COURT FILE NO.: CV-20-3646-00

DATE: 2021 03 31

SUPERIOR COURT OF JUSTICE - ONTARIO

RE: Amarjot Lamba and Chand Lamba, Plaintiffs

AND:

Michael Mitchell and Richard Bowring, Defendants

BEFORE: Doi J.

COUNSEL: Monica Unger Peters, for the Moving Defendants Martin Zatovkanuk, for the Responding Plaintiffs

HEARD: January 20, 2021

ENDORSEMENT

Overview

[1] This motion for summary judgment arises from a failed real estate transaction for the sale of a residential home. The sellers and the buyers each seek summary judgment.

[2] The moving Defendants, Michael Mitchell and Richard Bowring (the “Sellers”), claim that the responding Plaintiffs, Amarjot Lamba and Chand Lamba (the “Buyers”), defaulted on the sale by not closing the transaction. The Buyers claim that they did not close due to their concerns with an incorrect listing of the home’s area and a building permit issue arising from a prior renovation. The Sellers seek a declaration that the Buyer’s deposit for the transaction is forfeited. The Buyers claim a rescission of the agreement of purchase and sale and damages.

[3] For the reasons that follow, I find that summary judgment should be granted to the Sellers. Although the listing misstated the home’s dimensions, I find that the Buyers were aware of its area as they viewed the home before they agreed to purchase it. In addition, I find that the Buyers did not make a valid objection to title in respect of the building permit issue. In the circumstances, as the Buyers are not entitled to rescind the agreement of purchase and sale, I am satisfied that they defaulted on the transaction and should forfeit their deposit to the Sellers.

Background

[4] On July 7, 2020, the Sellers listed their home for sale through the Multiple Listing Service (the “MLS”). The subject property is a residential bungalow in Mississauga.

[5] The MLS listing represented the interior of the house as having “Apx Sqft 2500-3000” (i.e., approximately 2,500 to 3,000 square feet). According to the Sellers, the MLS listing gave all realtors access to: a) the listing; b) photos of the property; c) a brochure for the property; d) a floor plan of the home with accurate dimensions for each room; and e) a pre-listing inspection.

[6] The brochure for the property included the floor plan which showed the layout of the home and accurately stated its dimensions:

Gross Floor Area Above Grade (GFA): 2155 sq. ft.

MAIN FLOOR (2155 sq. ft.) LOWER FLOOR (665 sq. ft.)

THIS FLOOR PLAN IS PROVIDED FOR ILLUSTRATIVE PURPOSES ONLY. BUYER TO VERIFY MEASUREMENTS

[7] In his supporting affidavit for the Buyers, Mr. Lamba, an experienced realtor, noted that the MLS listing overstated the interior area of the home. Based on established listing practices, he explained that MLS listings should only post the “above grade” area of a house.

[8] Mr. Lamba has extensive real estate experience. He is a top realtor in Mississauga with years of experience buying and selling real property. By his own account, he has closed over 2,000 property transactions collectively worth over $1 billion.

[9] According to Mr. Lamba, the MLS listing did not have a floor plan or other documents with the correct square footage of the house. As such, he claims that neither he nor his wife had a record with the home’s correct area before they agreed to buy the property. However, the Sellers state that the MLS listing gave all realtors, including Mr. Lamba, access to the home’s floor plan

and brochure with the correct area. The Sellers also claim that copies of the brochure and floor plan were available in the “stand-up” display found in the kitchen during viewings of the home.

[10] On August 11, 2020, the Buyers attended to view the home. They claim that they saw the property for the first time that day and decided to buy the home as their principal residence. There is some dispute as to whether Mr. Lamba viewed the property on an earlier occasion, and whether the Buyers wished to buy the property for themselves or for their son. However, the disputes are not material to the motion.

[11] During their viewing, the listing realtor advised the Buyers that a potential purchaser had made an offer to buy the property. Liking what they saw, and given the multiple-offer scenario, the Buyers made an offer to purchase within a few hours of viewing the property. Their offer came with a one-hour irrevocable acceptance deadline. The Sellers accepted the offer.

[12] By agreement of purchase and sale dated August 11, 2020 (the “APS”), the Buyers agreed to buy the property from the Sellers for $1.2 million with no conditions. Pursuant to the APS, the Buyers gave the listing brokerage a $20,000.00 deposit. The APS set a September 15, 2020 closing date with time being of the essence.

[13] After entering into the APS, Mr. Lamba asked the listing relator for all available documents for the property. From these documents, he learned that the MLS listing and the floor plan gave different areas for the home. The MLS listing incorrectly gave the area of the home as being approximately 2,500 to 3,000 sq. ft., while the floor plan gave the correct gross floor area (“GFA”) of 2,155 sq. ft. above grade. The Buyers regard this difference of at least 345 sq. ft. as a “shocking” 16-30% reduction from the area given in the MLS listing.

[14] Mr. Lamba also learned of a prior renovation that built an addition to the home that almost doubled its original size. He claims that the Sellers initially agreed to produce a copy of the building permit for the renovation, but then refused to do so. The Sellers state that the renovation was done in 1993 before they bought the property, that they do not have the building permits, and

that their solicitor never raised the building permit as an issue when they purchased the property in 2009. When the Buyers raised this as a concern, the Sellers claim that they searched a municipal website which confirmed that the building permit from 1993 is closed. Although the Sellers shared a screen shot of their search results with their solicitor, it is unclear whether he shared it with the Buyers or their solicitor.

[15] The Buyers did not deliver a letter of requisition. In an effort to facilitate the closing, the Sellers’ solicitor sent a letter to the Buyers’ solicitor on September 8, 2020 with information that typically would be raised in a requisition letter to complete the Sellers’ obligations under the APS.

[16] On September 14, 2020, the Sellers delivered their closing documents for the transaction. The Buyers did not seek to tender on the September 15, 2020 closing date.

Main Issues

[17] In addition to the propriety of determining this matter by summary judgment, the following main issues arise on the merits:

a. Are the Buyers entitled to rescind the APS because the MLS listing gave the incorrect area of the home? and

b. Are the Buyers entitled to rescind the APS due to their concern over a building permit?

Summary Judgment

[18] Under Rule 20.04(2)(a) of the Rules of Civil Procedure, RSO 1990, Reg 194, the court shall grant summary judgment if satisfied that there is no genuine issue requiring a trial with respect to a claim or defence.

[19] There will be no genuine issue requiring a trial when the court is able to reach a fair and just determination on the merits using the summary judgment process. This will be the case when the process: (1) allows the court to make the necessary findings of fact, (2) allows the court to

apply the law to the facts, and (3) is a proportionate, more expeditious and less expensive means to achieve a just result: Hryniak v. Mauldin, 2014 SCC 7 at para 49.

[20] On a motion for summary judgment, the court must first decide whether there is a genuine issue requiring a trial based only on the evidence before the court, without using its fact-finding powers. If there seems to be a genuine issue that requires a trial, the court should then decide if the need for a trial can be avoided by using its powers under Rules 20.02(2.1) and (2.2): Hryniak at para 66. The court should employ its fact-finding powers only if it would lead to a fair and just result: Ibid; Mason v. Perras Mongenais, 2018 ONCA 978 at para 44.

[21] The court may assume that the record on a summary judgment motion contains all of the evidence that the parties would adduce if the matter went to trial: Sweda Farms Ltd. v. Egg Farmers of Ontario, 2014 ONSC 1200 at paras 26-27, affirmed 2014 ONCA 878, leave to appeal denied, [2015] SCCA No 97. It is well-established that parties to a summary judgment motion are obliged to put their best foot forward: Mazza v. Ornge Corporate Services Inc., 2016 ONCA 753 at para 9. Pursuant to Rule 20.02(1), affidavits may be made on information and belief, but the court may, if appropriate, draw an adverse inference from a party’s failure to provide evidence of any person having personal knowledge of contested facts.

[22] On a summary judgment motion, the court may grant judgment in favour of a responding party even in the absence of a cross-motion for such relief: Meridian Credit Union Limited v. Baig, 2016 ONCA 150 at para 17, leave to appeal denied 2016 SCCA No 173.

[23] In this case, the parties filed fulsome records to support their positions and are content for me to decide their respective claims on this motion. In the circumstances, and despite some conflicting evidence, I find that the record enables me to make necessary findings of fact and apply the law in a more expeditious and efficient way to achieve a just result without a trial: Hyrniak at paras 4 and 49; Rule 20.04(2)(a). In my view, the issues on this motion may be decided in a fair and just manner by way of summary judgment, which has been found to be an appropriate method for deciding similar cases involving failed real estate transactions: Zhang v. Lin, 2020 ONSC 6559;

Sankarsingh v. Ali, 2019 ONSC 5655; Hosseinzadeh v. Pringle, 2018 ONSC 1947 at para 20, reversed on other grounds, 2018 ONCA 1020.

Analysis

a. Area of the Home

[24] For the reasons that follow, I am satisfied that the Buyers are not entitled to rescind the APS because the MLS listing gave an incorrect area for the home. Although the MLS listing incorrectly set out the home’s area, I find that this did not amount to a material misrepresentation which the Buyers relied upon in deciding to purchase the property. I also find that the Buyers should not be permitted to relitigate this point based on issue estoppel.

[25] The rescission of a contract may be obtained on the basis of a misrepresentation involving a false statement that was material and induced a party to enter into the contract: Issa v. Wilson, 2020 ONCA 756 at para 12, citing Panzer v. Zeifman et al. (1978), 1978 CanLII 1658 (ON CA), 20 OR (2d) 502 (CA) at p. 5, and Singh v. Trump, 2016 ONCA 747 at para 156. Where the misrepresentation provides an approximation by using words such as “more or less,” a discrepancy that is too substantial to be encompassed by its qualifying language may allow a purchaser to resile from the transaction and obtain the return of their deposit: Hosseinzadeh v. Pringle, 2018 ONCA 1020 at para 10, citing Bouskill v. Campea (1976), 1976 CanLII 776 (ON CA), 12 OR (2d) 265 (CA) at p. 266.

[26] It is well-established that a material misrepresentation may be invoked to set aside an agreement:

The equitable remedy of rescission is available for a false or misleading representation that induces a contract. Rescission requires proof that the misrepresentation was material and was relied on by the party seeking to rescind the contract. To be material, a misrepresentation must relate to a matter that would be considered by a reasonable person to be relevant to the decision to enter the agreement, but it need not be the sole inducement for acting. Whether a contracting party did in fact rely on the misrepresentation, at least in part, to enter

into the agreement is a “question of fact to be inferred from all the circumstances of the case and evidence at trial.” [Citations omitted]

Deschenes v. Lalonde, 2020 ONCA 304 at para 29, leave to appeal denied 2021 CanLII 8830 (SCC); Barclays Bank PLC v. Metcalfe & Mansfield, 2011 ONSC 5008 at paras 156-159, affirmed 2013 ONCA 494, leave to appeal denied [2013] SCCA No 374; Zhang v. Lin, 2020

ONSC 6559 at para 30.

[27] A breach that allows an innocent party to elect to put an end to all unperformed obligations is exceptional and arises only where the entire foundation of the contract is undermined, where the very thing bargained for has not been provided: Place Concorde East Ltd. Partnership v. Shelter Corp. of Canada Ltd., 2006 CanLII 16346 (ONCA) at para 51; Guarantee Co. of North America

v. Gordon Capital Corp., 1999 CanLII 664 (SCC), [1999] 3 SCR 423 at para 50; Ball v. 189557 Ontario Inc., 2016 ONSC 3224 at para 61; Zou v. Sanyal, 2019 ONSC 738 at para 39.

[28] In determining whether misstatements of lot sizes in real estate cases amounted to material misrepresentations, the courts have considered: whether the discrepancy is so material that it would affect the purchase price; whether the discrepancy was known, or ought to have been known to the purchaser; and whether it would have impacted the decision of a reasonable person to purchase the property: Zhang at para 31; Sankarsingh at paras 65-68. In my view, similar considerations should apply in deciding whether a misstatement regarding the interior area of a home constitutes a material misrepresentation.

[29] The MLS listing misstated the above grade GFA of the bungalow by incorrectly posting the main floor area as being approximately 2,500 to 3,000 sq. ft. instead of correctly stating its true area of 2,155 sq. ft. as set out in the floor plan. In my view, the error in the MLS listing exceeded a fair and reasonable approximation of the proper main floor area of the home, which the listing purported to give. Given the extent of the overstated area of the home, I accept that the discrepancy gave rise to a misrepresentation that was not insignificant: Issa at para 15; Foerster v. Mlinar, 2008 BCSC 972 at para 3.

[30] However, I am not persuaded that the discrepancy should allow the Buyers to rescind the contract. Both of the Buyers personally attended the property to view the home. Having walked through the bungalow during their viewing of the home, I am confident that the Buyers were well- aware of its actual size and layout before they decided to buy what they had seen. In my view, the Buyers were not misled about the area of the home for sale. Mr. Lamba is an experienced and sophisticated realtor. Having viewed the home, he and Ms. Lamba clearly knew and appreciated its interior area and layout. They knew the area of the home they wanted to buy. In light of this, I am satisfied that the discrepancy between the actual and misstated area in the MLS listing did not constitute a material misrepresentation that would have impacted the Buyers’ decision to make an offer and enter into the APS.

[31] Justice McGee dismissed an earlier motion by the Buyers for leave to issue a certificate of pending litigation (“CPL”) on the property. In doing so, she similarly found that the misstated area of the home in the MLS listing did not constitute a material misrepresentation given the Buyers’ prior inspection of the property before making an offer to buy it: Lamba v. Mitchell, Court File No. CV-20-3646, unreported reasons dated October 7, 2020 at para 9.[^1]

[32] On this motion, the Buyers claim that they did not have the brochure or floor plan for the home before they entered into the APS. However, McGee J. held on the CPL motion (Lamba at para 10) that Mr. Lamba, as a realtor, could access the MLS listing which included a brochure and floor plan with the correct area of the home:

In any event, it was not disputed that Mr. Lamba senior is an experienced and successful realtor who conducted his own inspection of the property before placing an Offer on the property. He had watched this property carefully before placing an Offer on it, noting the reduction in its price over time. At all relevant times he had access to the MLS listing for the property which included a brochure and floor plan with correct square footage figures. [Emphasis added]

The Buyers did not appeal the decision on the CPL motion that decided the same issues they now seek to re-litigate, namely whether the brochure and floor plan with the correct area of the home

had been available to them before they entered into the APS, and whether the misstated area in the MLS listing gave rise to a material misrepresentation.

[33] The Buyers submit that the court’s finding about the MLS listing was obiter. Respectfully, I disagree with this submission. Finding on the CPL motion that the Buyers could not establish a triable issue to a reasonable interest in the land based on the alleged material misrepresentation of the area of the home, McGee J. held that the Buyers had inspected the home during a pre-purchase viewing, were aware of marketplace conditions, and could, through Mr. Lamba, access a brochure and floor plan with the home’s correct area through the MLS listing. She also took into account Mr. Lamba’s considerable experience as a realtor and the fact that he had watched the property carefully before the Buyers’ made their offer after the listing price was reduced over time. These were important findings for dismissing the CPL motion, and were not simply made in obiter.

[34] In my view, the earlier findings that Mr. Lamba could access materials with the correct area, and that the incorrect area on the MLS listing was not a material misrepresentation, should now bind the parties based on issue estoppel. The preconditions for applying issue estoppel are met. The same issues were determined by a judicial decision that is now final and binding on the same parties: Danyluk v. Ainsworth Technologies Inc., 2001 SCC 44 at paras 20, 24-25, 54-55. On this motion, the Buyers raised no grounds to suggest that they were unable to fully argue these points on the CPL motion. As such, I see no basis to exercise the court’s discretion in the interests of justice to revisit the same questions: Danyluk at para 33; Penner v. Niagara, 2013 SCC 19 at para 93. In arguing their material misrepresentation position on the CPL motion, the Buyers had a fair opportunity to argue the area issue with a fulsome evidentiary record and were obliged to put their best foot forward then: Danyluk at para 18. Once an issue is raised and decided as between the parties, then, as a general rule, neither party can re-litigate the same issue again in the same or subsequent proceedings: Kendall v. Sirard, 2007 ONCA 468 at para 43, citing Ward v. Dana G. Colson Management Ltd. (1994), 24 CPC (3d) 211 (Gen Div) at 218, affirmed [1994] OJ No 2792 (CA). Issue estoppel applies to interlocutory orders made in the same proceeding: Ibid.

[35] In my view, the Buyers should not be allowed to relitigate their access to information with the home’s correct area and the materiality of the MLS listing on a new evidentiary record by claiming that the earlier CPL decision was wrongly decided: Hawley v. North Shore Mercantile Corp., 2009 CanLII 92135 (ONCA) at para 26. To do justice to the parties, I find that issue estoppel should preclude a re-litigation of these same questions to avoid duplicative litigation and conflicting findings, and to promote finality to litigation: Penner at para 95; Danyluk at para 18.

b. The Building Permit

[36] As set out below, I am satisfied that the Buyers did not requisition a valid objection to title in respect of their purported concern with a building permit. As such, I find that the Buyers are not entitled to rescind the APS on this basis.

[37] After entering into the APS, the Buyers made inquiries and purportedly learned of a substantial renovation to the property that occurred in 1993. They submit that the building permit for the renovation may be open, which is a matter that goes to the root of title and may raise a valid objection to title that justifies their refusal to close the transaction. In support of their position, the Buyers submit that an open building permit implicates the possibility of an outstanding work order and a cloud on title, which goes to the root of title and raise a valid objection to title: 1854822 Ontario Ltd. v. The Estate of Manuel Martins, 2013 ONSC 4310 at para 15.

[38] In determining the position of the Buyers, it is helpful to consider clauses 8 and 10 of the APS which provide as follows:

8. TITLE SEARCH: Buyer shall be allowed until 6:00 p.m. on the 1st day of September, 2020 (Requisition Date) to examine the title to the property at Buyer’s own expense and until the earlier of : (i) thirty days from the later of the Requisition Date or the date on which the conditions in this Agreement are fulfilled or otherwise waived or; (ii) five days prior to completion, to satisfy Buyer that there are no outstanding work orders or deficiency notices affecting the property, and that its present use (Residential) may be lawfully continued and that the principal building may be insured against risk of fire. Seller hereby consents to the municipality or other governmental agencies releasing to Buyer

details of all outstanding work orders and deficiency notices affecting the property, and Seller agrees to execute and deliver such further authorizations in this regard as Buyer may reasonably require.

10. TITLE: Provided that the title to the property is good and free from all registered restrictions, charges, liens, and encumbrances except as otherwise specifically provided in this Agreement and save and except for (a) any registered restrictions or covenants that run with the land providing that such are complied with; (b) any registered municipal agreements and registered agreements with publicly regulated utilities providing such have been complied with, or security has been posted to ensure compliance and completion as evidenced by a letter from the relevant municipality or regulated utility; (c) any minor easements for the supply of domestic utility or telephone services to the property or adjacent properties; and (d) any easements for drainage, storm or sanitary sewers, public utility lines, telephone lines, cable television lines or other services which do not materially affect the use of the property. If within the specified times referred to in paragraph 8 any valid objection to title or to any outstanding work order or deficiency notice, or to the fact the said present use may not lawfully be continued, or that the principal building may not be insured against risk of fire is made in writing to Seller and which Seller is unable or unwilling to remove, remedy or satisfy or obtain insurance save and except against risk of fire (Title Insurance) in favour of the Buyer and any mortgagee, (with all related costs at the expense of the Seller), and which Buyer will not waive, this Agreement notwithstanding any intermediate acts or negotiations in respect of such objections, shall be at an end and all monies paid shall be returned without interest or deduction and Seller, listing Brokerage and Co- operating Brokerage shall not be liable for any costs or damages. Save as to any valid objection so made by such day and except for any objection going to the root of the title, Buyer shall be conclusively deemed to have accepted Seller’s title to the property. [Emphasis added]

[39] As stated earlier, the parties signed the APS on August 11, 2020. Clause 8 of the APS specified a requisition date of September 1, 2020.

[40] From August 22 to 26, 2020, Mr. Lamba exchanged a series of texts with the listing agent to request production of every available record for the property. He asked the listing agent for the records because the municipality purportedly did not have them. Among other things, Mr. Lamba sought records for a prior renovation that added a large extension to the home. The listing agent

advised Mr. Lamba that the Sellers did not have records for the renovation as they had acquired the property after the renovations were done.

[41] Around August 30, 2020, Mr. Lamba advised the Buyers’ solicitor of the large addition to the home and instructed her to ask the Sellers’ solicitor for the building permit for the renovation. On August 31, 2020, the Buyer’s solicitor emailed the Sellers’ solicitor to ask him to produce the municipal building permits for the addition or, alternatively, to confirm if the permits did not exist.

[42] On September 2, 2020, the Sellers’ solicitor sent the following response on the building permit issue:

In regards to your query about the City permits, as solicitor for the Purchasers you have the right to conduct all necessary due diligence to ensure the subject property is up to date on all City Permits and Work Orders required. Therefore, please satisfy yourself of any existing issues with this property and promptly bring them to my clients’ attention so that they may rectify the same before transferring ownership to your clients. [Emphasis added]

[43] On September 4, 2020, the Buyers’ solicitor responded that she was trying to conduct due diligence but that because, “the city office is closed due to covid [we] require the sellers to provide the permits.” She also sent an MCAP report and suggested that the renovations occurred in 2011.

[44] Later that afternoon, the Sellers’ solicitor advised as follows:

In terms of the Building Permit issue, your clients are not past the date of requisitions, which was September 1, 2020. You have provided me with an MPAC Report that states a building permit was issued in 2011, but no further particulars were provided. I am unable to determine if this permit goes to the root of the title and therefore unable to respond to the request at this time. Additionally, [as] I am not convinced that the City of Mississauga is closed due to COVID-19, please provide proof that the City of Mississauga will not provide you with the necessary Building Permit particulars. In the meanwhile, I await your full letter of requisitions with full particulars of all issues that require resolution before your clients can take title to the Property. [Emphasis added]

[45] For reasons that are unexplained, the Buyers chose to not give the Sellers any proof that the municipality would not provide the building permit particulars which they sought. Instead, on September 8, 2020, the Buyers’ solicitor responded to the building permit matter with the following email:

[M]y client will not close the transaction until and unless they are provided with a clear scenario on the extensions that were made, it is the seller’s duty to provide documentation that [is] requested by the buyer in order to fulfill their due diligence. It is a 1.2M dollar property that my clients are purchasing. To avoid any litigation on the matter, it is better that the sellers coordinate with the buyer and provide the required documents without giving unreasonable excuse of requisition date.

[46] According to the Sellers, the Buyers never explained why they felt that the building permit issue constituted a breach of the APS or went to the root of title. The Sellers also assert that the Buyers did not specify why their due diligence on this issue could not be finished before the closing date for the transaction due to the ongoing COVID-19 pandemic, as the Buyers had alleged.

[47] In my view, the Buyers’ request for the Sellers to provide the permit did not raise a valid objection to title. In the September 2, 2020 email, the Sellers invited the Buyers to promptly advise of any title issues so they could be rectified. This approach followed clause 8 of the APS by which the Buyers were to examine title at their own expense. However, the Buyers did not raise a defect or encumbrance on title. Nor did the Buyers ask the Sellers to remedy a cloud on title. As such, the Sellers advised on September 4, 2020 that they could not determine if the Buyers’ concern went to the root of title. On these facts, I find that the Buyers did not requisition a valid objection to title that required the Sellers to respond: 567 College Street Inc. v. 2329005 Ontario Inc., 2019 ONSC 7346 at para 17; Karami v. Kovari, 2019 ONSC 637 at para 72; Gelakis v. Giouroukos, [1991] OJ No 636 (Gen Div).

[48] The circumstances of this case are similar to those that arose in Stykolt v. Maynard, 1942 CanLII 95 (ON SC), [1942] OR 250 (HC), where a buyer asked a seller to complete a title search and cure any defects, among

other things. Kelly J. found that the buyer’s request did not raise a valid objection to title which the seller was bound to address:

A reading of this [requisition] letter, it seems to me, makes it very clear, not only that its author was in complete ignorance of the title, but also that the letter was written without any reference to the actual agreement between the parties. I am not able to find in it any “valid objection” to the title of the lands in question here, that the defendant [seller] was bound to remove. What the defendant [seller] was asked to do was to make a complete search of his own title for the benefit of the plaintiff [buyer], and then to cure any defects that might appear on such search. The agreement, however, is specific in making it for the plaintiff to search the title at his own expense. In my opinion, what I have said applies to requisition no. 8 as well as to the others. Although building restrictions are mentioned in this requisition, I can find no “valid objection” to title in its wording. [Emphasis added]

Applying Kelly J.’s reasoning to this case, I find that the Buyers’ request for the Sellers to provide the building permits without more did not raise a valid objection to title. Recently, in 567 College Street at para 17, O’Brien J. similarly found that a simple request for information was not a requisition to which a seller was obliged to respond.

[49] After the Buyers raised the open building permit as a concern, the Sellers reviewed the building permit history for the property using a website database maintained by the municipality. By reviewing building permit summaries for the property on the database, the Sellers learned that the previous owners had obtained a building permit in 1993 to add two bedrooms and convert the former garage into a family room for the home. From reviewing the summaries, the Sellers learned that the building permit from 1993 had been closed. They also confirmed that a building permit issued to them in 2011 to install solar panels had been closed. The Buyers did not adduce any evidence on this motion to challenge or rebut the Sellers evidence on these points.

[50] The Sellers were not convinced of the Buyers’ claim that the municipality was closed due to COIVD-19. On September 4, 2020, the Sellers asked the Buyers for proof of their inability to

obtain building permit particulars from the municipality. However, for reasons that are unclear, the Buyers did not respond to this request or explain their failure to do so on this motion.

[51] Although the Buyers previously claimed that they could not obtain the permit because the municipality was “closed” due to the pandemic, they later emailed the Sellers over the September 12, 2020 weekend to ask for their “consent to inspect city file for permits, work order etc. and confirm the legality of the extensions.” Without explaining why or how this information apparently became available from the municipality, the Buyers’ solicitor simply wrote: “Please provide me written consent so on Monday we can get in touch with the city.” She also added the following :

Given the situation the closing date needs to be extended till the time buyers due diligence is completed with the city. Buyers will only close the deal unless and until the seller confirms the legality of the extension or we get it from the city.

[52] The Buyers’ request for the Sellers’ consent was redundant as clause 8 of the APS gave this consent:

Seller hereby consents to the municipality or other governmental agencies releasing to the Buyer details of all outstanding work orders and deficiency notices affecting the property, and Seller agrees to execute and deliver such further authorization in this regard as Buyer may reasonably require.

Regardless, the Sellers responded by inviting the Buyers to send them a draft consent to inspect records in order to facilitate the closing.

[53] Ultimately, the Buyers never sent the Sellers a draft consent to inspect records. Instead, on September 14, 2020, the Buyers delivered a draft consent to extend the closing date, ostensibly to allow them time to make further inquiries. The Sellers declined to extend the closing.

[54] During the Sellers’ ownership, the property did not undergo any structural alterations. When they bought the property in 2009, the Sellers obtained title insurance. Neither their title insurer nor the municipality ever took issue with the earlier renovations to the property.

[55] As mentioned earlier, I find that the Buyers did not requisition a valid objection to title of the subject property. Moreover, there is no evidence of an open building permit for the property. The Sellers led uncontradicted evidence that the 1993 and 2011 permits are closed. Having regard to all of this, I am satisfied that the permit matter does not raise a valid objection going to the root of title for the property. Accordingly, I find that the Buyers are not entitled to set aside the purchase transaction on this basis.

The Deposit

[56] When a purchaser fails to close an agreement of purchase and sale, the vendor is entitled to retain the deposit without having to suffer a loss, subject to the court’s ability to grant relief from forfeiture: Azzarello v. Shawqi, 2019 ONCA 820 at paras 45-47, leave to appeal refused 2020 CanLII 27685 (SCC):

[F]orfeiture is always subject to the equitable remedy of relief from forfeiture. Section 98 of the Courts of Justice Act, R.S.O.1990, c. C.43, provides that: “[a] court may grant relief against penalties and forfeitures, on such terms as to compensation or otherwise as are considered just.” In Stockloser v. Johnson, [1954] 1 Q.B. 476 (Eng. C.A.), the English Court of Appeal set out the two pronged test that has been followed in Ontario for applying the relief from forfeiture provision: 1) whether the forfeited deposit was out of all proportion to the damages suffered; and 2) whether it would be unconscionable for the seller to retain the deposit.

Redstone Enterprises Ltd. v. Simple Technology Inc., 2017 ONCA 282 at para 15; Jesan Real Estate Ltd. v. Doyle, 2020 ONCA 714 at para 54. A finding of unconscionability is an exceptional one that is strongly compelled on the facts of the case: Redstone at para 25.

[57] In this case, I am satisfied that relief from forfeiture is not warranted. The $20,000.00 deposit is not disproportionate to the $1.2 million purchase price, and I see no factual basis to find that it would be unconscionable for the Sellers to have the deposit. The evidentiary record reveals none of the indicia of unconscionability in Redstone at para 30, and the Buyers raised no factors to suggest unconscionability. Mr. Lamba is a sophisticated realtor, and the Buyers knowingly made

an offer to buy the property after both had viewed it. I am satisfied that the Sellers acted in good faith to close the transaction, and that it would not be unconscionable for them to have the deposit.

Outcome

[58] Based on the foregoing, I am satisfied that I can make the necessary findings of fact and apply the law to those facts on this summary judgment motion. I find that the Buyers’ breached the APS by not concluding the transaction. In turn, I find that the Sellers should have the deposit. On the record before the court, I find no genuine issues requiring a trial. I also find that summary judgment is a proportionate, more expeditious and less expensive process to achieve a just result in this case than proceeding to trial.

[59] Accordingly, the Sellers’ motion is granted and the $20,000.00 deposit paid by the Buyers is declared forfeited to the Sellers.

[60] If the parties are unable resolve the issue of costs for this motion, the Sellers may deliver costs submissions of up to two (2) pages (excluding any costs outline or offer to settle) within fifteen (15) days, and the Buyers may deliver responding submissions on the same terms within a further fifteen (15) days. Reply submissions shall not be delivered without leave.

Doi J.

Date: March 31, 2021

[^1]: When the Buyers did not close on the APS, the Sellers regarded the APS as having been rescinded and arranged to sell the property to a different purchaser. To block the new sale, the Buyers moved for a CPL by asserting a triable issue on a reasonable interest in the property based on their claim for specific performance with an abatement due to a material misrepresentation of the area of the home, among other things. McGee J. dismissed that motion and held that the Buyers had not established a triable issue to an interest in the property. In her view, the home’s area was not material given the Buyers’ inspection before they entered into the APS: Lamba at para 9.

COURT FILE NO.: CV-20-3646-00

DATE: 2021 03 31

SUPERIOR COURT OF JUSTICE - ONTARIO

RE: Amarjot Lamba and Chand Lamba, Plaintiffs

AND:

Michael Mitchell and Richard Bowring, Defendants

BEFORE: DOI J.

COUNSEL: Monica Unger Peters, for the

Moving Defendants

Martin Zatovkanuk, for the Responding Plaintiffs

ENDORSEMENT

Doi J.

DATE: March 31, 2021