COURT FILE NO.: CV-19-142640
DATE: 20220210
ONTARIO
SUPERIOR COURT OF JUSTICE
BETWEEN:
Park Avenue Homes Corp.
Plaintiff
– and –
Aamna Malik
Defendant
Kristina Bezprozvannykh, for the Plaintiff
Shahzad Siddiqui, for the Defendant
HEARD: November 19, 2021
REASONS FOR DECISION
DE SA J.:
Overview
[1] The Plaintiff, Park Avenue Homes Corp. (the “Plaintiff” or “Park Avenue”), moves for summary judgment against the Defendant, Aamna Malik (the “Defendant” or “Malik”), for her breach of an Agreement of Purchase and Sale (“APS”).
[2] On or about February 28, 2017, Malik entered into an Agreement of Purchase and Sale (the “APS”) with Park Avenue for the property located at 59 Robb Thompson Road, Mount Albert, Ontario (the “Property”).
[3] Malik failed to close on the purchase of the Property. The Plaintiff had to sell the Property to another purchaser for substantially less money given a decline in the real estate market.
[4] The Plaintiff now seeks forfeiture of the deposit, as well as additional damages which resulted from the breach in the amount of $98,936.56.
[5] Malik resists summary judgment maintaining that there are issues for trial, including whether or not the Plaintiff misrepresented the value of the Property.
[6] Having reviewed the record and having considered the arguments advanced by the Defendant, I am satisfied that summary judgment in favour of the Plaintiff is warranted. The deposit is declared forfeited and damages are awarded in favour of the Plaintiff in the amount of $98,936.56.
[7] The reasons for my decision are outlined below.
Summary of Facts
The Agreement
[8] On February 25, 2017, the Defendant, Aamna Malik (“Malik” or the “Defendant”) was looking to purchase her first home. Malik consulted Balamurale Nagarajah (“Nagarajah”) who was operating as both a real estate agent and a mortgage agent at the time.
[9] Nagarajah told Malik about an opportunity to purchase a new build, semi-detached home form Park Avenue (the “Plaintiff” or “Park Avenue”).
[10] On or about February 28, 2017, Malik entered into an Agreement of Purchase and Sale (the “APS”) with Park Avenue for the property located at 59 Robb Thompson Road, Mount Albert, Ontario (the “Property”). Pursuant to the APS, Malik agreed to purchase the Property upon the following material terms:
(a) The Vendor under the APS was Park Avenue;
(b) The Purchaser under the APS was Malik;
(c) The purchase price for the Property was $788,900;
(d) Deposits were required to be paid on various dates, all in the total of $60,000;
(e) The closing date for the agreement was stated to be February 22, 2018; and
(f) Park Avenue had the ability to extend the time for closing.
[11] Upon acceptance of the APS, Malik paid an initial deposit of $15,000 and subsequently made three further payments of $15,000, totaling $60,000.
[12] While initially scheduled for February 2018, the closing of the APS was extended to October 19, 2018 on the consent of the parties.
Malik Breaches the Agreement
[13] Nagarajah, a Senior Mortgage Agent for Mortgage Alliance, provided Malik a mortgage commitment for the Property, which required a deposit of $157,780.00, and provided a loan amount of $631,120.00.
[14] According to Malik, she tried to contact Nagarajah in June 2018 regarding the commitment, however, he did not respond.
[15] By June of 2018, the real estate market had dropped. According to Malik, she went to other financial institutions and they advised that the appraised value of the Property was closer to $600,000. Based on the appraised value, the representatives from these other financial institutions advised that Malik had two options:
(a) her husband, who was not a Canadian resident, could purchase the Property as a non-resident by putting down 35% and, in addition, Malik had to show that she had enough cash to cover mortgage payments for the following year; or,
(b) Malik could pay the deficit between the purchase price and the appraised value, which amounted to approximately $188,900, and she would have to pay an additional down payment of $60,000.
[16] Neither of these options were possible for Malik.
[17] On or about September 25, 2018, Malik contacted Jenny Jin (“Jenny”), an independent realtor, via email about the assignment clause in the Agreement.
[18] However, when Malik met with Jenny on September 27, 2018, she told her that the best that Malik could do was list the house for $600,000 - $620,000 given the market at the time.
[19] When she reached out to Park Avenue, Park Avenue indicated that she could obtain the mortgage at the lower, appraised value, provide an additional deposit of $50,000 to Park Avenue, and receive a vendor take back mortgage from the builder for $80,000 for a two year term. Malik was not interested in this option.
[20] On October 16, 2018, Malik advised that she would not be attending the pre-delivery inspection as she was not able to close her purchase of the Property.
[21] On October 18, 2018, Park Avenue’s lawyers sent a letter to Malik confirming that:
(a) Park Avenue accepted Malik’s email and anticipatory breach of the APS;
(b) Park Avenue was treating the APS as at an end;
(c) the deposits were forfeited;
(d) Park Avenue would be selling the Property; and
(e) Park Avenue would be bringing an action against Malik for its damages.
The Re-Sale
[22] After the aborted sale, Park Avenue again listed the Property for sale. After a number of months on the market, Park Avenue entered into a new purchase and sale agreement on May 27, 2019 in which it was agreed that the Property would be sold for $633,900 and closing would occur on August 7, 2019. This was the highest offer Park Avenue was able to obtain given the current market conditions. The property closed on August 7, 2019.
Market Value of the Property at the time of the Sale to the Defendant
[23] The original purchase price for the Property was $788,900.
[24] Malik has filed an expert report indicating the market value of the Property at the time of the Agreement was $680,000.
[25] In response, Park Avenue filed evidence of comparable properties they sold as part of the same development around the same time Malik entered into the APS. These other properties were sold for prices between $776,900 to $878,900.
[26] The record indicates that in the summer and fall of 2017, there was a slump in the real estate market, and consequently, property prices fell in the area the Property is located.
Analysis
Test: Motion for Summary Judgment
[27] Pursuant to Rule 20.04(1) of the Rules of Civil Procedure, R.R.O. 1990, Reg. 194, the court shall grant summary judgment if it is satisfied there is no genuine issue requiring a trial. Animating the interpretation of 20.04(1) is Rule 1.04 which requires that the rule be liberally construed to secure the just, most expeditious and least expensive determination of a proceeding on its merits having regard to the complexity of the issues and the amounts involved.
[28] The judge in deciding whether to grant summary judgment must ask: can the full appreciation of the evidence and issues that is required to make dispositive findings be achieved by way of summary judgment, or can this full appreciation only be achieved by way of trial? A trial is not required if the judge on the motion can 1) achieve a fair and just adjudication; 2) make the necessary findings of fact; 3) apply the law to those facts; and 4) the motion is a proportionate, more expeditious and less expensive means to achieve a just result rather than going to trial. As the Supreme Court explained in Hryniak v. Mauldin, 2014 SCC 7, [2014] 1 SCR 87, at para. 50:
These principals are interconnected and all speak to whether summary judgment will provide a fair and just adjudication. When a summary judgment motion allows the judge to find the necessary facts and resolve the dispute, proceeding to trial would generally not be proportionate, timely or cost effective. Similarly, a process that does not give a judge confidence in her conclusions can never be the proportionate way to resolve a dispute. It bears reiterating that the standard for fairness is not whether the procedure is as exhaustive as a trial, but whether it gives the judge confidence that she can find the necessary facts and apply the relevant legal principals so as to resolve the dispute. [Emphasis added.]
The Defendant’s Breach of the Agreement of Purchase and Sale
[29] In this case, despite the fact that Park Avenue was ready, willing and able to close the transaction, Malik refused to close the agreement and accordingly, breached the APS.
[30] Malik clearly indicated her intention to repudiate the APS. In the circumstances, the breach is clear and the Plaintiff is entitled to damages: Spirent Communications of Ottawa Ltd. v. Quake Technologies (Canada) Inc., 2008 ONCA 92, at paras. 35–37.
[31] According to the Defendant, it was the misrepresentation made by Nagarajah about the value of the Property which prevented the Defendant from acquiring the requisite financing and closing the transaction. The Defendant submits that there is a genuine issue requiring a trial in respect of the following:
a. the representations made by the agent, Nagarajah, regarding the value of the Property and projected increase;
b. the capacity in which those representations were made by Nagarajah; and,
c. whether Nagarajah’s representations bind the principal, Park Avenue.
[32] The Defendant submits that Park Avenue’s damages were caused by the inflated purchase price. Even if the Plaintiff is entitled to damages, the Defendant submits that the alleged damages suffered are more appropriately shown as the difference in the appraised value of $680,000 and the subsequent sale price of $633,900 which amounts to $46,100. According to the Defendant, forfeiture of the deposit would overcompensate the Plaintiff for its losses.
[33] First of all, there is nothing in the materials to indicate Nagarajah was a representative or agent for Park Avenue. Nagarajah was a Senior Mortgage Agent for Mortgage Alliance.
[34] In any event, I am not satisfied that the breach was occasioned by any misrepresentations regarding the value of the Property. The materials filed by the Plaintiff indicate that Plaintiff sold various properties in the development for prices close to the purchase price of the Property. Even if the Plaintiff paid what may appear to be an “inflated price”, that was a choice made by the Plaintiff. There is nothing which would rise to the level of unconscionability with respect to the APS in this case.
[35] In my view, it is clear that the decrease in the value of the Property was a result of a general decline in the real estate market. By purchasing a home, the Plaintiff assumed the risk of fluctuations in the market value of the Property. Redstone Enterprises Ltd. v. Simple Technology Inc., 2017 ONCA 282, at para. 33. A drop in the market for real estate is not unforeseeable and not a valid basis for being let out of an Agreement of Purchase and Sale. See Perkins v. Sheikhtavi, [2019] O.J. No 5993, Burkshire Holdings v. Ngadi, [2021] O.J. No. 2781, and Forest Hill Homes .v Ou, [2019] O.J. No. 3781.
[36] In the circumstances, I see no basis to deny the damages sought by the Plaintiff in this case. The Plaintiff’s case has clearly been made out and there is no genuine issue for trial.
Calculation of Damages
[37] The general principle relating to the assessment of damages in a contract agreement of purchase and sale, and assuming the vendor has taken reasonable steps to protect the property following the breach, is that the Plaintiff is entitled to be put in a position it would have been in if the contract had been performed, so far as money can do.: Bang v. Sebastian, 2018 ONSC 6226, at para. 40.
[38] 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.
[39] 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.
[40] In this case, given the difference in the first sale price and the price paid on the subsequent sale, Park Avenue suffered a loss of bargain in the amount of $155,000. Park Avenue suffered additional losses as follows:
(a) Legal fees were incurred to close the second transaction in the amount of $974.72; and
(b) extra construction financing costs because of the delay in closing in the amount of $7,611.84.
(c) Park Avenue paid a commission of $19,017 on the resale to Meena and Megally. Had the sale with Malik gone through, Park Avenue would have been required to pay a real estate commission of $23,667. As such, Park Avenue saved $4,650 on commissions due to the failed sale with Malik, an amount that should be deducted from the total loss suffered by Park Avenue.
[41] After deducting the deposits paid by Malik and the saving on commissions noted above, the total amount of damages suffered as a result of Malik’s breach of the APS is $98,936.56.
Disposition
[42] Summary judgment is granted in favor of the Plaintiff. The Plaintiff is entitled to the forfeiture of the deposits in this matter in the amount of $60,000 and the Defendant is ordered to pay damages to the Plaintiff in the amount of $98,936.56.
[43] I will receive costs submissions from the Plaintiff within 3 weeks of this decision. The Defendant will have one week thereafter to respond.
Justice C.F. de Sa
Released: February 10, 2022
ONTARIO
SUPERIOR COURT OF JUSTICE
BETWEEN:
Park Avenue Homes Corp.
Plaintiff
– and –
Aamna Malik
Defendant
REASONS FOR DECISION
Justice C.F. de Sa
Released: February 10, 2022