Court File and Parties
COURT FILE NO.: CV-22-00001191-0000 DATE: 20240603 ONTARIO SUPERIOR COURT OF JUSTICE
BETWEEN:
BIANCA RENEE AMBER PHILP and BLAKE PHILP Plaintiffs – and – TOLANI ALVIN OSUNGADE, MARISA BAHADUR and CENTURY 21 INFINITY REALTY INC. Defendants
Counsel: Joseph J. Neal, for the Plaintiffs Sukanta Saha, for the Defendants
HEARD by videoconference: May 23, 2024
Reasons for Decision
REGIONAL SENIOR JUSTICE EDWARDS
1This is a motion for summary judgment by the Plaintiffs in relation to the aborted sale of their residence. The facts arise out of a standard form of Agreement of Purchase of Sale entered into between the parties which had a standard time of the essence clause. The transaction did not close. The Plaintiffs re-listed their home and now claim damages arising out of the Defendants’ breach of the agreement.
The facts
2Bianca Philp and Blake Philp (hereinafter the “Plaintiffs”) listed their property, located at 22 Parklawn Drive, Clarington, Ontario (the “Property”) on February 3, 2022, with their real estate agent, at a listing price of $799,900.
3Between February 3, 2022, and February 7, 2022, there were 32 showings of the Plaintiffs’ Property to prospective purchasers and their agents.
4On February 7, 2022, Tolani Osungade and Marisa Bahadur (hereinafter the “Defendants”) submitted an initial offer to purchase the Property in the amount of $999,000. The offer, as submitted by the Defendants, had the standard financing condition struck out before it was submitted to the Plaintiffs.
5With the knowledge that there was more than one offer being considered by the Plaintiffs, the Defendants submitted a further offer with a purchase price of $1,035,000. The Defendants submitted this offer having removed the standard financing clause. The Plaintiffs accepted the Defendants offer. The accepted offer, with a purchase price of $1,035,000, will be referred to throughout these reasons as the agreement.
6From the time that the offer became firm and the date of closing, April 25, 2022, there was no indication from the Defendants, communicated to the Plaintiffs, that the Defendants would require assistance from a financial institution to close the transaction. It was not until April 25, 2022, the scheduled date of closing, that the Plaintiffs’ lawyer received an e-mail at 10:59 a.m. indicating that the Defendants required an extension to the closing date for the transaction until May 2, 2022. The extension was necessitated, as a result of a requirement from a mortgage lender, to conduct an appraisal of the Plaintiff’s Property.
7On April 25, 2022, at 12:34 p.m., the Plaintiff’s real estate lawyer communicated with the Defendant’s real estate lawyer with terms for an extension of the agreement. The Plaintiffs position, as communicated by their lawyer to the Defendant’s lawyer, was that the agreement would be null and void unless all of the terms proposed by the Plaintiffs for the extension of the closing date were accepted by the Defendants. Those terms were not agreed to by the Defendants and, as such, the agreement did not close on April 25, 2022.
8Plaintiff’s lawyer advised the Defendant’s real estate lawyer that as a result of their failure to close the transaction the Plaintiffs would be re-listing the Property and that the Defendant’s would be responsible for any and all damages arising out of their breach.
9On April 29, 2022, the Plaintiffs re-listed the Property at a listing price of $799,900. The re-listing of the Property was for the exact same listing price that the Plaintiffs had listed their property for in February 2022.
10As a result of the re-listing of the Property, the Plaintiffs had 17 showings of their Property to prospective purchasers and, ultimately, an agreement of purchase and sale was entered into with an arm’s length purchaser on May 2, 2022, at a purchase price of $850,000.
11At the time that the Plaintiffs were selling their Property they had purchased another property which closed on April 22, 2022. The Plaintiffs took out a bridge financing in the amount of approximately $276,000 to allow them to close their transaction. The bridge loan that the Plaintiffs entered into was not repaid until the closing of their Property on May 27, 2022. The interest incurred, with respect to the bridge financing, is part of the damages claimed on this motion for summary judgment.
Position of the Plaintiffs
12The Plaintiffs’ position is simple. The agreement entered into with the Defendants had a closing date. The agreement was not subject to the standard financing condition which had been struck out by the Defendants prior to them submitting the offer to the Plaintiffs for their consideration.
13The Plaintiffs argue that the Defendants, being in breach of the agreement, entitles them to damages. The most significant damage claim includes the difference in the purchase price between what was offered by the Defendants and what the Plaintiffs were ultimately able to realize when they re-listed the Property and sold it for $850,000.
The Position of the Defendants
14The Defendants raise two defences. The first is that the Plaintiffs did not act in good faith by not granting an extension of the closing date of the agreement to May 2, 2022. The second defence raised is that the Plaintiff’s failed to mitigate their damages when they re-sold the Property for $850,000.
15As it relates to the mitigation defence, the essence of that argument amounts to a suggestion that the Plaintiffs failed to act reasonably in the steps they took to mitigate their damages. Specifically, the Defendants are referring to the time period between the original closing date and the proposed extension date being only nine days, and that the Property was eventually sold only 32 days after the original closing date for a purchase price of $185,000 less than the original sale price.
16The argument advanced by the Defendants, as it relates to the Plaintiff’s alleged failure to mitigate their damages, can be best summarized by quoting from the Defendant’s factum at paragraph 26, where the Defendants state:
26the Defendants respectfully submit that the Plaintiffs have made an inadequate business decision and are now relying upon this honourable court to rectify their mistake.
Analysis
17As it relates to the first defence advanced by the Defendants on this motion for summary judgment, specifically, the suggestion that the Plaintiffs did not negotiate in good faith when the Defendants sought an extension of time to obtain a mortgage financing, I inquired of defence counsel as to whether he could take me to any case law that stood for the proposition that vendors, in a standard form agreement of purchase and sale, are obliged when requested by a purchaser, to extend a closing date. In that regard, defence counsel was completely candid with the Court when he acknowledged that he was unaware of any case law that stood for such proposition.
18As it relates to the specific facts of this case, it is noteworthy that the Defendants had struck out the standard financing clause that would have provided the Defendants with the opportunity to terminate the agreement if they had not been able to obtain mortgage financing.
19The Defendants chose to submit an offer that often is referred to as a “clean offer”. The offer was not conditional on the ability of the Defendants to obtain financing. The offer included a standard clause that time was of the essence.
20The Defendants were represented by legal counsel. For reasons best known to the Defendants, they never made known to the Plaintiffs or the Plaintiffs’ real estate agent, or the Plaintiffs’ lawyer, that they needed mortgage financing to close the transaction. More significantly, the Defendants chose to notify the Plaintiffs of the need to obtain mortgage financing only on the date of closing. It is incomprehensible that the Defendants would not have known until the date of closing that the financial company that they were dealing with required an appraisal of the property. It was incumbent, in my view, on the Defendants to notify the Plaintiffs in a much more timely fashion of any need they might have had to extend the date of closing to accommodate the requirements of their financial institution.
21The Defendants chose to wait until the date of closing to seek an indulgence from the Plaintiffs to extend the closing date. The Plaintiffs were perfectly entitled to seek terms, as it relates to the indulgence sought by the Defendants. The Defendants chose not to agree with the terms proposed by the Plaintiffs, terms, which in my view, were entirely reasonable. There was no obligation on the Plaintiffs to extend the date of closing where the agreement clearly established a date for closing and the agreement contained a clause that time was of the essence. There is no merit to the Defendants’ defence that the Plaintiffs did not negotiate in good faith when confronted on the day of closing with a request to extend the closing date.
22As it relates to the mitigation of damages defence, there is no dispute that the Plaintiffs were under an obligation to mitigate. They did so by re-listing the Property at the exact same listing price as the property had originally been listed for. There was no evidence to suggest this conduct was unreasonable.
23The evidence establishes that the Plaintiffs re-listed the Property and then entertained a number of offers. Ultimately, the Plaintiffs entered into an agreement with an arm’s-length purchaser for the highest purchase price submitted.
24The onus is on the Defendants, when a mitigation defence is raised, to put before the Court evidence that would establish that the conduct of the Plaintiffs was unreasonable. The Court cannot, as was suggested by defence counsel in oral argument, take “judicial notice” of the real estate market conditions in the area where the subject property is located.
25In response to the mitigation defence, the Plaintiffs submitted an affidavit from their real estate agent that explained the change in market conditions between February 2022 and May 2022. Specifically, in that regard, the Plaintiffs’ real estate agent, Tyler Philp, stated at paragraph 13 of his affidavit that:
13By the end of April 2022, the real estate market in Courtice, where the property is located, had softened considerably, and offers were not coming in as high, nor were as many competing offers being received, for properties as they had been in January and February 2022.
26The Defendants did not cross-examine Mr. Philp. Mr Philp’s evidence, as it relates to the market conditions in Courtice where the property is located, is unchallenged. The Defendants did not put in any evidence with respect to the market conditions in Courtice where the Property is located. The Court is, therefore, left with the unchallenged evidence that the market conditions had, in fact, softened which explains why the Plaintiffs accepted the offer that they did when they were forced to mitigate their damages.
27To successfully meet their onus, the Defendants had an obligation to put evidence before the Court that, at the very least, would raise a genuine issue that the re-listing of the Property, at the same listing price as when the Defendants purchased it, was unreasonable. The issue, as it relates to the onus on the Defendants when raising a mitigation defence, was dealt with by Paraveski J. in Cuervo-Lorens & Zabik v. Linda L. Carpenter, 2016 ONSC 4661.
28In paragraph 6 of His Reasons, Paraveski J. in Cuervo-Lorens stated:
6I find that the purchaser reasonably mitigated her damages when confronted with the purchasers’ repudiation. She need only have acted reasonably. The onus is on the purchasers to show that she did not meet the standard. The evidence demonstrates that she relisted the property within six or seven days of the repudiation. She retained the services of the same real estate agent who had acted for her on the initial sale. The property was marketed using essentially the same methodology that resulted in the first sale. There were multiple offers, two or three of which did not result in binding agreements before the final one was entered into. All of this speaks of reasonableness. Of greater significance, however, in the context of a summary judgment motion, is the absence of evidence from a professional which opines that the shortcomings in the sale process alleged by the purchasers actually had any impact on the final sale price. It is not enough for the purchasers, upon whom the onus rests, to plainly and merely state, for example, that the six or seven day “delay” in the relisting of the property must have negatively affected its market price. The purchasers, it must be assumed, have put their “best foot forward” and it is lacking. The same holds for the other criticisms raised in their amended factum. It is similarly insufficient to argue that prices in the area generally rose during the relevant time period, thus suggesting that the vendor must have accepted less than market price when she agreed to sell the property for $50,000 less than the amount the purchasers were initially willing to pay. 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. There is little better evidence of market value than the price at which the property actually sold following what appears to be appropriate and apparently motivated marketing.
29The decision of Paraveski J. was upheld by the Court of Appeal in Cuervo-Lorens v. Carpenter, 2017 ONCA 109, where at paras. 2 and 3 the Court of Appeal stated:
2The motion judge concluded that the respondent acted reasonably in mitigating her damages. The property was relisted shortly after the repudiation through the same agent that handled the sale to the appellants. The property was resold approximately two months after it was relisted.
3The 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.
30It is clear from review of jurisprudence that a mitigation defence can only succeed where the Defendants put before the Court evidence as it relates to market conditions, that might lend credence to the defence argument that the Plaintiffs re-listed the Property for a purchase price that was unreasonable, given the market conditions. No such evidence is before the Court. In fact, the only evidence is that from the Plaintiff’s real estate agent evidence that was unchallenged on cross-examination.
31In my view, the Defendants have failed to put any evidence before the Court, as it relates to the defence of mitigation and, as such, summary judgment should follow.
32As it relates to the damages claimed, the Plaintiffs are entitled to recover the difference in the purchase as committed to by the Defendants, and the purchase price for which the Property was ultimately sold, being $184,984.18, less the deposit of $25,000, which has already been forfeited to the Plaintiffs. The other consequential damages claimed by the Plaintiffs, as reflected in the “Statement of Damages”, are all reasonable with the exception of the claim of $65.92 for additional interest on a vehicle loan. The Defendants are, therefore, ordered to pay to the Plaintiffs the sum of $159,915.26 as damages flowing from the Defendants’ breach of the agreement.
33The Plaintiffs are entitled to their costs of this action. The parties are encouraged to resolve the issue of costs. If the parties cannot resolve the issue of costs the Court will receive written submissions limited to 5 pages in length, which costs submissions are to be received no later than June 27, 2024. If submissions are not received by that date the Court will assume that the issue of costs has been resolved.
Regional Senior Justice Edwards Released: June 3, 2024