COURT FILE NO.: CV-14-517786
DATE: 20191018
ONTARIO
SUPERIOR COURT OF JUSTICE
BETWEEN:
YONG KEE CHING a.k.a RICHARD YONG and MARGARET NG a.k.a. MARGARET NG
Plaintiffs
– and –
PIER 27 TORONTO INC.
Defendant
David N. Vaillancourt and Annie (Qurrat-ul-ain) Tayyab, for the Plaintiffs
Gerald Solomon, for the Defendant
HEARD: February 26, 27, 28, 2019; March 1, 12, and 14, 2019.
M. D. FAIETA, j
REASONS FOR DECISION
[1] The Defendant built a residential condominium development on Toronto’s waterfront (the “Pier 27 Project”). On April 23, 2008, the Plaintiffs purchased a 1,531 square foot condominium in the Pier 27 Project from the Defendant. The tentative occupancy date was November 30, 2010. The tentative occupancy date was delayed almost 24 months and then a confirmed occupancy date was established and extended several times ultimately to August 20, 2014. By that time the plaintiffs mortgage approval had expired and they were unable to obtain an alternate source of mortgage financing in order to complete this purchase. The Plaintiffs terminated the Agreement of Purchase and Sale (“APS”) on August 7, 2014. The Defendant refused to return $214,238.85 to the Plaintiffs, which represents the deposit that the parties agree was paid. The Plaintiffs bring this action for breach of the APS to recover their deposit, the sum of $93,000 being the agreed increase in value of the condominium as of the date when the APS was terminated, and punitive damages of $100,000 for dishonest performance of the APS. In the alternative, the Plaintiffs submit that they should be granted relief from forfeiture of their deposit.
[2] For the reasons described below, I have dismissed this action.
BACKGROUND
[3] The Plaintiffs are a married couple. In 2006 or 2007 the Plaintiffs decided to move from Singapore to Canada following their retirement. The Plaintiff Richard Yong retired in 2006 while the Plaintiff Margaret Ng retired in 2011. In 2008, the Plaintiffs obtained permanent residency status in Canada and made their first visit to the country.
[4] The Plaintiffs attended numerous workshops in Singapore offered by a real estate agent named Leo Ng, Managing Director, L & A International Properties (S) Pte Ltd. The Plaintiffs entered agreements to purchase the following residential properties in Canada on the following dates:
• March 21, 2008: Unit 3002 – 888 Carnarvon street, New Westminster, British Columbia; (“3002 Unit”)
• April 23, 2008: Unit 314 – 39 Queen’s Quay East, Toronto, Ontario; (“Pier 27 Unit”)
• May 17, 2008: 1 Chemin de la Fraternite, Lac-Superieur, Quebec; (“1 Chemin Unit”)
• May 17, 2008: 7 Chemin de la Fraternite, Lac-Superieur, Quebec; (“7 Chemin Unit”)
• September 28, 2009: 3403 – 183 Wellington Street West, Toronto, Ontario (“Ritz Carlton Unit”)
• November 27, 2010: 3603 – 888 Carnarvon Street, New Westminster, British Columbia (“3603 Unit”)
• January 25, 2011: 2903 – 5 St. Joseph Street, Toronto, Ontario (“St. Joseph Unit”);
• March 26, 2011: 2302 – 2077 Rosser Avenue, Burnaby, British Columbia; (“Rosser Unit”)
• September 10, 2011: 473 Elmer Street, New Westminster, British Columbia (“473 Elmer”); and
• January 23, 2016: 2016 Turnberry Lane, Coquitlam, British Columbia.(“Turnberry Lane”)
[5] The Plaintiffs took occupancy of the Ritz Carlton Unit in March 2011 and subsequently sold it for about $150,000 more than the purchase price. Ms. Ng testified that the Plaintiffs did not make a profit on the sale of the Ritz Carlton Unit because they earned no rent for 10 or 11 months. The Plaintiffs moved to Canada in March 2011. Ms. Ng testified that the Plaintiffs lived in the 3603 Unit for about 10 months after they arrived in Canada. The Plaintiffs assigned the St. Joseph Unit. The Plaintiffs have also sold the 7 Chemin Unit and 473 Elmer. The Plaintiffs live in the Turnberry Lane home and own the 1 Chemin Unit, the 3002 Unit, the 3603 Unit and the Rosser Unit for investment purposes.
Agreement of Purchase and Sale
[6] The Plaintiffs’ second purchase of real estate in Canada, described above, is the subject of this action. The Plaintiffs purchased a “presidential suite” in the Pier 27 Project at a price of $1,347,000.00. At the same time, the Plaintiffs also purchased a parking spot for $37,500.00 and a locker for $4,500.00.
[7] Ms. Sharon Florian is Cityzen Development’s Director of Sales and Marketing and was responsible for the sales and marketing of the Pier 27 Project. Ms. Florian testified that she became involved with the Pier 27 Project after size, shape, and floor plans for the Pier 27 Project, as well as the tentative occupancy date, had been determined. She was responsible for anything pertaining to the sales and marketing of the Pier 27 Project including managing the sales team, the administration team, communication with the purchasers, and overseeing the preparation of legal documents. Ms. Florian testified that there were about 400 units in the building in which the Unit was located.
[8] Ms. Florian testified that L & A International is a brokerage that approached the Defendant to market and sell units in the Pier 27 Project to people in Singapore. She stated that L & A was not the Defendant’s agent and that it had no authority to speak for the Defendant or the developer. L & A sold seven units in the Pier 27 Project including the Unit that was sold to the Plaintiffs. The agreements of purchase and sale were written by the Defendant and sent to L & A for each purchaser’s signature. The Plaintiffs signed the APS in Mr. Ng’s office on April 23, 2008. The Defendant signed the APS in Toronto on April 30, 2008.
[9] Ms. Ng testified that she did not read the APS before signing it and that she neither asked for, nor was given, an opportunity to do so.
[10] Mr. Yong states that he did not read the APS before signing it for the following reason:
No, because we have a high respect for all developers, their counsels and the appointed builders or realtors.
[11] However, when asked whether he read section 5(a) of Schedule X of the APS related to the extension of the Occupancy Date, Mr. Yong indicated that he may have read this provision before signing the APS:
May have read this, but as layman as you know, the purchase agreement comes in that thick right, and being layman we are not trained in law school. We may have read it and somewhere down the lines we go through the pages, we may have looked at it.
Occupancy Date and Closing Date
[12] Paragraph 2B of the APS provides that:
Subject to the provisions hereinafter contained, the proposed occupancy of the Unit will be permitted on the 30th day of November, 2010 (the “Occupancy Date”). The Closing Date shall be established in accordance with paragraph 5(c) of Schedule “X” of this Agreement (“Closing Date”).
[13] Ms. Ng agreed that had she read the APS she would have understood that the November 30, 2010 proposed occupancy date was not a firm date.
[14] Ms. Florian explained that the proposed occupancy date described above is an estimation of the completion date for the first unit in the Pier 27 Project rather than the estimated occupancy date for all units in the Pier 27 Project.
[15] Paragraph 5(c) of Schedule “X” states:
Closing Date: The “Closing Date” or “Closing” shall be the later of the Occupancy Date or a date fixed by the Vendor at least ten (10) days after the Vendor’s solicitors notifies the Purchaser or their solicitor of the registration of the Corporation upon which date a transfer of title to the Unit shall be delivered to the Purchaser. The Purchaser covenants and agrees that they will, at their own expense, complete the transaction in accordance with the notice aforesaid and register the transfer of title immediately upon delivery of the transfer to them.
Extension of Occupancy Date for Delay
[16] Section 4 of Schedule “X” of the APS provides that the Defendant may: 1) extend the Occupancy Date as is reasonable for causes beyond its control (“unavoidable delay”); and, 2) terminate the APS if it fails to substantially complete the Unit for occupancy within 30 months from the date of the originally scheduled Occupancy Date. This provision states:
In the event that the completion of the Unit or the common elements should be delayed by reason of strike, lockout, fire, lightning, tempest, riot, war, unusual delay by common carrier, unavoidable casualty, non-installation or supply of services, obtaining building and other requisite permits, availability of tradesmen, and/or materials, or by any other cause of any kind whether of the foregoing nature or beyond the control of the Vendor in its sole, absolute and unfettered discretion, the Vendor shall be permitted such extensions of time as is reasonable under the circumstances and the Occupancy Date shall be extended accordingly, and the Vendor shall not be liable to the Purchaser for any costs or damages or otherwise by reason of such delay. The Unit shall be deemed to be completed for the purposes of the Occupancy Date or any extension thereof when the interior of the dwelling unit shall have been substantially completed in the opinion of the Vendor, and the Purchaser agrees that the sale shall be completed on that date, as hereinafter provided, without holdback of any part of the purchase price and the Vendor shall complete any outstanding details of construction required by the contract within a reasonable time thereafter having regard to weather conditions and the availability of supplies or tradesmen. In any event, the Purchaser acknowledges that failure to complete the common elements on or before the Occupancy Date shall not be deemed to be a failure to complete the Unit. The Vendor shall have the right to store topsoil or soil on the common elements, on or after the Occupancy Date, which topsoil or soil shall remain the property of the Vendor, to be used by the Vendor to complete final grading and the Purchaser shall not alter, remove or add any other material to same. If the Vendor should be unable to substantially complete the Unit for occupancy within thirty (30) months from the originally scheduled Occupancy Date specified in paragraph 2B hereof, at the Vendor’s sole option, the deposit shall be returned to the Purchaser without interest except as may be required by law and the contract shall be at an end, and the Vendor shall not be liable to the Purchaser for any damages. In such case, the Purchaser shall execute and complete such documents affecting the title or this Agreement as are necessary for the Vendor to affect a resale of the property to another purchaser. [Emphasis added]
Extension of Occupancy Date Unilaterally by Vendor for Up to 24 Months
[17] Section 5 of Schedule “X” of the APS provides that the Defendant may extend the Occupancy Date for one or more periods not exceeding 24 months. This provision states:
- (a) Occupancy Date: The Purchaser acknowledges that the Occupancy Date set out in paragraph 2B of this Agreement is a Tentative Occupancy Date and may be extended by the Vendor for one or more periods of time not exceeding twenty-four (24) months. The Purchaser acknowledges and agrees that the Vendor shall have the right to establish an earlier occupancy Date by delivery of written notice to the Purchaser at least thirty (30) days prior to such earlier Occupancy Date, and the Purchaser consents to such earlier Occupancy Date, if required by the Vendor. Moreover, the Vendor shall establish a Confirmed Occupancy Date which may be different from the Tentative Occupancy Date. The Confirmed Occupancy Date shall be established by notice in writing to the Purchaser or his solicitor, in accordance with the provisions of the Ontario New Home Warranties Plan Act, 1990, as amended. The Tentative Occupancy Date and the Confirmed Occupancy Date are herein referred to collectively as the Occupancy Date. [Emphasis added]
Payment of Deposits and Mortgage Financing
[18] The APS requires the Plaintiffs to pay the following deposits:
• $134,700.00 to be submitted with the APS;
• $7,000.00 (in respect of the parking spot) to be submitted within 120 days from the date that the APS was signed;
• $900.00 (in respect of the locker) to be submitted within 120 days from the date that the APS was signed;
• $67,350.00 to be paid within 300 days from the date that the APS was signed;
• $134,700.00 to be paid within 360 days from the date that the APS was signed;
• $134,700.00 to be paid on the Occupancy Date.
[19] The APS provides that all deposits paid by the Plaintiffs are made payable to the Defendant’s solicitors, Goldman, Spring, Kichler & Sanders LLP (“Goldman, Spring LLP”), in trust. Mr. Yong confirmed that he understood that any deposit payments would not be paid to the Defendant but rather would be held in trust. The APS also provides that the unpaid balance of the purchase price shall be paid on the closing date.
[20] By letter dated May 22, 2008, Goldman, Spring LLP acknowledged receipt of a deposit of $134,700.00 from the Plaintiffs and confirmed that such funds would be held in trust.
[21] The Plaintiffs obtained mortgage financing for the Pier 27 Unit from the Canadian Imperial Bank of Commerce (“CIBC”). By letter dated January 13, 2009, the CIBC advised the Plaintiffs that their mortgage application for $883,200.00 to finance the purchase of the Pier 27 Unit had been approved on condition that the equity funds, being the balance of the purchase price, were to be wired to Canada thirty days before closing. Mr. Yong testified that the balance of the purchase price was to be paid in cash from the Plaintiffs’ retirements funds.
[22] Goldman Spring LLP sent the following demand letter, dated March 24, 2009, to the Plaintiffs:
We are solicitors for Pier 27 Toronto Inc., the Vendor in the above-captioned transaction. Pursuant to the provisions of the Agreement of Purchase and Sale, you were required to pay the following deposits:
August 23, 2008 - $7,000.00 (deposit for parking unit); August 23, 2008 - $900.00 (deposit for locker unit); February 23, 2009 - $67,350.00 (300 day deposit); April 23, 2009 - $134,700.00 (post dated cheque for 360 day deposit)
To date our client has not received said deposits from you. We hereby demand payment of the deposits totalling $75,250.00 by way of certified cheque on or before April 8, 2009. In addition, we require post-dated cheque for the future deposit payable with respect to this transaction, as set out above. We will also require a second certified cheque, payable to our firm, in the amount of $157.50 (including GST), representing payment of our legal fees for preparation of this demand letter to you. In accordance with the provisions of paragraph 15 of Schedule “S” of the Agreement of Purchase and Sale. Also, we have not received the Mortgage Approval Letter from you with respect to this transaction. …
[23] In response, Leo Ng sent the following email dated April 1, 2009:
… We spoke to the subject purchaser. We all understand every deal is critical. Unfortunately the current global economic crisis has caused financial hardship to many people. In view of the purchaser current tight cash flow, we hope you could seriously look into this matter and understand the purchaser current financial situation. Hence, we therefore seek your help in this matter to request for deferment of deposit payment to allow the subject purchaser to have more time on arranging due deposit payment. Sincerely, we hope you could help to work out a revise payment plan for this purchaser to resolve this matter. We will follow up with him accordingly.
[24] By agreement dated April 5, 2009, the APS was amended to provide that the deposits, in addition to the deposit of $134,700 due on the Occupancy Date, would be paid as follows:
• $7,500.00 by April 15, 2009;
• $900.00 by April 15, 2009;
• $67,350.00 by April 15, 2009;
• $67,350.00 by October 30, 2009;
• $67,350.00 by April 30, 2010;
[25] A further deposit of $75,231.50 from the Plaintiffs was received by Goldman, Spring LLP on April 22, 2009. Ms. Ng denied that the Plaintiffs used borrowed funds to make this deposit payment.
[26] The APS was amended a second time by agreement dated September 25, 2009 in order to postpone the payment of the deposit of $67,350.00 on October 30, 2009 to April 30, 2010.
[27] The Plaintiffs did not make any additional deposit payments.
[28] Mr. Yong testified that he did not make these additional deposit payments because Leo Ng told him that the Defendant was in financial trouble. Mr. Yong recanted the evidence that he gave at his Examination for Discovery that the Plaintiffs were financially unable to pay the deposits. The transcript from the Examination for Discovery, held October 18, 2016, reads as follows:
Mr. Solomon: So, the deposits that you actually made, you and your wife …
Mr. Yong: M’hmm
Mr. Solomon: …were a lot less than the deposits in this agreement, correct?
Mr. Yong: Oh, yes.
Mr. Solomon: Okay. And am I correct that at different times when some of these payments would be coming due …
Mr. Yong: Uh-huh
Mr. Solomon: … you and your wife were having a hard time coming up with those deposits?
Mr. Yong: Yes
Mr. Solomon: So …
Mr. Yong: We had to borrow from our friends …
Mr. Solomon: I understand. So, the first deposit that you made, did you have to borrow that money?
Mr. Yong: I don’t remember especially which one, but roughly I can remember this one.
Mr. Solomon: Okay, and you then told the agent or the broker …
Mr. Yong: Yes
Mr. Solomon: … that you were having some difficulties?
Mr. Yong: Yes, right
Mr. Solomon: And the developer then agreed to change the deposit structure for you, correct?
Mr. Yong: Yes, they push it back …
[29] A little more than one year after his examination for discovery, on August 21, 2017, the Plaintiffs corrected the evidence given at his examination as follows:
The plaintiffs did not make certain deposit payments on the advice of Mr. Ng, and neither Mr. Ng or Pier 27 requested further deposit payments from the plaintiffs. The plaintiffs do not recall borrowing any money from their friends to make deposit payments.
[30] Mr. Yong testified that he “strongly believed” that the Defendant was in “very serious financial trouble” due to the global financial crisis of 2007-2008 and that any deposit paid to Goldman, Spring LLP in trust would “go down the drain”. However, in cross-examination, Mr. Yong admitted that he may have had “a little bit of difficulty” in paying the deposits.
[31] At trial, despite Mr. Ng’s email described above, the two amendments delaying the payment of deposits, his evidence at his Examination for Discovery, and the fact that the deposits were held in trust, Mr. Yong insisted that the Plaintiffs failure to pay the required deposits was not as a result of the Plaintiffs’ financial difficulties but rather as a result of his belief that the Defendant was in financial difficulty.
Commencement of Construction
[32] Anthony Pignetti has about 30 years experience in managing large construction projects and served as the construction manager for the Pier 27 Project. It was his responsibility to keep the Pier 27 Project on schedule and budget. Mr. Pignetti would meet regularly with the Defendant’s principals as well as the Defendant’s sales and marketing team to keep them apprised of the progress in the construction of the Pier 27 Project.
Extension of the Tentative Occupancy Date
[33] On May 25, 2010, Ms. Florian, with Mr. Pignetti’s input, sent a letter to purchasers which stated that shoring and excavation was underway and that cranes would begin to arrive on site in the Fall of 2010.
[34] By letter dated June 9, 2010, Goldman, Spring LLP advised the Plaintiffs that the Tentative Occupancy Date was being extended to October 18, 2012 pursuant to the provisions of paragraphs 4 and 5 of Schedule X of the APS and the provisions of the Act.
[35] Mr. Yong testified that when he received this letter he was unaware that the Tentative Occupancy Date could be extended and “strongly believed” that the Occupancy Date would remain November 30, 2010 and that he would receive the keys to the Pier 27 Unit despite the fact that construction was at the excavation stage. Ms. Ng stated that she also held this belief. Mr. Yong described his reaction to the letter as follows:
Well, when we received that, you know, this letter being issued by the counsel Goldman, Spring, okay, I say earlier we have high respect for all the developer, their counsel and their appointed realtors, so you know, we were as lay person, wrongfully and strongly believe to be true that this deal is ongoing.
[36] Mr. Yong stated that although he was “outraged” by the extension of the occupancy date he did not complain when he received the above notice or any of the subsequent letters that advised that the occupancy date for the Pier 27 Unit would be delayed. He stated:
So, we just think that you know the developer has the right to keep on postponing until we- until we consult our lawyer … sometime around, … August of 2014
[37] Mr. Yong also testified that it was his view that the APS ended on November 30, 2010 following the Defendant’s failure to deliver occupancy of the Pier 27 Unit to the Plaintiffs.
Plaintiffs Move to Canada
[38] The Plaintiffs moved to Canada on March 15, 2011. Mr. Yong testified that, although he and his wife had no friends or family in Toronto, it was his “life plan” to live in the Pier 27 Unit because it overlooked Lake Ontario. However, because the Pier 27 Unit was not ready for occupancy when they moved to Canada, the Plaintiffs’ dream to live in the Pier 27 Unit was “shattered”. As a result, the Plaintiffs chose to move into the 3603 Unit in British Columbia.
First Attempt to Assign/Sell the Pier 27 Unit
[39] Shortly after moving to Canada, the Plaintiffs decided to sell or assign the Pier 27 Unit.
[40] The Plaintiffs contacted a real estate agent, Yossi Kaplan, to sell or assign the Pier 27 Unit. An email dated March 4, 2012 from the Plaintiffs to Mr. Kaplan states:
We spoke to the developer sales staff who told us that the developer still has balance 5% units not sold and we cannot do any resale or assignment.
In view of the above and your advice that it may take up to a year to market our unit and the prospective buyer would want to view the actual unit itself, ie. after interim or final closing when we get the keys to our unit is quite a long wait. We would prefer to market it on assignment and before the interim or final closing where we need not have to make further payments to the unit.
Their site administrator confirmed that our unit is in Tower/Block C and the final closing is scheduled on October 18, 2012. Earlier on, he told us there will most likely be a postponement but the extension date is not confirmed. [Emphasis added]
[41] By agreement dated March 27, 2012 the Plaintiffs retained Mr. Kaplan to list the Pier 27 Unit at a price of $1,699,000 and a 5% commission. By email dated April 20, 2012, Mr. Kaplan advised the Plaintiffs that he was showing the Pier 27 Unit to a couple of interested parties.
[42] By email dated May 3, 2012 the Plaintiffs advised Mr. Kaplan that “as we have mentioned before, the assignment to the prospective buyer to be completed before the interim and final closing. Please check and confirm whether the transfer tax computation 1% for the 1st $200K and balance at 2% of the purchase price is correct and who should be paying the tax?”.
[43] By email dated May 4, 2012, Mr. Kaplan responded:
Thank you for the spreadsheet, I have saved it in your file.
We understand and aware that we need to find you a buyer as soon as possible, we are working on this and believe that as the buildings take shape, more interest will lead to offers.
With regards to taxation, your best bet is to ask your lawyer or accountant these questions. …
Establishment of the “Confirmed Occupancy Date”
[44] By letter dated June 29, 2012, Mr. Spring notified the Plaintiffs that the Defendant had established October 1, 2013 as the Confirmed Occupancy Date. Mr. Spring’s letter states, in part, that:
Pursuant to the provisions of Paragraph 4 and 5 of Schedule “X” contained in the Agreement of Purchase and Sale and the provisions of the Ontario New Home Warranties Plan Act, our client hereby establishes the Confirmed Occupancy Date of the above-noted transaction to be October 1, 2013. In all other respects, the terms of the Agreement of Purchase and Sale remain unchanged and time shall continue to be of the essence.
Kindly advise your solicitor of this Confirmed Occupancy Date and provide our office with the name of the solicitor that will be acting on your behalf with respect to this matter.
[45] Mr. Yong testified that he did not contact the Defendant after receiving the above letter although his reaction to this letter was that the establishment of October 1, 2013 as the Confirmed Occupancy Date shattered their “life plan to purchase and stay in that unit overlooking the Lake Ontario.”
[46] Mr. Yong testified that he and Ms. Ng came to Toronto, for the first time, in 2012 and visited the Pier 27 Project sales office. They asked a salesperson named Shelly for her assistance in selling the Pier 27 Unit and were told that the developer was not permitting assignments. At their request, Shelly opined that the Pier 27 Unit could “easily sell” for $1.6 million.
Extensions of the Confirmed Occupancy Date
[47] The Defendant subsequently extended the confirmed occupancy date on several occasions as summarized below:
Notice Date
Days’ Notice Provided
Reasons Provided
Existing Confirmed Occupancy Date
New Confirmed Occupancy Date
Days of Delay Imposed by Notice
Cumulative Days of Delay
29-Jun-12
n/a
[First notice]
n/a
1-Oct-13
n/a
n/a
1
16-May-13
138
Construction delays
1-Oct-13
18-Nov-13
48
48
2
16-Jul-13
125
Strike
18-Nov-13
30-Jan-14
73
121
3
1-Nov-13
90
Construction Delays
30-Jan-14
14-Feb-14
15
136
4
13-Dec-13
63
Construction Delays
14-Feb-14
21-Mar-14
35
171
5
23-Jan-14
57
Extreme weather
21-Mar-14
2-May-14
42
213
6
25-Mar-14
38
Extreme weather
2-May-14
27-Jun-14
56
269
7
16-May-14
42
Construction Delays
27-Jun-14
30-Jul-14
33
302
8
27-Jun-14
33
Construction Delays
30-Jul-14
20-Aug-14
21
323
[48] Mr. Pignetti testified that he was the source of the information regarding “construction delays”, “strikes”, and “extreme weather” referenced in the extension letters described below.
First Extension – May 16, 2013
[49] By letter dated May 16, 2013, the Defendant provided the Plaintiffs with a copy of a letter dated May 16, 2013, from the Defendant’s lawyer, Mr. Spring, which stated that the Defendant was extending the Occupancy Date to November 18, 2013 as a result of “construction delays”. Mr. Spring’s letter states, in part, that:
Pursuant to the provisions of Paragraphs 4 and 5 of Schedule “X” contained in the Agreement of Purchase and Sale and the provisions of the Ontario New Home Warranties Plan Act, our client hereby extends the Occupancy Date of the above-noted transaction to November 18, 2013. Please note that the extension requested by the Vendor is as a result of construction delays. In all other respects, the terms of the Agreement of Purchase and Sale remain unchanged, and time shall remain of the essence.
Kindly advise your solicitor of this extended Occupancy Date and provide our office with the name of the solicitor that will be acting on your behalf with respect to this matter.
[50] Mr. Pignetti did not provide any detail regarding the cause of the “construction delay” referenced in Mr. Spring’s letter other than to say that the delay was “… caused by the strikes and so on, the weather of this project”.
[51] The Defendant’s letter dated May 16, 2013, also foreshadows a further extension of the Occupancy Date. It states:
However, having set a new Occupancy Date we are also providing to you notice of two instances of Unavoidable Delay that will affect your Confirmed Occupancy date.
(1) On May 1, the union representing the Elevator installations in your building went on strike.
(2) On May 6, the union representing the Drywall installers in your building went on strike. While it is impossible to know how long those strikes will last, at the moment the industry is estimating that the strikes will last about 6 weeks.
(3) Within the 20 days of the end of each strike Pier 27 Toronto Inc will notify you of any further Occupancy Date adjustment required as a result of the above mentioned Unavoidable Delays.
Second Extension – July 16, 2013
[52] On July 16, 2013, the Defendant sent a letter to the purchasers, including the Plaintiffs, which stated:
As per our previous notice to you the union representing the Elevator Installations in your building went on strike on May 1st. Please note that this strike ended July 10, 2013.
Pursuant to Schedule X paragraph 4 and 5(a) of your Agreement of Purchase and Sale and in accordance with the regulations under the Ontario New Home Warranties Plan Act, R.S.O. 1990, as amended, we hereby advise that the Vendor wishes to extend the Occupancy Dates on account of a strike. The Occupancy Date, as of the date hereof, is January 30, 2014, subject to such further extensions required by the Vendor pursuant to the provisions of the Agreement of Purchase and Sale and the Ontario New Home Warranties Plan Act, 1990, as amended. All other terms of the Agreement shall remain the same and time shall continue to be of the essence.
[53] Mr. Pignetti explained that the elevator was critical to the construction of the building as it served to transport labour and material such as drywall and wood.
Selection of Finishes for the Pier 27 Unit
[54] In early October, 2013 the Plaintiffs came from Vancouver and met twice with Penny Tsampiras, décor consultant for the Defendant, to select the finishes, such as flooring and kitchen cabinets and countertops, for the Unit. The Plaintiffs selected certain upgraded features. The Plaintiffs signed an Order Form, dated October 5, 2013, specifying their selections and agreeing to pay $4,288.35 for the cost of upgrades. Such payment was to be made to the Defendant’s solicitor in trust.
[55] Just above the signature line, the standard form Order Form contained the following provision with the date handwritten:
The undersigned Purchaser(s) acknowledges and confirms that the Occupancy Date, as of the date hereof, is January 30, 2014, subject to such further extensions required by the Vendor pursuant to the provisions of the Agreement of Purchase and Sale and the Ontario New Home Warranties Plan Act, 1990, as amended.
[56] Ms. Tsampiras states that it was her practice to complete the Order Form, including adding the Occupancy Date by hand based on information regarding the Occupancy Date for various units that she obtained from “head office” prior to her final meeting with a purchaser. Ms. Tsampiras states that she inserted the January 30, 2014 date before her final meeting with the Plaintiffs.
[57] Both Plaintiffs state that the Occupancy Date of January 30, 2014 did not appear in the Order Form despite the fact that Ms. Ng placed her initials just to the left of the first line of the provision described above. However, the copy of the signed Order Form given to the Plaintiffs by Ms. Tsampiras contains the January 30, 2014 occupancy date. The Plaintiffs also state that there was no discussion regarding the January 30, 2014 occupancy date.
Third Extension – November 1, 2013
[58] By letter dated November 1, 2013, Mr. Spring notified the Plaintiffs that the Defendant was extending the Occupancy Date to February 14, 2014 as a result of “construction delays”. Mr. Spring’s letter states, in part, that:
Pursuant to the provisions of Paragraphs 4 and 5 of the Schedule “X” contained in the Agreement of Purchase and Sale and the provisions of the Ontario New Home Warranties Plan Act, our client hereby extends the Occupancy Date of the above-noted transaction to February 14, 2014. Please note that the extension requested by the Vendor is as a result of construction delays. In all other respects, the terms of the Agreement of Purchase and Sale remain unchanged, and time shall remain of the essence.
Kindly advise your solicitor of this extended Occupancy Date and provide our office with the name of the solicitor that will be acting on your behalf with respect to this matter.
[59] Mr. Pignetti provided little specific detail when asked about the specific construction delays that led to this extension. He stated:
Yeah, well, the construction delays were caused from the weather and the strikes and again projecting, our best efforts of projecting that date in the production schedule. So, we would communicate that and because of, you know we have to understand that this big building, this massive building, you don’t have one or two components that’s trying to complete a massive building. You have many components. You have mechanical, electrical, drywall, windows, concrete and trying to get that communication to all these facets of this project and to ensure that we’re on the same page, on the same line. And I made it my best effort to make sure that we had this project, to ensure that we had the production of this project and reaching out. And what happens is, is sometimes these trades just can’t continue at the progress because it’s just at the stage of where we are with the production of the project.
Mortgage Financing Cancellation and Retainer of Real Estate Solicitor – December 9, 2013
[60] By email dated November 15, 2013 the CIBC advised the Plaintiffs that the cancellation date for the mortgage approval granted in 2009 was approaching and that they would have to update their personal information as well as provide the name of their solicitor by December 16, 2013 in order for an extension to be facilitated.
[61] By email dated December 9, 2013, Mr. Yong confirmed to the CIBC that the Plaintiffs had retained Boris Zayachkowski for the closing of the Pier 27 Unit. His email to both CIBC and Mr. Zayachkowski states:
The scheduled Extended Occupancy Date is February 14, 2014. Please be informed that the builder has been extending the scheduled Occupancy Date a few times already. Provision should be made for possible future extensions.
[62] Mr. Yong testified that, on December 23, 2013, the CIBC advised by telephone that their mortgage approval had been cancelled. Nothing in writing was sent by the CIBC to confirm the cancellation of the mortgage approval.
[63] The Plaintiffs subsequently made applications to other banks for mortgage financing that were refused.
Fourth Extension – December 13, 2013
[64] By letter dated December 13, 2013, Mr. Spring notified the Plaintiffs that the Defendant was extending the Occupancy Date to March 21, 2014 as a result of “construction delays”. Mr. Spring’s letter states, in part, that:
Pursuant to the provisions of Paragraphs 4 and 5 of Schedule “X” contained in the Agreement of Purchase and Sale and the provisions of the Ontario New Home Warranties Plan Act, our client hereby extends the Occupancy Date of the above-noted transaction to March 21, 2014. Please note that the extension requested by the Vendor is as a result of construction delays. In all other respects, the terms of the Agreement of Purchase and Sale remain unchanged, and time shall remain of the essence.
Kindly advise your solicitor of this extended Occupancy Date and provide our office with the name of the solicitor that will be acting on your behalf with respect to this matter.
[65] Mr. Pignetti provided little detail regarding what the “construction delays” were. He adopted his explanation for the November 1, 2013 extension letter and stated:
Yeah, that same process. Re-inspection, re communicating, re getting that machine, I’m going to call it that machine, to get this building completed. Getting all these trades and things to focus and to – to continue with the completion of the project. And I did my – you know I – that was very important to me is to make sure that the time, the timeline was met. I made every effort, that was my position, and the reason for that is counsel is that you know the time is clicking. We have finances, we have a loan to pay.
Fifth Extension – January 23, 2014
[66] On January 23, 2014, the Defendant sent a letter to the purchasers, including the Plaintiffs, which stated:
As per our previous notice to you, on December 23, 2013 the City of Toronto experienced an ice storm and resulting power outages. Further to this, on January 6th and 7th, the City also experienced extreme cold temperatures, all of which resulted in the shut down of work on-site. Please note that the resumption of work on-site commenced on January 10, 2014.
Pursuant to Schedule X paragraph 4 and 5(a) of your Agreement of Purchase and Sale and in accordance with the regulations under the Ontario New Home Warranties Plan Act, R.S.O. 1990, as amended, we hereby advise that the Vendor wishes to extend the Occupancy Dates on account of extreme weather. The Occupancy Date, as of the date hereof, is May 2, 2014, subject to such further extensions required by the Vendor pursuant to the provisions of the Agreement of Purchase and Sale and the Ontario New Home Warranties Plan Act, 1990, as amended. All other terms of the Agreement shall remain the same and time shall continue to be of the essence.
Kindly notify your solicitor of this delay.
[38] Mr. Pignetti explained that the weather was the worst experienced in 20 or 25 years. He also stated that the ice storm which lasted several days resulted in a much longer delay in construction of the Pier 27 Project as snow and ice had to be removed so that the tradespeople could safely return.
Sixth Extension – March 25, 2014
[67] By letter dated March 4, 2014, the Defendant advised the Plaintiffs that:
… as of February 17, 2014, the City of Toronto is currently experiencing high winds and another extreme cold weather system. The frigid temperatures associated with this system have brought our construction to a halt. At this time, the consensus is that work will resume to normal by March 10, 2014.
[68] By letter dated March 25, 2014, the Defendant sent the following letter to the Plaintiffs:
As per our previous notice to you dated March 4, 2014, the City of Toronto experienced high winds and another extreme cold weather system. The frigid temperatures associated with this system brought our construction teams to a halt. Please note that the resumption of work on-site commenced on March 20, 2014.
Pursuant to Schedule X paragraph 4 and 5(a) of your Agreement of Purchase and Sale, and in accordance with the regulations under the Ontario New Home Warranties Plan Act, R.S.O. 1990, as amended, we hereby advise that the Vendor wishes to extend the Occupancy Dates on account of extreme weather. The Occupancy Date, as of the date hereof is June 27, 2014, subject to such further extensions required by the Vendor pursuant to the provisions of the Agreement of Purchase and Sale and the Ontario New Home Warranties Plan Act, 1990, as amended. All other terms of the Agreement shall remain the same and time shall continue to be of the essence.
Kindly advise your solicitor of this Occupancy Date and provide our Sales Office with the name of the solicitor that will be acting on your behalf with respect to this matter.
[69] Mr. Pignetti testified that the consequences of February, 2014 and March, 2014 weather episodes were the same as those that he identified earlier.
Seventh Extension – May 16, 2014
[70] By letter dated May 16, 2014, Mr. Spring notified the Plaintiffs’ lawyer, Boris W. Zayachkowski, that the Defendant was extending the Occupancy Date to March 21, 2014 as a result of “construction delays”. Mr. Spring’s letter states, in part, that:
Pursuant to the provisions of Paragraphs 4 and 5 of Schedule “X” contained in the Agreement of Purchase and Sale and the provisions of the Ontario New Home Warranties Plan Act, our client hereby extends the Occupancy Date of the above-noted transaction to July 30, 2014. Please note that the extension requested by the Vendor is as a result of construction delays. In all other respects, the terms of the Agreement of Purchase and Sale remain unchanged, and time shall remain of the essence. ·
We have forwarded a copy of this correspondence to the Purchaser(s) by regular mail, at the most current address in our records, however, we would ask that you kindly contact your client(s), to confirm that your client(s) are aware of the foregoing extended Occupancy Date.
[71] When asked to describe the “construction delays”, Mr. Pignetti stated:
Well, again counsel, I’m going to repeat myself. They’re delays. There are problems that affect this big, massive project. It’s getting every trade back. It’s getting everybody focused again. It’s not just one assembly, it’s hundreds of assembly and to ensure that that assembly is done properly, you have to go back. You have to – it’s almost like starting from day one and to proceed and to go forth and it’s very – here’s the other thing.
It’s very difficult, counsel, to predict something when your hands are tied. It’s something that you’re looking to the future and I’m going to say hopefully get done, because it’s not really me or Dominus doing the work. It’s multiple trades that are doing this work counsel. It’s the title guy, the kitchen guy, the drywall guy, the plumber, the electrician and it’s not one or two, it’s massive and you know there was – the construction industry was also very busy and it was a time of you know, trying to get everybody re-focusing. …
Eighth Extension – June 27, 2014
[72] By letter dated June 27, 2014, Mr. Spring notified Mr. Zayachkowski, that the Defendant was extending the Occupancy Date to August 20, 2014 as a result of “construction delays”. Mr. Spring’s letter states, in part, that:
Pursuant to the provisions of Paragraphs 4 and 5 of Schedule “X” contained in the Agreement of Purchase and Sale and the provisions of the Ontario New Home Warranties Plan Act, our client hereby extends the Occupancy Date of the above-noted transaction to August 20, 2014. Please note that the extension requested by the Vendor is as a result of construction delays. In all other respects, the terms of the Agreement of Purchase and Sale remain unchanged, and time shall remain of the essence.
We have forwarded a copy of this correspondence to the Purchaser(s) by regular mail, at the most current address in our records, however, we would ask that you kindly contact your client(s), to confirm that your client(s) are aware of the forgoing extended Occupancy Date.
[73] When asked to describe the “construction delay” referenced in this letter, Mr. Pignetti indicated that there was nothing different about the circumstances of the delay from the earlier “construction delays”.
Plaintiffs’ Reaction to the Letters Extending the Confirmed Occupancy Date
[74] Mr. Yong gave the following response when asked what his reaction to the letters, starting with the November 1, 2013 letter, and subsequent four extension letters, at the time that he received them. He stated:
Yes, for each and every letter of postponement of occupancy date, like I said earlier yeah. We were wrongfully and strongly believe that the deal is still ongoing and we have to honour it until we approach and appoint Miller, Thomson LLC, the lawyers.
Further Attempts at Assignment of the Pier 27 Unit
[75] Mr. Yong testified that he contacted many real estate agents to find someone who would purchase an assignment of the APS.
[76] On November 29, 2013, Mr. Yong sent an email to a realtor named “Charles” who was unable to find anyone interested in receiving an assignment of the APS even though he had told Charles that he was willing to take a loss on the assignment.
[77] The Plaintiffs also contacted another real estate agent, Edmond Yu, located in Vancouver. His email to Mr. Yong dated February 2, 2014 indicates that he believed that the Pier 27 Unit had a value of $1.5-$1.55 million. Mr. Yong told Mr. Yu to sell it for that price if possible. Mr. Yu however advised that his clients in Toronto were not interested in an assignment of the Pier 27 Unit given that they believed the interest in a “high end condo” was much lower in Toronto than it was in Vancouver.
[78] Mr. Yong contacted another real estate agent, James Lam, a few times to see if he could help arrange for an assignment of the APS. Mr. Lam was unable to help. An email dated June 25, 2014, from the Plaintiffs to Mr. Lam is an example of the help sought by the Plaintiffs:
Any interested party on our Pier 27 condo unit from your business network or your China high network investors? When are they coming to Toronto? What other options available to market the unit, on assignment basis (as the unit has not been handed over by the developer yet) for example, by advertisements, etc.?
[79] Mr. Yong testified that he would periodically contact Shelly Shapiro following their meeting in September 2012 to ascertain whether the developer was permitting the assignment or sale of units in the Pier 27 Project.
[80] On July 3, 2014, the Plaintiffs received an email from Ms. Shapiro asking when they would be taking occupancy of the Pier 27 Unit as she might have a prospective purchaser. Mr. Yong testified that Ms. Shapiro told him that she had two prospective purchasers but that they both wished to view the unit before making an offer. However, Ms. Florian testified that she refused to allow the prospective purchasers to inspect the Pier 27 Unit because of the attendant logistical and liability issues of permitting such purchasers to walk through a partially completed 700 unit building.
[81] Mr. Yong testified that the Defendant permitted the assignment of the Pier 27 Unit “somewhere near the closing date”.
Plaintiffs’ Request that the APS be Terminated
[82] By letter dated August 7, 2014, litigation counsel for the Plaintiffs, Odysseas Papadimitriou, asked the Defendant to permit rescission of the APS and, as a consequence, return all monies paid to the Defendant. His letter, in part, states:
We have been retained by the Purchaser to review and respond to your letter of June 27, 2014.
In a letter from your office dated June 29, 2012, the Confirmed Occupancy Date was set for October 1, 2013. The Confirmed Occupancy Date has subsequently been extended on six occasions, and well in excess of the 135 day maximum extension period permitted under the Tarion warranty provisions.
It is established case law that a vendor has an obligation to act in good faith and set bona-fide closing date estimates. The Vendor’s repeated delays and extensions suggest that the Vendor failed to satisfy this obligation. As a result, the Purchaser is being negatively impacted, including, but not limited to, increased costs associated with financing the purchase.
On a without prejudice basis, please advise if your client is agreeable to terminating the Purchase Agreement and returning all deposits to the Purchaser, without penalty or deduction, including the payment made by the Purchaser for the kitchen upgrade in the amount of $4,288.35. In exchange, the Purchaser is prepared to waive any claims that it may have against the Vendor. Under the circumstances, we believe it is incumbent upon the Vendor to permit rescission of the Purchase Agreement.
If your client is agreeable to the above proposal, please provide us with a copy of the rescission and release agreement that you would like executed in exchange for a return of the deposits paid by the Purchaser.
The Purchaser herby reserves all rights and remedies available under the Purchase Agreement and at law.
[83] By letter dated August 19, 2014, Mr. Spring responded to Mr. Papadimitriou. He stated that the Plaintiffs did not have the right to terminate the APS. His letter, in part, states:
Paragraph 5(a) of Schedule X of the Agreement of Purchase and Sale contained an acknowledgment by the Purchaser that the Occupancy Date set out in paragraph 2B of the Agreement of Purchase and Sale was a Tentative Occupancy Date and may be extended by the Vendor for one or more periods of time not exceeding 24 months. The original Tentative Occupancy Date was November 30, 2010, which was extended, in accordance with paragraph 5(a) of Schedule X to October 18, 2012.
Paragraph 5(a) of Schedule X of the Agreement of Purchase and Sale also provided that the Vendor shall establish a Confirmed Occupancy Date which may be different from the Tentative Occupancy Date. The said Paragraph 5(a) also provided that the Confirmed Occupancy Date was to be established by notice in writing to the Purchaser or his solicitor, in accordance with the provisions of the Ontario New Home Warranties Plan Act, 1990, as amended. Your client was notified of the Confirmed Occupancy Date of October 1, 2013, by letter dated June 29, 2012.
Paragraph 4 of Schedule X of the Agreement of Purchase and Sale provides the following delay provisions:
“In the event that the completion of the Unit or the common elements should be delayed by reason of strike, lockout, fire, lightning, tempest, riot, war, unusual delay by common carrier, unavailable casualty, non-installation or supply of services, obtaining building and other requisite permits, availability of tradesmen, and/or materials, or by any other cause of any kind whether of the foregoing nature or beyond the control of the Vendor in its sole, absolute and unfettered discretion, the Vendor shall be permitted such extensions of time as is reasonable under the circumstances and the Occupancy Date shall be extended accordingly, and the Vendor shall not be liable to the Purchaser for nay costs or damages or otherwise by reason of such delay.”
We would refer you to the provisions of Subsection 3(5) of regulation 165/08 under the Ontario New Home Warranties Plan Act which provides that the Vendor may extend the Confirmed Occupancy Date by a maximum of 120 days upon at least 65 days prior notice plus a maximum of 15 days upon at least 35 days prior notice. Under the provisions of the Ontario New Home Warranties Plan Act, the only recourse to the Purchaser for an extension beyond those time periods, is the payment of delayed closing compensation. As well, Section 3(6) of regulation 165/08 also provides that the compensation does not apply to a period of delay in occupancy caused by strike or act of God, and of which your client was notified, in accordance with the provisions of the Ontario New Home Warranties Program.
Please also note the case of Harding v. Wyldewyn Village Inc. (1994) 38 R.P.R. (2d) 268, which held that the provisions of the Ontario New Home Warranties Plan Act with respect to extensions of confirmed occupancy dates were not designed to allow the purchase a right of termination, but merely to compensate the purchaser for any direct costs as a result of the extension of the confirmed occupancy date beyond the allowed dates.
Further, in your client’s colour selection and upgrades form executed October 5, 2013, your clients specifically acknowledged that the Occupancy Date, as of that date, was January 30, 2014, subject to such further extensions required by the Vendor. As well, as to your statement that your client is being negatively impacted due to increased costs associated with financing the purchase, we do not understand how that can be possible since mortgage rates have been and continue to be stable, if not decreasing.
Accordingly, for all of the foregoing reasons, your client does not have the right to terminate the transaction.
[84] The Plaintiffs did not take possession of the Pier 27 Unit on August 20, 2014. Mr. Yong stated that without mortgage financing from the CIBC or another bank, he had no funds to pay the required deposits and ongoing occupancy rent and thus had no intention of taking occupation of the Pier 27 Unit. As a result, Mr. Yong instructed Mr. Zayachkowski that he would seek a litigation lawyer to approach the developer for a return of the monies that they had paid to the Defendant.
[85] By letter dated August 29, 2014, Mr. Papadimitriou, asked the Defendant to re-consider the Plaintiffs’ offer. His letter, in part, states:
We have reviewed your letter of August 19, 2014, with our client and have been instructed to respond as follows.
At the outset, we request that you provide us with a copy of the acknowledgement that our client allegedly signed on October 5, 2013. It is our client’s position that the alleged acknowledgment, if contained as part of the colour selection and upgrade form, was not brought to our client’s attention by the Vendor and/or its agents and employees. Specifically, our client has advised that they were led to believe that the said form related solely to the colour selection and unit finishes, at no point were they advised that execution of the form would result in an extension of the Occupancy Date.
Paragraph 5 (a) of Schedule “X” of the Purchase Agreement provides that the “Tentative Occupancy Date and the Confirmed Occupancy Date are herein referred to collectively as the Occupancy Date.” The first sentence of Paragraph 5 (a) of Schedule “x” of the Purchase Agreement provides that the Occupancy Date, which, again, is defined as including the Confirmed Occupancy Date, “may be extended by the Vendor for one or more periods of time not exceeding twenty-four (24) months”. Accordingly, the Vendor did not have the right to unilaterally extend the Occupancy Date beyond the twenty-four (24) months permitted by Paragraph 5 (a) of Schedule “X”.
It is our client’s position that the Vendor’s failure to provide occupancy by November 30th, 2012, being the maximum extension of the Occupancy Date permitted by the Purchase Agreement, is a breach of the Vendor’s obligations pursuant to the Purchase Agreement and entitles the Purchaser to terminate the Purchase Agreement with a return of the depositions, without penalty or deduction, including the payment made for the kitchen upgrade in the amount of $4,288.35.
As we advised in our letter of August 7, 2014, our client wishes to resolve this matter amicable and is prepared to waive any claims that it may have against the Vendor in exchange for a return of all payments made by the Purchaser. Given the ambiguous provisions of the Purchase Agreement, the unreasonably delay in providing occupancy, the likely increase in the value of the unit since 2008, which would presumably result in a higher sale price for the Vendor if the Purchase Agreement is terminated, as well as the benefits to be gained by both parties in avoiding the publicity and costs of extended litigation, we believe that our client’s proposal is fair and reasonable.
We respectfully request that you once again review our client’s office with the Vendor and contact our office to discuss the possibility of an amicable resolution.
If your client is not amenable to resolving this matter amicably, we have instructions to commence a claim against the Vendor. Although we hope to avoid the need for such proceedings, please advise if you will accept service on behalf of your client.
[86] By letter dated September 3, 2014, Mr. Spring responded to Mr. Papadimitriou. Rather than accept the Plaintiffs’ offer of rescission, he indicated that the Defendant was prepared to extend the Occupancy Date to September 8, 2014. His letter, in part, states:
We acknowledge receipt of your letter dated August 29, 2014. Your letter raises no new issues which have not been previously responded to in our prior correspondence. We do however note your statement that your clients’ position is that the maximum extension was until November 30, 2012. However, we would point out that your clients executed their colour selection and extras and upgrade selection on October 5, 2013, almost a year after your client’s states that the Agreement was to end. Your clients also provided a cheque for the extras ordered in November 2013, further confirming that the transaction was in full force and effect.
Further, your clients are in default of the terms of the Agreement of Purchase and Sale, by failing to complete this transaction on the scheduled Occupancy Date of August 20, 2014. However, as a courtesy to the Purchasers and without prejudice to the Vendor’s rights, the Vendor will allow the Purchasers to complete the occupancy for this transaction on September 8, 2014, on the following terms:
The Statement of Adjustments shall remain as at August 20, 2014, the originally scheduled Occupancy Date.
The Purchaser(s) shall pay our legal fees for such extension in the amount of $282.50 (taxes included) payable by way of a separate certified cheque to be made payable to our firm, on the extended Occupancy Date.
The Purchaser(s) waives any entitlement to Delayed Occupancy Compensation for the period of delay up to the Occupancy Date set out above. For greater certainty, the Purchaser(s) Acknowledge and agree that they waive any and all entitlement to Delayed Occupancy Compensation that may be payable under the Purchase Agreement and the Ontario New Home Warranties Plan Act, 1990, as amended and including any and all prior extensions of the Occupancy Date.
All terms of the Agreement of Purchase and Sale herein to remain the same and time to remain of the essence.
In the event your clients fail to complete this transaction on the extended Occupancy Date of September 8, 2014, your clients will be in substantial default under the Agreement of Purchase and Sale and the Agreement of Purchase and Sale will be automatically terminated. In such case, all monies heretofore paid by the Purchasers will be forfeited in full to the Vendor, and, in addition, the Purchasers shall be held responsible for all costs, losses and damages incurred by the Vendor arising out of the Purchasers aforesaid default, including interest thereon at the rate of twenty (20%) per cent per annum, in accordance with paragraph 21 of Schedule “X” to the Agreement of Purchase and Sale. The Vendor reserves its rights to take such further and other action against the Purchasers as the Vendor may, in its sole discretion deem necessary, by reason of the Purchasers aforesaid default.
For your records, we are enclosing a copy of the Occupancy Permit for this suite, as issued by the City of Toronto, confirming the Unit was ready for occupancy on August 20, 2014, the scheduled Occupancy Date.
Please provide your written acceptance of the foregoing terms of extension by 5:00 pm today, by signing a copy of this letter in the space indicated below, failing which our client reserves its rights to take action it deems necessary arising from your clients’ default.
[87] The Plaintiffs did not take possession of the Pier 27 Unit on September 8, 2014 as offered by the September 3, 2014 letter from Goldman, Spring LLP.
[88] A letter dated September 9, 2014 from Goldman Spring LLP to Mr. Papadimitriou states:
Further to our letter dated September 3, 2014 which was not accepted, we confirm that the Purchasers have failed to complete the above noted transaction on the Occupancy Date of August 20, 2014.
This letter shall serve as notice given on the part of the Vendor that, as a result of the Purchasers’ default, the Agreement of Purchase and Sale is hereby terminated, all monies heretofore paid by the Purchasers are forfeited in full to the Vendor, and, in addition, the Purchasers shall be held responsible for all costs, losses and damages incurred by the Vendor arising out the Purchasers aforesaid default, including interest thereon at the rate of twenty (20%) per cent per annum, in accordance with paragraph 21 of Schedule “X” to the Agreement of Purchase and Sale. The Vendor reserves its rights to take such further and other action against the Purchasers, as the Vendor may in its sole discretion deem necessary, by reason of the Purchasers’ default. Kindly advise your clients to govern themselves accordingly.
ISSUES
[89] This action raises the following issues:
Did any of the Defendant’s extensions of the occupancy date constitute a breach of the APS?
Did the Defendant breach the APS by acting dishonestly in its performance of the APS?
Did the Plaintiffs accept the Defendant’s repudiation of the APS?
Does the right to compensation for Delayed Occupancy under the Regulation limit the Plaintiffs’ common law right to claim damage for breach of the APS?
Should the Plaintiffs be granted relief from forfeiture?
ISSUE #1: DID ANY OF THE DEFENDANT’S EXTENSIONS OF THE OCCUPANCY DATE CONSTITUTE A BREACH THE APS ?
[90] The Plaintiffs submits that:
• the Defendant failed to deliver occupancy of the Unit by the deadline prescribed by the APS;
• each of the Defendant’s delays beyond what was permitted by the APS amounted to a repudiation of the APS by the Defendant;
• by letter dated August 7, 2014 or alternatively August 20, 2014, the Plaintiffs accepted the Defendant’s repudiation of the APS and thus are entitled to damages;
[91] The Defendant submits that any extensions of the occupancy date results from unavoidable delays that were beyond its control. Alternatively, the Defendant submits if such extensions did not result from unavoidable delays, then any such anticipatory breach of the APS was affirmed by the Plaintiffs’ conduct as, until about two weeks before the August 20, 2014 occupancy date, they expressed no displeasure with the extensions and continued to treat the APS as remaining in force in many ways including by seeking a buyer until July 2014 to whom they could assign the APS.
[92] The APS is written in language that is clearly favourable to the Defendant. The APS establishes a “tentative occupancy date” and a “confirmed occupancy date”.
[93] The Defendant is permitted to extend the tentative occupancy date by up to 24 months. The Defendant took full advantage of the APS and extended the tentative occupancy date by about 23 ½ months.
[94] Under the APS the Defendant was required to establish a confirmed occupancy date “… in accordance with the provisions of the Ontario New Home Warranties Plan Act, 1990, as amended.” There is nothing under the Act, as it existed at the time that the APS was signed, that addresses the establishment of a confirmed occupancy date. However, Administration of the Plan, R.R.O. 1990, Reg. 892, as it existed during the period of July 1, 2006 to June 1, 2008, established a delayed occupancy warranty that provides compensation of up to $5,000.00 under s. 17(5) if occupancy was provided more than five days beyond the confirmed occupancy date or any extension of such date. In this regard, the Regulation specified that:
• every agreement of purchase and sale in respect of a condominium dwelling unit is to contain a confirmed occupancy date or a tentative occupancy date. (s. 17(6));
• if the agreement of purchase and sale contains a tentative occupancy date, a confirmed occupancy date shall be established by written notice delivered to the purchaser,
o not more than 30 days after the completion of the roof slab …; and,
o at least 120 days before the confirmed occupancy date. (s. 17(7));
• A confirmed occupancy date established under s. 17(7) shall not differ from the tentative occupancy date unless the purchase agreement so permits; (s. 17(8));
• Where a tentative occupancy date has been given, and the vendor fails to set a confirmed occupancy date as specified in s. 17(7) at least 90 days before the tentative occupancy date, the tentative occupancy date becomes the confirmed occupancy date for purpose of calculating compensation under s. 17(5). (s. 17(9))
[95] The above provisions were repealed and replaced by Warranty for Delayed Closing or Delayed Occupancy, O.Reg. 165/08. In respect of purchases of new condominiums before July 1, 2008, the new regulation largely adopted the above provisions and further added that no claim for compensation is available unless: (1) it is made within one year after the date of possession; (2) the condominium home is occupied; and (3) the purchaser is not in default of the purchaser’s obligations under the purchase agreement.
[96] Under the APS there is nothing which permits either party to arbitrarily extend the Confirmed Occupancy Date. However, under section 4 of Schedule X, the Defendant is permitted to extend the Confirmed Occupancy Date in the event “… that the completion of the Unit or the common elements should be delayed by reason of strike, lockout, fire, lightning, tempest, riot, war, unusual delay by common carrier, unavoidable casualty, non-installation or supply of services, obtaining building and other requisite permits, availability of tradesmen, and/or materials, or by any other cause of any kind whether of the foregoing nature or beyond the control of the Vendor …”.
[97] The Defendant submits that its repeated extension of the confirmed occupancy date resulted from causes that were beyond its control. The only evidence tendered in support of this position was Mr. Pignetti’s evidence. Aside from specific incidents of strike and extreme weather conditions, I found his evidence regarding “construction delays” to be quite vague. Surprisingly, there were no emails or other written communication from Mr. Pignetti to the Pier 27 Project team, contemporaneous or otherwise, tendered to provide greater detail regarding these numerous “construction delays” and to support his assertion that these delays were unavoidable. I am not satisfied that such delays were beyond the Defendant’s control notwithstanding Mr. Pignetti’s observation that the Defendant has a vested financial interest in completing this development, and any other development for that matter, as soon as possible.
[98] Accordingly, I find that the Defendant breached the APS by extending the Confirmed Occupancy Date pursuant to the notices dated May 16, 2013, November 1, 2013, December 13, 2013, May 16, 2014 and June 27, 2014.
ISSUE #2: DID THE DEFENDANT ACT DISHONESTLY IN ITS PERFORMANCE OF THE APS?
[99] The issue of whether the Defendant breached the APS because it acted dishonestly in its performance of the APS is moot given that I have found that the Defendant breached the APS. In any event, I will address this issue.
[100] There is a general duty of honesty in contractual performance which requires that “… parties must not lie or otherwise knowingly mislead each other about matters directly linked to the performance of the contract. This does not impose a duty of loyalty or of disclosure or require a party to forego advantages flowing from the contract; it is a simple requirement not to lie or mislead the other party about one's contractual performance.”: Bhasin v. Hrynew, 2014 SCC 71, 3 S.C.R. 494, at para.73.
[101] The Plaintiffs submit that the Defendant’s breached this duty to act honestly in performance of the APS by:
(a) Repeatedly extending the confirmed occupancy date beyond the statutory deadline for confirmed occupancy and by giving insufficient notice of these extensions, while representing to the Plaintiffs that such extensions were compliant with the APS and the Act;
(b) Burying a clause concerning the confirmed occupancy date within the colour selection and finishes Order Form and by failing to alert the Plaintiffs to the presence of the clause.
[102] There is no basis in the evidence for suggesting that the Defendant did not conduct itself honestly throughout this transaction. The Defendant believed that its extensions of the confirmed occupancy date were made for reasons permitted by the APS and the Act. Further, the acknowledgment found in the Order Form dated October 5, 2013 was not “buried” and the Plaintiffs were alerted to this provision. I prefer the evidence of Ms. Tsampiras, who gave her evidence in a candid and direct manner, whereas the Plaintiffs struggled to do so and were often argumentative, overstated, and inconsistent. In any event, “…a duty of honest performance should not be confused with a duty of disclosure”: Bank of Montreal v. Javed, 2016 ONCA 49, at para. 12.
ISSUE #3: DID THE PLAINTIFFS ACCEPT THE DEFENDANT’S REPUDIATION OF THE APS?
[103] The Defendant’s extension of the Confirmed Occupancy Date on the five occasions described constituted a breach of contract. Whether a repudiation of the APS results in the termination of the APS turns on the application of the following principles outlined by the Ontario Court of Appeal in Ali v. O-Two Medical Technologies Inc., 2013 ONCA 733, 118 O.R. (3d) 321, at para. 24:
Once the counterparty shows its intention not to be bound by the contract, the innocent party has a choice. The innocent party may accept the breach and elect to sue immediately for damages — in which case, the innocent party must "clearly and unequivocally" accept the repudiation to terminate the contract: Brown, at para. 45. Alternatively, the innocent party may choose to treat the contract as subsisting, "continue to press for performance and bring the action only when the promised performance fails to materialize"; by choosing this option, however, the innocent party is also bound to accept performance if the repudiating party decides to carry out its obligations: S.M. Waddams, The Law of Contracts, 6th ed. (Toronto: Canada Law Book, 2010), at para. 621.
[104] The Plaintiffs submit that they accepted the Defendant’s repudiation by letter dated August 7, 2014 or alternatively by letter dated August 20, 2014 and, as a result, are entitled to damages. However, the Plaintiffs continued to press for performance of the APS after each of the five extensions of the Confirmed Occupancy Date. Rather than treat the APS as at an end, the Plaintiffs attended the Defendant’s office to select finishes and upgrades for the Pier 27 Unit in October, 2013. Further, the Plaintiffs attempted to assign the Pier 27 Unit on many occasions through numerous real estate agents from November, 2013 until July, 2014. In July, 2014 the Plaintiffs sought and were refused permission by the Defendant to have two prospective purchasers inspect the Pier 27 Unit.
[105] I am satisfied that the Plaintiffs treated the APS as subsisting notwithstanding the Defendant’s repeated repudiation of the APS.
ISSUE #4: DOES THE RIGHT TO COMPENSATION FOR DELAYED OCCUPANCY UNDER THE REGULATION LIMIT THE PLAINTIFFS’ COMMON LAW RIGHT TO CLAIM DAMAGES FOR BREACH OF CONTRACT?
[106] Subsection 3(5) of the Warranty for Delayed Closing or Delayed Occupancy provides a warranty for delayed occupancy of a new residential condominium of up to $5,000.00. However, s. 3(14) extinguishes such right to compensation unless: (1) the claim is made within one year after the date of possession; (b), the condominium home is occupied; and (c) the purchaser is not in default of the purchaser’s obligations under the purchase agreement. There is no dispute that the Plaintiffs are not entitled to compensation under the delayed occupancy warranty because they have not satisfied the requirements of s. 3(14).
[107] The Plaintiffs raise the issue that they are not barred by the Act or the Regulation from bringing a common law action for breach of contract against the Defendant. This issue is moot given that I have found that the Plaintiffs accepted the Defendant’s repudiation of the APS. Further, the Defendant did not strenuously take this position at trial despite the fact that it pled that “… the only recourse available for an extension beyond the time periods provided in the Act is the payment of delayed closing compensation.” In any event, this point can be addressed in a few words. There is nothing in the Act or Regulation which provides that this statutory right to compensation replaces or otherwise extinguishes the common law right of action for breach of contract. It is presumed that a statute does not alter the common law unless clear and unambiguous words are used: See Ruth Sullivan, Sullivan on the Construction of Statutes, 6th ed. (Markham, ON: LexisNexis Canada, 2014), at para. 17.5. In my view, there is nothing in the Act or its regulations which suggests that the right to claim a warranty of up to $5,000 for losses arising from the delayed occupancy of a condominium was intended to displace a purchaser’s right at common law to claim damages for breach of contract. Such a finding would be perverse given that the Act is consumer protection legislation and given that s. 13(6) of the Act expressly provides that such statutory rights are in addition to any other right that the purchaser may have against the developer: Metropolitan Toronto Condominium Corp. No. 1352 v. Newport Beach Development Inc., 2012 ONCA 850, 113 O.R. (3d) 673, at para. 33.
ISSUE #5: SHOULD THE PLAINTIFFS BE GRANTED RELIEF FROM FORFEITURE ?
[108] The Plaintiff submits that in the event that its claim is dismissed and it is found to have breached the APS by failing to complete the interim closing on August 20, 2014, then the monies that it paid to the Defendant should not be forfeited to the Plaintiff as provided by section 21 of the APS.
[109] The Plaintiffs rely on Scicluna v. Solstice Two Limited, 2018 ONCA 176, where a purchaser advanced $293,685 towards the purchase of a condominium at a price of $372,000 and was unable to obtain financing for the balance because she had lost her job at the time that the closing of the sale occurred. The condominium was resold for $93,000 more than the purchaser had paid. The vendor argued that it had incurred expenses on the second sale of the condominium however the court found that it was not in a net loss position. The court dismissed the vendor’s application for forfeiture of the deposit as it would have resulted in a grossly disproportionate windfall.
[110] Relief from forfeiture is an equitable and discretionary remedy that is available under s. 98 of the Courts of Justice Act, R.S.O. 1990, c. C.43. The appropriate factors to be considered are: (1) whether the conduct of the party seeking relief from forfeiture was reasonable in the circumstances; (2) whether the object of the right of forfeiture was to secure the payment of money; (3) whether there is a substantial disparity between the value of the property forfeited and the damage caused by the breach: Scicluna, para. 28-29.
[111] The Plaintiffs submit that relief from forfeiture should be granted for two reasons. First, the Plaintiffs state that they were unable to close the purchase as a result of the loss of mortgage financing due to the Defendants’ repeated extension of the occupancy date. The Plaintiffs also submit that there is a significant disparity between the deposit and the losses incurred by the Defendant that resulted from the Plaintiffs’ breach of the APS. The Plaintiffs submit that a refusal to grant relief from forfeiture would result in a windfall to the Defendant and a loss of the Plaintiffs’ retirement savings.
[112] The Defendant submits that the Plaintiffs were calculating real estate speculators that are not entitled to relief from forfeiture. It submits that the Plaintiffs gambled and lost. The Defendant correctly submits that had the Plaintiffs closed the purchase of the Pier 27 Unit on August 7, 2014, rather than notifying the Defendant that it would not be closing the purchase, then it would have “lost” $108,020.00 considering the total purchase price ($1,391,000), the agreed value of the Pier 27 Unit on August 7, 2014 ($1.4 million), the cost of land transfer taxes ($45,020) and 5% real estate commission ($72,000).
[113] The Pier 27 Unit was sold on July 8, 2016 for $1.5 million which is about $109,000 more than the price that the Plaintiffs would have paid. In the period between the Plaintiff’s refusal to close in August, 2014 and the second purchaser’s closing on July 8, 2016, the Defendant paid the occupancy fee for the unit ($82,686.35 based on $3,742.50 per month), the cost of staging the unit with furniture ($55,223.10), the listing commission cost ($12,594.00), and real estate commission on the sale ($121,400). To avoid double counting of the Defendant’s expenses arising from the Plaintiffs’ breach of the APS, I note that had the Plaintiffs closed the purchase of the Pier 27 Unit in August 2014, the Defendant would have paid a real estate commission of $38,485.71 plus applicable taxes to L & A International, as well as listing commission of $5,873.50.
[114] Given the above figures, I find that the forfeiture of the deposit would not result in a “windfall” to the Defendants given that almost all of the deposit covers the damages incurred by the Defendant. Considering all of the circumstances, I decline to grant relief from forfeiture.
CONCLUSIONS
[115] The Plaintiffs’ action is dismissed. I direct that the parties make every reasonable effort to resolve the issue of costs failing which the Defendant shall deliver its costs submissions (maximum six pages), an outline of costs and any settlement offers by October 25, 2019 and the Plaintiffs shall deliver its responding costs submissions (maximum six pages) by November 6, 2019. The parties shall attend before me on November 13, 2019 at 361 University Avenue, Toronto, at 9:15 am, to make brief oral submissions.
Mr. Justice M. D. Faieta
Released: October 18, 2019
COURT FILE NO.: CV-14-517786
DATE: 20191018
ONTARIO
SUPERIOR COURT OF JUSTICE
BETWEEN:
YONG KEE CHING a.k.a RICHARD YONG and MARGARET NG a.k.a. MARGARET NG
Plaintiffs
– and –
PIER 27 TORONTO INC.
Defendant
REASONS FOR DECISION
Mr. Justice M.D. Faieta
Released: October 18, 2019