Introduction

[1] This action relates to a failed real estate transaction involving a suburban home located in Brampton. The plaintiffs were the vendors, while the defendants were the purchasers. Despite an unconditional agreement of purchase and sale, the deal did not close. The decisive question in this action is why.

[2] The plaintiffs plead that they were ready, willing and able to finalize the sale on the agreed upon closing date. They claim that the only reason the defendants failed to close was because they came to regret entering the agreement after an unexpected downturn in the real estate market. The plaintiffs seek damages for what they claim to have lost because of the failure of the defendants to fulfill their obligations under the agreement.

[3] The defendants plead that they were induced into entering the agreement through a misrepresentation regarding the size of the property. They say the lot was smaller than they were led to believe. That the difference was material, as it proved to be a factor in their inability to obtain financing. The defendants seek a declaration that the agreement is rescinded, and an order for the return of their deposit.

[4] The plaintiffs move for summary judgment. They contend that there are no issues of fact or law requiring a trial. The defendants oppose the motion. They respond that there are triable issues that cannot be decided through summary judgment.

[5] These reasons will proceed in three parts. The first part will briefly outline the law governing summary judgment. The second part will detail the evidence marshalled by the parties on the motion relevant to their respective pleadings. Finally, the reasons will turn to assess whether or not this is an appropriate case for summary judgment.

I. The Law Governing Motions for Summary Judgment

[6] Given that the parties disagree regarding the appropriateness of deciding this action by summary judgment, the court’s authority on this motion comes from Rule 20.04(2)(a) of the Rules of Civil Procedure.

[7] Under Rule 20.04(a), the court shall grant summary judgment if "satisfied that there is no genuine issue requiring a trial with respect to a claim or defence" (italics added). In deciding whether or not there is a genuine issue requiring a trial, Rule 20.04(2.1) empowers the judge to exercise fact-finding powers. The judge may exercise these, “unless it is in the interest of justice for such powers to be exercised only at a trial”: Rule 20.04(2.1)

[8] In Hryniak v. Mauldin, 2014 SCC 7, [2014] S.C.R. 87 [Hryniak], the Supreme Court of Canada clarified these rules and provided essential guidance on their operation. The Court interpreted both Rules 20.04(2)(a) and 20.04(2.1), explained their interrelationship, and gave direction regarding the approach to be employed by judges hearing summary judgment motions. In her reasons for the Court, Karakastanis J. set out the following helpful summary, writing at paragraph 66:

On a motion for summary judgment under Rule 20.04, the judge should first determine if there is a genuine issue requiring trial based only on the evidence before her, without using the new fact-finding powers. There will be no genuine issue requiring a trial if the summary judgment process provides her with the evidence required to fairly and justly adjudicate the dispute and is a timely, affordable and proportionate procedure, under Rule 20.04(2)(a). If there appears to be a genuine issue requiring a trial, she should then determine if the need for a trial can be avoided by using the new powers under Rules 20.04(2.1) and (2.2). She may, at her discretion, use those powers, provided that their use is not against the interest of justice. Their use 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 also Bruno Appliance and Furniture, Inc. v. Hryniak, 2014 SCC 8, [2014] 1 S.C.R. 126, at para. 22.

[9] Even with the benefit of the fact-finding powers conferred by Rule. 20.04(2.1), summary judgment is appropriate only if the motion record, "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.

[10] In Hryniak, the Supreme Court explained that there will be no genuine issue for trial when the summary judgment process "(1) allows the judge to make the necessary findings of fact, (2) allows the judge to apply the law to the facts, and (3) is a proportionate, more expeditious and less expensive means to achieve a just result.": Hryniak, at para. 49.

[11] On a motion for summary judgment the focus is on both the pleadings and the evidence. This is because, “[a] motion for summary judgment must be judged on the basis of the pleadings and materials actually before the judge, not on suppositions about what might be pleaded or proved in the future”: Canada (Attorney General) v. Lameman, 2008 SCC 14, [2008] 1 S.C.R. 372, at para. 19; see also Deavitt v. Greenly, et al, 2017 ONSC 5674 (Div. Ct.), at para. 38.

[12] It follows that on a motion for summary judgment the parties are expected to marshal the evidence capable of supporting their respective pleadings. The court is, “entitled to assume that the record on a motion for summary judgment contains all the evidence the parties would present at trial”: Sweda Farms Ltd. v. Egg Farmers of Ontario, 2014 ONSC 1200, at para. 27, affirmed 2014 ONCA 878; see also Da Silva v. Gomes, 2018 ONCA 610, at para. 18 [Da Silva]. In other words, each side is expected to “put its best foot forward”: 2212886 Ontario Inc. v. Obsidian Group Inc., 2018 ONCA 670, at para. 49. The case law routinely cautions that a party responding to a motion for summary judgment must, “lead trump or risk losing”: see e.g. Da Silva, at para. 18.

[13] With the benefit of this brief overview of the principles governing motions for summary judgment, these reasons turn next to summarizing the evidence presented by the parties on this motion.

II. The Evidence on the Motion

[14] On April 26, 2017, the plaintiffs listed their house for sale. The home was located at 31 Massey Street in the City of Brampton. The listed sale price was $649,900.

[15] The house is two-storeys, with four bedrooms, four bathrooms and an attached two-car garage. The house was constructed in 1975. It is in a well-established residential subdivision.

[16] The streets in this subdivision are not laid out in a grid. In many locations, the streets gently curve. The result is that about half the homes in this subdivision sit on properties that are not perfectly square or rectangular. These lots are “irregular,” in that they are narrower at one end and wider at the other.

[17] The house at 31 Massey Street is on an irregular lot. The property has a depth of 120 feet. At the front, the property is 71.12 feet wide. The lot narrows to the rear, to a width of 44.93 feet. The backyard of the house is fenced in on all sides. The fence is tall and constructed of wood.

[18] The listing was through the Multiple Listing Service (MLS) operated by Toronto Real Estate Board (TREB). The plaintiffs had access to that service through their real estate broker, Real City Realty Incorporated.

[19] The MLS listing for the property at 31 Massey Street noted both the frontage and depth of the property. The listing did not note that the lot was irregular or that it narrowed at the rear. That said, a more detailed document on the MLS service, the “property line PDR” (“PDR”), available to all real estate agents, contained photographs and more detailed information regarding the property. The PDR for 31 Massey Street noted: “Variance: Narrows to rear (four sides only).”

[20] The listing became effective on April 26, 2017. The MLS listing indicated that offers would not be considered before 6:00 p.m. on May 3, 2017. The market was very active at the time. It would seem that the plaintiffs were hoping to receive the benefit of multiple offers.

[21] At some point on April 27, 2017, the defendants visited the property with their licensed real estate agent from a different brokerage. During cross-examination, Mr. Ali acknowledged that he and his wife viewed the property during daylight hours. He deposes that it was a “brief visit,” and that “by no means the lot size was apparent to us by viewing with a naked eye” (sic). During cross-examination he did acknowledge seeing the backyard.

[22] On May 3, 2017, at the appointed time, the plaintiffs received eight different offers for the property. This included an offer from the defendants.

[23] The offer was made on the standard TREB form for an Agreement of Purchase and Sale. The defendants initially made an offer to purchase the property for $805,000. This offer included two conditions. These would have made the offer conditional for five more days, to permit the defendants to arrange financing and conduct a home inspection.

[24] The plaintiffs signed back the initial offer made by the defendants, increasing the price to $850,000 and removing the financing and a home inspection conditions. The defendants agreed to these revised terms, initialling next to each of the changes proposed by the plaintiffs.

[25] On the execution of the agreement, the defendants paid a $25,000 deposit. Under the agreement, this amount was to be held in trust by Real City Realty Incorporated and credited towards the purchase price on completion. Real City Realty Incorporated is a defendant in this action. It has not filed a Statement of Defence. It continues to hold the deposit in trust pending the outcome of this action.

[26] In the standard TREB form, there is a section for the description of the property. Amongst the descriptors, the form includes a pre-printed section that provides: “and having a frontage of ……… more or less by a depth of ..……. more or less.” These two areas in the agreement were filled in, with the frontage noted as “71.12 Feet” and the depth noted as “120 Feet”. There is no reference in the agreement to the lot being irregular and narrowing at the rear. That said, there is no section in the pre-printed standard TREB form for such a notation to be made.

[27] In a schedule to the agreement, amongst other things, the following is found in typed text: “Seller agrees to supply the Buyer with the copy of the survey of this property within 10 days from the acceptance of this offer, showing all existing buildings and structures if available.” Immediately after this typewritten text, the following is handwritten in block text: “IF AVAILABLE”. All the parties also initialled next to this clause.

[28] The agreement also contains numerous standard clauses. One of these provides, in part: “If requested by the Buyer, Seller will deliver any sketch or survey of the property within Seller’s control to Buyer as soon as possible and prior to the Requisition Date.”

[29] The plaintiffs did not have a survey for the property. As a result, they never provided a copy of a survey for the property to the defendants. That said, the registered plan for the subdivision, on file with the Land Registry Office in Brampton, is available online through the Teranet/Teraview search system. The plan of subdivision that includes 31 Massey Street, which is legally described as Lot 288 Plan M75, shows that the parcel narrows at the rear.

[30] The agreement specified a “Requisition Date” of June 23, 2017. Another clause provided: “This Agreement shall be completed by no later than 6:00 p.m. on the 6th day of July 2017.”

[31] The lawyer who represented the defendants in the real estate transaction did not send his requisition letter to the lawyer representing the plaintiffs until June 26, 2017. Three days after the requisition deadline.

[32] On July 6, 2017, the date scheduled for the completion of the transaction, the lawyer representing the defendants faxed a letter to the lawyer representing the plaintiffs. In it, he simply wrote: “Please be advised that our clients need an extension until July 14, 2017 to close the transaction.”

[33] In a faxed letter sent in response that same day, the lawyer for the plaintiffs advised that his clients were agreeable to an extension, on certain conditions, including that: 1) all adjustments remain unchanged; 2) a per diem of $50 per day; and 3) additional legal fees of $300 plus HST. The lawyer for the defendants did not respond to this correspondence.

[34] On July 12, 2017, the lawyer for the plaintiffs sent a fax to the lawyer for the defendants, asking for confirmation that the defendants would complete the transaction on July 14, 2017, “as extended”.

[35] On July 13, 2017, the lawyer for the plaintiffs faxed a letter to the lawyer for the defendants. In it, he memorialized a conversation he apparently had with the lawyer for the defendants. He wrote: “Further to our telephone conversation of even date. You have advised that despite the extension of eight days previously granted by my client (sic) you are not in receipt of mortgage instructions.” The lawyer for the plaintiffs indicated that if a further extension was necessary, he would require “a copy of a mortgage commitment and an additional deposit of $10,000.”

[36] On July 14, 2017, the lawyer for the defendants faxed a letter to the lawyer for the plaintiffs. In it, he wrote: “Please be advised that our client is asking for an abatement in the price as the appraisal of the property value became a big issue in their mortgage.”

[37] That same day, the lawyer for the plaintiffs responded by way of a faxed letter to the lawyer for the defendants. He indicated that the plaintiffs were not agreeable to an abatement in the sale price. He also noted that: “No one has attended the property for an appraisal. Your client claimed to have a 50% down payment so appraised value should not be an issue even if an appraisal has been done without attending the property.” Further, he closed by noting that: “This transaction is scheduled to be completed today, please advise if your client is in a position to complete the transaction or is prepared to waive tender.”

[38] Later that same day, the lawyer for the plaintiffs sent a fax cover sheet to the lawyer for the defendant. It included the following note: “My client (sic) is prepared to grant a further extension to Monday July 17th under the same terms as the previous extension for you to seek instructions from your client. Please advise on Monday if your client intend (sic) to complete this transaction.”

[39] On July 17, 2017, the lawyer for the plaintiffs sent a fax to the lawyer for the defendants, asking: “Please advise if your clients are in a position to complete this transaction today.” He did not receive a response.

[40] Later that same day, by way of faxed correspondence, the lawyer for the plaintiffs tendered the closing documents on the lawyer for the defendants. He received no response to the tender documents. The lawyer for the plaintiffs heard nothing further from the lawyer for the defendants. The defendants did not finalize the transaction.

[41] In his affidavit, sworn in response to this motion, Mr. Ali deposes that it only came to his attention that “the lot size was not accurate” after July 6, 2017. He says that he discovered this on his own, after obtaining a copy of the survey from the city. He further deposes that he and his wife would never have agreed to purchase the property for $850,000 had they known this. Further, he deposes that the difference was the reason why they were unable to obtain financing, as the property did not appraise for the agreed-upon sale price.

[42] During cross-examination on his affidavit, when first asked what his intentions were with respect to the property, Mr. Ali testified that he was planning on living in the home with his wife and five children. At a later point during questioning, however, he suddenly claimed that he had been planning on tearing down the home and building a new one. It is noteworthy that Mr. Ali made no such claim in either the Statement of Defence or his affidavit filed on the motion.

[43] During cross-examination, Mr. Ali was unable to answer any questions about the appraisal; beyond explaining that the house did not appraise for the purchase price agreed on. Mr. Ali acknowledged that he had never actually seen the appraisal. When pressed as to how much financing he required to finalize the transaction, his responses were, at best, evasive. Despite the plaintiffs requesting production of the appraisal, the defendants have not produced it. If an appraisal exists, it does not form a part of the record on this motion.

[44] The plaintiffs moved out of the house in anticipation of the completion of the transaction. After the transaction failed to close, the plaintiffs relisted the property for $850,000.

[45] It would appear that between the spring and summer of 2017, there was a substantial downturn in the real estate market. No prospective purchasers were interested in the property at the list price of $850,000.

[46] On July 24, 2017, the plaintiffs reduced the list price to $799,900. They held an open house on the weekend of July 29/30, 2017. Unfortunately, through much of August and September 2017, there were few showings and no offers.

[47] On September 8, 2017, the plaintiffs once more reduced the list price, this time to $789,900. Again, there were few showings and no offers.

[48] On the advice of their real estate agent, on October 2, 2017, the plaintiffs reduced the price again, this time to $749,000. On October 6, 2017, they finally received a single offer for $740,000. The prospective purchaser asked for a closing date in February 2018. Ultimately, with no other offers in hand and the winter fast approaching, the plaintiffs finalized an agreement to sell the home for $746,000, with a closing date of January 31, 2018. That transaction did close.

III. Is this an Appropriate Case for Summary Judgment?

[49] The parties disagree as to whether or not this is an appropriate case for summary judgment. The plaintiffs claim it is, while the defendants maintain that a trial is necessary.

a) Positions of the parties

[50] The plaintiffs argue that this action is neither factually nor legally complex. The parties entered into an agreement for the purchase and sale of a home in a residential subdivision.

[51] According to the plaintiffs, there was no misrepresentation of any kind regarding the property. The MLS listing failed to note the lot was irregular. However, the more detailed PDR, that was readily available to the defendant’s real estate agent indicated that the lot “narrows to the rear.”

[52] Importantly, say the plaintiffs, the fact that the lot was narrower at the rear would have been readily apparent to the defendants when they inspected the property. After all, there was a tall wooden fence that marked off the boundary of the property in the backyard. As a result, it would have been obvious to the defendants that the property was not perfectly rectangular and that it narrowed at the back.

[53] The description of the property contained in the agreement was accurate. The property does have a frontage of 71.12 feet, and a depth of 120 feet. There was no misrepresentation of any kind.

[54] Instead, the plaintiffs argue, the defendants agreed to purchase a home in an overheated real estate market. When the market cooled, they wanted a reduction in the price. When the plaintiffs were unwilling to reduce the price, the defendants walked away from the agreement. They breached the contract.

[55] The breach resulted in the plaintiffs suffering damages. Specifically, the difference between what the defendants had agreed to pay, and the amount the plaintiffs ultimately obtained after the market cooled. The plaintiffs also seek to recover the costs they incurred to carry the property between the agreed-upon completion date and when they finally managed to sell the property after the downturn in the market.

[56] In contrast, the defendants maintain that there was a misrepresentation regarding the dimensions of the property. They only saw the MLS listing that referred to the frontage and depth, and this document did not refer to the lot being irregular. They only inspected the property briefly before making their offer and did not notice that the lot was narrower at the rear.

[57] The defendants say the misrepresentation regarding the size of the lot was material. It played a role in their inability to secure financing. They were willing to purchase the property at a reduced price, reflecting its actual value due to the smaller lot size. But the plaintiffs were not willing to redress the effect of their misrepresentation. As a result, the defendants say they had no other option but to refuse to finalize the transaction. Accordingly, they seek a declaration that the agreement is rescinded and the return of their deposit.

[58] During the hearing, counsel for the defendants made several additional arguments as to why his clients were entitled not to finalize the transaction. None of these arguments were grounded in anything pleaded by the defendants in their Statement of Defence. Not surprisingly, the materials filed by the plaintiffs did not respond to any of these arguments.

[59] I do not intend to address any of the additional arguments made by the defendants on the hearing of the motion. A motion for summary judgment is to be decided based on the pleadings and the materials filed on the motion to support the pleadings. It would be inappropriate to decide this motion on some basis that did not form a part of the pleadings.

b) Is there a genuine issue requiring a trial?

[60] Having considered both the pleadings and the evidence carefully, the court is satisfied that there is no genuine issue in this action that requires resolution through a trial.

[61] The law is well-established. “Rescission is available in the case of an executory contract where a material misrepresentation that was an inducement to enter into the contract is established”: Panzer v. Seifman (1978), 1978 CanLII 1658 (ON CA), 20 O.R. (2d) 502 (C.A), at p. 508 [Panzer]; see also Singh v. Trump, 2016 ONCA 747, at para. 156.

[62] The evidence on this motion fails to raise a triable issue regarding a number of the essential preconditions that would need to be met for the defendants to succeed in this action.

[63] First, there is no evidence capable of supporting a finding that there was a misrepresentation in this case. To be sure, the failure to disclose something that should be can constitute a misrepresentation: see Curtis v. Chemical Cleaning & Dyeing Co., [1951] 1 K.B. 805, at p. 809, cited with approval in Panzer, at p. 509.

[64] The evidence establishes that the plaintiffs never misrepresented the size of the lot. Although one of the MLS listings failed to note that the lot was irregular, the PDR, available to the real estate agent for the defendants, indicated that the lot narrowed to the rear. The agreement accurately described both the frontage and the depth of the lot.

[65] Critically, the defendants attended the property during daylight hours. Mr. Ali acknowledged looking in the backyard. There was a tall wooden fence marking the boundary of the property in the backyard. Even on the most cursory of inspections, it would have been readily apparent to the defendants that the lot was wider at the front and narrower in the back. As a result, Mr. Ali’s claim that he first learnt that the lot was narrower in the back at some point after July 6, 2017, is not credible.

[66] Second, even crediting Mr. Ali’s claim that he did now know the lot was narrower at the rear, there is no basis for suggesting that this was material: see Barclays Bank PLC v. Devonshire Trust (Trustee of), 2011 ONSC 5008, at para. 157, affirmed 2013 ONCA 494, leave to appeal refused [2013] S.C.C.A. No. 374. In their Statement of Defence, the defendants claim that the difference was material because it was a factor in the property not appraising for the agreed upon purchase price. Ultimately, there is no admissible evidence in the record to substantiate that claim. Mr. Ali conceded that he never actually saw the appraisal. If an appraisal was ever completed, the defendants have not produced it.

[67] It is hard to imagine that the narrowing of the lot at the rear of this suburban home would impact the decision of a reasonable person to purchase the property. Further, the idea that the narrowing of the lot at the rear would meaningfully affect the value of this property seems highly improbable. After all, more than half of the homes in this particular subdivision are on lots that are either wider or narrower at one end. Critically, the defendants did not put forward any evidence to establish that the narrowing of the lot at the rear was something that affected the value of this particular property.

[68] Third, the record makes plain that the defendants never sought to rescind the agreement before the scheduled closing because of any issue with the size of the lot. The lot size was not their concern; the price was. The defendants still wanted the property but at a reduced price. To the extent that they gave a reason for seeking a price reduction, they cited difficulties in securing financing. Tellingly, at no point did the lawyer representing the defendants reference the lot size as a factor contributing to the inability of his clients to secure financing.

[69] In summary, this is an appropriate case to grant summary judgment in favour of the plaintiffs. The record is bereft of evidence to substantiate the pleadings of the defendants. First, to the extent that Mr. Ali’s evidence suggests that there was a misrepresentation, it is against the weight of the evidence and is not credible. Second, even assuming that the defendants did not realize the lot was narrower at the rear, there is no basis to the claim that this was in any way material.

[70] In the circumstances, it is unnecessary to permit this action to proceed to trial. Summary judgment is the proportionate, more expeditious and less expensive means to decide this action.

Conclusion

[71] The defendants made an unconditional offer on a home owned by the plaintiffs in an overheated real estate market. To beat out seven other competing bids on the same property, they agreed to a sale price substantially above the list price. They also agreed to remove a condition that would have made the agreement conditional on them securing financing. In doing so, the defendants undoubtedly hoped that the market would continue its upward trajectory. Unfortunately, for them, it did not. Instead, the real estate market cooled.

[72] As the date for finalizing the transaction approached, the defendants regretted their decision. Given the change in market conditions, they concluded that they were going to overpay for the home. They attempted to negotiate a reduction in the sale price. Understandably, the plaintiffs were not agreeable. For them, a deal was a deal. Although the plaintiffs were ready, willing and able to finalize the transaction, the defendants decided to walk away. By doing so, they breached the agreement between them and the plaintiffs.

[73] In the circumstances, the plaintiffs are entitled to damages for what they lost because of the breach of the agreement by the defendants: see Fidler v. Sun Life Assurance Co of Canada, 2006 SCC 30, [2006] 2 S.C.R. 3, at para. 44; Bank of America Canada v. Mutual Trust Co, 2002 SCC 43, [2002] 2 S.C.R 601, at para. 27. The damages claimed by the plaintiffs are for the entirely foreseeable costs occasioned by the decision of the defendants to breach the agreement. Nor is there any basis to suggest that the plaintiffs failed to mitigate their damages. In the circumstances, they are entitled to the difference between the agreed-upon sale price for the home, less what they ended up selling the property for, plus their carrying costs over the interim period.

[74] Accordingly, this court grants judgment in favour of the plaintiffs. The defendants are ordered to pay the plaintiffs $114,140.17, plus pre-judgment interest from February 1, 2018, at a rate of three percent per annum. The plaintiffs are also entitled to post-judgment interest at the same rate.

[75] This court further orders that Real City Realty Incorporated, release the $25,000 deposit, plus any interest that has accrued on it, to the plaintiffs. This amount shall be credited towards the judgment owing by the defendants to the plaintiffs.

[76] If costs are in issue, the plaintiffs should serve and file written costs submissions, no longer than three pages in length, not inclusive of a Bill of Costs, by no later than October 15, 2019. The defendants may file any responding submissions, also not to exceed three pages in length, by no later than October 22, 2019. Reply submissions are not to be filed unless requested by the court.

Justice James Stribopoulos

Released: October 1, 2019

COURT FILE NO.: CV-17-3546

DATE: 2019-10-01

ONTARIO

SUPERIOR COURT OF JUSTICE

BETWEEN:

BRIAN SANKARSINGH and VINTHA SANKARSINGH

Plaintiffs/ Moving Parties

and -

KAMRAN ALI, YASMEEN ALI and REAL CITY REALTY INCORPORATED

Defendants/Responding Parties

REASONS FOR DECISION ON MOTION FOR

SUMMARY JUDGMENT

Justice James Stribopoulos

Released: October 1, 2019

Sankarsingh v. Ali, 2019 ONSC 5655

Case Summary

Introduction

I. The Law Governing Motions for Summary Judgment

II. The Evidence on the Motion

III. Is this an Appropriate Case for Summary Judgment?

a) Positions of the parties

b) Is there a genuine issue requiring a trial?

Conclusion

Judge

Counsel

Parties

Areas of Law

Fact Patterns

Financial Outcomes

Issues

Statutory Provisions 2

Legal Tests 1