Court File and Parties

COURT FILE NO.: CV-22-1641 DATE: 20231121

ONTARIO SUPERIOR COURT OF JUSTICE

BETWEEN: M.T. Johnstone Construction Ltd. Plaintiff – and – Wasif Rashidi a.k.a. Rashidi Wasif Defendant

Counsel: M. McCluskey, for the Plaintiff B. Singh Sandhu, for the Defendant

HEARD: November 15, 2023

Justice H.A. Rady

Introduction

[1] The plaintiff seeks summary judgment against the defendant for damages arising from an aborted agreement of purchase and sale. As Mr. McCluskey observed during oral argument, it is the unfortunate result of a falling market after several years of escalating home prices and low interest rates.

The Facts

[2] The facts are very straight forward and are largely uncontroversial.

[3] On September 28, 2021, the defendant agreed to purchase a new-build residential property from the plaintiff. The Agreement of Purchase and Sale (“APS”) provided as follows:

• purchase price was $998,230.00;
• the defendant’s deposit was $60,000.00;
• the agreement was conditional until October 4, 2021 for the defendant’s solicitor to approve its terms;
• the closing date was September 1, 2022;
• time was of the essence.

[4] There was no condition respecting financing. On October 4, 2021, the defendant waived the only condition.

[5] On the day of closing, the defendant advised that he was unable to complete the transaction. The plaintiff granted a one-day extension but the defendant was still unable to close.

[6] Following the defendant’s default, and in order to mitigate its damages the plaintiff relisted the property at the original purchase price. After 30 days, the property did not sell. The plaintiff lowered the listing price to $950,000.00 for 30 days. No offers were received. On November 30, 2022 the plaintiff signed an APS for $815,000.00 after an initial offer of $800,000.00. It was the only offer received. The deal closed on January 20, 2023.

[7] Pending the closing, the plaintiff incurred various carrying costs including taxes, utilities, property maintenance and inspections, interest on a loan and various expenses associated with the sale.

[8] The sale having closed, the plaintiff’s alleged damages have crystallized. It seeks $151,470.65 plus legal fees.

The Parties’ Positions

[9] The plaintiff submits that there is no genuine issue requiring a trial. It further submits that its claim is reasonable and supported by a number of authorities, all as elaborated in its factum.

[10] The defendant submits that there “may” be a genuine issue requiring a trial and it is necessary to exchange documents and conduct “cross-examinations”. I asked counsel whether he meant examinations for discovery rather than cross- examination. I did not receive a satisfactory response. In any event, it was too late for cross-examinations. The hearing was peremptory on the defendant and no adjournment request was made.

[11] The defendant submits that the plaintiff and its real estate agent, Ajay Gupta, misrepresented that he would be permitted to assign the APS. He also suggests that the plaintiff improperly refused to extend the time for closing.

[12] The plaintiff responds that Mr. Gupta acted only for the defendant as evidenced by the Confirmation of Co-operation and Representation form executed by the defendant.

[13] The plaintiff submits that the assignment issue is a red herring because in order for an assignment to be effective, written consent of the vendor was required, which could be withheld for any reason. Moreover, an assignment fee of $20,000.00 was required. None of these conditions were met.

Analysis and Disposition

[14] The law respecting Rule 20 of the Rules of Civil Procedure is well settled and needs no repetition. Hryniak v. Mauldin, 2014 SCC 7 remains the leading case. If the moving party demonstrates a prima facie right to summary judgment, the defendant has an evidentiary burden to provide evidence that there is a genuine issue for trial. See also Toronto-Dominion Bank v. 466888 Ontario Ltd., 2010 ONSC 3798; aff’d 2011 ONCA 149.

[15] I am not persuaded that there is a genuine issue that requires a trial. The defendant’s circumstances are most unfortunate. He lost his employment and was unable to secure mortgage financing. However, the APS did not contain a financing condition that would have enabled him to back out of the transaction.

[16] There is no merit in the defendant’s contention that he was to be permitted an assignment. The APS is very clear. The vendor’s consent was required and an assignment fee was to be paid. Neither happened. Further, the plaintiff was under no obligation to extend the closing date. The APS provided that time was of the essence.

[17] There is ample authority that supports the plaintiff’s claim. See, for example, Azzarello v. Sharifi, 2019 ONCA 820; Tribute (Grandview) Inc. v. Zhong, 2021 ONSC 2994; and Lecco Ridge Developments Inc. v. Vaquero, 2022 ONSC 6547.

[18] This case is factually similar to the Lecco Ridge case. The plaintiff was a developer who was building a subdivision of new homes. The defendant agreed to purchase one. The defendant was unable to close because he could not obtain mortgage financing. The plaintiff relisted the property and accepted the only offer received, which was less than the original sale price.

[19] The plaintiff brought a motion for summary judgment claiming the loss from the lower sale price as well as the real estate commission and maintenance fees incurred while the house was on the market. The defendant argued that the contract was unenforceable because of an unforeseeable drop in the real estate market.

[20] The Court granted summary judgment, reasoning that the defendant defaulted because he could not obtain mortgage financing and not as a result of the decline in the market. Judgment was granted for the loss of purchase price and the expenses incurred after default and before the property sold.

[21] As for the damages in this case, the plaintiff has acted reasonably to mitigate its damages. The carrying costs, interest and legal fees were all incurred as a result of the breach. The plaintiff has credited the defendant with the deposit. It seeks costs on a partial indemnity basis only.

[22] For these reasons, the plaintiff is entitled to judgment for $151,470.65 plus partial indemnity costs fixed at $14,826.67.

“Justice H.A. Rady” Justice H.A. Rady

Released: November 21, 2023