CITATION: Patel v Bond 2021 ONSC 5331
MOTION HEARD: 20210726
SUPERIOR COURT OF JUSTICE - ONTARIO
RE: Shakeel Patel and Imaan Hassen, Plaintiffs
AND:
David Bond and Julie Bond, Defendants
BEFORE: Master La Horey
COUNSEL: Obaidul Hoque, Counsel for the Moving Parties Plaintiffs
Johanne S. Pilon, Counsel for the Responding Party Defendants
HEARD: July 26, 2021 by videoconference
REASONS FOR DECISION
OVERVIEW
1The plaintiffs bring this urgent motion for leave to issue a certificate of pending litigation (“CPL”) with respect to a condominium unit known municipally as 481 Rupert Avenue, Unit 227, in the Town of Whitchurch-Stouffville, Ontario (the “Property”).
2The plaintiffs entered into an agreement of purchase and sale (“APS”) as buyers for the purchase of the Property with the defendants as sellers dated March 7, 2021 with a closing date of May 31, 2021. The plaintiffs were not able to close on that day. The plaintiffs were ready to close on the following day, however the defendants refused to extend the closing date.
3After entering into the APS, the plaintiffs discovered that the condominium complex was zoned as a Senior Citizens’ Home. Nonetheless, the plaintiffs were prepared to accept the zoning issue and waived the relevant conditions inserted in the APS for their benefit. The zoning issue caused difficulties in the plaintiffs’ ability to obtain title insurance and funding which they were not able to resolve until the day after the scheduled closing date.
4For the reasons that follow, the plaintiffs’ motion is dismissed.
FACTS
5The plaintiffs, Shakeel Patel and Imaan Hassen, are getting married in September 2021. In late 2020 they decided to purchase a property to be used as their matrimonial home. They viewed over 20 property listings and 15 properties before becoming aware of the listing for the Property. They viewed the Property on February 10, 2021 and made an offer on the Property. After some negotiations on the purchase price and closing date, the parties entered into the APS.
6Ms. Hassan has filed an affidavit in which she testifies to a number of reasons why the Property is uniquely suited to their needs. It is a spacious one-bedroom condominium with a den and two washrooms. One of the more significant reasons the plaintiffs selected this Property is that it is close to Ms. Hassan’s parents who have had health concerns. It is also within 20 minutes driving distance from Mr. Shakeel Patel’s1 mother. There is a mosque in the neighborhood which the plaintiffs have attended many times in the past and where they planned to attend regularly after moving into the Property. The Property is close to Mr. Shakeel Patel’s workplace and he has friends in the neighborhood. Ms. Hassan was not cross-examined on her affidavit or supplementary affidavit.
7The defendants, James and Julie Bond, have also filed affidavit evidence. They were not cross-examined. Their evidence is that they purchased the Property new from the builder. The Property was an investment Property. In late 2020 they decided to list the Property for sale. The MLS listing did not specify any zoning, nor did the APS. The APS was confirmed and accepted by the plaintiffs on March 8, 2021 and by the defendants on March 9, 2021. The defendants delivered a notice to vacate to their tenant to be able to deliver vacant possession on closing.
8The defendants’ evidence is that there are over 100 units in the condominium building in which the Property is located and, at the time of the affidavit, there were two similar units for sale. Furthermore, over the last six months or so, nine units in the condominium complex have been listed and sold. The defendants also state that there are other condominium / townhouse complexes in the area. In particular, there are two condominium complexes less than 2 km away in Whitchurch-Stouffville.
9In her reply affidavit sworn July 16, 2021, Ms. Hassan states that similar condominiums are not available for the purchase price under the APS. Her evidence is that in the event that a similar unit comes up for sale between now and her wedding date, the plaintiffs would likely have to pay a much higher price to purchase such property and they have already raised all the money they could to come up with the closing funds for the purchase of the Property. In this affidavit she also sets out fees paid and payable in respect of the mortgage in the sum of $19,000 which they will lose if the transaction does not close.
10The APS is in the standard Ontario Real Estate Association Form 101 for a condominium resale which includes the following terms:
a) The purchase price was $525,000.00;
b) The plaintiffs would pay a deposit of $25,000; and,
c) The closing date for the transaction was May 31, 2021.
11The APS contained a Schedule A which included the following conditions for the benefit of the plaintiffs as buyers:
a) a condition for financing whereby the plaintiffs had three business days from the date of acceptance of the APS to arrange satisfactory financing, failing which the APS would become null and void and the plaintiffs’ deposit would be returned to them in full (the “Financing Condition”); and,
b) a condition that the defendants had ten business days from the date of acceptance of the APS to provide the plaintiffs a current status certificate and current financial statements for the Property. Thereafter the plaintiffs and their solicitors would have three business days from receipt to review and be satisfied regarding the contents of those documents failing which the APS would become null and void and the plaintiffs’ deposit would be returned to them in full (the “Status Certificate Condition”).
12In addition to the above conditions the APS also contained conditions with respect an inspection of the Property and the agreement by the tenant to vacate the Property prior to closing.
13The plaintiffs delivered a signed notice of fulfillment of conditions on March 12, 2021 in which they confirmed fulfillment of the Financing Condition and the inspection condition. The condition regarding the tenant was fulfilled on March 16, 2021. On March 17, 2021 the plaintiffs delivered a notice of fulfillment of conditions regarding the Status Certificate Condition.
14Provided to the plaintiffs with the Status Certificate was the condominium corporation’s declaration (the “Declaration”). The exact date that the condominium documents were provided to the plaintiffs is not in evidence, but one would assume that the documents were provided to them or their real estate solicitor prior to the delivery of the notice of fulfillment of Status Certificate Condition. Section 1.8(a) of the Declaration provides that the lands are zoned “Institutional”. Section 1.8(b) states that all owners and subsequent owners of condominium units are advised that the lands are zoned as a “Senior Citizens’ Home”.
15Ms. Hassan deposes that the plaintiffs’ real estate solicitor, Nisar Patel, became aware on May 6, 2021 that there was an issue with obtaining title insurance for the Property as a result of the zoning restriction. Ms. Hassan deposes that she herself was not aware of the zoning limitation until May 6, 2021 when her lawyer advised her of it.
16Mr. Patel submitted a requisition letter on May 11, 2021 which contains a requisition demanding that the sellers clear the zoning restriction. On May 20, 2021 the defendants’ real estate solicitor, Johnathan Mak, requested a copy of the condominium documents and the zoning by-law from Mr. Patel. On May 21, 2021 Mr. Mak wrote to Mr. Patel in part as follows:
… As you have indicated that there are limitations and restrictions which have been imposed on the subject property, we will need to review same to confirm with our clients regarding the limitations and restrictions which affect the property in a material matter….
Your client’s reference to exercising their rights under the Agreement of Purchase and Sale seem to indicate their desire to rescind the agreement and if that is the case, I will need to be able to explain the limitations your client is referencing as their claim to rescind as per their rights under the Agreement of Purchase and Sale.
I would note however, that as per the Agreement of Purchase and Sale, there was a Status Certificate Review condition which was waived in accordance with the proper terms by the purchasers. The Condominium Documents are a standard and required delivery for the status certificate. If your clients had issues with this, they should have brought the matter up at review prior to waiving their condition.
17Mr. Patel responded by email the same day and said that the issue was discovered on review of the Declaration and was also flagged by the title insurer. He said that in any case, “our client is willing to close this transaction provided our client is able to secure the mortgage and appropriate coverage for the title.”
18Unfortunately, the plaintiffs were unable secure funding from the mortgagee and title insurance in time prior to the closing date of May 31, 2021.
19The defendants have deposed that they were not aware that the Property was zoned “Institutional” and as a “Senior Citizen’s Home” when they listed the Property and at the time they entered into the APS. Prior to listing the Property, they were given the impression from the management company that the condominium complex was no longer zoned in this fashion. The defendants who are under 50 years of age say they had no problems completing their purchase of the Property and their tenant was not a senior. Moreover, they have observed residents of various ages at the condominium complex.
20On May 27, 2021 Mr. Patel sent an email to Mr. Mak attaching a letter requesting an extension of the closing date from May 31, 2021 to June 17, 2021. Mr. Mak replied by email the following day stating, “Please be advised that my clients have instructed our office to deny your client’s request for an extension.” He went on to say that the zoning is not a matter that would prevent closing, and absent any other issue which would reasonably prevent closing, his clients “expect your clients to close on the scheduled closing date and will be holding your clients in breach should they fail to do so.”
21On May 31, 2021 Mr. Patel sent an email to Mr. Mak at 3:42 p.m. stating that he was waiting at his bank and that: “It appears that funding has been delayed and may not able to close by end of business day today. Let me know next step in case of delay.” At 4:49 p.m. Mr. Patel sent an email in which he said he was attaching an extension request. The attached letter formally requested an extension of the closing to June 1, 2021. Mr. Mak replied by email at 6:02 p.m. on May 31, 2021 advising that his clients refused to extend the closing. These communications are discussed further below.
22On June 1, 2021 the plaintiffs’ litigation counsel wrote to Mr. Mak and after setting out the plaintiffs’ position that defendants were in breach of the APS said that the plaintiffs were in funds with sufficient title insurance in place and were able to close the same day. He said that if the defendants failed to convey title by 4:00 p.m. the plaintiffs would register a caution on title and would commence an action and seek a CPL. The defendants refused to close on June 1, 2021.
23Ms. Hassan in her affidavit says that the plaintiffs were able to obtain title insurance on June 1, 2021 when they accepted an exclusion in respect of the zoning issue. She states that had it not been for the zoning limitation, the plaintiffs would have had title insurance on the day of closing and could have completed the transaction on that day. The plaintiffs understood that the zoning limitation would continue to affect the Property but they were prepared to address this issue at a later time.
24Ms. Hassan’s evidence is that the mortgagee’s title insurance was not approved until June 1, 2021 and that when the title insurance issue was cleared up, the mortgagee advanced funds for closing to the plaintiffs’ solicitor.
25The defendants relisted the Property on MLS. The plaintiffs commenced this action on July 5, 2021 seeking, inter alia, specific performance of the APS and an order granting the plaintiffs leave to issue a CPL and, in the alternative, claim damages.
26In their statement of defence and counterclaim the defendants plead that the plaintiffs were prepared to close notwithstanding the zoning issues and that they waited until the last minute to finalize their affairs to complete the transaction. As a result, the plaintiffs were unable to close on the closing date and breached the APS. In the alternative, they say that the requisition regarding the zoning and required action was unreasonable and could never be satisfied as the owners of one unit cannot change the zoning of an entire condominium complex. If zoning was truly an issue for the plaintiffs, they should have relied on their rights under paragraph 10 of the APS (relating to title) and treated the agreement at an end and requested the return of their deposit. The defendants counterclaim for the deposit and damages for breach of contract.
LAW AND ANALYSIS
CPL Motions Generally
27Section 103 of the Courts of Justice Act permits the issuance of a CPL when “an interest in land is in question”.2
28A CPL is a discretionary remedy which is similar to an interlocutory injunction. Courts must keep the purpose and impact of the remedy in mind when exercising this discretion. As Justice Belch said in Matheson v Gordon3 in the context of a motion to discharge a CPL:
22 … While it is not the trial, the discharge of a Certificate is not a matter to be taken lightly. It is a discretionary remedy. The Certificate has an effect similar to that of an interlocutory injunction. It provides a plaintiff with a method of protecting his or her rights by giving notice to third party purchasers that there is a claim pending with respect to the property. It prevents an owner from otherwise freely dealing with his or her property.
29The applicable principles on a motion for leave to issue a CPL on notice are summarized by Master Glustein (as he then was) in Perruzza v Saptone as follows:4
(i) The test on a motion for leave to issue a CPL made on notice to the defendants is the same as the test on a motion to discharge a CPL (Homebuilder Inc. v. Man-Sonic Industries Inc., 1987 CarswellOnt 499 (S.C. - Mast.) ("Homebuilder") at para. 1);
(ii) The threshold in respect of the "interest in land" issue in a motion respecting a CPL (as that factor is set out at section 103(6) of the Courts of Justice Act, R.S.O. 1990, c. C.43) is whether there is a triable issue as to such interest, not whether the plaintiff will likely succeed (1152939 Ontario Ltd. v. 2055835 Ontario Ltd., 2007 CarswellOnt 756 (S.C.J.), as per van Rensburg J., citing Transmaris Farms Ltd. v. Sieber, [1999] O.J. No. 300 (Gen. Div. - Comm. List) at para. 62);
(iii) The onus is on the party opposing the CPL to demonstrate that there is no triable issue in respect to whether the party seeking the CPL has "a reasonable claim to the interest in the land claimed" (G.P.I. Greenfield Pioneer Inc. v. Moore, 2002 CanLII 6832 (ON CA), 2002 CarswellOnt 219 (C.A.) at para. 20);
(iv) Factors the court can consider on a motion to discharge a CPL include (i) whether the plaintiff is a shell corporation, (ii) whether the land is unique, (iii) the intent of the parties in acquiring the land, (iv) whether there is an alternative claim for damages, (v) the ease or difficulty in calculating damages, (vi) whether damages would be a satisfactory remedy, (vii) the presence or absence of a willing purchaser, and (viii) the harm to each party if the CPL is or is not removed with or without security (572383 Ontario Inc. v. Dhunna, 1987 CarswellOnt 551 (S.C. - Mast.) at paras. 10-18); and
(v) The governing test is that the court must exercise its discretion in equity and look at all relevant matters between the parties in determining whether a CPL should be granted or vacated (931473 Ontario Ltd. v. Coldwell Banker Canada Inc., 1991 CarswellOnt 460 (Gen. Div.); Clock Investments Ltd. v. Hardwood Estates Ltd., 1977 CanLII 1414 (ON SC), 1977 CarswellOnt 1026 (Div. Ct.) at para. 9).
30In a contested motion on notice for a CPL where the plaintiff purchaser sought specific performance of an agreement of purchase and sale Master MacLeod articulated the applicable principles as follows:5
The first question is whether or not the claim for specific performance has merit. On an ex parte motion the threshold is low. The court must simply be satisfied that the claim is plausible and there is sufficient evidence to show that there is a serious issue.
On a contested motion, the court will review all of the evidence put forward by both parties and determine on the totality of the evidence before it whether or not there is a triable issue.
In making this determination the court need not accept the pleadings or the affidavit evidence uncritically but will examine all of the evidence after cross-examination to determine whether or not the claim has a reasonable prospect of success.
Reasonable prospect of success means not only a reasonable prospect of proving breach of contract but also succeeding in obtaining the equitable remedy of specific performance. Thus the court must be satisfied that damages would not be an appropriate remedy.
Even if the plaintiff has a potential case for specific performance the court may still refuse the CPL if it would be unjust to order it. The court must consider the equities of granting this form of interim relief. This is not a mechanical application of a test but an exercise of discretion to achieve a just result.
Factors the court may consider include the strength of the case, the uniqueness of the land, the adequacy of damages as a remedy, whether the CPL appears to be for an improper purpose, and the balance of convenience.
The court may impose terms whether it grants or withholds a CPL.
31Thus, the first stage of the analysis is for the court to determine whether there is a triable issue. Only if the threshold question is determined in the plaintiffs’ favour, does the court consider at the second stage whether it is just to grant the CPL given the equities between the parties.
32Even if the plaintiff succeeds in establishing that there is triable issue and thus crosses the threshold, the strength of the plaintiffs’ claim remains relevant as one factor to be considered in the second stage.6
Whether there is a triable issue
Position of the plaintiffs
33In their factum the plaintiffs state that the defendants have raised multiple issues, “the existence of which demonstrate that there is in fact a triable issue with respect to whether the Plaintiffs have a reasonable claim to an interest in the Property.”
34At paragraph 22 of the plaintiffs’ factum they state:
- The Defendants’ arguments’ raise, inter alia, issues that ought to be determined at trial or a summary judgment motion, on full evidence. These issues include:
a. Was the one-day delay a direct result of the zoning limitation? Were the Plaintiffs the cause of the delay? Or as the Defendants suggest, are the Plaintiffs utilizing the “zoning of the Property as a guise to evade their obligations under the contract”?
b. Were the Defendants in a position to insist on time was of the essence?
c. Did the Plaintiffs’ waiver of the Status Certificate Condition preclude them from
insisting on rectification of the zoning limitation?
d. Did the Plaintiffs waive any of their rights under the APS, including those flowing from
the Title Search (paragraph 10 of the APS), and Title (paragraph 11 of the APS)
provisions?
e. What actual step did the Defendants’ solicitor take to assist the Plaintiffs with the title
insurance issue?
35The plaintiffs take the position that the defendants were the cause of the delay and the alleged default and could not insist on time being of the essence. They argue that but for the zoning issue, the transaction would have closed on May 31, 2021 and that “had it not been for the Defendants’ unreasonable refusal to close the transaction, the closing would have been finalized on June 1, 2021.”
36The plaintiffs also suggest that at a motion or trial, the parties will lead additional evidence including evidence from the parties’ solicitors surrounding discussions on the title insurance issue and potentially evidence from the mortgagee, that but for the zoning issue, they would have funded on May 31, 2021 instead of June 1, 2021.
37In oral argument plaintiffs’ counsel took the position that the defendants never insisted that time was of the essence and that the letter from the defendants’ real estate solicitor on May 31, 2021 did not clearly indicate the defendants’ intention to treat the contract at an end following the plaintiffs’ failure to close.
Position of the defendants
38The defendants say that the plaintiffs’ case does not raise a triable issue as to a reasonable claim to an interest in land.
39Their position is that the evidence is clear that the plaintiffs breached the APS. Pursuant to the Status Certificate Condition the plaintiffs were provided with the condominium documents which clearly set out the zoning for the condominium and allowed them time to review the documents. Notwithstanding that condominium was zoned as “Institutional” and a “Senior’s Citizen’s Home”, the plaintiffs waived the Status Certificate Condition. The defendants say that if the plaintiffs did not review the documents or note the zoning prior to waiving the condition on March 17, 2021, the defendants do not bear any responsibility.
40Further, the defendants say their solicitor specifically asked the plaintiffs if they wished to rescind the APS pursuant to section 10 as the zoning for the building could not be changed.
41Section 10 provides:
- TITLE SEARCH: Buyer shall be allowed until 6:00 p.m. on the 20 day of May, 2021, (Requisition Date) to examine the title to the Property at Buyer’s own expense and until the earlier of: (i) thirty days from the later of the Requisition Date or the date on which the conditions in this Agreement are fulfilled or otherwise waived or, (ii) five days prior to completion, to satisfy Buyer that there are no outstanding work orders or deficiency notices affecting the Property, and that its present use (Residential) may be lawfully continued. If within that time any valid objection to title or to any outstanding work order or deficiency notice, or to the fact the said present use may not lawfully be continued, is made in writing to Seller and which Seller is unable or unwilling to remove, remedy or satisfy or obtain insurance save and except against risk of fire (Title Insurance) in favour of the Buyer and any mortgagee, (with all related costs at the expense of the Seller), and which Buyer will not waive, this Agreement notwithstanding any intermediate acts or negotiations in respect of such objections, shall be at an end and all monies paid shall be returned without interest or deduction and Seller, Listing Brokerage and Co-operating Brokerage shall not be liable for any costs or damages. Save as to any valid objection so made by such day and except for any objection going to the root of the title, Buyer shall be conclusively deemed to have accepted Seller's title to the Property. Seller hereby consents to the municipality or other governmental agencies releasing to Buyer details of all outstanding work orders and deficiency notices affecting the Property, and Seller agrees to execute and deliver such further authorizations in this regard as Buyer may reasonably require.
42Pursuant to section 11 of the APS the buyer agrees to accept title subject to the provisions of the Declaration and zoning by-laws. It provides:
- TITLE: Buyer agrees to accept title to the Property subject to all rights and easements registered against title for the supply and installation of telecommunication services, electricity, gas, sewers, water, television cable facilities and other related services; provided that title to the Property is otherwise good and free from all encumbrances except: (a) as herein expressly provided; (b) any registered restrictions, conditions or covenants that run with the land provided such have been complied with; (c) the provisions of the Condominium Act and its Regulations and the terms, conditions and provisions of the Declaration, Description and By-laws, Occupancy Standards By-laws, including the Common Element Rules and other Rules and Regulations; and (d) any existing municipal agreements, zoning by-laws and/or regulations and utilities or service contracts.
43The plaintiffs’ solicitor confirmed that the plaintiffs intended to move forward with the transaction. By waiving any rights they may have had to rescind under section 10 and confirming their intention to move forward with the transaction, the plaintiffs accepted the zoning.
44The defendants say that they were unequivocal about their reliance on the closing date of May 31, 2021. On that date, they tendered but the plaintiffs were not able to close.
Analysis and Conclusion on Triable Issue
45On this motion it is not the court’s role to decide whether the plaintiffs’ claim will likely succeed at trial. In determining this issue, the court is not to assess credibility or decide disputed issues of fact.7 However, even with these constraints, I am satisfied that there is no triable issue with respect to the plaintiffs’ claim for specific performance.
46The plaintiffs chose to accept the zoning for the condominium complex. They waived the Status Certificate Condition and they were prepared to close on June 1, 2021 with the current zoning for the condominium complex. They were put on notice of a potential issue with zoning with the delivery of the condominium documents which were required to be delivered within 10 business days of the acceptance of the offer. The MLS was silent as to zoning. There was no representation or warranty as to zoning in the APS and the APS contains an entire agreement clause (section 29). Indeed, the plaintiffs in their statement of claim do not allege that there were any representations with respect to zoning. Rather in paragraph 14 they allege that the defendants did not advise the plaintiffs that the Property was zoned only for a senior citizens home prior to the APS and that the MLS listing did not disclose the zoning.
47The plaintiffs say that the defendants cannot rely on the time of the essence clause of the APS “taking advantage of the existence of a state of affairs which they themselves produced.” This argument cannot be sustained. The plaintiffs were on notice of the zoning in March 2021 which had the effect of impacting title insurance and funding. The plaintiffs were able to resolve these issues only on June 1, 2021, a day after the closing date. By waiving the Financing Condition and the Status Certificate Condition in March 2021 and in not seeking to rescind the APS the plaintiffs took a calculated risk.
48In their factum, the plaintiffs suggest that at a summary judgment motion or trial the parties’ real estate solicitors may provide evidence about their discussions surrounding title insurance which will permit a court to determine whether the delay is attributable to the plaintiffs or defendants. Although the letter from the defendants’ real estate solicitor of May 28, 2021 offers to assist with title insurance, the same letter is unequivocal that the defendants expected to close on May 31, 2021. In her reply affidavit, Ms. Hassan deposes that the plaintiffs’ real estate solicitor advises her “that Mr. Mak did not follow up with his offer to assist” with title insurance.
49The plaintiffs also suggest in their factum that the parties may lead evidence from the mortgagee’s solicitor, who may confirm that but for the zoning issue, they would have funded the transaction on May 31, 2021. Whether or not this is the case, it does not assist the plaintiffs’ claim against the defendants.
50As noted above, in oral argument plaintiffs’ counsel took the position that the defendants were not entitled to rely on the time of the essence clause.
51Section 23 of the APS provides:8
- TIME LIMITS: Time shall in all respects be of the essence hereof provided that the time for doing or completing any matter provided for herein may be extended or abridged by an agreement in writing Signed by Seller and Buyer or by their respective lawyers who may be specifically authorized in that regard.
52The defendants were twice asked to extend the closing date in writing and refused both times to execute an extension agreement.
53At the hearing plaintiffs’ counsel argued that the May 31, 2021 letter from the defendants’ real estate solicitor did not insist that time remained of the essence.
54In Can-China Real Capital Inc. v Askar the court concluded that the plaintiffs in that case had raised a triable issue as to whether time continued to be of the essence. In that case Master Frank stated:
43 I find that there is a triable issue regarding whether time continued to remain of the essence. There were two extensions to the closing date that were agreed to through email communications. Neither party provided, insisted, or set out that time remained of the essence for either of the two extensions. Where an extension of time is agreed to without specifying that time is or remains of the essence, time no longer continues to be of the essence and the contract remains valid and subsisting; see Watchfield Developments Inc. v. Oxford Elgin Developments Ltd. (1992) 25 RPR (2d) 236 (Ont.Gen.Div.) at pp. 244-245. In 2329131 Ontario Inc. v. Carlyle Development Corp., 2013 ONSC 4876, affirmed 2014 ONCA 132, the parties had specifically provided that time remained of the essence when the closing date changed in several prior written amendments to the agreement of purchase and sale. However, no such stipulation was made after the fifth amendment. The Court found that given the parties' conduct, they had waived the time of the essence provision in the agreement of purchase and sale. For purposes of this motion, I do not agree with the defendants' submission that Watchfield is distinguishable because the contractual term with respect to time limits in the present case is markedly different from the clause in Watchfield.
55Can-China is distinguishable as no extensions of time were agreed to in this case. I do not find that there is any ambiguity about the defendants’ insistence as to time continuing to remain of the essence in the May 31, 2021 communications.
56Mr. Patel’s email of May 31, 2021 at 4:49 p.m. attached a letter on his letterhead requesting an extension of the closing date to June 1, 2021, on the basis that all other terms of the agreement would remain the same, adjustments would be as of May 31, 2021, “time will continue to be of the essence” and the purchasers would pay for any carrying costs for the extension. The letter was signed by Mr. Patel and contained a request for the defendants’ lawyer to sign a copy of the letter with a request to return the executed document to confirm agreement to the extension of the closing.
57Mr. Mak responded by email the same day at 6:02 p.m. stating: “Please be advised that our clients have denied your client’s extension request. Please see our notice of breach letter attached.” I reproduce the letter attached to the email in its entirety.
This is further to your advice of this afternoon, wherein you advised that the purchaser is not in a position to complete the transaction as scheduled. This is a breach of the Agreement.
Without acknowledging any requirement to do so given your advice, we confirm that we have tendered upon you as required. These are not to be released and to be returned to our office.
Be advised that the vendor reserves all rights against the purchaser for the breach and will hold the purchaser liable for all costs and damages including forfeiture of deposits and any shortfall upon resale. We will advise our clients to mitigate damages immediately and they will be relisting the property as soon as reasonably possible.
Without prejudice to our client’s rights against yours for your client’s breach and without admitting any obligation to do so, we would advise that if your client is later able to complete the transaction, we will advise our client to consider the request and advise of any terms which would be required.
58I cannot read any equivocation into this communication as suggested by plaintiffs’ counsel. The fact that the defendants’ solicitor states “without prejudice” that he will advise his clients to “consider” a request to extend if the plaintiffs were later able to close, does not change the fact that the extension request is being denied by the defendants and that they were insisting on their rights under the APS.
59The plaintiffs plead that the defendants breached their duty of good faith and contractual dealings in their statement of claim but point to no facts that would support this legal conclusion. Further, it is not an act of bad faith for a contracting party to insist upon the terms of the contract being honoured.
60Ms. Hassan says in her affidavit that the defendants have no real reason not to complete the transaction given that the plaintiffs were in funds on June 1, 2021. She believes that the defendants’ motivation is to sell the Property to someone else for a higher price than the APS. In this case the defendants’ motivation in refusing the extension is not relevant.
61In Time Development Group Inc. (In Trust) v Bitton,9 Justice Perell applies the principle of good faith in contracts in the context of a claim for specific performance of a real estate transaction. He said in part as follows:
74 Further, I find that it was not an act of bad faith in the circumstances of this case for the [sellers] to insist on the July 31, 2017 closing date for the sale transaction. As Justice Cromwell noted in Bhasin v. Hrynew, the principle of good faith must be applied in a manner that is consistent with the fundamental commitments of the common law of contract that generally places great weight on the freedom of contracting parties to pursue their individual self-interest and even cause loss to the other contracting party, even intentionally in the legitimate pursuit of economic self-interest.
75 The [sellers] were not responsible for the withdrawal of the lender's mortgage commitment and the [sellers] did nothing dishonest. They were not required to act to serve what was in the best interests of [the buyer]. Justice Cromwell also noted that the organizing principle of good faith should not be used as a pretext for scrutinizing the motives of contracting parties.
76 It is informative that [the president of the buyer] knew that he had to ask for an extension in writing. He actually was more begging than asking for an extension because of the late arriving news from Foremost Financial that it would not finance the transaction. But, [the seller] was not complicit in Foremost Financial's decision, and [the seller] was under no legal obligation to assist [the buyer] by giving it more time to find a replacement lender. In the circumstances of the immediate case, [the seller’s] personal motivations for refusing to grant an extension are not relevant in the analysis of whether he was performing the contract in good faith.
77 … […] the point remains that the [sellers] were entitled to insist on having the 2016 Agreement performed in accordance with its terms. It is not an act of bad faith to insist on a contract being performed in accordance with its terms.
78 The situation then was that [the buyer] breached the 2016 Agreement when it was unable to close on July 31, 2017. Specific performance is not available to a party who is not ready, willing, and able to close the transaction. The [seller’s] lawyer's email message on July 31, 2017 unambiguously terminated the Agreement and forfeited [the buyer’s] deposit.
62In conclusion, I am satisfied that the defendants have met their onus in showing that there is no triable issue with respect to whether the plaintiffs have a reasonable claim to an interest in the Property.
Consideration of the Equities
63In the event that I am wrong in my conclusion that there is no triable issue, I will proceed on the assumption that the plaintiffs have crossed the Stage 1 threshold and consider whether it would be just and equitable for a CPL to issue based on all of the circumstances, by considering and balancing the equities including the factors set out in the caselaw.
64One factor that the court may consider is the strength of the case.10 For the reasons set out above, this weighs heavily against granting the CPL.
65Whether the Property is unique is disputed. The plaintiffs point to the proximity of the Property to family, friends, work and the mosque. The defendants point to fact that the condominium complex contains over a 100 similar or identical units and the availability of other condominium units available for sale in the building and nearby. The plaintiffs say that there are no comparable properties, however the chief concern seems to be price. On balance, I find that this factor weighs against granting a CPL.
66One of the factors is whether damages are an alternative remedy. In their statement of claim the plaintiffs seek damages and list a number of heads of damage. Damages are easily calculable. It should be a relatively straightforward matter to calculate damages based on other condominium units in the vicinity taking into account square footage, number of bedrooms and parking spaces. Indeed Ms. Hassan’s affidavit contains some of this information. Ms. Hassan’s affidavit also refers to damages she has already quantified in connection with fees payable to the mortgagee. This factor weighs against granting a CPL.
67The plaintiffs submit that damages are not a satisfactory remedy as they say they do not have the financial wherewithal to pay a higher price, even if another comparable unit came up for sale. This factor weighs in favour of a CPL.
68There is no evidence of another willing purchaser. This is not like the situation in Pauwa North America Development Group Co. v Skyline Port McNicoll (Development) Inc.11 where the presence of third party agreement of purchase and sale militated against the granting of the CPL. This is a factor that weighs in favour of the CPL.
69The defendants assert that it would be unjust to grant the CPL as the plaintiffs seek it for an improper purpose. I do not accept this submission. It is clear from the unchallenged affidavits of Ms. Hassan that the plaintiffs are seeking a CPL because they wish to move into the Property when they are married and they have acted promptly in bringing this motion. The defendants argue that the plaintiffs have tried to bully and threaten the defendants into submission, relying on plaintiffs’ counsel’s letter of June 1, 2021. There is nothing at all improper in that letter and no evidence that the plaintiffs were attempting to bully the defendants. The letter merely expresses the plaintiffs’ legal position in a concise and respectful manner and requests that the defendants close the transaction the same day failing which the plaintiffs intend to take legal action. In this connection the defendants also say that they have been advised that a caution has been registered against title to the Property, but no further particulars have been provided.
70I now consider the balance of convenience. If the CPL is not granted, the defendants are free to deal with the Property and sell it. It is an investment property for them. However, the defendants decided to list the property at the end of last year and it is not likely that the litigation will be resolved in the immediate future. Thus they will not be able to realize on their investment possibly for some considerable time.
71The plaintiffs say that the balance of convenience favours them as, absent a CPL, the defendants may dispose of the Property before the plaintiffs’ claim can be determined on a summary judgment motion. They say that they intend to proceed by way of summary judgment and will adopt an expedited scheduled for the adjudication of the summary judgment motion and it is likely that the plaintiffs’ claim will be determined within a relatively brief period of time. Their concern is that they will not have a home to move into when they get married in September. It seems to me highly unlikely that the plaintiffs’ claim can be determined on a summary judgment motion and any appeals exhausted in sufficient time for a closing to take place in September should the plaintiffs be successful. In this context, it is relevant that the plaintiffs were put on notice of the zoning issue in mid-March 2021. Ultimately, the plaintiffs were prepared to close notwithstanding the zoning issue and were able to obtain title insurance and funding. The unfortunate time crunch that led to the one-day extension request appears to have been of the plaintiffs’ own making.
72Having considered and balanced the equities, I conclude that, even if there were a triable issue as to the plaintiffs’ entitlement to specific performance, it would not be just and equitable in the all of the circumstances that leave be granted to issue a CPL.
DISPOSITION AND COSTS
73The plaintiffs’ motion is dismissed.
74If the parties cannot agree on the costs of this motion, they may file written costs submissions not to exceed three pages (double-spaced) excluding costs outlines. The defendants shall deliver their costs submission by August 17, 2021, and the plaintiffs may deliver costs submissions by August 24, 2021.
Master L. La Horey
Date: 20210803
Footnotes
- I refer to the plaintiff Shakeel Patel by his full name to distinguish him from the plaintiffs’ real estate lawyer who has the same surname.
- R.S.O. 1990, c. 43
- [2004] O.J. No. 270, 2004 CanLII 28475
- 2010 ONSC 841 at para 20
- Interrent International Properties Inc. v 1167750 Ontario Inc., 2013 ONSC 4746 (Master) at para 15
- Interrent International Properties Inc. v 1167750 Ontario Inc., 2013 ONSC 4746 (Master) at para 15
- Can-China Real Capital Inc. v Askar, 2021 ONSC 4053 at para 38.
- This is the pre-printed language on the standard OREA Form 101.
- 2021 ONSC 4384
- Interrent at para 15
- 2021 ONSC 18 (Master)