Court File and Parties
COURT FILE NO.: CV-18-4241-00 DATE: 2020 02 26 SUPERIOR COURT OF JUSTICE – ONTARIO
RE: Parag Datta and Tandar Acharjee, Plaintiffs AND: Okey Eze and Okey Fabian Eze, Defendants
BEFORE: Ricchetti J.
COUNSEL: S. Jagpal for the Plaintiffs M. Tubie and D. Kinkead for the Defendants
HEARD: February 18, 2020
JUDGMENT
THE PROCEEDING
[1] The Plaintiffs bring this claim for breach of an Agreement of Purchase and Sale dated June 28, 2016 (“APS”) with respect to a property located at 6 Lonetree Court, Brampton Ontario (“Property”). Initially, the claim sought specific performance, however, the Plaintiffs purchased another property and, as a result, on this motion, seek damages for breach of the APS.
[2] The Defendant, Okey Fabian Eze, (“Fabian”) defended the claim. Although shown on the APS as the vendor personally, Fabian sold the Property under a Power of Attorney dated March 26, 2016 (“Power of Attorney”) granted by Okey Eze (“Okey”), Fabian’s father. The primary defence is that Fabian “was lacking in mental capacity at all material times” when he executed the APS. In addition, Fabian alleged that the Power of Attorney had been revoked “on or about June 15, 2016.” Damages claimed are also disputed.
[3] Okey died on February 3, 2017. The proceeding was continued by Zachary Eze as litigation administrator for the Estate of Okey Eze (“Litigation Administrator”). Essentially, in its defence, the Litigation Administrator denies knowledge of these matters.
THE SUMMARY JUDGMENT MOTION
[4] On January 17, 2019, the Plaintiffs brought this summary judgment motion seeking judgment against the Defendants. The motion was returnable on May 1, 2019.
[5] As too often occurs, the motion could not proceed on that date as this motion was not ready to be heard on its merits. Instead, on May 1, 2019, Stribopoulos J. imposed a timetable which required materials be exchanged and cross-examinations to take place well in advance of today’s date so that the motion could and would proceed on its merits. The summary judgment motion was re-scheduled to be heard for a full day on February 18, 2020.
[6] The timetable set by Stribopoulos J. was not followed by counsel. Most of the issues were caused by the Defendant's failure to comply with the Stribopoulos J. timetable order. Defendants’ materials (affidavits and factums) were filed with this court on the morning of February 18, 2020, the day the motion was to be heard. In addition, the Defendants served (but not filed) one affidavit by Fabian (on which cross-examination took place) but filed a different affidavit by Fabian on this motion. The Defendants’ failure to comply with the timetable also resulted in the Plaintiffs seeking to file a reply affidavit on the morning of the hearing.
[7] Very simply, counsels action getting this motion ready to be heard was simply unacceptable notwithstanding a timetable order, an 8 1/2-month adjournment and Stribopoulos J.’s admonition to counsel to strictly comply with his order or face serious cost consequences.
[8] This court was left with the untenable position of either adjourning a full day summary judgment motion for many months or permitting the late filing of materials, hold the matter down to review the new materials and thereafter proceed to hear the motion. The court chose to hear the motion.
THE PRELIMINARY ISSUE
[9] During the cross-examination of Fabian, Fabian said that he had told his lawyer (the vendor’s lawyer, Garry Shapiro) that his father's Power of Attorney had been revoked. However, the documentary evidence shows that, in early August 2016, the Plaintiff's (purchaser’s) lawyer requested confirmation the Power of Attorney was valid. Garry Shapiro, also the lawyer who prepared the Power of Attorney, advised the Plaintiffs’ lawyer, on August 8, 2016, as follows:
This will confirm that the attached POA is complete and legitimate and was executed in the law office of Garry Shapiro on March 14, 2016.
[10] Faced with this inconsistency, the Plaintiffs questioned Garry Shapiro and obtained an affidavit from him. The Plaintiffs sought to introduce the affidavit of Garry Shapiro which stated that he had not, at any material time, been advised that the Power of Attorney was revoked and denied the statements made by Fabian during his cross-examination.
[11] The Defendants objected to the introduction of Garry Shapiro’s affidavit on the basis it disclosed solicitor client privilege.
[12] I am not persuaded that the information contained in the Garry Shapiro affidavit remained subject to solicitor client privilege because Fabian made his lawyer’s knowledge of the alleged revocation a relevant issue in this motion and, accordingly, waived any privilege associated with Garry Shapiro’s statements as to whether Fabian had advised him of the revocation of the Power of Attorney.
[13] Fortunately, a ruling on this issue did not become necessary.
[14] Counsel for the Defendants agreed, as a fact, that Garry Shapiro was not told that the Power of Attorney had been revoked or had reason to doubt the validity of the Power of Attorney on or before August 8, 2016. As a result of this admission, the Plaintiffs’ counsel did not pursue filing Garry Shapiro’s affidavit on this motion.
THE FACTS
[15] Okey is the owner of the Property. Fabian and his family have resided on the Property for some time.
[16] On March 14, 2016, Okey provided a Power of Attorney to his son, Fabian. There is no issue regarding the proper execution of the Power of Attorney, validity of or Fabian’s authority under the Power of Attorney to sell the Property.
[17] Fabian retained a real estate agent, Ms. Mehr-Ali-Zaheh, to sell the Property and, subsequently, to assist him to find another property to purchase.
[18] The Property was listed for $949,000 on June 23, 2016.
[19] The Plaintiffs presented an offer to purchase the Property on June 28, 2016.
[20] Eventually, the APS was signed by all parties for $940,000 on June 28, 2016. Neither Fabian nor the Plaintiffs were aware of or knew of any revocation of or issue relating to the validity of the Power of Attorney, if in fact there was such a revocation before or after this date.
[21] The closing of the real estate transaction was to take place on September 28, 2016.
[22] The Plaintiffs knew that Fabian was selling under the Power of Attorney despite the fact the “seller” on the APS was Fabian.
[23] The Plaintiffs retained counsel to complete the real estate transaction. Garry Shapiro acted for the vendor, Fabian.
[24] I repeat from above, as the parties moved towards a closing, on August 8, 2016, Garry Shapiro, provided the Plaintiffs’ lawyer confirmation the Power of Attorney was complete and legitimate:
This will confirm that the attached POA is complete and legitimate and was executed in the law office of Garry Shapiro on March 14, 2016.
(emphasis added)
[25] On September 7, 2016, Garry Shapiro wrote to the Plaintiffs’ lawyer terminating the APS because Fabian, was at the time, “suffering from certain medical conditions which affected his mental capacity”. The only reason given for the termination of the APS was that Fabian did not have the capacity to execute the APS when it was signed. There is no mention in this letter of the revocation of the Power of Attorney.
[26] Litigation ensued.
[27] Four months later, the Plaintiffs purchased a substitute property – 10 Solstice Street, Brampton (“Solstice Property”) for $945,000.
The Evidence of the Purchasers’ Real Estate Agent – Mr. Brunner
[28] Mr. Brunner testified that he observed no indication Fabian had any mental health/capacity issues in his dealings with Fabian. I recognize that Mr. Brunner is not a health professional qualified to make a "diagnosis”, but he is permitted to state that he observed no obvious mental capacity issues in his dealings with Fabian.
The Evidence of the Vendor’s Real Estate Agent – Ms. Mehr-Ali -Zadeh
[29] Ms. Mehr-Ali-Zaheh's dealings with Fabian were more extensive than Mr. Brunner. Fabian had retained Ms. Mehr-Ali-Zaheh to help him find a home to purchase (having sold the Property) and he continued to do so until early September 2018.
[30] Ms. Mehr-Ali-Zaheh testified under oath that, during her dealings with Fabian, she was not aware of or observed any “mental capacity” issues regarding Fabian. Again, Ms. Mehr-Ali-Zaheh is not a health professional and not qualified to give a "diagnosis" but is permitted to state that she observed no obvious mental capacity issues with Fabian.
[31] More importantly, despite Fabian's statement in his cross-examination that Fabian had told her of the revocation of the Power of Attorney, Ms. Meh-Ali-Zaheh denied that she was ever told there was a revocation or other issue regarding the validity of the Power of Attorney.
The Evidence of Fabian
[32] Much of Fabian's evidence is vague, confusing, and lacked explanations on critical issues.
Fabian’s Medical Evidence
[33] The Defendants served Fabian's affidavit dated April 30, 2019 on the Plaintiffs’ counsel. At paragraph 6 of this affidavit, Fabian stated that:
Dr. Saito informed me and I believe him that my late father is going through depression and his judgment with respect to the sale transaction and the POA is much in doubt.
[34] The attached letter from Dr. Saito has a “re:” line referring to “Okey Eze.” However, I note that both Fabian and his father share similar, but not identical, names.
[35] When Fabian was cross-examined on his April 30, 2019 affidavit, he stated it was not his father, but him, who suffered from depression. Yet, when asked if Fabian had seen a doctor for his alleged depression, Fabian answered “no” “but if I have issues that could lead to that” “I not going to doctor because --- you know, your mindset of your medical situation, you know, can lead to depression”.
[36] Fabian has not seen a doctor for his alleged depression. In fact, Fabian denied he had a “mental illness” during his cross-examination. Fabian does not take medication for depression.
[37] Fabian was asked for his OHIP records or “medical records” to corroborate his alleged mental illness, but Fabian refused to give an undertaking to produce OHIP records or other medical records. None were ever produced.
[38] Fabian's own evidence on his depression is confusing and does not clearly establish a “diagnosis” of depression, let alone the impact on his mental capacity to enter into contracts.
[39] Fabian continues to be employed in a construction company. Fabian sometimes executes contracts in connection with this employment. Clearly, Fabian’s alleged mental illness is not such that he cannot continue to work and execute contracts in connection with his employment.
[40] Some 8 months after the cross-examination of Fabian on the served affidavit, the Defendants filed a different affidavit for Fabian with the court, dated February 11, 2020 which stated that it was him - not his father - suffering from depression. What is important is that neither affidavit, even if entirely accepted, fails to establish that Fabian has a mental illness which affected his capacity to contract.
The Alleged Revocation
[41] Fabian testified that he was told in early June that his father was “going to cancel” the Power of Attorney. Fabian does not explain why he would, in such circumstances, execute the APS or continue with the sale of the Property.
[42] In Fabian’s affidavit and in his cross-examination, he stated that his father revoked the Power of Attorney on June 15, 2016 but he only became aware of the revocation after he had signed the APS. Fabian does not state when he became aware of the revocation. Why Fabian did not raise the revocation at any time up prior to this litigation was never satisfactorily explained by him.
[43] Fabian states he told his lawyer, Garry Shapiro and Ms. Mehr-Ali- Zadeh about the revocation verbally at some unspecified time. Both deny ever being told of a revocation. Neither of these persons have any reason to lie. Why there was nothing in writing about the revocation was never explained by Fabian.
[44] Ms. Mehr-Ali-Zadeh continued assist Fabian’s search for a new home until September 2016.
[45] Of compelling importance, when Garry Shapiro, Fabian's own lawyer, wrote to the Plaintiffs' lawyers on September 7, 2016, there was no mention of a revocation of the Power of Attorney, only that Fabian lacked the "mental capacity" and was of "unsound mind" when he signed the APS.
The Written Revocation
[46] After considerable questioning during Fabian’s cross-examination about the revocation of the Power of Attorney, no such document being produced. The Defendants finally produced a copy of a revocation as an attachment to their factum served on the weekend before this hearing and sought to be filed on the morning of the hearing.
[47] This "revocation" document is inadmissible. The timing and late production also raises very serious questions regarding it reliability.
The Doctor’s Letter of September 1, 2016
[48] The Plaintiffs object to Dr. Saito's letter of September 1, 2016, attached to Fabian’s affidavit, as being hearsay.
[49] I agree. First, the qualifications of Dr. Saito to opine on such matters as mental capacity to contract is not known. Secondly, Dr. Saito's letter does not assist on two key issues - whether Fabian’s depression and insomnia when he signed the APS caused him to not understand or appreciate what he was signing on June 28, 2016 - i.e. that he lacked the capacity to contract at that time or at any time.
[50] Dr. Saito simply repeats that Fabian told him he "still does not understand how that happen or what state of mind he was in at the time of his signing the documents."
[51] In conclusion, I reject Dr. Saito's letter as admissible evidence in this motion on the issue of Fabian's capacity. See Zelez v. Raczkowska, 1996 CarswellOnt 2757, 63 A.C.W.S. (3d) 1155 at para. 6 and Alavi v. York University et al, 2013 ONSC 3213 at para. 46.
THE POSITION OF THE PARTIES
[52] The Defendants raise the following issues:
a) The APS was not a binding agreement; b) The purchasers were aware that the Power of Attorney was revoked; c) Fabian did not have the mental capacity to enter into the APS, when he executed the agreement; d) Fabian's wife did not consent to the APS; and e) The Plaintiffs have not proven the damages claimed.
THE LAW
[53] There is no dispute on the test for summary judgment under Rule 20.04(2) (a) of the Rules of Civil Procedure. Rule 20.04 (2) (a), which directs 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.”
[54] Rule 20.04 (2) (a) must be read in combination with r. 20.04 (2.1) which provides:
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 determinations being made by a judge, the judge may exercise any of the following powers for the purpose, unless it is in the interests of justice for such powers to be exercised only at trial:
- Weighing the evidence.
- Evaluating the credibility of a deponent.
- Drawing any reasonable inference from the evidence.
[55] In Hryniak v. Mauldin, 2014 SCC 7, [2014] 1 S.C.R. 87, Karakastanis J. considered the interrelationship between r. 20.04 (2) (a) and r. 20.04 (2.1) and made the following comments at para. 66:
On a motion for summary judgment under Rule 20.04, the judge should first determine if there is a genuine issue requiring trial based only on the evidence before her, without using the new fact-finding powers. There will be no genuine issue requiring a trial if the summary judgment process provides her with evidence required to fairly and justly adjudicate the dispute and is a timely, affordable and proportionate procedure under rule 20.04(2)(a). If there appears to be a genuine issue requiring a trial, she should then determine if the need for a trial can be avoided by using the new powers under Rules 20.04(2.1) and (2.2). She may, at her discretion, 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 they 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. [Emphasis original.]
[56] The question I must address is whether there is a genuine issue for trial. There is no genuine issue for trial where, as set out by Karakatsanis J. in Hryniak at para. 66:
A judge is able to reach a fair and just determination on the merits on a motion for summary judgment. This will be the case when the 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.
[57] Parties are required to put their “best foot forward” on a motion for summary judgment, and cannot rely on the fact that additional evidence may be able to substantiate their position; McPeake v. Cadesky & Associates, 2018 ONCA 554 at para. 11; and Mahoney v. Sokoloff, 2015 ONCA 390, at para. 5. Henry J. described the obligation of a party responding to a summary judgment motion as follows in Pizza Pizza Ltd. v. Gillespie (1990), 75 O.R. (2d) 225 (Gen. Div.):
It is not sufficient for the responding party to say that more and better evidence will (or may) be available at trial. The occasion is now. The respondent must set out specific facts and coherent evidence organized to show that there is a genuine issue for trial.
[58] As the moving party, the Plaintiffs have the burden to show there is no genuine issue for trial.
THE ANALYSIS
[59] A just result can be arrived at in this case without the need for the court’s “new fact finding powers”.
Was the APS a binding agreement when signed?
[60] The Defendants submit that the APS was not a binding agreement because there were several conditions in it. There are several problems with this submission.
[61] First, other than a bald statement that the APS was not binding, the Defendants did not plead in their defence any facts as to why the APS was not or did not become a "firm" APS, other than Fabian didn’t have the mental capacity. As for the defence allegation of non est factum, no facts were advanced on this issue on this motion and the issue was not pursued by the Defence on this motion.
[62] Secondly, the Defendants did not elect to terminate the APS because a "condition" had not been fulfilled. The only basis alleged on behalf of the Defendants, when the Defendants purported to terminate the APS on September 7, 2016, was because Fabian was "mentally incapable and of unsound mind at the time of signing the Agreement."
[63] Thirdly, unless void at law for such matters as incapacity, the APS is a binding agreement, even though it might contain conditions to be met. The APS creates contractual and legal obligations on the parties to the APS which can come to an end but only in accordance with the terms contained in the APS. The Defence has not pointed to any condition(s) which had not been complied with as of September 7, 2016.
[64] Fourthly, the evidence is that the parties were proceeding to complete the APS when it was terminated by the Defendants.
[65] There is no basis to conclude that the APS was not a binding agreement at the time it was signed or to conclude it became a non-binding agreement at any subsequent time due to some unspecified unfulfilled condition.
Were the Purchaser's Aware the Power of Attorney had been revoked?
[66] Fabian states in his affidavit that "it was obvious to the plaintiffs that my late father was the owner of the property and the revocation of the POA had been communicated to the plaintiffs". Fabian fails to state when this information had been communicated to the Plaintiffs. However, Fabian admits he did not know about the alleged revocation until after he signed the APS.
[67] There is no documentation to support this "communication" alleged to be "obvious." This is a bald statement with no details as to when, how and who communicated this information to the Plaintiffs. The Defendants do not allege that the Plaintiffs knew the Power of Attorney was revoked prior to June 28, 2016, the date the APS was signed.
[68] The cross-examination of Fabian makes it clear that he did not tell the Plaintiffs directly that the Power of Attorney was revoked at any time. The uncontroverted evidence is that the Plaintiffs deny they had knowledge of the revocation of the Power of Attorney.
[69] The Defendants do not allege that the Plaintiffs acted in bad faith.
[70] In his affidavit, Fabian states that he told his lawyer, Garry Shapiro and his real estate agent, Ms. Mehr-Ali-Zadeh. Again, it is unclear when he allegedly told Garry Shapiro and/or Ms. Mehr-Ali-Zaheh this information. However, they both deny they were so advised by Fabian.
[71] The pivotal issue on this motion is that this alleged revocation (if there was one) was not communicated to anyone, including Fabian and the Plaintiffs, until after the APS was executed. As a result, subject to the issue of capacity dealt with below, there was valid authority by all parties to enter into the APS and they did so. The APS was a binding agreement on June 28, 2016.
[72] If the revocation had occurred before the execution of the APS, s. 13 of the Substitute Decisions Act would continue to make the APS a valid and binding contract as between the vendor and purchaser. That section provides as follows:
13(1) If a continuing power of attorney is terminated or becomes invalid, any subsequent exercise of the power by the attorney is nevertheless valid as between the grantor or the grantor’s estate and any person, including the attorney, who acted in good faith and without knowledge of the termination or invalidity.
[73] If the revocation of the Power of Attorney occurred execution of the APS, that is an issue between Fabian and his father, and it does not impact on the validity or enforceability of the APS.
[74] I have no hesitation concluding that the APS was not affected by any prior or subsequent purported revocation of the Power of Attorney.
Fabian's Capacity to enter into the APS
[75] The Substitute Decisions Act, provides as follows:
2(1) A person who is eighteen years of age or more is presumed to be capable of entering into a contract. (3) A person is entitled to rely upon the presumption of capacity with respect to another person unless he or she has reasonable grounds to believe that the other person is incapable of entering into the contract or of giving or refusing consent, as the case may be.
[76] As a result, there is a presumption of capacity by Fabian to execute the APS.
[77] Fabian states in his affidavit "A trial is required to for example, explore... my mental state on the date of my signing the APS..." That statement, by itself, is insufficient to overcome the presumption of capacity. That statement by itself is insufficient to create a triable issue requiring a trial.
[78] At its best, the evidence establishes that Fabian may suffer from depression. Even if Fabian is suffering from depression, it does not establish or create a triable issue (without more evidence) that Fabian did not have the legal capacity to enter into the APS because:
a) Fabian does not see a doctor for his depression, takes no medication for depression, and continues to be employed where part of his job is to enter into contracts; and b) Fabian understood throughout that he was listing the Property, approving the listing price, negotiating the sale price, signing an agreement to sell the Property for the $940,000 and commenced to search for a new home.
[79] Of particular importance, neither of Fabian's affidavits state he did not understand the nature or effect of what he was signing on June 28, 2016, nor do his answers in the cross-examination support a failure to understand or appreciate the nature of the transaction - the APS - at that time.
[80] There is simply no evidence to establish that Fabian did not understand or appreciate the nature of the document he was signing.
[81] I am satisfied that this issue does not require a trial for a just determination.
Fabian's Wife's Consent
[82] The Defendants allege that the APS was void because Fabian's wife did not consent to the sale of the Property.
[83] The Defendants' counsel did not pursue this issue at the hearing. Nevertheless, I reject this issue since Fabian was not the beneficial owner. Fabian was selling the Property under the Power of Sale. In these circumstances, I am not persuaded that Fabian's wife's consent was required since it was not his matrimonial home.
[84] Further, there is no evidence this was a matrimonial home.
[85] In any event, even if Fabian's wife's consent was necessary, we have no evidence as to whether she would have consented to the sale on closing as the APS was terminated on September 7, 2016, a number of weeks prior to the expected closing.
[86] There is no merit to this defence.
Damages
[87] In this case, specific performance is no longer sought.
[88] There are damages suffered by the Plaintiffs as a result of the Defendants' breach of the APS. They include legal costs associated with the failed APS of $4,799.65. There is no dispute regarding these costs.
[89] But there are additional costs (besides costs of this litigation) claimed on this motion:
a) $5,000 for the increased costs of the purchase price of the Solstice Property over the purchase price of the Property; and b) $160,000 being the increased value of the Property less the increased value of the Solstice Property to July 2019;
[90] As for the $160,000 claim, the Plaintiffs rely on a joint appraiser who valued the increase in the Property, as of July 2019, to be $180,000 less the increased value of the Solstice Property over the same period to be $20,000. The net amount is $160,000.
[91] I am not satisfied that the Plaintiffs have established they are necessarily entitled to these additional damages. If the Plaintiffs are entitled to such damages, they should be determined at a trial.
[92] First, there is a question whether the Plaintiffs are entitled to the increased cost of the Solstice Property and the difference in the increased value between the Property and the Solstice Property.
[93] I make no comment on what the proper measure of damages would be in this case.
[94] Secondly, I reject the Plaintiffs’ submission that because the parties jointly retained the appraiser, the Defendants are "stuck" with the appraiser's opinions on value. The Defendants would be free at a trial to adduce further evidence inconsistent with the joint appraiser's opinion, which evidence might be accepted by the trier of fact.
[95] Accordingly, the issue of damages should be tried.
[96] Rule 20.04 provides as follows:
(3) Where the court is satisfied that the only genuine issue is the amount to which the moving party is entitled, the court may order a trial of that issue or grant judgment with a reference to determine the amount.
[97] I hereby direct a reference to determine the amount of any additional damages, beyond $4,799.65 plus costs of the action and motion, pre and post judgment interest in this case. Counsel may schedule an attendance before me by telephone to fix a timetable and date for this reference before me.
[98] At the same time as the reference, I will hear submissions on costs and interest.
CONCLUSION
[99] Partial Judgment to issue as follows:
a) in favour of the Plaintiffs for $4,799.65 plus such additional amounts as may be determined by this court on a reference to assess any additional damages, cost and interests; and b) the Certificate of Pending Litigation will remain on title until the reference is completed.
Ricchetti J. Date: February 26, 2020