THE HISTORY

[1] This matter came before this court by way of summary judgment motion on February 19, 2020.

[2] For the reasons set out in Datta v. Eze, 2020 ONSC 1240, summary judgment was granted in favour of the Plaintiffs. Essentially, this court found that the Defendants had breached the Agreement of Purchase and Sale (APS) to sell 6 Lonetree Court, Brampton (“Property”) to the Plaintiffs and were liable to the Plaintiffs for recoverable damages at law suffered by the Plaintiffs.

[3] On the issue of damages, this court found that the Plaintiffs’ thrown away pre-closing expenses (which had not been challenged) of $4,799.65 were recoverable damages.

[4] However, this court directed a reference to fix the quantum of any additional damages.

[5] On May 14, 2020, an audio conference call was heard to fix a timetable for the reference. The court fixed a date for the filing of any additional evidence on the reference, including appraisal expert reports. The court ordered that the parties ensure the affiants or appraisers be present at the videoconference for the purpose of any cross-examination.

[6] The reference on damages was heard on July 16, 2020.

PRELIMINARY ISSUE

[7] Both parties filed additional appraisal evidence.

[8] The Plaintiffs filed updated appraisal reports by Syan and Associates on the value of the Property and Solstice Property. Mr. Syan was present at the videoconference and available for cross-examination. The Defendants declined to cross-examine Mr. Syan.

[9] The Defendants filed appraisal reports by Mr. Teolis on the two subject properties. Despite the court order, the Defendants did NOT produce Mr. Teolis for cross-examination at the reference. Mr. Teolis was not present. No explanation was given why Mr. Teolis was not present. Mr. Teolis could not be cross-examined on his appraisal opinions.

[10] The failure to have Mr. Teolis available for cross-examination was a breach of the May 14, 2020 order and is a significant factor against any weight being attached to Mr. Teolis’ appraisal reports.

[11] There were obvious and significant areas to be explored in cross-examination of Mr. Teolis:

a) Mr. Teolis is a “candidate” appraiser. He is not a “certified” appraiser. It is not known whether Mr. Teolis had previously done any appraisal reports or what type of properties or the neighbourhood of the subject properties. There is no information on his experience. There is simply no evidence to properly weigh Mr. Teolis’ appraisals; and;

b) Mr. Teolis simply did a “drive by” and looked at old listing photos to arrive at his opinions. This significantly limits any weight to be given to his appraisals.

[12] Whether there are other serious shortcomings in Mr. Teolis’ approach and basis for his appraisals will never be known since it could not be challenged by the Plaintiffs.

[13] This is in strict contrast to Mr. Syan’s appraisals. The parties agreed to a joint appraisal for the properties at the settlement conference. Mr. Syan was jointly chosen by the parties. The parties had an opportunity to challenge Mr. Syan’s appraisals be a date set by the court – neither party challenged Mr. Syan’s appraisals.

[14] As a result, I put NO weight on Mr. Teolis’ appraisal reports.

BACKGROUND

The Repudiation

[15] The Plaintiffs entered into the APS to buy the Property on June 28, 2016. The purchase price was $940,000. The APS was to close on September 28, 2016.

[16] On September 7, 2016, the Defendants breached the APS by “rescinding” the APS. The deposit was returned.

The Solstice Property

[17] After the Defendants continued to refuse to close the APS, the Plaintiffs had their real estate agent look for another home “as the market was really hot and they feared they would be priced out of the market given their budgetary constraints”.

[18] During the subsequent search, the real estate agent found that there were “no properties available that could be considered a suitable substitute for the Property, at the price range of $940,000 to $950,000, having the characteristics” similar to the characteristics of the Property. The real estate agent testified that the “real estate market heated up extremely quickly” and that a property with the characteristics of the Property was “not readily available in another property at or around the time”. This evidence is unchallenged.

[19] As a result, the Plaintiffs were “forced to pay $5,000 more for a home that had no finished basement, was around 400 square feet smaller than 6 Lonetree and on a lot that was nearly 44% smaller than Lonetree.” This was 10 Solstice Street, Brampton (“Solstice Property”).

[20] On October 18, 2016, the Plaintiffs entered into an APS to purchase the Solstice Property for $945,000. The purchase of the Solstice Property was completed on December 20, 2016.

The Proceeding

[21] The Plaintiffs’ Statement of Claim was issued on September 27, 2016 seeking specific performance or, alternatively, damages.

[22] In the Statement of Claim, the Plaintiffs set out eleven (11) reasons why the Property was unique. See paragraph 12.

[23] The Statement of Defence of Okey Eze simply denies the allegations in the Statement of Claim.

[24] The Defence of Okey Fabian Eze denies that the Property was unique as there “are many other residential properties available in the neighbourhood”.

The Plaintiffs’ Summary Judgment Applicant Evidence

[25] In the Datta Affidavit, Mr. Datta set out that the Property was “particularly attractive” because it was on a cul-de-sac, situated on a golf course and within walking distance of a particular religious temple. Mr. Datta went on to describe the more attractive attributes to the Property rather than the Solstice Property. See paragraph 37 of the Datta Affidavit.

[26] At a judicial settlement conference, counsel for the parties agreed to have a “joint” appraisal done. The parties then jointly selected Mr. Pinday Syan, a certified real estate appraiser, to conduct an appraisal of the Property and the Solstice Property as of July 2019 (the date of the court settlement conference). Mr. Syan determined that the Property’s value had increased to $1,120,000 whereas the Solstice Property had increased to $965,000.

[27] In accordance with the settlement conference consent order, the Defendants were instructed that, if they disagreed with the valuations of Mr. Syan, they were to do so prior to October 15, 2019. The Defendants did not challenge Mr. Syan’s appraisals.

[28] As at the summary judgment motion, the Defendants introduced no valuation evidence.

[29] At the summary judgment motion, the Plaintiffs claimed additional damages of $160,000 being the NET amount that the Property had increased in value over the increase in value of the Solstice Property based on the Syan appraisals of July 2019.

The Defendants’ Summary Judgment Responding Record

[30] The Defendants failed to deal with the issue of damages at all.

Additional Reference Evidence

[31] The Plaintiffs filed an update of Mr. Syan’s appraisal opinions on the two properties as at March 2020. Essentially, the updated Syan appraisal reports disclosed an increase of value for the Property of $220,000 and the increase in value for the Solstice Property of $70,000 for a net differential increase of $150,000.

[32] As stated above, the Defendants chose not to cross-examine Mr. Syan.

THE POSITION OF THE PARTIES

[33] The Plaintiffs submit the Property was unique and seek additional damages of $160,000 based on the July 2019 Syan appraisals.

[34] The Defendants submit that the Property was not unique.

[35] The Defendants submit that damages should not be more than $20,000 or no more than $40,000. However, there was no principled basis for the damage quantification submitted by the Defendants.

THE LAW

[36] The parties did not provide any legal authority where the facts were similar to the circumstances of this case. Neither has this court been able to find any case “on all fours”.

THE ANALYSIS

[37] The starting point for any analysis for damages in failed real estate transactions is Semelhago v. Paramadevan, 1996 CanLII 209 (SCC), [1996] 2 SCR 415.

13 The rationale for assessing the damages at the date of breach in the case of breach of contract for the sale of goods is that if the innocent purchaser is compensated on the basis of the value of the goods as of the date of breach, the purchaser can turn around and purchase identical or equivalent goods. The purchaser is therefore placed in the same financial situation as if the contract had been kept.

14 Different considerations apply where the thing which is to be purchased is unique. Although some chattels such as rare paintings fall into this category, the concept of uniqueness has traditionally been peculiarly applicable to agreements for the purchase of real estate. Under the common law every piece of real estate was generally considered to be unique. Blackacre had no readily available equivalent. Accordingly, damages were an inadequate remedy and the innocent purchaser was generally entitled to specific performance. Given the flexibility of the rule at common law as to the date for the assessment of damages, it would not be appropriate to insist on applying the date of breach as the assessment date when the purchaser of a unique asset has a legitimate claim to specific performance and elects to take damages instead (see Wroth v. Tyler; Johnson v. Agnew; and Mavretic v. Bowman, 1993 CanLII 1270 (BC CA), [1993] 4 W.W.R. 329). The rationale that the innocent purchaser is fully compensated, if provided with the amount of money that would purchase an asset of the same value on the date of the breach, no longer applies. This disposition would not be a substitute for an order of specific performance. The order for specific performance may issue many months or even years after the breach. The value of the asset may have changed.

16 For all of these reasons, it is not inconsistent with the rules of the common law to assess damages as of the date of trial. It must be remembered that the rules of the common law did not contemplate awarding damages as a substitute for specific performance. The rules of the common law must be applied in light of the statutory imperative contained in s. 99 of the Courts of Justice Act. The damages that are awarded must be a true substitute for specific performance. ....

18 I therefore conclude that, in the circumstances of this case, the appropriate date for the assessment of damages is the date of trial as found by the trial judge. Technically speaking, the date of assessment should be the date of judgment. That is the date upon which specific performance is ordered. For practical purposes, however, the evidence that is adduced which is relevant to enable damages to be assessed will be as of the date of trial. It is not usually possible to predict the date of judgment when the evidence is given.

19 The difference between the contract price and the value “given close to trial” as found by the trial judge is $120,000. I would not deduct from this amount the increase in value of the respondent’s residence which he retained when the deal did not close. If the respondent had received a decree of specific performance, he would have had the property contracted for and retained the amount of the rise in value of his own property. Damages are to be substituted for the decree of specific performance. I see no basis for deductions that are not related to the value of the property which was the subject of the contract. To make such deductions would depart from the principle that damages are to be a true equivalent of specific performance.

20 This approach may appear to be overly generous to the respondent in this case and other like cases and may be seen as a windfall. In my opinion, this criticism is valid if the property agreed to be purchased is not unique. While at one time the common law regarded every piece of real estate to be unique, with the progress of modern real estate development this is no longer the case. Residential, business and industrial properties are all mass produced much in the same way as other consumer products. If a deal falls through for one property, another is frequently, though not always, readily available.

(emphasis added)

[38] The principles in Semelhago have continued to be followed. For example in Chai v. Dabir, 2015 ONSC 1327:

23 The decision of the Supreme Court of Canada in Semelhago confirmed that, in case where specific performance is an appropriate remedy, the plaintiff may elect to claim damages instead. In such cases, the plaintiff is relieved from the duty of mitigation ordinarily imposed on an innocent contracting party where the opposing contracting party has breached their agreement. In such a case, the innocent party may recover damages equal to the difference between the purchase price specified in the agreement of purchase and sale, and the value of the property as at the date of trial.

Is the Property Unique?

[39] The Plaintiffs’ evidence is clear – the Property was unique to them. It was a property they wanted for the reasons set out, namely:

• It was in the area they wanted;

• It was close to a religious temple;

• It was close to a school;

• It was close to the golf course;

• It was close to a highway;

• It had 4 bedrooms;

• It had a finished basement; and

• It had a large lot size.

[40] None of these characteristics are unique by themselves. However, when these characteristics are considered in total together with the sole availability of a property with these characteristics during a “hot” and rising market, this Property was unique.

[41] The uncontroverted evidence is that there was no other property (including the Solstice Property which they eventually bought) which met the Plaintiffs’ “wish list”. The Plaintiffs had to settle for the Solstice Property in the circumstances, particularly given their budget and the fast rising prices in the area and no other home with similar characteristics.

[42] The difficulty the Defendants face is that they have not led ANY evidence that the Property was not unique or that there were other comparable substitute properties available at the time.

[43] Defence counsel states that this was a “subdivision” home. However, not all the homes in that subdivision are the same or were available at that time. There is simply no evidence to support this submission.

[44] Uniqueness must take into account all the surrounding circumstances, including the purchaser’s “wish list”, the market conditions, the location, the type of home, the condition of the home, the lot, the finished areas of the home, the quality of finishes, the availability of comparable homes with the same attributes in the same price range, the proximity to certain amenities and so on.

[45] The Defendants chose not to lead any evidence on any of these issues.

[46] On the record before me the only conclusion I can reach is that the Property was unique.

The Measure of Damages

[47] The summary judgment motion was in February 2020. However, the reference is simply a continuation of that motion.

[48] In my view, the proper date for the measure of damages is the most current appraisal reports – March 2020.

[49] The evidence is that the Property had appreciated $220,000 to March 2020. The evidence is that the Solstice Property had appreciated $70,000 during the same period.

[50] Had the Plaintiffs closed on the Property they would have been financially ahead by $150,000 as at the date of the most recent evaluations which are close to the trial date (i.e. the reference date).

[51] Semelhago does not require the increase in the Plaintiff’s property to be deducted (see para. 19 Semelhago). However, in this case, given the concession by the Plaintiffs’ counsel that the increase in the Solstice Property be deducted from the damages claimed, I am satisfied the concession should be accepted by this court. This concession benefits the Defendants.

Is this an equitable result?

[52] This may to some appear to be a windfall for the Plaintiffs but for the same reasons described in Semelhago, I am not persuaded it is anything more than putting the Plaintiffs in the same financial position they would have been had the APS for the Property been completed.

[53] Although not framed as such, the Defendants’ position essentially appears to be that the Plaintiffs bought an alternate home, thereby mitigating their damages, and as such are not entitled to anything more than their “thrown away” expenses. I disagree. To accept the Defendants’ position would permit the Defendants to have breached the APS and walk away paying only minimal damages. Such an approach would be inequitable and would prevent purchasers, whose APS has been breached by the vendor, to acquire a new home rather than waiting for specific performance years later in an expensive legal proceeding. There are many reasons why the purchasers must buy another home in these circumstances even when the other home does not meet their criteria.

[54] In addition, the Defendants’ position would let the Defendants benefit from their breach. How so? The Defendants would continue to benefit from the appreciation in the Property and pay minimal damages. This approach would encourage vendors to breach their agreements of purchase and sale in a “hot” market. The Defendants would clearly have benefited by approximately $200,000, the increase in the value of the Property despite their breach of the APS! AND the innocent parties would be deprived of this increased value.

[55] Professor Waddams in The Law of Contracts (6th ed.) at pp. 523-524 explains why the party breaching the agreement should not benefit from their conduct to deprive the innocent party of damages from the loss of the bargain:

If the law of contracts protected only provable out-of-pocket losses incurred by the promisee, its usefulness to a commercial society would be substantially impaired. If A makes an agreement with B that is advantageous to B, B could not safely rely on it unless and until B incurred provable losses or expenses equal to the contractual advantage. Similarly it would be profitable for A to break the contract until such losses were incurred by B, for compensation would be cheaper than performance. Such a state of uncertainty would defeat the main purpose of contracts in a commercial context, that is, to allow and protect reliance. Thus... reliance can only be fully protected, at least in a commercial context, by a rule that measures damages by the value of performance, enabling the plaintiff to recover what he has been called the "expectation" interest or damages for "the loss of bargain."

[56] Similar concerns were expressed in Bhambra et al. v. Singh, 2019 ONSC 3110 at paragraphs 30-31.

[57] The Defendants approach acknowledges that they committed a wrong by breaching the APS but seeks to minimize damages by suggesting $20,000 or $30,000 as damages and keep the windfall appreciation of the Property.

[58] In my view, the damages approach taken by the Plaintiffs in this case is reasonable and fair to all parties. The Plaintiffs purchased a home in the area for approximately the same price. This permits the comparative approach to be an equitable manner for the assessment of damages without any further adjustments.

[59] I am satisfied that the Plaintiffs are also entitled to further damages of $150,000.

COSTS

Entitlement

[60] There is no doubt that the Plaintiffs were successful and are entitled to costs of the action.

Scale of Costs

[61] Substantial indemnity costs are appropriate in this case. I recognize that substantial indemnity costs are a punitive cost order and should only be made in the clearest of cases.

[62] Substantial indemnity costs are justified in this case:

a) The Defendants misled the Plaintiffs with regard to the timing of the registered owner’s death (Okey Eze) in an effort to cause the Plaintiffs to withdraw from the APS. This was false until discovered by the Plaintiffs;

b) The Defendants alleged that the Power of Attorney had been revoked thereby asserting that Okey Fabian Eze did not have the authority to sell the Property. The Defendants’ own lawyer was not advised of this. The Defendants own lawyer contradicted Okey Fabian Eze on this point. After numerous requests for such a copy of the revocation, a very highly suspect document purporting to revoke the Power of Attorney was produced on the eve of the summary judgment motion. The document was not even an exhibit to an affidavit. It is clear that this was nothing more than a further attempt to avoid the APS, albeit a very poor attempt;

c) The Defendants alleged that Okey Fabian Eze lacked the mental capacity. Yet, there was no cogent evidence to support this allegation – medical or otherwise. In fact, the evidence all supported the opposite conclusion. This was yet an attempt to avoid the APS;

d) The Defendants alleged that Okey Fabian Eze’s spouse had not consented to the transfer. Okey Fabian Eze’s spouse had no matrimonial interest in the Property. Again, this was a further attempt to avoid the APS;

e) The Defendants delayed this proceeding delaying in obtaining an order appointing Litigation Administrator for 9-10 months; and

f) On October 18, 2018 the Plaintiffs offered to settle this proceeding for $80,000 (all inclusive). This offer was open for a considerable time until withdrawn after the joint Syan appraisals were received. Nevertheless, while not engaging the Rule 49 Offer consequences, this offer is a further factor for awarding substantial indemnity costs.

[63] The Defendants’ conduct throughout can only be described as shocking and deserving of the court’s sanction.

Quantum

[64] The Plaintiffs seek costs of $21,986.25 plus HST for fees and $7,900.35 plus HST for disbursements.

[65] I have reviewed the line items of the Plaintiffs’ Cost Outline.

[66] Given the many issues without merit raised by the Defendants to avoid the APS each of which required the Plaintiffs to address, I am satisfied that the amounts claimed are entirely reasonable in the circumstances as substantial indemnity costs for the action.

[67] The Plaintiffs are entitled to costs of $29,886.60 plus HST.

CONCLUSION

[68] The Plaintiffs shall have judgment as follows:

a) $4,799.65 plus pre-judgment interest in accordance with the Courts of Justice Act from September 7, 2016 to August 17, 2020;

b) $150,000;

c) Costs of $29,886.60 plus HST;

d) Post judgment interest on the above amounts from August 17, 2020 in accordance with the Courts of Justice Act until payment.

Ricchetti, RSJ.

Date: August 13, 2020

Datta v. Eze, 2020 ONSC 4796

Case Summary

THE HISTORY

PRELIMINARY ISSUE

BACKGROUND

The Repudiation

The Solstice Property

The Proceeding

The Plaintiffs’ Summary Judgment Applicant Evidence

The Defendants’ Summary Judgment Responding Record

Additional Reference Evidence

THE POSITION OF THE PARTIES

THE LAW

THE ANALYSIS

Is the Property Unique?

The Measure of Damages

Is this an equitable result?

COSTS

Entitlement

Scale of Costs

Quantum

CONCLUSION

Judge

Counsel

Parties

Areas of Law

Fact Patterns

Expert Witnesses

Financial Outcomes

Issues

Statutory Provisions 1

Legal Tests 1

Legislation 1