Court File and Parties
COURT FILE NO.: CV-21-1183 DATE: 2023/12/13
ONTARIO SUPERIOR COURT OF JUSTICE
BETWEEN:
Richard Beckett and Gail Beckett Plaintiffs
– and –
Mohammad Ali Ahmed and Syeda Qurrat-Ul-Ain Ahmed Defendants
COUNSEL: Amber Bonnell, Counsel for the Plaintiffs Shahzad Siddiqui, Counsel for the Defendants
HEARD: November 27 and 28, 2023
BEFORE: The Honourable Mr. Justice G.E. Taylor
REASONS FOR JUDGMENT
Introduction
[1] Richard and Gail Beckett (the “Becketts”) owned a residential property located at 63 Brewster Place, Cambridge (the “Property”). The Property was listed for sale on MLS on March 15, 2021. On March 20, 2021, Mohammad Ali Ahmed and Syeda Qurrat-Ul-Ain Ahmed (the “Ahmeds”) submitted an Offer to Purchase the property for $1,200,000. The Offer to Purchase provided for a deposit of $40,000 to be paid “upon acceptance”. The Becketts accepted the Ahmeds’ Offer to Purchase which became an Agreement of Purchase and Sale (the “Ahmed APS”).
[2] The Ahmeds did not pay the $40,000 deposit. The Becketts then accepted another Offer to Purchase the property for $1,130,000 from Lisa and Robert Borba (the “Borbas”) and (the “Borba APS”). The Becketts seek judgment against the Ahmeds for $70,000 being the difference in the purchase price between the Ahmed APS and the purchase price in the Borba APS.
[3] The parties agreed that, with one exception, the evidence in chief of each witness would be by affidavit and each witness would be cross-examined and re-examined orally. The defendant, Syeda Ahmed was examined in chief orally and was not cross-examined.
The Evidence
[4] The Becketts listed the Property for sale on MLS on March 15, 2021. Gail Beckett, was the listing real estate agent.
[5] On March 20, 2021, two prospective purchasers submitted Offers to Purchase. The Ahmeds submitted an Offer to Purchase the property for $1,200,000. The Borbas submitted an Offer to Purchase the property for $1,110,000. The Becketts accepted the Ahmeds’ Offer to Purchase on March 20, 2021. The Ahmed APS required a deposit of $40,000 to be submitted “upon acceptance”. The Ahmed APS did not contain any conditions relating to financing.
[6] On March 21, 2021, the Ahmeds’ agent advised Gail Beckett, by telephone, that the Ahmeds would not be able to deliver the $40,000 deposit as required by the Ahmed APS and that the Ahmeds would be unable to complete the purchase of the Property. According to Gail Beckett, the Ahmeds’ agent advised she did not know why the Ahmeds were not able to complete the purchase. Gail Beckett said she told the Ahmeds’ agent that she and her husband intended to move forward with the sale of the Property to another prospective purchaser.
[7] The Ahmeds did not pay the deposit as required by the Ahmed APS.
[8] Gail Beckett testified that she contacted the agents for persons who had viewed the Property to ascertain if their clients were interested in purchasing the Property. She received a positive response from the agent for the Borbas. Gail Beckett asked if the Borbas would be willing to increase the offer price. She was told the Borbas would increase their offering price to $1,130,000 but that was their final offer.
[9] On March 22, 2021, the Borbas submitted an Offer to Purchase the property for $1,130,000. That Offer was accepted. The Borba Agreement was completed on June 25, 2021. The Borba Agreement indicates that it was signed by the Borbas between 5:34 and 5:48 p.m. and was accepted by the Becketts between 7:48 and 7:51 p.m.
[10] On March 22, 2021, Gail Beckett received by email from the Ahmeds’ agent, a Mutual Release in relation to the Ahmed APS. The Mutual Release was signed by the Ahmeds. She did not respond in writing to the receipt of the Mutual Release although Gail Beckett testified she told the Ahmeds’ agent that she and her husband would not be signing the Mutual Release. The Becketts did not sign the Mutual Release. Gail Beckett agreed that the Mutual Release was received at 5:14 p.m. on March 22, 2021.
[11] In his affidavit for trial, Mohammad Ahmed stated that he and his wife signed the Offer to Purchase the property on March 20, 2021. He understood the Ahmed APS was conditional on payment of the $40,000 deposit. The day after signing the Ahmed APS, he and his wife discovered they were having difficulty arranging the deposit and accordingly they asked their agent to send a Mutual Release to the Becketts.
[12] In his affidavit for trial Mohammad Ahmed complained that the Becketts sold the property to the Borbas without notifying he and his wife of their intention to do so. In his affidavit for trial, Mohammad Ahmed stated at paragraphs 16, 17 and 19:
I believe it is the Becketts who repudiated the contract, with insufficient notice to us, which prevented us from following through, or even considering, the purchase of the Property.
Before ultimately selling the Property to the Borbas, the Becketts did not communicate to me and my wife their election to disaffirm the Agreement.
Had the Becketts opted to communicate with us, we would have tried to furnish the deposit either by refinancing our existing house or borrowing money from the family.
[13] In cross-examination Mohammad Ahmed testified that if they had been given an opportunity to complete the Ahmed APS they would have been able to do so. He said he had spoken to numerous mortgage brokers who told him he had sufficient equity in his then home to complete a purchase for $1,200,000. No mortgage brokers gave such evidence at trial. He had not been pre-approved for financing. He said they did not complete the purchase of the Property because it had already been sold.
[14] Mohammad Ahmed agreed in cross-examination that on March 20, 2021, he instructed the Ahmeds’ agent to prepare and forward to the Becketts a Mutual Release with respect to the Ahmed APS. He acknowledged sending an email to the Ahmeds’ agent on March 22, 2021 at 3:35 p.m. asking the Ahmeds’ agent to send a Mutual Release because he had been unable to arrange the deposit. Mohammad Ahmed said he had difficulty contacting the Ahmeds’ agent after telling her he was having difficulty arranging financing to complete the purchase.
[15] Mohammad Ahmed acknowledged receiving an email from the Ahmeds’ agent on March 22, 2021 at 9:39 p.m. in which she referred to reminding him “once again” that the failure to provide the required deposit was a breach of contract that could have legal ramifications for him. The email also referred to conversations with him in which she advised that the Becketts had said they did not intend to sign the Mutual Release.
[16] Mohammad Ahmed testified that after the Ahmed APS was accepted, he encountered difficulty in arranging financing to pay the required deposit. He said he was unable to obtain money from his brother and as well he realized he had not factored into his calculations the taxes he would be required to pay at the end of the year.
[17] Mohammad Ahmed testified that on March 20, 2021, he advised the Ahmeds’ agent that he was having difficulty arranging financing and he asked her to prepare and send a Mutual Release to the Becketts. He said the Ahmeds’agent did not take his instructions well and thereafter he had difficulty communicating with her.
[18] The Ahmeds’ agent did not testify at the trial.
[19] Both parties called real estate appraisers to testify at the trial. Each side accepted the opposite appraiser as an expert in the field of real estate valuations.
[20] The Becketts’ real estate appraiser testified that, in his opinion, the value of the Property on March 23, 2021 was $1,130,000. The Ahmeds’ real estate appraiser testified that, in his opinion, the market value of the property as of March 23, 2021 was $1,2000,000. The Becketts’ appraiser testified that in March 2021, the local residential real estate market was rising. The Ahmeds’ appraiser testified that in March 2021 it was a sellers’ market. The Ahmeds’ appraiser also noted that real estate values decreased from 2022 to 2023.
Analysis
[21] The Ahmeds’ submit that payment of the $40,000 deposit in this case was a condition precedent to the formation of the contract. Because the deposit was not paid, there never was a binding contract for the sale of the property.
[22] In 460641 Ontario Co. v. Weiss, [1984] O.J. No. 865, the following was stated at paragraph 22:
There is authority in Ontario that is not only very persuasive, but which is binding upon me, that the failure of a purchaser to pay part of a deposit as and when required under an agreement of purchase and sale, entitles the vendor to consider nonpayment as a repudiation of the contract by the purchaser.
[23] In Kearns v. Randall, [2006] O.J. No. 2507, the following statement is found at paragraph 6:
In my view, the exchange of promises constitutes a binding contract whereupon the buyer "upon acceptance" was obligated to pay the initial $50,000. I do not regard the $50,000 obligation as a condition precedent to the existence of a contract.
[24] The Ahmeds’ rely on the case of Benedetto v. 2453912 Ontario Inc., [2019] O.J. No. 149 in support of the proposition Weiss and Kearns are wrongly decided. The issue in Benedetto was whether a purchaser of real property on behalf of a “company to be incorporated and without personal liability” was subject to forfeiture of the deposit upon default. The Court held that the operation of s. 21(4) of the Ontario Business Corporations Act did not require the return of the deposit to the purchaser, when the purchaser on behalf of a company to be incorporated defaulted on the agreement for the purchase of the property. Neither Weiss nor Kearns are mentioned in the decision.
[25] In my view the quotations above from Weiss and Kearns are accurate statements of the law. I therefore reject the argument that there never was a binding contract between the parties for the sale of the property because the Ahmeds failed to submit the $40,000 deposit upon acceptance by the Becketts of the Ahmeds’ Offer to Purchase and the Ahmed APS.
[26] The Ahmeds argue that the Becketts did not clearly and unequivocally communicate their intention to treat the contract at an end and claim damages. The Ahmeds’ submit that when the Becketts received the Mutual Release from the Ahmeds’ agent, their options were to sign it or formally give notice to the Ahmeds that they were accepting the repudiation of the Ahmed APS and that they intended to enter into a contract to sell the Property to the Borbas.
[27] Gail Beckett testified that when she was advised by the Ahmeds’ agent on March 21, 2021 that the Ahmeds would not be able to complete the purchase of the property, she advised the Ahmeds’ agent that she and her husband intended to move forward with the sale of the property to another prospective purchaser. That evidence is uncontradicted. In my view it is an acceptance of the repudiation of the Ahmed APS by the Ahmeds.
[28] I do not accept the testimony of Mohammad Ahmed that if he had known that the Becketts would not sign the Mutual Release he would have been able to arrange financing to complete the Ahmed APS. By his own admission he could not arrange financing for a $40,000 deposit. He had not been to a financial institution to obtain approval for a mortgage. His evidence that several mortgage brokers had told him that he had sufficient equity in his home to complete the Ahmed APS is self-serving hearsay. In my view, Mohammad Ahmed hoped to tie up the Property by having his Offer to Purchase accepted and then negotiate the final terms of the purchase of the Property.
[29] I am satisfied that the Ahmeds’ breached the terms of the Ahmed APS by failing to provide the required deposit and they are liable for the damages sustained by the Becketts as a result.
Damages
[30] The Ahmeds did not dispute the proposition that damages arising from the breach of an Agreement for Purchase and Sale of real property includes the difference between the sale price in the agreement that was breached and the sale price in the ultimate agreement (Goldstein v. Goldar 2018 ONSC 608 at para. 25 and Bang v. Sebastian, 2018 ONSC 6226 at para. 42).
[31] The Ahmeds’ submit that the Becketts had an obligation to re-list the property for sale, re-market the property and to obtain a sale price at or near $1,200,000. The Supreme Court of Canada has articulated the principle of mitigation as follows:
As a general rule, a plaintiff will not be able to recover for those losses which he could have avoided by taking reasonable steps. Where it is alleged that the plaintiff has failed to mitigate, the burden of proof is on the defendant, who needs to prove both that the plaintiff has failed to make reasonable efforts to mitigate and that mitigation was possible (Southcott Estates Inc. v. Toronto Catholic District School Board, 2012 SCC 51, [2012] 2 S.C.R. 675 at para 24).
[32] The evidence from the real estate appraisers satisfies me that the market value for the Property as of March 23, 2021 was between $1,130,000 and $1,200,000. There is no evidence that the Becketts could have obtained a price in excess of $1,200,000 for the sale of the Property. There is evidence that several potential purchasers viewed the Property before the two Offers were submitted on March 20, 2021. When the Ahmeds’ breached the Ahmed APS, Gail Beckett contacted the agents for these prospective purchasers which did not result in any offers forthcoming. Gail Beckett was able to obtain an increase of $20,000 in the amount the Borbas were prepared to pay for the Property.
[33] The position of the Ahmeds’ is that the Becketts had an obligation to expose themselves to the risk of the market in order to attempt to reduce the amount of damages caused as a result of their breach of the Ahmed APS. I appreciate there is evidence that home prices were increasing in the Region of Waterloo and that it was a sellers’ market in March 2021. That does not mean that by re-listing and re-marketing the property a sale price in excess of $1,130,000 was assured or even likely. Hot markets can end abruptly.
[34] In my view the Becketts acted reasonably in contacting the Borbas, soliciting an increase in the price they were prepared to pay for the Property and in accepting an Offer that was within the range of market value for the property determined by the real estate appraisers. Indeed, the damages could have included carrying costs and other expenses if the property had not been sold to the Borbas as quickly as it was.
[35] I find that the damages sustained by the Becketts as a result of the breach of the Ahmed APS to be $70,000.
Conclusion
[36] For the foregoing reasons judgment will issue in favour of the Becketts against the Ahmeds for $70,000.
[1] If counsel are unable to agree on the appropriate disposition as to costs they may make written submissions. The written submissions on behalf of the Becketts are to be delivered no later than January 15, 2024. The written submission on behalf of the Ahmeds are to be delivered no later than January 30, 2024. The written submissions are to be filed on Caselines and delivered electronically to my attention to mona.goodwin@ontario.ca and Kitchener.SCJJA@ontario.ca. Written submissions are not to exceed three pages in length exclusive of a Bill of Costs and Costs
Outline. If costs submissions have not been received within 40 days of the release of these Reasons, costs will be considered as having been resolved and the file will be closed.
G.E. Taylor J.
Released: December 13, 2023
COURT FILE NO.: CV-21-1183 DATE: 2023/12/13
ONTARIO SUPERIOR COURT OF JUSTICE
BETWEEN:
Richard Beckett and Gail Beckett Plaintiffs
– and –
Mohammad Ali Ahmed and Syeda Qurrat-Ul-Ain Ahmed Defendants
REASONS FOR JUDGMENT
G.E. Taylor J.
Released: December 13, 2023