Dhonsi v Parkvillegreens Belleville Inc., 2023 ONSC 4584

COURT FILE NO. CV-22-0068643-0000 DATE: 20231004 ONTARIO SUPERIOR COURT OF JUSTICE

BETWEEN: JASWANT SINGH DHONSI Applicant – and – PARKVILLEGREENS BELLEVILLE INC. Respondent

Counsel: Romesh Hettiarachchi, Lawyer for the Applicant, Jaswant Singh Dhonsi Payam Ezzatian, lawyer for the Respondent, Parkvillegreens Belleville Inc.

HEARD: August 8, 2023

REASONS FOR DECISION

G. DOW, J.

1The applicant, Jaswant Singh Dhonsi, seeks return of his $37,500 deposit and other potential relief arising from his entering into an Agreement of Purchase and Sale with the respondent, Parkvillegreens Belleville Inc. dated November 9, 2020.

Background

2The respondent is a builder with a project to develop and build a sub-division in Belleville. The applicant is an admitted part time realtor with eight years of experience and was represented by a real estate agent in this transaction. The property in question was yet to be built (and remains not completed), known as Lot 72, Block 53 in the development and construction of a “Banff” model townhome. The purchase price agreed on was $399,900.

3Six deposits were paid over the next seven or so months to reach the agreed upon amount of $37,500.

4At the heart of this dispute are clauses 10 and 11 in the 55 page Agreement of Purchase and Sale. Clause 10 is entitled “BREACH OF CONTRACT” and states “Any breach” shall entitle the respondent to terminate the Agreement and “all deposit monies paid” “shall be forfeited” “as liquidated damages and not as a penalty”. The claim also states the purchaser represented that the property was being purchased for “personal use” and not for “rental, or short term speculative purposes”. The Agreement prohibits the purchaser from posting “any signs for sale, or list the Property for sale whether on MLS or otherwise” without the “prior written consent of the Vendor, which “may be withheld in the Vendor’s sole and absolute discretion”. The Agreement repeats that a breach of this nature entitles the vendor to retain the deposit as liquidated damages.

5Clause 11 is entitled to “SALE, ASSIGNMENT AND RENTAL BY PURCHASER”. It repeats the purchaser’s awareness of the need to obtain “prior written consent” which may be withheld in the vendor’s “sole and absolute discretion”. It goes on to detail examples of conditions that may influence the granting of consent. No doubt to avoid or minimize competition in the sale of the other units in the development, these include waiting until a certain percentage of the units were sold, payment of a fee, including lawyers’ fees and the original purchaser remaining liable for payment until the agreement is completed.

6The other relevant portion of the Agreement was a Schedule “X” attached to the agreement of Purchase and Sale and (virtually) signed by the parties with a handwritten statement “Assignment Clause available at an extra cost of $5,000.00 + Legal Fee + HST”.

7In or about April, 2021, it appears the applicant caused material to be placed on social media that the unit was available as an assignment sale. This included entering into a listing agreement with the real estate agent (who negotiated the original agreement). By October 13, 2021 the applicant had entered into an Assignment of Agreement of Purchase and Sale to transfer interest in the property for $510,000. This Assignment Agreement acknowledged and contained a clause that it was “conditional upon the Assignor obtaining approval for this Assignment from the Builder within 60 days” failing which it was null and void with return of the $10,000 deposit.

8The respondent became aware of the property becoming available for assignment and its conditional sale in December, 2021. Counsel for the respondent was instructed and proceeded to advise the applicant in writing, on January 7, 2022, that it was terminating the Agreement and retaining the deposit as liquidated damages.

9Counsel for the applicant relied on his client’s interpretation of Schedule X to mean that consent to resale had somehow been obtained. This compares to the respondent’s position that Schedule X provided the applicant with the option to purchase an Assignment Clause for the additional sum indicated. For clarity, the amount indicated was not paid.

Analysis

10In his submissions, the applicant relied on the breach of the Agreement of Purchase and Sale as being one of a non-financial term. I disagree given the clear intent of the applicant, as indicated by the Assignment Agreement, was to derive a financial benefit by transferring ownership at a price much greater than what he had committed to pay for the property, that is $510,000 as opposed to $399,900. Even if this is incorrect, the wording in clause 10, entitled “BREACH OF CONTRACT” clearly stated any breach could result in the respondent terminating the agreement and that the deposit be forfeited.

11Similarly, and more specifically, clause 11 entitled “SALE, ASSIGNMENT AND RENTAL BY PURCHASER” clearly stated prior written consent was required with regard to any sale or assignment and any breach provided the respondent with the opportunity to terminate the agreement and retain the deposit. I find that that the terms and conditions set out in clauses 10 and 11 are quite clear and that the applicant breached same. I find that Schedule X, while it could have been worded more clearly, did not confirm or state consent or resale or assignment had been obtained. I am reinforced in this conclusion by the fact the amount of $5,000 had not been paid. Further, the clause in the Assignment of Agreement of Purchase and Sale confirmed the applicant’s awareness of the need to obtain the builder’s approval (rather than having already confirmed or that it could be purchased for $5,000 plus legal fees and HST).

12While the applicant relied on the principles of contractual interpretation found in Ventas, Inc. v. Sunrise Senior Living Real Estate Investments Trust, 2007 ONCA 205 (at paragraph 24), I find the four factors identified were met. That is, from interpreting the contract “as a whole” and, to doing so in accordance with “sound commercial principles and business sense” I find this was plainly set out and favours the respondent. As a result, I find no ambiguity existed which could raise, as submitted by the applicant, the construing the wording in the contract against the party that drafted it (MDS Inc. v. Factory Mutual Insurance Company, 2021 ONCA 594 (at paragraph 45)).

13Counsel for the applicant also relied on the respondent’s exercise of its “sole and absolute” discretion to be unreasonable. This resulted in reliance on the Supreme Court of Canada decisions regarding good faith performance and the duty of honest performance, Bhasin v. Hrynew, 2014 SCC 71 (at paragraph 63) and C.M. Callow Inc. v. Zollinger, 2020 SCC 45 (at paragraph 46). I do not agree the conduct of the respondent equated with or reached the level found in those cases. In the situation before me, the applicant had some experience in real estate and retained a realtor to assist him. This situation does not compare to either the misleading conduct found to have occurred in Bhasin v. Hrynew, supra or the acts of deception found to have occurred in C.M. Callow Inc. v. Zollinger, supra which required court intervention.

14The third issue and submission raised was whether the terms contained in the Agreement of Purchase and Sale which permitted termination and the seizure of the deposit were unconscionable. In this regard, the applicant relied on an inequality of bargaining power noting admissions by the respondent that the realtor used by the builder had no authority to alter substantive portions of what it described as a standard form for the Agreement of Purchase and Sale.

15Counsel relied on the decision in Uber Technologies Inc. v. Helle, 2020 SCC 16 (at paragraphs 69 to 79) and submitted his client was, to paraphrase the Supreme Court, the weaker party facing consequences that amounted to not freely entering into the contract. I disagree. As indicated by the applicant’s conduct, he utilized his experience in real estate in an attempt to purchase an unbuilt property and profit from that purchase in advance of when it would have been available to him (that is, after closing). He ignored the statement in clause 10 of the Agreement of Purchase and Sale that the respondent was relying on his purchasing the unit, for his own personal use and not for rental, or short term speculative purposes”. As part of this submission, the applicant raised and relied on the respondent having only the social media posting advising of the assignment as a basis for terminating the contract and that such conduct by the applicant was insufficient to do so. The applicant relied on it having advised the respondent, of learning its interpretation of Schedule X was incorrect, of his intention to abide by the Agreement of Purchase and Sale. This somehow eliminated the respondent’s right to exercise termination and keep the deposit. I rely on the conduct of the applicant, in making the property available “for sale whether on MLS or otherwise or advise others that the Property is or may be available for sale, offer for sale, assignment, lease or rental” as contained in clause 11 to be what occurred and permitted the respondent to, as stated in that clause “terminate the agreement and retain the deposit”.

16Finally, the applicant sought, as part of the damages, and in addition to return of its deposit, further damages based on the value of the property at various times in the process of being available to purchase to completion of the structure and closing. The townhouse is currently anticipated to be completed and ready for occupancy in January 2024. Submissions in this regard included raising the relief from forfeiture and the law which has interpreted Section 98 of the Courts of Justice Act, R.S.O. 1990 c. C.43 which grants same “on such terms as to compensation or otherwise as are considered just”.

17As this matter involved real estate deposits, I prefer to follow the principles set out in Redstone Enterprises Ltd. v. Simple Technology Inc, 2017 ONCA 282. The first step is to consider whether the deposit was disproportionate. Here, the deposit was less than ten percent of the purchase price. The court indicated (and I agree) its reluctance to “specify a numerical percentage, since much turns on the context” (at paragraph 28). There was no evidence here that the $37,500 was commercially unreasonable.

18The second step is to address whether the forfeiture would be unconscionable. Of note here, the property has appeared to appreciate in value and the respondent has or likely can resell the property for more than it sold to the applicant so that it has not suffered any loss. Such a circumstance was not found to be a proper basis to find retaining of the deposit unconscionable. Rather, such a finding “must be an exceptional one, strongly compelled on the facts of the case” (at paragraph 25) of Redstone Enterprises Ltd. v. Simple Technology Inc., supra. The logic for this finding rests on the court’s view that parties should be allowed to determine for themselves the consequences of breaching of contracts (at paragraph 23).

19As a result, I conclude the applicant has not demonstrated the requisite requirements to allow relief from forfeiture. This would also apply to the other damages sought.

Conclusion

20The application is dismissed.

Costs

21Counsel failed to have agreed on costs or deliver their Costs Outlines to the hearing contrary to Rule 57.01(6). However, they requested and I permitted them to do so by the end of the day. In this regard, the partial indemnity claim for costs by the applicant, if successful, was noted to be $13,333.50 for fees, plus HST and disbursements of $1,730.43. The partial indemnity costs sought by the respondent was $23, 544.91 for fees, without a list of disbursements. I was advised there were no formal Offers to Settle. During submissions the decision in Ching v. Peer 27 Toronto Inc., 2021 ONCA 551 was raised. It also involved a real estate transaction and the request the relief from forfeiture of the deposit. While dismissing the appeal, the court did find an error in principle in the award of costs and altered the trial judge’s decision to have each party bear their own costs. The factual matrix in that decision appears to be quite different than the one before me. In that case, there was repeated delay in completing construction with extensions on closing occurring on eight occasions.

22There is clearly disparity in the amount sought by each party. Further, the hourly rate of counsel for the applicant is higher ($525 as opposed to $385 per hour) than that of counsel for the respondent. This amplifies the disparity of time expended.

23Mindful of the factors enumerated in Rule 57.01 and the overarching principle enumerated in Boucher v. Public Accountants Council for the Province of Ontario, [2004] O.J. No. 2634 to “fix an amount that is fair and reasonable for the unsuccessful party to pay in a particular proceeding, rather than an amount fixed by the actual costs incurred by the successful litigant”, I fix the respondent’s costs in the amount of $17,500 inclusive of fees, HST and disbursements, payable by the applicant, forthwith.