Court File and Parties
SUPERIOR COURT OF JUSTICE - ONTARIO
RE: Shivamaran Thillairajan, Thuksa Selvarajah, Plaintiffs
AND:
Nanthini Sivasubramaniam, Defendant
BEFORE: The Honourable Mr. Justice R.E. Charney
COUNSEL: Jelani K. Asante, Counsel for the Plaintiffs
HEARD: In-Writing
ENDORSEMENT
1The plaintiffs bring this motion in writing for default judgment in the form of specific performance to require the defendant to transfer the property municipally known as 401 -7400 Markham Road, Markham, Ontario, L3S 0C3 (the Markham Property) to the plaintiffs.
Facts
2On December 22, 2020, the plaintiffs entered into an Agreement of Purchase and Sale (APS) with the defendant for the purchase of the Markham Property. The agreed purchase price was $615,000, and the plaintiffs paid a deposit of $35,000 to the defendant’s listing brokerage on December 29, 2020.
3The closing date on the APS was February 24, 2021.
4On February 16, 2021, the defendant’s real estate agent informed the plaintiffs’ real estate agent that on February 11, 2021, the defendant had informed her by email that she no longer wished to sell the Markham Property.
5On February 17, 2021, the plaintiffs’ lawyer wrote to the defendant confirming that the plaintiffs were ready, willing and able to close the transaction as scheduled and would register a caution on title if the plaintiffs did not hear from the defendant’s lawyer by February 22, 2021. The lawyer confirmed her clients’ intention to seek specific performance if the defendant did not comply with the terms of the APS.
6On the closing date the plaintiffs’ lawyer emailed the defendant’s real estate agent (the defendant had not retained a lawyer as required by the APS) the plaintiffs’ closing package, including a copy of the plaintiffs’ certified cheque for the balance owing, again confirming that the plaintiffs were ready willing and able to close in accordance with the terms of the APS. The agent forwarded the closing package to the defendant.
7The defendant confirmed receipt of the closing package but advised the plaintiffs’ lawyer that she was not going to sell her house. She alleged that the APS was not valid and requested a mutual release.
8The plaintiffs issued their Statement of Claim on March 4, 2021, claiming specific performance and a Certificate of Pending Litigation. The CPL was ordered on March 10, 2021. The Statement of Claim was served on the defendant on March 16, 2021. The CPL was registered on the Property on April 15, 2021.
9The plaintiffs’ lawyers asked the defendant to file a Statement of Defence throughout April. On April 16, 2021, the plaintiffs filed a requisition to note the defendant in default, and the defendant was noted in default on April 16, 2021.
10On June 7, 2021, the plaintiffs received a Notice of Sale Under Mortgage alleging that the defendant had defaulted on payment of the mortgage registered on the property. The plaintiffs have contacted the counsel for the mortgagee and have undertaken to pay the balance of the mortgage from the amount owed to the defendant if the court awards specific performance. The mortgagee was given Notice of the plaintiffs’ motion for default judgment on September 29, 2021.
Analysis
11The plaintiffs move under Rule 19.05 for default judgment. Rule 19.05 provides:
19.05 (1) Where a defendant has been noted in default, the plaintiff may move before a judge for judgment against the defendant on the statement of claim in respect of any claim for which default judgment has not been signed.
(2) A motion for judgment under subrule (1) shall be supported by evidence given by affidavit if the claim is for unliquidated damages.
(3) On a motion for judgment under subrule (1), the judge may grant judgment, dismiss the action or order that the action proceed to trial and that oral evidence be presented.
(4) Where an action proceeds to trial, a motion for judgment on the statement of claim against a defendant noted in default may be made at the trial.
Facts Must Entitle Plaintiff to Judgment
19.06 A plaintiff is not entitled to judgment on a motion for judgment or at trial merely because the facts alleged in the statement of claim are deemed to be admitted, unless the facts entitle the plaintiff to judgment.
12In the present case the plaintiffs seek an order for specific performance.
13In Semelhago v. Paramadevan, 1996 CanLII 209 (SCC), [1996] 2 S.C.R. 415, the Supreme Court of Canada discussed the circumstances in which specific performance was available. The Court rejected the traditional approach that specific performance would be automatically granted (at the purchaser’s option) for breaches of contract for sale of realty (para. 20):
While at one time the common law regarded every piece of real estate to be unique, with the progress of modern real estate development this is no longer the case. Both residential, business and industrial properties are mass produced much in the same way as other consumer products. If a deal falls through for one property, another is frequently, though not always, readily available.
14Accordingly, the Court concluded at para. 22 that: “[s]pecific performance should, therefore, not be granted as a matter of course absent evidence that the property is unique to the extent that its substitute would not be readily available.”
15Whether specific performance is to be awarded is a question that is determined on the facts of an individual case. In Landmark of Thornhill Ltd. v. Jacobson (1995), 1995 CanLII 1004 (ON CA), 25 O.R. (3d) 628 (C.A.), at p. 636, the Ontario Court of Appeal identified three factors bearing on the exercise of discretion in favour of specific performance: (i) the nature of the property involved; (ii) the related question of the inadequacy of damages as a remedy; and, (iii) the behaviour of the parties, having regard to the equitable nature of the remedy.
16In 1954294 Ontario Ltd. v. Gracegreen Real Estate Development Ltd., 2017 ONSC 6369, I stated, at para. 151:
Before proceeding further, I would observe that while the premise upon which the Supreme Court’s decision in Semelhago was based—that “Residential, business and industrial properties are all mass produced much in the same way as other consumer products”— may have been true in 1996, it does not necessarily reflect the current real estate and development market in the Greater Toronto Area. In a housing market in which land is in increasingly limited supply and home sales are often characterized by bidding wars among prospective purchasers, it is no longer accurate to assume that residential properties are “mass produced”, at least within the GTA. This does not abrogate the stated principles applicable to granting specific performance, but it does suggest that the criteria will be more easily met within the present GTA housing market.
17See also: Gao v. Park, 2021 ONSC 4560, at para. 67; Lucas et al v. 1858793 Ontario Inc. o/a Howard Park et al., 2020 ONSC 964, at para. 59, aff’d on appeal 2021 ONCA 52, at para. 62; Sivasubramaniam v. Mohammad, 2018 ONSC 3073, at para. 80, aff’d on appeal 2019 ONCA 242; Davis v. Khouri, 2021 ONSC 4095, at para. 69.
18The importance of subjective elements in establishing the uniqueness of residential property in a residential real estate agreement were highlighted by Pepall J. (as she then was) in DeFranco v. Khatari, [2005] O.J. No. 1890, at para. 35:
In this regard, frequently the purchase of a home is one of, if not the most significant acquisitions made in one’s lifetime. Not surprisingly, subjective factors feature prominently in the selection of a home.
19In the present case the plaintiffs rely on several factors to support their claim for specific performance and to establish that damages would not be an adequate remedy. In my view, the following two factors are sufficient to support their claim for specific performance:
a) The property was purchased for $615,000, which was the limit of the plaintiffs’ budget. Similar properties in the same area are currently being sold for around $720,000. The plaintiffs would be unable to afford a similar property in the area if their damages were limited to the purchase value of the condominium.
b) The plaintiffs intended to live at the property, which is located 5 minutes away from the first plaintiff’s employment and 15 minutes away from the second plaintiff’s employment. The first plaintiff can walk to work, the second plaintiff can take public transit.
20I am satisfied that these two factors make the property unique for the plaintiffs.
21The question of uniqueness is not just whether there are other similar homes in the same neighbourhood or subdivision, but whether any of those homes were “readily available” for the plaintiffs to purchase when the defendant breached the APS. When the housing market is characterized by rapid price increases, affordability becomes an important factor in the analysis: Sutton v. Sodhi, 2017 BCSC 325, at para. 22. The availability of similar homes outside of the plaintiffs’ price range does not, in my view, qualify as a “readily available” substitute: Sivasubramaniam, at para. 84.
22In Walker v. Jones, 2008 CanLII 47725 (ON SC), Strathy J. (as he then was), referenced affordability as one of the factors that made the home unique to the plaintiff. See for example para. 11: “The price was attractive and was within her budget”.
23At para. 123, Strathy J. notes that while the real estate agent testified that there were other homes available in the same neighbourhood, he did not say “that there were homes available at the date of the breach of contract that could have been obtained at a comparable price”. This was a significant factor in Strathy J.’s analysis of the appropriateness of specific performance.
24Strathy J. held that specific performance was the appropriate remedy in that case. The plaintiff’s “price range” was an important consideration (at paras. 164 – 165):
The defendant presented no evidence that there was any specific substitute residence available in the area of Mount Fuji which was available at the time of the breach of contract or shortly thereafter that would have met the plaintiff’s requirements and that would have been within her means.
The evidence of Mr. Moore suggests that the market was rising in the period between May and the end of November and it is a reasonable conclusion that the market was still “hot” and did not begin to cool off until some time into the new year. In these circumstances, considering that the defendant had purported to forfeit the plaintiff’s deposit, that the plaintiff had incurred legal expenses in the aborted transaction, together with moving expenses, rent and other costs, and considering that the holiday season was approaching, I do not think it was at all unreasonable for the plaintiff to seek specific performance rather than enter the still turbulent and rising real estate market. As well, the evidence does not establish that she could have found a reasonably comparable substitute property in her price range. [Emphasis added.]
25In Lucas, the Court of Appeal stated, at para. 74:
Uniqueness does not mean singularity or incomparability. Instead, it means that the property has a quality (or qualities) making it especially suitable for the proposed use that cannot be readily duplicated elsewhere: Dodge (S.C.), at para. 60. For example, a rising real estate market, particularly where the purchaser’s deposit remains tied up by the vendor, may indicate that the transaction could not have been readily duplicated or that other properties were not readily available at the time of breach within the plaintiff’s price range…[Emphasis added.]
26Moreover, I note that the defendant has done nothing to defend this claim, and the evidence indicates that she has defaulted on her mortgage for the Property. It is unlikely that the plaintiffs would ever be able to recover any of the damages claimed in this case if specific performance were not awarded: Lucas at paras. 90 – 91, 93.
27In conclusion, I find that the evidence presented by the plaintiffs on this motion for default judgment demonstrates that the property is unique to the plaintiffs and that a substitute was not readily available within their price range. As such the order for specific performance will issue.
Damages
28The plaintiffs’ motion for default judgment also claim damages of $13,500 for incidental costs incurred as a result of the delayed closing. These damages are comprised of rent, utilities, and home insurance for six months.
29The plaintiffs did not claim damages in their Statement of Claim. A motion for default judgment cannot seek relief that was not claimed in the Statement of Claim.
30Moreover, the plaintiffs have not provided any invoices or other evidence to support these claims, nor have they taken into account that they would have had to pay for utilities and home insurance for the Property had the APS closed on time.
31Accordingly, the claim for damages is dismissed.
Conclusion
32This Court Orders:
a) There shall be an order for specific performance of the Agreement of Purchase and Sale (APS), dated December 22, 2020, of the property municipally known as 401 -7400 Markham Road, Markham, Ontario, L3S 0C3.
b) The Plaintiffs are entitled to a conveyance of the property as provided in the APS on a closing date to take place within 60 days after the date of this order.
c) The Plaintiffs may pay out any liens or charges registered against the Property, and any arrears of property taxes, and upon paying the balance of the amount of the purchase price to the Defendant, the Plaintiffs’ lawyer may register a deed vesting title of the property in the Plaintiffs on the agreed closing date.
d) Costs of this motion are fixed at $2,500, inclusive of taxes, fees, and disbursements, payable by the Defendant Nanthini Sivasubramanian to the Plaintiffs within 30 days. If the costs are not paid they may be deducted by the Plaintiffs from the balance of the purchase price paid to the Defendant on closing.
Justice R.E. Charney
Date: November 18, 2021