Court File and Parties

COURT FILE NO.: CV-19-00620106 DATE: 20210222 ONTARIO SUPERIOR COURT OF JUSTICE

RE: Dantonbury Developments Inc., Plaintiff -and- Lian and Liu, Defendants

BEFORE: F.L. Myers J.

COUNSEL: Caitlin Steven, for the plaintiff Dan Hong Lian and Shuzhen Liu, in person (with an interpreter)

HEARD: February 19, 2021

Endorsement

The Motion

[1] The plaintiff moves for summary judgment on its claim for damages from a failed residential real estate transaction. The property has been re-sold and the plaintiff’s damages are therefore fixed.

[2] The defendants ultimately could not finance their purchase and are desperate to avoid liability. They have families to house and feed. The liability claimed against them is substantial. As asked by the defendants, I do and have considered and have accommodated the difficulties experienced by them as immigrants with limited English skills.

Process

[3] The defendants delivered an unsworn affidavit last November. They emailed the exhibits to the plaintiff and the court only the day before the motion was heard last week. The plaintiff did not object to the late delivery of material or to the defendants affirming the truth of their affidavit during the hearing.

[4] In their affidavit, the defendants confirm that they bought the house in good faith intending to close the transaction. They put forward the following defences:

a. They paid a $5,000 bribe to obtain an appointment to go to the plaintiff’s sales office;

b. The plaintiff failed to deliver an Occupancy Permit before closing and therefore the house was unsafe;

c. The plaintiff failed to mitigate by refusing to discuss with them an oral offer to close for $770,000 before the plaintiff re-sold the house to a third party for $680,000;

d. The resale price is unreasonably low;

e. The plaintiffs’ affidavits are false.

[5] At the outset of the hearing, the defendants asked for another adjournment. I incorporate my endorsement dated January 27, 2021 as a starting point.

[6] Last fall, the motion was scheduled on a peremptory basis for February 5, 2021. The motion date was moved based on a hearing in CPC that I did not realize was brought without notice to the plaintiff. The defendants say now that it was all confusion based on language. Be that as it may, the defendants assert a continued need for more time without establishing that there is more to do or that they have really done anything to advance their readiness in the time offered.

[7] The defendants have already delivered their affidavit. They have been allowed to email their documents at the last minute. It is not enough to continue to assert that they cannot find anyone to help them. They said they could not get their documents sworn. That too has been accommodated. They do not assert a need for further evidence. They do not want to hire a mandarin speaking lawyer as there are many and they have had since last October to make that telephone call.

[8] At the hearing, the defendants made a request to cross-examine the plaintiffs’ witnesses. Planned examinations in December were cancelled by the plaintiff when the defendants did not email the exhibits to their affidavit to counsel. Raising this issue now, despite the prior attendance at Civil Practice Court before the February 5, 2021 peremptory hearing date passed, is not a reasonable exercise of the cross-examination rule.

[9] In any event, I cannot see what use a cross-examination would be. The facts are either not in dispute or, where they might be, the legal issue does not turn on the facts.

[10] The plaintiff is entitled to its day in court too. It is not in the interests of justice to provide further time to the defendants given the procedural history of this matter. They have been given time and extra time to try to assist them. But, as noted below, they do not assert any responses to the plaintiff’s claim that turn on or will improve legally with the availability of further time.

[11] I am satisfied that the defendants have been treated fairly and accommodated taking into account their potential vulnerability.

The Defences Asserted

[12] Assuming that the defendants paid a bribe to get into the showroom to buy the house, that fact does not give them a defence to the agreement. Forest Hill Homes v Ou, 2019 ONSC 4332, at para. 14. Rather, it shows how much they wanted to buy the house that they would pay to obtain privileged access to a deal.

[13] Similarly, while the plaintiff did not send a copy of the Occupancy Permit to the defendants, it had one. It also confirmed to the defendants’ counsel that it was ready, willing, and able to close. This was not an issue ever raised until this proceeding. If the defendants had sought to terminate the agreement because of a breach by the plaintiff, they would have had to give notice at the time and the plaintiff would have sent the permit to their lawyer accordingly.

[14] On learning that the value of the house had fallen substantially by the time of closing, the defendants could not get sufficient financing to close. But, they say, they were prepared to offer $770,000 which was still far better than the amount for which the plaintiff ultimately sold the property.

[15] This offer was never formally made. During the hearing, the defendants asserted that the plaintiff’s lawyer would not let them speak to the plaintiff after the aborted closing. However, they then advised that they were told that the plaintiff would speak to them if they fulfilled either of two conditions that the plaintiff imposed. The defendants did not agree to either. It is not correct therefore to baldly assert that the plaintiff refused deal with the defendants.

[16] In any event, the Court of Appeal has determined that a party is not required to mitigate its damages by accepting a lower offer from the person in default. The defendants would still be paying the same overall amount as they would pay $770,000 and still be liable for the difference from the original sale price. Moreover, were it otherwise, in a falling market, every contracting party would be incentivized to refuse to close and make lower offers. See: Azzarello v. Shawqi, 2019 ONCA 820, at paras. 37 to 40.

[17] During the hearing, the defendants claimed for the first time that they were not provided with a copy of the agreement of purchase and sale and therefore they did not know they had a one week conditional period or grace period to escape the transaction. This issue was never raised in the defendants’ pleading or affidavit previously. It is wholly inconsistent with the defendants’ acts of paying multiple instalments of the deposit, choosing their finishes and upgrades, and then retaining a lawyer to close the deal.

[18] I asked the defendants why they paid the deposits and chose upgrades if they had wanted to get out of the deal. They said that they needed a home for their children but it turned out that when they went to finalize their financing before closing they could not get a big enough loan.

[19] There is no air of reality to the suggestion that (a) they did not know about the conditional period that they initialed in the agreement; or that (b) they had any intention of going to a lawyer or trying to get out of the deal within the one week conditional period. They repeatedly affirmed the transaction for months thereafter. They had a lawyer who had the agreement. They never raised any issue about the conditional period or getting out of the deal before closing. Moreover, the defendants were clear that if they could have raised the amount of money that they needed, they would have closed.

[20] Raising an allegation at the hearing that is not supported by any contemporaneous documentation and is wholly inconsistent with their own evidence does not raise a triable defence.

[21] Finally, the plaintiff has filed expert evidence by an appraiser showing that the house had declined in value to $680,000 by the date set for closing. This is consistent with the defendants’ evidence that they could not get financing beyond that amount. The drop in value is very large.

[22] The appraiser’s evidence is that the house was worth $690,000 on the date it was re-sold.

[23] The defendants have put into evidence a chart from TREB showing average house sale prices. If the chart were admissible without evidence attesting to its correctness, it does not help the defendants much. The chart shows the average resale home price in Toronto peaking just over $900,000 during the month when they bought the house – March, 2017. It shows an average price of around $750,000 during August, 2018 (the initial closing date) and a climb to over $800,000 in September 2019 (three months before the re-sale by the plaintiff).

[24] Directionally, the chart confirms there was a significant market frenzy when the defendants bought and a substantial decline shortly after. It does suggest the broader market recovered somewhat more than the plaintiff recognized on its resale.

[25] The plaintiff has adduced evidence about its resale process. It cannot simply list a house on MLS as it is managing an inventory of new homes that it is bringing to the market each month. The TREB chart does not respond to the facts facing the plaintiff or undermine the reasonableness of its resale efforts. The chart is based on averages throughout Toronto. It does not address the plaintiff’s subdivision or its circumstances.

[26] At the hearing, the defendants said that they heard that the plaintiff actually sold the house for $620,000, well below its appraised value. If that is true, despite the plaintiff’s evidence to the contrary, the plaintiff is not seeking to hold the defendants liable for the $60,000 difference between the price they claim and the $620,000 price asserted by the defendants.

[27] I find that the price obtained by the plaintiff, being within $10,000 of the appraised value of the property, was reasonable.

[28] In calculating its loss, the plaintiff is properly giving the defendants credit for the net price it received and for all the deposits received from the defendants.

[29] In all, nothing pleaded, attested to, or asserted without proper evidence by the defendants can amount to a defence to the plaintiff’s claim. The defendants bought the house in good faith for their families. They did not close because they could not raise enough financing to do so. They effectively admit their breach of the contract.

[30] I have reviewed closely the proof of damages sworn to by the plaintiff. They have backed up ever penny sought. The administration fee of 15% of amounts actually disbursed on upkeep is sufficiently immaterial as to fairly be said to be a reasonable approximation of internal costs in this case at least.

[31] I am satisfied that this is an appropriate case in which I can find the facts and apply the law on the record fairly. There is no serious issue requiring a trial. Nothing that the defendants assert as facts that they wish to prove at a trial can amount to a defence to the plaintiff’s claim.

[32] The defendants are jointly and severally liable to the plaintiff for damages for breach of contract including prejudgment interest totalling $374,967.70.

[33] Post-judgment interest is granted in accordance with agreement between the parties.

[34] Under the agreement, the plaintiff is entitled to indemnity for all of its legal costs. The defendants’ efforts to delay the proceedings increased the costs necessarily incurred by the plaintiff. I am satisfied that the hours spent and rates billed by counsel were reasonable. However, as a matter of discretion under s. 131 of the Court of Justice Act, RSO 1990, c C.43, it seems to me that substantial indemnity costs reflects a fairer basis than full indemnity. The plaintiff should be kept incentivized to control its costs and not given carte blanche.

[35] The defendants are jointly and severally liable for the plaintiff’s costs in the aggregate amount of $23,500 all-inclusive.

F.L. Myers J. Date: February 22, 2021