Court File and Parties

COURT FILE NO.: CV-19-00140891

DATE: 31012022

SUPERIOR COURT OF JUSTICE - ONTARIO

RE: Farhad Masoomi also known as Farhad Massomi, Plaintiff

AND:

Liang Qin Chen and Your Community Realty Inc. o/a Royal LePage Your Community Realty a.k.a. Royal LePage Your Community Realty, Brokerage, Defendants

BEFORE: Regional Senior Justice M.L. Edwards

COUNSEL: Mark A. De Sanctis, Counsel, for the Plaintiff

Lian Quin Chen, Self-Represented Defendant

HEARD: Virtually, January 26, 2022

ENDORSEMENT

Overview

[1] The biggest investment that most people will ever make during their lifetime is the purchase of a home. Most, but not all purchasers, will require mortgage financing to purchase a residence. The purchase of a residence usually entails the execution of a standard form of Agreement of Purchase and Sale. Where mortgage financing is required to complete a transaction, it is not uncommon for a purchaser to insert a condition that the purchase is conditional on obtaining financing. In recent years, the frenzy of the real estate market has often caused purchasers to present a so-called “clean offer” that is not conditional on financing or a home inspection. Purchasers who continue to adopt this practice without secure mortgage financing do so at their peril. The facts of this case, unfortunately, demonstrate this unfortunate outcome for the Defendant.

The Facts

[2] The Defendant, Liang Qin Chen (hereinafter “Chen”), entered into an Agreement of Purchase and Sale (“the APS) to purchase the residential property located at 30 Rougecrest Drive, Markham, Ontario (“the Property”). The closing date for the APS was June 30, 2017. The APS as originally drafted contained a Schedule A which included a provision that the offer was conditional on Chen arranging financing. This condition was struck out by both the Plaintiff and Chen.

[3] Prior to the closing date, Chen’s real estate solicitor wrote to the Plaintiff’s real estate solicitor indicating that Chen refused to close the transaction for the property due to financing concerns.

[4] Chen did not file any sworn evidence in opposition to the Plaintiff’s motion for summary judgment. This state of affairs was despite the fact that this matter had been before Lavine J. on two prior occasions, the most recent being October 15, 2021 when Lavine J. gave Chen an indulgence to allow him one month to file responding materials.

[5] What Chen did file was an unsworn two-page document which in part states:

On June 29, 2017 my lawyer sent the letter to the plaintiff lawyer, I has been unable to obtain financing sufficient for the purchase of the property. I tried multiple banks and tried to get a mortgage because the market value of this property was too high and the selling price was too high, at that time, the mortgage policy was tightened and I couldn’t get the mortgage.

[6] Despite the tender by the Plaintiff’s real estate solicitor on Chen’s real estate solicitor, this transaction did not close as required by the APS on June 30, 2017.

[7] The property was ultimately re-listed by the Plaintiff and it was sold on October 10, 2017 for $1,337,500. The uncontradicted evidence of the Plaintiff is this was the highest offer received in relation to the re-listing of the property.

[8] The Plaintiff moves for summary judgment for the difference in the purchase price between that set forth in the APS and the ultimate sale price of the property. The Plaintiff also seeks damages for the carrying costs between the closing date of the APS and the ultimate sale on October 10, 2017.

Analysis

[9] The evidence in this case is uncontradicted. On June 29, 2017, Chen’s real estate solicitor wrote to the Plaintiff’s real estate solicitor confirming that Chen refused to close as required by the APS because of the inability of Chen to obtain financing. It is beyond dispute that the Plaintiff, through his real estate solicitor tendered on Chen’s real estate solicitor, Chen is in breach of his obligations under the APS and, as such, the Plaintiff is entitled to damages.

[10] There is no evidence before this court that the Plaintiff has failed to properly mitigate his damages. Specifically, there is no evidence to suggest that the re-listing of the property was delayed. There is no evidence to suggest that the ultimate sale price of the property was unreasonable. The Plaintiff is therefore entitled to recover the difference between the sale price negotiated by Chen as reflected in the APS, less the actual sale price of the property. As such, the Plaintiff is entitled to recover damages fixed in the amount of $162,500.

[11] The Plaintiff also claims for the costs associated with the delay in the closing of the sale of the property. Those costs are itemized as follows:

a. additional mortgage payments - $9,852.14;

b. additional prorated property taxes - $1,370.66;

c. prorated hydro charges - $151.94;

d. prorated gas charges - $108.88;

e. additional home insurance - $300.53.

[12] The Defendant Chen has filed no evidence to suggest that these additional costs incurred by the Plaintiff were unreasonably incurred and were not causally linked to the breach of the APS. In my view, these additional costs are reasonable and as such the Plaintiff is entitled to recover total damages against Chen in the amount of $174,284.15.

[13] The Defendant Chen has already paid a deposit of $50,000 which will be offset as against the aforesaid damages. As such, the Defendant Chen must pay to the Plaintiff the sum of $124,284.15. The deposit funds presently held by the Defendant Royal LePage are to be released to the Plaintiff , together with accrued interest.

[14] As for the issue of pre-judgment and post-judgment interest as well as the issue of costs, the parties are invited to submit written submissions limited to no more than three pages, which submissions are to be received by the court no later than February 20, 2022. If submissions are not received within that timeframe the court will consider that these issues have been resolved between the parties.

Regional Senior Justice M.L. Edwards

Date: January 31, 2022