Court File and Parties
COURT FILE NO.: CV-22-00688014 DATE: 20240110
ONTARIO SUPERIOR COURT OF JUSTICE
BETWEEN:
Aaron Darmanin Plaintiff – and – Harpal Kaur Dhiman Defendant
Counsel: Gregory Patrick Weedon, for the Plaintiff Prabjot Singh Badesha, for the Defendant
HEARD: January 10, 2024
Papageorgiou J.
Overview
[1] The plaintiff and defendant entered into an agreement of purchase and sale whereby the defendant would purchase the plaintiff’s property.
[2] The defendant did not close the transaction.
[3] The plaintiff sued for breach of contract and moved for summary judgment.
[4] The defendant did not concede liability until shortly before the hearing of the motion but maintained that this matter was unsuitable for summary judgment. She also disputed both the damages claimed and asserted that the plaintiff had failed to mitigate.
Decision
[5] For the reasons that follow I am granting the plaintiff summary judgment and awarding damages in the amount of $456,696.24 which net of the $125,000 deposit which was paid and which is forfeited results in a net payment which must be made to the plaintiff in the amount of $331,696.24.
Issues
[6] The main issues are:
- Issue 1: Did the defendant fail to mitigate?
- Issue 2: If so, what are the damages to which the plaintiff is entitled?
- Issue 3: Is this matter suitable for summary judgment?
Analysis
[7] Before considering the issues, I set out here the test for summary judgment as well the agreed upon chronology of events.
The summary judgment test
[8] In accordance with r. 20.04(2) of the Rules of Civil Procedure, R.R.O. 1990, Reg. 194, the court shall grant summary judgment if the court is satisfied that there is no genuine issue requiring a trial: Hryniak v. Mauldin, 2014 SCC 7, [2014] 1 S.C.R. 87, at para. 49.
[9] Each side must “put their best foot forward” with respect to the existence or non-existence of material issues to be tried: Mazza v. Ornge Corporate Services Inc., 2016 ONCA 753, at para. 9.
Chronology
[10] The plaintiff and defendant entered into an agreement of purchase and sale on March 6, 2022 (the “APS”) in respect of 11 Nightjar Drive, Brampton ON, L7A 0B7 (the “Property”) for $2,125,000.
[11] The closing date was July 15, 2022.
[12] The defendant paid all required deposits.
[13] On July 14, 2022, the defendant advised that it would be unable to complete the transaction because of a lack of financing and a low appraisal value provided by its bank. She requested an extension to July 29, 2022.
[14] The plaintiff agreed on the condition that the defendant deliver a further deposit in the amount of $25,000 and compensate the plaintiff in the amount of $350 per day in respect of the plaintiff’s mortgage and a bridge loan he had to take out in respect of a new property the plaintiff had purchased. The defendant accepted the conditions and delivered the additional deposit.
[15] On July 22, 2022, the defendant requested a $275,000 abatement in order to close.
[16] The plaintiff refused.
[17] The plaintiff tendered and the defendant failed to tender the required closing funds or documents on the new closing date.
[18] The plaintiff advised the defendant that they had breached the APS and that he was electing to terminate the APS and claim damages.
Issue 1: Did the plaintiff fail to reasonably mitigate?
[19] It is trite that the burden of showing a failure to reasonably mitigate is on the defendant: 100 Main Street Ltd. v. W.B. Sullivan Construction Ltd. (1978), 88 D.L.R. (3d) 1 (Ont. C.A.), at p. 23; Southcott Estates Inc. v. Toronto Catholic District School Board, 2012 SCC 51, [2012] 2 S.C.R. 675, at para. 24; Gamoff v. Hu, 2018 ONSC 2172, at para. 34.
[20] The defendant raises two principal arguments:
- The ultimate sale price was lower than the market value at the time; and
- The plaintiff failed to accept the defendant’s offer to purchase the Property at an abated price.
[21] I reject these arguments for the following reasons.
The market value
[22] The defendant accepts that the real estate market was experiencing a significant downturn in the wake of COVID-19. The defendant admitted that she too was having difficulty selling her other properties “because [the] market had crashed [at] that time.”
[23] On August 9, 2022, the plaintiff re-listed the Property on MLS for $2,125,000, which is the same purchase price under the APS. Notably, the plaintiff is a real estate agent and had listed the Property himself originally. However, when he sought to re-list the Property, he retained an independent agent who provided him with direction and advice. The plaintiff has provided an affidavit from the listing realtor who set out the steps that he took to sell the Property.
[24] The Property received little to no interest when relisted with few showings and no offers. The plaintiff’s realtor recommended that the plaintiff reduce the list price to prevent the Property from sitting stagnant (going stale) on the market.
[25] Under the advice of his realtor, on August 24, 2022, the plaintiff reduced the list price to $1,879,000.
[26] On August 28, 2022, the plaintiff received an offer to purchase the Property for $1,650,000.
[27] The plaintiff countered for $1,750,000. The plaintiff’s agent advised the plaintiff that it was unlikely that the potential buyers would sign back the counteroffer based upon comparable properties in the market. In particular, 3 Nightjar, sold for $1,775,000,00 on August 11, 2022. Of significance, 3 Nightjar had similar upgrades featured in the Property, a larger lot, and was approximately 600 square feet larger than the Property.
[28] The potential buyers did not sign back the offer.
[29] On or about August 29, 2022, the potential buyers made a fresh offer to purchase the Property for $1,690,000.00. The plaintiff chose to accept the offer and entered into a conditional agreement to sell the Property (the “Second Agreement”). Notably, the plaintiff was aware that 3 Nightjar had sold on August 11, 2022 for approximately $479.73/square foot while the offer presented to the plaintiff would result in a sale price of the Property for approximately $545.16/square foot. In all the circumstances, the plaintiff concluded that he had made reasonable efforts to mitigate and obtained the best possible outcome in all the circumstances.
[30] The Second Agreement was firmed up and successfully completed on September 26, 2022.
[31] Although the defendant argues that the plaintiff failed to reasonably mitigate his damages by obtaining a higher offer, the defendant provided no evidence that the plaintiff could have sold the Property for more than the amount under the Second Agreement, apart from an appraisal of the Property dated July 21, 2022 by Rajesh Mohan attached to her affidavit which states that it is for a private lender and values the Property at $1,850,000. There is no affidavit from Mr. Mohan or any information as to his qualifications. His evidence has not been tested and is insufficient to show that the defendant has raised a genuine issue or put her best foot forward with respect to the market value of the Property. This appraisal is also dated one month before the ultimate sale in the context of a declining market.
[32] See Cuervo-Lorens v. Carpenter, 2016 ONSC 4661, at para. 6, (cited in Gamoff v. Hu, at para 35) where the Court directed as follows:
The purchasers, it must be assumed, have put their “best foot forward” and it is lacking. […] In the absence of a qualified appraiser’s opinion that she did so, I am not convinced that a trial is required to determine whether she undersold the property.
[33] The decision of Parayeski J. in Cuervo-Lorens was upheld by the Ontario Court of Appeal at 2017 ONCA 109. The Court stated, at para. 3:
The appellants did not file opinion evidence on the summary judgment motion indicating the steps taken on the resale were unreasonable or concerning the $50,000 price differential. In the absence of such evidence, we see no basis on which to interfere with the motion judge’s decision to dismiss the action as against the vendor.
[34] As set out in multiple authorities, the best indicator of the market value of a property is what a purchaser is willing to pay and the plaintiff has provided this evidence: 100 Main Street, Scott v. Forjani, 2021 ONSC 1996, at para. 44; and Victorian Homes (Ontario) v. DeFrietas, [1991] O.J. No. 324 (Ont. Gen. Div.)
[35] In all the circumstances, and in the absence of any contrary admissible evidence of the market value of the Property, or the inadequacy of steps to sell taken by the plaintiff, the defendant has failed to show any genuine issue that the plaintiff failed to reasonably mitigate by accepting the offer for $1,690,000.
The defendant’s offer
[36] I also reject the defendant’s argument that the plaintiff failed to reasonably mitigate by not accepting the defendant’s offer to abate the purchase price under the APS to $1,850,000.
[37] First, the concept of abatement has a particular meaning which is a reduction in the purchase price. The plaintiff was not obliged to sell at a reduced price just because of developments in the market when he had a firm and binding offer.
[38] When I raised this issue with counsel, he argued that what the defendant meant by this offer was that the price would be abated, but that the plaintiff would still be able to sue for damages. However, this is not set out in the offer which simply appears to be an offer to purchase at a reduced price.
[39] Second, even if that could be implied that this offer would have preserved the plaintiff’s right to sue for the difference between the original price and the defendant’s abated offer, there was no obligation on the plaintiff to continue to deal with a purchaser who had already defaulted, and who had already been granted one extension.
[40] In Azzarello v. Shawqi, 2018 ONSC 5414, 439 D.L.R. (4th) 127, rev’d on other grounds, 2019 ONCA 820, leave to appeal refused, [2019] S.C.C.A. No. 521, a defaulting purchaser argued that the vendors failed to mitigate damages by reviving a transaction and reducing the purchase price by 10 percent. The court held that “the Plaintiffs would have been justified in choosing not to deal with the Defendant because they had no confidence that the Defendant would exercise diligence in closing the transaction as he had failed to do in the past”: at para. 48.
[41] More importantly, even if an abatement was negotiated, the defendant has provided no evidence that she was ‘ready, willing, or able’ to close a transaction at the abated price or at any price. She gave the following evidence on cross examination:
Q: Is it a fair assessment that [the Defendant] does not have any evidence in the record here today that proves that she was able to close the transaction at $1.85M (the abatement price)? A: Yes, and no financial records have been produced.
[42] Until the Property sold, the plaintiff would have to continue to pay carrying costs including interest on bridge financing which he obtained to finance the purchase of his new home, which would have continued to increase his damage claim.
[43] In summary, the record shows on a balance of probabilities that the plaintiff made reasonable efforts to market the Property and resold it to the best purchasers on the open market. The Property was relisted on the same terms and conditions as prior. The plaintiff referred to comparable properties and the advice of his agent during the process to achieve the highest resale price possible. The plaintiff, at all times, abided by his duty to mitigate damages which was tempered against the risk of letting reasonable offers die: Pollard v. Perry, 2022 ONSC 5168, at paras. 30-37. As set out in Briscoe-Montgomery v. Kelly, 2014 ONSC 4240 at para 16, to show reasonable mitigation, a plaintiff need not show that they took “every possible avenue to reduce the loss.” Further, the plaintiffs decisions should not be “scrutinized too harshly by the defendant since it was the defendant’s breach that brought about the necessity to make the decisions and it does not lie with the breaker of the contract to be overly critical.”
[44] The defendant has failed to put her best foot forward on the issue of mitigation by providing a market valuation, expert evidence criticizing the steps to sell taken by the plaintiff, or evidence that she could have closed at the reduced price that she offered.
Issue 2: What are the damages to which the plaintiff is entitled?
[45] As set out by Morgan J. in Goldstein v. Goldhar, 2018 ONSC 608 at para 25, the measure of damages is the difference between the original price under the agreement and the new price as well as any additional carrying costs.
[46] The difference between the sale price under the APS and under the Second Agreement is $435,000.
[47] The plaintiff also incurred carrying costs in respect of utility providers, property insurance, property taxes, mortgage interest, and interest in respect of a bridge loan between the closing date under the APS and the Second Agreement. These are the usual carrying costs which courts ordinarily award in such cases: 100 Main Street, at p. 17; Briscoe-Montgomery v. Kelly, 2014 ONSC 4240, at para. 23, Arista Homes (Kleinburg) Inc. v. Igbinedion, 2019 ONSC 7086, at para. 28; Goldstein v. Goldhar, at para. 25; Scott at paras. 46-52.
[48] The plaintiff provided documentary evidence for these.
[49] Additionally, the defendant has not disputed or contested the out of pocket expenses incurred during this period. No evidence has been raised by the defendant to suggest that these damages were unreasonable, too remote or excessive apart from the fact that these would not have been incurred if the plaintiff had accepted the defendant’s abated offer.
[50] The fact that the defendant says her agent did not advise her that the plaintiff had purchased another property and taken out bridge financing prior to the failure to close does not raise any genuine issue. Sellers are usually also buyers of other properties such that the existence of bridge financing is reasonably foreseeable.
[51] Therefore, the plaintiff’s damages are as follows:
| Item | Amount |
|---|---|
| Original Net Purchase Price | $2,125,000.00 |
| Re-Sale Price | -$1,690,000.00 |
| Difference | $435,000.00 |
| Alectra Utilities | $103.68 |
| Water Tank Rental | $124.73 |
| Property Insurance | $293.84 |
| Property Taxes ($5,796.43 / 365 * 73 days) | $1,159.29 |
| Scotiabank Mortgage Interest | $5,691.82 |
| First National Bank Bridge Loan Interest ($213.04 * 73 days) | $14,322.88 |
| Less Deposits | -$125,000.00 |
| TOTAL DAMAGES | $456,696.24 |
[52] I note that even though the plaintiff used a listing agent for the resale as part of his reasonable mitigation, he did not claim any commission payable to this agent.
Issue 3: Is this matter suitable for summary judgment?
[53] An additional argument made by the defendant is that she relied upon representations made to her by her own real estate agent that he would be able to assist her with obtaining financing to complete the transaction. The defendant did not make any third party claim against her agent. This does not raise any genuine issue vis a vis the plaintiff.
[54] For all of the above reasons, this matter is suitable for summary judgment. There are no genuine issues for trial raised by the defendant. I have been able to make the necessary findings of fact. This motion is a proportionate, more expeditious and less expensive manner of achieving a just result in this case: Hryniak v. Mauldin, at para. 49.
Costs
[55] The overall objective of a costs award is “to fix an amount that is fair and reasonable for the unsuccessful party to pay in the particular proceeding, rather than an amount fixed by the actual costs incurred by the successful litigant”: Zesta Engineering Ltd. v. Cloutier (2002), 21 C.C.E.L. (3d) 161 (Ont. C.A.), at para. 4; Boucher v. Public Accountants Council for the Province of Ontario (2004), 71 O.R. (3d) 291 (C.A.), at para. 26; Clarington (Municipality) v. Blue Circle Canada Inc., 2009 ONCA 722, 100 O.R. (3d) 66, at para. 52; and G.C. v. Ontario (Attorney General), 2014 ONSC 1191, at para. 5.
[56] The plaintiff requests $29,231.47 in costs on a partial indemnity basis inclusive of HST and disbursements. The defendant has provided her own Bill of Costs showing she incurred partial indemnity costs in the amount of $16,628.73 which is some evidence that the costs claimed by the plaintiff were not reasonably foreseeable.
[57] In all the circumstances and taking into account the itemized Bills of Costs of both parties, I award the plaintiff $20,000 in costs in the exercise of my discretion.
Conclusion
[58] I am satisfied that I have been able to arrive at a fair and just decision on the basis of the record before me and that there is no genuine issue in respect of liability or damages. I award the plaintiff $456,696.24 in damages together with $20,000 in costs.
[59] The defendant has paid $125,000 in deposits which are forfeited and which shall be set off against the damages owed.
Papageorgiou J.
Released: January 10, 2024
ONTARIO SUPERIOR COURT OF JUSTICE
BETWEEN: Aaron Darmanin Plaintiff – and – Harpal Kaur Dhiman Defendant
REASONS FOR JUDGMENT Papageorgiou J. Released: January 10, 2024