Court File and Parties

COURT FILE NO.: CV-18-00610072

DATE: 2019-12-27

SUPERIOR COURT OF JUSTICE - ONTARIO

RE: DECO HOMES (RICHMOND HILL) INC., Plaintiff

AND:

CHUNMEI LI, Defendant

BEFORE: Sossin J.

COUNSEL: Emilio Bisceglia, Counsel, for the Plaintiff Malik Martin and Sara Erskine, Counsel, for the Defendant

Endorsement

[1] This motion is about whether an action arising out of an aborted real estate transaction should be stayed in favour of arbitration. It was argued together with a companion motion, now reported as Deco Homes (Richmond Hill) Inc. v. Mao, 2019 ONSC 6223.

[2] The key question in each case is whether the arbitration clause contained in the agreement of purchase and sale (“APS”) which the parties signed applies in the circumstances of the alleged breach of the APS in this case.

[3] The plaintiff, Deco Homes (Richmond Hill) Inc. (“Deco”), is a company which constructs and sells new homes. One of Deco’s new home development projects is “Richlands,” in Richmond Hill, Ontario.

[4] The defendant, Chunmei Li (“Li”), lives in Markham, and decided to buy one of the new homes in Richlands.

[5] In June, 2017, Deco and Li entered into an APS for a pre-construction home, priced at $1,127,280. Li paid approximately $120,000 as a deposit, as well as upgrade fees of $38,000.

[6] The closing date was originally September 13, 2018. The closing date was extended on consent to November 15, 2018.

[7] Several weeks prior to the closing date, on October 23, 2018, through counsel, Li advised Deco that she would not close the transaction due to breaches by Deco of the APS, including the fact that Deco did not comply with its obligations with respect to early termination conditions under the Tarion Addendum and the Ontario New Home Warranties Plan Act.

[8] Deco disputes Li’s objections. On October 29, 2018, Deco replied to Li that the APS was not subject to early termination and advised her that her deposit would be forfeited if she did not complete the transaction by the closing date and that she would be responsible for damages.

[9] Li did not complete the transaction on November 15, 2018.

[10] A statement of claim was issued by Deco against Li on December 3, 2018. On December 13, 2018, Li advised Deco that she was commencing arbitration proceedings and sent Deco a request for arbitration which had been filed on December 13, 2018. An arbitrator was appointed on December 18, 2019.

[11] Deco takes the position that this dispute is not arbitrable and should be subject to summary judgment. Deco’s position is based on the fact that under the Tarion Addendum, disputes involving a plaintiff’s breach of an APS are expressly excluded from the scope of the arbitration clause.

[12] In this case, however, Li also has alleged that Deco is in breach of the APS. These alleged breaches do fall within the scope of the arbitration clause.

[13] Deco takes the position that there is no substance to these allegations, as demonstrated by the fact that Li was a sophisticated real estate agent, and relying on the record of her conduct surrounding the transaction. In short, Deco argues that Li entered into the APS “fully aware that it was a firm deal with no early termination provisions.” (at para. 36 of Deco’s factum).

[14] For the reasons given in Deco Homes (Richmond Hill) Inc. v. Mao, I find that this case similarly cannot be resolved without recourse to questions that lay within the exclusive province of the arbitration clause to resolve under sections 15 and 11 of the Tarion Addendum.

[15] Where it is at least arguable that a dispute falls within the arbitration clause in the Tarion Addendum, the arbitration clause is triggered; Dancap Productions Inc. v. Key Brand Entertainment Inc., 2009 ONCA 135 (“Dancap”) at para. 32; and Ontario Medical Association v. Willis Canada, 2013 ONCA 745 at paras. 31-37.

[16] To the extent there are ambiguities regarding the scope of an arbitration clause, the competence-competence principle also suggests that determining what is within and beyond the purview of the arbitration clause, should be reserved in the first instance for the arbitrator; Dancap, at para. 34.

[17] For these reasons, and relying on the analysis of the APS and applicable statutory provisions in Deco Homes (Richmond Hill) Inc. v. Mao, I find that the action by Deco is stayed to permit the arbitration sought by Li to proceed.

[18] Li is entitled to costs of $7,200.00, all-inclusive, payable by Deco within 30 days of this endorsement.

Sossin J.

Released: December 23, 2019