COURT FILE NO.: CV-18-00600956 DATE: 20210222

SUPERIOR COURT OF JUSTICE – ONTARIO

RE: Sepanta Corp., Plaintiff AND: Mahtab Nali, Defendant

BEFORE: Davies J.

COUNSEL: Heather Catania, for the Plaintiff No materials submitted by the Defendant

HEARD at Toronto: in writing

REASONS FOR JUDGMENT

[1] Mahtab Nali entered into an Agreement of Purchase and Sale (APS) to buy a commercial condominium from Sepanta Corp. for $230,000. The transaction was to close on February 16, 2018. Ms. Nali paid a $20,000 deposit as required under the APS to Forest Hill Real Estate when her offer was accepted. Ms. Nali failed to close the deal on February 16, 2018.

[2] Sepanta now seeks default judgment in the amount of $91,639.74. [1] Sepanta also seeks an order directing Forest Hill Real Estate to release the $20,000 deposit to offset any damages awarded. Finally, Sepanta seeks $11,703 in costs.

A. Procedural History and Notice to the Defendant

[3] Sepanta issued its statement of claim on July 4, 2018. After receiving the statement of claim, Ms. Nali made an offer to settle. Ms. Nali offered to buy the condominium at the original purchase price with a closing of May 10, 2019. Sepanta accepted Ms. Nali’s offer and the parties signed minutes of settlement. Ms. Nali did not close in accordance with the minutes of settlement.

[4] On January 20, 2020, Ms. Nali’s lawyers brought a motion to be removed as counsel of record. Master Graham granted that motion.

[5] Counsel for Sepanta made several attempts to reach Ms. Nali after her counsel were removed from the record. Ms. Nali did not respond so Sepanta brought a motion to strike her statement of defence. Master Jolley granted that motion on September 4, 2020.

[6] Ms. Nali was noted in default on October 22, 2020.

[7] On November 10, 2020, Sepanta served Ms. Nali with its Motion Record and Factum in support of its motion for default judgment. Ms. Nali did not file any responding materials or bring a motion under rule 19.03 of the Rules of Civil Procedure to set aside the noting of default.

[8] Sepanta’s default judgment motion was scheduled to proceed in writing in December 2020. I had several questions after reviewing Sepanta’s motion record. I convened a hearing on December 17, 2020 and granted Sepanta leave to file a supplementary motion record.

[9] Ms. Nali was served with the supplementary motion record and supplementary factum by mail. Service on Ms. Nali was effective January 26, 2021. Ms. Nali has not filed any materials in response to the plaintiff’s supplementary motion record.

[10] I am satisfied that Ms. Nali has notice of Sepanta’s motion for default judgment and has had ample opportunity to respond.

B. Ms. Nali breached the Agreement of Purchase and Sale

[11] Ms. Nali is deemed to have admitted the facts pleaded by Sepanta in its statement of claim: rule 19.02(1)(a). Sepanta also relies on two affidavits from Armin Rahmanian, an officer of Sepanta, and an affidavit from Paul Gemmick, counsel for Sepanta. The following is a summary of the uncontested evidence.

[12] Ms. Nali signed the APS on November 29, 2017 to buy a commercial condominium unit from Sepanta for $230,000. The original closing date was January 26, 2018. The parties agreed to extend the closing to February 16, 2018.

[13] Ms. Nali requested a further extension but the parties were unable to reach an agreement to extend the closing beyond February 16, 2018. Ms. Nali failed to close on February 16, 2018.

[14] After Ms. Nali failed to close, Sepanta and its lawyer asked Forest Hill Real Estate to re-list the property. Because Sepanta’s agent also acted for Ms. Nali on the failed transaction, the agent took the position that the property could not be re-listed unless Ms. Nali signed a release. It took a couple of months for Sepanta’s lawyer to sort out this issue with Forest Hill Real Estate and the property was eventually re-listed on April 15, 2018. Sepanta also considered leasing out the property to mitigate its losses.

[15] In June 2018, Sepanta’s retained a new real estate agent, Keller Williams, and the condominium was re-listed in July 2018. There were a few showings in July 2018 but no offers were received on the property.

[16] On July 4, 2018, Sepanta issued its statement of claim.

[17] On October 31, 2018, Ms. Nali made an offer to settle Sepanta’s claim. She offered to complete the purchase of the condominium for the original purchase price. After lengthy negotiations, Sepanta and Ms. Nali reached an agreement to settle the claim and minutes of settlement were signed on May 1, 2019. According to the minutes of settlement, Sepanta was to provide a vendor take back mortgage in the amount of $50,000. Ms. Nali also agreed to pay Sepanta $3,000 in carrying costs and $1,500 in legal fees. The transaction was to close on May 10, 2019. The parties agreed to extend the closing date to June 20, 2019.

[18] Sepanta was ready, willing and able to close on June 20, 2019. Ms. Nali again failed to close in accordance with the minutes of settlement.

[19] The condominium was re-listed again in late July 2019 and eventually sold for $162,500 on February 14, 2020, after Sepanta received only one offer.

[20] Based on the admitted facts and uncontested evidence, I find that Ms. Nali breached the agreement of purchase and sale and the settlement agreement.

C. Damages

[21] Sepanta seeks $91,639.74 in damages as follows:

Description	Amount
Difference between price agreed to by Ms. Nali and final sale price in February 2020	$ 67,500.00
Common expenses (February 2018 to February 2020)	$ 7,138.51
Utilities (February 2018 to February 2020)	$ 1,632.37
Municipal taxes for 2018, 2019 and 2020 (including interest and penalties in 2018)	$ 9,971.42
Legal fees on the failed closing in February 2018	$ 2,233.67
Legal fees on the failed settlement and failed closing in June 2019	$ 3,163.77
Total	$ 91,639.74

[22] I am satisfied that Sepanta took reasonable steps to mitigate its loss and is entitled to $67,500 in damages, being the difference between the price Ms. Nali agreed to pay for the condominium in 2018 and the price the condominium finally sold for in 2020.

[23] Sepanta is also entitled to recover the expenses it incurred because Ms. Nali breached the APS and settlement agreement, including $7,138.51 in monthly condominium fees, $5,397.44 in legal fees related to the failed sale in February 2018 and the failed settlement in 2019 and $1,632.37 in utility costs.

[24] Sepanta paid $9,173.31 in municipal taxes on the condominium between February 2018 and February 2020. Sepanta is entitled to recover that amount in damages. Mr. Rahmanian states in his affidavit that Sepanta also paid $798.11 in interest and penalties on the 2018 municipal taxes. Mr. Rahmanian states the penalties and interest “were incurred because of the defendant’s failure to close.” Mr. Rahmanian does not explain why any penalties or fees were incurred or how the penalties or interest charges were caused by Ms. Nali’s breach of the APS. A mere assertion of causation, without more, is not sufficient to satisfy me that the penalties and interest were caused by Ms. Nali’s breach of the APS. Sepanta has not proven that the additional $798.11 in interest and penalties is recoverable as damages.

[25] I, therefore, find that Sepanta is entitled to $90,841.63 in damages.

D. Entitlement to $20,000 Deposit

[26] As set out above, Ms. Nali paid Forest Hill Real Estate a $20,000 deposit when the APS was accepted. Forest Hill Real Estate is still holding the deposit in trust.

[27] The APS says that the contract would be void and the deposit would be returned to Ms. Nali if she were not satisfied with the Condominium’s documentation and Status Certificate provided by Sepanta. The APS is otherwise silent on the return of the deposit. In those circumstances, Ms. Nali is not entitled to the return of her deposit having breached the contract: J.E.R. Harrison Estates Ltd. v. 1205458 Ontario Ltd. at para. 20, Urac v. Ferawana, 2017 ONSC 385 at para. 32.

[28] Forest Hill Real Estate is to release the $20,000 deposit to Sepanta. The $20,000 will offset the total damages owing by Ms. Nali.

E. Conclusion and Costs

[29] Sepanta seeks costs on a partial indemnity basis in the amount of $11,703. A successful party is presumptively entitled to costs on a partial indemnity scale. Having considered the factors set out in Rule 57.01 of the Rules of Civil Procedure and the principles articulated by the Court of Appeal in Boucher v. Public Accountants Council for the Province of Ontario at para. 26, I am satisfied that it would be fair and reasonable for Ms. Nali to pay costs in the amount of $11,703 as requested.

[30] I, therefore, grant default judgment in the amount of $90,841.63. I also order Forest Hill Real Estate to transfer the $20,000 deposit to Sepanta.

[31] Counsel is to prepare a draft Order for me review in accordance with these reasons.

Davies J. Date: February 22, 2021

Footnote:

[1] In its Notice of Motion, Sepanta claims $91,918.84, however, the damages enumerated in the affidavit evidence filed on the motion add up to $91,639.74.