OSHAWA COURT FILE NO.: CV-17-3019-00
DATE: 20190227
ONTARIO
SUPERIOR COURT OF JUSTICE
BETWEEN:
Anne Murphy-Larade
Plaintiff
– and –
Benedict Inpanayagam
Defendant
Kelli Preston and Sara Mosadeq, for the Plaintiff
Lubomire Poliacik, for the Defendant
HEARD: November 29, 2018
REASONS FOR DECISION
DE SA j.
[1] The Plaintiff has brought a motion for summary judgment seeking damages in relation to the Defendant’s failure to follow through with the purchase of her home. According to the Plaintiff, there is no genuine issue requiring a trial. The breach is clear and damages for the breach are warranted.
[2] Having reviewed the record, I agree with the Plaintiff. In my view, summary judgment is appropriate in this case.
[3] I grant judgment in favour of the Plaintiff. The details of my judgment are outlined below.
The Failed Transaction
[4] The action involves an agreement of purchase and sale (the “Agreement”) entered into on or about April 13, 2017 by the Plaintiff, Anne Murphy-Larade (“Anne” or “Plaintiff”) and the Defendant, Benedict Inpanayagam (“Benedict” or “Defendant”) for the property, being 1514 Lakemount Street, Oshawa, Ontario (the “Property”).
[5] The Property was originally listed on April 7, 2017 for $399,900. On April 13, 2017, the Plaintiff received seven offers for the Property, including one from the Defendant for $509,000.
[6] The Defendant agreed to remove all the conditions and offered to purchase the Property for $490,000. The Plaintiff accepted the offer, and the Agreement contained the following material terms:
The purchase price was to be $490,000;
The Defendant was to pay the deposit of $15,000 to Royal Service Real Estate Inc., in trust; and
The closing was to be completed on June 30, 2017.
[7] The Defendant paid the deposit of $15,000 to Royal Service Real Estate Inc., in trust.
[8] All other conditions set out in the Agreement had been either waived or fulfilled, and the transaction was expected by the Plaintiff to be completed as scheduled on June 30, 2017.
[9] By June 30, 2017, the Plaintiff had already taken the following steps to carry out the Agreement:
The Plaintiff gave the undertakings required to close the transaction, including undertakings to discharge the mortgages on the Property, to deliver vacant possession of the Property and to pay certain tax arrears, utilities, etc.
The Plaintiff provided the Defendant with a Warranties and Bill of Sale with respect to the Property.
The Plaintiff provided the Defendant with a declaration with respect to the Property.
The Plaintiff provided the Defendant with a direction to pay the sale proceeds of the Property to Marco Polsinelli (“Polsinelli”), her real estate lawyer.
The Plaintiff provided Polsinelli with an acknowledgment and direction to electronically transfer the Property to Benedict.
Polsinelli provided a statement of adjustments with respect to the sale of the Property.
In his letter of June 30, 2017, Polsinelli confirmed that he had provided the closing package to Vasuki Devadas (“Devadas”), the real estate lawyer acting for the Defendant, on June 26, 2017 and that the draft transfer had been executed.
[10] On June 29, 2017, the Plaintiff’s real estate lawyer, Polsinelli, received a letter from the Defendant’s real estate lawyer, Devadas, requesting an extension of the closing to July 10, 2018. The Defendant requested the extension of the closing date because he did not have the funds necessary to close the transaction.
[11] The closing of the Agreement was extended again to July 31, 2017 with time to remain of the essence and the statement of adjustments as of June 30, 2017. The Defendant also agreed to pay the mortgage payment in the amount of $1,766.66 and signed an irrevocable direction to release the deposit in the amount of $15,000 in the event he was unable to close on July 31, 2017. The direction did not state or suggest the Defendant would be released from any of his obligations under the Agreement.
[12] On July 14, 2017, the Plaintiff received an e-transfer in the amount of $1,766 from the real estate agent on behalf of the Defendant.
[13] On July 17, 2017, Devadas wrote to Polsinelli and advised that the Defendant would only be able to close the transaction on July 31, 2017 if the price was reduced to $465,000. The Defendant also requested that the Plaintiff provide an Acknowledgement and Direction duly executed by the Lender to provide the registered discharge forthwith upon receipt of the required funds on closing.
[14] The Plaintiff agreed to reduce the purchase price to $465,000 on the representation made to her by the Defendant that he would be able to close the transaction on July 31, 2017.
[15] On July 31, 2017, Devadas wrote to Polsinelli advising that he had not received mortgage instructions from the Defendant.
[16] On August 1, 2017, Polsinelli wrote to Royal Service Real Estate Inc. advising the transaction had not closed and enclosed a direction authorizing funds being held on deposit be released to the Plaintiff. The Plaintiff received the deposit of $15,000.
[17] On August 9, 2017, the Defendant was still attempting to obtain the requisite funds and asked the Plaintiff to agree to an extension to August 18, 2017. The Plaintiff agreed to the extension to August 18, 2017.
[18] On August 18, 2017, Polsinelli wrote to Devadas and asked whether the Defendant would be in a position to close that day. At approximately 4:45 p.m., Devadas wrote to Polsinelli and advised he has been unable to contact the Defendant for further instructions. The deal was scheduled to close at 6:00 p.m. The Defendant admitted in his cross-examination that he did not have the funds available to close the transaction on that date.
[19] On August 18, 2017, Polsinelli wrote to Devadas and advised that the Plaintiff would be pursuing legal action.
Events Following the Failure to Close
[20] There were two mortgages registered on title to the Property; the first mortgage was in favour of Elsy Gould, Gayle Kahn and Rebecca Khan (collectively the “First Mortgagee”). The second mortgage was in favour of 2099330 Ontario Inc. and Ronald Alphonso (collectively the “Second Mortgagee”).
[21] Part of the reason the Plaintiff decided to sell the Property was because she was having financial difficulty carrying both mortgages.
[22] By April 2017, the Plaintiff was unable to make payments on both mortgages. However, because of the sale of the Property to the Defendant, both the First Mortgagee and the Second Mortgagee agreed to wait until June 30, 2017 to be paid out rather than proceed with power of sale proceedings.
[23] By mid-May 2017, the Plaintiff moved out of the Property and into a rental property.
[24] When the Defendant failed to close on June 30, 2017, the First Mortgagee commenced power of sale proceedings and issued demand letters with respect to the same. Given the situation, the Second Mortgagee decided to pay the arrears owing to the First Mortgagee to bring the mortgage into good standing.
[25] In or around mid-July 2017, the Second Mortgagee took possession of the Property and put a lock box on the Property.
[26] After the Defendant failed to close on August 18, 2017, the Plaintiff contacted her agent and asked if she knew of anyone else interested in purchasing the Property. Her agent indicated that there was another agent who was interested in putting in an offer. The Plaintiff did not advertise the Property for sale or list it on the MLS system.
[27] On August 20, 2017, the Plaintiff received an email from an agent whose client was interested in purchasing the Property and made an offer of $370,000. On or about August 24, 2017, the Plaintiff accepted an offer from another buyer who had previously shown interest in the Property. The purchase price was $375,000 and the closing date was scheduled for September 8, 2017 (the “Second Agreement”). The difference between the initial Agreement and the Second Agreement was $115,000.
[28] On September 8, 2017, the Second Agreement closed.
Costs incurred in relation to the Property from June 30, 2017
[29] From June 30, 2017, the Plaintiff incurred various costs, charges, expenses and fees in relation to the Property up until the Property was sold in September 8, 2017, including:
Property taxes in the amount of $639.94, calculated at a per diem amount of $9.14 for the 70 days from July 1, 2017 to September 8, 2017.
Legal fees thrown away of $450 in relation to the failed transaction.
[30] In addition, the Plaintiff incurred the following expenses from the First Mortgagee as follows:
Fees for discharge statements dated July 26, 2017 and August 17, 2017 of $350;
Insurance premium and fees in the amount of $2,267.40 paid by the First Mortgagee;
Fee for the discharge statement dated August 28, 2017 in the amount of $175. She had already paid for the first discharge statement dated June 28, 2017;
Fee for the dishonoured payment in the amount of $400;
A two month pre-payment penalty in the amount of $3,050.18 which was applied because the mortgage commitment required a 60 day notice; and
Accrued interest in the amount of $1,946.78 on the mortgage.
[31] In relation to the Second Mortgagee, the Plaintiff incurred expenses as follows:
Legal fees related to power of sale proceeding commenced as a result of failure to close on June 30, 2017 in the amount of $5,604.10;
Missed interest-only payments for July, August and September of 2017 of $750.
Fees for 4 additional discharge statements in the amount of $1,000;
NSF fees in the amount of $600;
Three month interest penalty in the amount of $750;
5% management fee in the amount of $1,642.50 following possession of the Property by the Second Mortgagee;
Administration fee in the amount of $750 for default;
Charge to change the locks in the amount of $550;
Fee for attending for possession of the Property in the amount of $1,000;
Inspection fees in the amount of $750 prior to Second Mortgagee taking possession;
Inspection fees in the amount of $5,200 as per insurance requirement after Second Mortgagee took possession;
Charges for bank drafts in the amount of $250 for the payments made to the First Mortgagee;
Maintenance fee in the amount of $600;
Accrued interest to September 8, 2017 in the amount of $123.44;
Payments made to First Mortgagee to bring the mortgage into good standing;
Position of the Parties
[32] The Plaintiff takes the position that there is no genuine issue that requires a trial. This is a clear case of breach of contract, and the Defendant is liable for the damages resulting from that breach. The Plaintiff seeks the difference between the original offer price and the final sale price of the Property. She also seeks the costs incurred as a consequence of her default on the first and second mortgages.
[33] The Defendant disputes the Plaintiff’s entitlement to damages. The Defendant takes the position that the Plaintiff was not in a position to close on August 18, 2017, and accordingly, cannot seek to claim damages for a breach. According to the Defendant, the Plaintiff never delivered an acknowledgment and direction for discharge of the two private mortgages on title. As such, the Plaintiff was not in a position to close the transaction on August 18, 2017.
[34] In the alternative, the Defendant takes the following positions:
The Property was sold for well below the market value. In his efforts to obtain financing, the Defendant obtained an appraisal of the Property dated August 2, 2017. The Appraisal Report established the market value of the Property at $425,000.
The Plaintiff was also liable to pay additional real estate fees if she completed the transaction with the Defendant (higher rate). Accordingly, any damages awarded should be net of this difference in the real estate fee (approximately 2.5%).
Finally, even if the Plaintiff is entitled to damages, she is not entitled to damages incurred as a consequence of the default on her mortgages. The Plaintiff’s default on these mortgages was not “caused” by the Defendant’s actions. The Defendant argues that these defaults were a consequence of the Plaintiff’s own particular financial position. Accordingly, the Defendant should not be liable for the damages flowing from the Plaintiff’s own conduct.
Analysis
Test: Motion for Summary Judgment
[35] 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.
[36] 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.]
Is there a Genuine Issue Requiring a Trial?
[37] In order to form a contract, the parties must be of one mind as to the essential terms of the contract. 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.
[38] In this case, an agreement to purchase the Property was clearly complete. The Defendant waived any outstanding terms, and even forwarded the deposit on the understanding that the Agreement would be carried out.
[39] As explained in Kernwood Ltd. v. Renegade Capital Corp., 1997 CanLII 846 (ON CA), words and conduct are considered in assessing whether the Contract was complete:
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 CanLII 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 CanLII 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.]
[40] I do not accept the Defendant’s assertion that the Agreement was invalid because the Plaintiff never delivered an acknowledgment and direction for discharge of the two private mortgages. This direction was to be duly executed upon receipt of the required funds on closing. The closing never occurred because the Defendant never obtained the requisite funds. It would be unreasonable to expect the Plaintiff to carry on with obtaining all the necessary documentation when it was clear the Defendant was not going to close.
[41] I am also not persuaded by the Defendant’s attempt to identify technical issues with the Plaintiff’s compliance after the fact as a means to escape liability. Indeed, to allow for such arguments to prevail would undermine good faith bargaining and disturb the confidence placed by parties in contracts altogether. The proper question is whether a reasonable person, apprised of all the circumstances, would believe the parties had reached an agreement.
[42] In this case, I am satisfied that the Agreement was complete. It had been settled in all of its material terms.
The Calculation of Damages
[43] The judgment of Morden J.A. in 100 Main Street Ltd. v. W.B. Sullivan Construction Ltd. (1978), 1978 CanLII 1630 (ON CA), 20 O.R. (2d) 401, 88 D.L.R. (3d) 1 (C.A.) is the principal authority on the assessment of damages for breach of an agreement of purchase and sale. In that case, the court summarized the relevant principles in determining the damages and made clear that the basic principle for assessing damages for breach of contract applies: the award of damages should put the injured party as nearly as possible in the position it would have been in had the contract been performed.
[44] In this case, while the original offer price was $490,000, the Plaintiff agreed to re-negotiate the price and move the closing date. Ultimately, the price agreed to was $465,000. The Plaintiff ultimately sold the property for $375,000 which was $90,000 less than the amount owed by the Defendant.
[45] According to the Defendant, the real estate fee would have been greater on the transaction with the Defendant. Accordingly, the Plaintiff would have received 2.5% less if she had sold the Property to the Defendant ($12,250). Plaintiff’s counsel does not dispute that the Plaintiff saved fees by not selling the house to the Defendant. I will reduce the difference by this amount. This leaves a difference of $77,750.
[46] As noted above, from June 30, 2017, the Plaintiff incurred various costs, charges, expenses and fees in relation to the Property up until the Property was sold on September 8, 2017, including:
Property taxes in the amount of $639.94, calculated at a per diem amount of $9.14 for the 70 days from July 1, 2017 to September 8, 2017.
Legal fees thrown away of $450 in relation to the failed transaction.
Any other interest payments and or fees associated with carrying the Property beyond the scheduled closing date less the $1,766 that was paid.
[47] These amounts are to be paid by the Defendant.
[48] In addition to these amounts, the Plaintiff seeks the expenses outlined above flowing from the Plaintiff’s default on the First and the Second Mortgages.
[49] The Defendant resists the payment of these amounts. He takes the position that these expenses were the result of the Plaintiff’s precarious financial position. While these expenses may have been saved if the purchase went through, these expenses were not “caused” by the breach of contract.
[50] Apart from the $175 fee for discharge statement of August 28, 2017 (which had been obtained unnecessarily on June 28, 2017), I would agree. I will not add these amounts to the amounts to be paid by the Defendant.
Disposition
[51] I will grant the Plaintiff’s motion for summary judgment. The Defendant is ordered to pay the Plaintiff damages totalling $79,014.94 based on the amounts listed in paragraphs 45, 46(1) and (2) and 50 above. I will not deduct the deposit paid from this amount. In my view, that deposit ($15,000) was consideration paid by the Defendant to obtain the extension and the reduction in purchase price. It was properly forfeited when the Defendant failed to close on July 31, 2017.
[52] I will accept submissions on costs from the Plaintiff within 3 weeks of the date of this judgment. The Defendant has one week to provide his position in response. Submissions should be no more than 2 pages in length in addition to the bill of costs. There is no right for any reply submissions. Submissions are to be filed with the court.
Justice C.F. de Sa
Released: February 27, 2019
ONTARIO
SUPERIOR COURT OF JUSTICE
BETWEEN:
Anne Murphy-Larade
Plaintiff
-and-
Benedict Inpanayagam
Defendant
REASONS FOR DECISION
Justice C.F. de Sa
Released: February 27, 2019