COURT FILE NOS.: CV-19-619098 CV-20-636929
DATE: 20210409
ONTARIO
SUPERIOR COURT OF JUSTICE
BETWEEN:
Grandfield Homes (Kenton) Ltd.
Applicant and Respondent to Counter-Application
- and -
Xue Ping Li
Respondent and Applicant by Counter-Application
Michael Doyle, for the Applicant and Respondent to Counter-Application
Ruzbeh Hosseini and Leon Li, for the Respondent and Applicant by Counter-Application
HEARD: November 19, 2020
pinto j.
REASONS FOR DECISION
Overview
[1] The parties entered into an Agreement of Purchase and Sale (“APS”) with respect to a new construction five-bedroom freehold luxury home in Toronto. The APS did not close. The purchaser, Li, claims she rescinded. The vendor, Grandfield, claims that Li breached the APS. Grandfield forfeited Li’s deposits, and claims damages from Li.
[2] Grandfield commenced an application, and Li commenced a counter-application. Li’s counter-application seeks a stay of Grandfield’s application, an order appointing an arbitrator, and payment into court of Li’s deposits. In the alternative, Li seeks a declaration that the APS was rescinded, return of the deposits, and further relief.
[3] Grandfield sold the home to another purchaser after the application and counter-application materials were filed in this proceeding.
[4] For the reasons that follow, I find that Li breached the APS, and that Grandfield is entitled to retain Li’s deposits. The issue of Grandfield’s further damages should be sent to trial.
Facts
[5] Grandfield Homes (Kenton) Ltd. (the “Vendor”) is a Toronto new home developer and builder of luxury homes, registered with Tarion Warranty Corporation. The sole director of Grandfield is Zheng “Tim” Wang.
[6] Xue Ping Li (the “Purchaser”) is a resident of Richmond Hill, Ontario. Li is the owner and operator, with her husband, of Windeco Electric Technology Inc., carrying on business as Concord Electric Supply Inc., a lighting and electrical supply business.
[7] Li signed the APS on May 1, 2017, which was accepted by Grandfield on May 2, 2017.
[8] The purchase price of the home was $3,290,708, inclusive of HST.
[9] The APS had appended to it as a schedule, the Tarion Statement of Critical Dates Freehold Addendum (the “Addendum”), required by the Ontario New Home Warranties Plan Act, R.S.O. 1990, c. O.31 (“ONHWPA”), to be included in purchase agreements for the sale of new freehold homes in Ontario.
[10] After the APS was signed, Li paid the deposits according to the schedule in the APS and met with Grandfield representatives to make colour and interior feature selections. Grandfield constructed the home. The deposits were paid in five installments, an initial deposit of $100,000 upon signing the APS, and on each of the 30, 60, and 90 days thereafter, with a final deposit of $93,606 paid 120 days following signing. Accordingly, Li paid total deposits of $493,606.
[11] Pursuant to the Addendum, a First Tentative Closing Date, a Second Tentative Closing Date, and a Firm Closing Date, and notice dates for extension, were established. Grandfield extended the First and Second Tentative Closing dates on notice to Li and advised of a Firm Closing Date of January 15, 2019 (the “January Closing Date”).
[12] The APS did not close on the January Closing Date. Grandfield did not obtain the Occupancy Permit by the January Closing Date and wrote to Li’s real estate solicitor indicating that it would extend the closing date to January 18, 2019. However, Li’s solicitor wrote back advising that Li was not prepared to close on January 15 or January 18, 2019. Grandfield then invoked its right under the Addendum to establish a Delayed Closing Date of April 15, 2019. Grandfield obtained the Occupancy Permit on January 18, 2019. Grandfield provided the closing documents, the Occupancy Permit, and the electronic registration documents to Li’s real estate solicitor on February 1, 2019. A statement of adjustments and direction in respect of closing funds was also prepared.
[13] On February 27, 2019, Li’s litigation counsel sent Grandfield’s real estate solicitor a letter purporting to rescind the APS. Li’s counsel alleged that Grandfield had made a number of misrepresentations inducing Li to enter into the APS. Li’s counsel also claimed that the transaction was unconscionable, that Li was unable to understand the APS, and that Li was refused the opportunity to obtain independent legal advice.
[14] Grandfield’s litigation counsel replied to Li’s counsel by letter dated April 5, 2019, that Grandfield did not accept Li’s purported rescission of the APS, and that Grandfield was prepared to close on the Delayed Closing Date of April 15, 2019.
[15] The APS did not close on the Delayed Closing Date. Li did not take any further steps to close or pay the balance of the purchase funds. Grandfield terminated the APS at the end of the day on April 15, 2019. Grandfield advised Li’s counsel that the termination was effective immediately, Li’s deposits were forfeited, and that Li was responsible for all costs, losses, and damages incurred by Grandfield arising out of Li’s failure to close.
Discussion
Issue #1: Did Li breach the APS by failing to tender and failing or refusing to close?
[16] Broadly speaking, Li provides two reasons why she was not responsible for breaching the APS:
(a) It was Grandfield, not Li, who was not ready, willing, and able to close on the Delayed Closing Date.
(b) In any event, Li had rescinded, and was entitled to rescind the APS on the basis of Grandfield’s misrepresentations, unconscionability, and undue influence.
(a) Was Grandfield ready, willing, and able to close on the Delayed Closing Date?
[17] Li submits that Grandfield was not ready, willing, and able to close because, before the Delayed Closing Date, Grandfield failed to tender upon Li, inter alia, the Certificate of Completion and Possession (“CCP”), the Warranty Certificate, the Homeowner Information Package (“HIP”) and the Pre-Delivery Inspection (“PDI”) form, all of which are required of Grandfield under the ONHWPA, and under the APS. Li adds that Grandfield failed to conduct the PDI and failed to include other documents in the closing package such as the direction re: title, the HST rebate forms, a title memo, the deed, as well as the undertaking to discharge charge on title, and an undertaking to readjust. Finally, Li submits that, upon closing, the home was not substantially complete and was not in a habitable or living condition.
[18] Grandfield acknowledges that it did not deliver the CCP, the Warranty Certificate, the HIP, and the PDI form. Grandfield also concedes that a PDI was not conducted. However, Grandfield submits that the law does not require such technical compliance for the APS to close where the vendor has otherwise completed its closing obligations, and where, in any event, the purchaser was in no position to close. Grandfield submits that Li made it clear on February 27, 2019, that she had rescinded the APS and had no intention on closing. Grandfield had already sent a number of closing documents to Li’s solicitor on February 1, 2019. Grandfield argues that the law does not require it to go through the motions of completing the warranty-oriented steps to satisfy the APS closing.
[19] Grandfield relies on para. 29(b) of Schedule D to the APS, dealing with “Tender and Exchange of Documents”:
The Purchaser shall deliver on the Closing Date, such declarations, undertakings, indemnities, forms, documents, certificates and other documents as required herein, as well as all monies and funds as may be required herein (by way of cash or certified cheque, bank draft etc., as provided for in this Agreement), including inter alia, the “Requisite Deliveries” as defined in the Document Registration Agreement governing closing, to the Vendor or Vendor's solicitor (as determined by the Vendor) by no later than 3:00 p.m. on the Closing Date. In the event that the Purchaser or his solicitor has not delivered the Requisite Deliveries and/or monies as hereinbefore set out at such location and by the later of such time as stipulated in this Agreement, then the Purchaser shall be deemed for all purposes to have irrevocably waived tender by the Vendor, and the Purchaser shall be estopped and forever barred from claiming any defect in the title to the Property, or any deficiency in the construction thereof, or that the Vendor was unable or unwilling to provide occupancy of the Dwelling and/or complete this transaction in accordance with the provisions of this Agreement. [Emphasis added.]
[20] Grandfield argues that this was not a situation in which the purchaser had indicated that it was prepared to close, and the vendor had refused to provide the warranty documents or to implement the PDI. Here, Li made it clear on February 27, 2019, that she had no intention of closing and that the APS was rescinded. Grandfield submits that it made it equally clear in its subsequent letters of April 5 and 11, 2019, that it was still prepared to close and outlined the consequences, including the forfeiture of Li’s deposits, of Li not closing on the Delayed Closing Date.
[21] Beyond reliance on para. 29(b) of Schedule D, Grandfield also argues that, while failure to provide the warranty related documents may affect the vendor’s warranty, it does not constitute a reason for the APS not to close. The warranty is directed, by design, to the vendor’s post-closing warranty obligations and Tarion is the statutory guarantor of those rights. Grandfield submits that it is telling that Li could not provide any Tarion document, or authority from the Licence Appeal Tribunal (“LAT”), or a court, holding that the APS is vitiated due to the failure or refusal of the vendor to provide the warranty-related documents to the purchaser, or to conduct the PDI.
[22] I agree with Grandfield that the non-delivery of the warranty related documents and the non-completion of the PDI, in these circumstances where Li made it clear that she was unwilling to close, cannot be treated as Grandfield’s unwillingness to close the APS.
[23] I note that, in the normal course, the parties would have agreed on a date for the PDI. I find it did not occur because, on February 27, 2019, if not earlier, Li determined that she was not prepared to complete the transaction. There is no evidence that, after February 27, Li attempted in any way to request a PDI, the warranty related documentation, or to move towards closing. Indeed, Li does not argue otherwise. Li cannot place her own refusal regarding the PDI at the feet of Grandfield, and then argue that Grandfield was unprepared to close.
[24] Li relies on the Court of Appeal’s decision in 1179 Hunt Club Inc. v. Ottawa Medical Square Inc., 2019 ONCA 700, at para. 23, to suggest that, with Grandfield having refused Li’s repudiation of the APS, it had to have perfection in its own performance leading to closing. I disagree. In that decision, the Court of Appeal found that the purchaser had requested an extension of the closing date to allow the purchaser to secure financing and to accommodate a change in counsel. The vendor refused the extension but ultimately, was not ready to close on the date on which it insisted, because it failed to register a condominium-related agreement. Here, Li never requested the closing date to be extended. Li had, in fact, rejected Grandfield’s original offer to extend the closing date from January 15 to January 18, 2019, and Grandfield had then set the Delayed Closing Date on April 15. Unlike 1179 Hunt Club, it cannot be said that Grandfield failed to close due to its own conduct.
[25] I agree with Grandfield’s submission that the scheme of the PDI in the ONHWPA is warranty-facing, not APS-facing. The scheme is necessary for the commencement and the application of the warranties set out in the legislation, and may have registration consequences for builders. But the scheme is not a condition of closing, and cannot be taken to mean, in and of itself, that the vendor is unwilling or unable to close.
[26] Section 13 of the ONHWPA provides that:
Warranties
13(1) Every vendor of a home warrants to the owner,
(a) that the home,
(i) is constructed in a workmanlike manner and is free from defects in material,
(ii) is fit for habitation, and
(iii) is constructed in accordance with the Ontario Building Code;
(b) that the home is free of major structural defects as defined by the regulations; and
(c) such other warranties as are prescribed by the regulations.
Certificate of completion
(3) The vendor of a home shall deliver to the owner a certificate specifying the date upon which the home is completed for the owner’s possession and the warranties take effect from the date specified in the certificate.
Application of warranties
(6) The warranties set out in subsection (1) apply despite any agreement or waiver to the contrary and are in addition to any other rights the owner may have and to any other warranty agreed upon.
[27] Li also relies on ss. 1-3 of R.R.O. 1990, Reg. 892: Administration of the Plan, under the ONHWPA, which deal with the vendor’s obligations to deliver on the date of possession, a combined certificate of completion and possession and warranty certificate and to deliver to the purchaser, on or before the PDI date, the HIP. I read these obligations as mandating what the vendor must do to comply with the ONHWPA. I do not read the failure to comply as proof of, or evidence that, the vendor was unwilling or unable to close the APS.
[28] The warranties are designed to give comfort and confidence to purchasers and soon-to-be-owners that they may complete the transaction knowing that if there are defects in the construction, the vendor is still expected to rectify those defects subject to the initial claim and the one-year, two-year, and seven-year warranties in the ONHWPA, as backstopped by Tarion. There is also an entire post-closing quasi-judicial dispute resolution regime to resolve differences between the owner, builder, and Tarion as specified in the ONHWPA. To hold that discrepancies in the warranty documentation or PDI process, in and of themselves, are tantamount to the vendor not being ready to close, would introduce further opportunities for conflict into the sale process, and would run counter to the policy and statutory objectives of the warranty legislation.
[29] I note that paragraph 16(g) of Schedule D of the APS states:
The Purchaser agrees that in no event shall the Purchaser be entitled to obtain possession of the Dwelling and Property unless and until the Purchaser and/or his/her designated representative has completed the pre-delivery inspection and executed the said PDI Form. In the event that the Purchaser and/or his/her designated representative has omitted or refused to execute the said PDI Form prior to the Closing Date, and the Vendor has duly attended at the Dwelling for the purposes of completing the said PDI Form and to inspect the Dwelling, the Vendor shall have the unilateral right and option of either completing this transaction and refusing to allow possession of the Dwelling by the Purchaser until such PDI Form has been duly executed, or of terminating this Agreement, whereupon all Deposits and monies paid or payable in respect of Extras, together with all interest accrued thereon at the prescribed rate, shall be retained by the Vendor as its liquidated damages, and not as a penalty, in addition to (and without prejudice to) any other rights or remedies available to the Vendor at law or in equity. (Emphasis added)
[30] Does the inclusion of paragraph 16(g) mean that Grandfield cannot unilaterally terminate the APS and forfeit Li’s deposits because it did not attend at the dwelling and complete the PDI? I think not. This is because Grandfield relies on paragraph 29(b) referenced above, and not paragraph 16(g), for its conduct.
[31] Grandfield also relies on Azzarello v. Shawqi, 2018 ONSC 5414, 439 D.L.R. (4th) 127, for the proposition that technical flaws in the vendor’s closing documents do not mean that the vendor was not ready, willing, and able to close. Li responds that Azzarello was overturned on appeal, but a careful review of the Court of Appeal’s decision reveals that the motion judge’s ruling regarding technical flaws was upheld. The Court of Appeal found that the motion judge’s only legal error was to hold that the forfeited deposits should not be credited to the vendor’s damages: Azzarello v. Shawqi, 2019 ONCA 820, at para. 55, leave to appeal to S.C.C. refused, 2020 CanLII 27685.
[32] Relevant to the case at bar, the Court of Appeal in Azzarello, at para. 30, cited its decision in Di Millo v. 2099232 Ontario Inc., 2018 ONCA 1051, 430 D.L.R. (4th) 296, which explains the circumstances in which a vendor is relieved from having to tender to demonstrate that it is ready, willing, and able to close:
This court has recently explained the law that applies in these circumstances in Di Millo v. 2099232 Ontario Inc., 2018 ONCA 1051, 430 D.L.R. (4th) 296, at paras. 45-49, leave to appeal refused, [2019] S.C.C.A. No. 50:
For a party to be entitled to specific performance, the party must show he or she is ready, willing and able to close: Time Development Group Inc. (In trust) v. Bitton, 2018 ONSC 4384, at para. 53; see also Norfolk v. Aikens (1989), 1989 CanLII 245 (BC CA), 41 B.C.L.R. (2d) 145 (C.A.). While tender is the best evidence that a party is ready, willing and able to close, tender is not required from an innocent party enforcing his or her contractual rights when the other party has clearly repudiated the agreement or has made it clear that they have no intention of closing the deal: McCallum v. Zivojinovic (1977), 1977 CanLII 1151 (ON CA), 16 O.R. (2d) 721 at p. 723 (C.A.); see also Dacon Const. Ltd. v. Karkoulis, 1964 CanLII 252 (ON SC), [1964] 2 O.R. 139 (Ont. H.C.).
In McCallum, at p. 723, this court explained that the renunciation of a contract may be express or implied:
The renunciation of a contract may be express or implied. A party to a contract may state before the time for performance that he will not, or cannot, perform his obligations. This is tantamount to an express renunciation. On the other hand a renunciation will be implied if the conduct of a party is such as to lead a reasonable person to the conclusion that he will not perform, or will not be able to perform, when the time for performance arises.
The purchaser in McCallum made it clear that he did not intend to complete the transaction on the closing date and this renunciation relieved the vendors from the obligation to tender.
The principles around the requirement to tender are summarized succinctly by Perell J. in Time Development Group [2018 ONSC 4384], at paras. 56-57:
Tender … is not a prerequisite to the innocent party enforcing his or her contractual rights. Tender is not required from an innocent party when the other party has clearly repudiated the agreement. Numerous cases have held that the law does not require what would be a meaningless or futile gesture. Moreover, when there is an anticipatory breach, the innocent party need not wait to the date for performance before commencing proceedings for damages or in the alternative for specific performance of the agreement. [Citations omitted.]
Thus, when a party by words or conduct communicates a decision not to proceed to closing, the other party is released from any obligation to tender in order to prove he was ready, willing and able to close: see Kirby v. Cameron, 1961 CanLII 203 (ON CA), [1961] O.R. 757 (C.A.); Kloepfer Wholesale Hardware v. Roy, 1952 CanLII 8 (SCC), [1952] 2 S.C.R. 465.
[33] I find that Grandfield was entitled, as per the Addendum, to extend the January Closing Date of January 15, 2019, to the Delayed Closing Date of April 15, 2019. Li unequivocally repudiated the APS on February 27, 2019. Grandfield was entitled as per para. 29(b) of Schedule D of the APS, and as per the law, to not tender in order to prove it was ready, willing, and able to close. However, it opted to close the transaction on the Delayed Closing Date. That it did so imperfectly, without providing the warranty documentation or conducting a PDI, is permitted either as a technical flaw or on the basis that Grandfield did not have to make meaningless or futile gestures to demonstrate that it was ready, willing, and able to close. Not every statutory breach under the ONHWPA results in a contract being void or unenforceable: Beer v. Townsgate I Ltd., 1997 CanLII 976 (ON CA), 36 O.R. (3d) 136 (C.A.).
[34] As for Li’s remaining argument that Grandfield was not prepared to close because the property was allegedly not substantially complete, or not habitable, I find that Li’s argument is based on impressionistic evidence gleaned from photographs of the subject property on or around the Delayed Closing Date. Instead, the applicable legal standard for occupancy is the Occupancy Permit issued by the municipality pursuant to the Ontario Building Code, O. Reg. 332/12, under the Building Code Act, 1992, S.O. 1992, c. 23. Following the issuance of an Occupancy Permit, the home is complete, and possession may be given, which is not to say that the homeowner will necessarily be satisfied with the state of readiness of the property. Here, an Occupancy Permit was granted on January 18, 2019.
[35] In summary, I find that it was Li who repudiated the APS on February 27, 2019, and who refused to close on the Delayed Closing Date of April 15, 2019. I disagree that because Grandfield failed to provide the warranty or other documentation, or failed to conduct a PDI, that Grandfield was not ready, willing, and able to close on April 15, 2019. Moreover, given that the Occupancy Permit was issued in respect of the home on January 18, 2019, I disagree that the home was not substantially complete or not ready for habitation on April 15, 2019.
(b) Was Li entitled to rescind the APS on the basis of Grandfield’s misrepresentations, unconscionability, and undue influence?
[36] Li pursued a multi-pronged attack on the APS and the entire real estate transaction by asserting that Grandfield and its principal Wang had engaged in misrepresentation, inducement, unconscionability, undue influence, and unequal bargaining power at the time the contract was made.
[37] Li described Grandfield’s misrepresentations as follows:
(a) From April 28, 2017, to May 1, 2017, Grandfield and its representatives, including Wang, made, inter alia, the following representations to Li in an effort to induce Li to enter into the APS:
(i) Grandfield had decided to purchase all lighting and electrical supplies from Concord for the subject Kenton project developed by Grandfield (the “Project”);
(ii) The original purchase price for the home, which was $3,360,000, was an accurate reflection of the true market value of the home; and
(iii) If Li decided to purchase a home in the Project, she must make an initial payment of $100,000 in the form of a money order to Grandfield on May 1, 2017 to reserve an opportunity to purchase a home.
[38] Li also claimed that, after retaining litigation counsel in January 2019, she came to understand that the APS contained several “prejudicial terms”. These “prejudicial terms” are referenced at para. 74 of Li’s affidavit sworn December 9, 2019, in her counter-application, and reproduced at Appendix A to this decision. Li also argued that the APS should be set aside as Grandfield failed to honour an unwritten side agreement whereby Concord, her electrical and lighting business, was to be selected as the electrical subcontractor for the vendor’s entire development project (the “Supply Deal”).
[39] I find little merit in Li’s arguments.
[40] With respect to the alleged misrepresentations causing Li to enter into, or to be induced to enter into the APS, Grandfield responds that: (a) the parties were not in a fiduciary relationship or in a special relationship that attracts a duty of care; (b) the APS has an Entire Agreement Clause which operates to preclude representations external to the APS; and (c) the statements that were allegedly untrue, inaccurate, or misleading cannot be proven on a balance of probabilities.
[41] Li did not pursue the argument that Grandfield was in a fiduciary or special relationship and, given that this was a typical vendor-purchaser relationship, I would have found no merit in that submission.
[42] The Entire Agreement Clause is set out in Appendix B to my decision. It appears to bar Li from claiming with respect to terms that were not reduced to writing in the APS. However, Li replies that Grandfield cannot rely on the Entire Agreement Clause because the entire transaction was unconscionable.
[43] With respect to unconscionability, Li argues that she was entitled to rescind the APS because:
(a) Li was induced into a grossly unfair and improvident transaction in which she agreed to a purchase price for the home that was approximately $500,000 higher than its real market value and to a series of unconscionable clauses; and
(b) there was an inequality of bargaining power caused by Li’s denied opportunity to seek independent legal advice, her lack of proficiency in the English language, her ignorance of purchasing a pre-construction home in Ontario (compared to Grandfield being a seasoned real estate developer in Ontario), her trust in Wang and the business promise made by Grandfield and Wang, the ongoing business relationship between the parties, and the $100,000 that Li had been induced to pay to Grandfield prior to signing the APS.
[44] I agree with Li that, where unconscionability exists, it can make an entire agreement clause unenforceable.
[45] The Court of Appeal has recognized that under the doctrine of unconscionability, an entire agreement clause will be unenforceable “where one party to the contract has abused its negotiating power to take undue advantage of the other. This doctrine is generally applied in the context of a consumer contract or contract of adhesion”: Singh v. Trump, 2016 ONCA 747, at para. 114, citing ABB Inc. v. Domtar Inc., 2007 SCC 50, [2007] 3 S.C.R. 461, at para. 82; Curtis Chandler v. Karl Hollett, 2017 ONSC 2969, at para. 61.
[46] However, I find nothing unconscionable about the real estate transaction between Li and Grandfield. The purchase was in respect of a luxury new build five-bedroom home worth over $3 million dollars. One would expect the APS to be complex and detailed. I find nothing unconscionable about the terms of the APS, which are standard, reasonable, and widely used terms in real estate transactions.
[47] On the material before me, I do not find that Grandfield precluded Li from seeking legal advice, rather I find that she simply declined the opportunity to do so. As well, based on Li being a businessperson who ran Concord and who had engaged in previous real estate transactions, I find that Li was closer to the sophisticated end of the spectrum of real estate purchasers. In cross-examination, Li conceded that she is an experienced and sophisticated businessperson in the sale and supply of materials to the building and construction industry and that she has good familiarity with business transactions. I also note that Li negotiated a $10,000 reduction in an assignment fee on the purchase of the home from $30,000 to $20,000.
[48] I disagree that, because Li purportedly lacked proficiency in English, this created an inequality of bargaining power in these circumstances. I note, for instance, that Li brought Long Guan “George” Lin, her real estate agent, and friend, with her to the meeting with Grandfield on April 28, 2017, to make further inquiries about the Project.
[49] Finding no unconscionability in the transaction, I return to the Entire Agreement Clause. I note that the provisions of the Entire Agreement Clause were restated, in part, on the first page of the APS, which is also the execution page, just above the parties’ signatures. This is not a case about a “buried” Entire Agreement Clause. I see no reason why the Entire Agreement Clause is not enforceable. This precludes Li from relying on the various external representations purportedly made by Grandfield that Li considered negligent or false.
[50] With respect to the alleged Supply Deal from Concord, I find that the deal never got past a very preliminary discussion. There was no contract, no follow up from Li when she signed the APS without a firm commitment from Grandfield, and, even on Li’s own evidence, no details as to what materials by Concord were to be supplied, or when. I find that, even when Li determined in 2018 that Grandfield had proceeded with other suppliers for the electrical and light work for the Project, Li did not complain. It was only after she retained litigation counsel in January 2019 that the Supply Deal was raised as an issue to resile from closing.
[51] I find it telling that Li paid all her deposits up to almost $500,000 and proceeded to the point of colour and feature selection without asserting any unconscionability or misrepresentations. Then, in early 2019, where it is common ground that the real estate market for luxury homes in the Greater Toronto Area had fallen relative to 2017, Li’s litigation counsel asserted in its February 27, 2019 letter that Li was entitled to rescind the agreement. The letter stated (in part), “[a]s of November 29, 2018, the appraised value of the Subject Unit (as completed) was $2,800,000.00, which is approximately $500,000 less than the grossly inflated purchase price that Li was induced to agree to.”
[52] I find that Li was not entitled to rescind the APS as there is no merit to her allegations of Grandfield’s misrepresentations, unconscionability, and undue influence.
Issue #2: Did Grandfield validly and properly terminate the APS and retain Li’s deposits?
[53] Grandfield terminated the APS well past the 3:00 p.m. deadline on the Delayed Closing Date of April 15, 2019. Greenfield then advised Li’s counsel that the termination was effective immediately, Li’s deposits were forfeited, and that Li was responsible for all costs, losses, and damages incurred by Grandfield arising out of Li’s failure to close.
[54] Grandfield relies on para. 35 of Schedule D, of the APS, which deals with Default and Remedies and which states (in part):
If the Purchaser defaults with respect to any of the Purchasers covenants/obligations as set out in this this Agreement and/or defaults in the delivery of any monies and/or documents to the Vendor or the Vendor’s solicitors as required by this Agreement, on the Closing Date then the Vendor, in addition to (and without prejudice to) any other rights or remedies available to the Vendor (at law or in equity) may, at the Vendors sole option, unilaterally declare the Property Agreements to be terminated and of no further force or effect whereupon all deposit monies theretofore paid, together with all monies paid for any extras or changes to the Property, may be retained by the Vendor as the Vendors liquidated damages, and not as a penalty, in addition to (and without prejudice to) any other rights or remedies available to the Vendor at contract, law or in equity. In such event the Purchaser specifically acknowledges and affirms that time is of the essence and that the Purchaser shall not have any rights of rectification and that the default is not capable of being rectified without the express written consent of the Vendor.
[55] I find that Grandfield properly relied on this provision of the APS to terminate the APS. The question then becomes whether Grandfield was entitled, in the circumstances, to retain Li’s deposits of $493,606. The answer is to be found in the Court of Appeal’s aforementioned decision in Azzarello:
[42] There are four possible outcomes of the agreement where the disposition of the deposit must be determined: 1) the agreement is completed according to its terms; 2) the vendor breaches the agreement; 3) the purchaser breaches the agreement but the vendor suffers no loss; 4) the purchaser breaches the agreement and the vendor suffers a loss and is entitled to damages.
[45] It is well-established by case law that when a purchaser repudiates the agreement and fails to close the transaction, the deposit is forfeited, without proof of any damage suffered by the vendor: see Tang v. Zhang, 2013 BCCA 52, 359 D.L.R. (4th) 104, at para. 30, approved by this court in Redstone Enterprises Ltd., v. Simple Technology Inc., 2017 ONCA 282, 137 O.R. (3d) 374. Where the vendor suffers no loss, the vendor may nevertheless retain the deposit, subject to relief from forfeiture.
[47] However, forfeiture 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 (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 at para. 15.
[48] Up to this point, I have discussed what happens to the deposit when the agreement is completed, when the vendor defaults and when the purchaser defaults but the vendor suffers no damage. The issue in this case arose when the vendor did suffer a loss because of the purchaser’s breach; in that case, is the deposit treated as part payment and credited toward the damages, or is it retained in addition to the damages, subject to relief from forfeiture?
[53] I agree with this analysis. While the agreement only specifically calls for the deposit to be credited to the purchase price on completion of the agreement, the measure of damages is based on the difference between the purchase price and the lesser amount that the property sold for after the purchaser’s default. In other words, it is based on the vendor receiving the purchase price that was bargained for. One can infer that the intent of the parties was that the deposit be applied to the purchase price whether received on completion or as damages.
[56] I take from the Court of Appeal’s Azzarello decision that:
(a) The present case is one where Li has breached the APS and Grandfield argues that it has suffered a loss and is entitled to damages.
(b) Given the wording of para. 35 of Schedule D of the APS, Grandfield may retain the deposit subject to Li’s right to equitable relief from forfeiture.
(c) The test for equitable relief from forfeiture is:
(i) whether the forfeited deposit was out of all proportion to the damages suffered; and
(ii) whether it would be unconscionable for the seller to retain the deposit.
[57] Li paid $493,606 in deposits against a purchase price of $3,290,708, inclusive of HST. That is 15% of the purchase price. I do not find that the deposit is out of proportion to the purchase price. Grandfield’s damages are unknown at this point. For the same reasons that I did not find the underlying real estate transaction to be unconscionable, I do not find that it would be unconscionable for the vendor to retain the deposit. Essentially, this was a luxury home new build construction where Li unfortunately bought into a falling market. I find that she attempted to walk away from the APS primarily for that reason. I do not find any legal or equitable basis to deny Grandfield the ability to retain Li’s deposits, albeit set off against damages that may need to be determined at trial, if that issue cannot be resolved earlier.
Issue # 3: Should the issue of Grandfield’s damages be directed to trial?
[58] At the hearing of the application and counter-application, Li confirmed that she is no longer seeking a referral of the dispute to arbitration. As for damages, however, Li argues that, as Grandfield did not provide full details on the sale of the property in 2020, the court should either award no damages, or nominal damages: Rinc Consulting Inc. v. Grant Thornton LLP, 2019 ONSC 808, aff’d 2020 ONCA 182; Rosenhek v. Windsor Regional Hospital, [2007] O.J. No. 4486 (S.C.). I find that the issue of Grandfield’s damages is one that may have several aspects, including mitigation and whether Li has to pay further costs under the APS: Lin v. Brookfield Homes (Ontario) Limited, 2018 ONSC 7682, aff’d 2019 ONCA 706. Li disputes the applicability of Lin since, in that decision, the vendor put forward evidence of the resale of the subject property. I am not persuaded that, because Grandfield did not put forward evidence of the resale on the application or counter-application, the matter should not be dealt with in an action, as opposed to an application. It remains to be seen whether and to what extent material facts are in dispute, but the parties will have the full range of options applicable to actions under the Rules of Civil Procedure, R.R.O. 1990, Reg. 194, to sort out their differences.
Conclusion
[59] Grandfield’s application is allowed, Li’s counter-application is dismissed. The issue of Grandfield’s damages is directed to trial.
Costs
[60] Grandfield is entitled to its costs on the application and in the counter-application. Unless costs can be agreed upon, Grandfield shall provide submissions in PDF and WORD format not to exceed three double-spaced pages, exclusive of Costs Outlines, Bills of Costs, Offers to Settle, and are to be forwarded to me via my judicial assistant within 2 weeks of the date these Reasons are released. Li shall provide a response within 7 days after receipt of Grandfield’s costs submissions. I shall advise the parties if reply submissions are necessary.
Authorities should be hyper-linked in the submissions. If no submissions are received within this timeframe, the parties will be deemed to have settled the issue of costs.
Pinto J.
Released: April 9, 2021
Appendix A
Prejudicial Terms
Paragraph 74 of Li’s affidavit sworn December 9, 2019, in her counter-application, states:
The relevant provisions of these Prejudicial Terms are as follows:
• Paragraph 3 on page 1 of the APS: …The Purchaser releases and absolves the Vendor of any obligation to perform or comply with any promises or representation as may have been made by any sales representative or in any sales brochure, unless same has been reduced to writing herein. It is agreed and understood that there is no oral or written representation, warranty, collateral term or condition affecting this Agreement or the Property, or for which the Vendor or the Owner (or any agent or sales representative) can be held responsible or liable in any way, whether contained, portrayed, illustrated or represented by (or in) any plan, drawing, brochure, display, model or any other sales/marketing material(s), displayed or allegedly given, other than as specifically set out in this Agreement in writing. …;
Completion of Grading and Municipal Services
• Schedule D to the APS: general Terms and Provisions – Lots (“Schedule “D””) paragraph 12(e): The Purchaser acknowledges and agrees that the filing of the consulting engineers’ certificate(s) with the Municipality, or the issuance by the Municipality of an occupancy certificate or such other confirmation that the Property may be occupied shall, subject to the provisions of the Addendum, constitute complete and absolute acceptance by the Purchaser of all construction matters, and the quality and sufficiency thereof including, without limitation, all mechanical, structural and architectural matters. Acceptance of construction and siting of the Dwelling and/or grading of the Lot by the Municipality or government authorities shall conclusively constitute acceptance by the Purchaser. …;
Tarion Warranty and Modification of Plans, Specifications and Finishes
• Schedule D paragraph 16(b): … the Purchaser hereby releases the Vendor from any liability whatsoever in respect of water damage caused to improvements of, and chattels stored in, the Dwelling, and acknowledges and agrees that the Vendor shall not be liable or responsible for the repair or rectification of any damages to any exterior areas resulting from ordinary settlement, including the settlement of patio stones or sodded areas, nor for any damage to interior household improvements, chattels or décor caused by material shrinkage, twisting or warpage, nor for any secondary or consequential damages whatsoever resulting from any defects in material, design or workmanship related to the Dwelling, … The Purchaser acknowledges that any Third Party Work (as hereinafter defined) whether or not carried out by trades or subtrades employed by the Vendor shall be deemed to be work contracted directly by the Purchaser with the Vendor acting as agent for the Purchaser and as such, the Third Party Work shall bot be covered by the Tarion warranty. …;
• Schedule D paragraph 16(c): … the failure of the Vendor to complete the exterior landscaping or building elements, on or before the Closing Date, or the failure of the Developer to complete any element of the Subdivision, shall in no event entitle the Purchaser to refuse to take possession of the Dwelling and/or to close the within transaction on the Closing Date, or to fail to remit to the Vendor the entire amount of the Purchase Price and any other monies required to be paid by the Purchaser hereunder, or to maintain any holdback of any part of the Purchase Price or any other monies due to the Vendor, provided that the Vendor has complied with the occupancy requirements of the Addendum. … The Purchaser shall not hold the Vendor or the Municipality and/ or any other governmental authorities and/or any of their respective agents liable for any damages, charges or inconvenience arising from, or in connection with the completion (or non-completion) of any item, including but not limited to boulevard sodding, sidewalks, driveway approach, paving, fencing, final lot grading and/or lot sodding;
• Schedule D paragraph 16(d): The Purchaser acknowledges and agrees that the Vendor may, from time to time, as required by any governmental authority having jurisdiction or any other rights with respect to the Property or as required by the Vendor from time to time, change, vary or modify the plans and specifications pertaining to the Dwelling and Property, (including architectural, structural, engineering, landscaping, grading, mechanical, site service or other plan) from the plans and specifications existing at the inception of the project, or as they exist at the time the Purchaser has entered into this Agreement, or as same may be illustrated in any sales brochure(s), model(s) in the sales office or otherwise, including reversing the layouts of the Dwelling or changing the elevation/façade of the Dwelling. The Purchaser shall have absolutely no claim or cause of action whatsoever against the Vendor or its agent(s) for any such changes, variances or modifications. … With respect to any aspect of construction, finishing or equipment, the Vendor shall have the right subject to the requirements or TARION or the provisions of the ONHWPA, without the purchaser’s consent, to substitute materials and/or designs and/or installations, for those described in this Agreement, any schedule of finishes or in the plans or specifications, provided the substituted materials, designs and/or installations are in the judgment of the Vendor whose determination shall be final and binding, of equal or better quality or as may be required as a matter of law or any applicable building, fire, plumbing and/or electrical code or regulation. … The Purchaser acknowledges, confirms and agrees that the extent of the actual or usable living space or net floor area within the confines of the Dwelling may vary from any represented square footage or floor area measurement(s) made by or on behalf of the Vendor based on the permitted Tarion method of area calculation. The Purchaser shall have no claim against the Vendor for any changes, variances, alterations, amendments and/or modifications as permitted in this Agreement nor shall the Vendor be required to give notice thereof. The Purchaser hereby consents to any such alterations, variances, amendments and/or modifications and agrees to complete the sale notwithstanding same. The Purchaser shall have no claim against the Vendor for any such changes, variances, alteration, amendments or modification, etc., nor shall the Vendor be required to give notice thereof. …;
• Schedule D paragraph 16(e): Notwithstanding anything contained in this Agreement to the contrary, it is understood and agreed by the parties hereto that in the event that construction of the Dwelling is not completed on or before the Closing Date or any extension thereof as hereinbefore contemplated, for any reason except for the Vendor’s willful neglect … then subject to the terms of the Addendum to the contrary, Vendor shall not be responsible or liable for reimbursing the Purchaser for any costs, expenses, or damages suffered or incurred by the Purchaser as a result of such delay or damage …;
• Schedule D paragraph 16(f): Notwithstanding anything set out herein to the contrary, the Vendor shall have the right to enter upon the Dwelling for a period of eight (8) years after the completion of the transaction set out in this Agreement, as required by the Vendor in its complete discretion, in order to complete and/or rectify outstanding items identified in the PDI Form or any other list prescribed by Tarion …;
• Schedule D paragraph 16(k): The Purchaser acknowledges that notwithstanding anything contained in any brochures, drawings, renderings, plans and specifications, advertisements or other marketing materials, or any statements made by the Vendor or its representatives (the “Marketing Materials”), there is no warranty or representation contained herein or elsewhere on the part of the Vendor as to the area of the lot or Dwelling. …;
Execution of Documents
• Schedule D paragraph 27(a): The Purchaser hereby irrevocably constitutes and appoints the Vendor to be and act as his lawful attorney, in the Purchaser’s name, place and stead, in order to execute the PDI Form, … Purchaser hereby irrevocably confirms and agrees that the power of attorney set out herein may be exercised by the attorney so appointed during any subsequent legal incapacity of the Purchaser, and may and shall not be revoked upon the death of the party giving such power of attorney or as aforesaid. Each power of attorney as granted in this agreement shall be deemed to be coupled with an interest;
Binding Offer and Entire Agreement
• Schedule D paragraph 33: … It is agreed and understood that there is no representation, warranty, collateral term or condition affecting this Agreement or the Property, or for which the Vendor (or any sales representative representing the Vendor) can be held responsible or liable in any way, whether contained, portrayed, illustrated or represented by, or in, any plan, drawing, brochure, display, model or any other sales/marketing material(s), or alleged against any sales representative representing the Vendor, other than as expressed herein in writing. Without limiting the generality of the foregoing, It is understood and agreed by the parties hereto that the Purchaser shall not make or pursue any claim or proceeding against the Vendor, nor hold the Vendor responsible or liable, whether based or founded in contract law or in tort law, for innocent misrepresentation, negligent misrepresentation or otherwise, in respect of, or arising from, any statement, representation, warranty, collateral term or condition alleged to have been made by any sales representative or by any other person alleged to represent the Vendor on behalf of or purporting to be binding upon the Vendor, save and except for those representations of the Vendor herein set forth in writing. The Purchaser further confirms that in entering into this Agreement, he has not relied on any representation, warranty, collateral agreement or condition affecting this Agreement or the Property, or supported thereby, other than those specifically set out in this Agreement or in any of the schedules hereto, and specifically absolves the Vendor and/or any other party that may seek indemnification or contribution from the Vendor, of any obligation or liability to perform or comply with any promise or comply with any promise or representation that may have been made by any sales representative/agent or alleged against them, unless the same has been reduced to writing and is contained in this Agreement or in the schedules hereto;
Non-Registration, Assignment and Postponement and Subordination
• Schedule D paragraph 34(b): … The Purchaser’s only interest shall be this agreement and accordingly the Purchase agrees that he/she shall not have any claim for specific performance or damages. … Further, the Purchaser will at no time register or attempt to register this Agreement on title to the Property by way of caution, deposit, assignment or in any way whatsoever, or register a certificate of pending litigation and it is expressly agreed by all parties hereto that any such registration or attempt by the Purchaser or anyone acting for or through him shall, at the option of the Vendor, entitle the Vendor to terminate this Agreement and make it absolutely null and void and any monies paid under this Agreement shall immediately become due to the Vendor. In the event that this Agreement, a caution, certificate of pending litigation or any other instrument whatsoever is registered against or dealing with the title in contravention of this provision, then the Purchaser hereby irrevocably appoints the Vendor his true and lawful attorney pursuant to The Powers of Attorney Act R.S.O. 1990, as amended and/or The Substitute Division Act 1992, as amended for the purpose of removing the contract, caution, certificate of pending litigation or any other instrument from title, including the giving of any discharge, the lifting of any caution, the granting of any order or the assignment of any rights pursuant to this Agreement and this power of attorney shall be deemed to be coupled with an interest. The Purchaser shall bear all costs incurred by the Vendor in the exercise of its function pursuant to this power of attorney. Further, the Purchaser hereby covenants and agrees that at any time prior to Closing any default by him in the performance of any of his covenants or obligations contained herein shall entitle the Vendor, at its sole option, to terminate this Agreement and, upon such termination, all monies paid to the Vendor hereunder shall be forfeited to the Vendor and this Agreement shall be at an end and the Purchaser shall not have any further rights hereunder;
Default and Remedies
• Schedule D paragraph 35: If the Purchaser defaults with respect to any of the Purchaser’s covenants/obligations as set out in this this Agreement and/or defaults in the delivery of any monies and/or documents to the Vendor or the Vendor’s solicitors as required by this Agreement, on the Closing date then the Vendor, in addition to (and without prejudice to) any other rights or remedies available to the Vendor (at law or in equity) may, at the Vendor’s sole option, unilaterally declare the Property Agreements to be terminated and of no further force or effect, whereupon all deposit monies theretofore paid, together with all monies paid for any extras or changes to the Property, may be retained by the Vendor as the Vendor’s liquidated damages, and not as a penalty, in additions to (and without prejudice to) any other rights or remedies available to the Vendor at contract, law or in equity. In such event the Purchaser specifically acknowledges and affirms that … the Purchaser shall not have any rights of rectification and that the default is not capable of being rectified without the express written consent of the Vendor. … In the event of the termination of this Agreement by reason of the Purchaser’s default as aforesaid, then the Purchaser … shall execute such releases and any other documents or assurances as the Vendor may require, in order to confirm that the Purchaser does not have (and the Purchaser hereby covenants and agrees that he/she does not have) any legal, equitable or proprietary interest whatsoever in the Lands, Lot(s) and/or the Property (or any portion thereof), and in the event the Purchaser fails or refuses to execute same, the Purchaser hereby appoints the Vendor to be his or her lawful attorney in order to execute such releases, documents and assurances in the Purchaser’s name, place and stead, and in accordance with the provisions of the The Powers of Attorney Act R.S.O. 1990, as amended and/or The Substitute Decisions Act, 1992, as amended, the Purchaser hereby declares that this power of attorney may be exercised by the Vendor during any subsequent legal incapacity on the part of the Purchaser. In the event the Vendor’s Solicitors or an escrow agent is/are holding any of the deposits in trust pursuant to this Agreement, then in the event of default as aforesaid, the Purchaser hereby releases the said solicitors from any obligation to hold the deposit monies, in trust, and shall not make any claim whatsoever against the said solicitors and the Purchaser hereby irrevocably directs and authorizes the said solicitors to deliver the said deposit monies and accrued interest, if any, to the Vendor. In addition to and without prejudice to the Vendor’s rights set out above, the Purchaser acknowledges and agrees that if any amount, payment and/or adjustment which are due and payable by the Purchaser to the Vendor pursuant to this Agreement are not made and/or paid on the date due, then the Vendor shall be entitled, but not obligated, to accept same provided that such amount, payment and/or adjustment shall, until paid, bear interest at the rate equal to 15% per month. …
• Schedule D paragraph 37: The Purchaser acknowledges and agrees that notwithstanding any rights which he might otherwise have at law or in equity arising out of this Agreement, he shall not assert any of such rights, nor have any claim or cause of action (as a result of any matter or thing arising under or in connection with this Agreement) against any person, firm, corporation or other legal entity, other than the person, firm, corporation or legal entity specifically named or defined as the Vendor herein, even though the Vendor may be found to be nominee or agent of another person, firm, corporation or other legal entity, and this acknowledgment and agreement may be pleaded as an estoppel and bar against the Purchaser in any action or proceeding brought by the Purchaser to assert any of such rights, claims or causes of action. In the event that Vendor’s solicitor is holding any of the Deposits and/or Extras in trust pursuant to this Agreement, then in the event of a default by the Purchaser, the Vendor’s solicitor shall be entitled to pay and release the said Deposits and/or Extras together with any interest accrued thereon to the Vendor, provided the Vendor has delivered to its solicitors a statement of an officer of the Vendor, certifying that the Purchaser has committed a default pursuant to this Agreement that has not been remedied and that the Vendor has terminated this Agreement and that the Vendor is therefore entitled to the deposit and accrued interest, if any. Thereupon the Purchaser hereby releases the said solicitors from any obligation to hold Deposits and/or Extras, if any, in trust, and shall not make any claim whatsoever against the said solicitors and the Purchaser hereby irrevocably authorizes and directs the said solicitors to deliver the said deposit monies and accrued interest, if any, to the Vendor.
Limitation
• Schedule D paragraph 38: … The rights, remedies and recourse of the Purchaser in connection with this Agreement are limited to the Vendor, notwithstanding that the Vendor may be, or be deemed to be by law, acting as an agent or otherwise on behalf of some other person, firm, corporation or other entity and the Purchaser hereby agrees that with respect to this Agreement it shall not have any rights, remedies or recourse against such other person, firm, corporation, or other entity at law or otherwise. …;
Miscellaneous
• Schedule D paragraph 46: Each and every power of attorney as granted in this agreement to the Vendor shall be deemed to be irrevocable and shall be coupled with an interest.
Development Matters and Rezoning of Adjacent Lands
• Schedule D paragraph 49: The Purchaser acknowledges that the Vendor or the Vendors’ assigns or related or affiliated corporation(s), or the Subdivider, may apply to rezone or subdivide or amend the Official Plan and/or obtain site plan approval with respect to lands within, or adjacent to or in the neighboring vicinity of the lands contained within the plan of subdivision encompassing the Property and/or any lands within the County or Region in which the Property is situate, and the Purchaser hereby covenants and agrees that it shall not oppose any such rezoning or subdivision application(s), site plan approval applications, or any other applications ancillary thereto, including without limitation, any application(s) made … to enable the Vendor or its nominee to sever lands, grant easements, change the set-back requirements of such lands, the present use of such lands or any part thereof, or to vary the density coverage, dwelling count, size of lots or yield thereof, … and the Purchaser further acknowledges and agrees that this covenant may be pleaded as an estoppel or bar to any opposition or objection raised by the Purchaser thereto. …;
• Schedule D paragraph 50: The Purchaser covenants and agrees not to object to any construction by the Vendor or the registered owner of adjoining lands or claim that such construction and/or the resultant noise, dust or vibration is an inconvenience or nuisance. The Purchaser acknowledges and agrees that this covenant does not merge on closing and may be pleaded by the Vendor as complete defence to any opposition or objection raised by the Purchaser in this regard.
Appendix B
Entire Agreement Clause
The Entire Agreement Clause found at Schedule D, para. 33, of the APS states:
BINDING OFFER AND ENTIRE AGREEMENT
- The parties reaffirm that this Agreement when accepted shall constitute a binding Purchase Agreement between the Purchaser and the Vendor. It is agreed and understood that there is no representation, warranty, collateral term or condition affecting this Agreement or the Property, or for which the Vendor (or any sales representative representing the Vendor) can be held responsible or liable in any way, whether contained, portrayed, illustrated or represented by, or in, any plan, drawing, brochure, display, model or any other sales/marketing material(s), or alleged against any sales representative representing the Vendor, other than as expressed herein in writing. Without limiting the generality of the foregoing, it is understood and agreed by the parties hereto that the Purchaser shall not make or pursue any claim or proceeding against the Vendor, nor hold the Vendor responsible or liable, whether based or founded in contract law or in tort law, for innocent misrepresentation, negligent misrepresentation or otherwise, in respect of, or arising from, any statement, representation, warranty, collateral term or condition alleged to have been made by any sales representative or by any other person alleged to represent the Vendor on behalf of or purporting to be binding upon the Vendor, save and except for those representations of the Vendor herein set forth in writing. The Purchaser further confirms that in entering into this Agreement, he has not relied on any representation, warranty, collateral agreement or condition affecting this Agreement or the Property, or supported thereby, other than those specifically set out in this Agreement or in any of the schedules hereto, and specifically absolves the Vendor and/or any other party that may seek indemnification or contribution from the Vendor, of any obligation or liability to perform or comply with any promise or comply with any promise or representation that may have been made by any sales representative/agent or alleged against them, unless the same has been reduced to writing and is contained in this Agreement or in the schedules hereto.