COURT FILE NOS.: CV-16-00126292 and CV-16-00125597
DATE: 20210318
ONTARIO
SUPERIOR COURT OF JUSTICE
COURT FILE NO.: CV-16-00126292
BETWEEN:
Jiahang Bao
Plaintiff
(Responding Party)
– and –
Kit Yee Mok, Hip Mok and Wai Ching Tsang
Defendants
(Moving Party)
Joseph Martinello, for the Plaintiff, Responding Party
Mark Donald, for the Defendant, Moving Party, Kit Yee Mok
No one appearing for the Defendants, Hip Mok and Wai Ching Tsang
COURT FILE NO.: CV-16-00125597
AND BETWEEN:
Hip Mok and Wai Ching Tsang
Plaintiffs
– and –
Kit Yee Mok
Defendant
No one appearing for the Plaintiffs
Mark Donald, for the Defendant, Kit Yee Mok
HEARD: March 12, 2021
REASONS FOR DECISION
CHARNEY J.:
Introduction
[1] The defendant Kit Yee Mok (Kit) brings this motion for a declaration that the Agreement of Purchase and Sale (APS) between Kit and the plaintiff Jiahang Bao (Bao) dated December 22, 2015, in respect of a property at 2 Marydale Avenue, Markham, Ontario (the Marydale property), is “null, void, abandoned and unenforceable”.
[2] Kit argues that Bao has defaulted on the APS by refusing to schedule a closing date for the transaction. This has resulted in a long delay, which should result in the rescission of the APS.
[3] For the reasons that follow, Kit’s motion is dismissed.
Facts
Litigation Relating to the Agreement of Purchase and Sale
[4] The issues on this motion arise from two earlier cases, one involving Kit and Bao, the second involving Kit and her parents. Both cases related to Kit’s proposed sale of the Marydale property to Bao, and were heard together in November/December 2018.
[5] On January 2, 2016, Bao entered into an APS with Kit to purchase the residential property at 2 Marydale Avenue, where Kit lived with her elderly mother and father. Kit was the registered owner of the property. The closing was scheduled for March 30, 2016. Bao paid a $60,000 deposit.
[6] Kit’s father was 97 years old, and her mother was 93 years old. Kit’s younger brother, Paco, also lived at the property with Kit and her parents.
[7] The transaction did not close because Kit’s parents brought an action against Kit, claiming that they were the beneficial owners of the Marydale property, that Kit was holding the property in trust for them, and she had no right to sell their house.
[8] Bao and Kit took the position that, as the registered owner, Kit had the right to sell the property. Bao brought an action claiming specific performance of the APS. He was supported in this regard by Kit, who alleged that her parents gave her the Marydale property as a gift, and she wanted to complete the transaction.
[9] Following a five day trial, I released Reasons for Decision on February 6, 2019, finding, at para. 131, that Kit was the owner of the Marydale property and had the right to sell the property to Bao. I held that the parents had no right to stop the sale of the property. I declined to order specific performance, finding that an order for specific performance is appropriate only in cases in which the vendor is refusing to complete the sale of the property. Given the fact that the registered owner of the house (Kit) had agreed to the sale and stated her intention to complete the sale, an order for specific performance was unnecessary.
[10] In the result, the parents’ claim against Kit was dismissed, and Kit was entitled to transfer the property to Bao.
[11] Since the closing date in the APS had expired nearly three years before the release of the judgment and a new closing date would have to be agreed to, I stated at para. 159: “If the parties need assistance as to the scheduling of the closing, I may be spoken to.”
[12] Neither party sought to address this issue with the Court until this motion was brought by Kit.
Efforts to Close
[13] On October 8, 2019, Kit’s lawyer, Mr. Donald, emailed Bao’s lawyer asking what “Mr. Bao’s intentions are with respect to the judgment in this matter”. Mr. Donald further stated that Kit “is open to facilitating the sale of the property as per the court’s judgment, but it will need to be managed and scheduled appropriately”.
[14] On October 9, 2019, Bao’s lawyer sent an email to Kit’s counsel, proposing a December 5, 2019 closing date for the Marydale property, and asking Mr. Donald to confirm that date.
[15] On October 9, 2019, Mr. Donald responded: “I will likely have to get my client to retain a real estate solicitor to effect the close. I will get back to you”.
[16] On October 27, 2019, Mr. Donald wrote to Bao’s lawyer to advise that Kit was not yet able to schedule a closing date because she could not provide Bao with vacant possession of the property as required by the APS. Kit had not found alternative accommodation for herself, and, more importantly, Kit’s father was still living in the home and was refusing to be re-located. Mr. Donald stated:
The concern I have is that Mr. Mok [Kit’s father] appears to have been abandoned at the home by Paco Mok [Kit’s brother] and his mother. My client is continuing to attempt to look after him, but I understand that his strong desire is to continue living with his wife.
I can also advise that my client has reached out to the CCAC to attempt to have her father moved into a long term care home. However, I understand that he is adamantly against this, and has refused to consider the proposition.
In sum, the closing date will need to be extended into the new year, and in any event, the presence of Hip Mok [the father] creates an added complication. My client is doing her best, but, has no legal responsibility for him should he refuse to leave the property. This is a factor that could hinder the proper closing of the transaction, so my sincere hope is that other parties to the action come forward to assist with a solution. If not, I fear we will have to take the time and effort to go before Justice Charney to seek directions. I sincerely hope this can be avoided.
[17] At this point, the ball is squarely in Kit’s court. The APS requires the vendor to provide vacant possession on closing. Understandably, the purchaser did not want to close the Marydale property while Kit’s abandoned 97 year old father remained in the home. It is not clear to me how Kit’s lawyer could take the position that his client “has no legal responsibility for [her father] should he refuse to leave the property”.
[18] Kit rejected Bao’s proposed December 5, 2019 closing date because she could not provide vacant possession. At this point, the onus was on her to advise Bao when vacant possession might be available.
[19] It is clear from subsequent communications that Bao did not terminate the APS at that point, but sought to reschedule the closing date on a date when vacant possession would be available.
[20] Bao’s lawyer followed up with Mr. Donald on November 19, 2019, asking Mr. Donald to advise as to the closing date or to identify the vendor’s real estate lawyer.
[21] Bao’s lawyer followed up with Mr. Donald again on December 2, 2019 stating: “This transaction has been delayed for quite some time. Please check who is the real estate lawyer and schedule a closing date”.
[22] On April 21, 2020, Mr. Donald finally responded to Bao’s lawyer to advise that Mr. Netz Ngan would represent Kit in the real estate transaction. He also asked: “Can you please advise me as to Mr. Bao’s intentions with respect to the transaction”.
[23] For some unexplained reason, Mr. Donald did not advise Bao’s lawyer that Kit’s father had died that month, and that vacant possession could now be arranged, nor did he propose a closing date.
[24] Mr. Donald received no response, and followed up on June 1, 2020 and July 6, 2020 requesting a response to his April 21, 2020 inquiry.
[25] Again, Mr. Donald did not advise counsel for Mr. Bao that the father had died in April 2020 or propose a closing date.
[26] On July 6, 2020, Bao’s lawyer responded to Mr. Donald:
My understanding is that your side, given the family dispute, was supposed to confirm that it has vacant possession of the property now. Otherwise, we run into the same problems that resulted in this costly litigation that was the responsibility of someone other than ourselves. We will contact our client to see what works for him.
[27] In my view, this July 6, 2020 email from Bao’s lawyer did not change the fact that Bao was waiting to hear from the vendor as to when she could provide vacant possession. To the contrary, this email confirms that the issue of vacant possession must be resolved before a closing date can be agreed to.
[28] On August 23, 2020, Mr. Donald emailed Bao’s lawyer. Again, he did not advise counsel for Bao that Kit’s father had died, nor did he advise when vacant possession would be available, or propose a date for closing. He stated: “May I please have your response by the end of the week. If the transaction is to close, my client must be given a suitable timeline.” This was Mr. Donald’s last correspondence before bringing this motion.
[29] On February 18, 2021, Mr. Donald wrote to the Trial Coordinator, with a copy to Bao’s lawyer, asking the Trial Coordinator to schedule this motion before me because “the purchaser of the property has not closed the transaction, and the vendor/my client – Ms. Kit Mok- takes the position that the transaction is null and void”.
[30] The first that Bao’s lawyer ever heard that one of Kit’s parent’s had died was in Mr. Donald’s email to the Trial Coordinator on February 22, 2021, (copied to Bao’s lawyer) in which Mr. Donald advised the Trial Coordinator that “the other Mok defendants (one now deceased) have no interest in the relief sought…”
[31] Even this cryptic reference to “one now deceased” did not indicate which parent had died, when they died, or whether the surviving parent remained in the Marydale property. Nor was this information in the affidavit material filed by Kit in support of her motion.
[32] At the hearing of this motion Mr. Donald advised the Court that in fact the mother had been moved to a nursing home in July 2019, and that the father had died in April 2020. This was the first time that this information was provided to Bao or his lawyer.
Analysis
[33] The issues on this motion are whether Bao defaulted on the APS by refusing to schedule a closing date for the transaction, or whether the delays in closing the transaction were such that the APS should be rescinded regardless of who caused the delay.
[34] On October 9, 2019, Bao attempted to schedule a closing date of December 5, 2019. This date was rejected by Kit’s lawyer because Kit could not provide vacant possession of the Marydale property by that date.
[35] Having been advised that Kit could not close on the proposed date, Bao had two options: accept the repudiation and treat the agreement as being at an end, or decline to accept the repudiation and insist on performance. In Semelhago v. Paramadevan, 1996 CanLII 209 (SCC), [1996] 2 S.C.R. 415, the Supreme Court of Canada stated, at para. 15:
In cases such as the one at bar, where the vendor reneges in anticipation of performance, the innocent party has two options. He or she may accept the repudiation and treat the agreement as being at an end. In that event, both parties are relieved from performing any outstanding obligations and the injured party may commence an action for damages. Alternatively, the injured party may decline to accept the repudiation and continue to insist on performance. In that case, the contract continues in force and neither party is relieved of their obligations under the agreement.
[36] See also: Sivasubramaniam v. Mohammad, 2018 ONSC 3073, at para. 61, aff’d. 2019 ONCA 242.
[37] It is clear from Bao’s lawyer’s emails of November 19, 2019 and December 2, 2019, that Bao did not treat the agreement as being at an end. Rather, he continued to insist on performance and waited for Kit’s lawyer to advise when vacant possession could be delivered.
[38] As a general rule, the innocent party must make an election and communicate it to the repudiating party within a reasonable time: see Chapman v. Ginter 1968 CanLII 72 (SCC), [1968] S.C.R. 560, at p. 568. The November 19, 2019 and December 2, 2019 emails meet the “reasonable time” requirement, and the subsequent behaviour of both parties indicates that they both understood that Bao had elected to insist on performance.
[39] Moreover, Bao did not demand a return of his deposit, which also indicates a continued intention to enforce the terms of the APS: Sivasubramaniam, at para. 67. In Justice Perell’s article “Common Law Damages, Specific Performance and Equitable Compensation in an Abortive Contract for the Sale of Land: A Synopsis” (2011), 37 Advocates Quarterly 408, he writes as follows (at 413):
A purchaser who demands the return of his or her deposit is electing to end the contract and will not have a claim for specific performance.
[40] See also: R.J. Sharpe, Injunctions and Specific Performance 2nd ed. (Toronto: Canada Law Book, 2015) at para. 10.700:
It has been held that if the promisee asks the promisor for restitution of benefits conferred, usually the return of his deposit, an election for that relief has been made, the contractual obligation of the promisor is at an end and specific performance is no longer available to the promisee
[41] Bao’s intention to insist on performance and obtain vacant possession was reiterated in Bao’s lawyer’s email of July 6, 2020.
[42] At no time prior to bringing this motion did Kit advise Bao that she was in a position to deliver vacant possession, even though that was clearly the only obstacle to closing. At no time prior to the bringing of this motion did Kit propose an alternate closing date.
[43] In the absence of confirmation from Kit that vacant possession was available, there was no obligation on Bao to propose another closing date or to tender.
[44] Kit relies on the decision of this Court in Zender et al. v. Ball et al., 1974 CanLII 730 (ON SC). In that case the parties signed an agreement of purchase and sale for a property in May 1969, with a scheduled closing date of January 20, 1970. The agreement failed to close on time. The closing date was extended to January 30, 1970 by mutual agreement, but the agreement failed to close on that date as well.
[45] Three years later the purchaser brought an action for the rescission of the agreement and a return of the deposit.
[46] Pennell J. found that both parties were in default on the day set for closing. Neither party was ready to close. The vendor did not cure the defaults to title, and the purchaser did not have the funds to close. Since neither party was ready to close, and neither party proposed a new closing date, the contract was not at an end. He stated:
Thus, the status between these parties after their failure to close on January 30, 1970, was that either could within a reasonable time reinstate the contract and either could make a valid tender on the other. This would entitle the person so tendering, having complied with his contractual obligations, to rescind or take such other remedy as he felt was best for him.
[47] Neither party sought to reinstate the contract by the date of trial. Even at the date of the trial, some three and one-half years after the agreed closing date, the vendor had not cured all the defects on title. Pennell J. concluded that the delay had been so long that the Court should rescind the contract. He stated:
Both parties have treated the contract at an end; however, I think neither was entitled to do so. There has been a long delay since the original closing date and neither party has done anything to perfect his position and entitle himself to rely on the provisions of the contract. It would appear, therefore, that the Court should rescind the contract at this time and place the parties in the position they were in before they entered into it.
[48] Accordingly, the purchaser was entitled to a return of his deposit.
[49] Kit argues that this principle should apply to this case, and the court should rescind the contract because neither party has done anything to close the APS.
[50] I am not certain that I would agree with Pennell J.’s conclusion that in a situation where neither party can close, neither party are entitled to treat the contract as rescinded. I would have thought that if neither party could close, either or both parties could treat the contract as rescinded. The result would be the same – the purchaser would get his deposit back - but the route to that result would be different.
[51] In any event, the decision in Zender is irrelevant for a number of reasons. Firstly, in Zender there had been a long delay since the original closing date. In the present case, the original closing date is a red herring because the original closing date had expired long before the Court’s decision. The parties were aware that a new closing date would have to be agreed upon, and Bao did propose a new closing date. Kit rejected his proposed closing date because she could not meet the terms of the APS on the date proposed. Kit never proposed an alternative closing date. The “delay” in this case was Kit’s failure to advise Bao that vacant possession was available after April 2020 when her father died. Kit cannot rely on her own delay to defeat the purchaser’s right to the property.
[52] Second, in Zender the court found that neither party was ready to close on the agreed closing date. In the present case, I have concluded that the only obstacle to closing was the vendor’s inability to provide vacant possession. It is clear from the correspondence that Bao was, quite reasonably, waiting for Kit to remedy this situation. There was no onus on Bao to propose alternate closing dates until Kit confirmed the date that vacant possession could be made available. Again, Kit cannot rely on her own failure to provide vacant possession as a ground to rescind the contract.
Conclusion
[53] Accordingly, Kit’s motion for a declaration that the APS in respect of the Marydale property, is “null, void, abandoned and unenforceable” is dismissed.
[54] At the conclusion of the hearing of the motion I asked counsel for Bao whether, if Kit’s motion were dismissed, he wanted to propose a new closing date now that he knew that Kit could provide vacant possession of the Marydale property. He indicated that 60 days from the date of the release of this decision would be reasonable. He did not bring a motion for such relief, and I offer no opinion as to whether this suggestion would be appropriate.
[55] That said, I conclude these Reasons as I did my Reasons for Decision on February 6, 2019, at para. 159: “If the parties need assistance as to the scheduling of the closing, I may be spoken to.”
[56] Counsel for Bao requested $1,500 costs for this motion. This amount is very reasonable for a motion of this nature, and it is so ordered. Costs to be paid by Kit Yee Mok to Jiahang Bao in the amount of $1,500, payable within 30 days.
Justice R.E. Charney
Released: March 18, 2021
ONTARIO
SUPERIOR COURT OF JUSTICE
BETWEEN:
Jiahang Bao
Plaintiff
(Responding Party)
– and –
Kit Yee Mok, Hip Mok and Wai Ching Tsang
Defendants
(Moving Party)
AND BETWEEN:
Hip Mok and Wai Ching Tsang
Plaintiffs
– and –
Kit Yee Mok
Defendant
REASONS FOR DECISION
Justice R.E. Charney
Released: March 18, 2021