COURT FILE NO.: FS-14-397297 DATE: 20240611
ONTARIO SUPERIOR COURT OF JUSTICE
BETWEEN:
LEONA DUFFY Applicant – and – MICHAEL PAUL DUFFY Respondent
Counsel: Francine Sherkin, for the Applicant John Sheard, for the Respondent
HEARD: FEBRUARY 27, 2024
VELLA J.
REASONS FOR DECISION
Introduction
1The parties agreed to settle all their outstanding matters in this family law proceeding. The terms are reflected in Shore J.’s consent Final Order dated March 31, 2023 (the “Final Order”).
2The issue giving rise to the Applicant’s motion and the Respondent’s cross motion is the sale of the matrimonial home in the manner as stipulated in the Final Order.
3In brief, the Applicant states that she validly exercised her Right of First Refusal (“ROFR”) after the only “realistic” offer (as defined in the Final Order) was received. Therefore, she seeks, inter alia, an order transferring the Respondent’s interest in the matrimonial home (the “Home”) to her in accordance with the terms of the “realistic offer”, and some ancillary orders. In the alternative, she seeks an order under r. 1(8) dismissing the Respondent’s cross claim because of the Respondent’s admitted non-compliance with the Final Order.
4The Respondent states that no “realistic offer” (as defined in the Final Order) was ever presented because the requisite recommendation from the parties’ realtors to accept the offer did not occur. Furthermore, the parties effectively repudiated the sale terms relating to the Home when they decided to jointly retain two realtors instead of one. Therefore, the Applicant’s ROFR was not triggered. In the alternative, the Respondent submits that the Applicant exercised her ROFR after the subject offer expired, and it was therefore not valid. Therefore, he seeks an order requiring the Home to be re-listed for sale so that he might achieve a fair market value and proposes terms governing the sale that are different than provided in the Final Order. He also seeks ancillary orders, such as vacant possession of the Home, which is currently occupied by the Applicant and their two adult sons living with disabilities.
5The essence of this dispute focusses on the proper interpretation of the Final Order. In particular, whether the conditions set out in the Final Order were met and gave rise to the Applicant’s ability to exercise her ROFR, and, if so, whether the Applicant validly exercised her ROFR.
6It is worth repeating that the Final Order was entered into on consent and reflected resolution of all outstanding matters, including but not limited to the sale of the Home.
Issues
7The following issues must be determined:
(a) Do the terms of the Final Order prevail in light of the parties’ subsequent decision to retain two realtors instead of one realtor? (b) Did the parties receive a recommendation from their realtors to accept the subject offer to purchase the Home? (c) If yes, did the Applicant validly exercise her ROFR in a timely manner? (d) If no, is the Respondent entitled to seek redress from this court, or should he be precluded under r. 1(8) for noncompliance with the Final Order, and if he is entitled, what should the terms for relisting and sale of the Home be? (e) What is the appropriate disposition of sale proceeds from the Home?
8For the reasons that follow, the terms of the Final Order were not repudiated by the parties but modified by mutual agreement, the parties’ received a recommendation to accept the subject Offer, and the Applicant validly exercised her ROFR. Accordingly, it is not necessary to entertain the Respondent’s requested relief, or whether he is precluded from seeking that relief.
Background
9A brief review of the undisputed facts is helpful.
10The Final Order required the parties to follow the recommendations of their “realtor” with respect to the listing and sale of the Home, including any recommendation to accept an offer to purchase.
11However, the parties could not agree on a single realtor, and there was no mechanism in the Final Order to resolve this dispute. Therefore, they agreed to each select a realtor and then engage the two realtors as co-listing brokerage agents.
12The Applicant selected Susan Gucci, and the Respondent chose Drita Bruci.
13The parties jointly retained Susan Gucci and Drita Bruci as co-listing agents in early April 2023, as evidenced by a co-brokerage listing agreement signed by the parties and the real estate agents (the “realtors”), who were also brokers. Both realtors swore affidavits. Both realtors depose that they were jointly retained as realtors, though Ms. Bruci deposed that she was really representing the Respondent in this transaction as his choice of realtor.
14The co-brokerage listing agreement specifically referenced their role as realtors and an acknowledgement that they would follow the material terms from the Final Order. It was signed by both parties and the realtors.
15The first listing agreement was for the period from June 6 to August 5, 2023. The listed price was $999,000, based on various estimates and target prices prepared by Ms. Gucci and Ms. Bruci. At the end of the 60-day listing period, there were no offers made for the Home, and little interest had been shown by any prospective buyers or their agents despite some showings and online activity.
16The realtors discussed a further marketing strategy. They agreed to recommend listing the Home at $700,000. The Applicant agreed, but the Respondent did not agree.
17Ms. Gucci drafted a further listing agreement for the period from August 18, 2023, to November 18, 2023 at a listing price of $799,000 since the Respondent was agreeable to this, and it was signed by the parties. Again, despite showings and online activity, they initially received no offers.
18Finally, Ms. Gucci received an offer to purchase for $675,000 on October 2, 2023 (the “Offer”). She recommended this offer to both parties given the lack of interest in the property, the length of time the Home had already been on the market (approximately 4 months), and feedback received from prospective purchasers’ real estate agents that the Home was really a “tear down”.
19The content and fact of Ms. Bruci’s recommendation is disputed. However, she advised Ms. Gucci that she would recommend the Respondent issue a counteroffer between $750,000 and $760,000. However, Ms. Bruci did not receive a response from the Respondent and no counter-offer was issued.
20The Applicant agreed to follow Ms. Gucci’s recommendation to accept the Offer. The Respondent did not accept Ms. Gucci’s recommendation.
21The Offer expired on October 4, 2023. The parties dispute whether the offer expired at 11:59 a.m. or 11:59 p.m.
22When Ms. Bruci did not respond to Ms. Gucci as to whether she recommended acceptance or rejection of the offer to the Respondent or had received instructions from the Respondent to issue a counteroffer, the Applicant decided to exercise her ROFR. On October 4, 2023, at 7:10 p.m., Ms. Gucci wrote to Ms. Bruci advising that the Applicant was exercising her option to purchase the Home. She enclosed the Exercise of Right of First Refusal prepared by the Applicant’s lawyer, signed and dated October 4, 2023, to provide to the Respondent and his lawyer.
23The Respondent declined to recognize the ROFR purportedly exercised by the Applicant.
24After the Offer expired, the Home continued to show on the MLS as being listed for sale since the posting had not been removed.
25After the Applicant purportedly exercised her right of first refusal, a second offer from a different prospective purchaser was submitted. This offer was for $730,000. Neither party responded to the offer, and it also expired.
Issue #1: Were the Terms of the Final Order Modified or Repudiated?
26When interpreting the Final Order, the court must ascertain the mutual intentions of the parties when they entered into this consent agreement, as determined by the wording of the Final Order. Absent ambiguity, the court will give plain and ordinary meaning to the words chosen by the parties. The material provisions must be interpreted in harmony with the other provisions in the Final Order. In this case, the court will interpret the Final Order along the same principles of contractual interpretation as would be used for a contract or, more particularly, a settlement agreement. This is because the parties prepared the terms of the Final Order to reflect the terms of their full and final settlement agreement. [1] Accordingly, I shall approach the issue of interpretation using the same framework the courts use for contractual interpretation within the family law context: see; e.g.: Sattva Capital Corp. v. Creston Moly Corp., 2014 SCC 53, [2014] 2 S.C.R. 633; Bhasin v. Hrynew, 2014 SCC 71, [2014] 3 S.C.R. 494; Consolidated-Bathurst v. Mutual Boiler, [1980] 1 S.C.R. 888.
27The material provisions of the Final Order provide that the parties will jointly retain a real estate agent and follow the advice and suggestions of the realtor “with respect to the listings and sale of the home, as well as with respect to acceptance of any offers received on the home”. The Final Order stipulates that the Home will be listed within 60 days of the Final Order. Furthermore, it stipulates the terms for listing and sale of the Home, closing, and the disposition of net sale proceeds.
28Of particular importance, the Final Order provides:
- The parties shall follow the advice and suggestions of the realtor with respect to the listing and sale of the home, as well as with respect to acceptance of any offers received on the home.
- Subject to further agreement between the parties: a. The parties shall follow the advice of their realtor in soliciting and comparing offers, and shall follow the advice of the realtor with respect to acceptance of any offers they receive [Emphasis added].
29Also, of particular importance, the Final Order specifically addressed the Applicant’s option to buy out the Respondent’s interest in the Home through a ROFR:
- The Wife shall have a right of first refusal to purchase the property. She may purchase the property by matching any realistic offer to purchase the property (“Realistic” shall mean any offer that the parties’ real estate agent recommends that the parties accept).
30The Final Order also stipulates that if there is no accepted offer within 60 days of listing and/or the Applicant does not exercise her ROFR, then the parties shall update the listing in accordance with the realtor’s advice.
31The Final Order states, at para. 12, that the sale provision “satisfies all claims for retroactive support, equalization of Net Family Property and post-separation adjustments (all property related claims and retroactive support to December 31, 2022)”. This provision was made with the parties’ mutual knowledge that three of their adult sons were living with disabilities; all were in receipt of ODSP and lived full time with the Applicant. One of the sons, sadly, has since passed away, but the other two sons (one living with autism and the other with schizophrenia and alcohol abuse disorder) continue to live in the Home with the Applicant.
32Furthermore, at para. 18, of the Final Order, all claims made, or which could have been made in the action are settled (except for a divorce). The parties are also to execute full releases: Final Order, at para. 19.
33As the Respondent submitted, the Applicant is now prevented by virtue of the Final Order from raising any issues relating to the best interests of the children (or any of the resolved issues for that matter). This includes whether they are still dependents and the potential impact of having to move out of the Home in the event of a sale to a third party.
34The Final Order did not specifically address the situation in which the parties each appoint a realtor who then agrees to work with the other and provide recommendations on a joint basis under the co-brokerage agreement. The Final Order references “realtor” or “real estate agent” in the singular throughout. However, the Final Order specifically states that the provisions were subject to further agreement by the parties. Neither party seeks an order setting aside the Final Order in their respective notices of motion, though the Respondent seeks an order which would have the effect of significantly modifying some of the terms for listing and sale from what is reflected in the Final Order.
35The problem giving rise to this dispute is that by having jointly retained two realtors, the parties risked the realtors disagreeing on the viability of any offers received, and thus not making a joint recommendation. The Final Order provides no mechanism for resolving any such disputes. The scheme reflected by the Final Order is premised on there being no ambiguity or indecision relating to the realtor’s recommendation to accept, reject, or possibly counteroffer. The provisions of the Final Order also make clear that the parties have no discretion to disagree with the recommendations of the realtor as it relates to rejecting or recommending acceptance of an offer, the latter of which triggers the Applicant’s right to exercise her ROFR. The parties are obliged to accept an offer only if the “realtor” recommends acceptance. Furthermore, neither of the parties, nor their respective lawyers who acted throughout this transaction, addressed this potential issue at the time they decided to resolve the inability to select a common realtor in the manner that they did.
36The Final Order makes it clear that the parties agreed that whether an offer reflected fair purchase price was to be solely determined by their realtor. Nowhere in the Final Order does the phrase “fair market value” appear. Indeed, the Applicant’s right to exercise her ROFR is in relation to a “realistic offer to purchase”. As stated, the term “realistic” is specifically defined, at para. 9, to mean “any offer that the parties’ real estate agent recommends that the parties accept”.
37Similarly, nowhere in the Final Order is there any suggestion that either party will require an appraisal of the Home in considering whether any offer received is “realistic”.
38The scheme set out in the Final Order is intended to achieve finality within a relatively short period of time. The parties were to enter into a listing agreement within 20 days and then list the property for sale for 60 days. Closing was to take place no sooner than 75 days thereafter, to provide the Applicant and their sons an opportunity to find new accommodation in the event the Applicant did not exercise her ROFR, failing which the Home was to be re-listed “in accordance with the advice of the realtor”.
39The Respondent’s argument that the parties “departed” from the mechanism stipulated in the Final Order for determining “fair market value” of the Home when they decided to retain two realtors instead of one was not compelling. The only caselaw the Respondent advanced in support of his argument is Wright v. Wright, 2009 CarswellOnt 1817 (S.C.), at paras. 41-43. However, in Wright, the motions judge set aside the provision of the domestic agreement relating to the Applicant’s right of first refusal because in that agreement, the applicant could exercise this right over “any offer”. There were no safeguards to ensure that a “fair sale price will be achieved”.
40In the Final Order, the safeguard implemented was that of relying on the professional and independent advice of a realtor. The parties did not really change the mechanism for determining whether they must accept an offer, but rather added a complication by appointing two realtors instead of one. The complication that results arises if one realtor recommended the offer and the other rejected it. However, that is not the situation that manifested here, as will be seen.
41The Respondent does not address the fact that if the relevant provisions of the Final Order are set aside, the Applicant will have lost terms she negotiated for (including an exclusive ROFR) in exchange for resolving all her claims (including past support, equalization of net family property, etc.). He also does not suggest that the provision relating to ongoing spousal support is affected. There is no mechanism in the Final Order for severing portions of it. Really, the Respondent is looking to replace the process for determining what offer to purchase would be accepted, while removing the Applicant’s ROFR. He also proposes that the parties must obtain an updated appraisal to determine the reasonableness of any offers they receive. In short, his proposed process substantially re-writes the process in the Final Order and implements the concept of a “fair market value” rather than the defined concept of “realistic value”.
42There is no evidence that either the Applicant or the Respondent contemplated changing the terms of the listing and sale process in the Final Order when they agreed to appoint two realtors. Indeed, the parties instructed the realtors to follow the terms of the Final Order. All the conduct during the listing process was done in a manner that was consistent with the terms of the Final Order.
43It does not now lie in the mouth of the Respondent to say, after faced with the Applicant’s purported exercise of her ROFR of an offer he does not like, that the parties had already effectively repudiated the terms of the Final Order relating to the disposition of the Home, while maintaining the other provisions of this global settlement.
44This motion can be resolved on the factual issue of what the joint realtors’ recommendation was with respect to the Offer.
45I find that the parties agreed to alter the terms of the Final Order only to the extent of replacing the term “realtor” with “two jointly retained realtors”, with each party selecting their choice of realtor. Accordingly, the references to recommendation throughout the Home provisions now relate to the recommendation of the realtors, in this case, Ms. Gucci and Ms. Bruci. This interpretation is in harmony of the Final Order as a whole and reflects the conduct of the parties in entering into a co-listing agreement and during the listing and tendering process.
46In light of my ultimate finding that a “realistic offer” was tendered, triggering the Applicant’s right to exercise her ROFR, I do not have to speculate how the parties would have resolved the situation had their two realtors disagreed as to whether to recommend an offer.
Issue #2 - Did the Parties Receive a Recommendation from their Realtors to Accept the Subject Offer to Purchase the Home?
47The Applicant states that Ms. Gucci clearly recommended acceptance of the Offer and Ms. Bucci did not provide any recommendation but rather abdicated her responsibility under the Final Order. Therefore, Ms. Gucci’s recommendation prevailed. Alternatively, Ms. Bucci recommended acceptance to the Respondent, and he chose to ignore the recommendation. The Respondent states that Ms. Bucci recommended rejecting the Offer, notwithstanding Ms. Gucci’s recommendation to accept, and he followed her recommendation over Ms. Gucci’s.
48I must therefore resolve this credibility issue.
49The Applicant tendered her affidavit and Ms. Gucci’s affidavits.
50The Respondent tendered his affidavit, Ms. Bucci’s affidavits, and an affidavit from an appraiser, Giorgio Beghetto. The Respondent explained that the purpose of Mr. Beghetto’s expert evidence was merely to show that the “fair market value” of the Home at the time the Offer expired was higher than the Offer.
51No cross examinations were conducted, nor was questioning done.
52I can accept all, some, or none of the affidavit evidence of the respective witnesses. When examining the credibility (and reliability) of a deponent’s evidence, I will consider whose evidence is in harmony with the surrounding circumstances, including documentary evidence, as well as the witness’ own internal consistency or lack thereof. I will also consider the level of detail contained in the respective affidavits, the clarity of the affidavits, and any omissions that are material to the issues to be resolved. While I did not have the benefit of hearing viva voce evidence from the witnesses, this is not unusual in the context of motions and I have a sufficient evidentiary basis to make this assessment.
The Applicant’s Evidence
53The Applicant clearly deposed that on October 3, 2023, Ms. Gucci recommended that she and the Respondent accept the Offer. Ms. Gucci sent a follow up email to Ms. Bruci setting out her recommendation, her reasons for the recommendation and asking her to pass along her recommendation to the Respondent and his lawyer. The Applicant also deposed that Ms. Bruci advised that she recommended the Respondent (and Applicant) counter the Offer with a proposal between $750,000 - $760,000, but they did not hear back from the Respondent. Furthermore, the Applicant ultimately never received a recommendation from Ms. Bruci one way or the other.
54Ms. Gucci swore three affidavits. She clearly and unequivocally deposed that she recommended that the parties accept the Offer prior to its expiry and this recommendation was conveyed to both parties. She confirmed that she was aware of the terms of the Final Order and her role in providing recommendations, which the parties must follow. She deposed that she and Ms. Bruci had worked cooperatively throughout the listing and marketing of the Home.
55By way of background, Ms. Gucci deposed that the parties, as sellers, signed a listing agreement with the two real estate agents to list the Home for $999,000 for 60 days (June 6 - August 5, 2023). She deposed there was little interest shown and no offers. The feedback she and Ms. Bruci received was that the price was too high given the poor condition of the Home, which was essentially a “tear down” property.
56Ms. Gucci deposed that she and Ms. Bruci jointly recommended that the price be dropped to $700,000. She drafted the new listing agreement. The Applicant followed the joint recommendation and signed the listing agreement, but the Respondent refused to follow the recommendation and did not sign the new listing agreement. Ms. Bruci advised that the Respondent’s instruction was to list the Home at $799,000. Ms. Bruci subsequently advised the following day that she was now recommending that the Home be removed from the market and re-listed in the spring of 2024.
57Ultimately, both parties signed a second listing agreement on August 15 and 16, 2023 respectively, to list the Home for $799,000 for the period from August 18 - November 18, 2023.
58This time, there were approximately 40 showings, and there was “considerable” online activity by the end of September. However, again, no offers were initially tendered. According to Ms. Gucci, they were advised by a realtor for a prospective buyer that his client was likely going to offer $650,000, but after the prospective buyer consulted with her architect and found out the Home would likely have to be torn down, no offer was forthcoming. Ms. Bruci did not dispute this evidence.
59On October 2, 2023, an offer to purchase was submitted. The Offer was for $675,000 with the closing to be January 5, 2024. The Offer contained an “as is” condition, all in accordance with the terms of the Final Order.
60Ms. Gucci stated that she recommended acceptance to both parties and provided her reasons in a written exchange with Ms. Bruci. Ms. Bruci confirmed that she passed on the email and recommendation to the Respondent.
61Ms. Gucci deposed that she and Ms. Bruci were in communication by telephone, text, and/or email between October 2 and 4, 2023 with respect to the Offer. At no time did Ms. Bruci advise her of her own recommendation made to the Respondent, despite Ms. Gucci’s direct request. Rather, according to Ms. Gucci, Ms. Bruci told her that she was in limbo and unable to provide an opinion or recommendation; she was concerned about her reputation if she recommended acceptance. Ms. Bruci told her the market was unstable, poor for rebuilds, and the amount offered was low compared to other properties in the same neighbourhood. Ms. Bruci stated to Ms. Gucci that she wanted an appraisal, which she asked the Respondent and his lawyer to provide. Ms. Gucci states that despite her requests, Ms. Bruci did not provide any recommendation with respect to the Offer. Ms. Bruci did not ask her to pass on a recommendation to the Applicant.
62In a particular text exchange on October 2, 2023, Ms. Gucci confirmed with Ms. Bruci that when they discussed the Offer over the telephone, Ms. Bruci agreed to recommend it. However, in the responding text messages, Ms. Bruci stated that the Respondent and his lawyer would not accept the offer as they thought it too low. She also said that she would like to have some “back up” in the form of comparable sales in the neighbourhood or an appraisal, thus seemingly following the Respondent’s wishes.
63In her text response on October 2, 2023, Ms. Bruci asked “Can we not sign back at $750,000-$760,000 if [the Respondent] agrees?”
64Ms. Gucci attached an email exchange with Ms. Bruci from October 3, 2023 at 3:11 p.m. to 3:25 p.m. in support of her testimony. In this exchange, Ms. Gucci stated to Ms. Bruci that she was “under the impression you were going to recommend accepting” based on their conversation the morning the Offer was received. She confirmed that the week before that, they had agreed that they would recommend “lowering the price to $700,000” and that the Offer of $675,000 was “close” to that figure. She asked, “Please let me know what you suggest as I need to update [the Applicant]” and to “please get back to me as soon as possible as I am concerned about losing this offer and don’t want the only offer we have received to die”. She added statistics to the bottom of her email showing that while there were 6,506 hits on MLS since August 18, 2023, when the price was lowered to $799,000, there had been 47 showings since the original listing date of June 6, 2023. The property had been on the market for 106 days, whereas the average number of days for similar bungalows in the same area was 9 days. Only one offer had been received, conditional on survey and being satisfied of the lot size. She reminded Ms. Bruci that “we have emailed, called and texted each of the agents that have shown the property to ensure we have left no stone unturned.”
65The responding email from Ms. Bruci on October 3, 2023 at 3:24 p.m. is simply as follows: “Hi Susan: Email was sent to the lawyer and [the Respondent], will keep you posted.”
66Subsequently, Ms. Bruci told Ms. Gucci on the morning of October 4, 2023 that she had suggested a counteroffer between $750,000 to $760,000 to the Respondent based on his and his lawyer’s advice he would not accept the Offer, but she had not received those instructions. Ms. Bruci further told her that the Applicant should put in an offer for at least $800,000 and if she did not, Ms. Bruci would assist the Respondent in making an offer for $800,000 with a mortgage preapproved through the Respondent’s son’s covenant. However, no offers were presented, and the only offer that had been tendered on the Home since the original listing expired.
The Respondent’s Evidence
67In contrast, the Respondent deposed that Ms. Bruci told him that the Offer was low and recommended that he not take it. He followed her advice in declining the offer. He further deposed that he intended to follow Ms. Bruci’s advice to “achieve fair market value for the home” and proposes to relist the Home for sale in the spring of 2024 in accordance with Ms. Bruci’s instructions.
68The Respondent’s affidavit, unlike the Applicant’s, is very brief (six paragraphs and about one and a half pages, including the title of proceedings). The only other aspect of the Applicant’s affidavit that he responded to was with respect to his two sons’ disability level. He states that their disability level was previously disputed but has now been “dismissed as part of the final settlement in this matter”, per para. 18 of the Final Order. He did not attach any written communications he and/or his lawyer received from Ms. Bruci.
69Ms. Bruci swore an affidavit dated January 5, 2024, and then a supplementary affidavit sworn February 16, 2024. She agrees with Ms. Gucci regarding how they became jointly retained in the listing of the Home. However, she stated that her role was to achieve “maximum market value” and that while she “represented Mr. Duffy”, this objective would benefit both parties. She confirmed that in April 2023 her suggested targeted price was between $1,100,000 and $1,300,000. She noted that Ms. Gucci agreed with this target price. She noted that Ms. Gucci’s market analysis showed that comparable homes sold in the same area between April 2022 and March 2023 sold for a range of $760,000 and $1,049,000.
70Ms. Bruci does not dispute Ms. Gucci’s assertion that they did their best to market the Home but received no offers as of August 2023. She affirmed that, when the original listing period expired, she agreed with Ms. Gucci that the listing price should be lowered to $700,000 but, from her perspective, this would have reflected a strategy to attract interest with the hope it would spur a bidding war. It was not intended by her to be the new target price.
71When the Offer for $675,000 was submitted, Ms. Bruci considered this a “low-ball” offer. She texted Ms. Gucci and suggested a counteroffer for at least $750,000 to $760,000.
72Ms. Bruci opined that the land alone “could still fetch at least $900,000, and perhaps much higher” if the Home “is sold to the right investor”. She draws on Mr. Beghetto’s appraisal and opinion in support of her views.
73Ms. Bruci stated that in response to Ms. Gucci’s text messages asking her to recommend the Offer, she said that an appraisal should be done because no comparable sales justified this price point in her view. Ms. Bruci did not attach screenshots of the text messages and did not explain why she did not attach them. The text messages were sent in early October 2023, and the affidavit was sworn in early January 2024, about four months later. Given the controversy around the recommendation relating to the Offer and the purported exercise of right of first refusal, and Ms. Bruci’s admitted contact with the Respondent and his lawyer regarding her views about the Offer, it is reasonable to infer that she would not have deleted the text conversation if she thought it relevant to this dispute. Furthermore, neither the Respondent or his lawyer produced any of their text or email communications with Ms. Bruci. The Respondent does not address this omission in his affidavit.
74Ms. Bruci advised that as the listing had not been removed from MLS, an offer was submitted on October 10, 2023 for $730,000. She deposed that she spoke to the prospective buyer’s realtor who advised it was a “starting offer” and they would consider a sign back of an increased offer to $750,000 or $760,000. She attached this offer to her affidavit. However, as the Applicant took the position that she validly exercised her ROFR, she was unwilling to acknowledge the subsequent offer. In Ms. Bruci’s view, this was now a multiple offer situation. She attached a bulletin issued under the former Real Estate and Business Broker’s Act indicating that in multiple offer situations all parties must be notified about all the offers. She does not account for the fact that the Offer had already expired. Notwithstanding the controversy around the Applicant’s purported exercise of her ROFR, this was not a multiple offer situation.
75With respect to the critical issue of whether Ms. Bruci provided a recommendation to the parties (or at least to the Respondent) regarding the Offer, she states, at para. 45:
I disagree with Ms. Gucci’s statement in paragraph 18 of her Affidavit. She indicates that I would not provide a recommendation to accept the First Offer out of concern about my reputation. To be clear, my advice with respect to the First Offer aimed to get the clients fair market value and avoid an unfair deal. This is the fiduciary obligation of all realtors. With respect to the First Offer, no data supported the low price offered, even including data dating back several years in the area.
76In her reply affidavit dated February 16, 2024, which responded to Ms. Gucci’s affidavit dated January 16, 2024, Ms. Bruci takes issue with some of Ms. Gucci’s paragraphs concerning “comparable properties” in the neighbourhood and whether the Home was and is rentable.
77She also states the following with respect to the Offer:
[T]he sellers would ‘sign it back’ at a higher amount. The reality here is that Ms. Duffy refused to “sign back” the offer while it was live – instead, she waited until the offers expired without negotiating at all, then claimed that the $675,000 offer reflected fair market value and sent her purported exercise of right of first refusal after the buyer’s offer had already become null and void.
This statement about the alleged refusal by Ms. Duffy to sign back the Offer is not supported by the evidence. The evidence shows that it was the Respondent who neglected or refused to provide Ms. Bruci with instructions to sign back a counteroffer, and that she was “in limbo” until then. This distortion suggests that Ms. Bruci is acting as an advocate for the Respondent.
78Furthermore, Ms. Bruci admits that she was reluctant to make a recommendation to accept the Offer in the absence of an appraisal. There is no evidence to suggest that any such appraisal was attempted, or even possible within the short time frame provided before expiry of the Offer. In any event, given the terms of the Final Order, which both realtors accepted, Ms. Bruci had an obligation to make a recommendation one way or the other prior to the expiry of the Offer. If she was reluctant to recommend acceptance without an appraisal and received no response to her recommendation to counteroffer, then she could have recommended rejection to the parties.
79Further, it is telling that there is a lack of a clear statement in either of Ms. Bruci’s affidavits about whether she recommended the Respondent reject or accept the Offer. It appears that Ms. Bruci recommended the Respondent counteroffer, and he did not. Ms. Bruci does not adopt or affirm the Respondent’s statement in his affidavit that she recommended he decline the offer. Furthermore, Ms. Bruci does not specifically dispute Ms. Gucci’s assertion in the text message exchange of October 2, 2023, referenced above, that they had agreed to jointly recommend acceptance of the Offer when it came in.
80No where does Ms. Bruci suggest that she asked Ms. Gucci to convey a recommendation to the Applicant.
Analysis
81Returning to the Final Order, the parties are required, at paragraph 4, to “follow the advice of the realtor with respect to acceptance of any offers they receive”. This is repeated in paragraph 5a. The Final Order requires the realtors, and these realtors affirm they understood, to give advice with respect to any offers they received. That advice would be to accept or reject the offer in question – not to delay a recommendation pending appraisals or other steps beyond expiry of the offer. There was scope to make suggestions, and this could include making a counteroffer. However, at the end of the day, once the negotiation period was finished, the realtors had to make a firm recommendation to either accept or reject the subject offer. This is in keeping with the Final Order which put into place an efficient and specific process for the sale of the Home as part of the full and final settlement of all of the outstanding family law issues.
82Given that the critical issue in this motion is whether Ms. Bruci and Ms. Gucci gave a recommendation regarding the Offer, as mandated by the Final Order, it would have been essential that Ms. Bruci state in one of her affidavits that she in fact ultimately recommended that the Respondent and the Applicant reject the Offer prior to its expiry, if that is her position. Instead, there are carefully crafted affidavits that may infer Ms. Bruci recommended rejection, but there is in fact no such statement as to what her recommendation was. Rather, the affidavits and exhibits reveal that Ms. Bruci abdicated her role under the Final Order to make a recommendation to the parties regarding the Offer and instead sought instructions from the Respondent as to what her recommendation should be. This runs completely counter to the Final Order.
83Ms. Bruci lost sight of her role under the Final Order. Her role was to make recommendations along with Ms. Gucci, and then, if the recommendations were jointly made, those recommendations would be followed by the parties (whether they liked the recommendations or not). Instead, she appears to be asking the Respondent repeatedly for his instructions regarding the merits of the Offer and her proposed negotiation and marketing strategies, and appeared to follow them, contrary to the Final Order.
84In addition, neither the Respondent nor Ms. Bruci attached Ms. Bruci’s October 3, 2023 email (in which Ms. Bruci advised Ms. Gucci that she made her recommendation) to the Respondent and his lawyer to their affidavits, much less any written response from the Respondent and/or his lawyer. The failure to produce this critical email chain warrants an adverse inference against both Ms. Bruci and the Respondent. In other words, I infer that Ms. Bruci’s undisclosed email contained a recommendation that if the Respondent was not prepared to counteroffer, he should accept the Offer.
85Having carefully reviewed the evidence, I find that Ms. Bruci either made a recommendation to accept the Offer, which the Respondent ignored in breach of the Final Order and consistent with his pattern of rejecting Ms. Bruci’s recommendations, or Ms. Bruci abdicated her responsibility to make a recommendation, in which case the only recommendation that existed was made by Ms. Gucci. Pursuant to the Final Order, both parties were obliged to accept that recommendation and proceed with the sale, subject to the Applicant’s right to exercise a ROFR. Either way, the Offer was a “realistic offer” that, but for the Applicant’s right to exercise a ROFR, would have led to the sale of the Home to the offeror.
86It is clear on the evidence that, in any event, the Respondent was not prepared to follow the recommendations of the realtors with respect to the listing strategy and marketing strategy (e.g.: he failed to sign the draft new listing agreement dropping the price to $700,000), and with respect to negotiating the one offer that came in (e.g.: failed to agree to a counteroffer between $750,000 and $760,000). It is also clear on the evidence that Ms. Bruci failed to appreciate that her role was to represent and make recommendations to the parties, and not to seek instructions from the Respondent as to what those recommendations should be. Instead, she acted as an advocate for the Respondent. These actions are contrary to the terms of the Final Order, which she agreed to follow pursuant to the co-brokerage listing agreement.
87Before I leave this issue, I will address the Respondent’s argument that $675,000 was below fair market value and therefore not a valid offer under the terms of the Final Order. The Respondent relies on Ms. Bruci’s and Mr. Beghetto’s evidence for this submission.
88Mr. Beghetto’s opinion was that the fair market value of the Home as of October 4, 2023 was between $800,000 and $850,000. He based his opinion on a drive-by of the Home, his prior appraisal done on June 1, 2022 (not submitted), an assumption that the poorly maintained interior was the same as when he did his prior appraisal (the windows had to be repaired or replaced), and comparable properties in the same neighbourhood. His affidavit was not challenged.
89Throughout her affidavits, Ms. Bruci refers to seeking “fair market value” and basing her recommendations on this measure and supported by Mr. Beghetto’s opinion.
90While fair market value will inform a realtor’s recommendation to sellers, depending on the circumstances relevant to their clients, the parties here agreed to accept the realtor’s recommendation as to the validity and suitability of any offers received which they characterized as the “realistic offer” in the Final Order. The realtors’ exercise of (professional) judgment was not restricted to recommending only offers that in their view reflected the “fair market” value, much less an appraised value of the Home. While it can be assumed that the realtors exercised their professional judgment in a fiduciary manner (the realtors here are both brokers), their professional judgment was not fettered by conditions in the Final Order. In any event, as Ms. Gucci deposed, the market spoke in response to the efforts to market the Home over a considerable period of time; the result was a single offer of $675,000.
91The cases the Respondent relied upon supported the well-established propositions that (a) the court cannot impose a right of first refusal over a non-consenting spouse (Martin v. Martin (1992), 8 O.R. (3d) 41(Ont. C.A.), at p. 226; Watson v. Watson, 2015 ONSC 2091, at paras. 33-37), and (b) spouses are entitled to credit for the fair market value of the matrimonial home (Buttar v. Buttar, 2013 ONCA 517, 116 O.R. (3d) 481, at paras. 63-64.) Furthermore, the Respondent submitted that the Final Order replaced rights from the Partition Act, R.S.O. 1990, c.P.4, s. 2.
92Neither of these propositions are in play here since (a) the parties agreed that the Applicant would have a right of first refusal – it was not imposed by the court but rather incorporated into a consent-based Final Order as part of a global settlement of the family law claims, and (b) the parties delegated the determination of the fairness and suitability of an offer to purchase to their realtors, which was also incorporated into the consent-based Final Order.
93Parties are entitled to settle their family law claims in the manner they determined, provided the settlement does not offend the relevant legislation, is unconscionable, or against public policy (and there is no suggestion that the Final Order violates any of these parameters). The parties did so here. The Respondent even asserts that the issue of the children’s disability levels is no longer at issue, relying on the Final Order. As stated above, aside from ongoing (prospective) spousal support and designation of the Applicant as an irrevocably beneficiary to the Respondent’s insurance (as security for his spousal support obligation), all other issues were resolved through the disposition of the Home provisions.
94Instead of using the term “fair market value” in relation to the Applicant’s right of first refusal to purchase the Home, the parties specifically used the phrase “any realistic offer to purchase the property” which they defined as “any offer that the parties’ real estate agent recommends that the parties accept”.
95In conclusion, Ms. Gucci recommended the parties accept the Offer, and Ms. Bruci either did not make a recommendation and abdicated her role and responsibilities under the Final Order based on a misunderstanding of her role or, more likely, did make a recommendation that the Respondent either make a counter-offer or otherwise accept the offer which he ignored. The parties were bound to follow the recommendation that was provided by the realtors they appointed to carry out that function under the Final Order. In this case, the recommendation was to accept the Offer, and it triggered the Applicant’s right to exercise a right of first refusal as provided under the Final Order.
Issue #3: Did the Applicant Exercise her Right of First Refusal before the Offer expired?
96The next issue is whether the Offer expired at 11:59 a.m. or 11:59 p.m. on October 4, 2023. This is because the Applicant exercised her ROFR in writing via Ms. Gucci’s email to Ms. Bruci on October 4, 2023 at 7:10 p.m. and confirmed by telephone at 7:21 p.m. that evening. The Respondent alleges that the Applicant exercised her ROFR after the Offer expired, and therefore the exercise was invalid. As stated above, the Applicant had a right of first refusal pursuant to paragraph 9 of the Final Order.
97The Offer, when submitted, originally had an expiry date of 11:59 p.m. on October 3, 2023. It was extended to October 4, 2023. However, the time was manually typed as “11:59 am”. Next to it, the “p.m.” on the pre-printed form had an “x” under it. There was no “x” under the pre-printed “a.m.”.
98However, when the Respondent first raised this issue (in his responding record,) Ms. Gucci wrote to the purchaser’s realtor, Ms. Walter, on February 21, 2023 to obtain clarification of what she understood was a typographical error. The responding email from Ms. Walter, attached as an exhibit to Ms. Gucci’s February 23, 2024 affidavit, affirms that it was a typographical error and that the expiry time was 11:59 p.m. on October 4, 2023. No challenge was made to the authenticity of this email and the affidavit complies with r. 14(19)(a). I accept this information as evidence.
99Ms. Gucci and the Applicant both note that all parties operated at the time as if the Offer expired at 11:59 p.m. This is evidenced by the fact that Ms. Gucci and Ms. Bruci communicated about the appropriate response to the Offer after 11:59 a.m. on October 4, 2023.
100Furthermore, the Applicant notes that the Respondent did not raise the argument based on the time the Offer expired until after this motion was commenced, notwithstanding the fact that the parties’ respective lawyers were actively communicating about the disputed sale of the Home after the Offer expired and up to the commencement of this motion. No indication was given by the Respondent or his lawyer that the ROFR had been exercised too late or that the Offer allegedly expired at 11:59 a.m. on October 4, 2023 until after this motion was commenced.
101The Respondent’s affidavit is silent on this issue.
102Again, Ms. Bruci’s affidavit is not persuasive in support of the Respondent’s position on this point. She narrowly focusses on the manually typed “p.m.” in the Offer but did not address the fact that there continued to be discussions about how to respond to this offer after 11:59 a.m.
103Accordingly, I favour Ms. Gucci’s evidence over that of Ms. Bruci and find that the Offer did not expire until 11:59 p.m. on October 4, 2023. Therefore, the Applicant validly exercised her ROFR with respect to the Offer pursuant to the Final Order.
104As a result, the Home is declared to have been sold to the Applicant through her validly exercised ROFR. In light of this finding, I need not address the Applicant’s alternative application for relief under r. 1(8) of the Family Law Rules.
Issue #4: Disposition of Sale Proceeds from the Matrimonial Home
105The Applicant has produced a statement of adjustments/amount payable she owes the Respondent as net sale proceeds of the Home as at January 5, 2024 (attached as Schedule A to her draft Order). After payment of real estate commission and estimated legal fees, the net proceeds are $656,745.
106Subject to adjustments discussed below, the amount payable to the Respondent is 50 percent of the net sale proceeds. This is $328,372.50. Against this, the Applicant claims various amounts that she says are owing to her under the Final Order. These include the following: $295,000 as retroactive support, equalization, and post separation adjustments provided under the Final Order at paragraph 7b; $13,520 in ongoing arrears of spousal support to January 1, 2024 (without interest and calculated at $1,040 per month, per paragraph 13 of the Final Order); an estimated half of the property taxes and half the home insurance from January 1, 2024 to January 5, 2024 in the amount of $20.50 and $12.32 respectively; and $16,418.62, which is 5 percent of half the purchase price (see paragraph 10 of the Final Order). This leaves a balance of $3,401.06 owing to the Respondent.
107The Applicant claims a further $2,081 as ongoing spousal support due February 1, 2024 and March 1, 2024, and ongoing to the date of judgment (as per paragraph 13 of the Final Order, to be reviewed upon the Respondent’s retirement).
108The Applicant also claims funds she submits the realtors owe her.
109These figures were not canvassed during submissions or challenged in the Respondent’s affidavit or factum. The figures appear to accord with the sums in the Final Order, except for the sums the Applicant claims the realtors owe her. Accordingly, the amounts listed in the Applicant’s Statement of Adjustments are approved, subject to the accrual of any further spousal support from April 1, 2024 and May 1, 2024 and the amount the Applicant states is owing to her from the realtors. I will accept brief written submissions from both parties on the final amount owing to the Respondent with respect to the net sale proceeds if there is a disagreement.
110Furthermore, the Respondent is directed to cooperate with the transfer of the Home into the Applicant’s name in a timely manner. In the event that the Respondent refuses to cooperate, such as by failing to sign the necessary documents to transfer the Home into the Applicant’s name, then a 14B motion may be brought, on notice, to dispense with the Respondent’s signature and consent to this transaction. Such motion must be indicated to be returnable before me (to the family office) as I will stay seized of this matter for this purpose.
111In the event the parties cannot agree on costs, the Applicant shall have ten days to deliver her written submissions and cost outline. The Respondent shall have ten days thereafter to deliver his responding written submissions and cost outline. The respective written submissions will not exceed three double-spaced pages each. The documents should be directed to my judicial assistant by email.
Justice S. Vella Released: June 11, 2024
Footnotes
1There were no stand-alone minutes of settlement presented to the court. The parties agree that the terms of the Final Order accurately captured their settlement of this proceeding.