Court File and Parties

Oshawa Court File No.: CV-20-00000042 Date: 2022-06-10 Ontario Superior Court of Justice

Between: Tribute (Simcoe Street) Limited Plaintiff / Defendant by Counterclaim

– and –

Izhar Ali Defendant / Plaintiff by Counterclaim

Counsel: Stephanie Turnham, for the Plaintiff / Defendant by Counterclaim Obaidul Hoque, for the Defendant / Plaintiff by Counterclaim

Heard: May 30, 2022

Reasons for Decision

Charney J.:

[1] The plaintiff, Tribute (Simcoe Street) Limited (Tribute), brings this motion for summary judgment in relation to its action arising from the failure of the defendant, Izhar Ali, to close the purchase of a property pursuant to an Agreement of Purchase and Sale (APS) signed on March 28, 2017.

[2] The plaintiff seeks a declaration that it is entitled to retain the deposit paid by the defendant, and damages for breach of contract in the amount of the difference between the agreed purchase price and the sale price plus carrying costs, less the deposit.

Adjournment Request

[3] At the outset of the proceedings, counsel for the defendant requested an adjournment to permit him to file responding material to the summary judgment motion and to bring a third party claim against a real estate agent named Ather Ali.

[4] The adjournment request was opposed by the plaintiff. The plaintiff notes that its Motion Record for the summary judgment motion was served on September 25, 2020, and the defendant has therefore had 18 months to file responding material.

[5] Counsel for the defendant wrote to the plaintiff’s counsel on October 2, 2020, advising of his intention to deliver responding material, cross-examine, and commence a third party claim against the real estate agent, Ather Ali, referred to in the Statement of Defence.

[6] No responding material was filed, and no third party claim was commenced.

[7] Counsel for the plaintiff continued to press counsel for the defendant for his responding material in October 2020, June 2021, October 2021, November 2021 and December 2021. No responding material was filed and no third party claim was commenced.

[8] On March 28, 2022, counsel for both parties were notified that the plaintiff’s motion for summary judgment was placed on the Civil Long Motion Running List.

[9] Three business days before the motion was heard on May 30, 2022, counsel for the defendant wrote to counsel for the plaintiff to advise that he would be requesting an adjournment of the motion.

[10] When asked why no responding material had been served these many months, counsel for the defendant advised that he had been unable to get instructions from his client. He did not have any intelligible explanation as to why he has been unable to obtain instructions from his client for 18 months.

[11] Moreover, it is clear that any third party claim against the realtor is now statute barred: Limitations Act, 2002, s. 18, S.O. 2002, c. 24, Sched. B. The Statement of Claim in this matter was served on January 8, 2020, and the defendant’s allegations against the third party realtor are set out in his Statement of Defence dated March 2, 2020. The latest the 2 year limitation period could have begun to run would be March 2, 2020: Mega International Commercial Bank (Canada) v. Yung, 2018 ONCA 429.

[12] In these circumstances, I agree with counsel for the plaintiff that the defendant’s adjournment request is simply a delay tactic. Accordingly, the adjournment was denied.

Facts

[13] The plaintiff, Tribute, is a builder and developer of residential homes. One of its developments was a residential townhome community in Oshawa known as “U.C.Towns”.

[14] On March 28, 2017, the defendant signed an APS for the purchase of a condominium property municipally known as 2649 Deputy Minister Path, Oshawa (the “property”). The purchase price was $655,990, subject to adjustments, which included a deposit of $93,398.50 to be paid in deposits.

[15] The defendant reviewed the APS and initialed each page.

[16] The APS provided for two important dates: an Occupancy Date when the unit was sufficiently completed to permit occupancy, and a Transfer Closing Date when the Condominium Plan was formally registered.

[17] The first tentative occupancy date was June 24, 2019. The APS entitled Tribute to delay occupancy by written notice at least 90 days prior to the tentative occupancy date.

[18] On March 26, 2017, the defendant provided Tribute with cheques for the deposit, which was paid in full.

[19] On February 15, 2019, Tribute gave Ali notice in writing that it was setting a new occupancy closing date of August 20, 2019, in accordance with the APS. On the final occupancy date, Ali took occupancy and delivered post-dated cheques for occupancy fees. Pursuant to the APS, the occupancy fees were not to be credited or applied to the purchase price.

[20] On August 16, 2019, Tribute notified Ali that it was setting October 23, 2019 as the Transfer Closing Date in accordance with the APS. On October 18, 2019, Tribute uploaded the closing related documents required for Ali to take possession of the property.

[21] The balance due on the Transfer Closing Date was $559,104.84. Ali failed to pay the balance owing on that date. By email sent at 10:26 p.m. on October 23, 2019, Tribute notified Ali that he had failed to close and was therefore in breach of the APS, and confirmed that Tribute insisted on performance of Ali’s obligations under the APS and was not releasing him from his obligations thereunder.

[22] On October 25, 2019, Ali’s solicitor notified Tribute that Ali was willing to complete the transaction and requested a Vendor Take Back mortgage (VTB) of $100,000 with an extension of closing until November 27, 2019. Tribute’s solicitor responded to Ali’s solicitor with a proposal to extend the closing date to November 23, 2019, together with the terms for a $100,000 VTB.

[23] Ali executed the extension agreement on October 28, 2019, and it was emailed to Tribute’s solicitor on November 1, 2019.

[24] As November 23, 2019 was a Saturday, the closing date was set for November 25, 2019, the next business day in accordance with the APS.

[25] On November 21, 2019, Ali’s solicitor advised Tribute’s solicitor that Ali sought an increase in the VTB to $150,000.

[26] On November 25, 2019, Tribute’s solicitor sent Ali’s solicitor VTB documents with an increase to $150,000, and agreed to grant Ali an additional day to complete the transaction, with the closing scheduled for November 26, 2019.

[27] Ali failed to complete the purchase on November 26, 2019. Tribute notified Ali that he was in breach of the APS.

[28] The next day, November 27, 2019, Ali’s solicitor advised Tribute that Ali was trying his best to close, and requested another brief extension. Tribute’s solicitor sent Ali’s solicitor a proposal to an extension to November 28, 2019, but Ali did not sign this proposed extension.

[29] On November 29, 2019, Ali had still not closed the transaction, and Tribute notified Ali that it was terminating the APS effective the same day, without prejudice to Tribute’s right to recover damages for breach of contract.

[30] By letter dated December 5, 2019, Tribute served Ali with a Notice under the Residential Tenancies Act to end his tenancy, with a deadline of February 28, 2020 to vacate the premises.

[31] Tribute did not deposit any post-dated cheques for occupancy fees after the original Transfer Closing Date of October 23, 2019, and therefore no amounts were collected from Ali for occupancy fees from November 2019 onwards. Tribute claims occupancy fees of $2,660.43 per month from November 2019 to February 2020 (total $10,641.72) as Tribute was restricted from use of the premises during that period. These occupancy fees are comprised of the interest on the unpaid balance of the purchase price, the monthly estimate of municipal taxes and monthly common elements expenses for the property.

[32] Since Ali defaulted on the APS, Tribute listed the property for sale using the same sales process used to market the property to Ali. The property was returned to Tribute’s inventory and sold by Tribute’s sales agents. Based on the market rates for comparable properties in January 2020, the property was listed for $489,990, and sold to a third party on February 29, 2020 for the listing price, with a closing date of April 30, 2020. The commission paid by Tribute by selling internally was $1,275 (approximately 0.25%).

[33] Tribute has calculated the damages as follows:

Purchase Price ($655,990) – Deposit ($98,398.50) – Re-sale Price ($489,990) + Occupancy Fees ($10,641.72) = $78,243.22

[34] In addition, Tribute claims incidental damages of $4,191.59 for carrying costs and expenses suffered as a result of Ali’s failure to close the purchase price of the property, comprised of the following:

a. Commission for Re-sale: $1,275

b. Costs to terminate the APS: $902.83

c. Property taxes from March 1, 2020 (the expiration of the Notice to terminate tenancy) and April 30, 2020 (closing date for Re-sale): $1,087.63

d. Electricity between the termination date and the Re-sale closing date: $251.00

e. Gas between the termination date and the Re-sale closing date: $420.27

f. Cleaning services: $254.25

[35] Pursuant to section 8.06 of Schedule “A” of the APS, Tribute is entitled to charge a 15% administrative fee on costs and expenses due to breach of the APS, which would be a further $624.74.

[36] Finally, Tribute claims pre-judgment interest at prime plus five per cent in accordance with Section 8.06 of Schedule “A” of the APS for a total of $30,890.

Motions for Summary Judgment

[37] Rule 20.04(2)(a) of the Rules of Civil Procedure, R.R.O. 1990, Reg. 194 provides: “The court shall grant summary judgment if the court is satisfied that there is no genuine issue requiring a trial with respect to a claim or defence.”

[38] Rule 20.04(2.1) sets out the court’s powers on a motion for summary judgment:

In determining under clause (2)(a) whether there is a genuine issue requiring a trial, the court shall consider the evidence submitted by the parties and, if the determination is being made by a judge, the judge may exercise any of the following powers for the purpose, unless it is in the interest of justice for such powers to be exercised only at a trial:

1. Weighing the evidence.

2. Evaluating the credibility of a deponent.

3. Drawing any reasonable inference from the evidence.

[39] These powers were extensively reviewed by the Supreme Court of Canada in Hryniak v. Mauldin, 2014 SCC 7, where it laid out a two-part roadmap for summary judgment motions at para. 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.

[40] Even with these extended powers, a motion for summary judgment is appropriate only if the material provided on the motion “gives the judge confidence that she can find the necessary facts and apply the relevant legal principles so as to resolve the dispute” (Hryniak, at para. 50).

[41] In Hryniak, the Supreme Court held (at para. 49) that there will be no genuine issue for 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.”

[42] To defeat a motion for summary judgment, the responding party must put forward some evidence to show that there is a genuine issue requiring a trial. A responding party may not rest on mere allegations or denials of the party’s pleadings, but must set out—in affidavit material or other evidence—specific facts establishing a genuine issue requiring a trial.

[43] The motion judge is entitled to assume that the record contains all of the evidence that would be introduced by both parties at trial. A summary judgment motion cannot be defeated by vague references as to what may be adduced if the matter is allowed to proceed to trial.

[44] It is now well settled that “both parties on a summary judgment motion have an obligation to put their best foot forward” (see Mazza v. Ornge Corporate Services Inc., 2016 ONCA 753, at para. 9). Given the onus placed on the moving party to provide supporting affidavit or other evidence under Rule 20.01, “it is not just the responding party who has an obligation to ‘lead trump or risk losing’” (see Ipex Inc. v. Lubrizol Advanced Materials Canada, 2015 ONSC 6580, at para. 28).

[45] Thus, if the moving party meets the evidentiary burden of producing evidence on which the court could conclude that there is no genuine issue of material fact requiring a trial, the responding party must either refute or counter the moving party’s evidence or risk a summary judgment.

[46] While Rule 20.04 provides the court hearing a summary judgment motion with “enhanced forensic tools” to deal with conflicting evidence on factual matters, the court should employ these tools and decide a motion for summary judgment only where it leads to “a fair process and just adjudication”: Mason v. Perras Mongenais, 2018 ONCA 978, at para. 44; Eastwood Square Kitchener Inc. v. Value Village Stores, Inc., 2017 ONSC 832, at paras. 3-6 (and cases cited therein).

[47] In the present case, the defendant has not filed any material to support its position.

[48] I am satisfied that, given the motion record filed by the plaintiff and the lack of responding material from the defendant, there is no genuine issue of material fact requiring a trial, and this is an appropriate case to proceed by summary judgment.

Analysis

[49] Based on the record before me, and the terms of the APS, the defendant was in default of the APS when he failed to pay the balance of the purchase price on the closing date. There is no genuine issue requiring a trial.

[50] The defendant’s Statement of Defence acknowledges that he entered into the APS with the plaintiff and that he failed to close in accordance with the terms of the APS. His Statement of Defence advances three defences:

a. The property did not have Tarion warranty registration;

b. He was induced by the real estate agent, Ather Ali, to purchase the property;

c. The sale price was “inflated” and this prevented him from obtaining financing.

[51] The defendant has provided no evidence to support any of these allegations.

[52] The defendant also filed a counterclaim, seeking a return of the deposit paid, relying on the allegations made in its Statement of Defence.

[53] The plaintiff’s affidavit material refutes these defences. The evidence submitted by Tribute shows that the property was registered with Tarion at all material times.

[54] On the second point, the evidence submitted by Tribute is that Ather Ali is not an agent of Tribute, and Tribute has no relationship with Ather Ali, and no knowledge of any representations made by him. As indicated, the defendant has not commenced any third party claim against Ather Ali.

[55] On the third point, the court is not concerned with the market value of the property on the date of sale, that is a matter of negotiation between the parties. Once the sale price is agreed to, the defendant’s inability to secure financing is not a legal justification for failing to close an APS unless there is specific language in the contract to address the issue (eg. making the contract conditional on financing): Bang v. Sebastian, 2018 ONSC 6226, (aff’d on appeal, 2019 ONCA 501), at para. 36; Paradise Homes North West Inc. v. Sidhu, 2019 ONSC 1600; FSC (Annex) Limited Partnership v. ADI 64 Prince Arthur L.P, 2020 ONSC 5055, at para. 29; Forest Hill Homes v. Ou, 2019 ONSC 4332, at paras. 5-6; Perkins v. Sheikhtavi, 2019 ONCA 925; Arista Homes (Kleinburg) Inc. v. Griu, 2022 ONSC 1614; Park Avenue Homes Corp. v. Malik, 2022 ONSC 973, at paras. 34-36.

[56] It is also clear that, since the defendant was in default of the APS, the plaintiff is entitled to retain the $93,398.50 deposit paid, although the deposit must be credited against any other damages claimed: Pleasant Developments Inc. v. Iyer, 2006 10223 (ON SCDC), at paras. 7-8; Azzarello v. Shawqi, 2019 ONCA 820, at paras. 45, 53-54.

[57] The damages amount is the difference between the price under the APS and the price of the new sale of the property once it closes, plus any additional carrying costs incurred by the Vendor in mitigating its loss and dealing with the Purchasers’ breach: Goldstein v. Goldar, 2018 ONSC 608, at para. 25.

[58] See also Park Avenue Homes, at paras. 38-39:

Against a purchaser who aborted an agreement of purchase and sale, the plaintiff vendor is entitled to its loss of bargain, which is the difference between the original sale price and the re-sale price for which the property was eventually sold. 767804 Ontario Limited v. Bartoletti, 1998 CarswellOnt 1567; Azzarello v. Shawqi, 2018 ONSC 5414; Bang v. Sebastian, 2019 ONCA 501; Victorian Homes (Ont.) Inc. v. DeFreitas, 1991 CarswellOnt 414, at para. 20; Briscoe-Montgomery v. Kelly, 2014 ONSC 4240, at para. 22.

In addition, the jurisprudence recognizes that a Plaintiff can claim interest and interim financing costs, real estate commissions, legal fees, and other carrying costs associated with the breach. Briscoe-Montgomery v. Kelly, supra, at para. 23; Fang v. Peroff, 2014 CarswellOnt 3800, at para. 51; Azzarello v. Shawqi, supra, at para. 54.

[59] Based on the evidence provided in Tribute’s affidavits, I am satisfied that the damages set out at paras. 33-35, plus pre-judgment interest as calculated as per para. 36, have been proven: Tribute (Grandview) Inc. v. Zhou, 2021 ONSC 2994, at paras. 55-56.

Conclusion

[60] Based on the foregoing, summary judgment is granted in favour of the plaintiff. The plaintiff is entitled to the forfeiture of the $93,398.50 deposits paid by the defendant, and the defendant is ordered to pay damages to the plaintiff in the amount of $83,063.55, plus pre-judgment interest of $30,890.10 (total damages: $113,953.65).

[61] The defendant’s counterclaim is dismissed.

Costs

[62] Tribute seeks costs of the action and motion, including defending the counterclaim, on a substantial indemnity basis in the amount of $17,548.00, plus disbursements of $1,172.72.

[63] There are no allegations of reprehensible or egregious conduct that would justify an award of substantial indemnity costs, but Tribute argues that the APS provides that the defendant shall fully indemnify the plaintiff in the event of default.

[64] Costs are in the discretion of the court pursuant to s.131 of the Courts of Justice Act, R.S.O. 1990, c. C.43. While an agreement between the parties is certainly a factor to be considered in the exercise of that discretion, it is not binding on the Court, and does not displace the general principles applicable to costs awards set out in Rule 57.01 of the Rules of Civil Procedure. This is particularly true where the agreement, as in this case, does not specifically relate to, or even mention, court costs.

[65] Tribute’s partial indemnity costs are $11,698.86, plus disbursements. While some effort and care must be taken to calculate damages in each individual case, these summary judgment motions by developers following an aborted real estate transaction have become something of a boiler plate process. The legal principles are well settled and reference to the relevant cases are now routine. In these circumstances, when no real opposition is advanced by the defendant, this is an appropriate case for costs on a partial indemnity basis, notwithstanding the provision of the APS providing for full indemnity. Accordingly, I fix costs of the proceeding at $12,800.

Justice R.E. Charney

Released: June 10, 2022