COURT FILE NO.: CV-19-727

DATE: 2021-09-09

ONTARIO

SUPERIOR COURT OF JUSTICE

Between:

JASON ANTHONY GUNDY and JULIET DYKSTRA

Plaintiffs

and

GURKIRPAL GHUMAAN and SANDEEP GHUMAAN

Defendants

T. Arnold, for the plaintiffs

N. Waliani, for the defendants

Before: Justice R. Chown

Heard: June 10, 2021, by video conference

REASONS FOR JUDGMENT

[1] The defendants agreed to purchase the plaintiffs’ house but then refused or failed to close. This is a motion for summary judgment by the plaintiffs. For the reasons which follow, I grant judgment as requested.

Background

[2] The plaintiffs and the defendants entered into an agreement of purchase and sale (APS) on May 29, 2017 for a house at 1966 King Street, Caledon. The purchase price was $1,450,000. The closing date was to be September 27, 2017. The agreement was conditional upon the defendants arranging financing within five banking days and obtaining a satisfactory home inspection report. The defendants paid a $40,000 deposit, which is being held by the listing broker.

[3] The defendants waived the financing condition on June 5, 2017.

[4] On June 6, 2017, the parties agreed to amend the APS to change the purchase price to $1,448,000 and to delete the home inspection condition.

[5] On September 25, 2017, the defendants’ solicitor wrote to the plaintiffs’ solicitor:

Please be advised that the funds for the purchase were to come from the sale of my client’s existing home with a closing date of September 27th. My client had sold his existing home for $1,100,000.00, but the appraised value now is $876,500.00, thereby leaving a shortfall of $300,000.00. The purchaser is seeking reduction in the price and closing for 18th October, 2017.

The current appraised value of your client’s house is $200,000.00 less than the price paid by my client. My client is requesting a reduction in the purchase price by $50,000.00 with a closing date of October 18th, 2017.

Kindly speak to your client and confirm whether he is prepared to reduce the purchase price and change the closing date.

[6] The plaintiffs did not agree to this but agreed to extend the closing by one day to September 28, 2017.

[7] Further negotiations ensued. The parties agreed to four or five short extensions of the closing date with the last agreed extended date being October 18, 2017.

[8] On October 11, 2017, the defendants’ solicitor wrote:

I have discussed the numbers of the sale and purchase with my client. Here is the situation; after arranging two mortgages and putting the net proceeds from his sale, my client has a shortfall of $100,000.00 to purchase the property. He cannot come up with the shortfall. Unless your client is prepared to reduce the price, my client is unable to complete transaction.

Please let me your client’s position. [sic]

[9] On October 12, 2017, the defendants’ solicitor wrote:

I have discussed the matter with my client. He has already arranged a first in the amount of $700,000.00. He may be able to arrange a second for $200,000.00. Please check with your client whether he would, either, reduce the purchase price by $50,000.00 or give a second VTB for $250,000.00 for one year interest free.

[10] On October 13, 2017, the defendants’ solicitor wrote:

My client’s second mortgage has been denied. Here are the numbers:

to pay for purchase	1,440,660.00
first mortgage	724,000.00
net proceeds from sale	587,000.00
funds required to close	$129,610.00
Can arrange with friends	80,000.00

Left over required $50,000.00. He is asking for a reduction in the purchase price by $50,000.00.

[11] Below I will refer to this email as the “informal offer” and will find that it was the last offer made between the parties.

[12] The price reduction and vendor take back mortgage were not acceptable to the plaintiffs. The transaction did not close.

[13] On October 18, 2017, the plaintiffs’ solicitor wrote to the defendants’ solicitor:

Your communication in your email of October 11, 2017 that your clients cannot close without a price reduction and your email today constitutes a repudiation of the Agreement and a clear statement that your clients will not be proceeding to close the transaction. This correspondence serves as notice that our clients accept your clients’ repudiation of the Agreement.

Our clients will be proceeding to re-list the property for sale in order to mitigate their damages. Our clients would be seeking the forfeiture of all deposits plus all consequential damages as a result of your clients’ repudiation of the Agreement.

[14] On October 20, 2017, the plaintiffs re-listed the property. They used the same listing agent. By then, the plaintiffs had moved out of the house into the new house they had purchased. They began to carry two mortgages and the expenses of both homes.

[15] It appears from the MLS listings, which are included in the motion record, that the listing price was changed (decreased, for the most part) as follows (I have rounded to the nearest $1,000):

Date	Listing Price
October 20, 2017	$1,500,000
November 24, 2017	$1,450,000
January 4, 2018	$1,300,000
April 13, 2018	$1,400,000
September 14, 2018	$1,300,000
September 26, 2018	$1,200,000

[16] The plaintiffs sold the property for $1,150,000 to a new purchaser. This deal closed on November 9, 2018.

Controversy

[17] There is only one material controversy in the evidence. The defendant Gurkipal Ghumaan deposes that:

the Plaintiffs chose to sell to another buyer for $1.15 million, $250,000 less than the Defendants’ offer of $1.4 million, which still stood. This demonstrates the Plaintiffs failed to mitigate their losses in a reasonable manner, and such an economically irrational decision may suggest animus and bad faith towards the Defendants. [Emphasis added.]

[18] The plaintiff Juliet Dykstra replies to this as follows:

Contrary to what the Defendants allege at paragraph 9 of the Ghumaan Affidavit, the Defendants never submitted an offer to purchase the property following our acceptance of their repudiation of the Agreement of Purchase and Sale.

[19] The parties did not conduct cross examinations on their respective affidavits.

[20] The sole evidence that the offer to purchase for $1.4 million “still stood” is the above statement in the Ghumaan affidavit. This is not supported with any documentation.

[21] I have concluded that this controversy is not a factual controversy but rather a dispute on how the October 13, 2017 “informal offer” email should be interpreted. It does not create “a genuine issue requiring a trial.” I will return to this and explain why below.

Approach to Summary Judgment

[22] The Supreme Court of Canada set the roadmap for summary judgment in Hryniak v. Mauldin, 2014 SCC 7, [2014] 1 SCR 87, at para. 66:

[66] On a motion for summary judgment under Rule 20.04, the judge should first determine if there is a genuine issue requiring trial based only on the evidence before her, without using the new fact-finding powers. There will be no genuine issue requiring a trial if the summary judgment process provides her with the evidence required to fairly and justly adjudicate the dispute and is a timely, affordable and proportionate procedure, under Rule 20.04(2)(a). If there appears to be a genuine issue requiring a trial, she should then determine if the need for a trial can be avoided by using the new powers under Rules 20.04(2.1) and (2.2). She may, at her discretion, use those powers, provided that their use is not against the interest of justice. Their use will not be against the interest of justice if they will lead to a fair and just result and will serve the goals of timeliness, affordability and proportionality in light of the litigation as a whole.

[68] While summary judgment must be granted if there is no genuine issue requiring a trial, the decision to use either the expanded fact-finding powers or to call oral evidence is discretionary. The discretionary nature of this power gives the judge some flexibility in deciding the appropriate course of action. … [Footnotes omitted.]

Issues

[23] In oral argument the defendants acknowledged that they breached the APS. Mr. Waliani stated that the issues are quantification of the damages and whether the plaintiffs failed to mitigate. Mr. Waliani also argued that a trial is required in this case.

Mitigation Efforts

[24] As indicated above, the plaintiffs re-listed the property almost immediately. They used the same broker and listing price and reduced the price appropriately when the property did not sell. There is no direct evidence on this point, but because they had moved to new premises I presume the subject property was empty for the duration of the second listing and did not show as well, but this cannot be criticized as unreasonable. The plaintiffs were required to move in anticipation of the closing. There is nothing unreasonable about the plaintiffs’ mitigation efforts.

Offers Made Prior to October 18, 2017

[25] The defendants note that if the plaintiffs had accepted a $50,000 reduction in price as proposed by the defendants, their damages would have been limited to $50,000. Instead, they rejected that offer, only to later accept an offer with a $298,000 reduction in price.

[26] The problem with this argument is that the plaintiffs were entitled to reject the offer and insist on fulfilment of the contract. If the defendants’ position was accepted, a purchaser in a falling market would always be able to force a vendor to accept a lower price by arguing that failing to do so was a failure to mitigate.

[27] The measure of damages here is the amount required to put the vendors in the position they would have been in had the contract been performed. This is subject to the duty to mitigate. However, the duty to mitigate does not include a duty to accept a new bargain from the purchaser.

[28] A similar circumstance arose in O’Hare v. Wyton, 2018 ONSC 3946. In that case the defendant purchaser’s lawyer sent correspondence shortly after the intended closing date which said:

we are unable to complete the transaction without an abatement of the purchase price. The highest our client is able to offer now is $720,000, or a $20,000 abatement of the purchase price. Kindly advise if your client is agreeable to the above or what terms your client would require to agree to said abatement, if any.

[29] Justice Boswell noted that there was some ambiguity in the purchase price, for reasons which are not germane here, but he also noted:

the offer, in my view, implicitly suggests a complete resolution of the purchaser’s breach. In other words, it does not contemplate a sale … with the O’Hares entitled to sue for any expectation damages. The O’Hares were not required to take a significant loss just so that they could sell to Mr. Wyton.

[30] The same is true of the Ghumaans’ offer in the case before me.

Offer Made Subsequent to October 18, 2017

[31] Mr. Waliani advised during argument that, after the aborted closing, the defendants offered to purchase the subject property for $50,000 less than the agreed price. When asked where this offer is mentioned in the defendants’ affidavit, Mr. Waliani advised that it is not mentioned there but the defendants have provided him with that information. There is a serious problem with this, because of the “best foot forward” principle and because this motion was scheduled twice before with two detailed court-ordered timetables for the exchange of affidavits.

[32] Mr. Waliani did not ask for an adjournment to advance evidence of this nature. Later in the argument, Mr. Waliani asked for an adjournment to allow for examination of witnesses, but after the previous endorsements were reviewed regarding previous adjournments and timetables, Mr. Waliani withdrew this adjournment request.

[33] It is hard to accept that there was such an offer or that credible evidence of this nature could be advanced. The plaintiffs’ motion record appears to contain a comprehensive chronology and listing of the communications between the parties’ solicitors. In any event, there is no evidence before me on this point.

[34] There was some confusion during oral argument. I have reviewed the materials again and listened to the court recording of Mr. Waliani’s argument. The informal offer made in the email dated October 13, 2017, detailed above paragraph [10], was for $50,000 less than the agreed price. Mr. Waliani must have misunderstood the evidence to be that this offer made after October 18, 2017.

[35] In any event, there was no evidence of any offer made after October 18, 2017.

No Was Offer Made Prior to October 18, 2017 Which Still Stood

[36] On the available record, the appropriate conclusions are:

a. The email from the defendants’ solicitor dated October 13, 2017 (the informal offer) is the last proposal the defendants’ made.

b. What was said in the email is that the defendants were “asking for a reduction in the purchase price by $50,000.00.” [Emphasis added.]

c. The purchase price at that point had been amended to from $1,450,000 to $1,448,000. Therefore, it seems the informal offer being made was to pay $1,398,000. However, it is not fully clear whether the intended new price would have been a reduction from the old price or from the amended price. The Ghumaan affidavit does not clarify this issue. In fact it confuses the issue, in that it asserts the offer that “still stood” was for “$1.4 million.”

d. If the plaintiffs’ solicitor had emailed back and said the plaintiffs would agree to the requested $50,000 price reduction, it is questionable whether this would have formed an enforceable agreement. With that said, the determination of whether “acceptance” of the proposed price reduction would have formed an enforceable agreement is not essential to the result, because the informal offer was rejected. I will explain this further below.

e. The parties did not exchange any offers, formal or informal, after October 13, 2017.

f. The last agreed upon closing date was on October 18, 2017, five days after the informal offer of October 13, 2017, and the transaction did not close.

g. The informal offer must be considered to have been rejected when the plaintiffs allowed the closing date to go by without any effort to formalize an agreement based on the informal offer. The letter of October 18, 2017 also amounted to a rejection of the informal offer. It is trite that under the common law, when an offer is rejected, it is not open to the offeree to accept the offer unless the offer is renewed by the offeror.

h. While the informal offer was not withdrawn, it was not renewed at any time.

i. Because the offer was rejected by the plaintiffs and not renewed by the defendants, the statement that the offer “still stood” is not accurate.

j. Prior to selling, the plaintiffs did not keep the defendants informed as they stepped down the listing price. They did not ask the defendants if they wished to reconsider their position given the potentially increasing exposure the defendants faced with each price reduction.

Jurisprudence

[37] I have been referred to several cases that provide guidance. Gamoff v. Hu, 2018 ONSC 2172, is factually very similar to this case. Justice Edwards articulated the issue he had to decide at para. 33 of his decision:

The real issue that this court has to grapple with is whether or not the full forensic machinery of a trial is required to determine whether the Plaintiffs acted reasonably in their efforts to mitigate their damages

[38] At para. 34, he noted that the plaintiff had a duty to mitigate but the defendant had the onus to show that the plaintiff did not act reasonably in the steps taken to mitigate. That onus can be met with evidence from any source, but evidence is required. The defendant in Gamoff argued that the plaintiffs were unreasonable in selecting the listing price for the re-listing. However, the defendant did not put forth expert evidence show that the listing price selected was unreasonable.

[39] In Degner v. Cabral, 2019 ONSC 1610, the plaintiff vendor re-listed the property promptly after the defendant purchaser failed to close. The vendor received six offers within three days of the re-listing. The vendor negotiated with one of the offerors and accepted an offer six days after the re-listing. The defendant argued that the plaintiff did not expose the property to the market long enough and that it was unreasonable to accept an offer so quickly. The defendant had an expert opinion to support that view. Justice Nightingale nevertheless granted summary judgment based on the new purchase price. Justice Nightingale noted that the evidence of a significantly declining real estate market and the resale price afforded good evidence of the market price. Although the defence expert criticized the short duration of the remarketing efforts, he did not provide any opinion as to the fair market value on the date the property failed to close or the date of the re-sale. The case provides a helpful review of the legal principles involved in these cases.

[40] The quantum of damages should be the amount required to put the plaintiffs in the position they would have been in had the contract been completed. In a case of this nature, that would normally be the difference between the contracted price and the market price at the date the repudiation of the contract is accepted, plus any consequential damages. The ultimate sale price of the property is not determinative but is often the best evidence of the market price: 100 Main Street, Ltd. v. W.B. Sullivan Construction Ltd., (1978), 20 O.R. (2d) 401, 1978 CanLII 1630 (ON CA), [1978] O.J. No. 3448, at para 65 to 70; Briscoe-Montgomery v. Kelly, 2014 ONSC 4240, at para. 22; Victorian (Ontario) Inc. v. DeFreitas (1991), 16 R.P.R. (2d) 55, [1991] O.J. No. 324 (Gen. Div.), at para. 20 (“...in my view, there is no better evidence to calculate the real damage suffered than the price that the plaintiff was able to obtain in the market for the resale for the home”). See also 642947 Ontario Ltd. v. Fleischer (2001), 2001 CanLII 8623 (ON CA), 56 O.R. (3d) 417 (C.A.), at para. 4 (“as a general rule, in a falling market the court should award the vendor damages equal to the difference between the contract price and the ‘highest price obtainable within a reasonable time after the contractual date for completion following the making of reasonable efforts to sell the property commencing on that date’.”).

[41] Here, there was no delay between the repudiation, the acceptance of the repudiation, and the re-listing of the property. There is no potential that the plaintiffs could have mitigated their damages by listing the property sooner. This argument was also unsuccessful in Gamoff. In Marshall v. Meirik, 2019 ONSC 6215, in less than two months after the failed transaction, the plaintiff vendor re-sold the property for $325,000 less than the price the defendants had agreed to pay. At the first phase of the summary judgment motion, Justice Kimmel found that these “special circumstances” called out for further evidence from the plaintiffs to support the claim for damages. Ultimately, the evidence adduced at the second phase of the summary judgment motion showed that there was no difference in the market price among the date of repudiation, the date the property was listed for sale, or the date of the ultimate sale: Marshall v. Meirik, 2021 ONSC 1687, at para. 26. The same “special circumstances” do not exist here in that the property was exposed to the market for eleven months.

Failure to Keep Defendants Informed of Efforts to Sell

[42] I observed above that the plaintiffs did not keep the defendants informed as they stepped down the listing price, or ask the defendants if they wished to reconsider their position given the potentially increasing exposure the defendants faced with each price reduction. The point was not directly argued, and I was not provided with any authority on this point, but I have nevertheless considered the possible argument that the failure to keep the plaintiffs informed amounted to a failure to mitigate.

[43] A best practice may have been for the plaintiffs to have advised the defendants once they determined that the re-listing price should be lowered substantially below the amount the defendants had offered. This would have given the defendants an opportunity to make a new offer, or to state their position. However, I do not think it can be classified as “unreasonable” that the plaintiffs did not approach the defendants with this information. As Justice Boswell sated in O’Hare, supra, at para. 36, “Innocent parties need not demonstrate flawless efforts at mitigation. They need only act reasonably, in view of the prevailing circumstances known at the time to exist.”

[44] I would also note that there is no evidence that the defendants ever requested updated information from the plaintiffs or attempted to renew their offer. The listing was on MLS, and therefore it was public. The plaintiffs could have monitored the listing price and raised the issue with the plaintiffs had they been so inclined.

Quantification of Damages

[45] The plaintiffs have documented their damages well. I can find nothing excessive or unjustified in the plaintiffs list of damages, which is as follows:

Item	Amount
Difference in purchase price	298,000.00
Property taxes between October 18, 2017 to December 31, 2017	1,647.91
Property taxes between January 1, 2018 to November 9, 2018	7,094.57
Mortgage interest from October 18, 2017 to December 22, 2017	6,178.82
Mortgage interest from December 22, 2017 to November 9, 2018	28,824.00
Bridge Loan interest	2,041.01
Penalty to refinance	4,096.38
Interest to maturity charge	3,100.00
Mortgage fees	583.00
Home insurance payments	5,041.00
Water bills	83.60
Hydro bills	6,021.02
Propane	1,604.98
Home maintenance	514.15
Home appraisal	423.75
Legal fees on sale to defendants re: Sale falling through	1,753.48
Legal fees re: Refinancing	1,578.28
Subtotal	368,585.95
Less deposit	(40,000.00)
Total	$328,585.95

[46] Despite the quantification of damages being described as an issue, no criticism of the quantum of damages is offered in the defendants responding affidavit and no criticism was advanced in oral argument. The plaintiffs’ claims are supported with appropriate invoices or other documentation. The defendants chose not to cross examine. I can find nothing to criticize about the damages claimed.

Disposition

[47] I anticipate that the full $40,000 deposit will be paid to the plaintiffs, but as the real estate agents were not involved in this matter and as I did not hear from them, I will not make that assumption.

[48] As between the parties, the plaintiffs are entitled to the deposit being held by the real estate agent.

[49] The plaintiffs are also entitled to judgment against the defendants jointly and severally in the amount of $368,585.95, less any amounts received by the plaintiffs from the deposit.

[50] I wish to adopt the sentiments expressed by Justice Edwards in Gamoff, where he said:

The impact of this court’s decision will undoubtedly have a dramatic effect on the Defendants. I have every sympathy for the Defendants. With the changes in the real estate marketplace in the Greater Toronto Area, I have every expectation that there may be more cases where purchasers find that they have overextended themselves in a declining market. Purchasers would be well advised to consider making their offers to purchase contingent on financing, and for the sale of their existing home if they have one.

Costs

[51] If the parties cannot agree on costs, I will receive submissions of not more than two pages plus costs outlines, bills of costs, offers, supporting dockets or other supporting documents. The plaintiffs’ submissions shall be delivered by September 17, 2021. The defendants’ submissions shall be delivered by October 1, 2021. No reply without leave.

Chown J.