COURT FILE NO.: CV-21-00001702
DATE: 04022022
ONTARIO
SUPERIOR COURT OF JUSTICE
BETWEEN:
REBECCA CANNON and JORDYN GREENHAM
Plaintiffs
– and –
PHILIP GERRITS and MARYANN GERRITS
Defendants
Kyle C. Armagon, for the Plaintiffs
R.L. Youd and T. Lampropoulos, for the Defendants
HEARD: January 14, 2022
REASONS FOR DECISION
M.L. EDWARDS, R.S.J.:
Overview
[1] An owner of a residential property in a so-called “hot” real estate market will always want to obtain the highest sale price for his or her property. The news media and unfortunately the courts, are full of stories about failed real estate transactions and the consequences that flow from a failed transaction The motion before this court is a motion by the Plaintiffs for a certificate of pending litigation (CPL). When the motion was heard, I advised counsel that I would release my decision with reasons to follow. Counsel already have my order granting the CPL These are my reasons for making that Order.
The Facts
[2] The Defendants are the owners of a residential property municipally described as 992 Catskill Drive in Oshawa (“the Property”). The Defendants have owned this property and resided there for approximately 25 years.
[3] In June 2021, the Defendants decided to sell their home and retained Shawn Lepp (“Mr. Lepp”), of Keller Williams Energy Lepp Group Real Estate Brokerage (the Brokerage) to act as their real estate agent.
[4] Mr. Lepp described a strategy for the sale of the property with the Defendants. Mr. Lepp’s strategy gave the Defendants an expectation that more than one offer would be received for the property and that all offers would be considered on June 14, 2021. The Defendants, in their affidavit evidence, state that they were of the understanding based on what Mr. Lepp told them that any offer to purchase the property would be accompanied by a substantial deposit evidenced by a certified cheque.
[5] The property was listed on the Multiple Listing Service (“MLS”) on June 9, 2021 for $850,000. The property was showcased to potential buyers on June 10, 2021. Within a day of listing there was significant interest in the property, generating multiple so-called “bully offers”. These offers were submitted with the intention to purchase the property without having to contend with other bidders on the so-called offer date of June 14, 2021.
[6] On June 11, 2021, the Defendants were contacted by Mr. Lepp indicating that the Plaintiffs had submitted an offer for $1,100,000. The Defendants maintain in their evidence that they were pressured by Mr. Lepp to accept the offer. An agreement of purchase and sale for the purchase of the property was entered into between the Plaintiffs and the Defendants on June 11, 2021 (hereinafter “The Agreement”).
[7] The property is described as a four-bedroom home located on a 50-foot lot which backs onto the Deer Valley Park in the neighbourhood of Northglen in Oshawa.
[8] The agreement required a deposit from the Plaintiffs (the Deposit Term). The agreement specifically provided:
DEPOSIT: Buyer submits upon acceptance one hundred thousand dollars [CDN$] 100,000 by negotiable cheque payable to Keller Williams Energy Lepp Group Real Estate, Brokerage “deposit holder” to be held in trust pending completion or other termination of this Agreement and to be credited toward the Purchase Price on completion. For the purposes of this Agreement, “Upon Acceptance” shall mean that the Buyer is required to deliver the deposit to the Deposit Holder within 24 hours of the acceptance of this Agreement. The parties to this Agreement hereby acknowledge that, unless otherwise provided for in this Agreement, the Deposit Holder shall place the deposit in trust in the Deposit Holder’s non-interest bearing Real Estate Trust Account and no interest shall be earned, received or paid on the deposit. [Emphasis added]
[9] On June 12, 2021, the Plaintiff Jordyn Greenham delivered a personal cheque in the amount of $100,000 to the brokerage as required by the deposit term. The brokerage confirmed the receipt of the cheque via email on the same date.
[10] The Defendants maintain that they understood from Mr. Lepp that the deposit would be a certified cheque. The Defendants insisted on a certified cheque. By the end of June 14, 2021, a certified cheque had not been received and on the evening of June 14, 2021, the Defendants advised Mr. Lepp by email that they no longer wanted to proceed with the sale of the property.
[11] On June 15, 2021, not knowing of the Defendants’ position with respect to a certified cheque, the Plaintiffs delivered a certified cheque to the brokerage. On June 18, 2021, the Plaintiffs were advised by the Defendants that the agreement had been terminated.
Position of the Plaintiffs
[12] The Plaintiffs claim an interest in land, specifically the property, and as such seek a (“CPL”). The Plaintiffs argue that the court in exercising its discretion must do so in equity and look at all relevant matters between the parties in determining whether a CPL should be granted.
[13] As it relates to the question of the “uniqueness” of the property, the Plaintiffs in their evidence state that they were intent on purchasing a 50-foot property with a four bedroom home in the Northglen neighbourhood of Oshawa which backed onto a park. The Plaintiffs argue the fact that the property was adjacent to and overlooked a park establishes the uniqueness of the property such that a CPL should be granted.
Position of the Defendants
[14] The Defendants argue that the equities weigh in their favour and that a CPL should not be granted. The Defendants argue that the property is not unique and submitted to the court evidence of a number of other properties of a similar nature to that which the Plaintiffs had purchased. As well, the Defendants argue that damages are an appropriate substitute and are easily calculable. Apart from the Plaintiff’s claim for moving and other expenses, the Defendants argue that damages in this case would be calculated on the difference between what the Plaintiffs might pay for another similar property and what they would have paid for the Defendants’ property had the agreement closed.
[15] The Defendants also argue that there is no triable issue, in that the agreement is unenforceable because the Plaintiffs never delivered the deposit in a certified form within 24 hours of the parties having executed the agreement. They further argue that there is no evidence that the Plaintiffs even delivered a personal cheque to the brokerage.
Analysis
[16] The principles which the court must apply in determining whether to allow for the issuance of a certificate of pending litigation are well summarized in a decision of Ryan Bell J. in Canadian Western Trust Company v. 1324789 Ontario Inc., 2019 ONSC 4789. As in this case where the motion seeking the issuance of a certificate of pending litigation is brought on notice, the test is the same as on a motion to discharge a certificate of pending litigation. The circumstances in which the court may make an order discharging a certificate of pending litigation are set forth in s. 103(6) of the Courts of Justice Act. The first issue that the court must determine is whether or not the Plaintiffs’ claim to an interest in land meets the threshold requirement, i.e. whether the claim to an interest in land is reasonable and at least raises a triable issue.
[17] The Plaintiffs in this case submitted an agreement of purchase and sale for the purchase of the property. The agreement was accepted by the Defendants. The Plaintiffs, in my view, have met the threshold test of whether there is a claim by the Plaintiffs in the property. Having determined the threshold requirement, the factors this court must consider are set forth in Canadian Western Trust Company at para 15 as follows:
• whether the plaintiff is a shell corporation;
• whether the land is unique;
• the intent of the parties in acquiring the land;
• whether there is an alternative claim for damages;
• the ease or difficulty in calculating damages;
• whether damages would be a satisfactory remedy;
• the presence or absence of a willing purchaser; and
• the harm to each party.
[18] The principles which guide the court in determining whether to issue a certificate of pending litigation were also reviewed in a decision of Master Glustein (as he then was) in Perruzza v. Spatone, 2010 ONSC 841. Amongst those principles, is the requirement that the court must exercise its discretion in equity and look at all relevant matters between the parties in determining whether a certificate of pending litigation should be granted or vacated. None of the factors are determinative. All of the factors must be weighed, and the court must then make a determination that is based on an exercise of discretion in equity.
[19] Dealing with the question of whether or not there is an enforceable agreement, the Defendants’ position that the Plaintiffs failure to deliver a certified cheque somehow gave the Plaintiffs the right to terminate the agreement is, in my view, fundamentally flawed. Whatever Mr. Lepp may have told the Defendants in terms of his normal practice (which required a substantial deposit evidenced by a certified cheque), the actual agreement signed by the Defendants - as evidenced by the deposit term, only requires the Plaintiffs to submit a deposit in the form of a “negotiable cheque”. There is nothing in the agreement which requires the Plaintiffs to submit a certified cheque. As to the suggestion that there is no evidence that the Plaintiffs even submitted a negotiable cheque in the amount of $100,000, again the evidence in my viewpoints in the complete opposite direction. The Plaintiffs submitted in evidence an email dated June 12, 2021 at 12:02 p.m. The email is from Laurel Kimball, front desk Keller Williams Energy Real Estate Brokerage, and was sent to Mr. Lepp and stated:
Good afternoon Shawn
Jordan Greenham, buyer for 992 Catskill, has dropped off a personal cheque as per our phone conversation. He will bring Certified cheque on Monday to replace the personal cheque.
Once this has been received, we will return the personal cheque to him and issue the proper receipt at that time.
[20] While the Defendants may argue that the Plaintiffs did not submit a deposit cheque as required by the agreement, the uncontradicted evidence from the Plaintiffs’ real estate brokerage firm establishes the contrary. Significantly, the Defendants chose not to put in any evidence from Mr. Lepp or anyone else from the brokerage that would contradict the Plaintiffs’ position. In my view, while this may ultimately become an issue for the trial judge, the evidence presented on this motion in my view, at least from an equitable perspective, is far more favourable to the position of the Plaintiffs than that asserted by the Defendants.
[21] Both parties to this litigation submitted affidavit evidence. Cross-examinations on their affidavits took place and the evidence of the Defendant Maryann Gerrits was placed before the court. The following exchange assists in understanding the real reason why the Defendants refused to close on the agreement. The Defendants wanted to obtain a higher purchase price for the residence. The extract that I refer to in this regard I reproduce below:
- Q. Would you agree that that’s a unique selling feature, the fact that your house backs onto a park and is a 50-foot lot?
A. Well, are you suggesting that that’s the only reason why they want my house, because it backs onto a park?
- Q. So ---
A. Because it goes both ways. I’m not saying that that’s not a feature. That – that’s a lovely feature, but is that the only feature they want my house – why they want my house?
The bottom line is, Kyle, I wanted a certified cheque. The liberties that Shawn Lepp took were not my liberties, not his to take on my property. I waited until after my offer day to receive a certified cheque which I lost my offer day. Who knows what the potential of that offer day would have been and if they didn’t have their deposit until after my – my offer day, they should have came in on Monday, June the 14th and placed their offer then. They knew what their banking system was. They knew that they couldn’t get a certified cheque; and they should have came back after my offer day to submit their offer with everybody else’s --
- Q. Okay.
A. – so, that I could gain the most value for my house. Isn’t that what we all want when we sell our house? And they robbed me of that, and I have no idea whether they sold -- or had a good faith, personal cheque, or anything otherwise. I’ve never seen anything.
[22] The Defendants may have believed based on representations from Mr. Lepp that they would receive a certified cheque accompanying the agreement from the Plaintiffs. The agreement that they signed, however, does not require a certified cheque. The Plaintiffs, on the evidence before this court, delivered the deposit required by the agreement as evidenced by the email from the front desk representative of the brokerage-a real estate brokerage firm that was representing the Defendants.
[23] The Defendants wanted the highest possible purchase price for their residence. There is nothing wrong with an owner of a property wanting the highest possible purchase price for their home. Once an agreement is signed, however, there are legal obligations. While the Defendants may have wanted to “gain the most value” for their home and they may have felt that they were robbed of that opportunity, whatever complaints the Defendants may have do not lie with the Plaintiffs. The equities, in my view of this case, strongly favour the Plaintiffs.
[24] The position taken by the Defendants if this court accepted their arguments would allow the owner of a property to simply repudiate a binding agreement of purchase and sale, leaving the owners the opportunity to obtain an even higher purchase price in the rising real estate market that we are presently confronted with.
[25] I am satisfied based on the Plaintiffs’ evidence that they purchased the property at least in part because the property abutted a public park. None of the properties submitted as comparables by the Defendants abutted a park. While it will up to the trial judge to make a final determination in this regard I am satisfied that a residential property in a rising real estate market that abuts a public park may make the property unique and as such specific performance may be awarded to the Plaintiffs.
[26] While the Plaintiffs have claimed in the alternative damages, the comments of Corbett J. in Ghuman v. 1368394 Ontario Limited, 2007 ONSC 27026, at para. 10, are worth repeating:
The fate of a CPL should not depend upon counsel’s drafting choice to claim damages in the alternative. It is cogent to argue that one is entitled to specific performance, and yet ask for damages in the alternative, if the court is not prepared to grant the equitable remedy. Similarly, simply because a party does not claim damages as an alternative remedy does not mean that damages would not be an adequate remedy. The proper question for the court, on a motion such as this, is whether, in fact, it would be just to limit the plaintiff to a remedy in damages. In assessing this question, the court should consider whether the plaintiff is entitled, in fact and in law, to the remedy of specific performance or declaratory relief to the same effect.
[27] While the court should not make factual determinations that could potentially impact on the ultimate outcome at trial, as I have already indicated the evidence before this court leads me to conclude that the Plaintiffs have established a reasonable interest in land and that the agreement did not contemplate a deposit in the form of a certified cheque. The Defendants chose to effectively repudiate the agreement adopting the words of the Defendant Maryann Gerrits, “so, that I could gain the most value for my house. Isn’t that what we all want when we sell our house?”
[28] In my view, the equities of this case strongly favour the issuance of a certificate of pending litigation.
[29] As I indicated to the parties when I granted the motion for a certificate of pending litigation, I also indicated that I would case manage this case. While this is a relatively uncomplicated real estate transaction it is not one that should be allowed to languish, and as such as I have advised counsel I will case manage this action so that it can be ready for trial in the shortest time possible.
[30] If the parties cannot agree on costs, they should submit written submissions limited to three pages in length no later than February 20, 2022. If written costs submissions are not received within that timeframe the court will assume that the parties have resolved the issue of costs.
Regional Senior Justice M.L. Edwards
Released: February 4, 2022
ONTARIO
SUPERIOR COURT OF JUSTICE
BETWEEN:
REBECCA CANNON and JORDAN CANNON
Plaintiffs
– and –
PHILIP GERRITS and MARYANN GERRITS
Defendants
REASONS FOR DECISION
The Honourable Regional Senior Justice M.L. Edwards
Released: February 4, 2022