Court File and Parties

COURT FILE NO.: CV-19-00624875-00000 DATE: 20210406

SUPERIOR COURT OF JUSTICE - ONTARIO

RE: Cachet Summerhill Developments Inc.

AND:

Vita Kaznlson

BEFORE: Vermette J.

COUNSEL: Seta Boyadjian, for the Plaintiff Ari A. Lokshin, for the Defendant

HEARD: March 23, 2021

ENDORSEMENT

[1] The Plaintiff and the Defendant have brought motions for summary judgment. They both agree that this is an appropriate case for summary judgment. I also agree. The material facts are not in dispute and this Court is able to make a fair and just determination on the merits of this case based on the record that is before it on these motions.

FACTUAL BACKGROUND

[2] On August 18, 2016, the Plaintiff, Cachet Summerhill Developments Inc. (“Cachet”), entered into an agreement of purchase and sale with the Defendant, Vita Kaznlson, for a property in Thornhill for a purchase price of $1,479,000. Ms. Kaznlson subsequently paid four deposits of $30,000, for a total of $120,000, as required by the agreement of purchase and sale.

[3] On November 16, 2018, Cachet sent a notice to Ms. Kaznlson advising her that the closing date was scheduled for March 7, 2019. Although she was required to do so under the agreement of purchase and sale, Ms. Kaznlson did not retain a solicitor to represent her in connection with the closing. Cachet was not contacted by any lawyer acting for Ms. Kaznlson at any time before or on the scheduled closing date.

[4] On March 7, 2019, the scheduled closing date, Ms. Kaznlson’s daughter contacted Cachet on behalf of her mother to advise Cachet that Ms. Kaznlson was not prepared to close on that day. Ms. Kaznlson’s daughter stated that Ms. Kaznlson was out of the country, that she anticipated returning on March 15, 2019, but that she did not wish to extend the closing to a date following her return.

[5] Following this conversation with Ms. Kaznlson’s daughter, Cachet’s solicitor sent a letter to Ms. Kaznlson by e-mail at 1:35 p.m. (“March 7, 2019 Letter”) which read as follows:

Please be advised that I am the solicitor for Cachet Summerhill Developments Inc. with respect to the above-noted transaction. We confirm the closing date of the subject transaction is March 7, 2019. To date, we have not received your lawyer’s information such that we may co-ordinate the closing of the subject transaction accordingly and are compelled to communicate with you directly.

In the interim, we have been advised by our client that they have been in contact with your daughter, Galit Friedman, who has been speaking on your behalf, and advised that you cannot close this transaction today as you are out of the country and do not wish to mutually extend the closing until your return on March 15, 2019 or shortly thereafter.

So that there is no misunderstanding, your advice that you do not intend to complete this transaction, and your failure to provide us with your lawyer’s information to proceed with the closing hereof, amounts to an anticipatory breach of the contract entitling the Vendor to exercise such remedies available to it pursuant to the Agreement of Purchase and Sale (the “Agreement”).

Accordingly, pursuant to paragraph 41 of Schedule I – Terms and Conditions to the Agreement of Purchase and Sale made between the Purchaser and the Vendor in respect of the above-noted transaction, the Vendor hereby gives you notice that your failure or refusal to complete this transactions [sic] amounts to an anticipatory breach of the Agreement entitling the Vendor, in addition to any other rights or remedies that the Vendor may have in law or otherwise, to declare this Agreement null and void, whereupon all deposits of monies paid hereunder and any monies paid for extras shall be forfeited to the Vendor as liquidated damages and not as a penalty.

Unless we hear from you on or before end of day today, March 7, 2019, we shall declare this Agreement null and void, forfeit your deposits to the Vendor and hold you accountable for any and all additional damages, losses, costs, expenses, fees, including additional real estate commissions, carrying costs, insurance, property taxes, and legal fees in connection with the eventual resale of the property to another buyer together with such shortfall, if any, in the ultimate sale price to a third party.

We therefore suggest that you retain legal counsel forthwith with respect to this matter and govern yourself accordingly.

[6] At 2:08 p.m., Ms. Kaznlson’s daughter responded to the e-mail attaching the March 7, 2019 Letter. She stated the following in her e-mail, on which Ms. Kaznlson was copied:

Speaking on behalf of my mom.

Unfortunately we just got the news couple days ago that my mom was [sic] not been approved for the mortgage. All this time we were positive that everything is ok. But that’s the news we have received.

[7] There were no further communications between the parties on March 7, 2019, and the sale did not close. Ms. Kaznlson did not hear anything further from Cachet until she was served with the Statement of Claim.

[8] Cachet listed the property and ultimately sold it for the lesser amount of $1,285,000. Cachet entered into an agreement of purchase and sale with the new purchasers on August 19, 2019, and the sale closed on November 28, 2019. After application of the deposits paid by Ms. Kaznlson, Cachet alleges that it suffered a net loss in the amount of $109,801.96.

[9] This action was commenced on August 2, 2019. On November 18, 2020, Ms. Kaznlson brought a counterclaim for the return of the $120,000 deposit.

THE PARTIES’ POSITIONS

[10] Cachet’s position is that it unequivocally accepted Ms. Kaznlson’s anticipatory breach of the agreement of purchase and sale and that, as a result, Ms. Kaznlson forfeited her deposit and Cachet is entitled to damages flowing from the breach, including losses sustained on the resale of the property as well as carrying costs and expenses.

[11] Ms. Kaznlson does not dispute that she was not ready, willing and able to complete the purchase and sale of the property on March 7, 2019, and she does not deny that her actions leading up to and on March 7, 2019 amounted to an anticipatory breach of the agreement of purchase and sale. However, her position is that Cachet did not accept her anticipatory breach. Ms. Kaznlson submits that the March 7, 2019 Letter stopped short of accepting the anticipatory breach and gave her an ultimatum: either contact Cachet by end of day or Cachet will terminate the agreement on the basis of anticipatory breach. Her position is that by giving her an ultimatum, Cachet was insisting on performance of the agreement of purchase and sale, thereby rejecting the anticipatory breach and treating the agreement as still being in force. Ms. Kaznlson points out that she did contact Cachet, through her daughter, in the afternoon of March 7, 2019, and that acceptance of the anticipatory breach could not be inferred from Cachet’s complete silence after receiving her response. She submits that Cachet’s actions after receiving her daughter’s e-mail were unclear and highly equivocal, and could not amount to an acceptance of anticipatory breach.

[12] The parties made submissions regarding what the Court should find in the event that Cachet was held not to have accepted Ms. Kaznlson’s anticipatory breach. Given my conclusion below that Cachet did validly accept the anticipatory breach, I do not have to discuss these additional submissions.

DISCUSSION

[13] Given Ms. Kaznlson’s admission that her actions leading up to and on March 7, 2019 amounted to an anticipatory breach of the agreement of purchase and sale, the main issue on these motions is whether Cachet accepted the anticipatory breach.

[14] When confronted by an anticipatory breach, an innocent party has two options:

(1) They may accept the repudiation and treat the agreement as being at an end. If this is the option chosen by the innocent party, both parties are relieved from performing any outstanding obligations under the agreement and the innocent party may commence an action for damages.

(2) They may decline to accept the repudiation and continue to insist on performance. In that event, the agreement continues in force and neither party is relieved of their obligations.

The innocent party must make an election between these two options and communicate it to the repudiating party within a reasonable time: see Sivasubramaniam v. Mohammad, 2018 ONSC 3073 at paras. 61-62.

[15] Acceptance of an anticipatory breach must be clear and unequivocal; mere inactivity or acquiescence will generally not be regarded as acceptance for this purpose. Communication of the election to terminate the contract may be accomplished directly, by oral or written words, or may be inferred from the conduct of the innocent party in the particular circumstances of the case. There may be circumstances in which a continuing failure to perform will be sufficiently unequivocal to constitute acceptance of a repudiation: see Glen Schnarr & Associates Inc. v. Vector (Georgetown) Limited, 2019 ONCA 1012 at paras. 30-32.

[16] I find that Cachet validly accepted Ms. Kaznlson’s anticipatory breach on March 7, 2019. As a result, both parties were relieved from performing any outstanding obligations under the agreement of purchase and sale and Cachet could sue Ms. Kaznlson for damages.

[17] Considering the text of the March 7, 2019 Letter together with the conduct of Cachet after it sent it, it is my view that Cachet’s acceptance of Ms. Kaznlson’s anticipatory breach was clear and unequivocal. The March 7, 2019 Letter refers to Ms. Kaznlson’s anticipatory breach and states Cachet’s intention to accept it. It does not insist on Ms. Kaznlson’s performance of her obligations under the agreement of purchase and sale.

[18] If the March 7, 2019 Letter leaves any doubt as to Cachet’s intention, Cachet’s acceptance of Ms. Kaznlson’s anticipatory breach can be clearly inferred from its conduct after it received the e-mail from Ms. Kaznlson’s daughter at 2:08 p.m. on March 7, 2019, which stated that Ms. Kaznlson did not have the required financing and was not going to close the transaction. This e-mail simply confirmed the situation and could not be expected to change Cachet’s position outlined in the March 7, 2019 Letter. There were no further communications between the parties and the only conclusion that can be inferred, in my view, is that Cachet accepted the anticipatory breach and was treating the agreement as being at an end. I think that both parties understood this to be the case at the time. Among other things, they had no further communications regarding the agreement of purchase and sale. In both Glen Schnarr & Associates Inc. v. Vector (Georgetown) Limited, 2019 ONCA 1012 at para. 34 and Nutzenberger v. Mert, 2021 ONSC 36 at paras. 64-73, acceptance of an anticipatory breach was inferred from the innocent party’s conduct. In my opinion, the circumstances of the present case provide an even stronger basis for a similar inference.

[19] Ms. Kaznlson argues that the words “Unless we hear from you on or before end of day today” in the March 7, 2019 Letter constituted an ultimatum and a rejection of her anticipatory breach. She relies on the case 1179 Hunt Club Inc. v. Ottawa Medical Square Inc., 2019 ONCA 700 (“Hunt Club”) and states that the letter sent by Cachet in this case is similar to the letter sent by the vendor in Hunt Club, which was found to be a refusal of the purchaser’s anticipatory breach. The letter sent in Hunt Club, however, expressly stated that the vendor’s instructions were “to insist that the close of the sale proceed on November 28, 2017, as scheduled […]”. No such insistence or ultimatum is found in the letter sent by Cachet on March 7, 2019. In my opinion, interpreting the March 7, 2019 Letter as Cachet insisting that the sale close on March 7, 2019 is not a reasonable interpretation of the letter.

[20] Ms. Kaznlson also argues that she satisfied the condition set out in the March 7, 2019 Letter (“Unless we hear from you on or before end of day today”) since her daughter communicated with Cachet in the afternoon of March 7, 2019. Her position is that her daughter’s e-mail prevented Cachet from declaring the agreement of purchase and sale null and void, as set out in the March 7, 2019 Letter, unless Cachet took further steps. In addition, Ms. Kaznlson submits that by the time the deadline set out in the March 7, 2019 Letter passed, i.e. at the end of the day on March 7, 2019, Cachet was no longer in a position to accept an anticipatory breach because the anticipatory breach had become a breach and Cachet was allegedly not ready, willing and able to close on March 7, 2019.

[21] I do not accept these arguments. In my view, the only reasonable conclusion that can be inferred from Cachet’s conduct after receiving Ms. Kaznlson’s daughter’s e-mail in the afternoon of March 7, 2019 is that Cachet accepted Ms. Kaznlson’s anticipatory breach, as set out in the March 7, 2019 Letter. This acceptance happened before the end of the day on March 7, 2019.

[22] Since Cachet validly accepted Ms. Kaznlson’s anticipatory breach of the agreement of purchase and sale, I find that Ms. Kaznlson forfeited her deposit and Cachet is entitled to damages flowing from the breach, including losses sustained on the resale of the property as well as carrying costs and expenses.

[23] Cachet calculates its losses as follows:

Deficiency in sale price $194,000.00 Additional sales commissions paid $ 23,084.42 Property taxes $ 1,512.33 Insurance $ 357.21 Closing adjustments $ 10,848.00 Subtotal $229,801.96 Less deposits ($120,000.00) Net loss $109,801.96

[24] At the hearing of the motions, Ms. Kaznlson only took issue with respect to the amount claimed for closing adjustments. She submitted that Cachet adduced no evidence that these costs, or at least some of them, had been incurred.

[25] I find that there is sufficient evidence in the record with respect to the following closing adjustments: water/hydro meter installation/connection fees ($1,250); Tarion warranty enrollment fee ($1,725); driveway paving ($800); community aesthetics ($750); Ontario Land Survey Fee ($300); and Law Society levy fee ($60). However, there is no evidence in the record to support the amount claimed for levies and additional charges in the amount of $5,963.00. Therefore, I deny the claim for this amount, which reduces the amount that Cachet can claim for its net loss to $103,838.96.

CONCLUSION

[26] Cachet’s motion for summary judgment is granted and Ms. Kaznlson’s motion for summary judgment is dismissed.

[27] Judgment is granted to Cachet as follows:

a. damages in the amount of $103,838.96;

b. an order releasing to Cachet the $120,000 deposit paid by Ms. Kaznlson, together with any accrued interest; and

c. an order dismissing Ms. Kaznlson’s counterclaim.

[28] If costs cannot be agreed upon, Cachet shall deliver submissions of not more than four pages (double-spaced), excluding the bill of costs, within 15 days of the date of this Endorsement. Ms. Kaznlson shall deliver her submissions (with the same page limit) within 10 days of her receipt of Cachet’s submissions.

VERMETTE J.

Date: April 6, 2021