BARRIE COURT FILE NO.: CV-17-1085
DATE: 20190925
ONTARIO
SUPERIOR COURT OF JUSTICE
BETWEEN:
ASHLEY DAWN DUNNING a.k.a. ASHLEY DAWN REID and BRIAN JAMES DUNNING
Plaintiffs
– and –
HOUMAN EFTEKHAR, HANIEH EFTEKHAR and CENTURY 21 B.J. ROTH REALTY LTD.
Defendants
Mr. C. Salazar, for the Plaintiffs, Dunning
Mr. D. Bhatia, for the Defendants, Eftekhar
Mr. C. Tucker, for the Defendant, Century 21 B.J. Roth Realty Ltd.
HOUMAN EFTEKHAR, HANIEH EFTEKHAR
Plaintiffs by Counterclaim
– and –
ASHLEY DAWN DUNNING a.k.a. ASHLEY DAWN REID, BRIAN JAMES DUNNING, CENTURY 21 B.J. ROTH REALTY LTD., CHRISTY McGEE and ADAM SCARATI
Defendants by Counterclaim
Mr. D. Bhatia, for the Plaintiffs by Counterclaim, Eftekhar
Mr. C. Salazar, for the Defendants by Counterclaim, Dunning
Mr. C. Tucker, for the Defendants by Counterclaim, Century 21 B.J. Roth Realty Ltd., Christy McGee and Adam Scarati
HEARD: March 22 and September 17, 2019
REASONS FOR DECISION
VALLEE J.:
Introduction
[1] These motions for summary judgment, brought by the plaintiffs/sellers, Ashley Dunning and Brian Dunning, the defendant/defendant by counterclaim, Century 21, and the defendants by counterclaim, Christie McGee and Adam Scarati, are about a real estate transaction that did not close. The sellers owned 2 Ballymore Drive in Aurora, a corner lot on a plan of subdivision, being Lot 27, 65M-3049. The front of the house faces south on Downey Circle. The east side of the house faces Ballymore Drive. A swimming pool occupied most of the back yard. There was a fence across the rear lot line, very close to the back edge of the pool. A green belt area was on the other side of the fence. To the west of Lot 27 is Lot 28, another residence. Both houses are very close together.
[2] Century 21 was the listing broker. Christy McGee was the agent for the sellers. In preparing the listing, Ms. McGee consulted GeoWarehouse to determine the size of the lot. It showed the lot as being 145.99’deep (44.49m). She used that number in the listing. The legal description of the property on the listing was PCL 27 – 1 SEC 65M3049; LT 27 PL 65M3049.
[3] On March 27, 2017, the defendant/buyer, Houman Eftekhar[^1], and the sellers entered into an agreement of purchase and sale for $1,200,000. The closing date was June 29, 2017.
[4] Prior to closing, a mistake in the description of the lot size came to light. According to a field survey completed on October 26, 1995 by David O. Horwood, Ontario Land Surveyor, the lot was actually 33.95m (111.39’) deep, not 145.99’ deep.
[5] There is no dispute that the area of the lot was 23% less than advertised. The buyer requested a price abatement but did not specify an amount. The sellers refused. The buyer then refused to close the transaction. A few months later, the sellers sold the property to a third party for $1,075,000, 89.58% of the original offer.
[6] The sellers state that the mistake was immaterial. It did not go to the root of the contract. The buyer wanted to buy a house on a lot in a subdivision. He could see the boundaries of the entire property that he was buying. There was no basis for the refusal to close the transaction. The sellers request judgment for the deposit, the deficiency on the sale and their carrying costs up to the sale to the third party.
[7] The sellers named Century 21, the holder of the buyer’s deposit, as a defendant in this action in order to make a claim against the deposit. The buyers counterclaimed against Century 21, Christy McGee and Adam Scarati (whose name was also on the listing as a representative). The motion of Century 21 and the agents requests that the counterclaim be dismissed against them.
[8] The buyer states that the mistake was material. He was impressed with the advertised depth of the lot. It was one of the primary reasons why he agreed to purchase it. He wanted to tear down the existing house and build something bigger.
Is this an appropriate case for summary judgment?
[9] According to Hryniak v. Mauldin, 2014 SCC 7, para 66, “There will be no genuine issue requiring a trial if the summary judgment process provides [the motion judge] with the evidence required to fairly and justly adjudicate the dispute and is a timely, affordable and proportional procedure under Rule 20.04(2)(a).”
The Buyers’ Position
[10] The buyers rely on cases that generally state when a property is listed as being larger than it actually is due to a mistake resulting in a misdescription and a buyer relies on it because he has an intention to develop the property, he may rescind the agreement[^2].
The Sellers’ Position
[11] The sellers rely on cases that generally state when the boundaries of a property are easily ascertainable, for example if they are marked by hedges, fences and streets, even though there is a mistake resulting in a misdescription of the size of the property, the buyer could see what he was buying and was not deceived as to the actual land that was being sold. In order for a buyer to rescind an agreement, the mistake must go to the root of the contract. The sellers state that the buyer’s evidence regarding his intention to tear down the house and build another one is fabricated.
Evidence
[12] At the cross-examination on his affidavit for this motion, the buyer stated the following:
(a) He was driving by the property and saw an open house sign. He went into the house and saw the listing. The lot size, particularly the depth of 145.99’, was very appealing to him. He looked around inside the house but did not walk around the property. He looked out of a window in the house and saw a pool in the backyard but did not see a fence;
(b) His intention was to demolish the existing house and build a new one on the lot, a larger house for himself and his soon to be wife;
(c) His parents lent him the money for the down payment. He was making payments on that loan with interest;
(d) He could not get a mortgage for the purchase on his own because he didn’t own any property. He needed his sister to be a co-mortgagor;
(e) He did not familiarize himself with the applicable zoning bylaw and the subdivision agreement nor did he meet with a land use planner;
(f) He was going to finance the cost of the demolition and construction of the new house, partly by loan from his parents. In addition to that loan, he was also going to obtain another loan. He had not reached out to another party about obtaining this other loan; and,
(g) He had an idea of the cost of construction because he had a friend who is a contractor. He thought it would be approximately $220 to $250 per square foot.
Credibility
[13] The sellers state that this court should not accept the buyer’s evidence that the stated 145.99’ depth was important to him because he wanted to tear down the existing house and build a bigger one. This evidence lacks credibility because he was not in a financial position to do so. He could not even afford the purchase mortgage on his own. There is no evidence that he went to the municipality to discuss whether he could build a larger house on the lot. The buyer has fabricated this intention after the fact in order to support his rescission of the contract. The mistake in the description of the lot depth does not go to the root of the contract. The buyer wanted to buy a lot in a subdivision. He saw it. He knew what he was buying. The sellers were able to convey to him exactly what he bargained for.
Analysis
[14] The sellers are asking this court to find that the buyer’s stated intention is not credible. This is the basis of their argument that the mistake does not go to the root of the contract. While it may be quite unusual for a buyer to pay $1,200,000 for a house on a subdivision lot with the purpose of tearing it down and building something bigger when he had to entirely finance the purchase, including the deposit, the demolition and the new construction, it is not beyond belief. Some parents do lend their children significant amounts of money. I cannot find that the buyers stated intention to develop was fabricated because he did not have his own financial resources or because he did not make inquiries at the municipality and review the zoning bylaw and the subdivision agreement. An experienced developer would likely have done so; however, a person who has never developed property might not appreciate the wisdom of taking these steps prior to purchasing a property for development.
Conclusion
[15] On these motions for summary judgment, I cannot make the credibility finding to determine whether the mistake that resulted in the misdescription of the lot size went to the root of the contract. The matter is not appropriate for summary judgement. A trial is required. Accordingly, the motions are dismissed.
Costs
[16] If counsel cannot agree on costs, I will receive written submissions, commencing with the Eftekhars on October 9, 2019, followed by responding submissions from the Dunnings, Century 21, Christy McGee and Adam Scarati by October 16, 2019. Cost submissions shall be no more than 2 pages in length of text (14 pt font size, regular 1-inch margins, 1.5 spacing), exclusive of any costs outline or offers to settle. In their submissions, counsel are requested to set out the dates that they served their motion records on each other. All costs submissions shall be delivered via email through my assistant at barriejudsec@ontario.ca. If no submissions are received by October 16, 2019, the issue of costs will be deemed to have been settled between the parties.
Madam Justice M.E. Vallee
Released: September 25, 2019
[^1]: On June 13, 2017, the agreement was amended to include Mr. Eftekhar’s sister, Hanieh Eftekhar, as a buyer because he did not qualify for the mortgage on his own. Accordingly, I will refer to Mr. Eftekhar as the buyer up to June 13, 2017 and then to both of them as the buyers after that date.
[^2]: The buyers also state that they were entitled to rescind for other reasons; however, the lot size appears to be the most germane argument.