COURT FILE NO.: CV-17-2758-00 DATE: 20190115 ONTARIO SUPERIOR COURT OF JUSTICE
BETWEEN:
Mohammed Ahmed Plaintiff – and – Hesham Elmarsafy Defendant
Counsel: Shahzad Siddiqui, for the Plaintiff Arjun Vishwanth, for the Defendant
HEARD: July 3, 2018
REASONS FOR JUDGMENT
PETERSEN J.
Introduction
[1] There are two motions before me. In order to provide context for my decision on the motions, I will briefly outline the facts giving rise to the underlying litigation and I will summarize the parties’ pleadings.
[2] The plaintiff Mr. Ahmed and the defendant Mr. Elmarsafy were business partners. They jointly purchased two properties in Mississauga, one on Comet Avenue and the other on Lushes Avenue. Their business relationship subsequently broke down. In order to end the relationship, they agreed that the plaintiff would purchase the defendant’s half interest in both properties.
[3] The defendant’s interest in the Comet Avenue property was conveyed to the plaintiff pursuant to an Agreement of Purchase and Sale (APS). There are no issues relating to that transaction. Only the Lushes Avenue property is the subject of this litigation.
[4] On September 29, 2016, the parties entered into an APS regarding the defendant’s 50% ownership interest in the Lushes Avenue property. The APS had a closing date of November 7, 2016. The transaction did not close. Each party blames the other for the failed transaction.
Parties’ Pleadings
[5] In his Statement of Claim, the plaintiff pleads that the defendant breached the APS and acted in bad faith. He seeks specific performance of the contract and damages.
[6] In support of his claim for specific performance, he alleges that the Lushes Avenue property was occupied by his sister and her family as tenants at the time of the APS. (She had vacated the property by the date of the motion hearing.) He deposed that it was his deceased father’s dying wish that the property become his sister’s permanent residence. He claims that he agreed to purchase the defendant’s half interest in the property so that he could hold title for his sister’s eventual benefit, to fulfil his father’s wish. He submits that the property is unique and has emotional significance to him and his family.
[7] The defendant denies that he breached the APS and asserts that he acted in good faith. He relies on the doctrine of anticipatory breach (or anticipatory repudiation). He alleges that the plaintiff did not have sufficient funds to close the transaction, which relieved him of his contractual obligations under the APS.
[8] In his Statement of Defence and Counterclaim, the defendant pleads that the parties had a partnership in which he was to provide renovation services in respect of the properties, for which he would be compensated. He asserts that the parties’ mutual intention was to renovate then sell the properties for profit. He denies that the Lushes Avenue property was ever intended to be for the plaintiff’s sister’s use. He claims that the plaintiff has been unjustly enriched by extensive renovations that he performed and for which he has not been compensated. He further claims that the plaintiff had tenants in the property without accounting for the rent received. He seeks an order for sale of the property and for damages in the amount of $50,000, plus occupation rent and an accounting of carrying costs incurred by each party.
Motions
[9] As noted above, there are two motions before me. Both motions are effectively for summary judgment, although the defendant’s motion is not specifically framed as such.
[10] The defendant seeks dismissal of the plaintiff’s action, an order for damages in the amount of $50,000, vacant possession of the property and an order for sale of the property at fair market value, with the net proceeds of sale apportioned between the parties in accordance with their respective contributions to the maintenance and improvement of the property.
[11] The plaintiff seeks summary judgment in his favour, dismissal of the defendant’s counterclaims, and an order for specific performance of the parties’ APS, plus damages.
[12] The central (although not the only) issue in dispute in both motions is which party was responsible for the failed transaction. Each party alleges that the other defaulted on his contractual obligations.
[13] The plaintiff asserts that he had the funds required to close the deal, despite the fact that his real estate solicitor wrote to the defendant’s real estate solicitor on the morning of November 7, 2016, requesting a nine day extension of the closing. The defendant rejected the requested extension. The plaintiff argues that he then demonstrated that he was ready, willing and able to close on time, but the defendant’s solicitor ignored his repeated requests for a void cheque to facilitate a direct transfer of the necessary funds to the solicitor’s trust account. The plaintiff further argues that the defendant failed to tender the requisite closing documents on the closing date or in the days immediately thereafter, despite repeated requests by the plaintiff to proceed with the closing.
[14] The defendant submits that the reason given for the plaintiff’s requested extension of the closing date was that the plaintiff did not have sufficient funds to close the deal. The defendant argues that this amounted to anticipatory repudiation, which brought the APS to an end. He further argues that the plaintiff did not at any time (either prior to the scheduled closing or thereafter) tender the requisite funds to close the deal or show proof of his ability to do so (such as a commitment letter from a financial institution establishing the necessary mortgage loan approval).
Ruling
[15] After careful consideration of the parties’ submissions and review of all the evidence in the motion record, I have concluded that this is not an appropriate case for summary judgment: Rules of Civil Procedure, R.R.O. 1990, Reg.194, r.20.04(2)(b).
[16] There are numerous factual and legal issues in dispute that cannot be fairly resolved without a trial, including: whether the plaintiff was actually in possession of the funds required to close the transaction; whether the plaintiff repudiated the contract by demonstrating through his words or actions his intention not to perform his contractual obligations upon closing; if there was an anticipatory breach (or repudiation) of the contract by the plaintiff, whether the defendant communicated to the plaintiff his election to accept the repudiation; and if not, whether the defendant or the plaintiff (or both) failed to satisfy their contractual obligations upon closing. Also in dispute are the parties’ original intention when the property was jointly purchased, whether the property is unique and whether a substitute for it was readily available to the plaintiff. The latter issues are relevant to whether specific performance would be an appropriate remedy in the event that the plaintiff succeeds with his claim.
[17] I recognize that I have the authority to weigh the evidence in the motion record, evaluate the credibility of deponents and draw reasonable inferences from the evidence, but in my opinion, it is in the interest of justice for such powers to be exercised only at a trial of the issues in this case: Rules of Civil Procedure, r.20.04(2.1).
[18] On a summary judgment motion, both parties must put their “best foot forward” with respect to the existence or non-existence of issues requiring a trial: Sweda Farms v. Egg Farmers of Ontario, 2014 ONSC 1200, at para.32, aff’d 2014 ONCA 878. This includes a responsibility to submit all relevant evidence in support of their respective positions and also a responsibility to challenge the opposing party’s evidence: Kaur v. Medavie Blue Cross, 2017 ONSC 7396 at paras.19-20. In the motions before me, there are deficiencies in the record on both sides, which render it impossible for me to make the necessary factual findings to resolve the issues in dispute.
[19] The central factual dispute is what transpired between the parties’ real estate solicitors on the closing date. There is some correspondence in the record that will assist with the determination of this issue, but the evidence of both solicitors is required in order to resolve ambiguities and gaps in the documentary record. The defendant’s real estate solicitor attended for an examination in connection with the motions but the plaintiff’s real estate solicitor did not. The defendant argues that the Court should draw adverse inferences against the plaintiff because of his solicitor’s refusal to attend for an examination. I am not prepared to do so because the evidence in the record leaves me with unanswered questions about whether the plaintiff’s solicitor was properly served with a Notice of Examination, whether he was even available on the scheduled date for the examination, and whether he was entitled to refuse to be examined (or to refuse to answer certain questions) based on solicitor-client privilege. The record is not sufficient for me to be able to conclude that the plaintiff’s solicitor was improperly trying to evade being examined or that the plaintiff was colluding with his solicitor in that regard, as alleged by the defendant.
[20] The motion record is also deficient in other aspects. For example, the parties’ affidavits are both very brief and do not cover all of the relevant facts required for the Court to develop an understanding of what transpired. Both parties were cross-examined on their affidavits, but the examinations were hotly contested and there were frequent interjections by opposing counsel, without the benefit of a trial judge to rule on the issues that arose. Certain key areas were not covered during the examinations. For example, the plaintiff was not asked to produce evidence supporting his claim that he had the requisite funds to complete the transaction on the closing date. The plaintiff did not submit an affidavit from his sister, attesting to the purported sentimental value and uniqueness of the property for her purposes. The defendant did not submit evidence of the renovations that he claims to have performed to improve the property or evidence of the expenses arising from those renovations. These are just some of the deficiencies in the record that impede my ability to make the necessary factual findings in this case.
[21] There is no doubt that summary judgment would be a more expeditious and less expensive means of arriving at an adjudication of the issues in dispute in this action, but I am not confident that it would be a fair process or that a just outcome can be reached without a trial: Hryniak v. Mauldin, 2014 SCC 7, [2014] 1 SCR 87, at paras.49-50.
[22] I have considered whether a “mini trial” pursuant to Rule 20.04(2.2) of the Rules of Civil Procedure would be sufficient to permit me to make the necessary factual findings and adjudicate the merits of the issues. I am not satisfied that a mini-trial would achieve a just result. There are serious credibility issues that can only be resolved with the benefit of viva voce evidence including cross-examination of both parties and all of their witnesses at trial.
[23] I note that the Ontario Court of Appeal recently cautioned that summary judgment motions should not be treated as the preferred method for resolving civil claims in all cases: Mason v. Perras Monogenais, 2018 ONCA 978, at paras.43-44. The Court of Appeal commented on the cultural shift toward a more liberal application of the summary judgment procedure post- Hryniak, noting that judges should not be trying “as much as possible” to decide cases summarily in order to avoid the expense and delays of the trial process. The Supreme Court of Canada’s decision in Hryniak did not detract from the overriding principle that summary judgment is only appropriate where it leads to a fair process and just adjudication. As the Court of Appeal stated in Mason (at para.44), “there is nothing in Hryniak that suggests that trials are now to be viewed as the resolution option of last resort. Put simply, summary judgment remains the exception, not the rule.”
[24] This is not a case in which summary judgment would afford a fair process for the just adjudication of the issues in dispute. A conventional trial is required in order to provide the Court with a full record upon which to draw appropriate inferences and make the necessary factual findings.
[25] For the above reasons, both parties’ motions are dismissed. Each party will bear his own costs of the motions.