Court File and Parties

Court File No.: CV-23-00002048
Date of Decision: May 12, 2025
Ontario Superior Court of Justice

Between:
Datamy Inc., Plaintiff
– and –
Ka-Hang Yung and Vivien Yung, Defendants

Appearances:
Trung Nguyen and Cora Madden, for the Plaintiff
Jonathan Ku, for the Defendants

Heard: May 2, 2025

Reasons for Decision by Justice R.E. Charney

Introduction

[1] This is a motion for summary judgment under Rule 20.01 of the Rules of Civil Procedure, R.R.O. 1990, Reg. 194 brought by the Plaintiff, Datamy Inc., against the Defendants, Ka-Hang Yung and Vivien Yung. The motion relates to the Plaintiff’s action for damages arising out of the Defendants’ breach of an Agreement of Purchase and Sale (APS) dated February 7, 2023.

[2] The Plaintiff requests judgment in the amount of $140,000.00, which the Defendants were required to pay as a second deposit but failed to do. Alternatively, the Plaintiff requests judgment in the amount of $94,767 for consequential damages sustained by the Plaintiff as a result of the Defendants’ breach.

Facts

[3] The Plaintiff is a small, closely held, family corporation that carries on business as a home builder.

[4] The Plaintiff completed construction of a two-storey detached residential dwelling that was listed for sale on January 11, 2023 for $3,499,900.

[5] Following negotiations, the Plaintiff (Seller) and Defendants (Purchasers) entered into the APS on February 7, 2023.

[6] The APS contained the following material terms:

• The sale price of the Property was $3,250,000.00;
• The Purchasers would pay a deposit of $160,000.00 in two installments:
  • A payment of $20,000 within 1 business day of acceptance (the “First Deposit”);
  • A payment of $140,000 within 5 business days of acceptance (the “Second Deposit”); and
• The Seller would provide an existing survey of the Property.

[7] The APS was not made conditional on financing or conditional on inspection. These conditions had been included in the original offer, but were deleted by the parties in the final APS.

[8] On February 8, 2023: (a) the Purchasers made the First Deposit; and (b) the Seller provided a survey dated September 16, 2021.

[9] On February 14, 2023, the Purchasers failed to make the Second Deposit of $140,000.00. The lawyer for the Seller wrote to the Purchasers’ real estate agent (the Purchasers did not have a lawyer) to advise that the Purchasers had not provided the second deposit and had therefore “breached a key term in the APS and are noted in default of the transaction”.

[10] Although the Seller could have terminated the APS immediately, the Seller offered to extend the deadline for payment of the Second Deposit by an additional day, to February 15, 2024 at 2:00 p.m. The letter concluded:

If the Vendor does not receive a response within today and the deposit by tomorrow pursuant to the above, the Vendor will take any and all legal action that is available to them including but not limited to terminating the APS and relisting the property immediately to mitigate damages…

[11] The Purchasers did not respond to the Offer or communicate with the Seller or its lawyer.

[12] On February 15, 2023 at 2:14 p.m., the lawyer for the Sellers emailed the Purchasers’ real estate agent (they still did not have a lawyer) stating:

Please note it is past the 2:00 PM deadline as outlined in our previous communication and the agreed upon second deposit has not been provided. The purchasers remain in default due to their significant breach of the already executed and binding agreement of purchase and sale between the parties. As such, please be advised that the subject agreement of purchase and sale is hereby terminated and the vendor will be relisting the property as soon as practicable to mitigate damages. The vendor shall utilize any and all legal remedies available to them including but not limited to commencing a legal claim against the purchasers for any losses, damages, costs, expenses incurred due to their default, or as the vendor may further be advised.

[13] Accordingly, the Seller accepted the Purchasers’ repudiation and considered the APS terminated.

[14] On February 16, 2023, the Seller sold the Property to a third-party at a lower purchase price of $3,200,000.00 (the “Gill APS”) to mitigate its damages.

[15] On March 6, 2023, the Purchasers wrote to the Seller that they were willing to complete the transaction, but only if the Seller provided a $20,000.00 price abatement, all other terms remaining the same. The Seller’s lawyer responded that the APS had already been terminated and advised them to contact their lawyer.

Analysis

Motions for Summary Judgment

[16] Rule 20.04(2)(a) of the Rules of Civil Procedure, R.R.O. 1990, Reg. 194 provides:

“The court shall grant summary judgment if the court is satisfied that there is no genuine issue requiring a trial with respect to a claim or defence.”

[17] Rule 20.04(2.1) sets out the court’s powers on a motion for summary judgment:

In determining under clause (2)(a) whether there is a genuine issue requiring a trial, the court shall consider the evidence submitted by the parties and, if the determination is being made by a judge, the judge may exercise any of the following powers for the purpose, unless it is in the interest of justice for such powers to be exercised only at a trial:

1. Weighing the evidence.
2. Evaluating the credibility of a deponent.
3. Drawing any reasonable inference from the evidence.

[18] These powers were extensively reviewed by the Supreme Court of Canada in Hryniak v. Mauldin, 2014 SCC 7, where it laid out a two-part roadmap for summary judgment motions, at para. 66:

On a motion for summary judgment under Rule 20.04, the judge should first determine if there is a genuine issue requiring trial based only on the evidence before her, without using the new fact-finding powers. There will be no genuine issue requiring a trial if the summary judgment process provides her with the evidence required to fairly and justly adjudicate the dispute and is a timely, affordable and proportionate procedure, under Rule 20.04(2)(a). If there appears to be a genuine issue requiring a trial, she should then determine if the need for a trial can be avoided by using the new powers under Rules 20.04(2.1) and (2.2). She may, at her discretion, use those powers, provided that their use is not against the interest of justice. Their use will not be against the interest of justice if they will lead to a fair and just result and will serve the goals of timeliness, affordability and proportionality in light of the litigation as a whole.

[19] Even with these extended powers, a motion for summary judgment is appropriate only if the material provided on the motion “gives the judge confidence that she can find the necessary facts and apply the relevant legal principles so as to resolve the dispute” (Hryniak, at para. 50).

[20] In Hryniak, the Supreme Court held (at para. 49) that there will be no genuine issue for trial when the summary judgment process “(1) allows the judge to make the necessary findings of fact, (2) allows the judge to apply the law to the facts, and (3) is a proportionate, more expeditious and less expensive means to achieve a just result.”

[21] To defeat a motion for summary judgment, the responding party must put forward some evidence to show that there is a genuine issue requiring a trial. A responding party may not rest on mere allegations or denials of the party’s pleadings, but must set out—in affidavit material or other evidence—specific facts establishing a genuine issue requiring a trial.

[22] It is well settled that “both parties on a summary judgment motion have an obligation to put their best foot forward” (see Mazza v. Ornge Corporate Services Inc., 2016 ONCA 753, para 9). Given the onus placed on the moving party to provide supporting affidavit or other evidence under Rule 20.01, “it is not just the responding party who has an obligation to ‘lead trump or risk losing’” (see Ipex Inc. v. Lubrizol Advanced Materials Canada, 2015 ONSC 6580, para 28).

[23] A plaintiff or defendant bringing a motion for summary judgment has the initial onus of proving that there is no genuine issue for trial and must file some affidavit evidence to support that position. See for example, Sanzone v. Schechter, 2016 ONCA 566, paras 30-32, confirming the initial evidentiary obligation borne by the moving party (in that case the defendant) on a summary judgment motion.

[24] If the moving party meets the evidentiary burden of producing evidence on which the court could conclude that there is no genuine issue of material fact requiring a trial, the responding party must either refute or counter the moving party’s evidence or risk a summary judgment.

[25] While Rule 20.04 provides the court hearing a summary judgment motion with “enhanced forensic tools” to deal with conflicting evidence on factual matters, the court should employ these tools and decide a motion for summary judgment only where it leads to “a fair process and just adjudication”: Mason v. Perras Mongenais, 2018 ONCA 978, para 44; Eastwood Square Kitchener Inc. v. Value Village Stores, Inc., 2017 ONSC 832, paras 3-6.

[26] In the present case, the Plaintiff relies on the affidavit evidence of Tien Dat Bui, the director of the corporate Plaintiff.

[27] The Defendants have not filed any evidence to support their position.

[28] I am satisfied that a motion for summary judgment is appropriate in this case and is a proportionate, expeditious, and least expensive way of proceeding. The facts relevant to the legal issues to be determined are not in dispute.

Legal Principles Applicable to Failed Real Estate Transactions

[29] There are numerous cases dealing with summary judgment motions by vendors following a purchaser’s failure to close the transaction on the date set out in the agreement of purchase and sale. These cases are frequently amenable to a motion for summary judgment.

[30] Where the purchaser is in default of the APS, the plaintiff is entitled to retain the deposit paid, although the deposit must be credited against any other damages claimed. Where the seller sustains damages that are less than the deposit, the seller cannot recover damages beyond the amount of the forfeited deposit: Pleasant Developments Inc. v. Iyer, paras 7-8; Azzarello v. Shawqi, 2019 ONCA 820, paras 45, 53-54.

[31] The vendor has a duty to mitigate its damages: Bang v. Sebastian, 2018 ONSC 6226, para 42 (aff’d on appeal, 2019 ONCA 501). Generally, this is accomplished by the arm’s length sale of the property at market value, Bang, at para. 46.

[32] The damages amount is the difference between the price under the APS and the price of the new sale of the property once it closes, plus any additional carrying costs incurred by the vendor in mitigating its loss and dealing with the purchasers’ breach: Goldstein v. Goldar, 2018 ONSC 608, para 25.

Issue

[33] In the present case, the $160,000 deposit was to be paid in two installments: $20,000 and $140,000. The Purchasers paid the First Deposit, but failed to pay the Second Deposit, thus breaching the terms of the APS.

[34] The Seller treated the failure to pay the Second Deposit as a breach of the APS, and chose to terminate the APS and sue for damages. Since it was the Purchasers who breached the APS by failing to pay the Second Deposit, the Seller is entitled to keep the First Deposit.

[35] The issue in this case is whether the Seller is entitled to sue for the Second Deposit of $140,000, or whether its claim for damages is limited to the difference between the price under the APS and the price of the new sale of the Property, plus the additional carrying costs, less credit for the deposit already paid and forfeited. As indicated, the Plaintiff argues that this amount comes to $94,767.

[36] For the reasons that follow, I conclude that the Seller is entitled to sue for the second, unpaid deposit.

Claim for Unpaid Deposit

[37] The issue of whether a seller can sue for an unpaid deposit that is due and owing at the time the seller accepts the buyer’s repudiation of the contract was thoroughly canvassed by the British Columbia Court of Appeal in the case of Argo Ventures Inc. v. Choi, 2020 BCCA 17.

[38] In that case, the buyers agreed to purchase a property for $6.5 million dollars, with an initial deposit of $300,000 due within 10 business days. Within days – and before the deposit was due, the buyers advised the vendor that they had changed their mind and repudiated the contract. The buyers did not pay the deposit. The vendor accepted the repudiation of the contract, and commenced an action seeking judgment in the amount of the unpaid deposit. The trial judge granted judgment in favour of the vendor, and awarded judgment against the buyers in the amount of the unpaid deposit of $300,000.

[39] The buyers appealed, arguing that the judge erred in finding that an unpaid deposit that was not owing when the contract was repudiated was nevertheless forfeited upon their repudiation of the Contract.

[40] The BC Court of Appeal dismissed the appeal.

[41] Before reviewing the Court’s reasons, it will be helpful to emphasize an important distinction between the issue in the Argo Ventures case and the case at hand. In Argo Ventures, the buyer repudiated the contract before the deposit was due. In our case, it was the Purchasers’ failure to pay the Second Deposit that breached the contract. The precise issue considered by the BC Court was whether a seller could sue for a deposit that was not yet owing when the contract was repudiated. In our case, the deposit was owing when the contract was repudiated.

[42] At the end of the day, the Court of Appeal concluded that it made no legal difference whether the deposit was due before or after the breach. This point is important because the Court of Appeal started with the premise that the law was clear that a seller could sue for an unpaid deposit that was due before the repudiation – the precise facts in our case.

[43] The Court stated, at para. 36:

This court has held that where the seller’s right to a non-refundable deposit has accrued before it accepts the buyer’s repudiation, the seller can sue for an amount equal to the unpaid deposit owed under the contract: Vanvic Enterprises Ltd. v. Mack. In Tang v. Zhang, 2013 BCCA 52, para 30, this court further clarified that a deposit is intended to encourage parties to complete their contracts. While a deposit cannot be excessive or unconscionable, it is an exception to the usual rule against penalties: Tang at para. 30.

[44] The Court, at para. 41, cited the following paragraph from its decision in Vanvic:

This court upheld the trial judge’s award to the seller of judgment in an amount equal to the unpaid deposit with Hinkson J.A., for the Court, stating at para. 17:

In my opinion that covers the situation in the present case. When repudiation occurred the right to the $45,000 non-refundable deposit had already accrued to the plaintiff. The acceptance of the repudiation by the plaintiff did not affect that right. The plaintiff was still entitled to claim under the contract for that accrued right and, as a result, I conclude that the learned trial judge came to the correct conclusion. In the result, I would dismiss the appeal.

[45] The Court also reviewed decisions of the English High Court and Court of Appeal at paras. 42 and 42:

Furthermore, the England and Wales High Court (Commercial Court) and Court of Appeal (Civil Division) have rejected the argument that only a paid deposit is valuable: see Griffon Shipping LLC v. Firodia Shipping Limited, [2013] EWHC 593 (Comm.), aff’d Firodi Shipping Limited v. Griffon Shipping LLC, [2013] EWCA Civ. 1567, where Mr. Justice Teare stated at para. 27:

…The requirement to pay a deposit encourages the buyer to perform. “It is a guarantee that the purchaser means business”; see Soper v Arnold (1889) 14 AC 429 at p.435 per Lord Macnaughten. The encouragement flows from the fact that the deposit may indeed exceed the seller’s damages. … Moreover, it has long been recognised that a deposit which has been paid will be forfeited if the buyer fails to perform even though the deposit exceeds the loss of bargain damages. In those circumstances there is, in my judgment, no commercial or business sense in permitting a buyer to improve his position by the simple expedient of not paying the deposit. This has been recognised since at least 1868; see Hinton v Sparkes [(1868) 3 LR 3 CP 161 at p.166].

The Court in Griffon emphasized, at paras. 18 and 26, the value of a commitment to pay a deposit, as distinct from receipt of a deposit:

The right to a deposit is valuable. It is the seller’s “security for the correct fulfilment of this Agreement”. It has long been recognised that a deposit remains payable notwithstanding the termination of the contract.... The court would therefore expect that if the parties intended to exclude such right they would do so by the use of clear words…

…A deposit serves the commercial purpose of providing the seller with security for the performance of the MOA. It would not be consistent with business common sense to enable a buyer to put himself in a better position than he would be in having paid the deposit by adopting the simple expedient of refusing to pay the deposit...

[46] As indicated, the Court concluded that these principles applied even if the contract was repudiated before the deposit came due. The Court concluded, at para. 48:

Accordingly, in my view, the principle set out in Vanvic that a party may sue another for the amount of an unpaid deposit owing under a contract when it accepted the other party’s repudiation remains the law in this province.

[47] The British Columbia Court of Appeal’s decisions in Vanvic and Argo Ventures is consistent with the law in Ontario and was followed in the case of Gagliardi v. Al-Karawi, 2023 ONSC 6853, para 20, where Chown J. relied on Vanvic and Argo Ventures, and concluded, at para. 20:

In this case, the defendant argues that her repudiation of the contract before payment of the deposit became due brought the contract to an end and she had no obligation to pay the deposit. This argument must be rejected because, although the defendant repudiated the agreement before the deposit was due, the seller did not accept that repudiation until after the deposit was due. The innocent party is entitled to a reasonable amount of time to consider its position before accepting or rejecting the other party’s repudiation: Ching v. Pier 27 Toronto Inc., 2021 ONCA 551, para 39; Canada Egg Products Ltd. v. Canadian Doughnut Co.. Here, the correct analysis is that the plaintiffs accepted the defendant’s repudiation but only after the defendant failed to pay the deposit.

[48] Counsel for the Defendants argues that Argo Ventures and Gagliardi are distinguishable, because in those cases there was only one deposit, while in this case the deposit was to be paid in two installments, and the Buyer had already paid the first installment. While this is a factual distinction, there is no legal principle that would lead to a different result.

Relief From Forfeiture

[49] Finally, the Defendants argue that if the Plaintiff can sue for the unpaid deposit, they should be granted relief from forfeiture.

[50] Even if the amount paid is characterized as a non-refundable deposit, if the amount of the deposit is out of all proportion to the losses suffered, the court may order the deposit be returned: Dovbush v. Mouzitchka, 2016 ONCA 381, para 31, and cases cited therein. To obtain relief from forfeiture on this basis, the Defendants are required to establish (i) the forfeited sum was out of proportion to the damages suffered; and (ii) it would be unconscionable for the vendor to retain the money: Varajao v. Azish, 2015 ONCA 218, para 11; Redstone Enterprises v. Simple Technology, 2017 ONCA 282, para 20.

[51] In Gagliardi, Chown J. reviewed a number of cases that considered whether the deposit was disproportionate to the sale price. He stated, at paras. 71-73:

No Canadian case that I could find has found a deposit so large as to be unconscionable. Canadian courts have found that deposits of 20%, 25% and 28% were reasonable deposits and declined relief from forfeiture: Liu; Hinkson Holdings; Nawara v. Riverstone, 2019 ONSC 111.

The reason it is so difficult to establish unconscionability in a deposit case is that the buyer has always agreed to pay the deposit. In addition, real estate deals rarely involve vulnerable parties or significant unequal bargaining power. If the deposit is for a reasonable amount in relation to the purchase price, and if the contract does not proceed due to the breach of the buyer, it is difficult to see how it could be unconscionable to make the buyer pay what it agreed and expected to pay.

Unconscionability is not a factor in this case. At 6.3% of the purchase price, the deposit was reasonable. The plaintiffs can in no way be accused of oppression, extraction of an extravagant sum, or sharp exercise of contractual rights. Under the Stockloser formulation, this factor weighs against from relief from forfeiture.

[52] See also: Signal Chemicals Ltd. v. Dew Man Marine Trade Inc., 2011 ONSC 3951, para 16:

“Cases have held that deposit amounts were not penalties where they were in the order of 4.8%, 20% and 25%” (citations omitted).

[53] The onus is on the Defendants to show that the deposit terms constitute a penalty. In the present case, the total deposit of $160,000 equalled only 5% of the sale price. This is a reasonable deposit, indeed, it is at the lower end of the spectrum of deposit cases. The Defendants have failed to provide any basis to grant them relief from forfeiture of the deposit that they agreed to pay.

Conclusion

[54] Based on the foregoing, I am satisfied that the Seller is entitled to summary judgment in the amount of the unpaid deposit of $140,000.

Alternative Damages Calculation

[55] If I am wrong about the Plaintiff’s entitlement to damages in the amount of the unpaid deposit, the Plaintiff would be entitled to damages based on the difference between the price under the APS and the price of the new sale of the Property, plus any additional carrying costs incurred, less the $20,000 deposit already paid and forfeited.

[56] The Plaintiff claims that this amount is $94,767 calculated as follows:

• The difference between the APS sale price of $3,250,000 and the Gill APS of $3,200,000 = $50,000
• The difference between the original real estate agent fees of $32,500 and the new real estate fees of $96,250 = $63,750
• Costs of real estate lawyer’s fees for the Yung sale: $1,017.00
• Total: $114,767
• Less Credit for Deposit paid = $94,767

[57] The Defendants point out that the APS between the Plaintiff and Defendants provided that the Seller agreed to credit the Buyers $6,000 for the HST rebate on closing. This credit was not included in the Gill APS, which reduces the Plaintiff’s damages by $6,000.

[58] The Defendants also point out that the APS provided that the Seller agreed to make 16 improvements to the Property within 90 days after closing, and provided that “the Buyer’s solicitor shall hold back the amount of $20,000 for the payment if the Seller fails to complete the following items after closing”, and lists the 16 improvements, including building and installing an additional closet, electrical work, and various other mostly cosmetic changes.

[59] These improvements were not included in the Gill APS, again reducing the Plaintiff’s damages by an unspecified amount. Neither party provided a cost estimate for these improvements. Given the failure of either party to provide evidence on the value of this clause, I will assume that the $20,000 hold back was a reasonable estimate of the total value of these improvements, and deduct that amount from the damages that would be awarded if the Plaintiff was not able to sue for the unpaid deposit.

[60] This would reduce the $94,767 damages calculation by $26,000, for a total of $68,767.

Final Disposition

[61] Summary Judgment is granted in favour of the Plaintiff in the amount of $140,000.

[62] If the parties are not able to agree on costs, the Plaintiff may submit written submissions of no more than 3 pages plus costs outline and any offers to settle, within 20 days of the release of this decision. The Defendants may submit responding submissions on the same terms within a further 15 days.

Justice R.E. Charney
Released: May 12, 2025