Court File and Parties

Court File No.: CV-22-00002280-0000 Date: 2024-12-18 Superior Court of Justice – Ontario

Between: Hassan Siddiqui and Sara Al-Ahmar, Plaintiffs

And: Haarikka Sivanarayan Gyanesh Paliwal Remax Realty Specialists Inc. Sanjay Bhayana World Class Realty Point Exquisite Bay Development Inc. (Defendant to the counterclaim), Defendants

Before: Lemay J.

Counsel: Gurpreet Singh Chandok, for the Plaintiffs Sabrina Waraich, for the defendant Haarikka Sivanarayan Hans Engell, for the defendants Gyanesh Paliwal and Remax Realty Specialists Inc. Christopher M. Tucker, for the defendants Sanjay Bhayana and World Class Realty Point Oleg M. Roslak, for the defendant Exquisite Bay Development Inc.

Heard: September 13 and November 13, 2024.

Reasons for Judgment

[1] The Plaintiffs, Hassan Siddiqui and Sara Al-Ahmar, purchased the Defendant, Haarikka Sivanarayan’s, rights to purchase a house that was being constructed by the Defendant, Exquisite Bay Development Inc. The Plaintiffs paid a premium over the original selling price to Ms. Sivanarayan in order to purchase her rights to the property. The premium was paid by the Plaintiffs in 2021, in advance of the house being built. Ms. Sivanarayan, in turn, paid the real estate commissions associated with the transaction to her real estate agent, Re-Max Realty Specialists Inc. (“Re-Max”). Re-Max, in turn, paid the cooperating broker’s commissions to the Plaintiffs’ real estate agent, World Class Realty Point (“World Class”).

[2] Exquisite did not proceed with the construction of the house and the underlying agreement of purchase and sale was not completed. Exquisite returned the deposit to the Plaintiffs. However, the Plaintiffs were not refunded either the commissions that were paid to the real estate agents or the premium that Ms. Sivanarayan. They have sued Ms. Sivanarayan as well as both real estate agents who acted on the transaction and their real estate agencies to recover those monies. There was a counterclaim brought against Exquisite by the Defendant Sivanarayan, but I understand that claim was previously resolved.

[3] The Plaintiffs have also settled their claim with Ms. Sivanarayan. I am not aware of the details of that settlement. However, the Plaintiffs pursued their claim against both real estate agents and their agencies and sought summary judgment. That summary judgment motion proceeded before me. For the reasons that follow, those claims are both dismissed.

Background

a) The Parties and the Transaction

[4] In 2019, the Defendant Ms. Haarika Sivanarayan purchased a pre-construction home in a subdivision that was to be built by the Defendant Exquisite Bay Development Inc. She paid $1,339,900 for the property.

[5] The Plaintiffs, Sara Al-Ahmar and Hassan Siddiqui wanted to buy this property from Ms. Sivanarayan before it was built. As a result, in February of 2021, they offered to purchase Ms. Sivanarayan’s rights in the property for the sum of $1,589,900. Ms. Sivanarayan was prepared to accept that offer but insisted that she be given the money up front and before the property was completed. In other words, she wanted her part of the transaction to close and to receive her premium payment prior to the actual closing on the property.

[6] The Plaintiffs agreed with this term, and they offered to pay Ms. Sivanarayan $400,000 immediately, rather than waiting for the actual completion of the property. This amount included both the difference between the amount that Ms. Sivanarayan was supposed to pay and what the Plaintiffs agreed to pay and the deposit of $150,000.00 that Ms. Sivanarayan had already paid. The agreement was contingent on the builder approving the assignment.

[7] On the transaction that transferred the right to the property to the Plaintiffs, both sides were represented by real estate agents. The Defendants Sanjay Bayana and World Class Realty Point (“World Class”) acted for the Plaintiffs on the transaction. The Defendants Gyanesh Paliwal and Re-Max Realty Specialists (“Re/Max”) represented Ms. Sivanarayan on the transaction.

[8] The parties fully executed the Assignment of Agreement of Purchase and Sale (“AAPS”) on February 9th, 2021. As part of that agreement, a deposit of $50,000.00 was paid by the Plaintiffs to Re-Max. That deposit was held until the closing of the transaction.

[9] The AAPS was taken to the builder and approved by the builder by way of an assignment agreement dated May 26th, 2021. This made the AAPS firm, and the transaction duly closed at the end of May of 2021. A total of $400,000 was transferred to Ms. Sivanarayan. The Plaintiffs paid a further $350,000 to Re-Max and the entire $400,000 was released to Ms. Sivanarayan.

[10] That amount included $150,000 to cover the deposit that had been paid to the builder. Ms. Sivanarayan paid the amount of $72,000 to her real estate agent who, in turn, transferred approximately half of it to the Plaintiff’s real estate agent. No money went directly from the Plaintiffs to their own real estate agent, Mr. Bhayana or his brokerage, World Class.

[11] In May of 2022, the builder advised that the project was not going to be completed. The builder returned the deposit to the Plaintiffs, along with interest. The Plaintiffs also sought to obtain the rest of the money that they had paid ($250,000) to Ms. Sivanarayan. They brought this lawsuit against the real estate agents, the real estate agencies and Ms. Sivanarayan. As mentioned, there was then a counterclaim that included the developer.

[12] I am given to understand that the action against the developer was resolved relatively early, as the deposit was returned to the Plaintiffs, along with the accumulated interest. In any event, the developer did not participate in the litigation in any meaningful way that I can see.

b) The Operative Agreements

[13] There were a number of agreements that are relevant to this action, as follows:

a) The AAPS, between the Plaintiff and the defendant Sivanarayan, signed in February of 2021. b) The Assignment Agreement, which was executed between the Plaintiffs, the Defendant Sivanarayan and Exquisite Bay on May 26th, 2021. c) A Confirmation of Cooperation and Representation that was signed by the Plaintiffs, the Defendant Sivanarayan and both real estate agents. This required Ms. Sivanarayan’s broker to pay 2% commission to the Plaintiffs’ broker. d) The Buyer Representation Agreement between World Class Realty and the Plaintiffs.

[14] I will address the relevant terms of each of these agreements when I analyze the legal issues in this case.

c) The Litigation History

[15] The claim in this matter was issued by the Plaintiffs on August 10th, 2022 and served shortly thereafter. The Plaintiffs advanced claims of breach of contract, breach of duty of honesty and good faith, civil fraud, misrepresentations and negligence. Statements of defence were duly filed.

[16] In early 2023, the Plaintiff advised that it would be seeking summary judgment as against all of the Defendants except the developer. A notice of motion was served along with an Affidavit from Mr. Siddiqui in July of 2023. Responding materials and factums were served.

[17] The summary judgment motion was originally supposed to proceed before me on July 17th, 2024. The date had been booked on consent. It did not proceed for two reasons. First, Ms. Sivanarayan sought an adjournment of the proceeding for a family emergency. Second, and more importantly, she sought leave to amend her pleadings and bring a cross-claim and a cross-motion. She had also not served and filed her complete motion materials.

[18] This matter came before Ricchetti R.S.J. (as he then was), who set a peremptory timetable to address the serious concerns that existed about the delay in this matter. The timetable required the parties to return before Ricchetti R.S.J. on August 12th, 2024.

[19] At the hearing on August 12th, 2024, Ricchetti R.S.J. determined that there were small amounts of additional materials to be filed and directed cross-examinations on any affidavits to take place by August 31st, 2024. Ricchetti R.S.J. also directed that, other than documents permitted by his endorsement, nothing else could be filed for this summary judgment motion. He then directed the motion to be heard on September 13th, 2024.

[20] At the hearing on September 13th, 2024, the Plaintiffs advised that they had settled with Ms. Sivanarayan, but that the action against the real estate agents remained outstanding. I advised the parties that I was prepared to conduct a pre-trial in this matter for a half-day on November 13th, 2024. We had some preliminary discussions about how that pre-trial would proceed.

[21] I was subsequently advised that the settlement between the Plaintiffs and Ms. Sivanarayan had fallen apart. I convened a case conference on October 17th, 2024. At that time, all counsel confirmed that the summary judgment motion needed to be brought back on, and that they were content to have me hear it. These confirmations were provided in writing.

[22] At the hearing on November 13th, 2024, I was advised that the Plaintiffs and Ms. Sivanarayan had managed to resolve their issues after all. As a result, I heard the summary judgment motion in respect of the real estate agents and their agencies.

Issues

[23] In the Statement of Claim, the Plaintiffs advanced claims of negligence, breach of duty of honesty and good faith, breach of contract, willful misrepresentation, civil fraud and loss of opportunity. However, in oral argument, counsel for the Plaintiffs expressly withdrew the negligence allegations and advised that he was not vigorously pursuing the other allegations.

[24] Therefore, I will only very briefly address the breach of duty of honesty and good faith, misrepresentation and civil fraud claims. The Plaintiffs claims against all of the real estate defendants suffer from the same problem. These claims are all founded on the Plaintiff’s concerns that they completed the assignment transaction prior to the home being built. However, the Plaintiffs were advised in the agreements themselves that they needed to obtain independent legal advice and did so. That legal advice outlined to them the risks associated with closing this transaction before the house was built. These causes of action are unsustainable when the realtors have suggested independent legal advice to the Plaintiffs and they have acted on that suggestion. The decision to proceed with the transaction is the Plaintiffs’ alone.

[25] In addition, there is a further barrier to the Plaintiffs’ claims against Mr. Paliwal and Re-Max for these heads of damages. The Plaintiffs never had a contract with either Mr. Paliwal or Re-Max. These parties were acting for the other side in this transaction and would not have had the same duties as even the Plaintiffs’ real estate agent. Even if there were merit to the fraud, breach of duty of honesty and good faith and misrepresentation claims as against the Plaintiff’s own real estate agent, it would be almost impossible to advance these claims as against the other side’s real estate agents.

[26] As a result, there are only two issues that remained to be addressed, as follows:

a) Whether the Plaintiffs had a claim in contract for the return of commissions from either Re-Max or World Class. b) Whether either Re-Max or World Class had been unjustly enriched by receiving the commissions when the Plaintiffs were ultimately unable to purchase the property.

[27] I will deal with each issue in turn. First, however, I should briefly address the issue of whether this matter should proceed by way of summary judgment. All of the parties are amenable to having the matter resolved by way of summary judgment, and I agree that this is the appropriate way in which to dispose of the issues in this case.

[28] The Court can grant summary judgment when there is, in the words of Rule 20.04(2)(a) of the Rules of Civil Procedure, “no genuine issue requiring a trial.” The circumstances in which the Court should grant summary judgment are detailed in Hryniak v. Mauldin, 2014 SCC 7, [2014] 1 S.C.R. 87. There will be no genuine issue requiring a trial when the judge can reach a fair and just determination on the merits on a summary judgment motion. That will be the case when the process:

a) Allows the judge to make the necessary findings of fact; b) Allows the judge to apply the law to the facts; and, c) It is a proportionate, more expeditious and less expensive means to achieve a just result.

[29] In my view, all of these factors are present in this case. There are no real factual disputes between the parties. In addition, the legal issues for the Court to determine are clear, and the amount that is in dispute is not significant. Having a trial in this matter would not be proportionate. Therefore, I will dispose of this matter by way of summary judgment.

Issue #1 - Contract Claims

[30] The Plaintiff argues that there has been a default in the AAPS because the house was ultimately not built. In support of this position, counsel points to paragraph 17 of the AAPS, which reads:

17. DEFAULT BY SELLER: The Assignee and Assigner acknowledge and agree that if this Assignment Agreement is not completed due to the default of the seller for the Agreement of Purchase and Sale (Schedule C] that is the subject of this Assignment, the Assignor shall not be liable for any expenses, losses or damages incurred by the Assignee and this Assignment Agreement shall become null and void and all moneys paid by the Assignee under this Assignment Agreement shall be returned to the Assignee in full without interest.

[31] For the purposes of this motion, I accept that there has been a default here. The AAPS was designed to provide the Plaintiffs with a home to live in. It has not achieved that result. Therefore, it is a default. Whether it is a default of the seller is a more interesting question. However, as a larger matter the contract between the Plaintiffs and Ms. Sivanarayan has become unperformable as the essential bargain cannot be fulfilled. There should be a remedy for the essential failure of the contract.

[32] However, it must also be remembered that only Ms. Sivanarayan and the Plaintiffs are parties to the AAPS. Neither the real estate agents nor the agencies that they work for are parties to the AAPS. As a result, I do not see how this clause would require either of the real estate agencies to pay back any commissions that had been paid to them. The Plaintiffs’ claim for breach of contract lies against the Defendant Sivanarayan, and not the other Defendants.

[33] This point is made clear by the provisions in Schedule A of the AAPS that deal with the payment of real estate commissions. The relevant sections state:

The sum received by Assignor's lawyer shall be released to the Assignor on assignment closing date, provided that all terms and conditions under this agreement have been satisfied.

The Assignee agrees to pay the balance of purchase price in the Schedule C and all adjustments on final closing date to the developer in accordance with the original agreement of purchase and sale.

The sum equal to real estate fees plus EST from Listing Brokerage, or Assignor's lawyer's trust account shall be released to the Listing brokerage commission account on assignment closing date.

Both parties agree that Listing Brokerage can distribute the real estate fees on assignment closing date. The Assignor shall be responsible for the payment of all real estate commission. The co-operating brokerage shall be paid their commission upon release of funds to the Assignor in connection with this transaction.

[34] In these provisions, it is clear that Ms. Sivanarayan is the Assignor. The AAPS makes it clear that she is responsible for the payment of commissions. In short, the agreement between the Plaintiffs and Ms. Sivanarayan is for the payment of $400,000. The payment of commissions to real estate agents out of that money is Ms. Sivanarayan’s responsibility. Similarly, recovering that money from the real estate agents would seem to be Ms. Sivanarayan’s right. She is not seeking to enforce that right, should it exist, on this motion and there is no evidence that the Plaintiffs have any legal basis to claim that they are standing in her shoes.

[35] It is not necessary for me to determine the extent of Ms. Sivanarayan’s rights as against the real estate agents in deciding this motion. However, I would briefly observe that there is arguably a difference between the closing of the AAPS (which happened in May of 2021) and the closing of the underlying transaction (which never happened). The realtors were tasked with negotiating the AAPS and could argue that they had done their jobs and earned their commissions. I make no comment on the strength of that argument, I just observe that it is available.

[36] Counsel for the Plaintiffs also directed my attention to the clause in the Buyer Representation Agreement that deals with commissions. He suggests that this clause required the payment of commissions from the Plaintiffs to their real estate agents, the Defendants World Class and Mr. Bhayana. That clause states:

2. COMMISSION: In consideration of the Brokerage undertaking to assist the Buyer, the Buyer agrees to pay commission to the Brokerage as follows: If, during the currency of this Agreement, the Buyer enters into an agreement to purchase or lease a real property of the general description indicated above, the Buyer agrees the Brokerage is entitled to receive and retain any commission offered by a listing brokerage or by the seller. The Buyer understands that the amount of commission offered by a listing brokerage or by the seller may be greater or less than the commission stated below. The Buyer understands that the Brokerage will inform the Buyer of the amount of commission to be paid to the Brokerage by the listing brokerage or the seller at the earliest practical opportunity. The Buyer acknowledges that the payment of any commission by the listing brokerage or the seller will not make the Brokerage either the agent or sub-agent of the listing brokerage or the seller.

If, during the currency of this Agreement, the Buyer enters into an agreement to purchase any property of the general description indicated above, the Buyer agrees that the Brokerage is entitled to be paid a commission of .. 2.50% .. % of the sale price of the property [left blank]

or …[left blank]…

or for a lease, a commission of … [left blank].

The Buyer agrees to pay directly to the Brokerage any deficiency between this amount and the amount, if any, to be paid to the Brokerage by a listing brokerage or by the seller. The Buyer understands that if the Brokerage is not to be paid any commission by a listing brokerage or by the seller, the Buyer will pay the Brokerage the full amount of commission indicated above.

[37] This agreement, which is between the Plaintiffs, their real estate agent Mr. Bhayana and his brokerage, World Class Realty, only required the Plaintiffs to pay commissions if the amount received from the Defendant Sivanarayan’s real estate agent was insufficient. Although a commission of only 2 percent was paid to World Class, no money was paid by the Plaintiffs under this clause. As a result, there is no basis to claim any money back under this clause.

[38] This conclusion is also supported by the Confirmation of Cooperation and Representation Agreement. That agreement, which is signed by the Plaintiff, the Defendant Sivanarayan and both real estate agents, makes it clear that the Plaintiffs’ real estate brokerage was to receive a commission of 2 percent from the Defendant Sivanarayan’s brokerage and not from the Plaintiff.

[39] There was no evidence to establish that any additional monies were paid. In other words, when the agreements are read together, the Plaintiffs had an obligation to pay the Defendant Sivanarayan $400,000. Out of those monies, Ms. Sivanarayan had an obligation to pay real estate commissions to her own real estate agent, who was then responsible for paying the Plaintiffs’ real estate agent. The Plaintiff cannot, on the facts of this case, enforce the Defendant Sivanarayan’s rights to the extent that she had rights to recover the commissions previously paid.

[40] Counsel for the Plaintiffs relies on the decision in Poon v. Sultan Realty Inc.. This was a case involving an attempt by the Plaintiff to purchase a condominium unit. Mr. Poon provided Sultan Realty with two deposits and an assignment agreement was entered into. The transaction did not close, but Sultan Realty claimed the deposit as a commission in any event. The Deputy Judge found that Sultan Realty had not earned the commissions because the commissions had not been earned as the transaction had never closed.

[41] Poon is distinguishable from the case before me on two grounds:

a) The transaction in this case did close, and the Plaintiff paid the monies to the Defendant. b) The wording of the agreement in this case is different than the wording of the agreement in Poon. The agreement in Poon speaks to the commission being payable once the APS was completed, which would not happen until the building was built and the unit was transferred.

[42] In essence, the Plaintiffs’ argument is that, since the deal could not be completed, the real estate agents should not have earned any commission on the deal. There is some superficial attractiveness to this argument, especially as a matter of equity. However, the argument suffers from two flaws:

a) The Plaintiffs did not pay any money on account of commissions. While they did pay money to Ms. Sivanarayan’s brokerage, it was on account of the payment of the sale price. Ms. Sivanarayan was responsible for the payment of the commissions in the first instance, and there was never a claim for commissions from the Plaintiffs. b) The transaction closed. Therefore, the real estate commissions were earned, at least in the first instance. While there may be a claim that they should be repaid, it is Ms. Sivanarayan’s claim to make, and not that of the Plaintiffs. This is especially true with Ms. Sivanarayan’s real estate agent, given the remoteness of any relationship between them and the Plaintiffs.

[43] For these reasons, I am not persuaded that there is any contractual basis for the Plaintiffs to recover monies from the real estate agents. It was ultimately the Defendant Sivanarayan who paid the real estate commissions to the realtors. Article 17 of the AAPS permits the Plaintiffs to recover from Ms. Sivanarayan.

[44] I make no finding as to whether Ms. Sivanarayan could recover from either her own real estate agents or from the Plaintiffs’ real estate agents. That is a question that does not arise on the factual record before me and, as can be seen, it has some nuance to it.

Issue #2 - Unjust Enrichment

[45] The Plaintiff also argues that the real estate agents and agencies have been unjustly enriched in this case. I disagree.

[46] In order to establish unjust enrichment, three criteria must be met:

a) An enrichment of one party; b) A corresponding deprivation of the other party; and c) The absence of a juristic reason for the enrichment.

[47] In this case, the Plaintiffs cannot establish the second criteria. More specifically, they cannot establish the necessary link between the enrichment of either real estate agent and their own deprivation. In this respect, in Peel (Regional Municipality) v. Canada; Peel (Regional Municipality) v. Ontario, [1992] 3 S.C.R. 762, the Supreme Court of Canada stated:

While not much discussed by common law authorities to date, it appears that a further feature which the benefit must possess if it is to support a claim for unjust enrichment, is that it be more than an incidental blow‑by. A secondary collateral benefit will not suffice. To permit recovery for incidental collateral benefits would be to admit of the possibility that a plaintiff could recover twice ‑‑ once from the person who is the immediate beneficiary of the payment or benefit (the parents of the juveniles placed in group homes in this case), and again from the person who reaped an incidental benefit. See, for example, Fridman and McLeod, supra, at p. 361; Maddaugh and McCamus, supra, at p. 717; and, Gautreau, supra, at pp. 265 et seq. It would also open the doors to claims against an undefined class of persons who, while not the recipients of the payment or work conferred by the plaintiff, indirectly benefit from it. This the courts have declined to do. The cases in which claims for unjust enrichment have been made out generally deal with benefits conferred directly and specifically on the defendant, such as the services rendered for the defendant or money paid to the defendant. This limit is also recognized in other jurisdictions. For example, German restitutionary law confines recovery to cases of direct benefits:

[48] In this case, there was no money paid directly from the Plaintiff to the real estate agents. The money only flowed indirectly to the real estate agents. As a result, the Plaintiffs cannot satisfy the test for unjust enrichment and this claim also fails.

Conclusion and Costs

[49] For the foregoing reasons, the Plaintiffs claims as against the Defendants Gyanesh Paliwal, Re-Max Realty Specialists, Sanjay Kumar Bhayana and World Class Realty Point Inc. are dismissed.

[50] The parties are encouraged to agree on the costs of this motion and this proceeding. Failing agreement, the Defendants have until January 3rd, 2025 to serve, file and upload their costs submissions. Those costs submissions are to be no more than two (2) single-spaced pages, exclusive of bills of costs, offers to settle and case-law.

[51] The Plaintiffs shall then have until January 13th, 2025 to serve, file and upload their costs submissions. Those costs submissions are also to be no more than two (2) single-spaced pages, exclusive of bills of costs, offers to settle and case-law.

[52] There are to be no extensions for the time for serving, filing and uploading costs submissions, even on consent, without my leave. In the event that I do not receive costs submissions in accordance with this timetable, there shall be no order as to costs. Finally, in addition to serving, filing and uploading the costs submissions, counsel are directed to send an electronic copy to my judicial assistant. They were provided with her e-mail when this decision was released.

Lemay J. Released: December 18, 2024