Court File and Parties

COURT FILE NO.: CV-21-2459 (Brampton) DATE: 2024-06-07 ONTARIO SUPERIOR COURT OF JUSTICE

BETWEEN:

MAUREEN BONNER, FREDRICKA WILLIAMS and ANDREA BONNER Plaintiffs

-and-

SUKHPAL SINGH GILL, AMANDEEP KAUR GILL, JAGDEEP SINGH GILL and KAMALJIT KAUR GILL Defendants

Counsel: Yuvraj Katodia, for the plaintiffs Prabhjot Singh Badesha, for the defendants

Heard: January 16, 2024 and March 27, 2024 by video conference

Justice R. Chown

REASONS FOR DECISION

[1] This case arises from a failed residential real estate deal. The defendants agreed to buy 154 Muirland from the plaintiffs but did not tender payment on the closing date. The plaintiffs were relying on those funds to close the purchase of another property, 25 Emerald Coast. The plaintiffs had to pay $75,000 to extend the closing on Emerald Coast or risk losing the property and being exposed to a claim for damages from the sellers of Emerald Coast. The plaintiffs seek summary judgment against the defendants for that $75,000.

Facts

[2] The plaintiffs are Andrea Bonner, her mother Maureen Bonner, and her grandmother Fredricka Williams. The salient facts are as follows:

• On April 1, 2021, the plaintiffs Andrea and Maureen Bonner agreed to buy 25 Emerald Coast from non-parties. They intended to move in together to this residence.
• On April 11, 2021, the plaintiff Andrea Bonner agreed to sell her premises at 113 Crystal Glen to non-parties.
• On April 17, 2021, the plaintiffs Maureen Bonner and Fredricka Williams agreed to sell 154 Muirland to the defendants. Ms. Williams did not live at this residence but held joint title to it.
• May 17, 2021 was the agreed-upon closing date in all three deals.
• The plaintiffs did not advise the defendants about the other two deals closing that day. There is no evidence that the defendants were aware that plaintiffs were purchasing another property or were aware that that purchase depended on the deal with the defendants closing.
• The plaintiffs Andrea and Maureen Bonner took a mortgage to fund their purchase of Emerald Coast, but also required the funds from the sale of Muirland and Crystal Glen to close the Emerald Coast transaction.
• On May 17, 2021 at 1:54 p.m. the defendants advised the plaintiffs that their mortgagee had not provided their lawyer with instructions and they therefore needed an extension to May 19, 2021 on their purchase of Muirland from the plaintiffs. The plaintiffs were ready, willing and able to close with the defendants on May 17, 2021.
• On May 17, 2021 at 4:28 p.m. the plaintiffs emailed the seller of Emerald Coast to say that they had received mortgage funds but were waiting for funds from the sale of Muirland. They requested an extension to May 19, 2021. The sellers of Emerald Coast replied that they needed time to consider the request until 11:00 a.m. on May 18, 2021.
• On May 18, 2021 at 11:38 a.m., the sellers of Emerald Coast told the plaintiffs they were seeking additional consideration of $75,000 to extend to May 19, 2021.
• On May 18, 2021 at 2:16 p.m. the plaintiffs’ lawyer emailed a letter to the defendants’ lawyer saying, “Our clients are selling to buy and were unable to complete their purchase transaction because you did not close.” The plaintiffs demanded the additional $75,000 and $2,565 in other expenses. This was the first indication to the defendants that the plaintiffs were “selling to buy.”
• The plaintiffs demanded an additional $75,000 from the defendants and reserved the right to litigate, but closed both the Muirland and Emerald Coast transactions on May 19, 2021 without receiving the additional consideration from the defendants.

Preliminary Issues

[3] During the hearing the plaintiffs acknowledged that their claim for general damages and inconvenience is not amenable to summary judgment. Counsel for the plaintiffs advised that if the court is willing to deal with the case on a summary judgment basis, the plaintiffs would be content to forego this aspect of their claim.

[4] There was a further preliminary issue arising from the failure of the plaintiffs to answer undertakings given at Andrea Bonner’s cross examination. I required the plaintiffs to answer those undertakings before proceeding with the motion. I also invited further submissions addressing whether it was within the reasonable contemplation of the parties that the plaintiffs would need the funds from the sale to the defendants to close on another purchase the same day, and I referenced Godin v. Jenovac (1993), 35 R.P.R. (2d) 288 (Ont. Ct. (Gen. Div.)) and Harris v. Garcia, 2016 ONSC 3140 as cases that considered this issue.

Issues

[5] The defendants acknowledge that they were unable to complete the transaction on the closing date. They do not dispute liability for breach of contract.

[6] The only element of damages claimed by the plaintiffs is the $75,000 amount that they had to pay to extend the closing on the purchase of Emerald Coast.

[7] The remaining issues in this motion are:

1. Is this matter one in which summary judgment is appropriate?
2. Is the claim for $75,000 paid to extend closing on Emerald Coast too remote?
3. Did the plaintiffs properly mitigate their damages?

1. Summary Judgment

[8] The Supreme Court of Canada said in Hryniak v. Mauldin, 2014 SCC 7, at para. 5, that “summary judgment rules must be interpreted broadly, favouring proportionality and fair access to the affordable, timely and just adjudication of claims.” In this case, the facts are largely undisputed, and given the amount in issue ($75,000), proportionality deserves some emphasis.

[9] The defendants argued in their factum that summary judgment was not appropriate because numerous undertakings were outstanding. These undertakings primarily related to the supporting documentation for the damages. As indicated, they have now been answered.

[10] The defendants also argued that there is a factual issue over whether the plaintiffs could have financed the purchase of Emerald Coast from the proceeds of the Muirland and Crystal Glen alone. I address this in my reasons below and do not consider this issue an impediment to summary judgment. In this case it is not difficult to make the necessary findings of fact, apply the law to the facts, and achieve a just result through a summary judgment motion. A trial is unnecessary.

2. Remoteness

[11] The principle of remoteness imposes reasonable limits on damages awards as required by fairness: Matheson (D.W.) & Sons Contracting Ltd. v. Canada (Attorney General), 2000 NSCA 44, at para. 69. The rule aims “to prevent unfair surprise to the defendant, to ensure a fair allocation of the risks of the transaction, and to avoid any overly chilling effects on useful activities by the threat of unlimited liability”: RBC Dominion Securities Inc. v. Merrill Lynch Canada Inc, 2008 SCC 54, at para. 64, per Abella J. (dissenting in part), citing from Cassels, Jamie, and Elizabeth Adjin‑Tettey. Remedies: The Law of Damages, 2nd ed. Toronto: Irwin Law, 2008, at p. 352.

[12] The applicable legal principle was laid out 170 years ago in Hadley v. Baxendale (1854), 9 Ex. 341, 156 E.R. 145, where Alderson, B. said that damages must be:

such as may fairly and reasonably be considered either arising naturally, i.e., according to the usual course of things, from such breach of contract itself, or such as may reasonably be supposed to have been in the contemplation of both parties, at the time they made the contract, as the probable result of the breach of it.

[13] Alderson, B. went on to say that if the defendants were made aware of special circumstances that would alter the expectations of the parties regarding the damages they could reasonably contemplate, then the damages would be “the amount of injury which would ordinarily follow from a breach of contract under these special circumstances.”

[14] In this case, the defendant purchasers were not told that the plaintiffs were purchasing another property with the same closing date, or that the plaintiffs were counting on the funds from the defendants to close that transaction. That is, no “special circumstances” were communicated to the defendants. Therefore, the damages are limited to those that may fairly and reasonably be considered as arising naturally from the breach.

[15] In applying these principles, the following questions arise:

• When you buy a house, do you fairly and reasonably expect that the seller may need the funds for another transaction? That is, if you have not been told the sellers will need the funds for another transaction, should you expect that they will?
• Should you reasonably expect that the seller will need the funds on the very same day of closing?
• What should you expect the seller might lose if you fail to close?

[16] The leading authority in Ontario that addresses these issues is perhaps Kasekas v. Tessler (1998), 4 R.P.R. (2d) 110 (Ont. C.A.). In that case, a residential sale did not close, and the trial judge found the defendant buyer liable. On the strength of that intended sale, the plaintiff sellers had agreed to purchase another property. That transaction in turn failed to close and resulted in litigation against the plaintiff sellers. The plaintiff sellers settled that litigation and claimed against the defendant buyers for the full amount they had had to pay to settle it. That is, they claimed the full damages and costs and legal fees incurred. The trial judge granted judgment for the full amount. The Court of Appeal said:

We were concerned with that award because the usual measure of damages payable to a vendor when a transaction is repudiated is the loss on resale, and that amount had already been awarded by the trial Judge.

[17] However, the court went on to uphold the trial judge’s award, citing with approval the following passage from Cuttell v. Bentz (1986), 70 B.C.L.R. 85 (S.C.), at pp. 106-107:

This claim is relatively straightforward and the issue is essentially one of causation. It turns on the answers to three questions. First, could it reasonably have been anticipated that vendors in the position of the Cuttells would, on the strength of an unconditional contract to purchase their property for cash, commit themselves to purchase of another property? I have no difficulty answering that question in the affirmative. Secondly, was it reasonably foreseeable that vendors in their position might rely on the proceeds of sale to meet their contractual obligations on another house and, if deprived of those moneys, be driven to default on their contract of purchase? That question too requires an affirmative answer. The cost of carrying two homes is beyond the means of many, if not most, people. Thirdly, could it reasonably have been foreseen that vendors in the Cuttells’ position might not be able to find another purchaser for their home in time to permit them to complete their purchase of the other property, with consequent financial loss. That question ought also to be answered affirmatively.

[18] The two cases I asked counsel to address in further submissions, Harris v. Garcia, 2016 ONSC 3140 and Godin v. Jenovac (1993), 35 R.P.R. (2d) 288 (Ont. Ct. (Gen. Div.)), involve similar circumstances to those in this case, but both are distinguishable, in part. In those cases, unlike here, the buyers had been made aware that the sellers were committed to other transactions.

[19] Harris is a decision in a summary judgment motion. The case arose from a residential real estate transaction set to close on April 30, 2014. The Harrises were selling to the Garcias. Two years earlier, the Harrises had contracted with a builder for the construction and purchase of a custom-built house. That purchase was also scheduled to close on April 30, 2014. When the Garcias requested an extension, the Harrises refused. The deal did not close. The Harrises could not sell their property for the same price the Garcias had agreed to pay. The Harrises obtained extensions from their builder but ultimately were not able to close on the new house. They lost the deposits totalling $310,000 that they had paid the builder. They claimed this amount, along with other costs, from the Garcias and brought a summary judgment motion. On the question of damages, there was a genuine issue requiring a trial as to whether the $310,000 in construction deposits, arising from a contract made two years earlier, were too remote. The motions judge in Harris, at para. 80, concluded that a trial was necessary “to resolve the factual issues and to apply the applicable law.”

[20] In Godin, a trial decision, the Godins agreed to buy a house from the Jenovacs. The Jenovacs had previously agreed to buy another property from someone else. The Jenovacs told the Godins that they had purchased another house, and that the closing was coming up. The Godins backed out of the purchase from the Jenovacs after finding out that the property was near a former landfill site and that the agreed price was high for that neighbourhood. To the trial judge, it was significant that the Jenovacs had entered into their agreement to build the new house before agreeing to sell their property to the Godins. Clearly, the Jenovacs did not contract to purchase the new house on the strength of the sale to the Godins. The trial judge also found that even though the Godins knew the Jenovacs had agreed to buy a new home, the Godins did not know the Jenovacs needed the money from the sale of the property to close on the new property. He found that “it was not within the reasonable contemplation of the parties that the Jenovacs would need the funds from the sale” to close on the new house. However, importantly, he also found that the Jenovacs “were looking for a way out” of the purchase of the new property. He did not allow the claim for losses relating to the aborted purchase of the new property.

[21] As can be seen, remoteness questions resolve on the detailed facts of the cases in which they arise, and they are often a difficult call. An example of a case in which respected jurists came to a different view on the same facts is Kienzle v. Stringer (1982), 35 O.R. (2d) 85 (C.A.), leave to appeal refused (1982) 38 O.R. (2d) 159 (S.C.C.). It was a solicitor’s negligence case, and one of the controversies was the extent of the solicitor’s liability for consequential losses, including the loss of increase in value of a farm in Kincardine. I found the case instructive and will quote two lengthy passages.

[22] Zuber J.A., for the majority, said:

It may be helpful to recognize that in using the terms “reasonably foreseeable” or “within the reasonable contemplation of the parties” courts are not often concerned with what the parties in fact foresaw or contemplated. (I leave aside those cases where the disclosure of special facts may lead to the conclusion that a party has assumed an extraordinary risk.) The governing term is reasonable and what is reasonably foreseen or reasonably contemplated is a matter to be determined by a court. These terms necessarily include more policy than fact as courts attempt to find some fair measure of compensation to be paid to those who suffer damages by those who cause them.

In the ordinary course, a client relies on his solicitor to guarantee the title that he certifies. The fee charged is calculated upon the sale price of the title certified and arguably the size of the risk assumed. It is not unreasonable to add to that risk consequential damages immediately concerned with the failure of marketability.

This reliance, however, does not or should not extend to the loss of profits from secondary transactions which may be fuelled by funds expected from the marketing of the subject real property. This range of secondary transactions is unpredictable and limitless and so are the losses that may flow therefrom. If the ambit of reasonable foreseeability takes us into this area of secondary transactions it is difficult, if not impossible, to know where a boundary may be found. In my view, the damages that flow from the loss of profits from a secondary bargain lie on the far side of a Rubicon that should not be crossed; reasonable foreseeability takes us only to the shore. [Citations omitted. Emphasis added.]

[23] Wilson J.A. (as she then was), dissenting in part, said:

I recognize that this is not a “special knowledge” case, i.e., one in which the plaintiff communicated to the defendant at the time he retained him to obtain clear title to the Oxford farm that the Oxford farm was going to be sold in order to purchase the Kincardine farm. That would be the clearest case for recovery. However, I think it is common knowledge that the ability of the average person, whether farmer or homeowner, to move to a new farm or home frequently hinges on his ability to sell his existing one. No one is more aware of this than the solicitor who certifies that his client is receiving not only a “good” title but a “marketable” one. In my view therefore the frustration of a subsequent transaction through the defendant’s breach was an event which “would have appeared to the defendant as not unlikely to occur.” [Citations omitted. Emphasis added.]

[24] The jurisprudence calls upon judges to apply remoteness principles as a matter of policy to ensure a fair measure of compensation is awarded to those who suffer damages against those who cause them, while balancing concerns of unfair surprise to the defendant, ensuring a fair allocation of the risks of the transaction, and avoiding any overly chilling effects on commerce by the threat of unlimited liability. My task is to find the appropriate balance in this case.

[25] The Kasekas case, a decision of the Court of Appeal, points strongly towards holding the defendants liable for the payment the plaintiffs were required to make. To paraphrase from Kasekas and Cuttell, it could reasonably have been anticipated that sellers in the position of the Bonners would, on the strength of an unconditional contract to purchase their property for cash, commit themselves to the purchase of another property.

[26] The defendants point out that the Bonners committed to buying Emerald Coast before arranging the sale to the defendants. They say this circumstance is parallel to the circumstance in Godin. I do not agree. In this case, unlike in Godin, the plaintiffs reasonably relied on the defendants to close as they had agreed to do. If the defendants had not purchased Muirland, the plaintiffs would have time to arrange a sale to others or to otherwise arrange financing or arrange their financial affairs. The plaintiffs cannot be faulted for expecting the defendants to honour their contract. It is common knowledge that the ability of a homeowner to move to a new property frequently hinges on her ability to sell her existing one.

[27] To further paraphrase from Kasekas and Cuttell, it was reasonably foreseeable that sellers in the Bonners position might rely on the proceeds of sale to meet their contractual obligations on another house and, if deprived of those moneys, be driven to default on their contract of purchase. One of the lessons from Kasekas is that, as a broad and rough proposition, other parties can reasonably expect this. This is subject of course to exceptions depending on all the facts of the case, but as a general rule, it is not unreasonable for parties to real estate deals to coordinate closing dates on more than one deal. This allows parties to avoid expenses such as bridge financing, short-term accommodation, storage costs, and extra moving costs.

[28] Regarding the concern that the Gills are being exposed to damages for a secondary transaction with the attendant concern of indeterminate liability, one must consider that in the facts of this case, had the Bonners elected not to close on Emerald Coast, they would have incurred unknown expenses associated with obtaining short term accommodation, moving costs, and losses related to the failed transaction. The defendants could not have escaped liability for these losses. The Bonners might also have had to pay more to acquire another suitable property and they would have faced exposure to a claim from the sellers of Emerald Coast. All of this would have been caused by the Gills breach of contract and would have been unavoidable by the Bonners. It is not the case that they relied on the funds for some other investment, business, or money-making venture that was truly secondary to the transaction between the parties. If that had been the case, it could have justified allocating risk to the Bonners. But that is not the case, and in the circumstances here, it would be unjust to deny recovery to the Bonners.

[29] The $75,000 amount demanded by the sellers of Emerald Coast seems steep. One suspects that the sellers of Emerald Coast would not have been able to justify it. But the Bonners had to make a quick decision. Their exposure to damages could well have been higher than $75,000 had they not acceded to the demand, and the spectre of expensive litigation loomed large. By acceding to the demand, they at least eliminated exposure for legal costs that they might have had to pay to the sellers of Emerald Coast. It is easy for the Gills to now criticize the choice the Bonners made. But the Gills put the Bonners in the position where they had a difficult choice to make. I do not find their criticism persuasive.

3. Mitigation

[30] The defendants assert that the plaintiffs failed to mitigate their damages and that the mitigation issue is not amenable to summary judgment. I do not accept either of these arguments.

[31] The defendants argue that there is no evidence regarding efforts by the plaintiffs to negotiate the $75,000 demand made by the sellers of Emerald Coast. There is some hearsay evidence on the point in Andrea Bonner’s examination for discovery transcript, but that is not admissible in this motion. In other words, there is no admissible evidence that the plaintiffs tried to negotiate the $75,000. At the same time, there is no evidence that the plaintiffs did not try to negotiate this amount. The letters from the plaintiffs’ lawyer to the defendants’ lawyer are in evidence and suggest the $75,000 demand from the sellers of Emerald Coast was firm. There was little time for negotiation. The record does not establish a failure to mitigate on this basis, and I note that “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, at para. 24. This being a motion for summary judgment, the defendants also had the obligation to put their best foot forward, and there is nothing in the record to make me think that a trial would reveal additional evidence on these points.

[32] As part of their argument on mitigation, the defendants also suggested that between the mortgage amount the plaintiffs received to fund the purchase of Emerald Coast, and the amount they received for sale proceeds from Crystal Glen (both of which were received on May 17, 2021), they could have funded the purchase of Emerald Coast. The defendants say that this is a triable issue. This argument, however, treats the plaintiffs as one. The proceeds from Crystal Glen were Andrea Bonner’s alone, whereas the proceeds of Muirland were for Maureen and Fredricka.

[33] Furthermore, a party who is made aware of a breach is permitted a reasonable time to consider what steps it should take in response to the breach. The defendants cannot say that the applicants had to immediately make up their mind to close Emerald Glen using the funds from Crystal Glen.

[34] As I have already mentioned, the plaintiffs’ election to pay the $75,000 also eliminated the defendants’ exposure for financing costs, storage, extra moving costs, short-term accommodation, or other consequential expenses. In this sense, it can be said that payment of the $75,000 demand was in itself an effort to mitigate.

Result

[35] In result, the plaintiffs shall have judgment for $75,000.

[36] I will receive submissions in writing on costs. Submissions shall be limited to three pages plus bills of costs or costs outlines, offers to settle, supporting dockets or invoices, etc. Plaintiffs’ submissions by June 17, 2024. Defendants’ by June 24, 2024. No reply without leave.

Chown J. Released: June 7, 2024