Court File and Parties

NEWMARKET COURT FILE NO.: CV-20-2528-00

DATE: 20230801

SUPERIOR COURT OF JUSTICE - ONTARIO

RE: Rosehaven Homes Limited and Bram-Rose Homes Inc., Plaintiffs

AND:

Svetlana Egudkina and Igor Egudkin, Defendants

BEFORE: Casullo J.

COUNSEL: W. Jiang, A. Laljie, for the Plaintiffs (Moving Parties)

A. Bouchelev, for the Defendants (Responding Parties)

HEARD: July 24, 2023

ENDORSEMENT

Overview

[1] In this simplified procedure matter, the Plaintiffs move for summary judgment against the Defendants for damages they submit they sustained when the Defendants failed to close on a house purchase. More particularly, the Plaintiffs seek the difference between the agreed upon purchase price for the subject property and the amount the property ultimately sold for.

[2] The Defendants submit that in these particular circumstances, where there is conflicting evidence, a trial is the appropriate procedure.

The Facts

[3] On April 20, 2017, the Plaintiffs, as developers, agreed to build and sell a residential home located at 10 Dale Meadows Road, Brampton, Ontario (the “Property”), to Svetlana Egudkina. The purchase price was $1,024,923.

[4] The Agreement of Purchase and Sale was amended on May 1, 2019 to reduce the purchase price by $50,000 and to add Igor Egudkina as a purchaser.

[5] On or about May 16, 2019, the Defendants attended a pre-delivery inspection of the Property, at which 78 interior and six exterior deficiencies were documented. There were also exterior deficiencies not reflected in the pre-delivery inspection report, including incomplete landscaping, lack of sodding, and lack of patio tiles.

[6] The Defendants failed to close on July 2, 2019. That same day solicitors for the Plaintiffs sent a letter to the Defendants accepting what the Plaintiffs deemed to be the Defendants’ repudiation of the contract. The Plaintiffs declared that the deposit and extras ($110,000), paid by the Defendants in connection with the Property, were forfeited to the Plaintiffs.

[7] On August 28, 2019, Rosehaven listed the Property for sale on the MLS. The Property ultimately sold on February 3, 2020 for $860,990.

[8] The Defendants submit that the Plaintiffs failed to adequately mitigate their damages by taking almost two months to list the property in what has been described as a declining real estate market. The Defendants also submit that this gap in time supports their contention that the Property was deficient in a number of respects, and the evidence suggests it took almost two months to get the Property in proper sale condition.

Is There a Genuine Issue Requiring a Trial

[9] The advantages to summary judgment are readily discernable. Scheduling summary judgment motions typically occurs faster than getting the matter on a trial list. In the appropriate circumstance, a case can be determined at an early stage. This results in both time and costs savings, not only to the parties, but to the justice system as well.

[10] There will be no genuine issue for trial when the motions judge can fairly make the necessary findings of fact and apply the law to the facts, thereby achieving a just result: Hyrniak v. Mauldin, 2014 SCC 7, [2014] 1 S.C.R. 87, at paras. 4 and 49.

[11] Both sides agree that the transaction did not close. But there are differing versions as to why.

[12] The Plaintiffs rely on two decisions in which cases with similar factual matrixes were found to be appropriate for summary judgment: Cuervo-Lorens v. Carpenter, 2017 ONCA 109, and Forest Hill Homes v. Ou, 2019 ONSC 4332.

[13] In both of these cases the transactions failed because of drastic drops in the real estate market, such that the purchasers did not have the necessary funds to close.

[14] The Plaintiffs submit that the Defendants also failed to close due to a lack of funding. Linda Metcalfe’s affidavit, sworn in support of this motion, sets out the following at para. 14:

On or about June 28, 2019, the defendants advised that, despite receiving a price reduction and an extension to the closing date, they had allegedly failed to obtain financing necessary to close the transaction in accordance with the APS.

[15] When I asked Plaintiffs’ counsel whether there was anything in the record to support their contention that the Defendants specifically told the Plaintiffs they could not close due to lack of funds – for example an email or a letter from their lawyer informing the Plaintiffs of this – I was advised there was nothing to that effect.

[16] Instead, it was suggested that the court could assume the failure to close was due to a lack of financing, because the Defendants had asked for, and received, a reduction in the sale price the month prior.

[17] In her responding affidavit, Ms. Egudkina submits that the failure to close was due to the deficiencies identified in the pre-delivery inspection. Ms. Egudkina’s evidence is that she and her husband asked the Plaintiffs for a further reduction of the purchase price in light of the deficiencies, which was refused.

[18] Which version is correct? Herein lies the rub. As noted earlier, this is a simplified procedure matter. Pursuant to r. 76.04(1) of the Rules of Civil Procedure, R.R.O. 1990 Reg. 194, cross-examinations are not permitted in an action brought under the simplified procedure. This is a hard and fast rule, with judges afforded no discretion to order cross-examinations.

[19] In Combined Air, the Court of Appeal held that “[g]iven that Rule 76 limits discoveries and prohibits cross-examination on affidavits and examinations of witnesses on motions, the test for granting summary judgment will generally not be met where there is significant conflicting evidence on issues confronting the motion judge.” See Combined Air Mechanical Services Inc. v. Flesch, 2011 ONCA 764, 108 O.R. (3d) 1, at para. 256.

[20] The failure to close the transaction goes to the heart of the Plaintiffs’ case. There are conflicting explanations as to why the contract was breached. Despite the able submissions of Plaintiffs’ counsel, with the evidence in support of each party’s position remaining untested by cross-examination, I find this is not an appropriate case in which summary judgment should be granted. There are genuine issues requiring a trial.

[21] Should the Plaintiffs succeed on the threshold issue of breach of contract, a trial, even in summary form, will also allow the trier to determine whether the Plaintiffs’ efforts at mitigation were reasonable in the circumstances, and what the Plaintiffs proper damages are.

Conclusion

[22] The Plaintiffs’ motion for summary judgment is dismissed.

Costs

[23] I requested costs submissions at the end of the hearing, during which it became apparent that Rule 49 offers had been exchanged. At that point submissions ceased, and I asked counsel to forward their offers to my judicial assistant. I did not review these offers until after I had written my decision on the motion.

[24] In the event the Plaintiffs were successful they would have sought substantial indemnity costs in the amount of $60,000, using that scale because the Plaintiffs offered to settle the entire matter before bringing the summary judgment motion.

[25] If the Defendants succeeded, they would have sought costs on a partial indemnity scale in the amount of $15,000.

[26] As the successful party, the Defendants are presumably entitled to their costs. However, $15,000 is excessive. This motion was not complex. There were no examinations for discovery or cross-examinations. In my view, a fair and reasonable costs award is $9,000.

Casullo J.

Date: August 1, 2023