COURT FILE NO.: CV-17-585729

DATE: 2019/01/24

ONTARIO

SUPERIOR COURT OF JUSTICE

BETWEEN:

MOHAMMAD HASSAN KARAMI

Plaintiff

– and –

TIBOR KOVARI and VANESSA ISABELA KOVARI

Defendants

Dheeraj Bhatia and Arad Moslehi for the Plaintiff

Michael W. Carlson for the Defendants

HEARD: January 18, 2019

PERELL, J.

REASONS FOR DECISION

A. Introduction

[1] This is an abortive real estate transaction action. The Plaintiff, Mohammad Hassan Karami, who was the purchaser, sues for the return of his $150,000 deposit. The Defendants, Tibor and Vanessa Kovari, who were the vendors, claim the deposit and assert a counterclaim. In their defence and counterclaim, the Kovaris seek damages of $854,900, the forfeiture of the deposit, and the dismissal of the main action.

[2] The Kovaris now move for a summary judgment dismissing the claim and granting the counterclaim.

[3] Under rule 20.05 (1) of the Rules of Civil Procedure, where summary judgment is refused or is granted only in part, the court may make an order specifying what material facts are not in dispute and defining the issues to be tried, and order that the action proceed to trial expeditiously. Under rule 20.05 (3), any facts specified shall be deemed to be established, unless the trial judge orders otherwise to prevent injustice.

[4] For the reasons that follow, I dismiss the summary judgment motion, and subject to the order that I shall make specifying what material facts are not in dispute and defining the issues to be tried, I order that the claim and the counterclaim proceed to examinations for discovery and then to trial in the normal course.

B. Procedural Background

[5] It is helpful to understanding my Reasons for Decision to begin with the procedural background to the summary judgment motion. I pause at the outset to note that both parties have idiosyncratic approaches to the Rules of Civil Procedure, but except as noted later in these Reasons for Decision, for the purposes of the summary judgment motion, nothing turns on their practice infelicities and eccentricities.

[6] The real estate transaction that is the subject of the claim and the counterclaim failed to close on October 31, 2017.

[7] Almost immediately, on November 2, 2017, Mr. Karami had issued a Statement of Claim and he commenced his action for return of the $150,000 deposit.

[8] On December 8, 2017, the Kovaris delivered their Statement of Defence and Counterclaim for forfeiture of the deposit and for damages of $700,000.

[9] On December 19, 2017, Mr. Karami delivered two versions of a Reply and Defence to Counterclaim, one pleading more argumentative than the other.

[10] On July 27, 2018, the Kovaris brought a motion for a summary judgment. The motion was supported by the affidavit of Mr. Kovari dated July 27, 2018.

[11] Mr. Karami delivered a Reply Notice to the Kovaris’ Notice of Motion (an innovation and another example of an eccentricity) dated August 20, 2018 and his affidavit dated August 29, 2018 to respond to the summary judgment motion.

[12] On September 12, 2018, apparently pursuant to Rule 53, which governs the exchange of expert reports for a trial, the Kovaris delivered an expert report from Robert Carruthers of G.R. Carruthers Consulting Limited for the summary judgment motion. There was no cross-examination of Mr. Carruthers and the Kovaris did not retain an expert to deliver a responding expert report.

[13] On September 27, 2018, Mr. Karami and Mr. Kovari were cross-examined on their affidavits.

[14] On November 2018, the Kovaris delivered an Amended Statement of Defence and Counterclaim. The amendment is that the amount of the counterclaim is increased from $700,000 to $900,000.

[15] After an adjournment because of lack of judicial resources, the summary judgment motion was argued on January 18, 2019, and I reserved judgment.

C. Jurisdiction to Grant Summary Judgment and the Evidentiary Background

[16] Rule 20.04(2)(a) of the Rules of Civil Procedure provides that the court shall grant summary judgment if: “the court is satisfied that there is no genuine issue requiring a trial with respect to a claim or defence.” With amendments to Rule 20 introduced in 2010, the powers of the court to grant summary judgment have been enhanced. Rule 20.04 (2.1) states:

20.04 (2.1) In determining under clause (2)(a) whether there is a genuine issue requiring a trial, the court shall consider the evidence submitted by the parties and, if the determination is being made by a judge, the judge may exercise any of the following powers for the purpose, unless it is in the interest of justice for such powers to be exercised only at a trial:

1. Weighing the evidence.

2. Evaluating the credibility of a deponent.

3. Drawing any reasonable inference from the evidence.

[17] Hryniak v. Mauldin does not alter the principle that the court will assume that the parties have placed before it, in some form, all of the evidence that will be available for trial. The court is entitled to assume that the parties have advanced their best case and that the record contains all the evidence that the parties will present at trial.[^1] Thus, if the moving party meets the evidentiary burden of producing evidence on which the court could conclude that there is no genuine issue of material fact requiring a trial, the responding party must either refute or counter the moving party’s evidence or risk a summary judgment.[^2]

[18] Under rule 20.02(1), the affidavits for a summary judgment motion may be made on information and belief, but on the hearing of the motion, the court may, if appropriate, draw an adverse inference from the failure of a party to provide the evidence of any person having personal knowledge of contested facts. The principles governing the admissibility of evidence are the same as apply at trial save for the limited exception of permitting an affidavit made on information and belief.[^3] Where an affidavit relied upon in support of a motion for summary judgment does not state the source of the information and the fact of the deponent’s belief, the court may nevertheless rely upon the substance of the exhibits to the affidavit in evaluating the merits of the case.[^4] However, evidence of an expert witness may not be provided by the information and belief evidence of an affiant because the responding party should have the opportunity to cross-examine the expert.[^5]

[19] In Hryniak v. Mauldin[^6] and Bruno Appliance and Furniture, Inc. v. Hryniak,[^7] the Supreme Court of Canada held that on a motion for summary judgment under Rule 20, the court should first determine if there is a genuine issue requiring trial based only on the evidence in the motion record, without using the fact-finding powers introduced when Rule 20 was amended in 2010. The analysis of whether there is a genuine issue requiring a trial should be done by reviewing the factual record and granting a summary judgment if there is sufficient evidence to fairly and justly adjudicate the dispute and a summary judgment would be a timely, affordable and proportionate procedure.

[20] If, however, there appears to be a genuine issue requiring a trial, then the court should determine if the need for a trial can be avoided by using the powers under rules 20.04 (2.1) and (2.2). As a matter of discretion, the motions judge may 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 their use 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. To grant summary judgment, on a review of the record, the motions judge must be of the view that sufficient evidence has been presented on all relevant points to allow him or her to draw the inferences necessary to make dispositive findings and to fairly and justly adjudicate the issues in the case.[^8]

[21] If a judge is going to decide a matter summarily, then he or she must have confidence that he or she can reach a fair and just determination without a trial; this will be the case 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.[^9] The motion judge is required to assess whether the attributes of the trial process are necessary to enable him or her to make a fair and just determination.[^10] To grant summary judgment, on a review of the record, the motions judge must be of the view that sufficient evidence has been presented on all relevant points to allow him or her to draw the inferences necessary to make dispositive findings and to fairly and justly adjudicate the case.

[22] As I shall elucidate below, in my opinion, in the immediate case, although there are a few substantial issues that do not require a trial, there are numerous genuine issues that do require a trial and the case at bar is not an appropriate case for a summary judgment. There is insufficient evidence to allow me to draw the inferences necessary to make dispositive findings and to fairly and justly adjudicate both the claim and the counterclaim.

[23] As a matter of both commission and omission, the evidentiary record is not adequate to decide the genuine issues and it would not be in the interests of justice to decide the genuine issues. There are significant issues of credibility and reliability that ought to be tried. The evidentiary record about alleged physical defects to the property and about the market value of the property at various points in time is woefully inadequate and has not been properly tested by cross-examination.

[24] For a more detailed explanation of why the case is inappropriate for a summary judgment, the evidentiary background is a good place to start.

[25] Reading the evidentiary record and the factums in the immediate case and hearing counsel for the parties reveals that the principal actors in the events of the litigation were the individuals listed below, all of whom had to varying degrees significant relevant evidence.

[26] The principal actors in this abortive real estate transaction were:

• Tibor Kovari and Vanessa Kovari, the vendors;

• Mohammad Hassan Karami, the purchaser

• Randy Cohen, the Kovaris’ real estate agent;

• Issie Fishman, the Kovaris’ conveyancing lawyer;

• Diane Sainsbury and Naomi Raanani, Mr. Fishman’s assistants;

• Bob Mehrabi of Wet Walls Inc., a waterproofing contractor, who along with Mr. Karami inspected the Kovari’s property on October 8, 2017 and who delivered a letter report on October 9, 2017;

• Derek Camastra of Home Value Inc., an appraiser who prepared a report for Mr. Karami for mortgage financing purposes dated October 19, 2017 just before the scheduled closing of the real estate transaction;

• Jane Hi Ok Chung, Mr. Karami’s initial conveyancing lawyer;

• Dheeraj Bhatia, the lawyer who replaced Ms. Chung and who is Mr. Karami’s litigation counsel on this motion; and

• Robert Carruthers of G.R. Carruthers Consulting Limited, an appraiser retained by the Kovari’s after the litigation commenced to provide an expert opinion as to the value of the property around the time of the abortive real estate transaction;

[27] If there was a trial, there are thus twelve potential witnesses with relevant and significant evidence. However, on the summary judgment, I had the affidavit and cross-examination evidence of only two of the twelve witnesses; i.e., Mr. Kovari and Mr. Karami.

[28] Although there was some meaningful documentary corroboration the evidence of what the other ten potential witnesses saw, heard, and did, for the summary judgment motion, the evidence of their acts was all hearsay or double or triple hearsay. While hearsay evidence is admissible on a summary judgment motion, in the case at bar, there was too much of it from both sides for me to fairly and justly draw the inferences necessary to make dispositive findings and to fairly and justly adjudicate this case.

[29] Moreover, as I shall elucidate below, there were other problems associated with the hearsay evidence making it unfeasible and unfair to come to a decision. These problems included the failure to qualify Mr. Carruthers as an expert and the failure to qualify Mr. Mehrabi as an expert, if that was what he was. And there is improper way that Mr. Carruthers’ expert appraisal report was introduced for the summary judgment motion pursuant to Rule 53 which governs the exchange of expert reports for a trial and not for a summary judgment motion.

[30] Moreover still, as I shall elucidate below, apart from the photographs, which only in part speak for themselves, there was vague, controversial, and inadequate evidence of about the alleged defects to the property and when the defects first became apparent. Mr. Karami’s evidence about the alleged latent and patent defects of the physical quality of the Kovaris’ residence was argumentative, self-serving, unreliable, and unsupported by objective non-partisan evidence. Mr. Mehrabi report was vague, superficial, and unhelpful. The photographs of the alleged defects and Mr. Karami’s evidence about the defects was not helpful. What was required was the evidence of an independent expert about the significance of defects in quality in a resale house that was built and renovated decades ago.

[31] Finally, there was no properly proffered appraisal evidence that would assist the court in determining a $900,000 breach of contract damages claim.

[32] I conclude that a trial in the normal course is required to adjudicate the claim and the counterclaim. No purpose would be served by my remaining seized of the proceedings. The action should proceed to normal documentary discovery, examinations for discovery, and the proper exchange of expert witness reports.

D. Facts: Genuine Issues and Specified Material Facts

1. Introduction

[33] As noted above, under rule 20.05 (1), when the court dismisses a summary judgment motion, it has the jurisdiction to specify what material facts are not in dispute and to define the issues to be tried. Under rule 20.05 (3), any facts specified shall be deemed to be established, unless the trial judge orders otherwise to prevent injustice.

[34] In the immediate case, there are some issues that are conceded, uncontested, or uncontestable and although I am dismissing the summary judgment motion, it is desirable to specify what material facts are not in dispute. It would be unnecessary, inefficient, and disproportionate not to decide these issues now and to have them relitigated by the trial judge. Thus, in my opinion, it is in the interests of justice to utilize the jurisdiction provided by Rule 20.05 in the immediate case. Exercising this jurisdiction preserves and does not waste the legal resources expended by the parties in the summary motion procedure and produces a more efficient procedure that respects the proportionality principles of the Rules of Civil Procedure.

[35] For the purposes of a summary judgment motion, the court is required to determine whether there are genuine issues requiring a trial, and when the court does decide that there are genuine issues requiring a trial, then by exercising its jurisdiction under Rule 20.05 to specify what material facts are not in dispute, the court can direct a procedure that is efficient, proportionate, and fair that also does not interfere with the role of the trial judge who is not bound by the findings of fact if he or she orders otherwise in the interests of justice.

[36] In the next section of my Reasons for Decision, I shall make findings of material facts and identify the genuine issues of fact that are required to be determined by the trial judge.

2. Factual Background

[37] In March 2017, the Kovaris listed their residential property at 10 Bowerbank Drive, Toronto for sale with Re/Max Realtron Realty Inc., Brokerage. The property was listed with the Toronto Real Estate Board. The sales agent was Randy Cohen, an experienced real estate agent. The listing price was of $1,499,000.

[38] Mr. Karami, who is a structural engineer by education and experience, is a novice real estate agent for Homelife/Bayview Realty Inc. Mr. Karami represented himself in searching for a home. Mr. Karami made an offer to purchase the Kovari’s property in what was an overheated real estate market.

[39] On March 10, 2017, the Kovaris and Mr. Karami signed a standard form Toronto Real Estate Board agreement of purchase and sale. Mr. Karami paid a $150,000 deposit to Re/Max Realton Realty. The agreement provided for a closing date of October 31, 2017. Before signing the agreement, Mr. Kovari inspected the property externally and internally. Before signing the agreement and after signing for that matter, there were no direct contacts between the Kovaris and Mr. Kamari.

[40] There are genuine issues requiring a trial about what Mr. Karami saw and about what actually was the physical state of the Kovaris residence in March 2017. As just noted, Mr. Karami had no direct meetings with the Kovaris and there are genuine issues for trial about what, if anything, their agent, Mr. Cohen, said to Mr. Karami about the state of the Kovaris’ residence before the agreement was signed and after the agreement was signed up to the abortive closing on October 31, 2017.

[41] Following the adage that a picture is worth a thousand words, below is a picture of the first page of the agreement of purchase and sale as it was signed initialed by the parties.

[42] Mr. Karami submits that there is a genuine issue requiring a trial about the purchase price for the Kovaris’ property. Mr. Karami submits that the purchase price is unknown because the standard form contract specifies two purchase prices; i.e. $2,250,000 and $2,200,000. Thus, he argues that there is no agreement, and, therefore, the $150,000 deposit should be returned to him. The Kovaris’ position is that the purchase price was $2,250,000.

[43] There is, however, no genuine issue requiring a trial about the purchase price. I find as a fact that the purchase price was $2,250,000. An analysis of the agreement reveals that the $2,250,000 price was initialed by both vendor and purchaser and the $2,200,000 price was not initialed by both parties. The Toronto Real Estate Board, which records sales made on the multiple listing service, reported the sale price as $2,250,000. As the discussion below will reveal, Mr. Karami acknowledged that the purchase price was $2,250,000 in a proposed amendment to the agreement that he proposed in October 2017. The alleged discrepancy in the purchase price only became a question when Mr. Karami had decided that he did not want to proceed with the transaction. Mr. Karami is not credible on this point about the purchase price, which alleged belief belies his conduct and also the conduct of Ms. Chung, his conveyancing lawyer. It seems that the discrepancy only became an issue after Mr. Bhatia was appointed. Based on all these material facts, I find as a material fact that the purchase price was $2,250,000.

[44] For reasons that will become clearer later, it is necessary to note that the standard form agreement signed by the parties contained a provision (clause 14) about the risk of damage pending the closing of the transaction. It is also necessary to note that the parties added a handwritten notation that “Buyer shall have the privilege of visiting the property four (4) times prior to completion for measuring, estimates, or appraisal” but the parties crossed out a typed provision in Schedule A of the agreement making the contract conditional on satisfactory inspections and thus this condition did not form part of the agreement.

[45] Clause 14 of the standard form agreement states:

14 INSURANCE: All buildings on the property and all other things being purchased shall be and remain until completion at the risk of Seller. Pending completion, Seller shall hold all insurance policies, if any, and the proceeds thereof in trust for the parties as their interests may appear and in the event of substantial damage, Buyer may either terminate this Agreement and have all monies paid returned without interest or deduction or else take the proceeds of any insurance and complete the purchase. No insurance shall be transferred on completion. If Seller is taking back a Charge/ Mortgage, or Buyer is assuming a Charge/Mortgage, Buyer shall supply Seller with reasonable evidence of adequate insurance to protect Seller's or other mortgagee's interest on completion.

[46] The provision that the parties struck from Schedule A stated:

This Offer is conditional upon the inspection of the subject property by a home inspector at the Buyer's own expense, and the obtaining of a report satisfactory to the Buyer in the Buyer's sole and absolute discretion. Unless the Buyer gives notice in writing delivered to the Seller personally or in accordance with any other provisions for the delivery of notice in this Agreement of Purchase and Sale or any Schedule thereto not later than 11:59 p.m. on March 17, 2017 that this condition is fulfilled, this Offer shall be null and void and the deposit shall be returned to the Buyer in full without deduction. The Seller agrees to co-operate in providing access to the property for the purposes of this inspection. This condition is included for the benefit of the Buyer and may be waived a Buyer's sole option by notice in writing to the Seller aforesaid within the time period stated herein.

[47] After signing the agreement, the Kovaris retained Issie Fishman as their conveyancing lawyer and Mr. Karami retained Ms. Chung as his lawyer. After signing the agreement, Mr. \ Karami applied to Benson Mortgages for mortgage financing. Benson Mortgages, in turn, retained Mr. Camastra of Home Value Inc., to prepare an appraisal.

[48] Nothing of significance occurred after the agreement was signed in the winter of 2017 until the autumn, when on October 8, 2017, Mr. Karami along with Mr. Bob Mehrabi of Wet Walls Inc., a waterproofing contractor, inspected the Kovaris’ property. Mr. Karami took photographs and a video of the inspection. He had a brief conversation with Ms. Kovari.

[49] There are genuine issues requiring a trial, among other things, about: (a) how this inspection came about, including any conversations between Mr. Kovari and Mr. Cohen; (b) what instructions Mr. Karami gave to Mr. Mehrabi about the inspection; (c) Mr. Karami’s rights to inspect and any ancillary legal rights having regard to the provisions of the agreement of purchase and sale that were inserted and deleted; (d) Mr. Mehrabi’s qualifications to express an opinion about waterproofing or about quality defects generally; and (e) the conversations between Mrs. Kovari and Mr. Karami.

[50] After the inspection, on October 9, 2017, Mr. Mehrib sent Mr. Karami the following letter:

Hi Mohammad,

According to my visit on October 8- 2017 from property at 10 Bowerbank, list of my jobs would be as below. Please determine items you want to be done and arrange another visit for more detail and inquiry.

1- There are extensive cracks on front of the building main wail which needs immediate attention. Those cracks are not typical and minor and maybe because of structure damage present or maybe in future. They are major damages in structure and recently have been covered some by silicon which is not professional repair. It means there’s a more serious problem such as severe foundation shifting or water damage.

Mould evidence on walls and inside of cracks. Presence of mould is a serious health hazard and must be treated immediately.

Insolation of walls should be repaired.

2- There is major cracks, severe mould and water getting in from outside on the back side of the property main foundation wall and steps to basement. In this area, I recommend to demolish wall, put new isolation and build new wall instead of cover and repair the existing wall.

3- There is evidence of water leakage or water getting in from outside in basement and garage. So, we need to remove basement flooring and also all stuff from garage to find source of water.

4- Land subsidence from right side of building which should be fixed. - Foundation walls should be isolated to stop foundation shifting. It could lead to future major damage.

This is the major job list and other minor jobs will be discussed later.

Thanks,

Bob Mehrabi.

[51] There are many genuine issues requiring a trial about Mr. Mehrabi’s report and about his inspection of the property. For the purposes of the summary judgment motion all that can be said is that the report was written and sent and no evidentiary weight can be given to the contents of his report.

[52] Meanwhile, in October 2017 as the lawyers were preparing for the closing of the transaction, there were conversations between Mr. Kovari and Mr. Cohen. There are numerous genuine issues requiring a trial about these conversations. The text messages that were included in the evidentiary record summary judgment motion reveals that Mr. Cohen fundamentally disagree about the substance of these conversations and why they were occurring. I make no findings of fact other about the truth of these text messages but note that in them Mr. Cohen denies that he ever agreed to bind the Kovaris to a new agreement at a lower price and he denies discussing physical defects in the quality of the property as the reason for negotiating a new price for the property.

[53] Around this time, in October 2017, Mr. Fishman’s assistant, Diane Sainbury, contacted Ms. Chung about the closing of the transaction. There are genuine issues requiring a trial about what was said as between Ms. Sainbury and Ms. Chung. Just for the purposes of the summary judgment motion, I infer that Ms. Sainbury believed that there might be problems in closing the transaction and she reported her concerns to Mr. Fishman.

[54] On October 19, 2017, Mr. Fishman contacted Ms. Chung and asked whether Mr. Karami intended to close the transaction. Ms. Chung told him that she would send a letter of requisitions the next day, which did not occur.

[55] On October 24, 2017, Mr. Karami sent Mr. Cohen the following email message to which was attached a mutual release:

Hi Randy, Mutual release attached. Thanks.

[56] The circumstances leading up to this communication to Mr. Cohen raise numerous genuine issues requiring a trial.

[57] Mr. Cohen forwarded the email message to Mr. Fishman who instructed Ms. Sainsbury to write Ms. Chung to confirm whether Mr. Karami would not close the transaction and if so whether he would waive tender and not oppose the property being relisted. Thus, Ms. Sainsbury drafted a letter and on October 25, 2017, Mr. Fishman sent it to Ms. Chung. The letter stated:

Please be advised that I act for the vendors in the above transaction and I understand that you represent the purchaser, Mr. Karami. During the week of October 9, 2017, my Assistant, Diane, spoke to you requesting title instructions. She then forwarded to you an e-mail on October 17, 2017, requesting both your letter of requisitions and title instructions. She did not receive anything from you.

On or about October 19, 2017, the undersigned called you to discuss your client's intentions. You informed me that you were awaiting instructions and that the letter of requisitions would be sent to me the following day. I did not receive anything from your office.

On October 24, 2017, I again called you advising you that your client was in touch with the Listing Agent and provided said Listing Agent with a Mutual Release signed only by your client and requesting, inter alia, the return of the $150,000 deposit.

In light of all of the above, it appears that your client is refusing to complete this transaction. The Vendors are of the opinion that your client's actions are indicative of your client's anticipatory breach of contract. In the absence of your timely requisition letter, I enclose the following documents which will be signed and delivered to you on or before closing: […]

Please advise if you will be waiving a tender of documents in this transaction and advise if your client is prepared to allow us to relist the property so as to mitigate their losses.

[58] Mr. Fishman’s letter was covered by the following email message on October 25, 2017:

I attach my letter dated October 25, 2017 together with documents referred to therein. A separate letter will follow with the Document Registration Agreement and Scotiabank Discharge Statement. I await the courtesy of your reply as soon as possible as time is of the essence. I can also be reached on my cell phone […]. In the event this transaction will close, the funds and your client's documents should be delivered to my satellite office located at 1110 Finch Avenue West, Suite 406, Toronto, Ontario, M3J 2T2. It is always best to call me on my cell.

[59] Later in the day, Mr. Fishman sent the following letter to Ms. Chung:

Further to my earlier letter of even date, attached please find my executed Document Registration Agreement together with a copy of the Scotiabank Discharge Statement dated today. I await draft copies of your client's documents if it is his intention to complete this transaction. Otherwise, please advise if you will be waiving a tender of documents in this transaction and advise if your client is prepared to allow us to relist the property so as to mitigate their losses.

[60] Meanwhile, Mr. Karami and Mr. Cohen were continuing to communicate by email. For the purposes of this summary judgment motion, it seems that Mr. Cohen believed that Mr. Karami wanted out of the transaction and he suggested that Mr. Karami allow the Kovaris to relist the property to mitigate their damages. Mr. Karami, however, responded by sending Mr. Cohen an amending agreement changing the purchase price to $170,000. The email says: “Please get the sign back from [the Kovaris] if they don’t want to go for 2 year’s curt [sic court] process.”

[61] There are once again numerous issues requiring a trial about any of these conversations associated with the communications between Mr. Kovari and Mr. Cohen and it will be for the trial judge to making binding findings of fact. For present purposes, I just note that the amending agreement forwarded by Mr. Kovari states that the closing date of October 31, 2017 and the purchase price of $2,250,000 should be deleted and a closing date of November 30, 2017 and a purchase price of $1,700,000 should be inserted. These proposed amendments explain in part why I have concluded that there is no genuine issue about the purchase price for the pending sale.

[62] The correspondence between Mr. Karami and Mr. Cohen was passed on to the Kovaris and also to Mr. Fishman. The Kovaris were not interested in selling for a reduced purchase price, and Mr. Fishman sent the following email message to Ms. Chung on October 26, 2017.

Please be advised that your client has again been in touch with my client’s agent and provided the agent with an Amendment (dated October 26, 2017) to the Agreement of Purchase and Sale signed by the Buyer only wherein he requested to change the closing date to November 30, 2017 and to reduce the purchase price to $1,700,000. It is quite clear that your client is not intending to complete this transaction on October 31, 2017. Although all evidence comes to the conclusion that this is an anticipatory breach of contract by the Buyer, it would serve all concerned parties best if you would: 1. Confirm in writing that the Buyer will not be closing this transaction; 2. Waive tender of documents; and 3. Allow the Listing Agent to relist the property as soon as possible so that all losses can be mitigated. The longer your client waits the worse off he is! I await your timely response.

[63] When Mr. Fishman did not hear from Ms. Chung, he called her. A trial is required to determine whether any findings of fact can be made based on their conversations. Simply for the purposes of the summary judgment motion, it appears that Ms. Chung said that Mr. Karami was retaining a new lawyer and she refused to schedule a time for Mr. Fishman to tender. She told Mr. Fishman that he should wait to receive correspondence from Mr. Karami’s new lawyer.

[64] Around noon on October 30, 2017, Ms. Chung sent Mr. Fishman a fax, the cover sheet of which indicated that it enclosed a requisition letter and closing documents but only two of the eight pages of the fax were received, not including the requisition letter.

[65] This truncated fax was followed by another from Ms. Chung advising that Dheeraj Bhatia was now acting for Mr. Karami.

[66] On October 31, 2017, Mr. Fishman wrote Mr. Bhatia seeking confirmation that he was acting for Mr. Karami. Receiving no response, Mr. Fishman, along with his assistant Naomi Raanani, attended at Ms. Chung’s office and tendered the closing documents. Ms. Chung said that she was not acting and she refused to accept tender. Mr. Fishman left the documents with the receptionist and returned to his office. There are genuine issues requiring a trial about this tender at Ms. Chung’s office, including what occurred and whether a tender was even necessary.

[67] I pause here to observe again that hearsay evidence about the words and deeds of Mr. Cohen, Mr. Fishman, Ms. Sainsbury, Ms. Raanani, Mr. Mehrabi, and Ms. Chung was inadequate to decide the claim and counterclaim summarily.

[68] Upon his return to his office, Mr. Fishman learned that shortly before noon, Mr. Bhatia had sent the following email message:

Mr. Fishman,

I am the solicitor for the buyer of the property being Mohammad Hassan Karami, having been just retained yesterday. Upon instructions of our client, we state as under:

1. The Agreement of Purchase and Sale is null and void. There are two different sale prices written on the first page being Two Million Two Hundred Thousand (no currency is mentioned therein): However, at the top of the page, it is written “TWO MILLION TWO HUNDRED & FIFTY THOUSAND”'. No currency is again mentioned therein.

Both the price denominations are contrary to each other and none of them are crossed out. Thus there is no fixed amount of consideration for this Agreement and thus the Agreement is null and void for this reason alone.

2. The deposits of the buyer in the amount of $50,000 plus $100,000 must be returned in full and without any deduction whatsoever.

3. Even if the agreement would have been valid, the title of the sellers is not clear. The title is subject to the following restriction:

"THE RIGHTS OF ANY PERSON WHO WOULD, BUT FOR THE LAND TITLES ACT, BE ENTITLED TO THE LAND OR ANY PART OF IT THROUGH LENGTH OF ADVERSE POSSESSION, PRESCRIPTION, MISDESCRIPTION OR BOUNDARIES SETTLED BY CONVENTION"

The said restriction has not been removed by the sellers. This restriction on the title of the sellers goes to the root of the title and thus it is settled law that there is no time restriction for the buyer to requisition same to be removed by the sellers. The sellers are anyways not ready, willing and able to close the transaction as the sellers are not able to provide a clear title of the property to the buyer.

4. Even if the APS for arguments sake is taken to be valid (not admitted by the buyer), the property has changed condition drastically since the date of the alleged agreement. The agreement is dated 10th of March 2017. It is trite law that the property must be delivered by the seller to the buyer at the time of the closing in exactly the same condition as it existed on the date of entering into the agreement. Please see attached the video taken by our client recently as proof there are major cracks in the property, which were not present or were not evident to a prudent person seeing with a naked eye at the relevant time. Thus, the sellers are in breach of established law and procedure since the property is not in the same condition as the buyer expected when the agreement was supposed to have been entered into. The sellers are in breach of the agreement.

5. I will forward you further emails with videos and attachments thereto as incorrigible proof that the property has changed condition drastically ever since.

6. All these problems in the condition of the property were brought to the notice of the sellers, through listing agent. The same were acknowledged by the listing agent and the sellers and thus fresh negotiations took place between the parties to decide on the new price of the property. It is settled law that when a written contract is entered into between parties, the same may be superseded and/or nullified by fresh contract, written or verbal and also by the subsequent conduct of the parties.

7. The sellers acknowledged the problems in the property being in a state of disrepair since the signing of the alleged agreement and thus agreed to negotiate a fresh price for the property as the sellers refused to repair the property prior to the alleged closing date, as claimed by the sellers. The Agreement dated March 10th was thus rendered invalid for this reason as well due to the parties agreeing to re-negotiate the price for the property.

8. Should you choose to deny all of the above, there are emails exchanged between the buyer and the listing agent. And amendment was also signed and sent by the buyer to the listing agent whereby the price was changed from $2,250,000 to $1,700,00 as per the verbal agreement reached between the parties. The sellers and their agent never refuted the receipt of the said amendment and never challenged same in writing. However, later on, it seems that the sellers reneged on the verbal commitment and refused to sign the said amendment.

9. A Mutual Release was also sent by the buyer to get the deposit back due to there being serious deficiencies in the property and the sellers' refusal to remove same prior to the closing. The sellers however instead of accepting the Mutual Release agreed verbally to sign the amendment and agree to a new price for the property. That is the verbal contract that the buyer is relying upon for enforcement.

10. Thus the buyer is ready, willing and able to close the transaction as per the verbal contract entered into by the parties, provided the sellers provide a clear title to the buyer prior to the new closing date of November 30th, 2017.

11. The sellers are thus in breach of the agreement of purchase and sale that the sellers seek to rely upon for the following reasons:

Title is not clear as per clause 10 of the agreement, the same is null and void;

The property has number of deficiencies which were not evident on the date of the alleged agreement.

12. Additionally, the agreement itself was superseded by the subsequent verbal contract entered into by the parties whereby a new price was agreed upon. The buyer asks the sellers to honor the verbal contract or return the deposit of the buyer.

We expect the hear from you positively. Please look out for further emails showing the deficiencies in the property.

[69] Almost of all of the allegations contained in Mr. Bhatia’s raise genuine issues that require a trial and issues that cannot be fairly and justly determined by way of a summary judgment motion.

[70] The genuine issues requiring a trial include: (a) whether Mr. Karami is entitled to a return of the deposit; (b) whether the property changed drastically in condition between March and October 2017; (c) what rights by way of warranty or representation Mr. Karami had to refuse the transaction because of alleged latent or patent defects of quality; (d) whether there were any latent and patent defects of quality; (e) whether Mr. Karami was entitled to rely on s. 14 of the standard form agreement to end the transaction; (f) whether there were latent and patent defects to the property; (g) whether the principle of caveat emptor applied; (h) whether and if so when Mr. Karami brought the problems about the alleged defects in the property to the attention of Mr. Cohen; (i) whether and if so when Mr. Cohen brought the problems about the alleged defects in the property to the attention of the Kovaris; (j) whether Mr. Cohen bound the Kovaris to an oral agreement to sell the property at the reduced purchase price of $1,700,000; (k) whether the Statute of Frauds notwithstanding, Mr. Cohen could bind the Kovaris by an oral agreement to sell the property at the reduced purchase price of $1,700,000; (l) whether the Kovaris knew about the alleged defects in their property; (m) whether the Kovaris intentionally covered up the defects and made a fraudulent misrepresentation about the quality of their property before or after the signing of the agreement of purchase and sale; (n) whether Mr. Karami was ready willing and able to close the transaction at the purchase price of $2,250,000; (o) whether Mr. Karami was ready willing and able to close the transaction at the purchase price of $1,700,000; (p) whether Mr. Karami’s reliance of the alleged defects was disingenuous and his actual motivation was to escape a transaction that had become improvident because of dramatic decline in the real estate market; (q) what was the fair market value of the property at the time of the abortive real estate closing with or without the alleged defects of quality; and (r) what damages did the Kovaris suffer, if any.

[71] There are, however, no genuine issues requiring a trial about: (a) the $2,250,000 purchase price; or (b) whether apart from the alleged physical defects to the quality of the property, Mr. Karami had a legally valid reason to refuse to close the transaction entitling him to the return of the deposit.

[72] I have already dealt the matter of the purchase price. As to the alleged title defect described in paragraph 3 of Mr. Bhatia’s letter, I find as a material fact that this was and is not a valid title requisition. The legal description for the Kovaris’ property was the standard legal description used when property is transferred from the Registry Act system to the Land Titles Act system and is not a valid title requisition.

[73] Moving on in the narrative of the factual background, after receipt of Mr. Bhatia’s letter, Mr. Fishman and Ms. Raanani then went to tender documents at Mr. Bhatia’s office. He was not at the office and the staff refused to accept any documents. That this tender occurred is denied, and thus there are genuine issues requiring a trial about the alleged tender and whether the tender was even necessary.

[74] The transaction not closing, on November 2, 2017, the Kovaris relisted the property with Mr. Cohen’s brokerage. The property has not been sold to date.

[75] The Kovaris submit that that Mr. Karami had no legitimate reason to refuse to close the real estate transaction and that he forfeits the deposit and is liable for damages for breach of contract.

[76] The Kovaris claim as damages for breach of contract the difference in value between the $2,250,000 purchase price and the value of the property around the date of the abortive closing plus the expenses of carrying two properties.

[77] The Kovaris rely on Mr. Carruthers appraisal report and perhaps the appraisal report of Mr. Camastra as evidence of the market value of the property at the time of the abortive closing of the transaction. Neither report was properly before the court, and there are genuine issues requiring a trial about the Kovaris’ damages and whether any of their losses were avoidable losses.

E. Discussion

[78] As the above recital of the factual background reveals the evidentiary record for this summary judgment motion is miserably inadequate for the court to determine this matter summarily.

[79] I, therefore, dismiss the summary judgment motion.

[80] My Reasons for Decision shall be appended as a Schedule to the formal order. These Reasons specify what material facts are not in dispute and define the genuine issues to be tried, I order that the claim and the counterclaim proceed to examinations for discovery, the exchange of expert reports, and then to trial in the normal course.

[81] I dismiss the summary judgment motion with costs in the cause, which I regard as the appropriate order in the circumstances of this case where the merits of the claim and the counterclaim remain to be determined.

Perell, J.

Released: January 24, 2019

COURT FILE NO.: CV-17-585729

DATE: 2019/01/24

ONTARIO

SUPERIOR COURT OF JUSTICE

BETWEEN:

MOHAMMAD HASSAN KARAMI

Plaintiff

– and –

TIBOR KOVARI and VANESSA ISABELA KOVARI

Defendants

REASONS FOR DECISION

PERELL J.

Released: January 24, 2019

[^1]: Canada (Attorney General) v. Lameman, 2008 SCC 14, [2008] 1 S.C.R. 372 at para. 11; Dawson v. Rexcraft Storage & Warehouse Inc., 1998 4831 (ON CA), [1998] O.J. No. 3240 (C.A.); Bluestone v. Enroute Restaurants Inc. (1994), 1994 814 (ON CA), 18 O.R. (3d) 481 (C.A.)

[^2]: Toronto-Dominion Bank v. 466888 Ontario Ltd., 2010 ONSC 3798.

[^3]: Sanzone v. Schecter, 2016 ONCA 566 at para. 15; Caithesan v. Amjad, 2016 ONSC 5720 at para. 24.

[^4]: Carevest Capital Inc. v. North Tech Electronics Ltd., 2010 ONSC 1290 at para. 16 (Div. Ct.).

[^5]: Dutton v. Hospitality Equity Corp., [1994] O.J. No. 1071(Gen. Div.).

[^6]: 2014 SCC 7.

[^7]: 2014 SCC 8.

[^8]: Campana v. The City of Mississauga, 2016 ONSC 3421; Ghaeinizadeh (Litigation guardian of) v. Garfinkle Biderman LLP, 2014 ONSC 4994, leave to appeal to Div. Ct. refused, 2015 ONSC 1953 (Div. Ct.); Lavergne v. Dominion Citrus Ltd., 2014 ONSC 1836 at para. 38; George Weston Ltd. v. Domtar Inc., 2012 ONSC 5001.

[^9]: Hryniak v. Mauldin, 2014 SCC 7 at paras. 49 and 50.

[^10]: Hryniak v. Mauldin, 2014 SCC 7 at paras. 51-55; Wise v. Abbott Laboratories, Ltd., 2016 ONSC 7275 at paras. 320-336; Drywall Acoustic Lathing and Insulation Local 675 Pension Fund (Trustees of) v. SNC-Lavalin Group Inc., 2016 ONSC 5784 at paras. 122-131.