Pristine Homes (Belle Aire) Inc. v. Nur

COURT FILE NO.: CV-19-00622177 DATE: 2021-09-27 ONTARIO SUPERIOR COURT OF JUSTICE

BETWEEN: Pristine Homes (Belle Aire) Inc., Plaintiff – and – Saida Mohamed Nur, Defendant

COUNSEL: Stephen Brunswick and Jennifer J. Lake, for the Plaintiff David Windrim and W.E. Weston Powell, for the Defendant

HEARD: July 22, 2021

BEFORE: J. Steele J.

The Motion

[1] This is a motion for summary judgment by the plaintiff, Pristine Homes (Belle Aire) Inc. ("Pristine"), seeking, among other things:

a) A declaration that there is no genuine issue requiring a trial and that the Agreement of Purchase and Sale was terminated by the defendant's breach and that all deposits paid by the defendant are forfeited to the plaintiff;

b) An order dismissing the defendant's counterclaim; and

c) An order granting the plaintiff damages for breach of contract plus interest at a rate of 12% per annum.

[2] The defendant counterclaims for a return of the deposit monies paid to Pristine and general damages.

[3] For the reasons set out below, the plaintiff's motion for summary judgment is granted.

Overview

[4] This is a case about an aborted purchase of a new build home. The defendant, Saida Mohamed Nur, entered into an agreement with Pristine to purchase the Property (defined below) and subsequently changed her mind. There was other evidence regarding potentially forged signatures on documents, which is troubling; however, these allegations are not relevant to the issue of whether Ms. Nur contracted to purchase the Property and certain extras.

Background

[5] The parties entered into an Agreement of Purchase and Sale on or about November 2, 2017 (the "APS") for the defendant's purchase of a new home to be built in the plaintiff's Belle Aire Shores development municipally known as 1029 Barton Way, Innisfil, Ontario (the "Property"). The purchase price of the Property under the APS was $849,990.00. The first tentative closing date was scheduled for December 6, 2018.

[6] The APS contained the following provisions:

a) "This offer…when accepted, shall constitute a binding contract of Purchase and Sale… The deposit and further deposit(s) are expressly deemed to be deposit monies only, and not partial payments. Default in payment of any amount payable pursuant to this Agreement on the date or within the time specified, shall constitute substantial default hereunder, and the Vendor shall have the right to terminate this Agreement and forfeit all deposit monies in full. Without prejudice to the Vendor's rights as to forfeiture of deposit money as aforesaid, and in addition thereto, the Vendor shall have the right to recover from the Purchaser all additional costs, losses and damages arising out of default on the part of the Purchaser pursuant to any provision contained in this Agreement including interest thereon from the date of demand for payment at the rate of 12% per annum, calculated daily, not in advance until paid."

b) "The Purchaser covenants and agrees that he shall pay to the Vendor in advance for all extras, upgrades or changes ordered by the Purchaser… at the time such order is made and the Purchaser further acknowledges and agrees that such payment is non-refundable unless this transaction is not completed due only to the Vendor's default."

[7] The defendant paid the plaintiff five deposit cheques totaling $80,000.00 in accordance with the APS.

[8] Purchasers of new build homes have the option of choosing from Pristine's standard sample finishes or further customizing the home to include upgrades or extras at an additional cost. On or about November 30, 2017, Ms. Nur voluntarily ordered several upgrades to the Property, at the price of $68,314.15, and subsequently delivered partial payments for these upgrades in the amount of $20,494.25 (by cheque dated Dec. 15, 2017). The cheque for the upgrades was not cashed by Pristine and was eventually returned to Ms. Nur.

[9] There were issues between the parties regarding the documentation that was to reflect the updated purchase price of the Property, including the upgrades.

[10] The Property was constructed with the extras and upgrades that Ms. Nur had selected.

[11] The Property was not going to be ready for occupancy by the first tentative closing date set out in the APS. Accordingly, on or about June 20, 2018, Pristine advised Ms. Nur that a second tentative closing date of April 5, 2019 had been set.

[12] After much correspondence and many dealings between the parties, including two aborted settlements, Ms. Nur refused to close on the purchase of the Property. Pristine accepted the breach and took steps to sell the Property.

[13] On or about June 4, 2019, Pristine accepted an offer to purchase the Property for a purchase price of $779,990.00. The transaction closed on or about August 1, 2019.

Analysis

Summary Judgment Principles

[14] The plaintiff seeks summary judgment against the defendant under Rule 20 of the Rules of Civil Procedure. Under Rule 20.04 the court shall grant summary judgment where the court is satisfied that there is no genuine issue requiring a trial with respect to a claim or defence.

[15] In Hryniak v. Mauldin, 2014 SCC 7, [2014] 1 S.C.R. 87, the Supreme Court of Canada set out the principles for the summary judgment motion judge to consider in order to determine whether there is a genuine issue requiring a trial based on the evidence before the court. Specifically, the Court indicated that there will be no genuine issue requiring a trial when the summary judgment process: "(1) allows the judge to make the necessary findings of fact, (2) allows the judge to apply the law to the facts, and (3) is a proportionate, more expeditious and less expensive means to achieve a just result."

[16] On a motion for summary judgment, each party is required to put their best foot forward and lead trump or risk losing. Further, the court is entitled to assume that the parties have provided all of the relevant evidence that the parties would present if the matter went to trial: Sweda Farms Ltd. v. Egg Farmers of Ontario, 2014 ONSC 1200, at paras. 26-27, aff'd 2014 ONCA 878, leave to appeal refused, [2015] S.C.C.A. N. 97.

[17] In my view, the issues raised in the motion are appropriate for summary judgment and do not require a trial. As I set out below, the parties entered into a contract that was breached by Ms. Nur. The plaintiff took steps to mitigate its losses but ended up having to sell the Property at a lower price than the contract price with Ms. Nur. Based on the record before me, there is no genuine issue requiring a trial. As set out below, the issues of liability, mitigation and damages can be determined on the record before me.

Was there a contract between the parties for the Property and the extras?

[18] Ms. Nur and Pristine entered into the APS pursuant to which she agreed to purchase the new build Property from Pristine for $849,990.00. In her statement of defence and counterclaim, Ms. Nur stated at paragraph 6:

"On or about November 2, 2017, Ms. Nur entered into an Agreement of Purchase and sale… with Pristine for 1029 Barton. The purchase price for the property was stated as eight hundred and forty-nine thousand, nine hundred and ninety dollars ($849,990.00)."

[19] On or about November 30, 2017, Ms. Nur ordered extras, which were ultimately included in the Property as constructed, in the amount of $68,314.15. Ms. Nur executed and initialed documents confirming the selection of those extras.

[20] The document signed by Ms. Nur in respect of her selected extras makes it clear that the total upgrade cost was $68,314.15. However, the document erroneously states that the original purchase price of the Property is $793,990.00.

[21] The original APS needed to be amended to reflect the agreement to the optional upgrades and the new total purchase price. On or about December 20, 2017, Ms. Nur signed an amendment to the APS (the "December Amendment") in the presence of Ms. Anita Tang at Kelly Harvey Living, a design/décor centre used by Pristine. Based on the evidence before me, I am satisfied that Ms. Nur signed the December Amendment (the document referred to as K2 in the Handwriting Expert Report referred to below), which clearly stated the value of the extras Ms. Nur agreed to purchase ($68,314.15) and contained the incorrect original purchase price and incorrect corresponding total.

[22] When Michael Cortellucci, the president of Pristine, received the December Amendment signed by Ms. Nur he double checked the document and realized that Ms. Tang had made some plain and obvious errors in preparing it. Mr. Cortellucci's evidence is that the December Amendment, as well as the earlier document that was prepared in November at the time of the upgrade order, contained typographical and mathematical errors and erroneously listed an original purchase price of $793,990.00 and a new purchase price (including the extras) of $862,304.15.

[23] The plaintiff alerted the defendant to the errors on the document and asked that she execute the corrected document. Mr. Cortellucci's evidence is that he corrected the documents by hand, crossing out the incorrect numbers and changing them to the correct numbers and initialing the changes. He then sent them back to Ms. Nur for execution. This is where the narrative breaks down. Ms. Nur took the position that she was confused about the purchase price of the Property and tried to get out of the transaction. However, in the discovery of Ms. Nur she confirmed that she knew that the purchase price of $793,990 on the agreement regarding the upgrades was a mistake.

[24] After some correspondence between the parties, Ms. Nur failed to execute the corrected APS amendment. Ms. Nur's counsel wrote to Pristine and stated that "my client is refusing to execute the Amendment to Agreement of Purchase and Sale. She is asserting forgery of her signatures on Amendment dated December 20, 2017. She has lost trust in your client's veracity. In your faxes you have admitted error." She further stated that "unless the Price remains as stated on the original Agreement of Purchase and Sale, my client does not wish to proceed with the completion of this transaction."

[25] There may have been issues with some of the documents; however, this does not change the fact that the parties had entered into a valid and binding contract with regard to the Property and the extras. Ms. Nur agreed to purchase the Property in accordance with the APS. She subsequently selected upgrades and agreed to purchase the upgrades.

[26] On or about July 16, 2018, Pristine's counsel sent Ms. Nur's counsel an account of the history between the parties and requested that she "unequivocally confirm whether [Ms. Nur] has changed her mind and no longer wishes to have any of the upgrades and extras she selected … or if she still wants the extras and upgrades she previously selected". In addition, the letter confirmed that Pristine expected Ms. Nur to proceed with the transaction. The letter stated that if she failed to do so Pristine would pursue all available remedies. Pristine's counsel followed up by letter dated July 24, 2018 and August 3, 2018.

[27] There was no response from Ms. Nur's counsel. On or about September 11, 2018, Pristine notified Ms. Nur that construction on the Property had commenced.

[28] Further correspondence ensued between counsel, including two settlements that were reached but not completed as Ms. Nur changed her mind. In the correspondence, Pristine asks numerous times in writing for confirmation as to whether Ms. Nur intends to complete the transaction.

[29] The correspondence confirming the first settlement sets out the terms of the first settlement, which includes an abatement to the purchase price plus the extras and upgrades in the amount of $68,314.15. There was again considerable correspondence back and forth, and Ms. Nur appears to have vacillated on her willingness to proceed with the settlements.

[30] Ultimately, Ms. Nur's counsel informed Pristine's counsel that she was scheduled to come in to meet with him on April 17, 2019 to execute settlement documents in respect of the second settlement. On April 17, 2019, Ms. Nur's counsel wrote to Pristine's counsel to confirm that she would not execute the settlement documents.

[31] Following the breach of the second settlement, on or about April 18, 2019, Pristine's counsel confirmed that all of Pristine's rights were reserved and that its position with regard to Ms. Nur's breach of the APS had been clearly set out. It was at this point that Pristine accepted Ms. Nur's breach and began to take steps to mitigate its damages.

[32] During this extended time period of correspondence and potential settlement, construction on the Property continued. Given the ongoing dealings between the parties, including the negotiation of the first settlement which included the extras, it is reasonable that Pristine continued to build the Property with the extras that Ms. Nur had requested.

[33] Based on the record before me, I am satisfied that there was a valid and binding contract between the parties for the Property and the extras and that Ms. Nur breached the agreement.

Was the contract vitiated due to Pristine's conduct?

[34] Ms. Nur has alleged that Pristine did not deal with her in good faith, thereby vitiating the APS. Ms. Nur argues that good faith is at the core of the contract and her trust was breached by Pristine's conduct relating to certain of the documents reflecting the APS amendments.

[35] In 978011 Ontario Ltd. v. Cornell Engineering Company Ltd. (2001), 2001 8522 (ON CA), 53 O.R. (3d) 783 (C.A.), leave to appeal refused, [2001] S.C.C.A. No. 315, the Ontario Court of Appeal stated (at para. 33):

"The law does, however, regulate contractual conduct between individuals through the imposition of three types of standards: unconscionability, good faith and the fiduciary standard. All three standards are points on a continuum in which the law acknowledges a limitation on the principle of self-reliance and imposes an obligation to respect the interests of the other. They are defined by P. Finn, "The Fiduciary Principle", in T. Youdan, ed., Equity, Fiduciaries and Trusts (Scarborough, Ont.: Carswell, 1989), 1 at 4 as follows:

"Unconscionability" accepts that one party is entitled as of course to act self-interestedly in his actions towards the other. Yet in deference to that other's interests, it then proscribes excessively self-interested or exploitative conduct. "Good faith", while permitting a party to act self-interestedly, nonetheless qualifies this by positively requiring that party, in his decision and action, to have regard to the legitimate interests therein of the other … The "fiduciary" standard … for its part enjoins one party to act in the interests of the other – to act selflessly and with undivided loyalty. There is, in other words, a progression from the first to the third: from selfish behavior to selfless behavior. Much the most contentious of the trio is the second, "good faith". It often goes unacknowledged. It does embody characteristics to be found in the other two."

[36] Based on the evidence before me, including the affidavit and the report of Brenda Petty, a certified questioned document examiner, (the "Handwriting Expert Report") there may have been some irregularities in certain documents. However, as set out above, the key contractual agreements were signed by Ms. Nur. The parties were ad idem as to what Ms. Nur was purchasing from Pristine and at what price.

[37] Ms. Nur's position is that the alleged alteration of certain documents would justify her rescission of the APS contract. In this regard, Ms. Nur relies on Guarantee Co. of North America v. Gordon Capital Corp., 1999 664 (SCC), [1999] 3 S.C.R. 423, where the Court set out the meaning of rescission (at para. 39):

"A fundamental confusion seems to exist over the meaning of the terms "rescission" and "repudiation". This confusion is not a new one, as it has plagued common law jurisdictions for years. Rescission is a remedy available to the representee, inter alia, when the other party has made a false or misleading representation. A useful definition of rescission comes from Lord Atkinson in Abram Steamship Co. v. Westville Shipping Co., [1923] A.C. 773 (H.L.), at p. 781:

Where one party to a contract expresses by word or act in an unequivocal manner that by reason of fraud or essential error of a material kind inducing him to enter into the contract he has resolved to rescind it, and refuses to be bound by it, the expression of his election, if justified by the facts, terminates the contract, puts the parties in status quo ante and restores things, as between them, to the position in which they stood before the contract was entered into." [emphasis added]

[38] The issue with Ms. Nur's position is that if there were irregularities in some of the subsequent APS amendment documents, they were not made to induce her into the contract with Pristine. She had already signed the APS with Pristine. She had also signed the document for the extras (albeit with a plain and obvious numerical error in the original purchase price). There was already a contract in place and the parties knew the terms.

[39] While I understand that Ms. Nur may have been unhappy with some of the dealings with Pristine regarding the documentation of the agreed-upon extras, there was nothing untoward done by Pristine to induce her to enter into the APS or to agree to buy the extras. Ms. Nur contracted voluntarily knowing the terms of the contract.

Damages

[40] Pristine claims damages from Ms. Nur resulting from the breach of the APS. The Ontario Court of Appeal in 100 Main Street East Ltd. v. W. B. Sullivan Construction Ltd. (1978), 1978 1630 (ON CA), 20 O.R. (2d) 401, at pp. 414-415, set out the general principle applicable to the determination of damages arising out of a failed real estate transaction as follows: "The most general principle relating to the assessment of the damages is that the plaintiff is entitled to be put in the position it would have been in if the contract had been performed, so far as money can do it."

[41] In McKnight v. Morrison, 2019 ONSC 552, on the issue of damages, the court stated (at paras. 40 and 42):

"The legal principle for the calculation of damages payable as a result of breach of contract is set out in Hadley v. Baxendale (1854) 9 Exch 341. The plaintiff is entitled to recover any reasonable damages that reasonably flow from the breach of contract by the defendant."

In failed real estate transactions, the damages payable to the seller include the difference between the price under the agreement and the price of the new sale of the property once it closes, plus any additional carrying costs incurred by the seller in mitigating her loss and dealing with the purchaser's breach, including legal fees thrown away from the aborted sale: Bang v. Sebastian, 2018 ONSC 6226 (Ont. S.C.J.), at paras. 53, 57 and 59."

[42] Net of Ms. Nur's forfeited deposit ($80,000.00), Pristine claims $82,716.33 plus interest under the terms of the APS at 12% per annum. The damages result from:

a) Marketing/resale and carrying costs for the Property from the original April 5, 2019 closing date to the August 1, 2019 resale closing date: $24,402.18

b) The differential between Ms. Nur's purchase price (inclusive of extras) and the resale purchase price: $138,314.15.

[43] Ms. Nur's position is that the extras should not be included in the damages. However, Ms. Nur contracted for the extras and the extras were installed by Pristine. In these circumstances, the contracted extras are part of the damages.

[44] The marketing/resale and carrying costs claimed (in the amount of $24,402.18) are broken down as follows:

a) Sales commission: $7,799.90

b) Property taxes: $1,071.23

c) Hydro: $219.70

d) Gas: $258.28

e) 5% interest on balance (118 days at 114.84 per day): $13,551.12

f) Renovations (hood fan): $694.95

g) Cleaning: $807.00

[45] The property taxes, hydro and gas are clearly carrying costs associated with the Property during the period prior to resale. The plaintiffs provided documentation verifying these costs. The sales commission is related to the reselling of the Property, which the plaintiff is entitled to recover. The cleaning was required due to the traffic of people viewing the Property when it was for sale. I find that but for the defendant's breach, this cost would not have been necessary and that it was reasonably incurred by the plaintiff.

[46] The affidavit evidence of Mr. Cortellucci regarding the hood fan is as follows:

"With respect to the Coast Appliances invoice, one of the upgrades which Ms. Nur had selected was an opening for a specific size and type of hood fan which Ms. Nur and her spouse intended to purchase and install themselves at a later date. Obviously Ms. Nur did not complete the transaction but we had built the home to accommodate the specific opening that Ms. Nur had provided the specifications for. We had to purchase a hood fan to accommodate it prior to the resale."

[47] In my view, the hood fan does not reasonably fall within the damages contemplated in a failed real estate transaction (as set out above from Bang v. Sebastian). Accordingly, I have not included this in the calculation of damages.

[48] Pristine also claims $13,551.12 in interest, which is based on the purchase price of $918,304.15 less the $80,000 in deposit money paid by Ms. Nur at 5% interest for 118 days (from April 5, 2019 to August 1, 2019). There was no evidence that Pristine was out of pocket or had to take a loan to bridge this period. I disallow this claim.

[49] Accordingly, the total marketing/resale and carrying costs are $10,156.11 and the total damages (net of the deposit money) are $68,470.26.

Mitigation

[50] The defendant bears the onus of proving that the plaintiff unreasonably failed to mitigate its loss. As noted by the Supreme Court of Canada in Southcott Estates Inc. v. Toronto Catholic District School Board, 2012 SCC 51:

"Where it is alleged that the plaintiff has failed to mitigate, the defendant bears the burden of proving that the plaintiff has failed to make reasonable efforts to mitigate and that mitigation was possible."

[51] As set out above, the Property was ultimately re-sold by Pristine for a purchase price of $779,990.00. The resale transaction closed on or about August 1, 2019. Mr. Cortellucci's affidavit states that: "The listing price for the Property was $779,990.00 which is lower than the price in the APS (and the new purchase price inclusive of Nur's Extras which were installed) because when Nur purchased the Property in November 2017 the real estate market was in a more favourable state and we had purchasers lined up to buy new homes and many had to be turned away due to lack of inventory."

[52] Mr. Cortellucci's evidence was that some, but not all, of Pristine's resale homes were listed on the multiple listing service ("MLS"). His evidence was that in an effort to achieve the maximum price for each inventory home and to avoid flooding the market, Pristine was selective with how many homes were detailed on the website and listed on MLS. The Property was not listed on MLS.

[53] Mr. Cortellucci's evidence was that the Pristine's marketing and sales efforts for homes for sale at the relevant time, such as the Property, included the following:

a) When prospective purchasers and real estate agents visited Pristine's website at material times, they would be able to view the available inventory homes.

b) When prospective purchasers and real estate agents drove around the neighbourhood, there were sales office signs in addition to "for sale" signs on the lawns of properties for sale.

c) Pristine had a database of over 6000 registrants dating back to its site launch in 2016 that could be utilized to send marketing information and development updates.

d) Pristine had 6 billboards signs advertising the development located at different spots in Innisfil where they would attract the most attention;

e) Pristine had trailer signs along Highway 400; and

f) Inside Pristine's sales office, it had feature sheets to hand out with information on all the available homes and an inventory price list. The Property was one of the 4 largest and most expensive homes on the list.

[54] Mr. Cortellucci's evidence was also that the list price of the Property following Ms. Nur's breach was reflective of market value and in line with other homes for sale of different model types and sizes in the development at that time. Pristine worked with Crescendo Real Estate Solutions and Fairgate Real Estate Brokerage to provide digital marketing and sales management for the Property and also consulted them about the list price for the Property.

[55] As noted by the Ontario Court of Appeal in 100 Main Street, what is considered to be reasonable efforts to sell a property to mitigate damages is a question of fact to be decided on the basis of all relevant market circumstances. It is also clear that mitigation efforts must be reasonable but are not required to be flawless: see Azzarello v. Shawqi, 2018 ONSC 5414, 439 D.L.R. (4th) 127, at para. 56, rev'd in part, 2019 ONCA 820, 439 D.L.R. (4th) 127. The court in Malatinszky v. Miri, 2020 ONSC 16, stated (at para. 82):

"In assessing the innocent party's efforts at mitigation, the courts are tolerant, and the innocent party need only be reasonable, not perfect; in deciding what is a reasonable way to mitigate the effects of a breach of contract, the innocent party is not to be held to too nice a standard; it need only act reasonably, using what it knows then, without hindsight, and it need not do anything risky."

[56] The defendant relies on Tribute (Springwater) Limited v. Sumera Anas, 2020 ONSC 5277 in taking the position that the mitigation efforts to re-sell the Property were not sufficient as the plaintiff did not list the Property on MLS. In my view, Tribute is distinguishable. Unlike in Tribute, where the evidence was that Tribute does not list new homes on the MLS (at para. 6) and only sells directly through Tribute's sales representatives or agents (at para. 7), in this case the evidence of Mr. Cortellucci was that some but not all of Pristine's resale homes were listed on MLS. Pristine considers whether an MLS listing is appropriate in the circumstances. Mr. Cortellucci's evidence also detailed other marketing and sales efforts to resell properties, as set out above.

[57] The defendant did not cross examine Mr. Cortellucci on his affidavit. The defendant did not provide any evidence that the plaintiff's mitigation efforts were insufficient, nor did the defendant provide any evidence that the price obtained by the plaintiff for the Property was not commercially reasonable.

[58] In the circumstances, the defendant has not established that the plaintiff failed to mitigate its damages.

Disposition and Costs

[59] In the result therefore:

a) I grant summary judgment to Pristine in the total amount of $148,470.26 and order that the $80,000.00 deposit paid by Ms. Nur shall be transferred to Pristine and applied as a credit toward the damages with the result that Ms. Nur shall pay Pristine the amount of $68,470.26;

b) Pristine is entitled to interest on its damages at the rate of 12% per annum, calculated daily until paid, pursuant to the APS; and

c) The defendant's counterclaim is dismissed.

[60] Pristine, as the successful party, is entitled to costs. It is my hope that the parties can come to an agreement on the appropriate quantum of costs. As requested, the parties have filed their costs outlines. If the parties cannot agree on costs by October 29, 2021, the parties shall advise my judicial assistant and may deliver written submissions on costs (not to exceed 3 pages each, double spaced). Pristine may deliver their submission by no later than the close of business on November 12, 2021 and Ms. Nur will have 10 business days to respond. In that case, my costs decision will be released in due course once I have considered these additional submissions.

J. Steele J.

Released: September 27, 2021