Court File and Parties

Court File No.: CV-23-00702630
Date: March 25, 2025
Court: Superior Court of Justice - Ontario

Plaintiffs: Caivan (Creekside) Limited Partnership and Caivan (Creekside) Limited
Defendants: Carmen Logoteta and Giuseppe Versace

Before: Paul B. Schabas
Counsel:

• Joseph N. Blinick and Megan Steeves for the Plaintiffs
• Jake Newton for the Defendants

Heard: March 18, 2025

Reasons for Judgment

Overview

[1] The Plaintiffs have brought a motion for summary judgment. In their responding record, the Defendants also seek summary judgment by way of cross-motion. In my view, this is an appropriate case for summary judgment. The material facts are not in dispute and I am able to make a fair and just determination on the merits of this case based on the record before me.

[2] In June 2022, the defendants entered into an Agreement of Purchase and Sale (“APS”) contract with the plaintiffs to purchase a townhouse in Oakville which was under construction. The purchase price was $3,309,990. The house was expected to be ready for occupancy in July 2024.

[3] The defendants had to make a series of payments as construction progressed. They made the first two payments, in June and July 2022, totalling $100,000. But the defendants could not make the second and third payments, on August 29 and October 28, 2022, totalling $262,000, as they were having difficulty selling their home in the United Kingdom.

[4] On October 31, 2022, the plaintiffs granted an extension to the defendants to November 10, 2022 at 5 p.m. to make the payments, “failing which”, the plaintiffs said, they “shall have the right” to deem the defendants in breach and terminate the APS.

[5] The defendants advised the plaintiffs on November 4, 2022 that they could not make the payments by November 10, 2022. On November 8, 2022, the plaintiffs said that if the payments were not made by 5 p.m. on November 10 they “will move to terminate the Purchase Agreement and all deposits paid shall be forfeited.” However, the plaintiffs also informed the defendants that if they became able to make the payments and the house remained available, the plaintiffs were “willing to consider in good faith reviving the transaction”, including applying the forfeited deposits toward the purchase.

[6] The payments were not made on November 10, 2022. The plaintiffs took no steps to “move to terminate” or communicate with the defendants.

[7] Several months later, on March 16, 2023, the plaintiffs entered into an agreement to sell the house to a new purchaser for $2,899,990. Six weeks later, on May 2, 2023, the defendants inquired whether the property “was still available”, and were told by the plaintiffs that it had been sold. The defendants then took the position that the plaintiffs had “fundamentally breached” the APS and that they were entitled to the return of their deposits and damages.

[8] The plaintiffs, in turn, demanded that the defendants pay the plaintiffs $397,080 reflecting their “preliminary estimate of damages” resulting from the lower sale price in March 2023 and other expenses incurred by the plaintiffs.

[9] On July 12, 2023, the plaintiffs commenced this action and the defendants counterclaimed.

Issues

[10] The following questions must be addressed:

(a) Was the APS between the parties terminated by the plaintiffs on or after November 10, 2022?
(b) If not, did the plaintiffs breach the APS by re-selling the property to a third party in March 2023?
(c) If the plaintiffs terminated the APS, are they entitled to damages from the defendants and, if so, in what amount?
(d) If the plaintiffs breached the APS, are the defendants entitled to the return of their deposits?

Discussion

[11] This case raises the legal issue of anticipatory breach, and what flows from it. Here, the defendants committed an anticipatory breach, or repudiated the contract, when they told the plaintiffs they would not be able to make the required payments on November 10, 2022. There is no dispute about this. However, it has long been held that “a repudiatory breach or an anticipatory repudiation of a contract does not, in itself, terminate or discharge a contract”: Brown v. Belleville (City), 2013 ONCA 148 at para. 42, citing Guarantee Co. of North America v. Gordon Capital Corp., 1999 SCC 64 at para. 40.

[12] In Gordon Capital the Supreme Court stated that “the effect of a repudiation depends on the election made by the non-repudiating party”, who can choose to treat the contract as remaining in force, or accept the termination which discharges the parties from any future obligations. This is sometimes described as a choice between affirming and disaffirming the contract.

[13] In Brown v. Belleville, at para. 45, the Court of Appeal stated that if the innocent party chooses to disaffirm the contract, or terminate it, that “election to disaffirm the contract must be clearly and unequivocally communicated to the repudiating party within a reasonable time.” [emphasis added] The communication of the election may be accomplished directly or indirectly, orally or in writing, “or may be inferred from the conduct of the innocent party in the particular circumstances of the case.” See also: Ching v. Pier 27 Toronto Inc., 2021 ONCA 551 at paras 31–35.

[14] The plaintiffs submit that they terminated the contract at 5 p.m. on November 10, 2022. They acknowledge that they did not communicate that fact to the defendants on or after that date and time; rather, they rely on the communications leading up to November 10, 2022 as an election to terminate. This includes the November 8, 2022 letter and an email exchange between the lawyers for the parties on November 9, 2022, in which the defendants requested the return of a portion of their deposits which was rejected by the plaintiffs whose counsel responded that the vendor “will be exercising its rights under the Purchase Agreement to forfeit 100% of the deposit as the Vendor’s property.”

[15] The plaintiffs rely on the decision in Cachet Summerhill Developments Inc. v. Kaznlson, 2021 ONSC 2512. There, the purchaser made a number of deposits, but when she was advised of the upcoming closing date she repudiated the agreement, indicating she was not prepared to close. The vendor’s lawyer then wrote to the purchaser’s lawyer on the closing date stating that “unless we hear from you before end of day today…we shall declare this Agreement null and void, forfeit your deposits to the Vendor and hold you accountable for any and all damages…”: para. 5. The purchaser responded only to say that she could not close, and the vendor did not make any further communication.

[16] Vermette J. inferred from the correspondence that the Vendor accepted the anticipatory breach. She relied on the mandatory language used – “unless we hear from you…we shall declare this agreement null and void” – which she found in the circumstances of that case was unequivocal that the agreement would end. Vermette J. contrasted that with cases where the communication continued to insist on performance.

[17] In my view, Cachet Summerhill Developments is distinguishable from this case. Here, unlike in Cachet, the defendants had been in breach of the APS for some time, having missed payments in August and October. The plaintiffs did not terminate the APS, but instead extended the time to make payments. On October 31, 2022, for example, the plaintiffs confirmed that the defendants were in default, but that the outstanding payments could be made by November 10, 2022, “failing which the Vendor shall have the right to deem you in breach of the Purchase Agreement, terminate the Purchase Agreement and forfeit all deposit monies received as the absolute property of the Vendor.” The letter went on to state that “[w]e trust this will not be necessary and we look forward to receiving the funds as required.”

[18] The October 31, 2022 letter said simply that the Vendor would “have the right” to terminate the APS, but it did not say it would do so. Further steps would be required.

[19] The November 8, 2022 letter went further, saying that if payment is not received “the Vendor will move to terminate” the APS. However, this too suggests that the Vendor would still have to take steps to terminate which, perhaps, would not be taken. Additionally, the statement that “all deposits shall be forfeited” is not a termination. The APS provides that in the event of default or breach by the Purchaser, amounts paid could be forfeited, but that this is “irrespective of any other right, cause of action or remedy to which the Vendor may be entitled hereunder in law or in equity”, which could include affirming the contract.

[20] Further, unlike in Cachet, the context here is that the plaintiffs had granted indulgences and might do so again. Indeed, as the November 8, 2022 letter pressed for performance in the face of an anticipatory breach, the letter is an affirmation of the contract which remained in effect. The plaintiffs acknowledged this in their evidence. The law is clear that such an affirmation, once made, cannot be rescinded: Dosanjh v. Liang, 2015 BCCA 18 at para. 41.

[21] It follows, then, that the November 8, 2022 letter is not a “clear and unequivocal” communication terminating the contract. As Charney J. noted in somewhat similar circumstances in 2174372 Ontario Ltd. v. Dharamshi, 2021 ONSC 6139 at paras. 75-78, where the vendor also pressed for performance, the effect of that choice is that “neither party is relieved of their obligation under the agreement.”

[22] Consequently, when the defendants breached again by failing to pay at 5 p.m. on November 10, 2022, the plaintiffs had to again make a choice – to “move to terminate” or not. They did nothing. The breach was unaccepted, and the agreement was not terminated. Even if the plaintiffs, in their minds, believed or “deemed” the APS to be terminated, they were required to communicate that termination to the defendants. Termination cannot be unilateral. As it was put long ago, “[a]n unaccepted repudiation is a thing writ in water and is of no value to anybody: it confers no rights of any sort or kind”: Howard v. Pickford Tool, [1951] 1 K.B. 419 at p. 421 (Eng. C.A.).

[23] Here the plaintiffs did not “clearly and unequivocally” communicate a disaffirmation to the defendants following the breach on November 10, 2022, unlike, for example, the subsequent termination by the purchasers in Dharamshi, at para. 106, in which the communication following the vendor’s repudiation was crystal clear: “As far as my client is concerned the agreement is terminated.” Rather, in this case the plaintiffs said and did nothing.

[24] Further, in the particular circumstances of this case I do not regard the plaintiffs’ silence after November 10, 2022 to be a basis to infer that they had terminated the contract. Unlike Cachet, which involved failing to close an agreement of purchase and sale, the closing date here was still more than eighteen months away (indeed, I am told that the resale has yet to close), and there was time for the defendants to cure their default, as the November 8, 2022 letter suggested. Although an innocent party is not obliged to make its election immediately, it must do so within a reasonable time. As stated in Dosanjh, at para. 37, “at least until that reasonable period of time has elapsed, a court should be slow to treat equivocal statements or acts as affirmations of the contract”: Ching v. Pier 27 at para. 39.

[25] As the APS was not terminated by the plaintiffs, they ought not to have resold the property to a new buyer. In doing so, the plaintiffs ran the risk described in Ching v. Pier 27 at para. 40, quoting from Chitty on Contracts, in turn quoting from an English case:

As long as the contract remains alive, the innocent party runs the risk that a merely anticipatory repudiatory breach, a thing ‘writ in water’ until acceptance, can be overtaken by another event which prejudices the innocent party’s rights under the contract—such as frustration or even his own breach. He also runs the risk, if that is the right word, that the party in repudiation will resume performance of the contract and thus end any continuing right in the innocent party to elect to accept the former repudiation as terminating the contract.

[26] This is what happened here. The plaintiffs were the innocent party in November 2022, but that position was overtaken by the resale in March 2023 which put the plaintiffs in the position that they could not perform the contract when the defendants came back in May 2023 seeking to resume performance. As put in the case law, “the tables had turned” and now the plaintiffs were in breach. In response to that fundamental breach of the APS, the defendants demanded the return of their deposits.

[27] I conclude that the defendants are entitled to the return of their deposits. Although they had been told they “shall be forfeited” if they did not pay by November 10, 2011, the Tarion Addendum to the APS provides in s. 11(a) that where a purchase agreement is terminated “other than as a result of breach of contract by the purchaser”, the vendor is to return all deposits with interest. This is consumer protection legislation which prevails over anything to the contrary in the APS. As I have found that the APS was not terminated due to a breach by the defendants, the plaintiffs must return the deposit with interest which, pursuant to s. 11(c) of the Tarion Addendum, I conclude shall be at rates established under the Courts of Justice Act.

[28] Before concluding, I note that had I found for the plaintiffs I would not have awarded them damages other than permitting them to keep the $100,000 in deposits. This is because there is no evidence that the plaintiffs have closed the sale with the purchaser who agreed to buy the property in March 2023. Indeed, I was advised that the sale has not yet closed. Accordingly, any additional damages are unproven.

Conclusion

[29] It follows from my analysis that the questions posed earlier result in the following answers:

• The APS was not terminated by the plaintiffs on or after November 10, 2022.
• The plaintiffs breached the APS when they resold the property in March 2023, making them unable to comply with the APS.
• As the plaintiffs did not terminate the APS, they are not entitled to damages arising from the subsequent sale to a third party.
• Due to the breach of the APS by the plaintiffs, the defendants are entitled to the return of their deposits, with interest from May 4, 2023 until the date of these Reasons at the pre-judgment interest rate that applied in May 2023. The post-judgment rate shall apply going forward.

[30] The summary judgment motion of the plaintiffs is dismissed. Summary judgment is granted to the defendants in accordance with these Reasons.

[31] If the parties are unable to agree on costs they may, within 15 days of the release of these Reasons, provide me with submissions no longer than two pages, double-spaced, not including attachments, addressing costs.

Paul B. Schabas
Date: March 25, 2025