Superior Court of Justice - Ontario

COURT FILE NO.: CV-21-674239-0000

DATE: 20220802

RE: WENDY WARNER, Plaintiff

– and –

MAAROUF AHMADI, Defendant

BEFORE: E.M. Morgan, J.

COUNSEL: Shaneka Shaw Taylor, for the Plaintiff

Eliezer Karp, for the Defendant

HEARD: August 2, 2022

MOTION TO VARY

[1] This action arises from the Defendant’s failure to close a real estate transaction. On May 4, 2022, I issued an endorsement in which I found the Defendant in breach of the agreement of purchase and sale and ordered specific performance.

[2] The Plaintiff has moved to vary my Order under Rule 59.06(1) of the Rules of Civil Procedure – i.e. a motion to vary in respect of a matter “on which the court did not adjudicate.” Specifically, she seeks to add to my ruling compensation for certain losses and transaction costs that she has incurred as a result of the breach. Some of these costs were contained in the motion record that was before me in the original motion, and others are updates of those costs that have been incurred since that time.

[3] In short, the Plaintiff submits that she has had to bear out-of-pocket expenses of $9,157.81. She also submits that if the transaction were to close now as I ordered, she would only be able to obtain a mortgage at 4.505% rather than at the original rate of 3.84%. Counsel for the Plaintiff argues that the Plaintiff is entitled to update these figures as time passes.

[4] Counsel for the Defendant advises that his client is appealing my ruling, which, of course, means that to the extent that what the Plaintiff seeks are ongoing monthly carrying charges pending closing, her request for compensation is a moving target. No date has yet been set for the appeal and it is not currently knowable when the appeal will be heard and decided.

[5] In my view, the Plaintiff is entitled to be compensated for any extra mortgage expense resulting from an increase in the mortgage rate available to her when the transaction ultimately closes. Calculation of the precise amount of compensation, if any, will necessarily have to wait until the eventual closing date. Of course, if her mortgage rate at the eventual closing is lower than the original 3.84%, no compensation will be owing to her by the Defendant on this account. As a matter of convenience, it is logical to calculate at the eventual closing the present value of a 5-year term for any amount that the then available mortgage rate is higher than 3.84%. That amount can then be deducted from the amount payable to the Defendant on closing.

[6] Turning to the Plaintiff’s claim for out-of-pocket expenses, Defendant’s counsel submits that in the Statement of Claim the Plaintiff claimed for specific performance or damages in the alternative. It is his view that she was successful in obtaining an Order for specific performance in the summary judgment motion, and cannot now return to court seeking her alternative remedy of damages in addition to that Order. Defendant’s counsel also submits that under Rule 59.06(1) the Plaintiff can seek to vary my Order with respect to matters that were before me but that I left unaddressed, but that she cannot seek to adduce new evidence and have me rule on expenses that have arisen subsequent to my ruling and which by definition were not initially before me.

[7] Plaintiff’s counsel replies that she is not now seeking the alternative remedy of damages. That was pleaded in order to claim the loss arising from the loss of the contract itself in the event that the court was not prepared to order specific performance. Rather, Plaintiff’s counsel states that what she is now seeking are transaction costs that naturally accompany specific performance and that are an adjunct to that Order.

[8] Plaintiff’s counsel goes on to submit that these expenses are pleaded at paragraph 12 of the Statement of Claim. That paragraph sets out that the Plaintiff has suffered additional pecuniary losses and/or expenses and wasted transactional costs and legal fees. I agree that this is pleaded as part of either the damages claim or the specific performance claim, and that the Plaintiff is not somehow estopped from claiming lost transaction costs of this nature just because she has been awarded specific performance instead of damages.

[9] Furthermore, Plaintiff’s counsel points out that what Defendant’s counsel calls “new evidence” is, in fact, updated figures with respect to evidence that was already before me. To the extent that this is an accurate description of the expenses that she now claims, I agree with her on that point as well. If specific performance entails, for example, a new set of legal fees for a new closing of the transaction, the Plaintiff is entitled to be compensated for those fees despite the fact that they will necessarily arise subsequent to my initial ruling.

[10] The costs that the Plaintiff now claims are for additional legal fees, appraisal fees, movers, storage, and rent. In my view, she is entitled to be compensated by the Defendant for legal fees of $3,516.86 from the aborted closing and moving costs of $600 relating to moving to new lodgings pending the eventual closing. Had the Defendant closed as he should have in the first place, the Plaintiff would not have occurred two sets of legal fees and two moving fees (one already incurred and one to be incurred at the eventual closing). One of each of those fees – the ones that have been already incurred – are due and payable to the Plaintiff now.

[11] The Plaintiff is also entitled to the storage costs of $292.67 per month pending the eventual closing. Had the transaction closed as it should have, she would not have incurred storage costs for her belongings, as she would have moved them to the new house that the Defendant sold to her. We do not know at this point how many months will pass until the closing takes place, but the amount of $292.67 is to be added to her compensation every month until that time and is to be paid in its entirety at the new closing date. For convenience, the total amount of storage costs is to be deducted from the purchase price paid by the Plaintiff to the Defendant at closing.

[12] Defendant’s counsel submits that the Plaintiff ought not be entitled to compensation for rent paid pending closing. He argues that she would have had to live somewhere whether the deal closed on the original closing date or not. In fact, he points out that had the deal closed as originally set out in the agreement of purchase and sale, the Plaintiff would have been paying $1,057.63 per month in mortgage costs, whereas she is currently incurring only $500 per month in rent.

[13] I agree with Defendant’s counsel on this point. Plaintiff is paying rent pending closing but does not have to make mortgage payments for those same months. The saving on the latter more than makes up for the expense on the former. Accordingly, the Plaintiff is not out of pocket for monthly accommodation expenses, and they should not be added to my Order.

[14] In sum, the Defendant is to pay the Plaintiff $4,116.86 representing legal fees and moving costs. In addition, the Defendant owes the Plaintiff $292.67 for every month that passes from the aborted closing date to the new closing date. The Defendant also owes the Plaintiff the present value for a 5-year term of the difference in mortgage between 3.84% and the rate available to her at closing. The overall amount of the storage fees and mortgage difference are to be calculated at the new closing date and deducted from the amount paid by the Plaintiff to the Defendant at closing.

[15] These amounts assume that my ruling is upheld. If it is not upheld, it will be for the Court of Appeal to adjust this as it sees fit.

[16] The results here are mixed. Accordingly, there will be no costs of this motion paid by or to either party.

Date: August 2, 2022

Morgan J.