Ontario Superior Court of Justice
Court File No.: CV-22-80271
Date: 2025-03-20
Between
Giuseppina Mari
Plaintiff
Counsel: R. Di Gregorio
-and-
Mujeeb Sanjer and Genan Zamt
Defendants
Counsel: M. Gayed
Heard: March 3, 2025
Decision on Summary Judgment Motion
Justice J. Krawchenko
Introduction
1The plaintiff brings this motion for summary judgment stemming from a failed real estate transaction.
2The defendants acknowledge that they were unable to complete the purchase.
3Both parties agree that this matter is suitable for summary judgment.
4The parties dispute which of two agreements ought to be considered for purposes of assessing damages, the original or the amended agreement. The defendants also argue that plaintiff failed to mitigate her damages and this failure should ultimately be taken into account to reduce any judgment granted.
5The plaintiff also claims additional damages associated with carrying costs and costs thrown away.
6For reasons that will follow, I grant summary judgment to the plaintiff on the basis of the original agreement of purchase and sale (“APS”) and some of the additional damages claimed.
Facts
7The parties entered into an APS on 24 February 2022 in relation to 3 Argon Court, Hamilton, ON (“the Property”).
8For the purposes of this motion, the relevant terms of the APS were as follows:
- Sale price of $1,450,000.00.
- $100,000.00 deposit was paid.
- Closing date 15 August 2022.
- The defendants were permitted two visits prior to closing.
- The defendants’ appraiser was permitted access to the property prior to closing.
9An appraisal was completed for the defendants in August 2022. The appraisal assessed a value for the Property of $1,160,000.00. The difference in value from that set out in the APS was $290,000.00, a reduction attributed to a decline in the real estate market from the date the APS was signed and August. This appraisal created difficulties for the defendants in securing financing. As a result, prior to the closing date, the defendants communicated to the plaintiff that “…we cannot afford to come up with an extra $290,000.00 required to close on the agreed upon price in February. Frankly, all we can afford is an additional $120,000 above the appraised price”.
10On 10 August 2022, the defendants’ lawyer wrote to plaintiff’s counsel that “…we understand our legal obligations under the Agreement of Purchase and Sale. We acknowledge your client is entitled to $1,450,000.00. We understand that if we are unable to close, our client will be held liable for all costs incurred due to our inability to close the transaction, including any shortfall in the purchase price. However, we also understand that the market has taken a substantial hit, your client over sold the property more than it was worth. It is likely your client will sell it for even lower than our requested $1,325,000.00 and while your client may exercise their right to sue for the shortfall, this will cost time, money and energy, all of which I am sure your client would like to avoid.”
11On 22 August 2022, counsel for the defendants wrote: “My clients have exhausted all avenues and we regret to inform you that we will not be able to close the transaction.” Counsel suggested mutual releases be signed with further negotiations on how much of the deposit would be forfeited in exchange for same.
12Ultimately the parties signed an amended APS on 25 August 2022 (“AAPS”). They agreed to the following changes to the APS:
- Purchase price was reduced to $1,315,000.00.
- Closing date was extended to 06 September 2022.
- The selling brokerage agreed that they would receive no commissions and Re/Max Escarpment Realty fees would receive 2% with no HST payable by the seller.
13The defendants were unable to close on the new date of 06 September 2022 and by email dated that same day, requested an extension to 30 September 2022 with “all terms and conditions in the Agreement of Purchase and Sale to remain the same (unless otherwise amended), and time to remain of the essence.” The parties agreed to extend the closing for one further day, to 07 September 2022 to allow the defendants to provide evidence of their progress in obtaining a mortgage.
14On 07 September 2022, the defendants’ lawyer provided some information to the plaintiff but also advised that the purchasers were “…also working on another commitment with an “A” Lender”.
15Communications continued between counsel on 07 September 2022, with the vendor’s lawyer requiring an additional deposit of $100,000.00 and the purchasers’ lawyer countering with a further deposit of only $25,000.00 and a change of closing date from 30 September 2022 to 15 October 2022.
16On 9 September 2022, the vendor’s lawyer confirmed that the reduced deposit offered earlier by the purchasers was acceptable, however, he also needed to discuss a “…couple of other conditions…”.
17The record contains no further communications regarding the AAPS between purchaser and vendor counsel after 9 September 2022.
18By 12 September 2022, the plaintiff had relisted the Property for $1,199,888.00. On 27 September 2022 her realtor recommended to adjust the listing price downward, recommending $1,150,000.00 due to a slow market attributed to rapidly rising interest rates.
19Notwithstanding the relisting and lack of communication between the plaintiff and defendants, Scotiabank provided the defendants with a conditional approval for financing issued on 28 September 2022, for an advance of $1,052,000.00 to be advanced on 27 October 2022.
20The plaintiff ultimately accepted an offer from an unrelated party on 07 October 2022 for $1,030,000.00. That sale was completed on 01 November 2022.
Issues
21There are four issues to consider in this motion:
i. Is this a proper case for summary judgment?
ii. For purposes of assessing damages, what is the starting point (a) the sale price on the original APS or (b) the sale price on the AAPS that applies? If the starting point for an assessment of damages is the AAPS, is it the stated “sale price” or the adjusted net proceeds of sale (taking into account the reduction in commissions and HST) that is used to determine the measure of the plaintiff’s loss?
iii. Did the plaintiff suffer additional damages as a result of the failed closings? And if so, what are they?
iv. Did the plaintiff mitigate her damages?
Discussion
22Dealing with the first issue, Rule 20 of the Rules of Civil Procedure provides a mechanism to justly and expeditiously adjudicate a matter and thus avoid potential delay and a costly trial process where there is no genuine issue that requires a trial. Both parties submit that this is such a case, and I agree; this is a relatively straightforward case of a failed residential real estate transaction.
23Turning to the second issue, the plaintiff argues that the starting point in the assessment of damages is the original sale price of $1,450,000.00 and not the sale price of $1,315,000.00 in the AAPS. The plaintiff argues that the lower AAPS price should not be used due to a lack of consideration for that second agreement. The defendants argue that the lower AAPS price is the starting point for assessing damages as additional consideration was not required for the amendments as the AAPS is a document “signed under seal” and the formality of the seal serves as a substitute for the need for consideration.
24The AAPS is a standard OREA form which the parties used. The parties signed their respective names next to a small preprinted black spot with the word “seal” below it. As noted above, the defendants argue that this AAPS is therefore a document under seal. On this point, as per Friedman Equity Developments Inc. v. Final Note Ltd., 2000 SCC 34, a determination of whether a contract is “under seal” must be undertaken with the common law which requires a demonstration that the parties to the contract intended it to be “under seal”. There is no such evidence in this case to show an intent to sign under seal.
25Additionally, pursuant to the decision in Gilbert Steel Ltd. v. University Construction Ltd., post-contractual modifications, unsupported by fresh consideration, are unenforceable. This is still the leading authority on this issue in Ontario. On the facts of this case, there was no fresh consideration in relation to the AAPS.
26Given my findings that (a) the AAPS was not a document signed under seal and (b) there was no fresh consideration for the AAPS, it is the original sale price as set out in the APS that is the starting point for an assessment of damages, with the measure of damages being the difference between the original sale price in the APS of the failed transaction and sale price in the subsequent successful closing.
27The plaintiff also claims damages that she argues naturally flow from the failed closings. While I accept that but for the failed closings the plaintiff would not have had to pay for insurance ($372.06), property taxes ($567.91), utilities ($451.31) and property maintenance ($300.00) along with costs thrown away for legal services associated with the failed transactions ($1,655.51), I do not find that she is entitled to the compensation claimed for real estate commissions which she would have had to pay from the gross proceeds of sale. Here, the allowed damages attributed to the failed closings total $3,346.79.
28Moving to the fourth issue of mitigation, in a similar fact situation as this the Court of Appeal in Azzarello v. Shawqi, 2019 ONCA 820 the court held that the purchaser was not obliged to accept a defaulting purchaser’s proposal of a reduction in purchase price. The court referenced S.M. Waddams, The Law of Contracts, 7th ed., wherein it stated that the duty to mitigate is derived from the proposition that the wronged party cannot recover from the defaulting party for losses that could reasonably have been avoided. The defendants argue that the plaintiff could have reasonably avoided her loss, by closing with them for more than she ultimately received; this proposition ignores the fact that after the defendants failed to close in August, the plaintiff took steps to mitigate her losses with a price reduction and a new closing date and even then, the defendants still did not close. The plaintiff did not engage in wishful thinking and place further faith in the defendants with hope upon hope that the next time, the deal would actually close. The duty to mitigate does not go that far.
29In this case, it is common ground that real estate prices were falling. The plaintiff attempted to mitigate her damages through the AAPS and then, having endured two failed closings, she took the most reasonable course of action in the circumstances and relisted the Property. The plaintiff sold the property to an arm’s length purchaser. The defendants do not allege that the ultimate sale price was improvident, but rather, that had the plaintiff given the defendants one last chance, she would have received more money than she ultimately did. As noted earlier, the duty to mitigate does not go that far.
Conclusion
30For the foregoing reasons, the plaintiff shall have judgment as against the defendants in the amount of $420,000.00 being the difference between the original sale price of $1,450,000.00 and $1,030,000.00.
31In addition to that amount, the plaintiff shall also have judgment for additional costs associated with the failed closings fixed in the amount of $3,346.79.
32The funds held in trust from the original deposit shall be released to the plaintiff and shall be applied against the amount owing under this judgment.
33The parties have already agreed to the costs of this motion on a partial indemnity scale, with a further agreement for an increase in same if offers to settle exchanged prove to be consequential. I will allow counsel until 11 April 2025 to advise me, through the judicial assistance, of what they agree to being the final costs order. Upon receipt of this information, I will prepare a separate endorsement relating to costs only.
Justice J. Krawchenko
Released: March 20, 2025
Note
1In Azzarello, the appellant/purchaser complained that the respondent/vendor did not entertain an offer, after the purchaser failed to close, to purchase the property for a 10% reduction in the purchase price based upon an appraisal of the property and instead resold the property for less than they could have received under the respondent/vendor’s proposal.