COURT FILE NO.: CV-21-1589-00

DATE: 20220805

ONTARIO

SUPERIOR COURT OF JUSTICE

B E T W E E N:

BERNARD DRAG

Plaintiff/Defendant by Counterclaim

Marek Z. Tufman, for the Plaintiff/ Defendant by Counterclaim

• and -

ROHIT MEHTA

Defendant/Plaintiff by Counterclaim

Gary M. Caplan, for the Defendant/Plaintiff by Counterclaim

HEARD: March 22, 23, 24 & 25, 2022

REASONS FOR JUDGMENT

Justice Thomas A. Bielby

INTRODUCTION

[1] The Defendant, the Plaintiff, by Counterclaim, Rohit Metha (Mehta), seeks the remedy of specific performance alleging a breach of an Agreement of Purchase and Sale (APS). It is the only relief sought as there is no claim for damages. The Plaintiff, Defendant by Counterclaim Bernard Drag (Drag) submits the APS was null and void as of 11:59 p.m., December 9, 2020, and denies the claim.

[2] Drag, in December 2020, was the registered owner of the property known municipally as, 1 Flaherty Lane Caledon, Ontario (the property).

[3] The parties executed the APS by which Drag agreed to sell the property to Mehta for $2,470,000. The deal was to close April 28, 2021. There is an issue as to when the APS was executed; December 2nd or 3rd. 2020.

[4] The APS included a condition, for the sole benefit of Mehta, allowing for a home inspection by a qualified home inspector. The condition had to be waived within five business days from the date of execution, otherwise the APS was null and void.

[5] If the APS was executed on December 2nd, the condition had to be waived by 11:59 p.m., December 9, 2020. If it was executed on December 3rd, the condition had to be waived by 11:59 p.m., December 10, 2020.

[6] As a result of the home inspection report, released on December 8, 2020, a number of deficiencies were identified. As a result, Mehta sought an abatement of the purchase price and negotiations ensued. The negotiations continued into the evening of December 9th.

[7] Mehta submits that on that evening the parties and/or their agents had agreed to an abatement of $40,000. An amending agreement was prepared reducing the purchase price by the amount of the abatement and deleting the home inspection condition. The amending agreement was prepared by Mehta’s real estate agent, Shan Ghuman (Ghuman), signed by Mehta and emailed to Tav Schembri (Schembri), the real estate agent for Drag. Mehta alleges they were told by Schembri that Drag was away for the evening and would not be available to sign the amending agreement, until the morning of December 10, 2020.

[8] At the time, and at all relevant times thereafter, both the parties believed the home inspection condition had to be waived by 11:59 pm December 9th. Otherwise, as noted above, if the Amending Agreement was not signed, and the condition not waived, the APS would be null and void. Accordingly, during the evening of December 9, 2020, Ghuman, on behalf of Mehta, sought written confirmation from Schembri that the parties had agreed on an abatement amount, and the deletion of the home inspection condition and that Drag would execute the document the next day. Schembri refused or failed to provide written confirmation. It is alleged that he verbally said, something to the effect of, “you have my word”.

[9] As a back up plan, Mehta, at 4:31 p.m. December 9th, signed a Notice of Waiver (the waiver) of the home inspection condition, without any abatement in price. Mehta, one way or the other, wanted the property and, if abatement negotiations broke down, was prepared to forgo any abatement in the purchase price.

[10] Because Schembri would not provide written confirmation of an agreement, it is alleged that Mehta, along with a number of friends and colleagues, between the hours of 11:00 p.m. and 11:59 p.m., on December 9th, delivered a copy of the waiver to a number of locations. The locations included Schembri’s ReMax office in Caledon, the property itself, the adjacent property at 5 Flaherty Lane, and 2 Remax offices in Mississauga. it is alleged that envelopes containing the waiver were left at the doors of these locations.

[11] Mehta submits therefore that the waiver was hand delivered prior to 11:59 p.m. December 9, 2020, and, moving forward, Drag was contractually obligated to sell the property to him. By refusing to complete the APS, Drag, it is alleged, breached the APS.

[12] Drag and Schembri deny that the waiver was delivered by December 9, 2020, at 11:59 p.m. They submit the waiver was first delivered in an email from Ghuman to Schembri, at 1:11 p.m. December 10, 2020. It is submitted therefore that the APS was null and void. Further, Drag and Schembri deny there was any agreement regarding a $40,000 abatement.

GROUNDS FOR RELIEF

[13] Counsel for Mehta sets out the following grounds for an order of specific performance:

a) On December 2, 2020, Schembri delivered the APS to Ghuman, signed by Drag (it had been signed by Mehta previously). However, Drag failed to initial the closing date of April 28, 2021, which had been written in at para 2 of the APS. The APS was returned by Ghuman to Schembri for Drag to add his initials. After his client added his initials, Schembri returned the APS to Ghuman on December 3, 2020, at 2:11 p.m. The amending agreement was attached to an email which read:

“Please see the final seller’s signed executed APS and let me know if you have any questions.”

[14] Counsel for Mehta submits that accordingly, the date of acceptance of the APS was actually December 3, 2020, and that the 5 business day period in which to waive the home inspection condition would therefore expire at 11:59 p.m. December 10, 2020. There is no dispute that the waiver was, at the very least, emailed by Ghuman to Schembri, at 1:11 p.m. December 10th.

b) Alternatively, if the period for waiving the home inspection condition expired at 11:59 p.m., December 9, 2020, counsel for Mehta submits that the waiver was hand delivered by 11:59 p.m., December 9, 2020, by leaving copies of the waiver at the door of Schembri’s office and at the door of the residence on the property, along with the other locations. Accordingly, the APS was no longer conditional, the home inspection clause being waived, and the parties were contractually obliged to complete the purchase and sale of the property.

c) As a further alternative, it is submitted that, in negotiating the terms of an amending agreement, Drag and his Schembri breached their duty of Good Faith. It is submitted that Drag and Schembri was seeking to nullify the APS, believing the property had a value greater than the agreed purchase price. To that end, they made misrepresentations upon which Mehta relied, and thereafter claimed the APS was null and void.

[15] Mehta claims the property is unique and therefore the remedy of specific performance is appropriate. Counsel for Drag did not challenge the claim that the property is unique. If Mehta succeeds in his claim, the remedy is specific performance.

[16] Counsel for Drag submits the counterclaim ought to be dismissed. It is argued that the APS was null and void as a result of Mehta not delivering the waiver within time. It is also submitted that Drag and Schembri acted honestly and in good faith.

EVIDENCE

[17] The MLS listing of the property was dated November 19, 2020. The listing price was $2,495,000 (Ex. 1 Tab 3) and Schembri was shown as the real estate broker.

[18] Mehta retained Ghuman as his real estate agent who, on November 30, 2020, delivered to Schembri, via email, an offer to purchase the property, for $2,377,000 (Tab 4).

[19] Various offers were exchanged until an agreement was reached. On December 2, 2020, at 8:43 p.m., Ghuman delivered the offer to Schembri by email, which read, in part:

‘Hi Tav

Congratulations!

It’s accepted and done!

Please check all the initials (Tab 21)

[20] I accept that as of December 2, 2020, the parties reached an agreement regarding the purchase price which was reduced to writing and signed by both parties, with the exception of one set of initials, on a non-controversial point. After Schembri emailed the agreement back to Ghuman, it was noted that Drag had not initialed the proposed closing date of April 28, 2021. By email dated December 2, 2020, at 8:56 p.m., Ghuman asked Schembri to have his client initial the proposed closing date which he did the next day and the APS was returned to Ghuman, on December 3, 2020 (tab 19).

[21] Attached to the offer was Schedule A, in which was included a home inspection condition of sale that read as follows (para. 5),

“This Offer is conditional upon the inspection of the subject property by a qualified home inspector at the Buyer’s own expense and the obtaining of a report satisfactory to the Buyer in the Buyer’s sole and absolute discretion. Unless the Buyer gives notice in writing delivered to the Seller within 5 banking days (excluding Saturday, Sunday & Bank holidays) following the date of acceptance of this offer that this condition is fulfilled this Offer shall be null and void and the deposit shall be returned to the Buyer in full without deduction. The Seller agrees to co-operate in providing access to the property for the purpose of this inspection. This condition is included for the benefit of the Buyer and may be waived at the Buyer’s sole option by notice in writing to the Seller within the time period stated herein.”

[22] On page 2 of the agreement, paragraph 3, of the APS, entitled “Notices” read as follows:

“NOTICES: The Seller herby appoints the listing Brokerage as agent for the Seller for the purposes of giving and receiving notices pursuant to this Agreement. Where a Brokerage (Buyer’s Brokerage) has entered into a representation agreement with the Buyer, the Buyer hereby appoints the Buyer’s Brokerage as agent for the purposes of giving and receiving notices pursuant to this Agreement. Where a Brokerage represents both the Seller and the Buyer (multiple representations), the Brokerage shall not be appointed or authorized to be agent for either the Buyer of the Seller for the purposes of giving and receiving notices. Any notice relating hereto or provided for herein shall be in writing. In addition to any provisions contained herein and in any Schedule hereto, this offer , any counter-offer, notice of acceptance thereof or any notice to be given or received pursuant to this Agreement or any Schedule hereto [any of them, “Document” shall be given or received personally or hand delivered to the Address for Service provided for the Acknowledgement below, or where a facsimile number or email address is provided herein, when transmitted electronically to that facsimile number or email address, respectively, in which case, the signature of the party (parties) shall be deemed to be original.”

[23] As per the “Notice” paragraph, the waiver could be given and received personally or hand delivered to the Address for Service provided for in the Acknowledgement paragraph, or where a facsimile number or email address is provided “herein”, transmitted electronically.

[24] In the paragraph entitled, “ACKNOWLEDGEMENT”, the municipal address of the property is set out as the Address for Service.

[25] As noted above, upon the delivery of the home inspection report (December 8th) given the deficiencies noted therein and estimate costs to correct, Mehta sought an abatement of the purchase price. Ghuman and Schembri exchanged a series of emails, text messages and telephone calls on December 8th and 9th, 2020, regarding a price abatement all the while believing that the period to waive the home inspection condition expired at 11:59 p.m. December 9, 2020.

[26] On December 8, 2020, at 9:50 p.m. Ghuman emailed Schembri and said the cost to rectify the “issues at hand” would be around $75,000 (Exhibit 1, Tab 34).

[27] Schembri emailed Ghuman on December 8, 2020, at 11:37pm which read:

“What are you suggesting?

We know it is an older home and needs attention. This is why we priced it so low.

Let me know your offer” (tab 35).

[28] On December 9, 2020, at 1:17 am Ghuman emailed Schembri saying,

“Hi Tav

I just came back after talking to him

2.4 if the buyer gets the work done.

Or is seller gets it done? Up to him

Thanks” (tab 35).

[29] At 7:56 am Schembri responds:

“help me out here. Let’s at least split it

Your clients can use the money of a different way” (tab 37).

[30] At 9:50 am, December 9, 2020, Ghuman emailed Schembri as follows:

“Hi Tav

Cost to do that work is almost double with detail estimates. Keeping that in mind I came up with visual cost just to sound fair to both side. Rest I leave it in your hands” (tab 38).

[31] Schembri replies at 10:35 am,

“Do you think I can approach my client with $40,000 reduction?” (tab 38)

[32] Ghuman responds, at 10:51 am,

“Hi Tav

At least $70 I convinced them last night!! This was the reason I did not go into detail estimates and further inspection” (Tab 40).

[33] At 12:41 p.m., on December 9, 2020, Schembri emails Ghuman as follows:

“Many of these concerns are minimal and small in nature and cost. The floor was self-evidence upon viewing the house. The roof may have been not visible during the viewing and my client has agreed needs attention however, not immediate attention. The window is being replaced as we speak and can be included through an amendment. We will also do an electrical inspection and repair the items you have identified in the report.

My client as a sign of good gesture and faith will agree to reduce an additional $25,000 on the purchase price bringing the price to $2,445,000. They are getting great value for this amount.

As you know my seller has agreed to include the piano and high end furniture and along with some work.” (Tab 41)

[34] This email is the last one delivered by Schembri to Ghuman on December 9, 2020. However, from the following, it is clear that the Ghuman and Schembri continued negotiations.

[35] Regarding this proposed abatement amount, Drag testified that on December 9th, he had instructed Schembri to advise Khuman that he would agree to a $35,000 abatement in price. However, Schembri, after receiving these instructions, at least in writing, never advised Ghuman that Drag would only agree to a $25,000 abatement in price.

[36] To add to the confusion, the last amending agreement, emailed to Schembri at 6:59 p.m., on December 9, 2020, included a new purchase price based upon a $40,000 abatement.

[37] Ghuman responded, at 1:20 p.m., December 9, 2020:

“Hi Tav

I hesitate to go in details but estimates would go close to 150k also septic tank issue still outstanding. Some how let me try if I can convince them to lower then 70K because last night I spent quite a bit time with them. On phone not workable see if your client can go up to 55k then I can go visit buyer’s wife personally with other details.” (Tab 42).

[38] At 5:21 p.m., Ghuman emailed Schembri again stating,

“Hi Tav

I spoke to Raman I think you had a busy day. I had an appointment with buyer at 4:30 p.m.. I got it signed with best efforts. For window & electrical I given her assurance will be done before end of month in good faith.

Amendment is attached!

Thank you & see you next week.” (Tab 46).

[39] Included with this email was an amending agreement, signed by Mehta, which called for an abatement of purchase price in the amount of $50,000 and deleted the home inspection condition.

[40] At 6:15 p.m. Ghuman emailed Schembri saying,

Hi Tav

It’s a final amendment!!

Thank you again will see you next week!!” (Tab 50).

[41] Attached to the email was a second amendment agreement, signed by the Mehta setting out a new purchase price to $2,425,000, being an abatement of $45,000. The home inspection condition was to be deleted.

[42] At 6:30 p.m. Ghuman received a call from Schembri which was received and placed on speaker phone and was overheard by Mehta and Baljinder Singh (Singh), Ghuman’s father, who were in Ghuman’s office. It is alleged there was and an agreement to abate the purchase price by $40,000 but that Drag was out of town that evening and would not be available until the morning of the next day to execute the amending agreement.

[43] Mehta and Singh testified that Schembri was heard to say,

“Send me the agreement and we will honour it”

[44] At 6:59 p.m., on December 9, 2020, Ghuman again emailed Schembri, as follows:

RE: firm and final amendment

“Hi Tav

I got is signed as per your commitment. Taken out the window and electrical clause but given her assurance will be done. The deal is firm now & send me the signed copy tomorrow!

It’s gone out of my pocket!

Thank you.” (Tab 52)

[45] The new amending agreement, attached to the 6:59 p.m. email, was signed by Mehta and proposed a new purchase price of $2,430,000 ($40,000 abatement) and the deletion of the home inspection condition. This latest, and last amending agreement was made irrevocable until 12:30 pm, December 10, 2020. It is alleged by Mehta that the irrevocable date was chosen on the basis that Drag was out of town that evening and would sign the agreement the next morning.

[46] As a result, of the irrevocable date chosen and the fact that the time period for waiving the home inspection condition expired at 11:59 pm, December 9th, Ghuman sought written confirmation from Schembri that there was an agreement in place, and that the 11:59 p.m. expiry date would not be enforced. Schembri however, would not put anything in writing.

[47] As a back plan at 4:32 pm December 9th, Mehta, believing that the time to waive the home inspection condition expired at 11:59 pm had signed a waiver to be used if the parties could not agree on an abatement in price. The bottom line was that Mehta wanted to purchase the property with or without a price abatement.

[48] At 8:58 p.m., December 9, 2020 (tab 58), in the presence of Mehta and Singh, who both testified they could hear the call, Ghuman received a telephone call from Schembri who they said was upset and used foul language. Both testified that Schembri said something to the effect of, his words were “fucking’ good enough and that the agreement would be signed the next morning.

[49] Singh also testified that he heard Schembri say something to the effect of:

“You believe my word… I’m a big guy and I don’t have to do nothing, I don’t care.”

[50] Ghuman, Mehta, and Singh became concerned and with no written confirmation of an agreement in price, made some calls seeking advice from other brokers and a lawyer, Nikki Kaur, as to what they should do. Ms. Kaur is a real estate lawyer and she testified that it was her advice to personally serve the waiver of the home inspection condition.

[51] By this point Mehta and Ghuman were concerned that the amending agreement may never be signed and that the pressing issue was delivery of the waiver of the home inspection condition. However, by this time it was approximately 10:00 pm. It was decided to follow the advice received and personally deliver the waiver to a number of locations by the 11:59 pm. In order to achieve this goal, Mehta sought the assistance of friends and colleagues to assist with the delivery.

[52] It is to be noted that a copy of the waiver was faxed to a phone number set out in the MLS listing, however, Mehta is not relying on any facsimile mailing as proof of delivery.

[53] Two groups of men were called upon to effect delivery. Mehta, Singh and Mr. Lidder were in one car and travelled to Caledon to attempt delivery at Schembri’s office and at the property. They arrived at Schembri’s Caledon office at 11:14 p.m.

[54] Two other men were tasked with delivering the waiver to two ReMax offices in Mississauga.

[55] When Mehta, Singh and Lidder arrived at Schembri’s office, Singh testified that he went to the door and knocked. He verbally identified himself and the reason for his attendance (to deliver the waiver). He testified that he saw shadows and lights on, but no one answered the door. A copy of the waiver in an envelope was left at the door.

[56] Immediately thereafter, they drove to the property arriving at approximately 11:37 p.m. They drove up the long driveway and parked in front of the house. Singh testified that he got out of the car with an envelope containing the waiver and knocked on the main door without success and on another door, without success. He verbally identified himself and the reason he was there. Again, shadows were said to be observed as well as lights, but no one came to either door. Singh testified that an envelope with the waiver, was stuck on the front or main door.

[57] At exhibit 1, tabs 57 and 58, are some pictures allegedly taken by Mr. Lidder, that evening, utilizing his cell phone. There are pictures of both the exterior and interior (looking through the glass entry door) of the Caledon ReMax office. Other pictures shown, of which appear blurred and dark, are said to show lighting along the driveway at the property. Mr. Lidder passed away last summer but Mehta and Singh testified that the pictures are an accurate representation of the property and the office on December 9, 2020. Drag and Schembri contest the accuracy of the pictures testifying that what was seen in the pictures and relied upon, did not exist until the spring and summer of 2021.

[58] Mehta, Singh and Lidder then left the property and went to the adjacent property, 5 Flaherty Lane which is also owned by Drag and left a copy of the envelope with the waiver in the mailbox located on a post close to the mouth of the driveway.

[59] Drag disputes this attempt at delivery. He testified that on December 9, 2020, the mailbox was lying on the ground because a snowplough had previously knocked it over

[60] Ghuman, regarding delivery of the waiver, testified that, at the request of Schembri, at 1:11 p.m. on December 10th, that he emailed a copy of the waiver to Schembri. Along with an email which read:

“Hi Tav

As per your request” (Tab 62).

[61] This email was a follow up to a telephone conversation at 12:09 p.m. between Ghuman and Schembri, made in the presence of Mehta. Schembri was allegedly told that if the waiver was accepted, there would be no abatement in the purchase price.

[62] On December 11, 2020, at 2:50 p.m. Schembri emailed Ghuman advising that he has spoken with his client Drag who would be agreeable to sell the property to Mehta for $2,550,000. It was implied that the price was non-negotiable and that if it was agreeable, Drag would repair the floor and roof. This offer was based on a belief that the APS was null and void. Drag and Schembri denied the waiver was delivered and therefore the condition had not been waived in time.

[63] All parties seem to be in agreement that the waiver could have been delivered electronically, via email, on the evening of December 9, 2020, however it was not until the next day that email delivery was utilized. Accordingly, counsel for Drag posed the question to some of the witnesses called by Mehta, why the waiver had not been emailed, keeping in mind that both Ghuman and Schembri had exchanged a number of emails. Mehta and Singh testified that they had been seeking written confirmation from Schembri without success and that Schembri had stopped taking their calls and stopped responding. Ghuman testified that he had tried to call Schembri a couple of times, without success and Schembri was not responding to emails. He also testified that they were following the advice of the other brokers and the lawyer they had contacted that evening.

[64] Singh, who was an experienced real estate broker, testified that he was at his son’s office on December 9th, to assist his son, who he said, lacked experience. He assisted his son with the wording of a number of emails.

[65] Singh also testified that on December 9th, he believed the property continued to be listed for sale and there were continued showings of the property to prospective purchasers, without reference to a conditional offer pending.

[66] Returning to the alleged photographs taken by Mr. Lidder (Tabs 57 & 58), Ackama Stroka, an electrician and a witness called by Drag, testified that he was retained by Drag in the summer of 2021 to wire up the lights on the gate and along the driveway so that they would be operational. He testified that accordingly, the pictures could not have been taken on December 9, 2021. He provided corroboration by way of receipts for material used in making the lighting operational and which were dated, 2021.

[67] Drag testified that, he believed the costs of rectifying the deficiencies disclosed in the home inspection report, was $70,000 and this expense ought to have been shared equally with Mehta. As noted above, Drag testified he instructed Schembri to offer an abatement of $35,000 and to advise he would not budge from this amount.

[68] Drag testified that he was unaware of the email Schembri sent to Ghuman in which it was said that he had instructions to agree to a $25,000 abatement in price.

[69] Drag denied receiving a copy of Schembri’s email wondering if they could split the difference.

[70] Mr. Drag was aware of the December 9th, 11:59 p.m. deadline. He said that he never received the waiver of the home inspection condition and that no one attended at his house after 11:00 p.m. He heard no voices or banging (on the door). He testified he was anxious to hear from Schembri and was waiting for a phone call. Drag testified that he was home alone that evening. His routine is to watch the 11:00 p.m. news and go to bed at approximately 11:45 p.m.

[71] Mr. Drag testified that he did not hear from Schembri on the evening of December 9, 2020. He went to Schembri’s office on December 10th and was told there was no agreement and no deal. He was told by Schembri that the buyer’s agent, Khuman, wanted to know if he would take $5,000 less but was told there was nothing binding. He testified he was anxious to sell and was disappointed there was no sale of the property. He testified as to wanting a quick sale and that he was considering relocating to a country in the Caribbean.

[72] Drag told his agent to remove the listing and cancel any showings. He decided to stay in the house and continue with the upgrades. He testified that Schembri did not pressure him to continue to list the property or to agree to any proposals.

[73] Mr. Drag testified that he could not receive emails at home and had to go to his work office located at the Pearson International Airport to receive emails.

[74] Drag testified that he never saw nor received the proposed amending agreements or the emails with which the agreements were attached. He was unaware of the continuing negotiations. He denied telling his agent, after 6:15 p.m. not to respond to any other offers or emails. He denied ever telling Schembri he would be out of town on December 9th or to tell Ghuman he was out of town.

[75] Drag was not aware that Schembri may have told Ghuman he would accept a $40,000 abatement. He never saw the 6:59 pm email which referenced a “commitment” by Schembri.

[76] Schembri and Mr. Drag had no discussions concerning a waiver and how it was to be delivered.

[77] Mr. Drag testified that he did not became aware of the email with the executed waiver until 2:30 p.m., December 10th. Regardless, Drag testified that by this point, he was unhappy and wanted to walk away from the deal. He was told by Schembri that there was no, “obligation”.

[78] However, as noted above, in the email dated December 11, 2020, at 2:30 p.m. (Tab 67), Schembri advised Ghuman that Drag would sell the property to Mehta for $2,550,000, a price which was said to be non-negotiable.

[79] Schembri testified that the pictures found at exhibit 1, tabs 57 & 58, were, “a joke”. The desk shown therein was not purchased in March 2021 and he produced a proposal from Officestock, dated in March 2021, which contained price quotes on some office furniture, including the desk.

[80] Schembri testified that he did not receive a copy of the waiver until December 10th, day after the condition expired. He denied the claim that a copy was delivered to his office on December 9,2020. He testified that after December 9th, he had a phone conversation with Ghuman and said that they did not want to do the deal anymore.

[81] Schembri testified he wanted to see the property sold as he would have made a commission of $50,000. He could not recall being contacted between December 2nd and 9th by other prospective buyers. He denied taking any steps to abort the deal.

[82] Regarding the email delivered to Ghuman on December 9th, advising Drag would agree to a $25,000 abatement, Schembri testified that if this offer was not good enough, they would have split equally the $70,000 cost of rectifying the deficiencies.

[83] Schembri in his evidence at trial said that Drag, at one point on December 9, 2020, instructed him not to respond any further (as opposed to saying he was firm on an abatement price of $35,000) a fact denied by Drag.

[84] Schembri testified that regardless of such instructions, he continued to negotiate. He agreed receiving the first proposed amending agreement which he said he forwarded to Drag at 5:22 p.m. on December 9th, in accordance with his duty, sending it by email to, bernard@yyzops.com, notwithstanding it was known that Drag could not receive emails at home.

[85] Schembri testified that he never told Ghuman that his client would agree to an abatement of $35,000.

[86] Regarding the second proposed amending agreement Schembri acknowledged receiving it and testified he forwarded it to Drag, even though he had instructions not to negotiate any further.

[87] With respect to the third and final amending agreement ($40,000 abatement) Schembri at first denied telling Ghuman that Drag was out of town but after reviewing earlier evidence agreed that he may have said that. Regardless, Schembri denied advising Ghuman to leave the agreement irrevocable until December 10th to allow his client to review and sign the Agreement. He denied it was part of an effort to lull Ghuman into believing there was a deal but thereafter rely on the expiry of the time period for waiving the home inspection condition. Schembri admitted he was aggravated and used foul language. He testified that everyone on the call was aggravated and that he apologized the next day.

[88] Schembri denied leading Ghuman on, regarding an agreement to an abatement amount or purposely attempting to confuse him. He denied making any commitment.

ANALYSIS

CREDIBILITY

[89] Credibility is a significant issue in this matter. In 2287913 Ontario Inc. v. ERSP International Enterprises Ltd., 2021 ONSC 6756 Sanfilippo J. stated at paras. 78 & 79:

“I have assessed the credibility and reliability of the witnesses by referring to facts proven by others independently, and by considering whether their evidence is contradicted or corroborated by the evidence of other credible witnesses. I have considered how the witnesses’ evidence fits into the entirety of the evidence presented at trial.

I have also assessed the interests and motives of the parties, whether questions are answered in a forthright and frank manner, whether their testimony was impeached in cross-examination and whether it is consistent with their examination for discovery evidence, whether they prevaricate or vacillate, whether they evade or argue or quibble, or whether they readily and candidly provide a response without focus on its implication to their position.”

I will make findings as to credibility in the same manner. I will consider the written evidence before me and determine to what extent it supports the testimony of the respective witnesses. The credibility of the witnesses on both sides of this dispute is in issue.

[90] Mehta and some of his witnesses, confirmed the accuracy of the pictures filed as evidence at tabs 57 and 58, testifying that the pictures provided an accurate representation as to what they observed on December 9, 2020. Drag and his witnesses testified that the pictures could not have been taken on the night of December 9, 2020 and filed corroborating evidence.

[91] As a witness, Schembri was argumentative and overly defensive. At times his memory was vague. He conceded that on December 9, 2020, he may have told Ghuman that Drag was out of town and not available to sign any documents until the next day. He acknowledged that on the evening of December 9th he had a telephone conversation with Khuman (allegedly overheard by Mehta and Singh) in which he became aggravated and used profanity.

[92] There were significant inconsistencies between the evidence of Schembri and Drag. Drag testified that he instructed Schembri to offer to Ghuman and Mehta a $35,000 abatement in the purchase price because of the deficiencies disclosed in the home inspection report. However, after receiving these instructions, he advised Ghuman his client would agree to a $25,000 abatement in price.

[93] Schembri testified that he emailed copies of all three of the draft amending agreements to Drag as per his duty as a real estate broker and agent. Drag testified he never received the documentation.

[94] As noted above, and I find it as a fact, Schembri told Khuman that Drag was out of town on the evening of December 9th. Drag testified he was home all evening, waiting for the phone to ring. He was disappointed that the deal was not firmed up. He denied that any documents were delivered to his door. He testified that he saw the waiver, for the first time, on the afternoon of December 10, 2020.

[95] These discrepancies challenge their credibility.

[96] In Schembri’s letter of December 11, 2020, as was noted above, it was said that Drag believed he had always acted professional and honourable in his decision and felt he had been more than accommodating. Drag believed the property and the furniture which was part of the sale, was worth $500,000 more in value and that:

“He has advised me that he will be firm on the Sale price and keeping his Original sign back of $2,550,000.

If your client is interested this will be a non-negotiable acquisition for this beautiful Estate home on 10 Acres.”

[97] Drag, who testified that he wanted a quick sale, and was prepared to agree to an abatement of the purchase price, now wanted considerably more for the property. It would appear there was a major shift of Drag’s position between December 9th and 11th, 2020.

WAS THE APS COMPLETED ON DECEMBER 2ND OR 3RD

[98] Counsel for Mehta submitted that it was not until December 3rd, 2020, when Drag initialled the APS, that the APS was finally executed. Therefore, the home inspection condition did not have to be waived until December 10th, at 11:59 pm. This issue was not raised by counsel for Mehta until the “11th hour”. On December 2, 2020, the APS had been signed by both parties and therefore executed, except for Drag’s failure to add his initials to the closing date. There was no suggestion that there was an issue regarding the closing date. In my opinion, the lack of one set of initials on a non-contentious matter was simply an oversight.

[99] Further the APS was first signed by Mehta and then delivered to Schembri, setting out a closing date of April 28, 2021. It was then executed by Drag. Accordingly, while Drag did not initial the closing date, it was a term of the APS when executed by him.

[100] I find that the APS was executed on December 2, 2020, and the time period to waive the home inspection condition expired at 11:59 p.m. December 9, 2020.

WAS THE WAIVER OF THE HOME INSPECTON CONDITION DELIVERED PRIOR TO 11:59 p.m. ON DECEMBER 9, 2020

[101] Paragraph 3 of the APS is entitled, “NOTICES” and dictates that, documents shall be given or received personally, or hand delivered to the Address for Service provided for the Acknowledgement paragraph or where a facsimile number or email address is provided herein, when transmitted electronically to that facsimile number of email address.

[102] Facsimile transmission is not relied upon by Mehta, as a means of delivery. The waiver was emailed on December 10, 2020, at 1:11pm.

[103] The address of the property was set out under Acknowledgement in the APS. Accordingly, the waiver could be, “given or received personally or hand delivered to the property.

[104] The home inspection condition was set out in Schedule A to the APS. It requires the buyer to give notice in writing, delivered to the Seller within 5 banking days.

[105] It is the evidence of Mehta and his witnesses, particularly Singh, that copies of the waiver were left at the front door of Schembri’s ReMax office and at the front or main door of the residence on the property (as well as other locations).

[106] In McKee v. Montemarano, 2009 ONCA 359, a buyer gave notice by leaving a copy of the waiver at the seller’s residence and delivering a copy of the waiver to the dual agent. In that case, the OREA form 100, upon which the agreement of purchase and sale was prepared, was different than the one before me.

[107] Paragraph 6 of the old OREA form 10 read in part:

“This offer, any counter offer, notice of acceptance thereof, or any notice shall be deemed given and received, when hand delivered to the address for service provided in the Acknowledgement below, or where a facsimile number is provided therein, when transmitted electronically to that facsimile number.”

[108] The trial judge ruled that paragraph 6 provided for only one method of notice and that was by personal service. There was a finding that it was insufficient to simply leave the notice at the seller’s property or by delivering it to the dual agent.

[109] The Court of Appeal was of the opinion that the phrase, “delivered to the seller” required actual delivery of the waiver to the seller. The Appeal Court agreed with the trial judge that leaving a copy of the waiver at the house or with the agent was not sufficient service and the appeal was dismissed.

[110] Counsel for Mehta distinguishes the McKee case, arguing the OREA form 100 has been modified. I agree. There is now an option to of delivery personally or delivered to the address for service provided for in the acknowledgement by hand delivering the waiver to the address for service set out under the title “Acknowledgement”. Therefore, personal service therefore is not the only manner in which a waiver can be served.

[111] High Tower Corporation v. Stevens et al., 2014 ONSC 2309, is a decision of my brother judge, Trimble J., who heard the matter sitting as a motion’s judge. OREA form 100, under consideration in High Tower, is identical to the one before me. However, in High Tower no address for service was set out under the title, “Acknowledgement”. Further no email addresses or facsimile numbers were provided following the notice clause.

[112] To deliver a waiver in the High Tower matter, the buyer had his lawyer fax to the seller’s lawyer waiving a condition on one of 2 properties. The buyer also delivered the waiver to one of the properties that was the subject of the proposed purchase but was not the seller’s residence.

[113] The motion judge ruled that the notice ought to have been delivered personally to the seller and that a fax between lawyers and the delivery to an address which was not that of the seller did not amount to delivery.

[114] The matter was appealed to the Ontario Court of Appeal (High Towers Corp. v. Stevens, 2014 ONCA 911.) The Court upheld the motion judge’s decision ruling that he did not err in finding that the vendor could avoid completing the sale transaction by relying on the purchaser’s failure to give notice of its waiver of conditions personally.

[115] The Appeal Court was of the opinion that since no address for service was set out under, Acknowledgement, personal service was required.

[116] WED Investments Limited v. Showcase Woodycrest Inc., 2021 ONSC 237 is a decision of Schabas J. Under consideration was the notice provisions in OREA form 500, which contains a notice provision identical to the current OREA form 100. It was held that email delivery of a waiver was sufficient given the conduct of the parties. The judge did not agree that personal service of the waiver was required.

[117] The decision was appealed, and the ruling can be found at WED Investments Ltd v. Showcase, 2022 ONCA 384. The only issue on the appeal was whether the delivery of a notice of waiver by email was satisfactory. The Appellant argued service had to be hand delivered, however, the Court of Appeal thought otherwise and dismissed the appeal.

[118] The Court had regard to the paragraph entitled “Notices”. It also had regard for a provision in Schedule A, which required notices to be in writing, delivered to the Seller within five banking days.

[119] The Court of Appeal concluded that WED complied with the terms of the Agreement of Purchase and Sale by emailing the notice of waiver to Showcase. At para. 66, the court makes reference to the requirement in Schedule A, noting it did not say how the written notice is be delivered

[120] However, the Court of Appeal said that if the delivery requirement in Schedule A is different than the delivery requirements found in para. 3, Schedule A would prevail.

[121] In the matter before me, I agree with the submissions of counsel for Mehta, that Schedule A does not set out how the notice is to be delivered to the Seller. The Notice provision does. Mehta was entitled to deliver the Notice of Waiver by personal service or hand delivered to the address for service set out under, the title, Acknowledgement. The methods of delivery were a choice. Hand delivery to the property did not require personal service.

[122] The issue before me is therefore, was the waiver hand delivered to the property at 1 Flaherty Lane, Caledon, being the address for service set out under, “Acknowledgement”?

[123] In this case there is no conflict between Schedule A and the paragraph in the APS entitled Notice. The address for service and Drag’s personal address is the same.

[124] Mehta and Singh testified that they attended at the property and Schembri’s office on the night of December 9, 2020, before 11:59 p.m. and delivered the waiver. Singh testified that at both locations he got out of the car and knocked on the door and announced who he was and his purpose for being there. He received no response and he testified that he left the documents at the door.

[125] Schembri and Drag testified that they found no documents at their respective doors next morning.

[126] As with the evidence of Drag and Schembri, I find there are significant credibility issues with respect to Mehta’s witnesses and their evidence of delivering the waiver to Schembri’s office and the property. I say that because I am troubled over the conflicting evidence regarding the pictures (tabs 57 & 58). I am unable to conclude, even on a balance of probabilities, that the pictures are an accurate representation of Schembri’s office and the property, as of December 9, 2020. I am unable to conclude the pictures were taken on December 9th and therefore I am unable to find that proper delivery of the waive occurred on or before December 9, 2020, at 11:59pm.

[127] What I do know is that, at the very least, electronic (email) delivery was made at 1:11 pm, December 10, 2020, when Ghuman emailed the waiver to Schembri, a fact relevant to the next ground for relief.

[128] I cannot conclude that the waiver of the home inspection condition was delivered on/or before December 9, 2020, at 11:59 pm.

LACK OF GOOD FAITH

[129] On this issue I agree with the submissions of counsel for Mehta that Drag and Schembri did not contractually, act in good faith and that, as a result, Drag breached the APS.

[130] I will not review all of the emails exchanged by Schembri and Ghuman but note that it is clear negotiations regarding an abatement of purchase price were ongoing well into the evening of December 9, 2020. I will however make repeated reference to a few of the emails.

[131] In an email of December 9, 2020, at 10:35 am, Schembri asks Ghuman,

“do you think I can approach my client with $40,000 reduction” (Tab 39)”.

[132] This email is interesting given that the third amending agreement called for a $40,000 abatement in the purchase price.

[133] At 12:41 p.m., December 9th, Schembri, on behalf of Drag, offers an abatement of $25,000 (Tab 41). Drag testified however, that earlier on the morning of December 9th, he instructed Schembri to offer an abatement of $35,000. In an earlier email that day, at 10:51 am, Ghuman advised his clients would accept a $70,000 abatement. It could be inferred that Drag’s instructions reflect an equal split of the $70,000 proposed abatement in price.

[134] At 6:59 p.m., December 9, 2020, Ghuman sent to Schembri, the third version of an amending agreement, signed by Mehta, prior to delivery, which calls for a $40,000 price abatement (Tab 52). The email to which the agreement was attached, read, in part:

“Re: firm and final amendment

I got it signed as per your commitment… the deal is firm now & send me the signed copy tomorrow.”

[135] Further, the third amending agreement stipulated that the terms of the agreement were irrevocable until December 10, 2020, at 12:30 p.m. Further, as with the first two amending agreements, the agreement deleted the condition of a home inspection. If the third amending agreement had been signed before 11:59 p.m., December 9th, there would be no need to deliver a waiver of the condition in order to firm up the deal. However, considering the extended period of irrevocability (to the next day) what impact did the third amending agreement have on the 11:59 p.m. December 9th expiry of the 5-day period to waive the home inspection condition?

[136] Bhasin v. Hrynew, 2014 SCC 71, is a decision of the Supreme Court of Canada. In the decision it was said that under the Common Law, there is an unsettled and incoherent body of law regarding good faith in contract law (para. 32).

[137] The court recognized that there is an obligation of good faith contractual performance (Para. 33).

[138] I quote,

“Commercial parties reasonably expect a basic level of honesty and good faith in contractual dealings. While they remain at arm’s length and are not subject to the duties of a fiduciary, a basic level of honest conduct is necessary to the proper functioning of commerce” (para. 60).

[139] It was said that there is a new common law duty to good faith performance of contracts (Para. 72).

[140] I quote,

I would hold that there is a general duty of honesty in contractual performance. This does not impose a duty of loyalty of disclosure or require a party to forego advantages flowing from the contract. It is a simple requirement not to lie or mislead the other party about one’s contractual performance. Recognizing a duty of honest performance flowing from the common law organizing principle of good faith is a modest, incremental step. The requirement to act honestly is one of the most widely recognized aspects of the organizing principle of good faith” (para 73).

[141] Finally, I quote,

“A summary of the principle is in order:

(1) There is a general organizing principle of good faith that underlies many facets of contract law.

(2) In general, the particular implications of the broad principle for particular cases are determined by resorting to the body of doctrine that has developed which gives effect to aspect of that particular types of situations and relationships.

(3) It is appropriate to recognize a new common law duty which applies to al contracts as a manifestation of the general organizing principle of good faith; a duty of hones performance, which requires the parties to be hones with each other in relation to the performance of their contractual obligations” (para. 93).

[142] Insistence on adherence to the terms of an offer of purchase and sale is not, in and of itself, a lack of good faith. If Schembri had advised Ghuman, in a timely fashion, that his client (Drag) would not agree to an abatement in price, Drag would have been entitled to rely on the strict terms of the APS and if Mehta failed to deliver a waiver by 11:59 pm December 9, 2020 Drag would be able to declare the APS, null and void.

[143] However, if misleading or dishonest representations were made by Schembri on behalf of Drag and relied upon by Mehta and/or his agent Ghuman, the duty of acting honesty and good faith may have been breached and, as in this case, give rise to a judgment for specific performance of the APS.

[144] 2343680 Ontario Inc. v. Bazargan, 2021 ONSC 6752, is a decision of Boswell J. who wrote, after reviewing decisions of the Supreme Court of Canada:

“The trilogy of cases, in fact, establish two new good faith doctrines: the duty to act honestly in the performance of contractual obligations and the duty to exercise contractual discretion in good faith” (para. 27).

[145] These authorities, simply put, stated that the parties must not lie and knowingly mislead each other.

[146] I have also reviewed and considered C.M. Callow Inc. v. Zelliger, 2020 SCC 45 in regard to a part actively misleading or deceiving the other party.

[147] Schembri was, at all material times, the agent for Drag. there was no dispute as to his ability to speak and act on behalf of Drag.

[148] For the following reasons, I find that Schembri, on behalf of Drag, purposely mislead Mehta and his agent Ghuman and thereby breached the obligation to act in good faith. In doing so I am, in part, relying on the inconsistencies of the evidence between Drag and Schembri.

[149] As noted above, the email sent by Ghuman to Schembri on December 9th, at 6:59 pm referred to the attached third amending agreement as a,

“firm and final amendment”.

[150] Thereafter Ghuman wrote,

“I got it signed as per your commitment… The deal is firm now and send me the signed copy tomorrow.”

[151] Ghuman referenced a commitment (on the part of Schembri) and concluded, “the deal is firm now”.

[152] I find that the email followed a five minute telephone conversation between Ghuman and Schembri, at 6:30 p.m. on December 9th (Fido phone records Tab 51). I infer that the 6:59 email and the attached third amending agreement was delivered as the result of this telephone conversation.

[153] Schembri did not respond, in writing, denying a firm and final deal or that he made no commitment or alleging some kind of misunderstanding. It would be reasonable therefore, for Ghuman and Mehta to believe there was an amending agreement acceptable to both sides and to rely on that belief. By not responding in writing, deniability can be maintained.

[154] I also find that the third amending agreement, was made irrevocable until December 10th at 12:30 because of Schembri’s representation to Ghuman that Drag was out of town on the evening of December 9th, a fact denied by Drag. Schembri in his testimony agreed that he may have made said Drag was out of town and I accept that he did. No other reasonable inference was suggested as a reason for the terms of the agreement to be irrevocable until the next day.

[155] I also rely on the subsequent efforts of Mehta and Ghuman to have Schembri confirm in writing that there was an acceptable amending agreement that would be executed by Drag the next day. I accept that it was reasonable for them to seek such an assurance because the time period for waiving the home inspection expired before Drag would be available to sign. There was a risk.

[156] I accept the evidence of Ghuman, Mehta and Singh that during a telephone conversation regarding written confirmation, Schembri sounded upset and aggravated and used profane language. Schembri when testifying, admitted to a telephone conversation in which he was aggravated for which he apologized.

[157] I accept that Schembri told Ghuman and the others listening to the call, that he would not provide written confirmation and said something to the effect of, they would have to rely on his word that they would have to rely on his word, or that he would honour his word.

[158] After December 9th, Schembri’s and Drag’s opinion was that the APS was null and void. They denied agreeing to the terms of the third amending agreement and submitted that the waiver of the home inspection condition was not waived within time.

[159] I find that Schembri on behalf of Drag made misrepresentations to make Ghuman (and Mehta) believe there was agreement as set out in the third amending agreement that would be executed the next morning, December 10th.

[160] At the very least the misrepresentations created a great deal of confusion and uncertainty.

[161] I accept that as a result of such misrepresentations, it would be reasonable to conclude and rely thereon, that the11:59 pm expiry of the time period to waive the home inspection condition was either deleted (retroactively) and/or would not be relied upon or enforced by Schembri and Drag.

[162] Nevertheless, after the telephone conversation with Schembri, subsequent to the delivery of the third amending agreement by email at 6:59 pm, Mehta, Ghuman and Singh were unsure of the status of the APS and the third amending agreement and became concerned.

[163] Could they rely on what Schembri said or should they attempt to deliver a waiver of the home inspection condition? What was the right course of action?

[164] As a result of the uncertainty, Mehta, Ghuman and Singh decided to seek the advice of others in the real estate business as to what to do and how to do it. Based upon the advice they received at around 10:30 pm, 90 minutes before the expiry of the time period in which to serve the waiver, there is some evidence that it was decided to attempt to deliver the waiver personally, notwithstanding the hour and the fact that the property was located out of town, in Caledon, as was Schembri’s office. While I have already ruled on the delivery issue, nevertheless I find that the ability to properly deliver a waiver was compromised and rushed.

[165] Drag testified as to his disappointment regarding Mehta’s timely failure to deliver the waiver. I, however, do not note any disappointment in Schembri’s letter of December 11, 2020, to Ghuman by which Drag was said to be firm on a new sale price of $2,550,000 (tab 67).

[166] On these facts I conclude that Schembri and Drag, did not act in good faith and breached their duty of acting of good faith and made misrepresentations, as to an accepted amending agreement and Drag’s unavailability to execute it until the next morning. These misrepresentations were made by Schembri, on behalf of Drag and were intended to be relied upon by Mehta and Ghuman. They were, in fact, relied upon by Mehta and Ghuman. They were made in an effort to have the APS declared null and void. Mehta’s reliance on the misrepresentations, delayed and compromised delivery of the waiver of the home inspection condition, to his detriment.

CONCLUSION

[167] The misrepresentation that Drag was out of town on the evening of December 9, 2020 and was not available to execute the amending agreement until the next day, infers that the time period for the waiving the home inspection condition would, at least, be deferred an additional day. Drag on that basis alone should not be able to declare the APS null and void. The waiver, without a doubt, was delivered the next day by email to Schembri.

[168] As noted above, Mehta seeks the remedy of specific performance. The consensus was that if successful, Mehta would be entitled to specific performance. Therefore, no evidence was called in regard to the “uniqueness” of the property. However, from the pictures included with the listing it is clear the property has unique qualities. It can be said to be a rural estate home, located on a large and beautiful tract of property. I accept the property can be considered, “unique”.

[169] Mehta is entitled to and granted judgement for specific performance of the sale by Drag to Mehta of 1 Flaherty Lane, Caledonia, in accordance with the terms of the APS, dated December 2, 2020, with the necessary adjustments in terms resulting from the passage of time.

[170] If either party seeks costs, and the parties cannot agree on costs, I will accept from the party seeking costs, written submissions, of no more than four pages, double spaced, together with a cost outline. These submissions to be delivered within 21 days of the release of this judgment. The party responding to a claim for costs has 14 days thereafter to do so, in writing, of no more than four pages, doubled spaced together with a cost outline.

[171] There shall be no submissions in reply without leave. All submissions may be filed by sending them by email to my judicial assistant, Melanie Powers, at melanie.powers@ontario.ca.

Bielby J.

Released: August 5, 2022

COURT FILE NO.: CV-21-1589-00

DATE: 20220805

ONTARIO

SUPERIOR COURT OF JUSTICE

B E T W E E N:

BERNARD DRAG

Plaintiff/Defendant by Counterclaim

– and –

ROHIT MEHTA

Defendant/Plaintiff by Counterclaim

REASONS FOR JUDGMENT

Bielby J.

Released: August 5, 2022