Court File and Parties

Court File No.: 18-64421-SR Date: 2019/07/29 Superior Court of Justice - Ontario

Re: Goldengrove Investments Inc., Plaintiff And: Krysta Danielle Atkinson, Defendant

Before: The Honourable Justice M. J. Donohue

Counsel: Michael Chow, Self-presented litigant for the Plaintiff Incorporated Company Krysta Atkinson, Self-represented, Defendant

Heard: June 21, 2019

Endorsement

[1] The plaintiff brought this rule 20 motion for summary judgment on the basis that there was no genuine issue requiring a trial.

[2] The defendant agreed that the matter could be determined on the written record as the facts were not in dispute.

[3] The plaintiff sues claiming breach of an agreement of purchase and sale. The defendant claims she was unable to sell the property, that she had no legal right to sell.

[4] Each party sought the court to order that the monies previously paid into court, $56,544.44, be paid out to the successful party on the motion.

[5] Mr. Chow sought leave of the court, pursuant to rule 15.01(2), to represent the corporate plaintiff of which he is the sole director, officer, and shareholder. The defendant did not object. In light of the amount of money and the narrow issue involved, it was appropriate to grant leave for a non-solicitor to represent the corporate plaintiff.

Undisputed Background Facts

[6] The defendant owned a property: 101 Barnesdale Avenue North, in Hamilton. The property was mortgaged to SDC Mortgages Limited (SDC) and it went into default.

[7] On October 17, 2017, the mortgagee, SDC, obtained a judgment against the defendant for $171,042.76 and costs of $746.67. They served a notice on October 19, 2017, demanding possession.

[8] On November 17, 2017, SDC obtained a writ of possession for the property.

[9] The defendant described herself as “desperate” and “in a panic”, with nowhere to take her children. She said they were facing being out on the streets on Christmas.

[10] The defendant found the plaintiff company on Kijiji which advertised that they “buy houses for cash”.

[11] On December 4, 2017, the defendant met the plaintiff at the property. The defendant advised him of the mortgagee’s judgment and writ of possession. Her evidence was that she was unsure whether she was entitled to sell the property or not.

[12] Nonetheless, the defendant signed an agreement of purchase and sale of the property for $200,000. The plaintiff purchaser inserted a clause that the offer was conditional “upon receiving written confirmation from the Seller’s lender…that the Buyer will be able to complete purchase of property under terms of this Agreement of Purchase and Sale.”

[13] The agreement further stated that “this condition is included for the benefit of the Buyer and may be waived at the Buyer’s sole option by notice in writing to the Seller as aforesaid within the time period stated herein.” The time period was 10:00 p.m. on December 22, 2017. The plaintiff purchaser sent a written notice waiving all conditions within the time period.

[14] The sale was to close on December 29, 2017.

[15] Two days before closing, the defendant’s lawyer wrote to the plaintiff’s lawyer stating that the defendant’s lender, SDC, was denying the right of the defendant to proceed with the sale and the defendant proposed a mutual release. The defendant’s lawyer refers to the condition in the agreement about confirmation of the Seller’s lender but does not mention that the condition was for the benefit of the Seller or that the Seller had waived the condition five days earlier.

[16] The record does not disclose any direct evidence from SDC confirming their objection to the sale before closing.

[17] On the day of closing, December 29, 2017, the defendant’s lawyer wrote the plaintiff’s lawyer alleging that the plaintiff’s firm gave legal advice to the defendant within 24 hours of executing the agreement of purchase and sale, and that they induced the sale far below market value. The defendant’s lawyer stated that the $1 deposit had not been received and that the agreement was not legally constituted and therefore void.

[18] That same day, the plaintiff’s lawyer denied that their firm had provided any advice to the defendant and that they were not involved in the negotiation of the transaction. On the record, Ms. Atkinson did not provide any evidence of this purported advice nor did she argue this issue at the motion.

[19] The plaintiff’s lawyer confirmed that the $1 deposit had been provided to them by the plaintiff purchaser when they were retained, and they are willing to transfer it to the defendant’s firm.

[20] The plaintiff’s lawyer attached the defendant’s signed documents and a copy of the certified cheque to the defendant’s law firm for the purchase price. They offered to extend the closing to January 3, 2018, to allow the plaintiff to confirm the amount owing to discharge the mortgage and writ.

[21] The defendant’s lawyer replied on January 2, 2018, stating that the defendant was not proceeding with the sale of the property to the plaintiff purchaser.

[22] The plaintiff’s lawyer then, on January 2, 2018, wrote to the mortgagee’s lawyers advising of the binding Agreement of Purchase and Sale and asking whether SDC would honour the sale. They inquired whether SDC was taking possession of the property and, if so, when that was expected.

[23] The mortgagee’s lawyers responded January 8, 2018, that they were not party to the Agreement and not bound by it. They confirmed that once SDC takes possession of the property, they will be listing it and welcome an offer from the plaintiff.

[24] On January 9, 2018, the mortgagee, SDC, took possession. The defendant and her children moved to a shelter.

[25] The plaintiff purchaser sued on the agreement and obtained a Certificate of Pending Litigation on February 15, 2018, registered against the property.

[26] On March 29, 2018, SDC sold the house for $271,900. The plaintiff purchaser agreed to discharge their Certificate of Pending Litigation if the surplus sale proceeds were paid into court.

[27] On May 10, 2018, the surplus $56,544.44 was paid into court.

[28] The plaintiff purchaser seeks these funds as part of the damages he sustained for the defendant’s failure to close.

[29] The defendant seller seeks these funds as the surplus on her property on the basis that she understood that she had no legal right to sell the property and so could not close the deal.

Capacity to Sell

[30] The defendant did not provide any case law as authority for her position that she was unable to sell the property.

[31] She relied on the condition in the agreement which mentions the Seller’s lender confirming her ability to complete the purchase but overlooked the wording that stated that the condition was for the benefit of the Buyer; that it may be waived; and that is was waived.

[32] The law under the Mortgages Act, R.S.O. 1990, c. M. 40, provides that a mortgagor has an equitable right of redemption, a right to a reconveyance of the property upon payment of the debt (see Joseph E. Roach, The Canadian Law of Mortgages, 2nd ed. (LexisNexis: Markham, 2010, at p. 285).

[33] The defendant could have exercised her right of redemption until the property was sold under power of sale. Case law demonstrates that she was not barred from selling her house to redeem the mortgage even though the mortgagee elected power of sale.

[34] In Municipal Savings & Loan Corp. v Wilson (1981), 1981 CanLII 2979 (ON CA), 127 D.L.R. (3d) 127 (Ont. C.A.) para 6 the Court of Appeal specifically addressed this issue, “Can a mortgagee exercise a power of sale without giving the mortgagor an opportunity to redeem? Can he, in other words, say to the mortgagor: I am going to sell your land for your default in the payment of interest and you cannot redeem because I have not exercised my option to accelerate the principal? Clearly he cannot…..A mortgagee cannot resort to the security and at the same time assert his option to prevent redemption.”

[35] In Theodore Holdings Ltd. v. Anjay Ltd. (1990), 1990 CanLII 6624 (ON SC), 72 O.R. (2d) 645 (Ont. H.C.J.), the court determined the relative rights of a purchaser from a mortgagee under a power of sale and a purchaser from the mortgagor who desired to redeem. The plaintiff mortgaged its two parcels of land to the defendants. Acting under its power of sale, the defendants agreed to sell one parcel. The agreement failed to close. The plaintiff obtained an order prohibiting the defendants from selling the lands. The plaintiff subsequently agreed to sell the north parcel to another purchaser. Despite knowledge of the order, the mortgagee defendants listed the north parcel and entered into an agreement to sell. The plaintiff brought the action to redeem the mortgages.

[36] Lane J. held that the plaintiff mortgagor was permitted to redeem the mortgage because when the plaintiff agreed to sell, there was no agreement to sell by the mortgagees. The plaintiff was, therefore, entitled to redeem until the mortgagees entered into another bona fide agreement. The mortgagees’ third agreement did not fall into that category since it offended the court order.

Was There a Defect in Title?

[37] Under the power of sale process, the mortgagee does not become vested with title to the property. The mortgagee is only entitled to sell the property (see Municipal Savings & Loan Corp. v. Wilson (1981), 1981 CanLII 2979 (ON CA), 127 D.L.R. (3d) 127 (Ont. C.A.) noted above.

[38] The defendant therefore was the person holding title at all times. The Writ of Seizure and Sale created a lien against the title to the land. See Lograsso v. Kuchar (2009), 80 R.P.R. (4th) 272.

[39] Accordingly, the defendant had title and remained capable of completing a purchase and sale agreement.

Rule 20 Motions

[40] The law on Rule 20 motions was succinctly stated by Henderson J. in Frame et al. v. Watt et al., 2016 ONSC 718, at paras. 25-30:

[25] Rule 20.04(2)(a) provides that the court shall grant summary judgment if the court is satisfied that there is no genuine issue requiring a trial with respect to a claim or defence.

[26] Rule 20.04(2.1) and (2.2) provide the motions judge with additional powers that may be used to determine whether there is a genuine issue that requires a trial.

[27] It is trite law that on a Rule 20 motion a judge must take a hard look at the evidence to determine whether or not there is a genuine issue for trial. Further, the onus of establishing that there is no genuine issue for trial is on the moving party. See the case of 1061590 Ontario Limited v. Ontario Jockey Club, 1995 CanLII 1686 (ON CA), 21 O.R. (3d) 547 at para. 35.

[28] In the case of Hryniak v. Mauldin, 2014 SCC 7, [2014] 1 S.C.R. 87, the Supreme Court of Canada established a two-step approach to Rule 20 motions. In the first step, the motions judge is to take a hard look at the evidence to determine whether there is a genuine issue requiring a trial. If there is no genuine issue for trial, summary judgment will be granted.

[29] In the second step of the process, a motions judge shall consider the evidence submitted by the parties, and may exercise the additional powers of weighing the evidence, evaluating credibility, and drawing reasonable inferences as set out in Rule 20.04(2.1) to determine whether there is a genuine issue, unless it is in the interest of justice for such powers to be exercised only at a trial. See Hryniak at paras. 49-52.

[30] The use of the additional powers available on a motion for summary judgment will not be against the interest of justice if they will lead to a fair and just result and will serve the goals of timeliness, affordability, and proportionality in light of the litigation as a whole. See Hryniak at para. 66.

[41] Further, pursuant to Rule 20.02(2), a responding party may not rest on the mere allegations or denials of the party’s pleadings, but must set out, in affidavit material or other evidence, specific facts showing that there is a genuine issue requiring a trial.

Analysis

[42] I am satisfied that there is no genuine issue for trial.

[43] There is no dispute that there was an agreement of purchase and sale; that the purchaser waived all conditions; the purchaser was ready, willing, and able to complete the sale; but the defendant seller declined to do so.

[44] Under the law, the defendant seller was entitled to sell the property and redeem the mortgage as SDC had not listed or sold the property themselves.

[45] The defendant seller made an anticipatory breach two days before closing and confirmed their refusal to close on the date of closing.

[46] The plaintiff is entitled to judgment.

Damages

[47] The plaintiff is no longer seeking specific performance of the contract and is content to receive damages for the breach.

[48] The Supreme Court of Canada has held that where a contract has been breached by a seller, an innocent purchaser may sue for damages. The court set out the principles to apply to the assessment of damages in lieu of specific performance. To compensate the aggrieved party, they held that a party is entitled to the increase in value of a property from the date of breach until the date of trial (see Semelhago v. Paramadevan, 1996 CanLII 209 (SCC), [1996] 2 S.C.R. 415, at pp. 426-27).

[49] The property here sold at a profit of $71,900 above the original price agreed upon between the plaintiff and defendant.

[50] The appropriate measure of damages is $71,900, which is the increase in value from the contract price to the ultimate market price.

Conclusion

[51] Accordingly, the plaintiff shall have judgment of $71,900 as against the defendant.

[52] Following any decision on appeal, or on the expiry of the appeal period, the funds in court, $56,544.44, and any accrued interest thereon, may be paid out to the plaintiff to the credit of the judgment.

Costs

[53] If the parties are unable to resolve costs, the plaintiff is to serve written submissions within seven days of this judgment. The respondent is to serve responding submissions within seven days thereafter. If needed, the plaintiff may serve reply submissions within three days thereafter.

[54] Costs submissions are not to exceed one page, plus any bills of costs, offers to settle and case law.

[55] If submissions are not received within 30 days of this endorsement, the issue of costs will be considered settled and the file closed.

M. J. Donohue J.

Date: July 29, 2019