Samiy Retail Inc. v. Kallarakkal, 2024 ONSC 6896

Court File No.: CV-22-1907 Date: 2024-12-10 Court: Superior Court of Justice – Ontario

Between: Samiy Retail Inc., Plaintiff/Defendant to the Counterclaim And: Sajish Kallarakkal, Defendant/Plaintiff by Counterclaim

Before: S.E. Fraser, J.

Counsel: Robert P. Hine, for the Plaintiff/Defendant to the Counterclaim Haider Ashraf, for the Defendant/Plaintiff by Counterclaim

Heard: December 9, 2024

Reasons for Decision

I. Overview

[1] The Plaintiff brings this motion for summary judgment. The action arises from a failed real estate transaction. The Plaintiff claims that there is no genuine issue for trial arguing that the Court can easily identify the contract, the breach, and the damages.

[2] The Plaintiff asserts that the parties entered into an Agreement of Purchase and Sale (APS) for a contract price of $3,450,000. The APS was subject to three conditions and the Defendant either waived these conditions or agreed to amend the APS to delete them.

[3] The APS required that the Defendant provide two deposits. The Plaintiff asserts that the Defendant paid the first deposit of $20,000 but did not pay the second deposit of $150,000, due on October 26, 2022. The Defendant’s first deposit cheque was returned NSF on July 11, 2022, and the Plaintiff states that a replacement payment was made the same day.

[4] The Plaintiff listed the property for sale and ultimately sold the property for less than the amount set out in the APS. He states that his mitigation efforts were reasonable, and that the Defendant should be held accountable for the shortfall, financing costs, and the forfeited deposits.

[5] The Defendant argues that there are genuine issues for trial which require a full trial including the validity of the APS, the waiver of the conditions, and authenticity of the signatures.

[6] The Defendant asserts that the initial deposit cheque was returned for insufficient funds and that the consequence of the returned cheque is that the contract was void as there was no consideration. He does not acknowledge that the funds were replaced or that they are held in trust by the real estate brokerage as alleged, despite claiming their return in his counterclaim.

[7] He argues that Samiy Retail Inc. does not have standing to bring this claim, as the buyer on the original APS was a different corporate entity. It argues that the failure to disclosure the true ownership of the property renders the APS invalid and unenforceable despite that the parties agreed to amend the agreement to delete the seller and add a new seller. The Defendant questions the authenticity of the amendment.

[8] The Defendant further asserts that the issue of the authenticity of the amendment is one which requires a credibility assessment for which a trial is required.

[9] For the reasons set out below, I find that the matter is suitable for summary judgment as there is no genuine issue for trial. The Plaintiff has established the existence of the contract, that it was breached by the Defendant, and that damages should be awarded for the breach.

[10] In my reasons below, I set out the matters in issue and then address each in turn addressing the additional facts as is necessary to determine the issues.

II. Issues

[11] The law on summary judgment is well understood. Rule 20.04(2(a) of the Rules of Civil Procedure, R.R.O. 1990, Reg. 194 provides that the Court shall grant summary judgment if there is no genuine issue for trial.

[12] I should grant summary judgment if I can make the necessary findings of fact, apply the law to those facts, and if summary judgment is a proportionate, more expeditious and less expensive process to achieve a just result than going to trial. See Hryniak v. Mauldin, 2014 SCC 7, at paras. 4, 49.

[13] I first look at whether there is a genuine issue for trial on the evidence before exercising the Rule 20.04(2.1) and (2.2) fact-finding powers of the Rules of Civil Procedure, R.R.O. 1990, Reg. 194. See Hryniak v. Mauldin, supra, at para. 66.

[14] The real dispute here is that the Plaintiff claims that there was a contract and the Defendant claims that there was not. I assess the Defendant’s argument to determine whether they raise a genuine issue for trial. This means examining the following issues:

a. What were the terms of the APS? b. Is the contract void ab initio because the Defendant failed to provide the deposit in accordance with the APS? c. What are the consequences of the Defendant’s failure to waive the conditions by the time prescribed by the APS? d. Does the Plaintiff have standing to commence this action? e. If summary judgment is granted, what damages should be ordered?

III. Analysis

[15] I will examine each issue in turn.

A. Terms of the APS

[16] I will examine the terms of the APS and the steps the parties took towards the transaction. On June 29, 2022, the Defendant Sajish Kallarakkal agreed to purchase the property 1800 Simcoe Street North in Oshawa. The APS provides that the Buyer is Sajish Kallarakkal (In Trust to form a corp). The APS names Simcoe Street North Ltd. as the seller.

[17] Time was of the essence.

[18] The purchase price was $3,450,000 and the Defendant was to provide the $20,000 deposit within 24 hours of the acceptance of the agreement.

[19] The APS was irrevocable on the buyer by July 4, 2022, and had a completion date of October 29, 2022.

[20] The requisition date was October 14, 2022.

[21] The APS had three conditions: a solicitor’s approval condition, a due diligence condition, and a financing condition, all of which were waived by the Defendant. The date upon they were waived is not in dispute. The effect of their late waiver is in dispute as I will discuss further.

[22] The APS also provided that:

Seller and buyer acknowledge that buyer will provide an additional deposit of $150,000.00 within Five (5) Business days upon waiving the due diligence condition. All these deposits will be made to CREILAND CONSULTANTS REALTY INC., to be kept in the Real Estate Trust account and will be used towards the purchase price on the day of closing.

[23] The parties agreed to extend the closing to November 30, 2022. The parties retained lawyers to complete the sale.

[24] The Defendant waived the solicitor condition on July 19, 2022.

[25] On August 15, 2022, the parties amended the agreement to delete the due diligence condition and provide an additional five days regarding the financing condition.

[26] On August 22, 2022, the parties further amended the agreement to delete the financing condition and amend the date for the provision of the second deposit and the completion date.

[27] On September 14, 2022 and October 18, 2022, the APS was further amended to delete Simcoe Street North Ltd. as the seller and replace it with Samiy Retail Inc.

[28] On October 13, 2022, the Plaintiff changed the name of the owner of the Property from Samiy Developments Inc. to Samiy Retail Inc. According to the Plaintiff, Samiy Developments Inc. owned the property and it amalgamated with Samiy Retail Inc., such that the title had to be changed to reflect the name change. The parties amended the APS again accordingly and the date for the second deposit was changed to October 26, 2022.

[29] On October 24, 2022, the Defendant’s lawyer confirmed the closing date and provided requisitions. The re-line in the letter was “Sajish Kallarakkal (in trust to form a corp) purchase from Samiy Retail Inc.”

[30] On or about November 9, 2022, the Defendant terminated his relationship with his lawyer and then failed to provide the second deposit, respond to the Plaintiff’s real estate lawyer or retain a new lawyer. The Defendant’s real estate broker advised that the further deposit would be provided that day.

[31] On November 25, 2022, the Plaintiff informed the Defendant that they were ready, willing, and able to close.

[32] On November 30, 2022, the Defendant advised Dr. Saqib Qureshi of Samiy Retail Inc. that he did not have the financing to close the transaction.

[33] The Defendant sought to extend the closing date, but the parties did not reach an agreement. The Plaintiff commenced an action against the Defendant on December 23, 2022.

[34] The Plaintiff sold the property to another buyer in March 2023.

B. Is the APS void ab initio?

[35] The Defendant submits that there are several reasons for which the agreement is null and void. I will address with each of them.

(i) Failure to deliver deposit on time

[36] The Defendant argues that because the APS provides that time is of the essence, and that the offer is irrevocable until July 4, 2022 by the buyer after which it is null and void, the failure to deliver the deposit in time renders the agreement null and void.

[37] The Defendant relies on Stevenson v. Colonial Homes Ltd., stating that the Court held that the failure to comply with a deposit requirement rendered the contract unenforceable. In my view, this case is about a material misrepresentation and not about the late delivery of a deposit. It does not assist me with this issue.

[38] Stevenson v. Colonial Homes Ltd. also provides that the buyer is entitled to a return of deposit as part of payment of the purchase price. I agree with the Plaintiff that on the issue of deposits, this case is no longer good law. See Benedetto v. 2453912 Ontario Inc., 2019 ONCA 149, at paras. 5-6.

[39] The Defendant also argues that the failure to provide the deposit means the contract is without consideration and that because the deposit was not provided in time that the offer was never accepted, and no binding agreement formed.

[40] I reject this argument.

[41] First, the Defendant’s claim that the $20,000 was not provided is belied by his conduct and the evidence on this motion. The parties proceeded as if they had a binding agreement. They amended the agreement and had agents and lawyers. The Defendant claims the return of his deposit in his counterclaim. There is no merit to the suggestion that he did not intend to form an agreement to purchase the property or that he did not carry through with certain actions to effect the agreement.

[42] Next, time of the essence clauses are for the benefit of the innocent party. See Jesan Real Estate Ltd. v. Doyle, 2020 ONCA 714, at para. 38. If the Plaintiff had wished to claim a breach by the Defendant’s failure to provide the first deposit in accordance with the agreement, it could have relied on that provision.

[43] Further, the consideration is the exchange of the property for $3,450,000, not the $20,000 deposit.

[44] Finally, the Defendant asserts that the funds were deposited by Sajish Kallarakkal Group Incorporated and not by the Defendant personally. I find this does not alter my analysis.

(ii) Identification of Parties

[45] The Defendant claims that Simcoe Street North Ltd. may not have existed as a legal entity at the time of the sale and as a result was not a proper party to the contract. It states that the Plaintiff has failed to provide the corporate profile report or articles of incorporation or that Simcoe was authorized to act on behalf of the true owners.

[46] The Defendant relies on Corridor Transport Inc. v. Vittorio Junior Lentini, 2024 ONCA 773, at para. 31, that the identity of the contracting parties is an essential term of the contract. I agree with that principle.

[47] This case is distinguishable. Here, the Defendant agreed to amendment which reflected the proper contracting parties. In Nyugen v. Zaza, 2023 ONCA 34, at paras. 10-11, the Court of Appeal rejected an argument that to enter an agreement of purchase and sale that the property had to be in the seller’s name at the time the agreement was entered into. The Court held that it is at the point of closing that the seller must be in a position to ensure that good title can be conveyed to the buyer.

[48] With respect to the identification of the buyer, I find the Defendant to be bound as s. 21 (1) of the Business Corporations Act, RSO 1990, c B.16 provides that:

Except as provided in this section, a person who enters into an oral or written contract in the name of or on behalf of a corporation before it comes into existence is personally bound by the contract and is entitled to the benefits thereof.

[49] This applies here, that the Defendant is bound by the APS, notwithstanding that the buyer is named as Sajish Kallarakkal (In Trust to form a corp).

[50] I therefore reject the argument that the way the parties identified themselves in the APS renders it null and void.

(iii) Defendant’s failure to waive conditions

[51] The Defendant argues that his failure to waive condition in accordance with time frames set out the APS renders the APS null and void.

[52] There is no merit to this argument. The practical effect of the Defendant’s position would be that a party could render a contract null and void without consequence by failing to comply with its terms. This makes no sense.

[53] This Court has held that the late waiver of a condition may be waived by the parties’ conduct. In VanderMolen Homes Inc. v. Mani, 2024 ONSC 2617, at paras. 36-37, Justice ten Cate held that there was a binding agreement of purchase and sale where waiver deadlines were missed, and the waivers were accepted without protest.

[54] I therefore reject this argument such that I can conclude that the parties had a binding agreement.

C. Plaintiff’s standing to commence action

[55] The Defendant raises questions about the authenticity of the October 18, 2022 amendment but does not allege that his signature was forged.

[56] This is also not a genuine issue for trial.

[57] This is raised at first instance on this motion. It does not form part of his defence to this claim. The Defendant was represented when his defence was filed and was represented by counsel until August, 2024. He filed no materials on this motion having failed to comply with a timetable. I granted him leave to file materials after the motion was first adjourned and it is only now that he raises this issue.

[58] I again find that the Defendant’s conduct undermines his position on this point. He did not resile from the agreement after the amendment. His lawyer’s correspondence clearly references Samiy Retail Inc.

[59] I therefore reject that this defeats the Plaintiff’s claim.

D. Should summary judgment be granted?

[60] The Defendant makes other meritless arguments including that the Plaintiff does not come to the Court with clean hands and alleging improper conduct on his part. I will not address them all and have considered them.

[61] The issue about the Plaintiff’s conduct needs to be addressed. It was not improper for Dr. Qureshi to contact Mr. Kallarakkal personally. In contrast, when a lawyer contacts a party who is represented by counsel, there is nothing wrong with one party contacting another. Sometimes it may be unwise, but that is different than improper.

[62] I also find that Dr. Qureshi did not threaten the Defendant.

[63] I find the balance of the Defendant’s arguments without merit.

[64] The Defendant has not raised a genuine issue for trial on the evidence before the Court. The Plaintiff demonstrated that there was an agreement, and that the Defendant breached it.

E. Damages

[65] I turn to the question of damages.

[66] I accept that the APS provided for two deposits. Those deposits are forfeited upon breach of the APS. The Defendant should not be rewarded for failing to provide the second deposit and I find the Plaintiff’s claim for the second deposit, even though it was not provided, is with merit. See Pleasant Developments Inc. v. Iyer, (ONSC) (Div. Ct), at paras. 51-52; Zou v. Sanyal, 2019 ONSC 738, at paras. 51-52.

[67] I order that the Defendant pay to the Plaintiff $150,000 representing the second deposit which was to be provided and is now forfeited.

[68] The Defendant shall therefore forfeit deposits totalling $170,000.

[69] As set out in Rosehaven Homes v. Aluko, 2022 ONSC 1227, at para. 72, the innocent party to a breach does not have a positive duty to mitigate but the failure to do so shall be taken into consideration on damages.

[70] The Plaintiff is entitled to reasonable damages that flow from the breach. See Rosehaven, supra, at para. 81. The Plaintiff’s attempts to mitigate were reasonable and the shortfall flows from the breach. The Plaintiff is entitled to the shortfall in the amount of $590,000.

[71] In connection to the breach, the Plaintiff also incurred, pre-litigation legal costs associated with the breach in the amount of $3,302.85 and appraisal costs in the amount of $4,514.35.

[72] The Plaintiff is entitled to claim financing costs and has demonstrated by affidavit how those were incurred as the failure to close this property meant refinancing another, charges which total $30,643.84.

[73] In addition to the deposits forfeited, the Defendant shall pay damages to the Plaintiff in the amount of $628,461.04.

IV. Order

[74] The motion is granted. Judgment shall issue in accordance with these Reasons.

[75] The counterclaim is dismissed.

[76] Creiland Consultants Realty Inc. shall release the $20,000 held in trust and any accrued interest to the Plaintiff’s solicitor forthwith.

[77] The Plaintiff is entitled to pre-judgment and post-judgment interest in accordance with the Courts of Justice Act, RSO 1990, c C.43.

[78] The Plaintiff has been successful and is presumptively entitled to its costs.

[79] I heard the cost submissions of the parties at the hearing of the motion. The parties may supplement those by providing a written submission no longer than two double-spaced pages, together with any offers to settle relevant to the consideration of costs and a bill of costs. These supplemental written submissions shall be provided by noon on December 13, 2024 to my judicial assistant. If none are received, I will decide the matter based on the submissions that I have already received.

Justice S.E. Fraser Date: December 10, 2024

ONTARIO SUPERIOR COURT OF JUSTICE BETWEEN: SAMIY RETAIL INC. Plaintiff/Defendant to the Counterclaim – and – SAJISH KALLARAKKAL Defendant/Plaintiff by Counterclaim REASONS FOR DECISION Justice S.E. Fraser

Released: December 10, 2024