Court File and Parties

Court File No.: CV-17-00580145-0000 Date: 2019-02-05 Ontario Superior Court of Justice

Between: Mohammad Mohsin, Plaintiff – and – Empire Communities (Mount Pleasant) Ltd. and Royal Bank of Canada, Law Offices of Gabriel Krikunez and Gabriel Krikunez, Defendants

Counsel: Laurencia Fasoyiro and Bill Denstedt for the Plaintiff Mark A. Klaiman, for the Defendant Empire Communities (Mount Pleasant) Ltd.

Heard: January 31, 2019

Before: Perell, J.

Reasons for Decision

A. Introduction

[1] In 2015, the Plaintiff, Muhammad Mohsin, signed an agreement with the Defendant Empire Communities (Mount Pleasant) Ltd. (“Empire”) to purchase a property and a house to be built on it. After the house was constructed, the transaction did not close, and Mr. Mohsin sued Empire for return of his $40,000 deposit and for approximately $600,000 in damages for breach of contract or for unjust enrichment. He also sued the Royal Bank of Canada for a banking error and the Law Offices of Gabriel Krikunez and Gabriel Krikunez for professional negligence with respect to the abortive real estate transaction.

[2] Empire brings a motion for a summary judgment dismissing Mr. Mohsin’s action as against it.

[3] For the reasons that follow, I grant the summary judgment motion.

B. Facts

[4] On June 27, 2015, Mr. Mohsin signed an agreement of purchase and sale to purchase a property municipally known as 186 Golden Springs Drive, Brampton, Ontario from Empire for a purchase price of $469,990. He paid a $40,000 deposit.

[5] The home on the property was to be constructed, and after several postponements made by Empire, the house was ready for occupancy and the closing date was eventually scheduled for March 23, 2017.

[6] On March 15, 2017, with the closing date approaching, Mr. Mohsin met with a banking advisor at the Royal Bank of Canada (“RBC”) to discuss a mortgage loan to finance the purchase.

[7] The transaction, however, did not close on March 23, 2017. On that day, Mr. Mohsin’s real estate lawyer, Gabriel Krikunez, who had just been retained, wrote the lawyers acting for Empire. Mr. Krikunez requested a 30-day extension of the closing date. He sent the following fax message to Marcia Weber, a law clerk at DLA Piper Canada LLP, which was acting for Empire:

We are in the process of being retained on this matter. In the interim, the purchaser has requested that we ask for a one-month extension. Would you please seek instructions on this matter and revert to us?

[8] Ms. Weber promptly responded with a letter dated March 23, 2017 sent by fax. The letter stated:

Thank you for your facsimile of today. The Vendor is not agreeable to an extension of the closing date for one month. The Vendor is agreeable to an extension of the closing date from March 23, 2017 to March 30, 2017 upon the payment of an administration fee of $3,000 plus HST plus legal costs of $400 plus HST for a total amount of $3,842 and payable by certified cheque/bank draft and to be delivered to our office or direct deposited to our trust account (details attached) by 5:00 p.m. on March 24, 2017, failing which the agreement of purchase and sale dated June 27, 2015 between the Vendor and Purchaser (the “Agreement”) will be immediately terminated. The statement of adjustments will remain as of March 23, 2017. All other terms and conditions of the Agreement are to remain the same and time continues of the essence. Please provide the Purchaser’s agreement to the foregoing terms of closing extension immediately.

[9] It should be noted that Empire did not treat Mr. Mohsin’s failure to close on March 23, 2017 as grounds to immediately treat the agreement at an end, and, rather, it agreed to extend the closing date on terms that would treat the agreement as terminated if those terms, which included (a) an immediate acceptance of the terms; and (b) the payment of an administration fee, were not satisfied on March 24, 2017 by 5 p.m. If the terms of the extension were satisfied, then the transaction was scheduled to close on March 30, 2017.

[10] On March 24, 2017, Mr. Mohsin received pre-approval of a loan commitment from for a $429,990 mortgage loan from Ish Investment Corporation for a closed 5-year mortgage with interest at 3.29%. Also on March 24, 2017, Mr. Mohsin went to a branch of the RBC to start the process for a loan from the RBC. It appears that Mr. Mohsin wished to see if he could make a better deal with RBC than he had with Ish Investment.

[11] While at the RBC, using the information that had been provided by Ms. Weber, Mr. Mohsin asked that the Bank to deposit $3,842 to DLA Piper Canada LLP’s trust account. The monies were apparently deposited; however, Mr. Mohsin was unaware that due to the bank’s error, the deposit had not actually been made into the right account. Unaware of the banking error, Mr. Mohsin asked the Bank to send a fax confirming the deposit to the law firm. This fax was sent in the in the early afternoon.

[12] Meanwhile, later in the afternoon of the 24th, Ms. Weber sent the following letter by fax to Mr. Krikunez:

Further to our letter of March 23, 2017, we have not received confirmation of the terms of closing date extension nor the administration fees required therein if you could kindly advise.

[13] It is not clear why when Ms. Weber sent her fax in the afternoon of March 24, 2017; she did not know that the bank had already faxed a confirmation that the administration fee had been deposited. Mr. Krikunez did not reply to the fax, perhaps because he was aware that Mr. Mohsin had attended to the matter. In any event, as of March 24, 2017, Empire did not immediately take the position that the agreement had come to an end and was asking for a status report.

[14] It is also somewhat unclear what Ms. Weber knew and did between March 25, 2017 and March 29, 2017. It is clear that at some time she did receive and read the fax confirmation from the RBC. It is also clear that she inquired whether the administration fee had actually been deposited and that she learned that notwithstanding the fax message, the monies had not been deposited.

[15] On the morning of March 29, 2017, believing that the administration fee had not been paid, Ms. Weber sent the following termination letter by fax to Mr. Krikunez:

Further to our letters of March 23, 2017 and March 24, 2017, we have not received the administration fees requested thereon to extend the closing date of this transaction and the Purchaser did not close this transaction on the closing date of March 23, 2017. The Purchaser is in default under the terms of the Agreement of Purchase and Sale between the Vendor and the Purchaser dated June 27, 2015 and Amendments thereto (the “Agreement”) and accordingly, the Agreement is hereby terminated and is of no further force and effect and all monies paid by the Purchaser by way of deposit, administration fees, extras and upgrades, etc. are forfeited by the Purchaser and shall be retained by the Vendor as liquidated damages and not as a penalty.

The Purchaser shall be held responsible for all costs, damages and expenses incurred by the Vendor in connection with the remarketing and reselling of the house as a consequence of the breach of the Agreement.

[16] Within minutes, Mr. Krikunez responded to Empire’s termination letter with the following fax termination message on behalf of Mr. Mohsin:

Thank you for your letter of this morning. I am advised that the purchaser did in fact pay the administration fees that you requested and to this end your termination of the agreement is a breach of contract on your client’s part. Notwithstanding the foregoing and in any event, my client is prepared to continue to complete this agreement on April 14, 2017 and given your client’s obligation to mitigate, we ask that all parties cooperate in this regard. We look forward to your reply.

[17] In turn, Ms. Weber responded with the following reiterated termination letter delivered by fax:

We are in receipt of your letter of today, however, as advised in our letter of March 24, 2017, we did not and have not yet received any confirmation from you accepting the terms of the extension nor have we received the extension fees either delivered to our office or deposited to our trust account.

We received the attached undecipherable facsimile on March 24, 2017. We are not sure who deposited funds or where those funds were deposited as we reviewed our trust account but no deposit was made to our firm's trust account nor have we been provided with a copy of the certified cheque or bank draft that was required pursuant to the terms of our letter of March 24, 2017.

In accordance with our letter dated March 29, 2017 terminating the above-noted transaction, our termination letter remains in effect.

[18] Still on March 29, 2017, there was then a phone conversation between Mr. Krikunez and Ms. Weber but the parties’ positions did not change.

[19] Pausing here, it shall prove helpful to my analysis later in these Reasons for Decision to appreciate the legal position of the parties as of March 29, 2017.

[20] It was Empire’s position that Mr. Mohsin had breached the agreement as at March 23, 2017, when he failed to close but that the termination did not take effect until March 25, 2017 or March 29, 2017 when Mr. Mohsin failed to satisfy the terms for an extension of the closing to March 30, 2017. Empire terminated the transaction, forfeited the deposit, and asserted a claim for damages.

[21] Unaware of the Bank’s error, it was Mr. Mohsin’s position that he had satisfied the terms for the extension and that Empire was anticipatorily breaching the agreement. He also, terminated the agreement; however - as an act of mitigation – he was prepared to complete the purchase on April 14, 2017 at the original purchase price.

[22] Returning to the narrative, after his exchange with Ms. Weber, Mr. Krikunez spoke to Mr. Mohsin who contacted the RBC and learned that notwithstanding his instructions, the Bank’s employee had made an error and the administration fee had not been deposited into the law firm’s trust account.

[23] On March 30, 2017, Mr. Mohsin returned to the RBC branch and this time the transfer of funds to DLA Piper Canada LLP’s trust account was completed.

[24] The following day, on March 31, 2017, Mr. Krikunez sent the following letter to Ms. Weber, which acknowledged the Bank’s error and which sought to extend the closing of the transaction. The letter stated:

Further to our conversation of Wednesday, as it turns out my client's bank made an error in the transfer of the funds and did not sent the funds properly. Yesterday, my client transferred the funds to your account. I enclose further paperwork re same. As we discussed, my client does require some additional time to finalize his affairs. He was under the impression that there would be further extensions as your client extended numerous times.

He is asking for your client's indulgence for a couple of weeks. He believes that he will be able to complete next week but does not want to continually ask for extensions and thus is asking for two weeks up front.

Can you please speak to your client regarding this matter and revert to us.

[25] Empire rejected Mr. Mohsin’s proposal and on April 2, 2017, Ms. Weber wrote Mr. Krikunez:

Further to our telephone conversation of March 29, 2017 and termination letter of same date, we advise the Vendor's position remains the same and this deal is terminated. Enclosed please find our trust cheque payable to Gabriel Krikunez in trust in the amount of $3,842.00 returning extension fees that were wired into our account subsequent to the termination of the subject transaction.

The Vendor will reprice the Property and provide the Purchaser the opportunity to repurchase said Property.

[26] On April 5, 2017, Ms. Weber wrote Mr. Krikunez and advised that Empire was prepared to sell the property at the revised purchase price of $679,990 with the $40,000 deposit credited towards the price.

[27] On April 6, 2017, Mr. Mohsin sent an email to DLA Piper Canada LLP attaching proof that he had attempted to deposit the fee into the Law Firm's trust account and explaining that RBC's clerical error resulted in the fee not been deposited. He stated that he was prepared to proceed with the original agreement.

[28] Once again, Empire was not prepared to revive the original agreement and sometime between April and June it resold the property for $669,990, which was $200,000 more than Mr. Mohsin had agreed to pay for it.

[29] On August 2, 2017, Mr. Mohsin commenced an action against Empire and RBC. In 2018, he added a claim against Mr. Krikunez and his law firm. The claim against Empire was for return of the $40,000 deposit plus damages of approximately $600,000 for breach of contract or for unjust enrichment.

C. Jurisdiction to Grant Summary Judgment

[30] 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.

[31] 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]

[32] 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]

[33] 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.

[34] 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]

[35] 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.

[36] Mr. Mohsin submits that the case is inappropriate for a summary judgment mainly because the evidentiary record wants for Mr. Krikunez’s evidence about his conversation with Ms. Weber. I disagree that this absence of evidence makes the case inappropriate for a summary judgment for four reasons.

[37] First, I am 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 and it was open to Mr. Mohsin to summons Mr. Krikunez as a witness. Second, on his examination for discovery, Mr. Mohsin refused to give an undertaking to obtain Mr. Krikunez’s file, from which circumstances it can be inferred that Mr. Krikunez’s evidence would harm rather than help Mr. Mohsin’s case. Third, there is already sufficient evidence about the nature of Mr. Krikunez’s conversation with Ms. Weber, which is documented and confirmed by the written correspondence between them. Fourth, in any event, there is ample evidence without hearing directly from Mr. Krikunez to determine the facts of this case.

[38] The events of this case are well documented by contemporaneous correspondence, and there is sufficient evidence on all relevant points to allow me to draw the inferences necessary to make dispositive findings and to fairly and justly adjudicate the issues in the case.

[39] In this case, I am confident that I can determine the facts of what occurred. The difficulty of the immediate case is not about the facts but rather it is about how to apply the law to those facts. As I am in a privileged position as a trial judge to apply the law to the facts and since in the immediate case a summary judgment is a proportionate, more expeditious and less expensive means to achieve a just result, therefore, in my opinion, the case at bar is an appropriate case for a summary judgment.

D. Discussion

[40] Mr. Mohsin’s straight-forward argument is that this is a complex case and there are genuine issues requiring a trial about whether Empire breached the agreement of purchase and sale when Ms. Weber sent the letter of March 29, 2017 purporting to terminate the agreement. He submits that he did not breach the agreement, and although he did not bring a summary judgment motion, he submits that he will prove at trial that Empire breached the agreement and that it must return the deposit and be liable for damages. He disputes Empire’s arguments that he was never ready, willing, and able to close the transaction, and he says that there is no evidence that he was actually unable to close the transaction in March or April 2017. He submits that the onus is on Empire to prove that he was unable to close the transaction.

[41] Empire’s argument is that Mr. Mohsin breached the agreement when he did not close the transaction on March 23, 2017. Empire submits that in order to not be treated as having repudiated the agreement, Mr. Mohsin was required to immediately accept the terms of the extension and to pay the administrative fee before 5:00 p.m. on March 24, 2017, which he did not do because of the Bank’s error. While the bank’s failure may expose it to liability, Empire submits that the Bank’s error does not excuse Mr. Mohsin from his non-compliance with agreement to extend.

[42] Moreover, even if the administration fee had been properly paid, Empire submits that Mr. Mohsin was not compliant with his obligation to “provide the Purchaser’s agreement to the foregoing terms of closing extension immediately.” Empire submits that the Bank’s confirmation that the administration fee had been paid did not satisfy Mr. Mohsin’s obligation to provide an agreement to immediately accept the terms for an extension of the closing of the agreement to March 30, 2017. Empire submits that it was entitled to terminate the agreement as set out in Ms. Weber’s first letter of March 29, 2017, from which it follows that it was entitled to forfeit the $40,000 deposit and that it is not liable for breach of contract.

[43] For somewhat different reasons, I agree that Empire’s argument that it was entitled to treat the agreement of purchase and sale as terminated on March 29, 2017 and that Mr. Mohsin’s action should be dismissed as against it.

[44] In my opinion, from a legal perspective, the events between March 23, 2017 and April 6, 2017 can be analyzed in a several different ways, and, in each of these ways, the outcome is that Mr. Mohsin breached the agreement of purchase and that he is not entitled to a return of the deposit or to damages as against Empire.

[45] I appreciate that it was good fortune for Empire that Mr. Mohsin did not close a transaction to purchase 186 Golden Springs Drive for $469,990. His failure to close meant that Empire could resell the house for $200,000 more and also to keep his $40,000 deposit. However, it was always in Mr. Mohsin’s power to compel Empire to complete the original question, and he has only himself to blame for his misfortune and Empire’s good fortune.

[46] On March 23, 2017, instead of being in funds and having a lawyer ready to close the transaction (which, by the way, was an express obligation under the agreement of purchase and sale), Mr. Mohsin was just retaining a lawyer, who was given instructions to request an extension. Had Mr. Mohsin been ready to close, it was he and not Empire that would have profited from the increase in market value of the property from June 2015 to March 2017.

[47] Mr. Mohsin, however, was not ready to close, but Empire did not drop the legal hammer, and it did not immediately treat the agreement at an end, which it was entitled to do, and rather Empire gave Mr. Mohsin an opportunity to complete the transaction on March 30, 2017 if the terms of Ms. Weber’s letter of March 23, 2017 were satisfied by 5:00 p.m. on March 24, 2017.

[48] This was an unconventional approach on Empire’s part, which could have immediately terminated the contract, and it was as harsh as it was kind, but Mr. Mohsin, once again, had his fate in his own hands and had he both satisfied the terms of Ms. Weber’s letter and also been in funds then on March 30, 2017, then, once again, Empire would have had no choice but to close at the original purchase price.

[49] Empire submits that Mr. Mohsin did not satisfy the terms of Ms. Weber’s letters because; (a) the administration fee was not paid as specified by 5:00 p.m. on March 24, 2017; and (b) Mr. Mohsin or his lawyer never immediately confirmed in writing that he was prepared to close on March 30, 2017 with adjustments as of March 23, 2017. I agree with Empire’s former point but not the latter. In my opinion, it was implicit and immediately obvious that Mr. Mohsin was agreeing to close on the 30th and that this could have been confirmed by any form of notice that that the administration fee was being paid.

[50] Unfortunately for Mr. Mohsin, the Bank made a mistake and the administration fee was not paid into Empire’s lawyer’s trust account by 5:00 p.m., and, therefore, Mr. Mohsin must wear the Bank’s mistake with the consequence that Empire was entitled to treat the agreement at an end as it did on March 29, 2017.

[51] In short, Mr. Weber had breached the agreement on March 23, 2017 and Empire was entitled to treat the agreement as an end when Mr. Mohsin did not satisfy the terms of what was a suspended or conditional termination of the agreement. This is unconventional, but I see nothing illegal or unfair in Empire accepting Mr. Mohsin’s breach of contract but giving him an opportunity to keep the transaction alive by satisfying the terms of Ms. Weber’s letter of March 23, 2017.

[52] But assuming this analysis is wrong and Empire should have taken Mr. Mohsin as having satisfied the conditions of Ms. Weber’s letter and having extended the closing of the transaction to March 30, 2017, then Mr. Mohsin still needed to be in funds and ready to close on March 30th, but the truth of the matter is that Mr. Mohsin was not willing and able to close the transaction on that date.

[53] The truth of the matter is that through Mr. Krikunez, Mr. Mohsin acknowledged that he was unable and unwilling to close the transaction and that he was seeking a further extension of the closing. In other words, even if the administration fee had been properly paid by 5:00 p.m. on March 24th and even if the Bank’s confirmation fax is treated as satisfying the other terms of Ms. Weber’s letter of March 23rd, Mr. Mohsin has only himself to blame for not closing the transaction on March 30, 2017.

[54] The parties contested whether or not Mr. Mohsin could have been in funds on March 30th to close the transaction. Mr. Mohsin submitted that the onus was on Empire to prove that he was not capable of closing the transaction. I disagree on the matter of the onus of proof, but it matters not because the proof is in the pudding so to speak and there was no money tendered on March 30th.

[55] Mr. Mohsin submitted that he had made arrangements to secure the necessary financing from a second-tier non-bank lender but was seeking better terms from first-tier bank lender. Assuming this is true (the point is disputed by Empire), then he was wrong to think that Empire could not and should not have required him to close on March 30, 2017. The closing of the transaction was not conditional on arranging suitable financing and this was a matter of concern only to Mr. Mohsin. Empire was under no obligation to extend closing to suit Mr. Mohsin’s financial arrangements.

[56] I conclude that Mr. Mohsin breached the agreement of purchase and sale, that Empire accepted the breach and terminated the agreement. Under the normal principles of contract law applicable to an abortive real estate transaction, the deposit was forfeit, and as the culpable party, Mr. Mohsin has no claim for damages.

[57] However, as noted above, the events between March 23, 2017 and April 6, 2017 can be analyzed in a several different ways, and Mr. Mohsin seeks to snatch victory from the jaws of defeat by arguing that Empire anticipatorily breached the agreement when it sent its letter of March 29, 2017 purporting to terminate the agreement before the rescheduled closing date set for March 30, 2017.

[58] This argument, however, fails for the reasons already expressed, and it would fail for other reasons. If I assume that Empire did anticipatorily breach the agreement, then Mr. Mohsin’s response to Empire’s breach was a breach of his own, and he has never been in a position to reclaim his deposit or to claim damages.

[59] Assuming contrary to my finding above that Empire anticipatory breached the agreement on March 29, 2017 and that Mr. Mohsin was the innocent party, then it is trite law, that as the innocent party, Mr. Mohsin’s choice was to keep the agreement alive and sue for specific performance or to accept the breach, terminate the agreement and sue for damages which would entail that he mitigate his damages by seeking to find a replacement property. It is helpful to note that specific performance avoids mitigation because the innocent party is seeking to complete the original transaction.

[60] In a contract where time is of the essence, where a plaintiff sues for specific performance, the plaintiff must show that he or she was ready, willing and able to close on the date fixed for closing, that the default of the defendant was in no way attributable to the plaintiff’s fault, and that he or she continues to be ready, willing and able to perform the contract.[^11]

[61] For an innocent party to treat the agreement at an end for fundamental breach or repudiation, time must be of the essence. The commonly recited rule for time of the essence is that time may be insisted upon as of the essence only by a litigant: (a) who has shown himself or herself ready, desirous, prompt, and eager to carry out the agreement; (b) who has not been the cause of the delay or default; and, (c) who has not subsequently recognized the agreement as still existing.[^12]

[62] When both contracting parties breach the contract, the contract remains alive with time no longer of the essence, but either party may restore time of the essence by giving reasonable notice to the other party of a new date for performance.[^13]

[63] In the immediate case, it appears that on March 29, 2017, Mr. Mohsin initially elected to terminate the contract and to sue for damages. He did not seek specific performance. In this regard, it should be recalled that in his fax message, Mr. Krikunez stated that Mr. Mohsin was “prepared to continue to complete this agreement on April 14, 2017 and given your client’s obligation to mitigate, we ask that all parties cooperate in this regard.”

[64] The problem, however, for Mr. Mohsin in electing to terminate is that he was not entitled to treat time of the essence, a prerequisite to termination, because: (a) he had not shown himself ready, desirous, prompt, and eager to carry out the agreement; and (b) he had been the cause of the delay or default. Thus, Mr. Mohsin’s response to Empire’s termination letter of March 29, 2017 was a reciprocal anticipatory breach of the contract. Thus, on this alternative analysis, Mr. Mohsin is the culpable party and not entitled to a return of the deposit or damages.

[65] It appears that Mr. Mohsan attempted to, in effect, retract his own termination of March 29, 2017 and to seek specific performance of the original agreement when he had the administration fee paid on March 30, 2017 and when he sought to complete the original contract at another date, which are acts inconsistent with treating the original agreement as terminated. The problem, however, again, is that Mr. Mohsan was not entitled to specific performance because: he was not ready, willing and able to close on the date fixed for closing; Empire’s default was attributable Mr. Mohsan’s fault, and Mr. Mohsan was ready, willing and able to perform the contract. Thus, on the this further alternative analysis, Mr Mohsin is the culpable party and is not entitled to a return of the deposit or damages.

[66] There is one further issue of law to address. While not entitled to damages, Mr. Mohsin seeks relief from the forfeiture of the deposit pursuant to s. The Plaintiff has pled that he is entitled to relief of forfeiture under s. 98 of the Courts of Justice Act,[^14] which provides that "a court may grant relief against penalties and forfeitures, on such terms as to compensation or otherwise as are considered just".

[67] Relief from forfeiture, however, is not appropriate in the circumstances of the immediate case. If the purchaser breaches the agreement, then his or her deposit is forfeited. The vendor may retain the deposit without proof of actual damages.[^15] The deposit is compensation for the fact that his property was taken off the market for a time as well as for his loss of bargaining power resulting from the revelation of an amount that the vendor would be prepared to accept.[^16] If the vendor’s losses exceed the deposit, the deposit is a credit toward any damages award. There is, however, an exception to the forfeiture of the deposit if the deposit is a penalty. To be a penalty, the deposit would have to be exorbitant compared to the vendor’s actual losses and it would have to be unconscionable in the circumstances for the vendor to keep the money.[^17]

[68] In the immediate case, the $40,000 deposit was a modest 8.5% and there is no evidence and nothing to suggest that the contract of purchase was negotiated other than the normal course of relations between a purchaser and a home builder. There is no evidence that Empire took advantage of Mr. Mohsin and, as I have explained above, Mr. Mohsin has only himself to blame for creating a circumstance in which Empire could resell the property without losses and with an increased profit. There is nothing penal about a modest deposit and no evidence of unconscionable conduct. Empire held Mr. Mohsin to the terms of their agreement, and he failed to close. There is no basis for relief from forfeiture.

E. Conclusion

[69] For the above reasons, I grant Empire a summary judgment dismissing the action against it.

[70] If the parties cannot agree about the matter of costs, they may make submissions in writing beginning with Empire’s submissions within twenty days of the release of these Reasons for Decision followed by Mr. Mohsin’s submissions within a further twenty days.

Court File No.: CV-17-00580145-0000 Date: 2019-02-05

Ontario Superior Court of Justice

Between: Muhammad Mohsin, Plaintiff – and – Empire Communities (Mount Pleasant) Ltd. and Royal Bank of Canada, Law Offices of Gabriel Krikunez and Gabriel Krikunez, Defendants

Reasons for Decision

Perell J.

Released: February 5, 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 CanLII 4831 (ON CA), [1998] O.J. No. 3240 (C.A.); Bluestone v. Enroute Restaurants Inc. (1994), 1994 CanLII 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.

[^11]: O'Neil et al. v. Arnew (1976), 1976 CanLII 758 (ON SC), 16 O.R. (2d) 549 (H.C.J.); Dacon Construction Ltd. v. Karkoulis, 1964 CanLII 252 (ON SC), [1964] 2 O.R. 139 (H.C.J.); Watts v. Strezos, 1953 CanLII 164 (ON SC), [1955] O.R. 615 (H.C.J).

[^12]: 2329131 Ontario Inc. v. Carlyle Development Corp., 2014 ONCA 123; Domicile Developments Inc. v. McTavish (2000), 1999 CanLII 3738 (ON CA), 45 O.R. (3d) 302 (C.A.); King v. Urban & Country Tpt. Ltd. (1973), 1973 CanLII 740 (ON CA), 1 O.R. (2d) 449 (C.A.); Koffman v. Fischtein (1984), 1984 CanLII 1874 (ON SC), 49 O.R. (2d) 124 (H.C.J.), aff’d (1986), 1986 CanLII 2656 (ON CA), 53 O.R. (2d) 671 (C.A.); Morgan v. Lucky Dog Ltd. (1987), 45 R.P.R. 263 (Ont. H.C.J.); Bethco Ltd. v. Clareco Can. Ltd. (1985), 1985 CanLII 2252 (ON CA), 52 O.R. (2d) 609 (C.A.); Metro. Trust Co. v. Pressure Concrete Services Ltd., (1976), 1975 CanLII 445 (ON CA), 9 O.R. (2d) 375 (C.A.), affg. 1973 CanLII 480 (ON SC), [1973] 3 O.R. 629 (H.C.J.); Campbell v. Sovereign Securities & Holdings Co., 1958 CanLII 99 (ON SC), [1958] O.R. 441 (H.C.J.); aff’d 1958 CanLII 107 (ON CA), [1958] O.R. 719 (C.A.); Lucifora v. Walfish, [1955] O.W.N. 898 (C.A.); Shaw v. Holmes, 1952 CanLII 285 (ON CA), [1952] 2 D.L.R. 330 (C.A.); Walton v. Morris, [1944] O.W.N. 410 (H.C.J.); Brickles v. Snell (1916), 30 D.L.R. 3 (P.C.); Mills v. Haywood (1877), 6 Ch. D. 196.

[^13]: Domicile Developments Inc. v. McTavish (2000), 1999 CanLII 3738 (ON CA), 45 O.R. (3d) 302 (C.A.); King v. Urban & Country Tpt. Ltd. (1973), 1973 CanLII 740 (ON CA), 1 O.R. (2d) 449 (C.A.); Shaw Industries Ltd. v. Greenland Enterprises Ltd., (1991), 1991 CanLII 3955 (BC CA), 79 D.L.R. (4th) 641 (B.C.C.A.).

[^14]: R.S.O. 1990, c. 43.

[^15]: Pleasant Developments Inc. v. Iyer, 2006 CanLII 10223 (ON SCDC), [2006] O.J. No. 1319 (Div. Ct.); Baker v. Wynter, [2006] O.J. No. 2759 at para. 34 (S.C.J.); De Palma v. The Runnymede Iron & Steel Company, 1949 CanLII 73 (ON CA), [1950] O.R. 1 at p. 8 (C.A.).

[^16]: H.W. Liebig & Co. Ltd. v. Leading Investments Ltd. (1986), 1986 CanLII 45 (SCC), 25 D.L.R. (4th) 161 at p. 182 (S.C.C.).

[^17]: Redstone Enterprises ltd. v Simple Technology Inc., 2017 ONCA 282; Varajao v. Azish, 2015 ONCA 218; Hinkson Holdings Ltd. v. Silver Sea Developments Limited Partnership, 2007 BCCA 408; Liu v. Coal Harbour Properties Partnership, 2006 BCCA 385; Porto v. Di Domizio, [1996] O.J. No. 22 (Gen. Div.); Craig v. Mohawk Metal Ltd. (1976), 1975 CanLII 364 (ON SC), 9 O.R (2d) 716 (H.C.J.); Stockloser v. Johnson, [1954] 1 All E.R. 630 (C.A.).