REASONS FOR DECISION

de sa j.:

Summary of Facts

The Original Agreement

[1] Sandra Greco (“Sandra”) and Andrea Greco (“Andrea”) entered into an Agreement of Purchase and Sale dated June 26, 2017 (“the Original Agreement”) to sell the property at 55 Newman Avenue, Richmond Hill, Ontario (the “Property”) to the Respondent, Vince Padovani (“Padovani”).

[2] The Original Agreement stipulated a purchase price of $3,200,000.00 and the original closing date was set for September 29, 2017. Padovani was to pay the following deposits:

(a) $50,000.00 on acceptance payable to NRS Select Ltd. (“NRS”), which was to be held in trust pending the completion or other termination of the Agreement, and to be credited towards the purchase price upon completion; and

(b) $150,000.00 to NRS by no later than 5:00 PM on July 10, 2017, to be held in trust in the same manner as the previous deposit pending the completion or other termination of the Agreement.

[3] In addition, the Plaintiffs were to receive mortgage interest in the amount of $500,000.00 over the course of a five (5) year term.

The Breach of Agreement

[4] Padovani was unable to close on September 29, 2017, indicating through his real estate lawyer, that he would require a four-week extension to October 27, 2017.

[5] The Plaintiffs agreed to this extension, provided that:

(a) Padovani provide a deposit in the amount of $200,000.00;

(b) That Padovani agree to pay per diem interest on $2,800,000.00 at a rate of 5% per annum until closing; and

[6] Padovani agreed to these conditions and the extension was granted.

[7] The Plaintiffs granted Padovani seven more extensions. The last of these extensions was granted to March 20, 2018. Over the course of these extensions, Padovani paid a total of $200,000.00 in further deposits and agreed to pay 6% interest on the outstanding balance.

[8] Additionally, between the original closing date of September 29, 2017 and the final closing date of March 20, 2018, Padovani had paid the interest on the outstanding balance in the amount of $72,569.78.

[9] On or about March 20, 2018, Padovani failed to close the transaction, breaching the Original Agreement.

[10] The Plaintiffs commenced an Application by way of a Notice of Application issued on August 15, 2018.

[11] The Application was heard on June 7, 2019 by Justice Charney, who found that Padovani was in breach of the Original Agreement by failing to close on the agreed closing date.

The Subsequent Sale

[12] After Padovani had failed to close the transaction, the Property was relisted for sale.

[13] On October 1, 2020, the Plaintiffs sold the Property to another purchaser pursuant to an Agreement of Purchase and Sale dated August 25, 2020 (“the New Agreement”). The sale price specified in the New Agreement was $1,950,000.00 and provided for a vendor take-back mortgage in the amount of $1,200,000.00, bearing an interest rate at 5.5% per annum, over the course of a 3-year term, on a repayable interest-only basis. Under the New Agreement, the Plaintiffs were entitled to receive mortgage interest in the amount of $198,000.00.

Analysis

The Assessment of Damages

[14] The judgment of Morden J.A. in 100 Main Street Ltd. v. W.B. Sullivan Construction Ltd. (1978), 1978 CanLII 1630 (ON CA), 20 O.R. (2d) 401, 88 D.L.R. (3d) 1 (C.A.) is the principal authority on the assessment of damages for breach of an agreement of purchase and sale. In that case, the court summarized the relevant principles in determining the damages as follows:

(1) The basic principle for assessing damages for breach of contract applies: the award of damages should put the injured party as nearly as possible in the position it would have been in had the contract been performed.

(2) Ordinarily courts give effect to this principle by assessing damages at the date the contract was to be performed, the date of closing.

(3) The court, however, may choose a date different from the date of closing depending on the context. Three important contextual considerations are the plaintiff’s duty to take reasonable steps to avoid its loss, the nature of the property and the nature of the market.

(4) Assessing damages at the date of closing may not fairly compensate an innocent vendor who makes reasonable efforts to resell in a falling market.

(5) Therefore, 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” (at p. 421 O.R.).

(6) Where, however, the vendor retains the property in order to speculate on the market, damages will be assessed at the date of closing.[^1]

[15] Aside from the drop of $1,250,000.00 in the purchase price, the Plaintiffs submit they incurred additional expenses between the March 20, 2018 closing date of the Original Agreement and the October 1, 2020 closing date of the New Agreement including:

(a) Loss of Interest: $337,260.27 drop in mortgage interest.

(b) Commission fees to Re/Max West Realty Inc. Brokerage (“Re/Max”) pursuant to the transaction under the New Agreement in the amount of $88,140.00.

(d) Water and wastewater fees for the Property in the amount of $1,977.84.

(e) Electrical fees for the Property in the amount of $2,364.81.

(f) Natural gas fees for the Property in the amount of $3,167.02.

(g) Legal fees in the amount of $6,077.74 for the sale of the Property pursuant to the New Agreement.

(h) Maintenance fees for the installation of a new roof and furnace repairs at the Property in the total amount of $5,951.30; and

(i) Home insurance fees for the Property in the amount of $1,965.60.

[16] In total, Sandra and Andrea submit that Padovani’s breach of the Original Agreement caused them losses in the amount of $1,315,726.13. This is less the amounts already paid by Padovani.

[17] Apart from the real estate commissions, and the interest sought, I have no issue with the amounts specified in the materials. I understand that the real estate commission was not paid on the original transaction, and accordingly, this amount cannot be claimed as damages arising from the breach.

[18] Additionally, the interest terms were renegotiated on the original transaction, and payments of interest were made in accordance with the renegotiated agreement up until the breach. I would not grant the amount sought for lost interest.

[19] I will order judgment in favor of the Plaintiffs in the amount of $817,756.08. I will also order costs in favor of the Plaintiffs in the amount of $10,000.

Justice C.F. de Sa

Released: September 21, 2021

ONTARIO

SUPERIOR COURT OF JUSTICE

BETWEEN:

Andrea Greco and Sandra Greco

Applicants

– and –

Vince Padovani and NRS Select Ltd. and Stanley Paul Fienberg

Respondents

REASONS FOR DECISION

Justice C.F. de Sa

Released: September 21, 2021

[^1]: The duty to mitigate does not compel the seller of residential property to abandon a perfectly valid agreement and accept a substantially reduced price just because the purchaser decides to abort the valid agreement because of a falling real estate market. Bang v. Sebastian, 2019 ONCA 501, 2019 CarswellOnt 10808: see also DHMK Properties Inc. v. 2296608 Ontario Inc., 2017 ONSC 2432 (Ont. S.C.J.).

Greco v. Padovani , 2021 ONSC 6249

Case Summary

REASONS FOR DECISION

Summary of Facts

The Original Agreement

The Breach of Agreement

The Subsequent Sale

Analysis

The Assessment of Damages

Judge

Counsel

Parties

Areas of Law

Fact Patterns

Financial Outcomes

Issues