OSHAWA COURT FILE NO.: CV-18-2680
DATE: 20190923
ONTARIO
SUPERIOR COURT OF JUSTICE
BETWEEN:
Dilan Noel Punitharaj and Maylin Torres Estevez
Plaintiffs
– and –
Tameeka Miller-Jones
Defendant
Jason Allingham, for the Plaintiffs
Emily Fan, for the Defendant
HEARD: August 9, 2019
RULING ON SUMMARY JUDGMENT MOTION
LEIBOVICH, J.
Overview
[1] This is a motion for summary judgment brought pursuant to Rule 20.01(1) of the Rules of Civil Procedure, R.R.O 1990, Reg. 194. The plaintiffs claim that the defendant breached their agreement to purchase their house and that the subsequent relisting and reselling of the house resulted in a shortfall of $89, 000. They also incurred some additional expenses. The plaintiffs bring this motion on the basis that there is no genuine issue for trial as the breach and quantum of damages are clear. The defendant claims that the plaintiffs negligently represented to her the status of the basement apartment. She did not know that it was not a legal rental unit at the time she signed the agreement of purchase and sale. The defendant claims that there is a dispute on this issue requiring a trial. The defendant also states that she has started an action against her real estate agent and the Court should not issue what, in essence, would be a partial summary judgment given the factual overlap of the two actions. The defendant also states that some of the claimed damages result from the agreed upon extensions of the closing date by the plaintiffs.
[2] For the reasons set out below, I grant summary judgment on behalf of the plaintiffs, although not for the expenses resulting from the extensions of the closing. In my view, even assuming that the defendant was only told the status of the basement apartment after she signed the agreement, the evidence is uncontested that she never objected to closing the sale on that basis.
The Facts
[3] The only factual issue in dispute is whether the defendant was told that the basement apartment was a legal rental unit before she signed the agreement of purchase and sale or afterwards. What is undisputed is that the defendant knew that the basement apartment was not a legal rental unit before she closed the sale, but yet she never objected to the sale on that basis. The following chronology is clear from the record filed on the motion:
- On April 2, 2017, the plaintiffs and the defendant entered into an agreement of purchase of sale. The defendant agreed to buy the plaintiffs’ property for $680,000. She paid a deposit of $5,000. The agreement of purchase of sale was to close on June 29, 2017;
- According to the defendant, she learned on April 13, 2017 that the basement apartment was not a legal rental apartment;
- On April 20, 2017, the defendant paid another $5,000 deposit, as required by the agreement of purchase of sale;
- On June 28, 2017, the defendant, who was represented by counsel (not counsel on this motion), asked the plaintiffs for an extension of time to close the deal. The extension was granted to July 28, 2017. The status of the basement apartment was not raised as an issue. On July 4, 2017, the plaintiffs agreed to the extension;
- On July 21, 2017, the defendant, again through her lawyer, asked that the closing be extended to August 31, 2017, to coincide with the sale of her property. The status of the basement apartment was not raised. On July 27, 2017, the plaintiffs agreed to the extension;
- On August 28, 2017, the defendant, through her lawyer, asked that the price be reduced by $110,000 to reflect the current market value. The plaintiffs refused;
- On August 31, 2017, the defendant, through her lawyer, refused to close, indicating that the property was subject to undisclosed easements. The plaintiffs were ready to close; and
- The plaintiffs relisted the property and eventually sold it on November 23, 2017 for $591,000.
[4] The defendant swore an affidavit, dated February 28, 2019. For the first time, in this affidavit, she discussed the importance of the basement apartment as a rental unit in her decision to agree to buy the house. According to the affidavit, she discovered that the basement apartment was not a legal rental unit. Despite her concerns about the unit, she felt that she had to continue with the closing and would seek her remedies post closing. She listed her own house for sale for $639,000 but was only able to obtain $535,000. She needed time to get the additional financing needed to close the deal with the plaintiffs and thus instructed her lawyer twice to obtain extensions. She also sought to have the price reduced to reflect the softened real estate market. Her affidavit does not explain why she never previously discussed the basement apartment as an issue with the plaintiffs between the time she agreed to the initial purchase and sale and the last closing date of August 31, 2017. Nor does the affidavit explain why her lawyer raised the issue of easements but not the basement apartment when he advised the plaintiffs that she was not going to close.
[5] The listing for the property states that the basement apartment is a “Great Opportunity for Rental Income”. The listing also states that the “Sellers & listing Agent Does Not Warrant Retro Fit Status of basement.” The copy of the listing attached to the defendant’s affidavit does not include this disclaimer. It is evident from the manner in which it is presented in Exhibit A to the defendant’s affidavit that it was purposely omitted.
[6] The plaintiff, Dolan Noel Punitharaj, has provided an affidavit outlining the history of the failed transaction, but also stating that he personally told the defendant when she first saw the property, before the agreement of purchase and sale was signed, that the basement apartment was not a legal rental unit.
[7] The defendant has sued her real estate agent for his role in the failed transaction. That litigation is still outstanding.
The Law
The Test for Summary Judgment
[8] The test for summary judgment is set out in Rule 20.04 of the Rules of Civil Procedure. The court shall grant summary judgement if:
a) the court is satisfied that there is no genuine issue requiring a trial with respect to a claim or defence; or
b) 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.
[9] Rule 20.04(2.1) of the Rules of Civil Procedure states that the judge may exercise any of the following powers for the purpose, unless it is in the interest of justice for such powers to be exercised only at trial:
Weighing the evidence.
Evaluating the credibility of a deponent.
Drawing any reasonable inference from the evidence.
[10] Rule 20.02(1) states that a court may, “draw an adverse inference from a party’s failure to adduce evidence from a person having a general knowledge of contested facts.” As stated by Doi J. in FFO Fibreglass v. Distribution Composites, 2019 ONSC 4291 at para. 13:
Absent detailed and supporting evidence, a self-service affidavit does not create a triable issue.
[11] As stated by the Supreme Court of Canada in Hryniak v. Mauldin, 2014 SCC 7, [2014] 1 S.C.R. 87, at para. 43:
The Ontario amendments changed the test for summary judgment from asking whether the case presents “a genuine issue for trial” to asking whether there is a “genuine interest requiring a trial”. The new rule, with its enhanced fact-finding powers, demonstrates that a trial is not the default procedure. Further, it eliminated the presumption of substantial indemnity costs against a party that brought an unsuccessful motion for summary judgment, in order to avoid deterring the use of the procedure.
[12] There will be no genuine issue requiring a trial when the judge is able to reach a fair and just determination on the merits on a motion for summary judgment. However, “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 principles so as to resolve the dispute”; Hryniak, at para. 50.
[13] The court must be careful in considering partial summary judgement as the trial judge “will develop a fuller appreciation of the relationships and the transactional context than the motions judge” which could risk “inconsistent findings and substantive injustice” Baywood Homes Partnership v. Haditaghi, 2014 ONCA 450 120 O.R. (3d) 438, at para. 37; see also Butera v. Chown, Cairns LLP, 2017 ONCA 783, 137 O.R. (3d) 561, and Mason v. Perras Mongenais, 2018 ONCA 978; and Healthy Lifestyle Medical Group Inc. v. Chand Morningside Plaza Inc., 2019 ONCA 6, at para. 9; Service Mold + Aerospace Inc. v. Khalaf, 2019 ONCA 369 at para. 14.
Misrepresentation
[14] A purchaser may refuse to close if the vendor has made a false representation and the elements of the equitable claim of rescission are present. The elements for the equitable remedy of rescission are: (a) a false statement; (b) materiality, which is to say that the false statement must be of a type that would influence a contracting party’s decision to enter into the contract; (c) the false and material statement must have induced the party to enter into the transaction; and (d) the innocent party must object before the closing of the transaction, unless the representation is fraudulent or an error in substantialibus; Tse v. Sood, 2015 ONSC at paras. 9, 23
Positions of the Parties
[15] The plaintiffs claim that there is no genuine issue for trial. There is no dispute that the defendant failed to close the agreement and the damages are easily identifiable. The plaintiffs make the following points:
Based on the material filed, the Court can make the requisite credibility findings and determine that there was no misrepresentation to the defendant;
The agreement of purchase and sale has an exclusion clause that overrides any language that the defendant could have relied upon in the listing agreement with respect to the basement; and
Rescission does not apply as the defendant, because, based on her affidavit, still wanted to proceed with the purchase after she discovered that the basement apartment was not a legal rental unit.
[16] The defendant claims that there is a genuine issue for trial. The defendant states that there is conflicting evidence regarding when she was not told that the basement was illegal and a trial is needed to resolve this factual dispute. Furthermore, this issue will also be the subject of her action against her real estate agent. Rendering a summary judgment in this case will be, in essence, a partial summary judgment and will risk inconsistent verdicts. If the defendant is believed on this credibility issue, then she has a strong claim for rescission. The defendant also states that the exclusion clause does not oust the specific misrepresentation.
Analysis
[17] I agree with the defendant that if it is necessary to resolve the credibility issue with respect to when the defendant knew that the basement apartment was not a legal rental unit then I should dismiss the motion for summary judgment. I have grave doubts, based on the material filed on this application, that the defendant is telling the truth when she claims that she was only told that the basement was an illegal rental unit after she signed the agreement of purchase and sale. The first time she ever raised the basement issue as a complaint was in February 2019, despite being represented by a lawyer at the relevant times in between the signing and the various closing dates. Furthermore, I am concerned that the defendant attempted to mislead by filing the cropped listing agreement which omitted the comment that the seller does not retro fit the basement. However, there have been no cross-examinations on the affidavits, and as noted by Copleand J. in Candiano v. Yakubov, 2018 ONSC 1161 at para. 14:
In particular, I do not accept the plaintiff’s argument that cross-examination of the defendant on his affidavit could not yield any additional useful information, because the defendant was required to put his best foot forward on the summary judgment motion, and he has not filed any documentary evidence to support his claim of duress. With respect, this argument fails to address that cross-examination is a two-way street. The defendant would also be entitled to cross-examination of the plaintiff on his affidavit. Given the importance of cross-examination to the truth-seeking function of our justice system, I am not prepared to assume that it would serve no utility here.
[18] In addition, there is no evidence from the defendant’s real estate agent, who was present when the relevant conversations took place. The plaintiffs have extracted from the agent’s statement of defence. I cannot rely on that for this motion. If any party wanted me to consider the agent’s evidence, a proper affidavit should have been filed.
[19] However, even assuming that the defendant was told, after she signed the agreement of purchase and sale, that the basement apartment was not a legal rental unit, it is evident from the defendant’s own affidavit that this had no bearing on her decision to not close the transaction. The elements of the doctrine of rescission have not been made out as while the defendant failed to close and objected she did not object based on the representations with respect to the basement.
[20] After discovering that the basement was not a legal rental unit, the defendant stated in her affidavit that she still wanted to close the deal. In support of this desire, she then paid the second deposit. The change in the housing market resulted in the defendant not receiving the amount she thought she would receive from the sale of her own house. This caused her difficulties as she now had to finance the shortfall. She asked for two extensions of the closing. They were granted. She then asked for the price to be reduced because of the changed market. This was refused. She then advised the plaintiffs through her lawyer that she was not going to close because of some easement issues. The easement issues have not been raised as a defence in this motion. But more critically, the status of the basement apartment was never raised by the defendant as her reason for not closing the real estate transaction. If the basement apartment was the issue for not closing, there is no logical reason for the defendant, who was represented by counsel at the time, not to raise it. It was not raised at the time, because it was not the reason. The complainant could not close the deal because the market had changed, she was short the necessary funds and she could not get the requisite financing. This conclusion flows inescapably from the defendant’s own affidavit. A trial is not needed to resolve this issue.
[21] In addition, it must be remembered that this is not a request for partial summary judgment. Summary judgment in this matter will dispose of the entire action. There is a separate action against the real estate agent, and while there is a factual overlap, there are different claims against the real estate agent. This case is similar to the request to stay a summary judgment pending the conclusion of a defendant’s action against their real estate agent in Zou v. Sanyal, 2019 ONSC 738. The request was dismissed. Cavanagh J. found at para. 65:
There is some overlap between the issue that I decided on this motion and the claims made in the third party claim. However, I have concluded that there was clear breach in the Agreement by the defendants by failing to complete the transaction. In my view, given the conclusion, the potential prejudice of non-payment to which the plaintiffs would be exposed if they were to be delayed in their ability to enforce a judgement until the final disposition of the third party action is the decisive factor that, in this case militates against a stay of enforcement of the judgement.
Also see Miller v. Wang, 2018 ONSC 7668.
[22] Finally, nothing that occurs in the action against the real estate agent can alter the fact that the defendant never objected to the sale because of the basement apartment and was still prepared to close after she, on her evidence, found that the basement was not a legal rental unit.
The Effect of the Exclusion Clause
[23] The agreement of purchase and sale contained the following entire agreement clause:
While not strictly necessary to address to resolve this motion, the agreement of purchase and sale contained the following clause which specifically stated that it was only the parties should only rely on what is contained in the agreement
“26. AGREEMENT IN WRITING: If there is a conflict or discrepancy between any provision added to this Agreement (including any Schedule attached hereto) and any provision in the standard pre-set portion hereof, the added provision shall supersede the standard pre-set provision to the extent of such conflict or discrepancy. This Agreement including any Schedule attached hereto, shall constitute the entire Agreement between Buyer and Seller. There is no representation, warranty, collateral agreement or condition, which affects this Agreement other than as expressed herein. For the purposes of this Agreement, Seller means vendor and Buyer means purchaser. This Agreement shall be read with all changes of gender or number required by the context.” [emphasis added]
[24] As noted in Sobcoczynski v. Beauchamp 2015 ONCA 282:
The entire agreement clause in this case is saying, “These are the terms of our agreement and nothing that was said beforehand is relevant. You have no basis for relying on anything other than the terms of the agreement. The agreement stands on its own”.
[25] The plaintiffs state that irrespective of what was said earlier about the basement apartment the exclusion clause prevents the defendant from relying on those representations. The defendant relies on Singh v. Trump, 2016 ONCA 747, where the Court refused to enforce an exclusion clause because it functioned as a trap to the unwary purchasers. Given my findings above, I need not resolve this issue but there is nothing in the record before that supports the inference that the defendant did not understand the clause or that it was used as a trap.
Damages
[26] The plaintiffs are entitled to damages based on the difference between the contracted sale price between the parties and the ultimate sales price; Gamoff v. Hu, 2018 ONSC 2172 at para. 40. The defendant agreed to purchase the house for $680,000. The property was ultimately sold at $591000. The plaintiffs are owed the shortfall of $89,000, included in that is the forfeited deposit of $10,000 for an outstanding amount of $79,000.
[27] The plaintiffs are also entitled to recover their costs involved in relisting the property as they are entitled to be put into as close a position as they would have been had the purchase with the defendants closed; Briscoe-Montgomery v. Kelly, 2014 ONSC 4240. However, they are not entitled to now seek costs for the extension of the closings that they voluntarily agreed to. The plaintiffs are therefore entitled to the following additional damages:
a) $3501.21 incurred for bridge financing;
b) $8696.36 paid to buy out the furnace and air conditioner to assist in the resale of the property. In my view this was a valid step by the plaintiffs to assist in reselling the property and mitigating their damages; and
c) $325.74 utility charges arising from the breach of the agreement of purchase of sale
[28] Therefore, the total damages owing to the plaintiffs are $91,523.31.
Disposition
[29] For the reasons given, the motion for summary judgment is allowed; and
a. The deposit of $10 000, with all accumulated interest, is forfeited to the plaintiffs;
b. General damages for breach of contact in the amount of $79,000 (the breach of contract damages of $89 000 less the forfeited deposit of $10,000) is owing to the plaintiffs; and
c. Special damages in the amount of $12, 523.31 is owing to the plaintiffs.
[30] In the event that the parties cannot agree upon the costs, I ask that the parties exchange and file written submissions, limited to two pages. The submissions shall be filed in accordance with the following schedule:
a. The plaintiffs shall file its submissions and bill of costs within five business days of the release of these Reasons; and
b. The defendant shall file its submissions within five business days thereafter.
The Honourable Justice H. Leibovich
Released: September 23, 2019
Punitharaj v. Miller-Jones, 2019 ONSC 5505
ONTARIO
SUPERIOR COURT OF JUSTICE
Dilan Noel Punitharaj and Maylin Torres Estevez
Plaintiffs
– and –
Tameeka Miller-Jones
Defendant
RULING ON SUMMARY JUDGMENT MOTION
Justice H. Leibovich
Released: September 23, 2019