Court File and Parties
COURT FILE NO.: CV-19-0630071 DATE: 20201216 SUPERIOR COURT OF JUSTICE – ONTARIO
RE: TRIBUTE (simcoe street) LIMITED, Plaintiff AND: tike he and xiao ping huang, Defendants
BEFORE: Davies J.
COUNSEL: Krista Chaytor and Caitlin Steven, for the Plaintiff No materials submitted by the Defendants
HEARD at Toronto: In writing
REASONS FOR DECISIONS
Overview
1This is a motion for default judgment against Xiao Ping Huang.
2On March 11, 2017, Tike He signed an Agreement of Purchase and Sale (APS) to buy a townhouse condominium in a new development in Oshawa, Ontario for $614,990. Tribute was the builder and developer on the project. The tentative occupancy date for the townhouse was March 25, 2019. On March 11, 2017, Mr. He assigned the APS to Xiao Ping Huang with Tribute’s consent.
3Tribute delayed the occupancy date from March 25, 2019 to May 13, 2019.
4On March 18, 2019, Tribute received a letter from Mr. He and Ms. Huang’s lawyer asking to extend the closing date to May 25, 2019 because they were having trouble securing a mortgage. No agreement was reached between the parties to extend the closing.
5Ms. Huang did not take possession of the townhouse on May 13, 2019.
6Tribute terminated the APS on October 22, 2019 and resold the property on July 27, 2020.
7Tribute now seeks default judgment in the amount of $87,678.21. This represents the difference between the purchase price agreed to by Ms. Huang and the final sale price on the property plus unpaid occupancy fees, interest and carrying costs.
A. Notice to Mr. He and Ms. Huang
8Tribute issued its statement of claim on October 29, 2019.
9Mr. He was served with the statement of claim on November 4, 2019. He did not deliver a statement of defence and he was noted in default on December 19, 2019. Counsel for Tribute sent a copy of the signed requisition noting Mr. He in default to Mr. He by mail and by email on December 30, 2019.
10Ms. Huang was served with the statement of claim on December 13, 2019. She did not deliver a statement of defence and she was noted in default on January 15, 2020. Counsel for Tribute sent a copy of the signed requisition noting Ms. Huang in default to Ms. Huang on January 16, 2020 by mail. A copy of the letter to Ms. Huang was also sent by email to Mr. He.
11On October 20, 2020, Justice Myers ordered the plaintiff to serve the defendants with its default judgment motion record and factum by mail by November 9, 2020. Justice Myers ordered that, if the defendants wanted to defend the action, they had to file a motion to lift the noting in default by November 27, 2020 together with an affidavit explaining why they have not delivered their statements of defence.
12On November 3, 2020, counsel for the plaintiff mailed a copy of the motion record and factum along with Justice Myers endorsement to the defendants at the address where they were each served with the statement of claim. Under rule 16.06 of the Rules of Civil Procedure, R.R.O. 1990, Reg. 194, the service of these documents by mail was effective on the fifth day after the document was mailed, or November 8, 2020.
13Ms. Huang has not filed any materials in response to the plaintiff’s motion for default judgment.
14I find that Ms. Huang has notice of this motion and has been given with a fair opportunity to bring a motion to have the noting in default set aside or to respond. Having no materials from Ms. Huang, I am prepared to consider Tribute’s motion for default judgment on an ex parte basis.
B. Contract Breach and Damages
15Ms. Huang is deemed to have admitted the facts pleaded by Tribute in its statement of claim: rule 19.02(1)(a). In addition, Tribute has adduced two affidavits, including an affidavit from a certified Canadian Residential Appraiser who assessed the value of the townhouse on October 22, 2019 when the APS was terminated. Based on the admitted facts and the evidence adduced, I find that Ms. Huang breached the APS by failing to take occupancy on May 13, 2019. I also find that the deposit of $92,903.90 paid by Mr. He should be forfeited to Tribute to offset any damages owing by Ms. Huang.
16As set out above, the original purchase price for the townhouse was $614,990. Mr. He paid a $92,248.50 deposit in various installments as required by the APS. In March 2018, Ms. Huang selected upgrades for the townhouse totalling $3,277. The APS was amended to add the cost of the upgrades to the purchase price. The new purchase price was $618,267. Ms. Huang paid a deposit of $655.40 towards the cost of the upgrades. The balance owing on closing was $525,363.10 (the revised purchased price minus the deposits of $92,903.90).
17I am satisfied that Tribute took reasonable steps to mitigate its damages. It listed the townhouse for resale on January 20, 2020 for $529,990. On June 1, 2020, Tribute accepted a $505,000 offer. Tribute paid a 2.5% finder’s fee to the purchaser’s agent. The net proceeds from the sale by Tribute were $490,733.75.
18Tribute adduced an affidavit from William Ly, a certified real estate appraiser. According to Mr. Ly, the townhouse had a market value of $500,000 on October 22, 2019. I accept Mr. Ly’s evidence on this point. Tribute, therefore, recovered more than the assessed market value of the property in its efforts to mitigate its damages.
19The difference between the balance owing by Ms. Huang on closing ($525,363.10) and the proceeds from the resale of the property ($490,733.75) is $34,629.35. I am satisfied that these damages arise from the breach of the contract.
20Under the APS, Ms. Huang was required to pay a monthly occupancy fee of $2,520.43 on the first of each month during the occupancy period. The occupancy period should have started on May 13, 2019 when Ms. Huang was to take possession of the townhouse and would have continued until the condominium was finally transferred to her. Ms. Huang did not take possession on May 13, 2019 and never paid the occupancy fee. I am satisfied that the occupancy fees due by Ms. Huang between May 13, 2019 and the date that Tribute terminated the APS is $13,415.19. Tribute is entitled to damages for the unpaid occupancy fees.
21The APS says that if the purchaser defaults on the APS, the Vendor is also entitled to recover any costs or expenses incurred as a result of the breach. I am satisfied that Tribute incurred the following costs and expenses as a result of the breach:
- legal fees related to the failed transaction in the amount of $902.84;
- insurance on the property in the amount of $708.79; and
- electricity, gas and water expenses in the amount of $2,062.82.
Tribute is entitled to recover those fees. The APS also says that Tribute is entitled to a 15% administrative fee on expenses incurred as a result of a breach of the agreement. Tribute’s expenses, including the commission paid to re-sell the property, legal fees and carrying costs, total $3,674.45. The administrative fee owing on these expenses is $551.17. [1]
22Finally, Tribute seeks interest on the amounts owing by Ms. Huang. The APS says “in the event the Purchaser fails to make payment as and when required pursuant to the terms of this Agreement, the payment amount shall bear interest at a rate equal to five percent (5%) above the Prime Rate, calculated from the due date to the date of payment.” Based on the calculations provided, I am satisfied that the total interest on the closing balance between May 13, 2019 and the resale date is $32,948.18. I am satisfied that the interest on the difference between the original purchase price and the proceeds from the resale is $940.07. Finally, I am satisfied that the interest owing on the unpaid occupancy fees is $1,519.80.
23I am satisfied that the total damages are $87,678.21.
C. COSTS
24Tribute seeks costs on the Application on a full indemnity basis. A successful party is presumptively entitled to costs on a partial indemnity scale. Generally, costs are only awarded on a substantial indemnity basis if the conduct of a party is reprehensible, scandalous or outrageous: see Young v. Young, [1993] 4 S.C.R. 3 (S.C.C.) at para. 251. The APS states that Mr. He and Ms. Huang indemnify Tribute and its solicitor against “any losses, costs, expenses or damages” incurred by Tribute or its solicitors as a result of the non-payment of any amount owing under the APS. The reference to costs in the APS would include legal costs. I am, therefore, satisfied that Mr. He and Ms. Huang agreed to fully indemnify Tribute for its legal fees, and I order them to pay $12,641.73.
D. POST-JUDGMENT INTEREST
25Tribute also seeks post-judgment interest at a rate of 7.45%, which is the prime rate plus five percent.
26Section 130 of the Courts of Justice Act, R.S.O. 1990, c. C.43 gives me the discretion to set the interest rate for post-judgment interest higher or lower than provided for in s. 129. The post-judgment interest rate is currently set at 3%.
27Tribute argues that a higher interest rate is provided for in the APS. In a clause titled “Rights of Vendor”, the APS states as follows:
It is understood and agreed that the rights contained in this Article 8.00 on the part of the Vendor are in addition to any other rights which the Vendor may have at law, in equity or under any other provisions of this Agreement, and the Vendor expressly has the right to exercise all or any one or more of the rights contained in this Agreement, at law or in equity, without exercising at such time the remainder of such right or rights and without prejudice to the subsequent right of the Vendor to exercise any remaining right or rights at law, in equity or in this Agreement. In the even the Purchaser fails to make payment as and when required pursuant to the terms of this Agreement, the payment amount shall bear interest at a rate equal to 5% per annum above the Prime Rate, calculated from the due date tot eh date of payment.
28Without evidence that Tribute brought this provision to Ms. Huang’s attention when the amendment to the APS was signed, I am not prepared to exercise my discretion to set the post-judgment interest rate higher than provided for in s. 129. I am not satisfied that Ms. Huang would have expected there to be a clause dealing with post-judgment interest in the APS or would have understood the import of this clause. In addition, there was a significant power imbalance between Tribute on the one hand and Ms. Huang on the other. Tribute drafted the terms of the APS. There is no evidence that the terms of the standard form APS, including the interest rate, were negotiated or negotiable. In those circumstances, I am not satisfied that it is just to impose a post-judgment interest rate beyond 3%.
E. Conclusion
29I find that Tribute is entitled to judgment against Ms. Huang in the amount of $87,678.21 plus costs in the amount of $12,641.73. The motion for default judgment is granted on the terms set out in the order signed by me today.
Davies J. Date: December 16, 2020
Footnote
1In its Motion Record and factum, Tribute claims that the administrative fee should be $477.68. This was a mathematical error: 15% of the costs and expenses is $551.17, not $477.68.