NEWMARKET COURT FILE NO.: CV-17-133777-00
DATE: 20190125
CORRIGENDA: 20190213
ONTARIO
SUPERIOR COURT OF JUSTICE
BETWEEN:
Ao Luo and Cheng Chen
Plaintiffs
– and –
Guo Dian Chen and Homelife/New World Realty Inc.
Defendants
D.G. Edward, for the Plaintiffs (Respondents on the Motion)
Whitney Abrams, for the Defendant Guo Dian Chen (Moving Party)
HEARD: November 15, 2018
Reasons for decision
Text of original decision is corrected with changes appended.
DE SA J.
Overview
[1] Guo Dian Chen, the defendant (and plaintiff by counterclaim), has brought a motion for summary judgment.
[2] The action relates to the purported agreement to purchase the defendant’s (Guo Dian Chen) home. The plaintiffs (Ao Luo and Cheng Chen) have taken the position that the agreement of purchase and sale was never finalized, and commenced an action for the return of their deposit. Guo Dian Chen, the defendant, brought a counterclaim seeking damages for breach of the purchase and sale agreement.
[3] The defendant now asks this court to find, by way of summary judgment, that the agreement was complete, to grant him damages for breach of contract, and to dismiss the plaintiffs’ claim seeking return of the deposit.
[4] Having reviewed the record before me, I do not find that this is an appropriate case for summary judgment. The motion is dismissed.
[5] The particulars of my decision are outlined below.
Summary of Facts
The Negotiations Regarding the Agreement of Purchase and Sale
[6] The defendant, Guo Dian Chan, (plaintiff by counterclaim) owned 53 Port Rush Trail, Markham, Ontario (the Property).
[7] The defendant agreed to sell the Property to the plaintiffs, Ao Luo and Cheng Chen, (defendants by counterclaim) in February 2017 (the Agreement).
[8] The Agreement was purported to be negotiated through real estate agents. The plaintiffs were represented by Min Hui (Katherine) Zhou. The defendant acted through his daughter, Viki Chen (Viki), also a real estate agent with Homelife/New World Realty Inc.
[9] Tiffany Li (Tiffany) was an agent for Royal Elite Realty Inc., a different brokerage. She was the “referring agent” who referred the plaintiffs to Katherine, and assisted the plaintiffs in the negotiation. She was not the real estate agent for the plaintiffs.
[10] The plaintiffs submitted an offer to purchase the Property on February 12, 2017 at a price of $1,190,000. The closing date was specified as April 20, 2017. The chattels listed in the Agreement as being part of the transaction included a fireplace, alarm system, central vacuum and hot tub.
[11] The defendant found the price acceptable but was not prepared to include the fireplace, alarm system and central vacuum. Furthermore, he wanted to specify that while he would include the hot tub, it was being sold on an as-is basis. The offer was amended accordingly, initialled by the defendant, and sent back to Li in the early morning of February 13, 2017.
[12] Tiffany responded by advising Viki that the plaintiffs would sign the offer back, provided that the defendant put back the fireplace, alarm system and central vacuum as chattels accepting that the defendant would not be warranting their “working” condition. She indicated that the plaintiffs would initial that change, but that it would not be necessary for the defendant to provide written confirmation of the acceptance of that change.
[13] The plaintiffs signed the offer back in that manner later in the morning of February 13, 2017. The defendant did not initial the document, but his acceptance was acknowledged through Viki as his agent.
[14] The defendant then proceeded on the basis that they had a concluded agreement. He was made to believe the agreement was concluded on the basis of the following events:
Later in the morning of February 13, 2017, Tiffany left a message for Viki asking for arrangements to be made for the plaintiffs to visit the Property and receive instructions on how to use various devices, and indicating that the deposit cheque had been prepared and would be delivered that day. Viki responded affirmatively;
On the afternoon of February 13, 2017, Tiffany sent Viki a text confirming that she had sent the signed document and referring to it as “final”;
The plaintiffs delivered their deposit of $50,000;
[15] On February 19, 2017, Tiffany left a voicemail for Viki indicating that the plaintiffs were having some difficulties transferring funds and asking if the defendant would agree to put the closing off until August with a small increase in price (which would have to be reviewed with the plaintiffs) or alternatively, terminate the transaction.
[16] Through Viki, the defendant responded by declining the request for a postponement of the closing date or the termination of the transaction. Viki also advised Tiffany that the seller (the defendant) would not agree to return the deposit.
[17] In response, Tiffany advised:
“they still encouraged me to ask if it could be refunded. I think you can try to find out what the seller thinks about it. I will do my best to cooperate. We will see what the best solution could be”.
[18] Several days later, Tiffany stated that she was still optimistic that the transaction would close. However, on February 23, 2017, at 11:13 a.m., Tiffany left a message for Viki indicating that she had no further news from her clients.
[19] Later that day, Tiffany left a voicemail message indicating:
“Hello, Viki Sister, I personally feel that it won’t be good for him to take legal action. Because no matter what to say, the seller has the reason. As we are the agents, I certainly hope he would close the deal, so yes, you can talk to him and see what the situation is now. I think that the best choice is to close the deal, otherwise, just take legal action. Anyway, I think he will not be possible to give back the deposit, because he does not have any reason. This is my idea, so I should tell you about it.”
[20] There is no evidence of any further communications between the parties after this date until April 2017. On April 13, 2017, the plaintiffs advised, through counsel, that they did not consider that they were bound by the Agreement and demanded the return of the deposit.
[21] At some point (the specific date is unclear in the record), the defendant re-listed the Property for sale and ultimately sold it on August 10, 2017 for $999,000.
[22] After selling the Property, the defendant discovered that the plaintiffs had purchased another property on February 20, 2017 with a closing date of April 25, 2017.
Evidence of the Responding Party
[23] Ao Luo, one of the plaintiffs, provided an affidavit on the motion. In that affidavit, Mr. Luo swears to the following:
a. Tiffany was not a licensed or registered agent acting for the plaintiffs.
b. By late in the day on February 13, or on February 14, or February 15, 2017, he and Chen were made aware by Katherine that the seller (the defendant) had not initialled the changes dealing with the chattels.
c. They could not understand why the seller had not initialled the changes and were worried that if they continued with the negotiations and reached a binding agreement, the seller would try to remove the items referred to at the last minute before closing.
d. They were exasperated by the seller’s requirement that these items not be included in the sale, and did not want to continue any further negotiations.
e. They did not want to be involved in an agreement where they were not going to have a fireplace or central vacuum, and began looking for another new home.
f. On or about February 19, 2017, they became aware of another home that had just been listed for sale and, on February 20, 2017, they signed an Agreement of Purchase and Sale to buy that home and did buy that home.
g. They were not, at any time, informed of any discussion among the agents and brokerages as to whether or not the final amendment to the “Chattels” provision had to be initialed by the seller.
h. The deposit was delivered to the brokerage representing the seller only because there was so much confusion on February 12 and 13 as to whether or not this transaction was valid and binding or if it would proceed. The brokerage and agent did not want to be liable for damages for not paying the deposit. At the time, the plaintiffs did not know whether or not the defendant would accept/initial the agreement.
i. At no point had the plaintiffs understood that the Agreement was complete.
Analysis
Is there a Genuine Issue Requiring a Trial?
[24] Pursuant to Rule 20.04(1) of the Rules of Civil Procedure, R.R.O. 1990, Reg. 194, the court shall grant summary judgment if it is satisfied there is no genuine issue requiring a trial. Animating the interpretation of 20.04(1) is Rule 1.04 which requires that the rule be liberally construed to secure the just, most expeditious and least expensive determination of a proceeding on its merits having regard to the complexity of the issues and the amounts involved.
[25] The judge in deciding whether to grant summary judgment must ask: can the full appreciation of the evidence and issues that is required to make dispositive findings be achieved by way of summary judgment, or can this full appreciation only be achieved by way of trial? A trial is not required if the judge on the motion can 1) achieve a fair and just adjudication; 2) make the necessary findings of fact; 3) apply the law to those facts; and 4) the motion is a proportionate, more expeditious and less expensive means to achieve a just result rather than going to trial. As the Supreme Court explained in Hryniak v. Mauldin, 2014 SCC 7, [2014] 1 SCR 87, at para. 50:
These principals are interconnected and all speak to whether summary judgment will provide a fair and just adjudication. When a summary judgment motion allows the judge to find the necessary facts and resolve the dispute, proceeding to trial would generally not be proportionate, timely or cost effective. Similarly, a process that does not give a judge confidence in her conclusions can never be the proportionate way to resolve a dispute. It bears reiterating that the standard for fairness is not whether the procedure is as exhaustive as a trial, but whether it gives the judge confidence that she can find the necessary facts and apply the relevant legal principals so as to resolve the dispute. [Emphasis added.]
[26] The court is entitled to assume that the record contains all the evidence which the parties will present if there is a trial: See New Solutions Extrusion Corp. v. Gauthier, 2010 ONSC 1037, at para. 12. The question of whether the evidence allows for a “full appreciation” of the matter is highly fact-dependant and varies on a case-by-case basis. As the Court of Appeal observed in Combined Air Mechanical Services Inc. v. Flesch, 2011 ONCA 764, at para. 39:
Although both the summary judgment motion and a full trial are processes by which actions may be adjudicated in the “interest of justice”, the procedural fairness of each of these two processes depends on the nature of the issues posed and the evidence led by the parties. In some cases, it is safe to determine the matter on a motion for summary judgment because the motion record is sufficient to ensure that a just result can be achieved without the need for a full trial. In other cases, the record will not be adequate for this purpose, nor can it be made so regardless of the specific tools that are now available to the motion judge. In such cases, a just result can only be achieved through the trial process. This pivotal determination must be made on a case-by-case basis. [Emphasis added].
Application to the Facts of the Case
[27] The defendant seeks summary judgment on its counterclaim for breach of contract. The defendant argues that the Agreement was complete. Taking into account the cost of interest on the mortgage on title between the date upon which the subject transaction should have closed and the date that the Property was actually conveyed to the new purchasers, as well as realty taxes for the same period and the difference in purchase prices, the damages claimed by the moving party are $201,069.29.
[28] The plaintiffs take the position that the Agreement was not valid because the final offer with the amendment was never initialled by the defendant. According to the plaintiffs, there was no final agreement, and accordingly, the plaintiffs seek the return of their deposit.
[29] The plaintiffs also point to the fact that the Agreement contained an irrevocability provision which made the agreement irrevocable by the buyer until 11:59 p.m. on February 12, 2017 after which time, if not accepted, the offer would be null and void and the deposit returned in full. The plaintiffs also rely on this provision to assert the Agreement was invalid as the purported agreement was completed on February 13, 2017.
[30] In order to form a contract, the parties must be of one mind as to the essential terms of the contract. McKenzie v. Walsh (1920), 1920 72 (SCC), 61 S.C.R. 312; Erie Sand and Gravel Ltd. v. Seres’ Farms Ltd., 2009 ONCA 709, 97 O.R. (3d) 241; Hunter v. Baluke (1998), 1998 14719 (ON SC), 42 O.R. (3d) 553.
[31] To determine whether the parties reached a meeting of the minds, or consensus ad idem, the court applies an objective test. The court considers whether a reasonable person, apprised of all the circumstances, would believe the parties had reached an agreement. J.M.B. Cattle Corp. v. 2144032 Ontario Inc., 2015 ONSC 7372; Bawitko Investments Ltd. v. Kernels Popcorn Ltd. (1991), 1991 2734 (ON CA), 79 D.L.R. (4th) 97 (Ont. C.A.): The existence of the agreement does not depend on the formal written document being executed, provided that all of the essential terms have been agreed upon.
[32] Even a failure to sign an agreement does not invalidate it, provided that the parties have agreed to its essential terms. As explained in Kernwood Ltd. v. Renegade Capital Corp., 1997 846 (ON CA), both words and conduct are considered in making the assessment.
With respect, I do not agree that Blair's failure to sign the Share Purchase Agreement establishes that he did not assent to it on November 21, 1989. It is well-settled law that, except in certain situations, a party's intention to be bound can be manifested by words or conduct: Calvan Consolidated Oil & Gas Company Limited v. M.E. Manning, 1959 56 (SCC), [1959] S.C.R. 253 at 261. A manifest intention to be bound can be established by conduct or words where an objective interpretation of the conduct or words of the parties would lead a reasonable person to conclude that the parties intended to be bound: Industrial Tanning Co. v. Reliable Leather Sportwear Ltd., 1953 345 (ON CA), [1953] 4 D.L.R. 522 at 525 (Ont. C.A.). In such cases, the requirement of a signature is treated as a mere formality. [Emphasis added]
[33] I disagree with the plaintiffs that the technical issues identified (failure to initial the document and/or the irrevocability clause) would somehow invalidate the contract if there had been a true meeting of the minds. It is well-settled law that a party's intention to be bound can be manifested by words or conduct: Kernwood Ltd. v. Renegade Capital Corp, supra.
[34] In the circumstances here, however, I am left with conflicting evidence regarding whether or not an agreement was ever reached. On the evidentiary record before me, I cannot determine whether or not there was a meeting of the minds. This is largely due to the affidavit of Ao Luo.
[35] On the evidence in his affidavit, Mr. Luo swears that he was never informed that the revised offer had been accepted. They were never told why the seller had not initialled the changes. According to Mr. Luo, they were exasperated by the seller’s behaviour and did not want to continue any further negotiations. This apparently was never communicated to the defendant.
[36] I have no evidence in the record before me from the plaintiffs’ agent, or from Ms. Tiffany Li regarding these facts. In my view, to properly determine the issues, evidence from these witnesses would be necessary. Indeed, it may be that the agents themselves would be liable for the damages if what Mr. Luo states is true. The determinations here will largely be based on assessments of credibility.
[37] The onus is on the moving party to demonstrate that there is no genuine issue requiring a trial. He has failed to do so.
[38] The motion is dismissed.
[39] I will entertain costs submissions from the parties no more than 2 pages in length, together with a bill of costs. The submissions of the plaintiffs Ao Luo and Cheng Chen on costs are to be filed within 3 weeks. The defendant Guo Dian Chen can file his response within 1 week of receiving the submissions from the plaintiffs. There is no right for any reply submissions. Submissions are to be filed with the court.
Justice C.F. de Sa
Released: January 25, 2019
ONTARIO
SUPERIOR COURT OF JUSTICE
BETWEEN:
Ao Luo and Cheng Chen
Plaintiffs
-and-
Guo Dian Chen and Homelife/New World Realty Inc.
Defendants
REASONS FOR DECISION
Justice C.F. de Sa
Released: January 25, 2019
CORRECTIONS
- Paragraph [4] is amended as follows:
Second sentence: “The application is dismissed.” has been corrected to read: “The motion is dismissed.”
- Paragraph [38] is amended as follows:
“The application is dismissed.” has been corrected to read: “The motion is dismissed.”