BARRIE COURT FILE NO.: CV-17-1145
DATE: 20190530
ONTARIO
SUPERIOR COURT OF JUSTICE
BETWEEN:
DARRYL FRIESE
Plaintiff
– and –
ROXANA ARFA
Defendant
William J. Leslie, for the Plaintiff
Samy Ouanounou, for the Defendant
HEARD: May 13, 2019
REASONS FOR JUDGMENT
DiTOMASO J.
INTRODUCTION
[1] By way of Agreement of Purchase and Sale (“APS”), the Plaintiff, Darryl Friese (“Mr. Friese”) contracted with the Defendant, Rozana Arfa (“Ms. Arfa”) to sell his property in Keswick. The sale failed to close. Mr. Friese commenced this action claiming specific performance and, in the alternative, damages. Ms. Arfa counterclaimed seeking a declaration that the APS was at an end and that the deposit in the amount of $15,000 be returned to her without any deductions.
[2] Mr. Friese subsequently re-sold his property and claims damages at trial. The trial was short, lasting one day.
OVERVIEW
[3] Mr. Friese is 40 years of age and is a self-employed contractor. He purchased a home at 306 Hollywood Drive, Keswick, Ontario, being the subject property. He later decided to sell this property and relocate to North Bay. He listed the property with realtor, David Clark.
[4] Mr. Friese and Ms. Arfa entered into an APS on April 15, 2017, whereby Mr. Friese sold property to Ms. Arfa, municipally described as 306 Hollywood Drive, Keswick, Ontario, and more particularly described as Lot 210, Plan 299, N. Gwillimbury, Town of Georgina, for the purchase price of $590,000.
[5] The APS was unconditional and the transaction was scheduled to close on June 26, 2017.
[6] On the date of closing, Mr. Friese’s real estate lawyer, Mark Altwerger, was notified in writing by Ms. Arfa’s lawyer that the real estate transaction would not close. On the following day, June 27, 2017, the Keswick property was re-listed by Mr. Clark in the amount of $599,900, being the original listing price.
[7] Approximately three months later, the listing price was reduced to $529,900. There was no interest or activity in respect of the listing. As a result, the property was reduced once again to the amount of $499,900.
[8] The property was re-sold pursuant to an APS, dated September 8, 2017, in the amount of $425,000. The resale transaction closed on October 6, 2017.
[9] By Amendment to Agreement of Purchase and Sale, dated July 18, 2017, Ms. Arfa proposed certain terms to Mr. Friese whereby the sale of the Keswick property by Mr. Friese to Ms. Arfa could be revisited. Mr. Friese had no interest in revisiting a sale to Ms. Arfa and he did not accept the proposed Amendment to the Agreement of Purchase and Sale, having regard to the transaction which Ms. Arfa failed to close previously. There is no dispute between the parties that Ms. Arfa breached the APS, dated April 15, 2017, which was unconditional and failed to close on June 26, 2017.
POSITIONS OF THE PARTIES
Position of the Plaintiff, Darryl Friese
[10] Mr. Friese claims the difference between the sale price of $590,000 on the aborted transaction with Ms. Arfa and the resale in the amount of $425,000; that difference being $165,000, plus interest, including special damages for out-of-pocket expenses, namely additional legal fees, interest on money borrowed, extra property taxes paid and travelling expenses between North Bay and Keswick.
[11] Mr. Friese denies that he had entered into a new agreement with Ms. Arfa for the sale of the Keswick property. He takes the position that no further agreement was reached with her for the sale of the Keswick property. He relies on the evidence of his realtor, Mr. Clark, that he obtained the best possible price for the resale of the property, namely the sum of $425,000.
[12] Mr. Friese submits that he did his best in all of the circumstances and acted reasonably to mitigate his damages.
[13] Mr. Friese seeks damages against Ms. Arfa and submits that her counter-claim be dismissed.
Position of the Defendant, Roxana Arfa
[14] Ms. Arfa submits that Mr. Friese should have entertained her proposal advanced by way of an Amendment to the Agreement of Purchase and Sale, dated July 18, 2017. She submits that Mr. Friese should have entertained her proposal and should have made reasonable efforts to negotiate with her. She submits that if he had accepted the proposal, and the real estate transaction closed, there would be no damages.
[15] Further, Ms. Arfa submits that Mr. Friese did not make reasonable efforts to re-sell the property and that he failed to mitigate his damages.
[16] Ms. Arfa submits that Mr. Friese’s action be dismissed and that by way of counter-claim, her deposit in the amount of $15,000 be returned to her without deductions.
THE ISSUES
[17] The issues to be determined are as follows:
(a) Was a new APS agreed to between the parties as a result of Ms. Arfa’s Amendment to Agreement of Purchase and Sale, dated July 18, 2017?
(b) Did Mr. Friese take all reasonable steps to mitigate his damages as a result of the breach of the APS by Ms. Arfa?
THE EVIDENCE
The Evidence of the Plaintiff, Darryl Friese
[18] Marked as Exhibit 1 at trial was the Exhibit Book of the Plaintiff, filed on consent.
[19] Mr. Friese is a 40 year old home renovator. He bought his home in Keswick, located at 306 Hollywood Drive. After a time, he decided to relocate to the North Bay area. He listed the Keswick property with realtor, David Clark, for the sum of $599,900. The Keswick property was sold to Ms. Arfa for the sum of $590,000 by way of APS, dated April 15, 2017[^1]. The APS was unconditional and the transaction was scheduled to close on June 26, 2017.
[20] The transaction did not close on June 26, 2017. Rather, Ms. Arfa’s lawyer wrote to Mr. Friese’s lawyer, Mark Altwerger, on that date to advise that Ms. Arfa was unable to complete the transaction as the sale of her property in Newmarket had failed to close. She relied on that transaction to close in order to purchase the Keswick property[^2].
[21] Mr. Friese testified that after the Keswick transaction failed to close, he re-listed the property through Mr. Clark. The very next day, Keswick property was re-listed at the original listing price of $599,900. The listing did not attract any interest and the price was reduced after 30 days, on the advice of Mr. Clark, to the amount of $529,900. The property was again reduced on the advice of Mr. Clark to the sum of $499,000. The property eventually sold for the sum of $425,000. The reduced listings can be found in Exhibit 1 at Tabs 19, 20, 21 and 22. The APS, dated September 18, 2017, indicating a purchase price of $425,000 can be found at Tab 16.
[22] Mr. Friese testified that he received no other offer after the original transaction was aborted, other than the APS for the purchase price of $425,000.
[23] Once Mr. Friese decided to move to the North Bay area, he made financial commitments, which involved the purchase of property and the construction of a house. Mr. Altwerger acted for him on the purchase of the North Bay property[^3].
[24] Mr. Friese borrowed $50,000 secured by way of a promissory note to help fund the construction of his North Bay home[^4].
[25] Mr. Friese testified that he incurred $500 in legal expenses as a result of the aborted Keswick real estate transaction[^5].
[26] He also claims a further expense incurred regarding additional property taxes paid between the original aborted closing date and the actual closing date. Mr. Altwerger testified about this amount. He was unable to produce evidence of the additional expenses he was required to pay, such as the water bill, hydro bill and Enbridge bill.
[27] Mr. Friese testified that he incurred additional loan interest and travelling expenses estimated at $400 for trips between North Bay and Keswick, being approximately 12 trips between June 26, 2017 and October 6, 2017, the date of closing of the resale.
[28] Mr. Friese testified about discussions between his real estate agent and Ms. Arfa’s real estate agent after the Keswick transaction failed to close. Mr. Friese had no direct discussions with Ms. Arfa. He understood that Ms. Arfa was having a problem with the closing on the sale of her home, which was located at 57 Gladman Avenue in Newmarket[^6]. Mr. Friese testified that Ms. Arfa listed her property in the amount of $890,000. Her property ultimately sold for $1,070,000. The sale of her home in Newmarket was to have closed on May 31, 2017, before the closing of the Keswick property. Mr. Friese testified that he was never told that Ms. Arfa’s property in Newmarket had sold. His understanding was that her property did not close and she was trying to work out matters relating to her property so she could close the Keswick deal.
[29] Presented to Mr. Friese by Mr. Clark, was an Amendment to Agreement of Purchase and Sale, dated July 18, 2017[^7]. Mr. Clark sat down with Mr. Friese and went over the amended APS, started to make revisions. and then stopped. The document reviewed by Mr. Clark and Mr. Friese can be found at Exhibit 1, Tab 9. Mr. Friese could not identify the handwriting on the Amendment to Agreement of Purchase and Sale presented to him by Mr. Clark. Mr. Friese knew there had been verbal discussions between the real estate agents. Mr. Friese testified that what was written in the Amendment to the Agreement of Purchase and Sale was not what had been discussed. This document referred to a vendor-take-back second mortgage in the amount of $150,000 for a term of two years. Mr. Friese testified that this was not discussed and he needed money in order to carry out the house construction on his North Bay property.
[30] It was decided that the Amendment to the Agreement of Purchase and Sale should be given to Mr. Altwerger.
[31] On July 21, 2017, Ms. Arfa’s lawyer, Mr. Ouanounou, sent a letter to Mr. Altwerger setting out certain terms that were discussed between the clients and inquiring whether the previous offer might be revived by amendment or by a new offer[^8].
[32] By letter sent the same day by facsimile to Mr. Ouanounou, Mr. Altwerger replied as follows:
We have your letter of today’s date.
With respect, your proposed terms are not at all acceptable. Your client already breached the terms of the Agreement when she refused to close on June 26, 2017. There is no reason why our client should now grant her a financing condition. He is similarly not interested in waiting a further 4 months or taking back a second mortgage.
If there is to be some sort of resolution at this time, it is to be entirely predicated upon your client making our client whole, and in a timely manner.
[33] Mr. Friese testified that this was the end of the matter as between himself and Ms. Arfa.
[34] In cross-examination, Mr. Friese testified that he saw the Amendment to the Agreement of Purchase and Sale set out at Exhibit 1, Tab 9. He did not make the changes on this document. He testified that he did not have any idea who made the changes. The document was presented to him by Mr. Clark. Mr. Friese testified that this document did not reflect the verbal discussion between the realtors. There was no discussion about an interest rate and there were no discussions about a term of two years. There were discussions about a vendor-take-back mortgage for a couple of months.
[35] Mr. Friese agreed that on his examination for discovery on April 25, 2018, the Amendment to the Agreement of Purchase and Sale marked Exhibit 2 was presented to him. He compared that document with the copy of the Amendment to the Agreement of Purchase and Sale found at Tab 9. Again, Mr. Friese did not know who made the changes. He testified that the Amendment to the Agreement of Purchase and Sale was not signed back by him. While there had been verbal discussions, the document was not close to what was discussed. Mr. Friese gave this document to his lawyer. It was Mr. Friese’s understanding that the Amendment to the Agreement of Purchase and Sale was rejected and was not signed back. He acted on his lawyer’s advice and gave instructions not to take back a second mortgage and he was not willing to extend time.
[36] In cross-examination, Mr. Friese described how the property was re-listed and when.
[37] He closed the transaction on his North Bay property in April 2017.
[38] In respect of the Amendment to the Agreement of Purchase and Sale[^9], Mr. Friese did not suggest to his lawyer or agent any terms of acceptance. He did not do so because at that point in time, they were past doing so. He was aware that property values in Ontario and in the Keswick area had been dropping in the late Summer and Autumn of 2017.
[39] Mr. Friese never considered going back to Ms. Arfa to negotiate the terms that she sought in the Amendment to the Agreement of Purchase and Sale. He testified that there was no signed agreement to go back to. There were no discussions or proposals to pursue. He continued to re-list the property and did the best he could with the advice of his lawyer and real estate agent. Mr. Friese was not interested in financing and/or extending time, which was reflected in the letter of July 21, 2017, delivered by his lawyer to Ms. Arfa’s lawyer.
[40] Mr. Friese was questioned about his special damages. There was an additional claim in the amount of $1,200 regarding loan interest which was not supported by documentation. Neither did he have documents to support his transportation claims.
[41] In re-examination, Mr. Friese testified that around the time that he received the Amendment to the Agreement of Purchase and Sale (July 18, 2017), he heard about Ms. Arfa’s sale of the Gladman property. When discussions were going on between the realtors, his understanding was that her property did not close. However, he subsequently learned that, in fact, it did close. He was told one thing, but learned another. This had a bearing on having any further discussions or negotiations with Ms. Arfa. He testified that if he had not been told the truth in the first place, he did not want to re-negotiate with her.
Evidence of David Clark
[42] Mr. Clark is 39 years of age and has been a real estate agent since 2012. The majority of his work is done in the Georgina Township, Keswick, Sutton and Pefferlaw areas.
[43] He was asked by Mr. Friese to list his Keswick property, which Mr. Clark sold as a result of a listing.
[44] Mr. Clark was taken through the APS with Ms. Arfa[^10]. The transaction was to close on June 26, 2017, but did not close on that date.
[45] He learned through Mr. Altwerger that the transaction was not going to close as Mr. Altwerger had received communication from Ms. Arfa’s lawyer to that effect.
[46] The very next day, Mr. Clark re-listed the property upon direction from Mr. Friese and his lawyer.
[47] Mr. Clark then testified about steps taken to re-list the property the next day at $599,900 for 30 days. At the conclusion of 30 days, the situation was re-evaluated and re-listed again at current market value. At that time, the property was re-listed in the amount of $529,900 after a Comparative Market Analysis was performed to determine current market value. In respect of all the re-listings, Mr. Clark described what steps were taken to give maximum exposure to the listing. He testified that there was no interest and no offers obtained. This resulted in another Comparative Market Analysis being performed, with his recommendation that the price be reduced to the sum of $499,900. That listing produced the final APS, dated September 8, 2017, in the amount of $425,000, with a closing date of October 6, 2017. The transaction did close on that date.
[48] Mr. Clark testified about discussions that he had with Ms. Arfa’s real estate agent after June 26, 2017. He never spoke directly to Ms. Arfa nor her lawyer.
[49] Mr. Clark received the document marked Exhibit 2, which he altered at a meeting with Mr. Friese (see Exhibit 1, Tab 9). He testified that he had received the Amendment to Agreement of Purchase and Sale through electronic means. He did not know whose handwriting appeared on that document. He testified that the Amendment to Agreement of Purchase and Sale did not reflect what had been discussed. He started to make changes in respect of Exhibit 2 (as evidenced by the document found at Exhibit 1, Tab 9). As he was working through the document, he realized that he was not authorized to make any such changes and this was something that Mr. Friese needed to take to his lawyer.
[50] Mr. Clark testified that in his discussions with Ms. Arfa’s agent, he was told that Ms. Arfa’s property transaction had not closed and therefore there was a willingness to give Ms. Arfa a bit of time to close her transaction. He had telephone calls with Ms. Arfa’s agent. He obtained the MLS document[^11], regarding Ms. Arfa’s Newmarket property. The document showed that her property (Gladman property) sold on March 20, 2017 with a closing date of May 31, 2017. Notwithstanding this information, he could not rely on this document to say that the property actually closed on May 31, 2017. He did learn that eventually the property did close for $1,070,000.
[51] In cross-examination, Mr. Clark was asked about receiving Exhibit 2 and making the changes found on Exhibit 1, Tab 9. He once again testified that the Amendment to Agreement of Purchase and Sale proposed terms which were not part of the negotiation at all. Although the Gladman property was to close May 31, 2017, he never received a telephone call from Ms. Arfa’s agent to advise that the Gladman transaction had closed. He checked and determined that the property did close, but on a different date.
[52] The discussions with Ms. Arfa’s agent also involved being told that Ms. Arfa was losing money on her end. Once Mr. Clark found that this was not accurate, he lost confidence in Ms. Arfa. Mr. Clark described the steps taken to re-list the property and that he undertook a Comparative Market Analysis at each step.
[53] Mr. Clark testified that the original APS between Mr. Friese and Ms. Arfa was terminated because the transaction failed to close. He testified that the original deal was dead and it was not for him, as the real estate agent, to revive a dead deal. This was something that Mr. Friese’s lawyer would have to address. The situation was beyond Mr. Clark’s expertise. This was where his involvement stopped and the matter went to Mr. Altwerger.
[54] In re-examination, he was taken to his Comparative Market analysis, dated July 26, 2017[^12]. He described what was contained in that Analysis. He went on to review the listings found at Tabs 19, 20, 21 and 22, which showed the original listing of the Keswick property at $599,900, and the re-listings at $599, 900, $529,900 and $499,900.
Evidence of Mark Altwerger
[55] Mr. Altwerger is a lawyer who has been practicing in Ontario since 2003. Approximately 75% of his practice relates to real estate matters.
[56] He acted on the sale of Mr. Friese’s Keswick property to Ms. Arfa. He identified the APS at Exhibit 1, Tab 1. This was an unconditional transaction. By letter, dated June 19, 2017[^13], he wrote to Ms. Arfa’s solicitor enclosing various documents.
[57] By letter, dated June 20, 2017, Mr. Altwerger received correspondence from Mr. Ouanounou[^14]. This was a requisition letter to which Mr. Altwerger responded by letter dated June 20, 2017[^15].
[58] Under cover of letter, dated June 23, 2017[^16], Mr. Altwerger sent to Mr. Ouanounou a closing package, which included the key to the property. Mr. Altwerger was waiting for a cheque.
[59] On June 26, 2017, at mid-afternoon on the closing date, Mr. Altwerger received correspondence from Mr. Ouanounou[^17], indicating that the deal would not close.
[60] Mr. Altwerger wrote back to Mr. Ouanounou on the same date, June 26, 2017[^18], which indicated that Ms. Arfa would be held accountable for damages.
[61] Mr. Altwerger testified that after the closing date of June 26, 2017, Mr. Friese brought him the Amendment to Agreement of Purchase and Sale. It was brought to Mr. Altwerger approximately one month after the closing date. There were discussions between Mr. Friese and Mr. Altwerger concerning the Amendment to Agreement of Purchase and Sale, which involved taking back a second mortgage. Mr. Altwerger did not know how much was outstanding on the first mortgage. Mr. Altwerger advised Mr. Friese against working with the amendment document. Mr. Friese did not sign this document or any other amendment agreement.
[62] Mr. Altwerger had received correspondence from Mr. Ouanounou, dated July 12, 2017[^19], which suggested a potential offer from the defendant to restore the transaction.
[63] By letter dated July 21, 2017, Mr. Altwerger responded to Mr. Ouanounou’s correspondence advising that the plaintiff was not interested in granting a financing condition, waiting a further four months or taking back a second mortgage.
[64] Mr. Altwerger never received a response to this letter. He identified the $500 legal fee paid by Mr. Friese on the aborted transaction. Mr. Altwerger was not involved in the re-listing of the property.
[65] He testified that Mr. Friese had continuing obligations to pay in respect of the Keswick property from June to October 2017. One of those continuing obligations was additional property taxes, which Mr. Altwerger calculated after receiving the final tax bill in the amount of $2,072.92 for the year. Based on that amount, the daily rate was $5.679. Mr. Friese was obliged to pay an extra 102 days regarding the property taxes, which amounted to the sum of $579.28. He would have also had to pay water bills and other utility bills.
[66] After Mr. Altwerger received Mr. Ouanounou’s letter, dated July 21, 2017, he had no conversations with Ms. Arfa’s solicitor nor her real estate agent.
[67] In cross-examination, Mr. Altwerger was asked how one would revive a lapsed real estate transaction. He testified that it would depend on the circumstances. A fresh agreement might be required. It could also be done through an amendment agreement, but language would be important.
Evidence of Roxana Arfa
[68] Ms. Arfa testified that she owned a property in Newmarket located at 57 Gladman Avenue. She bought this property in November 2016. She sold this property which was scheduled to close on May 31, 2017. However, she had problems in respect of closing her sale. She closed the sale of the Gladman property on June 29, 2017. There was a one-month delay in the closing of that transaction. Because the sale of the Gladman property was delayed, she had various problems and could not close the purchase of the Keswick property on June 26, 2017 with Mr. Friese. She expected to transfer her mortgage on the Gladman property to the Keswick property. She learned that she could not do this. She expected to receive some funds from outside the country, but this did not happen.
[69] Her agent negotiated an extension with Mr. Friese’s agent. An Amendment to Agreement of Purchase and Sale[^20] was prepared. She signed that document, dated July 18, 2017. This document was sent to Mr. Friese’s real estate agent. This Amendment to Agreement of Purchase and Sale was not accepted.
[70] She testified that after June 26, 2017 she was still interested in purchasing the Keswick property. She had expressed her interest to her agent and her lawyer. She received no reply regarding the Amendment from Mr. Friese’s agent and/or lawyer.
[71] In cross-examination, when shown Exhibit 2, she believed that the handwriting was that of her lawyer. She agreed that the Gladman property in Newmarket was listed for $890,000, but sold for $1,070,000. She agreed that she received more than the listing price.
[72] She knew that her property was for sale and was asked why she had not asked to extend the Keswick closing for a week or two. She testified that there was a private lender’s lien on her property – that was another reason why the transaction could not close.
[73] In Exhibit 2, she was asking Mr. Friese to take back a second mortgage. She was asked how much the first mortgage was going to be on the Keswick house. She testified that this amount would be $330,000. She did not know if she had first mortgage approval. She testified that 10 days before closing, she went to the bank and was told that the mortgage was not transferrable and she would have to apply for a new mortgage.
[74] She did not have enough money to close the deal and she did not have mortgage approval to buy the Keswick property.
ANAYLSIS AND FINDINGS
[75] There is no dispute as to whether Ms. Arfa breached the APS. I find on all of the evidence that she did breach the APS.
Was a new APS agreed to between the parties as a result of Ms. Arfa’s Amendment to Agreement of Purchase and Sale, dated July 18, 2017?
[76] The question then becomes whether a new APS was agreed to as a result of the Amendment to Agreement of Purchase and Sale, dated July 18, 2017.
[77] I accept the evidence of Mr. Friese, Mr. Clark and Mr. Altwerger in respect of the Amendment to Agreement of Purchase and Sale[^21]. I find that there were discussions between Mr. Clark, Ms. Arfa’s real estate agent and Mr. Friese, after the transaction failed to close on June 26, 2017. I accept their evidence that the Amendment to Agreement of Purchase and Sale, dated July 18, 2017, did not contain terms that were agreed to by Mr. Friese. The document was only a proposal. It was unsigned by Mr. Friese.
[78] The Amendment to Agreement of Purchase and Sale was problematic because it did not reflect what the parties were discussing. There was no indication as to what the first mortgage would be. That was problematic. The amendment spoke of a vendor-take-back second mortgage in the amount of $150,000 for two years. This was not discussed. Mr. Friese was committed to relocating to North Bay and building a house there. He was not prepared to wait and extend time to receive money from Ms. Arfa. He was not willing to provide her with financing while he was under financial constraints. By letter dated July 21, 2017, Mr. Altwerger rejected the proposed terms contained in the Amendment to Agreement of Purchase and Sale as unacceptable. Ms. Arfa had already breached the terms of the APS when she refused to close on June 26, 2017.
[79] Mr. Altwerger clearly stated on behalf of his client that there was no reason why Mr. Friese should grant Ms. Arfa a financing condition. Similarly, Mr. Friese was not interested in waiting a further four months or taking-back a second mortgage. Also of importance is Mr. Altwerger’s putting Ms. Arfa on notice that “if there is to be some sort of resolution at this time, it is to be entirely predicated upon your client making our client whole, and in a timely manner.” Mr. Altwerger never received a reply to his letter.
[80] In addition, I find that there was good reason why Mr. Friese did not wish to pursue further negotiations with Ms. Arfa. He was of the understanding that the sale of her Newmarket property was causing her financial problems. In fact, he came to understand that her Newmarket property did sell and sold for more than the listing price. It is clear that Mr. Friese was not given correct or accurate information and he did not have the confidence to continue any further negotiations with Ms. Arfa.
[81] Ms. Arfa’s evidence also supports the evidence of Mr. Friese and his witnesses that the Amendment to Agreement of Purchase and Sale was never accepted by him.
[82] For these reasons, I find that a “new” APS was not agreed to between the parties by way of Amendment to Agreement of Purchase and Sale, dated July 18, 2017.
Did Mr. Friese take all reasonable steps to mitigate his damages as a result of the breach of the APS by Ms. Arfa?
[83] The next issue relates to the mitigation of damages. The question is whether Mr. Friese took all reasonable steps to mitigate his damages as a result of the breach of the APS by Ms. Arfa.
[84] It is the position of Ms. Arfa that if Mr. Friese had further considered the Amendment to Agreement of Purchase and Sale and agreed to her terms or other negotiated terms, the transaction would have closed for $590,000 and there would have been no damages for Mr. Friese to claim.
[85] Further, Ms. Arfa submits that Mr. Friese did not take reasonable steps to mitigate his damages by lowering the purchase repeatedly and eventually closing the transaction on October 6, 2017 for the sum of $425,000.
[86] Firstly, I find that Mr. Friese, Mr. Clark and Mr. Altwerger did consider the Amendment to Agreement of Purchase and Sale proposed by Ms. Arfa. The APS had already been breached by Ms. Arfa. The previous unconditional transaction failed to close. Ms. Arfa had not asked for an extension of time for closing. Instead, on July 18, 2017, an Amendment to Agreement of Purchase and Sale was sent to Mr. Clark. I accept the evidence of Mr. Friese and Mr. Clark that the amendment document did not reflect what the parties were discussing. This was compounded by confidence or trust issues between Mr. Friese, Mr. Clark and Ms. Arfa. She had indeed sold her Newmarket property for more than the listing price. The property was listed in the amount of $890,000 and sold for $1,070,000.
[87] As it turned out, on Ms. Arfa’s own evidence, she was not in a financial position to close the Keswick transaction. She was not in funds, her mortgage on the Newmarket property was not transferrable to the Keswick property and any mortgage financing had not been approved by the bank. In addition, she had an issue with a private lender’s lien on the Gladman property.
[88] In all of these circumstances, I find that Mr. Friese did consider the Amendment to Agreement of Purchase and Sale. He consulted with his real estate agent and his lawyer on this real estate transaction and concluded that he did not wish to pursue his dealings with Ms. Arfa.
[89] I reject the submission that if Mr. Friese had pursued the amendment and if he had concluded some further arrangement to sell the Keswick property to Ms. Arfa, then there would be no claim for damages. All of this is wishful thinking. It is not realistic, particularly in the circumstances which I have already identified. I find that Mr. Friese went as far as he could go in his dealings with Ms. Arfa and quite properly came to the conclusion that he wanted to have no further dealings with her.
[90] Secondly, and quite apart from whether Mr. Friese should have accepted Ms. Arfa’s proposal set out in the Amendment to Agreement of Purchase and Sale, Ms. Arfa submits that Mr. Friese did not take all reasonable steps to mitigate his damages as a result of her breach of the APS. For the following reasons, I reject this submission.
[91] Ms. Arfa relies upon the decision of the Supreme Court of Canada in Southcott Estates Inc. v. Toronto Catholic District School Board, 2012 SCC 51, [2012] S.C.J. No. 51, regarding the issue of mitigation of damages.
[92] General principles in respect of mitigation are cited at paragraphs 23, 24 and 25 in Southcott, as follows:
[23] This Court in Asamera Oil Corp. v. Seal Oil & General Corp., 1978 CanLII 16 (SCC), [1979] 1 S.C.R. 633, cited (at pp. 660-61) with approval the statement of Viscount Haldane L.C. in British Westinghouse Electric and Manufacturing Co. v. Underground Electric Railways Company of London, Ltd., [1912] A.C. 673, at p. 689:
The fundamental basis is thus compensation for pecuniary loss naturally flowing from the breach; but this first principle is qualified by a second, which imposes on a plaintiff the duty of taking all reasonable steps to mitigate the loss consequent on the breach, and debars him from claiming any part of the damage which is due to his neglect to take such steps.
[24] In British Columbia v. Canadian Forest Products Ltd., 2004 SCC 38, [2004] 2 S.C.R. 74, at para. 176, this Court explained that “[l]osses that could reasonably have been avoided are, in effect, caused by the plaintiff’s inaction, rather than the defendant’s wrong.” As a general rule, a plaintiff will not be able to recover for those losses which he could have avoided by taking reasonable steps. Where it is alleged that the plaintiff has failed to mitigate, the burden of proof is on the defendant, who needs to prove both that the plaintiff has failed to make reasonable efforts to mitigate and that mitigation was possible (Red Deer College v. Michaels, 1975 CanLII 15 (SCC), [1976] 2 S.C.R. 324; Asamera; Evans v. Teamsters Local Union No. 31, 2008 SCC 20, [2008] 1 S.C.R. 661, at para. 30).
[25] On the other hand, a plaintiff who does take reasonable steps to mitigate loss may recover, as damages, the costs and expenses incurred in taking those reasonable steps, provided that the costs and expenses are reasonable and were truly incurred in mitigation of damages (see P. Bates, “Mitigation of Damages: A Matter of Commercial Common Sense” (1992), 13 Advocates’ Q. 273). The valuation of damages is therefore a balancing process: as the Federal Court of Appeal stated in Redpath Industries Ltd. v. Cisco (The), 1993 CanLII 3025 (FCA), [1994] 2 F.C. 279, at p. 302: “The Court must make sure that the victim is compensated for his loss; but it must at the same time make sure that the wrongdoer is not abused.” Mitigation is a doctrine based on fairness and common sense, which seeks to do justice between the parties in the particular circumstances of the case.
[93] I adopt those principles.
[94] The question is whether Mr. Friese took all reasonable steps to mitigate his loss consequent on the breach. I find that he did. I find that the approach that he took based upon the advice received from Mr. Altwerger and Mr. Clark was entirely reasonable. I accept the evidence of Mr. Friese and Mr. Clark as to the steps taken in a timely fashion between June 26, 2017 and October 6, 2017 to reduce the price of the property based on a Comparative Market Analysis at every stage, with the result that the Keswick property sold for the sum of $425,000 based upon an APS dated September 8, 2017 with a closing date of October 6, 2017. I accept the evidence of Mr. Friese and Mr. Clark in respect of the process taken to reduce the listing price in a reasonable and timely fashion. This is evidenced by the various listings set out in Exhibit 1, Tabs 19, 20, 21 and 22. Further, the approach to price reduction with a view to sell is supported by Mr. Clark’s Comparative Market Analysis found at Exhibit 1, Tab 18.
[95] I find the actions taken by Mr. Friese, Mr. Clark and Mr. Altwerger demonstrate a course of action whose objective was to sell the Keswick property for the best price and in a timely fashion. To do this required the steps taken by Mr. Friese and Mr. Clark to act quickly and reasonably, which they did.
[96] In this case, it is alleged that Mr. Friese failed to mitigate. The burden of proof is on Ms. Arfa, who is required to prove both that Mr. Friese has failed to make reasonable efforts to mitigate and that mitigation was possible.
[97] To the contrary, Ms. Arfa has failed to satisfy her burden of proof. She has failed to lead any evidence to establish that Mr. Friese did not make reasonable efforts to mitigate. Neither did she tender any evidence to support her assertion that mitigation was possible. Mitigation by Mr. Friese accepting the Amendment to Agreement of Purchase and Sale is not mitigation, as I have found. Neither am I satisfied that there is any evidence to establish that Mr. Friese failed to make reasonable efforts to mitigate on the resale or that he should have taken some other course of action. There is no evidence in respect of what that other course of action might have been, except for the fantasy of accepting the proposed Amendment to Agreement of Purchase and Sale, which Mr. Friese was not obliged to do.
[98] Accordingly, I find that after Ms. Arfa breached the APS, Mr. Friese immediately began his efforts to mitigate his damages. I am entirely satisfied that he acted reasonably in listing the property and re-listing the property in the manner that he did, reducing the list prices to the point where he was able to obtain an offer that ultimately closed. See: Gamoff v. Hu, 2018 ONSC 2172 at para. 39.
Damages
[99] Mr. Friese is entitled to damages based on the difference between the contracted sale price in the amount of $590,000 and the ultimate sale price in the amount of $425,000, the difference being $165,000. In addition, Mr. Friese is entitled to pre-judgment interest on said amount from June 26, 2017 to October 6, 2017 at the applicable rate.
[100] In addition, Mr. Friese is entitled to special damages claimed, as follows:
- $ 500.00: legal fees, for the aborted transaction
- $ 579.28: increased property taxes
- $1,250.01: increased interest payments on the promissory note at the rate of $416.67 per month for three months
- $ 400.00: transportation expenses for travel between North Bay and Keswick between June 26, 2017 and October 6, 2017. I find the amount to be reasonable, as it related to gas expenses and other expenses directly related to the maintenance of the Keswick property during this period of time by Mr. Friese
- $2,729.29: TOTAL
[101] As for the counterclaim, Ms. Arfa’s deposit in the amount of $15,000 is forfeited. The counterclaim is dismissed.
CONCLUSION
[102] For these reasons, Darryl Friese shall have Judgment against Roxana Arfa, in the amount $165,000 for damages, together with pre-judgment interest on said amount for the period of June 26, 2017 to October 6, 2017. Darryl Friese is also awarded Judgment against Roxana Arfa for special damages in the amount of $2,729.29.
COSTS
[103] The parties have agreed that costs will be determined by way of written submissions. Within 10 days of the receipt of these reasons, counsel for Mr. Friese shall serve and file with my judicial assistant at Barrie, a concise 2 page summary of position in respect of costs, together with a costs outline and draft bill of costs and any relevant authorities. Counsel for Ms. Arfa shall thereafter serve and file the same materials within the following 10 days. Thereafter, if required, counsel for Mr. Friese will serve and file any reply materials within the next 5 days.
Mr. Justice G.P. DiTomaso
Released: May 30, 2019
[^1]: See Exhibit 1, Tab 1 of the Exhibit Book of the Plaintiff. [^2]: See Exhibit 1, Tab 6. [^3]: See Exhibit 1, Tab 13. [^4]: See Exhibit 1, Tab 17. [^5]: See Exhibit 1, Tab 14. [^6]: See Exhibit 1, Tab 8. [^7]: See Exhibit 2. [^8]: See Exhibit 1, Tab 10. [^9]: Exhibit 1, Tab 9. [^10]: See Exhibit 1, Tab 1. [^11]: See Exhibit 1, Tab 8. [^12]: See Exhibit 1, Tab 18. [^13]: Exhibit 1, Tab 2. [^14]: Exhibit 1, Tab 3. [^15]: Exhibit 1, Tab 4. [^16]: Exhibit 1, Tab 5. [^17]: Exhibit 1, Tab 6. [^18]: Exhibit 1, Tab 7. [^19]: Exhibit 1, Tab 10. [^20]: Exhibit 6. [^21]: Exhibit 2 and found at Exhibit 1, Tab 9.