Court File and Parties
COURT FILE NO.: CV-22-00687572-0000 DATE: 20230628 SUPERIOR COURT OF JUSTICE - ONTARIO
RE: MILAN GRKAVAC and DESPINA ILIADIS, Plaintiffs – and – BIMAL MAN BASNET, SARASWATI PANDEY BASNET, and ZOLO REALTY INC., Defendants
BEFORE: E.M. Morgan J.
COUNSEL: D. Gordon Bent, for the Plaintiffs Bikram Singh Bal, for the Defendants, Bismal Man Basnet and Saraswati Pandey Basnet
HEARD: June 26, 2023
Amended Reasons for Decision
[1]
Overview
The Plaintiffs were vendors and the Defendants, Bismal Man Basnet (properly spelled Bimal Man Basnet) and Saraswati Pandey Basnet (the “Basnets”), were purchasers in an aborted sale of residential real estate.
2The Plaintiffs move for summary judgment under Rule 21.01.
[3]
Background
In an Agreement of Purchase and Sale dated March 6, 2022 (“APS”), the Plaintiffs agreed to sell their residence at 192 Oakridge Drive, Markham, Ontario (the “Property”), to the Basnets for $1,608,000.00. The closing date in the APS was set for June 27, 2022.
4Pursuant to the APS, the Basnets paid a deposit in the amount of $90,000, which was deposited with Zolo Realty Inc. (“Zolo”), the real estate brokers representing the Plaintiffs. Zolo has not released these deposit funds.
5Two weeks before closing, on June 13, 2022, the solicitor for the Basnets sent an email to the solicitor for the Plaintiffs stating that the Basnets were “short of downpayment [sic] due to decrease in appraised value”. In this email, the Basnets’ solicitor requested an abatement of $150,000 in the purchase price for the Property. The Plaintiffs refused this request for an abatement.
6In a further email sent on the closing date, June 27, 2022, the solicitor for the Basnets requested an extension of the closing date to August 15, 2022. The email explained that this was in order to permit the Basnets more time to arrange mortgage financing. There was an exchange of potential terms for an extension, but the parties did not reach any agreement.
7It is the Basnets’ view that the Plaintiffs were unreasonable in not accepting their terms for an abatement and/or an extension of the closing. That may or may not be the case, but, of course, that was their right. The Plaintiffs were under no obligation to amend the APS, no matter how reasonable the proposed amendment might have seemed from the Basnets’ point of view. Accordingly, the transaction did not close in accordance with the terms of the APS.
8The APS contained standard terms to the effect that time was of the essence and that the APS, as written and signed, together with its schedules, was the entire agreement with respect to the transaction. None of these terms was amended by any negotiation between the parties on the closing date or otherwise.
[9]
Tender
The Basnets’ counsel submits that the Plaintiffs’ claim should be dismissed because they failed to tender on the closing date. In my view, that is a technical argument that is not apt to the current circumstances.
10The Basnets had made it clear that they did not have the funds to close and would not be closing without an extension of the closing date or an abatement of the purchase price, neither of which was not agreed to by the Plaintiffs. The Court of Appeal has indicated on a number of occasions that in such circumstances there is no need for a vendor to tender. In Di Millo v. 2099232 Ontario Inc., 2018 ONCA 1051, at para 45l, Justice Feldman, on behalf of a unanimous Court, reasoned:
While tender is the best evidence that a party is ready, willing, and able to close, tender is not required from an innocent party enforcing his or her contractual rights when the other party has clearly repudiated the agreement or has made it clear that they have no intention of closing the deal.
[11]
Mitigation
As a result of the failure of the transaction to close, the Plaintiffs relisted the Property with Zolo. The new listing price was $1,499,000, which was a reduction by $100,000 from the original listing price for the Basnet purchase. This reduction reflected an increase in interest rates and a consequent decline in the real estate market since the time of the original listing.
12The Plaintiffs have produced a copy of the Canadian Real Estate Association’s Toronto Home Price Index for the relevant period which shows this overall market decline. In any case, it does not lie with the Basnets to be skeptical of the claim that the market had declined since they signed the APS; after all, that was their very reason for seeking an abatement in the purchase price of the Property.
13During the new 30-day listing with Zolo, the Plaintiffs received only one offer, for $1,318,000. That offer was negotiated briefly with the offerors, and was ultimately accepted by the Plaintiffs at a sale price of $1,325,000, with an initial deposit of $65,000. That sale ultimate closed in accordance with its terms on its appointed closing date of September 7, 2022.
14The Basnets’ counsel contends that the re-sale price of the Property was too low. The Basnets have submitted an appraisal report which contains a list of what are described as comparable sales showing that recent sale prices were somewhat higher than what the Plaintiffs actually obtained.
15In my view, the appraisal report does not assist the Basnets countering the Plaintiffs’ case. Of the three properties described in the appraisal report, the average sale price was $1,450,000. However, the “comparable” sales are not self-explanatory; they contain certain calculations that are not fully explained. Moreover, and perhaps more importantly, they may not really be comparable. They all appear to predate the July 2022 re-sale of the Property by several months in a declining market.
16Beside that, the Plaintiffs only received one offer during the month-long re-listing. It seems to me that from a financial point of view wise to accept it. Even at a somewhat lower listing price, it was obvious that the housing market was in a slump and that purchasers had for a large part withdrawn from the market. There was no reasonable expectation that a more favourable offer would be coming along if they held out for a longer period of time in a declining real estate market.
17In 6472047 Ontario Ltd. v. Fleischer, the Court of Appeal observed that making reasonable efforts is the key to mitigation, not hitting an appraised value with precision. There is no reason to have a battle of appraisers on this point. Applying this to a declining market, the Court in Fleischer held, at para 41:
[A]s a general rule, in a falling market the court should award the vendor damages equal to the difference between the contract price and the ‘highest price obtainable within a reasonable time after the contractual date for completion following the making of reasonable efforts to sell the property commencing on that date.’
[18]
Damages
The record before me establishes the following losses incurred by the Plaintiffs as a result of the Basnets’ breach of the APS:
(a) a loss of $290,677.51 on the resale of the Property; (b) interest payments of $20,095.79 (composed of $9,460.36 plus $10,635.43 incurred on the bridge loan for their replacement home from June 28 to Sept 7, 2022) up to the date of closing of the re-sale of the Property; (c) legal fees of $3,986.68 for the aborted sale transaction.
19The damages claimed by the Plaintiffs come to $314,759.98, plus pre-judgment interest on this amount at the Courts of Justice Act rate from September 7, 2022 to the date of the present judgment (to be calculated by counsel). Also, the deposit funds of $90,000 held by Zolo are to be released by Zolo and paid to the Plaintiffs; the $90,000 can then be deducted from the damages claimed from the Basnets in calculating the total damages payable.
20Defendants’ counsel submits that the damages have not been proven in the record, and that there must be viva voce evidence, or even a full trial, on the issue of damages. I do not agree.
21The re-sale sale transaction is adequately documented with a Trust Ledger Statement and Statement of Adjustments, as are the legal fees on the aborted transaction. The interest payments on the bridge loan are also documented in a combination of a Statement of Adjustments and bank documents. I see no material facts that would require use of the court’s further fact-finding powers or a trial.
[22]
Disposition
The Plaintiffs shall have judgment as set out in paragraph 19 above. The damages figure set out there has been amended by me in response to the parties alerting me to the correct (and agreed-upon) calculation. Additionally, post-judgment interest will run on the net damages amount at the Courts of Justice Act rate from the date of this endorsement to the date of payment.
23As stated at the outset, the first Defendant’s name should be spelled Bimal Man Basnet. In addition to their motion for summary judgment, the Plaintiffs have moved to amend the style of cause to correct what is obviously a clerical error in the spelling of the name. That motion is also granted. The correct spelling of Bimal Man Basnet’s name has been used in the title of proceedings on this endorsement.
[24]
Costs
Counsel may make written submissions in respect of costs. I would ask that Plaintiffs’ counsel send my assistant brief submissions by email within two weeks of today, and that the Basnets’ counsel email my assistant with equally brief submissions within two weeks thereafter.
Date: June 28, 2023 Morgan J.