Court File and Parties

COURT FILE NO.: CV-20-29389 DATE: 20220228 ONTARIO SUPERIOR COURT OF JUSTICE

BETWEEN: Sewa More, Gurlal Singh Gill, And Ravneet Kaur Boparai Plaintiffs – and – 1362279 Ontario Ltd., operating as Seiko Homes Defendant

Counsel: Anthony Di Battista, for the Plaintiffs David M. Sundin, for the Defendant

HEARD: October 20, 2021

Ruling on Summary Judgment Motions

Carey J.

[1] This is an action by the three plaintiffs for enforcement of Agreements of Purchase and Sale for three neighbouring homes purchased from the defendant with closing dates of October 1, 2020. Their position is that these agreements were wrongly repudiated by the defendant and seek specific performance of each of the agreements on a motion for summary judgment.

[2] The defendant indicates that when the plaintiffs failed to close on October 1, 2020, they attended on the plaintiffs and when the plaintiffs were unable to provide the closing funds they confirmed the agreements were at an end and returned the closing funds to the plaintiffs’ solicitor. The defendant has brought its own motion for summary judgment dismissing the plaintiffs action, discharging the certificate of pending litigation issued on December 4, 2020, and judgment for damages sustained as a result of the registration of the Certificate of Pending Litigation on title to the properties.

Background Facts

[3] The salient facts grounding the plaintiffs’ claim are set out in the affidavit of Sewa More, sworn August 31, 2021. That affidavit relates how he and his co-plaintiffs bought adjoining townhouse properties from the defendant, a real estate developer building homes in Southwestern Ontario. Mr. More is himself a realtor with over 30 years’ experience, mostly in the greater Toronto area. As well he works part-time for Canada Post. He is 63 years old and he planned, with his wife, to retire to Windsor to live alongside two family friends for mutual support in their later years. He relates how he was tasked by the group, as a realtor, to shop around for homes in Windsor. He did so for some time before coming across the homes built by Seiko Homes.

[4] In Mr. More’s words, the three adjoining properties “checked off all the boxes”, including: they were new builds and thus less likely to bring high maintenance and repair costs; they were side by side to one another on a private court; and they were in close proximity to Devonshire Mall, other shopping, dining, and entertaining facilities with convenient access to the E.C. Row Expressway, Highway 401, and Windsor International Airport. The purchasers were also allowed to customize the properties to fit personal preferences, which was another attraction.

[5] Agreements of Purchase and Sale were signed by the plaintiffs on December 29, 2019. The terms, identical for each property, included purchase price of $369,000, with a $5,000 deposit initially upon signing the Agreements of Purchase and Sale, and with further down payments being made once the financing conditions were waived. Each property had a total down payment of $25,000 resulting in $75,000 which Seiko Homes continues to hold and which the defendant seeks forfeiture of in its countermotion.

[6] The sales were originally set to close on November 19, 2020. This was brought forward on agreement of all parties to October 1, 2020. None of the agreements specified the time of closing on that date. This is a significant fact, given that the vendor’s counsel, Mr. Tomas, signed a document registration agreement which provided, among other things that, “If the purchase agreement does not specify a closing time and a release deadline has not been specifically inserted, the release deadline shall be 6:00 p.m. on the closing date.”

[7] As the closing date approached, Mr. More relates events he recites as “a bit unsettling to say the least”. First, the Tarion New Home Warranty inspection for new homes occurred two days prior to the closing but terminated after 20 minutes. He said his co-plaintiffs had similar experiences denying all of them an opportunity to fully inspect the homes. While there were deficiencies recorded, Mr. More did not receive a copy of the deficiency list despite requesting such through his real estate lawyer. A request to extend the closing date a few days past October 1, 2020 was denied by the defendant.

[8] Mr. More relates that he was advised by his real estate lawyer that the properties could not be properly identified at registration as they had not been severed. A requirement that should have been complete, he understands, just before or after the closing date.

[9] Despite these issues, which were outlined in a letter to Mr. Tomas from the plaintiffs’ lawyer, the plaintiffs all remained ready and willing to close especially given the factors that made the properties unique to them. In addition, property values were going up and entering into new agreements would be costly. He concludes, “In hindsight I suspect that Seiko Homes had the same view and was doing everything in their power forcing us to walk away and forfeit our deposits.” He relates that on October 1, 2020, the mortgage funds arrived later than had been expected and their lawyer attempted to wire funds to Mr. Tomas’ trust account. It is his believe that the incorrect swift code was provided by Mr. Tomas’ office and the wire transfer failed when the plaintiffs’ lawyer tried to prepare certified funds or a bank draft. It was revealed that the bank was closing early due to COVID-19 protocols and less staff. The affidavit asserts that by the date of closing, all funds were in possession of the plaintiffs’ lawyer, prior to 6:00 p.m.

[10] At 5:11 p.m. on October 1, 2020, Mr. Tomas faxed a letter to the law office of the plaintiffs’ real estate lawyer, also named Mr. More, terminating the Agreements of Purchase and Sale alleging that the plaintiffs were unable or unwilling to close the transaction. It is Sewa More’s belief that the defendant was never ready, willing, or able to close, that the Tarion New Home Warranty inspection was not properly carried out, and the properties were not severed.

[11] Necessary funds were delivered, and a closing date of October 2, 2020 was proposed and if that date was not accepted, the plaintiffs proposed October 6, 2020. The plaintiffs assert that the full purchase price, including all adjustments, were available on October 1, 2020 and in the hands of the defendant’s lawyer on the morning of October 2, 2020. In the following days, the defendant refused to close and attempted to return the mortgage funds. The defendant did not return the deposit amounts.

[12] Subsequently, litigation counsel was retained by the plaintiffs who, after unsuccessful negotiations and communication that litigation was to follow, registered a Certificate of Pending Litigation on November 30, 2020 as previously registered cautions were set to expire. The three plaintiffs all maintained their interest in these properties and insistence on specific performance. The affiant, Mr. More, includes in his affidavit proof of similar properties in the Windsor area that have sold for $120,000 more than what was agreed by the three plaintiffs in their Agreements of Purchase and Sale.

[13] The defendants assert that all three plaintiffs were in breach of their contracts for purchase of the properties when they failed to close the transactions before 5:00 pm. on October 1, 2020 and seek a judgment against all three plaintiffs and the forfeiture of each of their $25,000 deposits. They deny that they never intended to close, or that the wrong swift code was given, or that they were doing “everything in their power to force” the plaintiffs to forfeit their deposits.

Issues and the Position of the Parties

[14] The plaintiffs maintain that at all times they were both ready, willing, and able to close these transactions and acted in good faith. When they were informed by the bank that closing funds might be delayed, they requested a short extension of the closing date which was flatly denied by the defendant. They submit that the 6:00 p.m. closing time in the document registration agreements was to permit the closing in escrow and has the effect of waiving the “time is of the essence” clause to permit a closing to take place if necessary the following morning.

[15] The plaintiffs assert that the defendant had no intention to close the transactions on the date set and their decision to terminate the transaction prior to midnight was not done in good faith and was arbitrary. They request an order for specific performance of each real estate transaction.

[16] The defendant says they were entitled to revoke the agreements at any time after 5:00 p.m. on the closing date, and they are entitled to forfeiture of the deposits as the plaintiffs were not ready, willing, and able to close the transaction. They rely on the assertion of Mr. Tomas, the real estate solicitor, that while acknowledging there was no closing time provided in the Agreements of Purchase and Sale, closing could be no later than 5:00 p.m. because the Teraview System does not permit transfers to be electronically registered past that time.

[17] For reasons I will review below, I have concluded that the defendants were not acting in good faith and were not entitled to terminate the transactions prior to midnight on October 1, 2020. The only reasonable remedy on the facts of this case is specific performance of each and every transaction.

Law and Analysis

[18] The plaintiffs argue that there is no genuine issue requiring trial and seek judgment in their favour granting summary judgment pursuant to r. 20.04(2) of the Rules of Civil Procedure, R.R.O. 1990, Reg. 194. I reject the defendant’s position that summary judgment to the plaintiff is inappropriate as the claim fails to address issues of damages. The plaintiffs are seeking specific performance as their primary remedy. If necessary, further submissions can be received on the question of further damages from the time of the breach to the time of the release of the judgment, as suggested by the plaintiffs. Such an approach is, in my view, consistent with the decision in Hryniak v. Mauldin, 2014 SCC 7, where Karakatsanis J. cited a “culture shift” in order to promote timely and affordable access to the civil justice system. I am satisfied applying the principles in Hryniak that in this case, I am able to make the necessary findings of fact, apply the law to the facts, resulting in a proportionate, more expeditious and less expensive result. The moving party plaintiffs have satisfied their onus to show that there is no genuine issue for trial.

Was there a breach of the agreement by the plaintiffs or the defendant?

[19] The evidence here establishes that the three plaintiffs and their families carefully planned the purchase of these connected homes so they could start the next phase of their lives in Windsor. The three families would uproot from Brampton, approximately four hours east of Windsor. This was an enormous commitment, and all had deposited $25,000 each. I accept that the COVID-19 pandemic has “changed the way real estate lawyers process transactions”. I accept the evidence proffered by the plaintiffs that where there are minor delays in delivery of closing funds, the purchase transactions will be honoured where a licensed lawyer has confirmed receipt of funds on the date of closing. I conclude that they were always ready, willing, and able to close these transactions for their new homes.

[20] I further accept that the National Bank who were forwarding the mortgage funds acknowledged delays on the date of closing due to COVID-19 protocols as well as banking delays due to a high volume of transactions at the end of the month and beginning of the next month.

[21] I further accept that Mr. More attempted to wire funds to Mr. Tomas’ trust account and whether he was given the correct swift code or not that attempt occurred and failed despite Mr. More’s best efforts.

[22] I further accept that real estate counsel, also named Mr. More, was in receipt of the required funds necessary under each purchase transaction and certified those funds on the date of closing. I accept his assertion that he would have delivered those funds to Windsor on the day of closing if necessary. I have concluded that the evidence supports that had the transaction not been repudiated, and Mr. Tomas’ office had responded to the numerous communications from Mr. More, the funds could have been delivered on the closing date.

[23] I have also concluded that the buyers were always ready, willing, and able to close these transactions for their new homes on the closing date.

[24] What should have been a minor glitch owing to delays that could have been expected given the COVID-19 pandemic and the volume of transactions on October 1, 2020, appears to have been pounced on by the defendant corporation and their lawyer in a totally unexpected fashion. When the plaintiffs’ counsel explained the delays and sought an adjustment of the closing date to allow the funds to be delivered. The defendant refused to consider that possibility.

[25] The defendant asserts that it was making it clear that time was of the essence when they refused to be flexible in the closing date. I agree with the plaintiffs that this was unreasonable and reflects a lack of good will. The defendant is a developer, not a homeowner who had another transaction depending on the funds from this sale. This was a developer who was closing three houses that were empty and apparently ready for occupancy as homes for the purchasers. These were not the residence of the defendant. These were mere assets that had apparently risen in value unexpectedly since the time of the sale agreements. There is no evidence that any unexpected costs of building these houses had arisen. The defendant argues this was a business transaction and they were entitled to close it on the agreed date. “This was just smart business” argued their counsel.

[26] I do not accept Mr. Tomas’ assertion that because the Teraview System does not permit transfers to be electronically registered past 5:00 p.m. on any business day “closing funds therefore must be tendered by the buyer/solicitor no later than 5:00 p.m. on October 1, 2020 for all of the transactions.” This is contradicted by the signed documents registration agreement Mr. Tomas prepared and delivered to the plaintiffs’ counsel which provided that if the Agreement of Purchase and Sale was silent on the time of closing, the deadline for “release” would be 6:00 p.m. on the day of closing. I accept as reasonable that during the pandemic the common practice is for lawyers to co-operate to complete the rest of the steps after the closing of the registry office Teraview System and before midnight. They then complete the remaining steps as soon as reasonably possible the next day. I agree with the plaintiffs that the defendant prematurely cancelled the transaction and acted unreasonably and in bad faith.

[27] I conclude that from the time the defendant was made aware of the likely slight delay in the arrival of the funds, Seiko Homes were determined to end the transactions. They were clearly never willing to close the transactions. It matters not their motivation. However, I do accept that if these transactions had been scuttled, that as indicated in the affidavit of Daniel Habib, the defendant would have been able to resell the properties. Given the evidence relating to the rise of property values throughout the province and in the Windsor area, it is likely that would be at a significantly higher price than that in the Agreements of Purchase and Sale.

[28] I accept that the defendant cannot rely on the “time of the essence” clause for two reasons. First, there was not a specific time set out in the Agreement of Purchase and sale. Secondly, as stated by the defendant at paragraph 36 of their factum “it is settled law that a party may not rely on a time of the essence where a) the party itself was not ready, willing and able to close on the agreed date”. As indicated earlier, I have concluded that the defendant was clearly not willing to close on the agreed date and terminated the transaction prematurely.

[29] The plaintiffs had been diligent in attempting to fulfil their obligations in the Purchase and Sale Agreement. The defendant was not entitled to rely on time of the essence to avoid the contract: see Salama Enterprises (1988) Inc. v. Grewal, [1992] BCJ No. 703 (QL).

[30] This was an anticipatory breach as described in Nutzenberger v. Mert, 2021 ONSC 36. The defendant repudiated the contract before performance was due. The plaintiffs wanted to and could close the agreement and are innocent parties to the breach.

Specific Performance as the Appropriate Remedy

[31] More recently, in this court in Windsor, Carroccia J., in Davis v. Khouri, noted that the defendant “was upset because he thought he should have waited and sold his home for more money.” Carroccia J. also states:

It would be inappropriate to reward a party who violates a valid APS because he or she feels they would be in a more advantageous financial position by doing so. The equities favour the plaintiffs

[32] This is a very clear case where specific performance is appropriate. The three plaintiffs specifically wanted three houses together in Windsor in the location they chose due to the cost, its convenience, location and custom features as summarized in Mr. More’s affidavit: see Lucas v. 1858793 Ontario Inc. (Howard Park), 2021 ONCA 52.

[33] As a Certificate of Pending Litigation was issued in this case by Howard J., the property remains available for the completion of the Agreement and Purchase of Sale to take place.

Equitable Damages

[34] Given my findings, it is likely that the plaintiffs have a claim for equitable damages from the date of the breach by the defendant, October 1, 2020.

[35] If the parties are unable to reach an agreement as to these damages, I am prepared to receive written submissions from the parties within 30 days.

Conclusion

[36] For the reasons set out in this decision, the motion by the plaintiffs for summary judgment is granted and the cross-motion for summary judgment by the defendant is dismissed.

[37] There will be an order for specific performance of the Agreements of Purchase and Sale dated December 29, 2019 signed by each of the individual plaintiffs, requiring the defendant 1362279 Ontario Ltd. operating as Seiko Homes to sell the residences at 3543, 3545, and 3547 Hallee Crescent in Windsor, Ontario to the plaintiffs in accordance with that agreement.

[38] If the parties cannot agree on either a new closing date, equitable damages or costs, submissions can be made in writing.

[39] Any order as to costs and equitable damages will be paid from the purchase price in the Agreement of Purchase and Sale upon closing of these transactions.

“original signed and released by Carey J. ” Thomas J. Carey Justice Released: February 28, 2022