made a further offer of $144,000, which reduced the cash amount that would be paid to Ms. De Silva’s father by $6,000, and otherwise accepted all of Ms. De Silva’s proposed changes.

[10] On March 7, 2016, Ms. De Silva accepted Ms. Wang’s offer and an Agreement of Purchase and Sale was formed. On March 9, 2016, Han submitted a $75,000 deposit to Ms. De Silva’s brokerage, as required by the Agreement.

Parties’ Understanding of Renovation Clause

[11] Ms. De Silva’s understanding of the renovation clause was that the $144,000 was to be paid directly to her father in anticipation of doing work on the Property after closing. It also would allow Ms. De Silva to repay Mr. De Silva for a loan.

[12] The basis for Ms. De Silva’s understanding arises from one or more discussions between her father and Mr. Zhu before entering into the Agreement. Mr. De Silva was a builder who had known Mr. Zhu for some time. Prior to the parties’ entering into the Agreement, Mr. De Silva met with Han and Mr. Zhu for a consultation to discuss demolishing the existing house and building a new house. Mr. De Silva’s evidence is that he had one or more discussions with Mr. Zhu about the Property. His understanding, arising from the discussion(s), was that he was to be the general contractor on a major renovation to complete the rebuild of the Property.

[13] With respect to repayment, Mr. De Silva had given Ms. De Silva $150,000 as a down payment when she originally bought the house on the Property. Pursuant to the Agreement, Ms. De Silva believed that the $144,000 would go to her father as repayment, in addition to functioning as a retainer for him to be the contractor to build the new home.

[14] Ms. Wang’s understanding of the renovation clause was unclear, although it did not include any understanding that she had retained Mr. De Silva to complete the rebuild. Her evidence was that she was “suspicious” of the request to pay part of the purchase price in cash and considered it “unusual.” She stated she was prepared to go along with it in order to complete the deal. She is clear that in spite of Han and Mr. Zhu’s discussions with Mr. De Silva, she did not commit herself to retaining Mr. De Silva for any rebuild.

[15] The parties’ diverging understandings of the renovation clause became evident in the course of subsequent events. Specifically, at the time of closing, the parties could not agree on the receipt required by the renovation clause, and whether Mr. De Silva would provide a receipt for $144,000 towards construction of the home even if he was not involved in the rebuilding process. On March 28, 2016, Ms. De Silva wrote to Mr. Zhu attaching a receipt from her father for the renovation work, as she understood was contemplated by the renovation clause. The receipt was authored by Mr. De Silva and read:

This is to confirm receipt for the amount of $144,000 towards the sale of 1521 Lorne Wood Road, Mississauga and receipts to be provided of equivalent value towards the future construction of the new home at time of construction.

[16] Mr. Zhao’s response, on behalf of Ms. Wang, raised Ms. Wang’s position that she had not committed to Mr. De Silva as the builder:

The buyer will take the note of future receipt and have the lawyer to review it tomorrow, so this transaction can be closed tomorrow if the following terms or similar are added in the note (1) the buyer will get the receipt from your dad in three months of the new home construction started (the starting date will be the date of beginning to put the footing of the new house); (2) the buyer will still get the receipt from your dad if your dad is not the builder for the new house; (3) the buyer will have the right to get receipt as long as the buyer owns this property.

[17] Ms. De Silva then responded with her view that receipts for construction could only be provided if her father actually performed the construction:

My father wanted to ensure there is no liability in him providing receipts even if he is not involved in the building process so he spoke with his lawyer. He was advised that providing receipts for a project he is not directly involved in and has no control over could be a big liability for him should there be any issues with the construction of the new home and was strongly advised not to. At this point, the only thing we can offer as we originally discussed with Baolin while negotiating the deal is the following:

(1) Buyer will receive a receipt of funds for $144K as previously attached, signed only when the money is provided by certified cheque or bank draft PRIOR to closing.

(2) Buyer will receive additional receipts to cover the $144K during construction, ONLY if the construction is done with my father.

[18] The parties ultimately were not able to reach an agreement on the terms of the receipt and the underlying meaning of the renovation clause. As a result, although Ms. Wang was prepared to provide the necessary funds, Ms. De Silva, through her counsel, would not receive them. The Agreement included a specific time for performance and, as it did not close at that time, the deal was not completed.

No Meeting of the Minds

[19] Having reviewed all of the evidence, I conclude that the parties did not have a meeting of the minds with respect to the Agreement. The formation of a legally binding contract requires a meeting of the minds – consensus ad idem: Lee v. 1435375 Ontario Ltd, 2013 ONCA 516, 363 D.L.R. (4th) 222 at para. 37. The test as to whether there has been a meeting of the minds is an objective one – that is, would an objective, reasonable bystander conclude that, in all the circumstances, the parties intended to contract?: UBS Securities Canada Inc. v. Sands Brothers Canada, Ltd. (2009), 2009 ONCA 328, 95 O.R. (3d) 93 (C.A.) at para. 47. One situation in which consensus ad idem is not reached is where there is a mutual mistake. In that case, the parties are mistaken, but do not share their mistake; put otherwise, the parties are at cross-purposes.

[20] Here, the parties were at cross-purposes. An objective bystander would not conclude that the parties had an agreement on the renovation clause because, in the factual context in which the parties were dealing, the renovation clause was ambiguous. In interpreting the Agreement, it is appropriate to consider the “factual matrix” in which the contract arose: Dumbrell v. The Regional Group of Companies (2007), 2007 ONCA 59, 85 O.R. (3d) 616 (C.A.) at paras. 52-54; Morgan v. John Bear Pontiac Buick Cadillac Ltd., 2010 ONSC 6231 at para. 8. At the time of the drafting of the renovation clause and the subsequent completion of the Agreement, there was no discussion of, nor review of, nor intention to pay Mr. De Silva for renovations actually completed on the house. There is no evidence to suggest that Mr. De Silva had ever actually completed renovations on the house. Moreover, Ms. Wang was looking to purchase an older home in order to demolish it and, specifically, intended to demolish this house and to rebuild on the Property, rather than renovate the existing house. On a reading of the words of the renovation clause, in the circumstances in which it arose, it is very confusing.

[21] The Defendant’s understanding of the renovation clause also makes little sense. It is questionable whether a payment would be made for renovation work, when there was no clear understanding of what work would be done for that amount. I accept the characterization of counsel for the Defendant that the entire plan was “ill-conceived” from the outset.

[22] Not only is the wording of the clause ambiguous, but the evidence indicates that the parties had different understandings of the renovation clause. Ms. De Silva understood that the renovation clause meant that her father was retained for future work on the Property. Therefore, when it came time to address the issue of the receipt, she was prepared to provide a receipt for the funds. She committed to a receipt for work to be completed in the future, but she could not provide a receipt for work that had not been completed. Ms. Wang, meanwhile, did not have a clear understanding of the purpose of the receipt referenced in the renovation clause. This is clear from her evidence that she was suspicious, but prepared to comply with the request for the cash payment in order to complete the deal. Later, she was prepared to bargain about providing receipts in the future. In other words, she did not have a fixed understanding that the payment of $144,000 and associated receipt were for work already completed on the home. She only had a fixed understanding that she had not agreed to retain Mr. De Silva for the rebuild on the property.

[23] Ms. Wang’s failure to have a clear understanding of the renovation clause may have been caused, in part, by the fact that a number of people were involved in the deal from her side. Ms. Wang did not have any discussions with Mr. De Silva directly. Instead, the discussions and meetings all occurred between Mr. De Silva and Mr. Zhu or Mr. De Silva and Mr. Zhu and Han. According to the evidence of Mr. Zhu, he also completed the first draft of the Agreement, including drafting the renovation clause. Subsequently, his colleague Mr. Zhao presented the draft Agreement to Ms. Wang for review and, at that time, made handwritten changes to it. In the Agreement, the first sentence of the renovation clause was typed, whereas the second sentence was handwritten, suggesting that part of the clause was inserted with the involvement of Mr. Zhao rather than Mr. Zhu.

[24] I should note that Mr. Zhu was originally named as a third party in this proceeding and swore an affidavit on his own behalf, which does not accord with Mr. De Silva’s account of events. He subsequently was released from the proceedings. In his affidavit, Mr. Zhu states that, during initial discussions with Mr. De Silva, Mr. De Silva indicated that he wanted the price for the Property to be divided into two parts: the vast bulk of the price would be listed as the purchase price, but $150,000 would be paid to him, nominally for renovations performed at the Property, notwithstanding that he would not perform any such renovations. According to Mr. Zhu, Mr. De Silva advised that he would provide the purchaser with a receipt for the renovations. Mr. Zhu was not cross-examined and he provides no further detail on the content or meaning of his discussions with Mr. De Silva.

[25] In my view, Mr. Zhu’s account is either incomplete or inconsistent with Ms. Wang’s admission on Examination for Discovery that Han and Mr. Zhu consulted with Mr. De Silva as a developer about the possibility of his rebuilding the Property. Ms. Wang’s own affidavit evidence also describes a meeting between Han and Mr. De Silva in mid-March at a property located near the Property and upon which Mr. De Silva was working at the time. Mr. De Silva and Han discussed the structure of the house, the materials, and the cost of rebuilding. They also viewed another home that Mr. De Silva’s partner had built. In other words, although Mr. Zhu does not reference this in his affidavit, there obviously were discussions about Mr. De Silva doing work on the new construction on the Property. Whether an agreement was reached on this was a different matter, but it is clear that the discussion was not limited to an understanding that Mr. De Silva would be paid for nominal pre-existing renovations.

[26] In any event, what is clear is that Ms. De Silva’s understanding was that the $144,000 was to repay her father and to retain him as a contractor. There has been little challenge to her belief that this was the purpose of the clause. Indeed, the Plaintiff has emphasized on at least one occasion that Ms. De Silva was simply relying on what her father had told her. Ms. De Silva did not have any discussions with Mr. Zhu and I am not aware of any evidence that Mr. De Silva ever told Ms. De Silva that the payment would be for work he did not perform. While the plan may have been “ill-conceived”, in my view, the evidence before me does not challenge Ms. Silva’s genuine belief that her father would be provided with work on the Property as a result of the deal.

[27] In order for a mistake to prevent the formation of a contract, it must be fundamental, in the sense that it must go to an essential term of the alleged contract: Ron Ghitter Property Consultants Inc. v. Beaver Lumber Co., 2003 ABCA 221, 330 A.R. 353 at para. 11. Here, in my view, the renovation clause was fundamental. The requirement for a cash payment to Mr. De Silva formed part of the negotiations between the parties from the outset. It was important to Ms. De Silva to be able to repay her father for the down payment and to obtain work for him. Further, Mr. De Silva was involved in discussions with Han and Mr. Zhu early on about his role and met with Han to view properties. His role was central to the parties’ dealings. Finally, $144,000 is not an insignificant payment in the context of a total cost of $944,000.

[28] Where the parties are not ad idem about the fundamental terms of a contract, no contract is deemed to be created: Dalewood Investments Ltd. v. Maida (1982), 40 O.R. (2d) 472 (C.A.), at para. 17; St. Amand v. Tisi, 2017 ONSC 3125, 78 R.P.R. (5th) 124 at para. 61. Therefore, I find that in this case, there is no Agreement of Purchase and Sale between the parties.

Remedy

[29] Given my conclusion that the parties did not reach an agreement, neither party is in breach. As a result, the Defendant is not entitled to retain the deposit paid by the Plaintiff. I would dismiss the Plaintiff’s motion, dismiss the action, and order the repayment of the deposit to the Plaintiff. In addition, I would vacate the Certificate of Pending Litigation on the Property.

Specific Performance

[30] In the event I am wrong about the existence of a valid Agreement of Purchase and Sale, I will address the Plaintiff’s request for specific performance of the agreement. If the renovation clause was not unclear, there was no mistake, and the clause only required Ms. De Silva to provide a receipt for “renovation work” already done on the house, Ms. Wang was ready, willing and able to provide the purchase funds and receive the receipt at the time set for closing.

[31] Ms. Wang claims that she is entitled to specific performance with respect to this Property on the basis that it had unique features that were particularly important to her. These are:

(a) The Property was located in close proximity to the residence of Ms. Wang’s closest friend. (b) The backyard of the property sloped downward from the house, offering an alluring view of the wooded backyard of neighbouring properties. Although the Defendant has downplayed this feature, saying it is only a hydro corridor, Mr. De Silva referred to the space as a “conservation area” (even though it was not formally designated as such). He considered it a selling point for the Property. (c) Ms. Wang believed the hydro corridor would prevent future development. (d) The Property featured a particularly large lot which would facilitate Ms. Wang’s intention to tear down the existing house and build a new house. (e) The Property was in proximity to private golf clubs that Ms. Wang aspired to join. (f) The Property was in proximity to the Polycultural school in which Ms. Wang intended to enroll.

[32] Specific performance should not be granted as a matter of course absent evidence that the property is unique to the extent that its substitute would not be readily available: Semelhago v. Paramadevan, [1996] 2 S.C.R. 415 at p. 429; Yan v. Nadarajah, 2015 ONSC 7614, 62 R.P.R. (5th) 85, aff’d 2017 ONCA 196, 82 R.P.R. (5th) 175 at para. 50. There are subjective and objective aspects to uniqueness. Normally the subjective aspects will be more significant in residential purchases, as compared to commercial transactions: John E. Dodge Holdings Ltd. v. 805062 Ontario Ltd. (2001), 56 O.R. (3d) 341 (S.C.J.), aff’d , 63 O.R. (3d) 304 (C.A.) at para. 50. The Court should examine the subjective aspect from the point of view of the Plaintiff at the time of contracting. The Court should then determine from an objective perspective whether the Plaintiff has demonstrated that the property has characteristics that make an award of damages inadequate for that particular Plaintiff: Yan v. Nadarajah at para. 52.

[33] Uniqueness does not mean singularity; it means that the property has a quality or qualities that make it especially suitable for the proposed use that cannot be reasonably duplicated elsewhere: Yan v. Nadarajah at para. 52.

[34] The Plaintiff has provided a number of authorities in which courts have awarded specific performance, taking into account factors such as the shape of the lot, the proximity to a close friend or relative, that the property was a ravine lot, and that it was suitable for renovation: Yan v. Nadarajah at paras. 51, 59 and 62; Yan v. Nadarajah (ONCA) at para. 23; Tropiano v. Stonevalley Estates Inc. (1997), 36 O.R. (3d) 92 (Gen. Div.) at para. 16; McLeod v. Schmidt, [2007] O.J. No. 3039 (S.C.J.) at para. 24. All of these factors were significant to the Plaintiff with respect to the Property in this case.

[35] The Defendant denies that the Property was sufficiently unique and claims that a substitute was readily available, pointing especially to another property on the same street that sold five to six months later for a similar price ($992,000). From the information provided in the record, this property does appear to be comparable. However, the time to determine whether a property is unique is the date on which the breach takes place. That is the time at which the aggrieved party must decide whether to keep the agreement alive by seeking specific performance or accept the breach and sue for damages: John E. Dodge Holdings Ltd. (ONCA) at para. 40. Here, the only evidence of a similar property was a single property available five or six months later. In my view, a single property several months later is not sufficiently proximate to the breach to show that Ms. Wang had other comparable properties available at the time of the breach.

Costs

[36] I encourage the parties to settle the costs of this motion. If they are unable to do so, the Defendant may provide written costs submissions within 14 days of the date of this decision, consisting of no more than three pages, not including the costs outline or bill of costs and any applicable offers to settle. The Plaintiff then will have 7 days to provide responding submissions with the same limitations. The costs submissions can be emailed to my judicial assistant, Anna Maria Tiberio, at annamaria.tiberio@ontario.ca.

S.M. O’Brien, J. Released: May 2, 2019