Court File and Parties
COURT FILE NO.: CV-23-00002159 DATE: 20240506 SUPERIOR COURT OF JUSTICE - ONTARIO
RE: VanderMolen Homes Inc. (Plaintiff/Defendant by Counterclaim) AND: Rennichan K. Mani and Seeniya Joseph (Defendants/Plaintiffs by Counterclaim)
BEFORE: Justice E. ten Cate
COUNSEL: Jack Masterman, for the Plaintiff (Moving Party) Michael Simaan, for the Defendants (Responding Parties)
HEARD: May 1, 2024
Reasons on Motion
ten cate, j.:
Introduction
[1] This summary judgment motion arises out of a failed real estate purchase of a newly constructed home. The plaintiff seeks an order awarding it damages for breach of contract, and the defendants seek the return of their deposits.
[2] For the following reasons, I agree with the plaintiff that the contract was breached and that damages are payable by the defendants.
Background
[3] The plaintiff, VanderMolen Homes Inc., builds custom homes. The defendants, Rennichan K. Mani, and his wife, Seeniya Joseph, are individuals.
[4] On January 13, 2022, the defendants signed an agreement of purchase and sale for a single-family home located at 26 Triebner Street, Exeter, Ontario. The defendants agreed to pay $937,400 and paid a deposit of $5,000 upon signing. The closing date was scheduled for August 31, 2022.
[5] The agreement was conditional upon fulfillment of certain conditions, including approval by their solicitor and arranging suitable financing. The deadline for confirmation of the fulfillment of those conditions was 6:00 pm on January 20, 2022. A further deposit of $88,740 was due upon removal of all conditions.
[6] On January 20, 2022, the defendants offered to extend the conditional terms to January 26, 2022. The offer to extend was irrevocable until 11:59 pm on January 21, 2022, failing which the offer to extend became null and void.
[7] The plaintiff signed the confirmation of acceptance one day later, on January 22, 2022.
[8] On January 26, 2022, the defendants signed a waiver of the conditions which was delivered to the plaintiff. The plaintiff also received the second deposit, paid through the defendants’ real estate agent.
[9] On May 7, 2022, and May 16, 2022, the plaintiff emailed both defendants regarding interior décor selections, with no response.
[10] On May 30, 2022, the plaintiff texted the defendants at the telephone number they provided on the agreement of purchase and sale, indicating that they had attempted emailing on multiple occasions with no response and as a result, décor selections had been made on their behalf. They asked that the defendants call if they had questions.
[11] On June 10, 2022, the plaintiff texted to the same phone number with no response. On the same day, a third party, Sarah Jacobs, sent an email to Mr. Mani asking for the defendants’ selection regarding countertops. She received no response and no “bounce back” to her email.
[12] The plaintiff concedes that there was a typographical error in the email address used to contact Ms. Joseph. However, the email address that was used for Mr. Mani was listed on the agreement of purchase and sale signed by the defendants. All parties agree that the telephone number provided for Mr. Mani was correct, but the defendants dispute that the text messages were sent or received.
[13] The defendants allege that they heard nothing for the ensuing six months from the plaintiff. They assumed the deal was not proceeding. However, there is no evidence that the defendants contacted the plaintiff to request the return of their deposits or to notify them that they did not intend to complete the purchase, prior to August 17, 2022.
[14] On August 10, 2022, the plaintiff’s real estate counsel, Barry Cleaver, wrote to Satish Dayanandan, a lawyer assisting the defendants, asking how the defendants intended to take title. The email noted that the purchase was scheduled to close on August 31, 2023.
[15] On August 12, 2022, the plaintiff spoke to Mr. Mani regarding a pre-delivery inspection. Mr. Mani advised that he needed to speak to his wife who was in India at the time. Mr. Mani gave no indication that the purchase would not be completed.
[16] On August 17, 2022, the defendants contacted the plaintiff and cancelled the pre-delivery inspection, which was scheduled for later that day. On the same day, Mr. Dayanandan advised Mr. Cleaver for the first time that the defendants would not be able to complete the purchase.
[17] On August 29, 2022, Mr. Cleaver spoke to Mr. Dayanandan who verbally advised that the defendants would not be able to complete the transaction. Mr. Cleaver then emailed Mr. Dayanandan to confirm. He received the following response:
“Further to our conversation earlier today I confirm my clients are unable to close the deal and request that property be listed for so [sic] that the damages can be lessened.”
[18] The plaintiff retained a realtor, Century 21, to list the property. On September 8, 2022, the property was listed for $849,000, based on the advice of the realtor, but there were no offers on the property. On February 7, 2023, the price was reduced to $799,900, again based on Century 21’s advice. Again, no offers. On April 4, 2023, the price was reduced to $749,900.
[19] On May 15, 2023, the plaintiff accepted a conditional offer for $710,000 but the conditions were not fulfilled, and the deal fell through. Another conditional offer was accepted on May 26, 2023, for $740,000, but it too fell through.
[20] Between May 26, 2023, and September 13, 2023, there were no further offers.
[21] On September 13, 2023, the price was reduced again to $724,900 based on further advice from the realtor. On September 17, 2023, the plaintiff accepted a conditional offer from a third party for $705,000. That transaction closed on October 11, 2023, and the property was transferred to a third party.
[22] The plaintiff now seeks total damages of $138,660.00 representing the difference between the price in the original agreement of purchase and sale ($937,400) and the ultimate sale price ($705,000), less total deposits paid by the defendants ($93,740).
[23] The plaintiff also seeks “carrying charges” incurred for property taxes, insurance, utilities, and maintenance costs associated with the property between the date the property was supposed to close (August 31, 2022) and the date the third-party buyers purchased the property (October 11, 2023).
[24] The total amount sought by the plaintiffs is $175,917.89 plus interest and costs.
[25] The plaintiff takes the position that this is a case of “buyers’ remorse” and that the agreement became binding once the conditions were waived and the second deposit was paid, on or about January 26, 2022.
[26] The defendants take the position that the agreement of purchase and sale was “dead” no later than midnight on January 21, 2022, and that they are entitled to the return of their deposits in the total amount of $93,740.
Issues
[27] The issues I am asked to decide are:
a. Is there a genuine issue that requires a trial? b. Is the missed deadline to accept the extension fatal to the contract because it contained the clause, “time is of the essence” ; and c. If the contract survived, what is the appropriate amount of damages payable?
Issue #1: Is there a genuine issue that requires a trial?
[28] Defendants’ counsel did not argue that there are genuine issues requiring a trial. Rather, I was advised that the defendants wished to seek a cross motion for summary judgement seeking the return of their deposits, based upon the materials before me, to save court time and resources.
[29] On the evidentiary record before me, I am satisfied that there is no genuine issue that requires a trial. Using the additional fact-finding powers under Rule 20.04(2.1) of the Rules of Civil Procedure, I can make the necessary findings of fact and apply the relevant legal principles to resolve the issues raised.
[30] Cross-examinations were conducted, and the relevant portions of the transcripts were provided to me along with the relevant documentation. I find that I can reach a fair and just determination on the merits based upon the evidence and that this matter can proceed in a summary manner as per Rule 20.02(2) of the Rules of Civil Procedure and the Supreme Court’s decision in Hyrniak v. Mauldin, 2014 SCC 7.
[31] Based upon the above, I conclude that a trial is not required.
Issue #2: Is the missed deadline to accept the extension fatal to the contract because it contained the clause, “time is of the essence”?
[32] The Court of Appeal in DiMillo v. 2099232 Ontario Inc., 2018 ONCA 1051 at para 31 interpreted a commercial real estate contract which contained the term: “time is of the essence”. The Court stated that such phrase means that a time limit in an agreement is essential, such that breach of the time limit will permit the innocent party to terminate, or rescind, the contract.
[33] A recent case, Coffey v. High, 2024 ONSC 420, is analogous to ours. In Coffey, the parties entered into an agreement in relation to the purchase of a cottage. The agreement required that a deposit be paid within 24 hours and that time was of the essence. Days after it was due, the purchaser paid, and the vendor accepted, the deposit. Five months later, the vendor took the position that the agreement was void because the deposit had not been paid in time. The court rejected the vendor’s position because, it said, the effect of the repudiation depends on the election by the non-repudiating party. If that party treats the contract as still being in full force and effect, the contract remains in force and effect for both sides. However, if the non-repudiating party accepts the repudiation, the contract is terminated, and the parties are discharged from future obligation. In other words, when a repudiating breach occurs, the innocent party has the right to elect to terminate the agreement. The court cited Nicolaou v. Sobhani, 2017 ONSC 7602 to support these principles.
[34] The defendants rely upon Firoozi v. 809963 Ontario Limited, [2005] O.J. No. 6233 (SCJ) for the proposition that if waivers are not delivered on time, the contract is null and void. They take the position that because the defendants did not expressly indicate that they wished to revive the agreement, it was no longer capable of acceptance.
[35] I do not find Firoozi, supra, applicable to our case. In that case, the non-repudiating party elected to terminate the agreement based upon late delivery. In our case, the defendants continued to treat the agreement as still being in force, despite the deadline missed by the plaintiff on January 21, 2022.
[36] On January 26, 2022, the defendants delivered a waiver of the conditions signed by both and the amendment to the agreement of purchase and sale. Additionally, the second deposit was received on January 25 or 26, 2022, although the defendants say that they wrote the two deposit cheques at the same time and gave them to their real estate agent. The fact remains that the second deposit cheque was cashed without any protest from them.
[37] I therefore find that the agreement of purchase and sale became binding on January 26, 2022.
[38] I find that it is of no moment that subsequent emails may have been sent to the wrong address and/or they did or did not “bounce back” because the agreement became binding on January 26, 2022.
[39] On August 12, 2022, the plaintiff spoke with Mr. Mani regarding the pre-delivery inspection. Mr. Mani did not ask for the deposits back, nor did he give any indication that the defendants did not intend to close the deal.
[40] For a period of approximately six months, the plaintiffs continued to construct the home.
[41] Despite paying a significant deposit of nearly $100,000, the defendants never requested its return prior to the commencement of this litigation.
[42] The email from Mr. Dayanandan is telling. It was argued that he was not formally retained by the defendants. However, his email refers to his “clients” and then states they are “unable to close the deal and request that property be listed for so [sic] that the damages can be lessened.” I find that Mr. Dayanandan, who was clearly speaking on behalf of the defendants, knew that the contract was valid and was requesting that it be listed to mitigate damages. In response, Mr. Cleaver confirmed that the defendants were unable to complete the transaction.
[43] In Nicolaou, supra at para 37, the Court of Appeal summarized the law relating to anticipatory breach. In short, an anticipatory breach sufficient to justify the termination of a contract occurs when one party, whether by express language or conduct, repudiates the contract or evinces an intention not to be bound by the contract before performance is due. To assess whether the party in breach has evinced such an intention, the court is to ask whether a reasonable person would conclude that the breaching party no longer intends to be bound by it.
[44] I find that the email from Mr. Dayanandan to Mr. Cleaver would lead a reasonable person to conclude that the defendants no longer wished to be bound by the contract. I therefore find that although the contract could have been terminated by the defendants at 12:00 midnight on January 21, 2022, after the plaintiff missed the deadline, they did not elect to treat the contract as at an end. Rather, they continued to treat the agreement as being in full force and effect until August 17, 2022, when it was anticipatorily breached.
Issue #3: What is the appropriate amount of damages?
[45] This court in Spiridakis v. Li, 2020 ONSC 2173, upheld at 2021 ONCA 359, at paras 95 to 97 outlined the principles related to mitigation with respect to expectation losses payable as a result of a contractual breach. In general, expectation loss is the amount required to put the innocent party in the position it would have been in had the contract been performed as agreed. However, the law requires innocent parties to take all reasonable steps to mitigate the losses caused by a breach. It is well-settled law that the onus of proof to establish a failure to mitigate is on the defendants (Spiridakis, supra, at para 100).
[46] The defendants assert that the plaintiff failed to accurately represent the number of bedrooms which may have had the effect of reducing the price paid for the property by the ultimate purchaser. No appraisals were obtained by the defendants; they simply speculate that the change in marketing strategy adversely affected the price. As per Spiridakis, supra, the onus is on them to prove that the plaintiff failed to mitigate by marketing the home as having three bedrooms plus an upstairs laundry versus four bedrooms.
[47] The plaintiff’s evidence is that it relied on Century 21’s advice to modify the listing after reductions in price failed to attract buyers. They advised the plaintiff to install a laundry hook-up in one of the upstairs bedrooms so that potential buyers could decide whether the room could be used as a laundry room. No change to the floor plan was ever made.
[48] I find that the defendants have failed to discharge their onus and that the plaintiff is entitled to the full difference in the price of the home.
[49] The next issue is carrying costs. While I find there is sufficient documentary support for the property taxes and utilities, there is no supporting documentation regarding the insurance premiums paid with respect to this property because the policy covered all the properties under construction. Without a copy of the policy and some indication as to how the premium was allocated, it is not possible for me to make such a determination and I decline to do so.
[50] There is also a dearth of evidence regarding expenses associated with “site visits”. I was not provided with mileage logs or time sheets evidencing the work, nor any real explanation for the hourly amount of $130 for employees’ time to maintain the property. I am therefore not prepared to award the amount of $30,860 for maintenance expenses.
Disposition
[51] Based upon the above, I therefore award the plaintiff damages as follows:
Loss on sale price $232,400.00 Less deposits paid ($93,740.00) Subtotal $138,660.00 Property Taxes 1,164.97 Utilities 2,932.92
TOTAL $142,757.89
Costs
[52] The parties have submitted bills of costs. If they are not able to agree, then further submissions are to be delivered electronically to my assistant at grace.griffin@ontario.ca within 14 days. Further submissions should not exceed two pages in length, double-spaced.
“Justice E. ten Cate” Justice E. ten Cate
Date: May 6, 2024