Reasons for Decision

Court File Nos.: CV-25-00000456-0000 & CV-25-00000456-0000/A1
Date: 2025-06-18
Ontario Superior Court of Justice

Between:
Mary Ayuba and Audu Ayuba Ayuba, Plaintiffs/Defendants by Counterclaim
– and –
I. Bello Erhunmwun, Defendant/Plaintiff by Counterclaim
– and –
Hometon Inc. operating as Hometon Group Realty Point and Chiu Ha Clara Chan, Third Parties

Appearances:
Jeffrey S. Klein, for the Plaintiffs/Defendants by Counterclaim
Michael Gayed, for the Defendant/Plaintiff by Counterclaim
Shahzad Siddiqui, for the Third Parties

Heard: June 10, 2025

Justice R.E. Charney

Introduction

[1] The Plaintiffs bring this motion for summary judgment against the Defendant for the return of the Plaintiffs’ deposit for an assignment of a property that was never built.

[2] The Defendant takes the position that he is entitled to retain the deposit paid by the Plaintiffs. In the alternative, if he must repay the deposit, he seeks the return of the commission he paid to the real estate agent (“Hometown” or the “Third Party”) that acted for the Defendant on the sale of the assignment of the property that was never built. Alternatively, if the real estate agent is not required to return the commission, the Defendant argues that the commission paid by the Defendant must be deducted or “set off” from any deposit returned to the Plaintiffs.

[3] The Third Party takes the position that they are entitled to retain the commission paid by the Defendant.

[4] There are no facts in dispute. The legal issues all turn on the interpretation of the agreements that the parties signed. All parties agree that this case should be decided on a summary judgment motion.

Facts

Agreement of Purchase and Sale

[5] The Defendant, I. Bello Erhunmwun (“Bello”), entered into an Agreement of Purchase and Sale (“APS”) with Stateview Homes (“Stateview” or the “Vendor”) on July 22, 2021, for a new home to be constructed in Barrie at the property municipally known as Lot 2, Hampton Height by Stateview Homes (Hampton Heights) Inc. (the “Property”). The purchase price was $949,990. The Defendant agreed to pay a total of $80,000 deposit (four payments of $20,000). The original occupancy date was August 24, 2022.

[6] The APS provided that the Defendant was entitled to assign the APS at the Vendor’s discretion. The Defendant and the Vendor agreed that the cost associated with an assignment would be $7,500 plus HST as the Vendor’s fee, plus $950 as the legal fees of the Vendor. This amount would be paid by the Defendant.

Listing Agreement

[7] On November 25, 2021, the Defendant entered into a Listing Agreement with the Third Party, Hometown Inc. (“Hometown”), to sell the Property. The Listing Agreement was on the Ontario Real Estate Association (OREA) Form 200. Since the Defendant was not yet the owner of the Property, the Defendant was seeking to assign its interest under the APS. Pursuant to the Listing Agreement, the Defendant retained Hometown to offer the Property for sale at $1,280,000. Hometown was to receive a 4.5% commission for the sale of the Property. The Third Party Clara Chen executed the Listing Agreement on behalf of Hometown.

Assignment Agreement

[8] The Plaintiffs saw that the Property was available and contacted Hometown. The Plaintiffs knew that the Property was a “pre-build” and that the Vendor was Stateview.

[9] On January 14, 2022, the Plaintiffs entered into an Assignment of Agreement of Purchase and Sale with the Defendant for the subject Property. The Assignment Agreement was on the OREA Form 145 (“The Assignment Agreement”).

[10] The Assignment Agreement provided that the total purchase price to be paid by the Plaintiffs for the Property was $1,280,000 of which the amount payable to Stateview Homes was $949,990 and the balance of the price to be paid by the Plaintiffs to be $330,010 which was payable to the Defendant. The assignment closing date was scheduled for April 12, 2022.

[11] The Assignment Agreement provided that the “Assignor will pay the assignment administrative fee plus applicable tax and legal fees associated with the assignment to the builder…”.

[12] The Assignment Agreement was also conditional upon the Vendor (Stateview) approving the terms of the Assignment Agreement and supplying a vendor’s Consent document.

[13] Paragraph 17 of the Assignment Agreement specifically dealt with the consequences of a default by the seller (Stateview):

Default by Seller: the Assignee and Assignor acknowledge and agree that if the 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 monies paid by the Assignee under this Assignment Agreement shall be returned to the Assignee in full without interest.

[14] The Assignment Agreement provided payment to the Defendant of the sum of $410,010, payable as follows:

a. A deposit of $50,000;
b. A further $206,000 to be paid on or before the assignment closing date;
c. The remaining balance of $154,010 was due on the final closing when Stateview Homes transferred title to the Property to the Plaintiffs.

[15] The $410,000 payment exceeded the $330,010 to be paid to the Defendant because $80,000 was to reimburse the Defendant for the deposit that the Defendant had paid to Stateview.

[16] On signing, the Plaintiffs paid the Defendant the deposit of $50,000.

[17] On the same date that the Assignment Agreement was signed, the Plaintiffs, Defendant and Hometown entered into a confirmation of co-operation and representation agreement to permit Hometown to represent both the Plaintiffs and the Defendant in relation to the sale of the assignment.

Vendor’s Consent

[18] As indicated above, the APS between Bello and Stateview required that Bello obtain the consent of Stateview to any assignment. As a result, Stateview prepared a consent for the assignment (Vendor’s Consent). The Vendor’s Consent was signed by Bello as assignor, the Plaintiffs as assignees and Stateview Homes as Vendor on June 10, 2022.

[19] The Vendor’s Consent expressly references and incorporates the Assignment Agreement at para. 3:

The Assignor and Assignee may have by separate agreement set out the terms of any financial consideration between them for the assignment here, to which agreement the vendor is not a party by which it is not bound. The Assignor and Assignee shall be responsible as between such parties to arrange for the assignee reimbursing the assignor for the deposits here by assigned.

[20] This reference and incorporation also appear at para. 23 of the Vendor’s Consent:

This Agreement and the agreement referred to in paragraph 3 above, shall constitute the entire agreement between the assignor and the assignee and there is no representation, warranty, collateral agreement or condition affecting this agreement or supported thereby other than as expressed herein or in paragraph 3 hereof in writing.

[21] The Vendor’s Consent does not purport to replace or supersede the Assignment Agreement, it expressly references it and confirms its continued operation as between the Assignor and Assignee.

Payment of Deposit and Commission

[22] The Plaintiffs paid Bello the amount of $206,000 on the assignment closing date of April 12, 2022. This payment, together with the original $50,000 deposit equalled $256,000.

[23] In April and June 2022, the Defendant paid Hometown its 4.5% commission, for a total commission of $57,600 plus $7,488 HST. The commission was calculated on the total purchase price of the Property ($1,280,000).

Stateview Placed into Receivership

[24] The subject matter of the Assignment Agreement was never built.

[25] On June 15, 2023, a receiver was appointed over the assets of Stateview Homes by Order of the Ontario Superior Court of Justice. On August 18, 2023, the Court terminated all existing purchase and sale agreements between Stateview Homes and purchasers including the one that was assigned to the Plaintiffs by the Defendant.

[26] Pursuant to the Assignment Agreement, the Plaintiffs have paid the Defendant deposits totalling $256,000. The Plaintiffs also paid directly to Stateview Homes as a deposit for upgrades $31,149.02 on July 14, 2022 and $5,721.19 paid on April 20, 2023.

Tarion Warranty Claim

[27] The Plaintiffs made an Application to the Tarion Warranty Corporation for the return of funds paid by them. As a result, Tarion agreed to reimburse the Plaintiffs the sum of $94,999.

Analysis

Motion for Summary Judgment

[28] 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.”

[29] 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.

[30] These powers were extensively reviewed by the Supreme Court of Canada in Hryniak v. Mauldin, 2014 SCC 7, 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.

[31] 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).

[32] 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.”

[33] 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’”: Ipex Inc. v. Lubrizol Advanced Materials Canada, 2015 ONSC 6580, para 28.

[34] 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.

[35] Having reviewed the material filed by each party, I am satisfied that this is an appropriate case in which to proceed by way of motion for summary judgment. The relevant facts are not in dispute. Each party is an innocent victim of Stateview’s bankruptcy. Each party acted in good faith in their dealings with each other and are now figuring out how to allocate their losses from Stateview’s default. This case turns on the interpretation of the relevant agreements made by the parties.

Issue #1: Is the Plaintiff entitled to the return of its $256,000 deposit?

[36] In my view, para. 17 of the Assignment Agreement is perfectly clear on this point. It expressly provides that “if the Assignment Agreement is not completed due to the default of the seller… this Assignment Agreement shall become null and void and all monies paid by the Assignee under this Assignment Agreement shall be returned to the Assignee in full without interest”. That is precisely what happened in this case: the Assignment Agreement could not be completed due to the default of Stateview. The Assignment Agreement became null and void, and the $256,000 paid to the Defendant must be returned to the Plaintiffs “in full without interest”.

[37] The Defendant argues that para. 6 of the Vendor’s Consent Agreement nullifies para. 17 of the Assignment Agreement. Para. 6 of the Vendor’s Consent provides:

The Assignee does hereby indemnify and save harmless the Assignor from and against all liabilities, suits, actions, proceedings, claims, causes of action, damages, judgments or costs whatsoever, including all claims arising out of, incidental to or in connection with any breach by the Assignee of any of the Purchaser’s obligations under the Purchase Agreement arising or occurring on or after the date of execution of this Agreement.

[38] I reject the Defendant’s interpretation for two reasons. Firstly, as indicated above, paras. 3 and 23 of the Vendor’s Consent expressly references and incorporates the “terms of any financial consideration” as between the Assignor and the Assignee in the Assignment Agreement. The two agreements must be read together, and it would lead to an absurd result if a general provision like para. 6 of the Vendor’s Consent nullified the financial terms of the Assignment Agreement that it purports to continue and incorporate.

[39] When interpreting any contract, the “overriding concern is to determine the intent of the parties and the scope of their understanding”: by reading “the contract as a whole, giving the words used their ordinary and grammatical meaning, consistent with the surrounding circumstances known to the parties at the time of formation of the contract.”: Sattva Capital Corp. v. Creston Moly Corp., 2014 SCC 53, para 47. The primary object of contract interpretation is to give effect to the intention of the parties at the time of contract formation: Bhasin v. Hrynew, 2014 SCC 71, para 45.

[40] In Plan Group v. Bell Canada, 2009 ONCA 548, para 37, the Court of Appeal for Ontario held that a commercial contract should be interpreted: (i) as a whole, by giving meaning to all the terms of a contract to avoid an interpretation that would render any term ineffective; (ii) by determining the intention of the parties with reference to the words used in the contract; (iii) with regard to objective evidence of the factual matrix underlying the negotiation of the contract, but without reference to subjective intention; and (iv) to the extent that there is any ambiguity in the contract, in a fashion that accords with sound commercial principles and good business sense and that avoids a commercial absurdity.

[41] Giving the words of para. 17 of the Assignment Agreement their ordinary and grammatical meaning, they can only mean one thing: if the Assignment Agreement cannot be completed because the seller (Stateview) defaults, the Plaintiffs get their full deposit back. Not some of the deposit, not the deposit minus the Defendant’s expenses, but the full deposit.

[42] Secondly, para. 6 of the Vendor’s Consent cannot bear the meaning proposed by the Defendant. Paragraph 6 of the Vendor’s Consent is limited to “any breach by the Assignee of any of the Purchaser’s obligations under the Purchase Agreement”. In this case, there was no breach by the Assignee of any of the Purchaser’s obligations under the Purchase Agreement. Indeed, there was no breach by the Assignee of any agreement at all. Paragraph 6 simply has no application to the circumstances presented in this case.

[43] The Defendant argues that para. 6 of the Vendor’s Consent uses the words “including all claims arising out of, incidental to or in connection with any breach by the Assignee of any of the Purchaser’s obligations under the Purchase Agreement” [emphasis added], and argues that the word “including” gives para. 6 a limitless and expansive application which encompasses indemnification for the Defendant’s liability to the Plaintiffs under the Assignment Agreement.

[44] The word “including” may be a term of enlargement or expansion, but it is not limitless. “[T]he word “includes” does not necessarily require an expansive interpretation extending the definition beyond the itemized list…The word “includes” may, depending on the context, precede a list that exhausts the definition”: Cochrane v. Ontario (Attorney General), 2008 ONCA 718, para 52. See also: R. v. Loblaw Groceteria Co. (Manitoba); Canada 3000 Inc., Re; Inter-Canadian (1991) Inc. (Trustee of), 2006 SCC 24, paras 47-50.

[45] As explained by Ruth Sullivan in The Construction of Statutes, 7th Ed. (LexisNexis Canada, 2022), at s. 4.04[3]:

While definitions that begin with “includes” are non-exhaustive in the sense that they do not displace the ordinary meaning of the defined term and often enlarge it, they are exhaustive in the sense that, for the definition to apply, the person or thing in question must come either within the ordinary meaning of the defined term or within the meaning of the terms following “includes”.

[46] The same analysis applies to the use of the word “including” in a contract. For para. 6 to apply, there must be some breach of some agreement by the Assignee for which the Purchaser (Assignor) would be exposed to some liability. In the absence of a breach by the Assignee of some contract, including the original APS, the indemnification in para. 6 of the Vendor’s Consent has no application.

Issue #2: Is the Defendant entitled to deduct its expenses from the Plaintiffs’ Deposit?

[47] The Defendant and Stateview agreed that the cost associated with an assignment of the APS would be $7,500 plus HST as the Vendor’s fee, plus $950 as the legal fees of the Vendor. The Defendant paid this money to Stateview in order to obtain the Vendor’s Consent to the assignment.

[48] The Assignment Agreement also provided that these administrative costs and the Vendor’s legal fees would be paid by the Assignor.

[49] In addition, the Defendant paid Hometown commission of $57,600, plus $7,488 HST for its services acting as real estate agent for the sale of the Property.

[50] The Defendant argues that if he is liable to the Plaintiffs for the return of the deposit, both of these expenses should be “set off” against the $256,000 refund to the Plaintiffs.

[51] There is no basis for this counterclaim. The Defendant paid this money pursuant to contractual agreements with Stateview and Hometown to which the Plaintiffs were not a party. There is no provision in either the Assignment Agreement or the Vendor’s Consent that would oblige the Plaintiffs to reimburse the Defendant for these payments.

[52] Nor did the Plaintiffs breach any provision of any agreement with the Defendant that would entitle the Defendant to damages from the Plaintiffs.

Issue #3: How much of the $94,999 Tarion Warranty Payment Should be Deducted from the Deposit Refund?

[53] The Plaintiffs argue that of the $94,999 which the Plaintiffs received from Tarion, that portion of the Tarion payment attributable to the $80,000 deposit amounted to 72% and that portion attributable to the deposit of $31,149.02 paid by the Plaintiffs directly to Stateview for upgrades amounted to 28%. Therefore, after deducting the reimbursement from Tarion from the amount paid to the Defendant, ($256,000 less $68,399.28) the damages claimed are $187,600.72.

[54] I have reviewed the Claim Resolution Schedule provided by Tarion to the Plaintiffs. I agree that it indicates that the amount received was calculated by taking into account both the $80,000 deposit paid by the Defendant to Stateview (which the Plaintiffs paid as part of their deposit to the Defendant) and the additional $31,149 additional deposit paid by the Plaintiffs directly to Stateview for upgrades. As such, the calculation proposed by the Plaintiffs appears to be correct, and $68,399.28 will be deducted from the $256,000 refund to be paid by the Defendant to the Plaintiffs.

Issue #4: Does Hometown have to return its commission to the Defendant?

[55] The Defendant argues that, through no fault of either the Plaintiffs or the Defendant, the underlying sale of the Property assigned to the Plaintiffs did not close. It would be unjust to permit the Third Party to retain their commission for an Assignment whose underlying sale did not close. If the Assignment is null and void under the Assignment Agreement, it is null and void for all purposes, and all monies paid in relation to the Assignment should be repaid.

[56] The Third Parties submit that they completed the services for which they were contracted, being the assignment of the Agreement of Purchase of Sale for the Property. The Assignment Agreement closed successfully on April 12, 2022 and the Third Parties were paid pursuant to the terms of the Listing Agreement with the Defendant and the Assignment Agreement signed between the Plaintiffs and Defendant. Since the Assignment Agreement closed successfully, they are entitled to keep their commission even if the underlying sale of the Property did not close.

[57] The Third Parties argue that they performed and met all conditions required for the brokerage to earn commission and compensation. Hometown incurred advertising, marketing, and operational expenses, along with significant time and effort on negotiations and communications to bring a valid assignment offer to the Defendant.

[58] Again, the resolution of this dispute depends on the interpretation of the Listing Agreement signed by the Defendant and Third Party.

[59] In my view, the relevant provision of the Listing Agreement provides as follows:

The Seller further agrees to pay such commission as calculated above even if the transaction contemplated by an agreement to purchase agreed to or accepted by the Seller or anyone on the Seller's behalf is not completed, if such non completion is owing or attributable to the Seller’s default or neglect, said Commission to be payable on the date set for completion of the purchase of the Property.

[60] The “property” is defined in the Listing Agreement as “Lot 2 project – Hampton Heights in Barrie by Stateview Homes (Hampton Heights Inc.)”.

[61] Also significant is the fact that the 4.5% commission is calculated as a percentage of the total sale price for the property - $1,280,000 - not just the value of the Assignment Agreement to the Defendant.

[62] In addition, the Assignment Agreement provided that the final payment to the Defendant - the remaining balance of $154,010 - was due on the final closing when Stateview Homes transferred title to the Property to the Plaintiffs.

[63] There is no dispute that, under the Listing Agreement, the Defendant was the “Seller”.

[64] Reading the contract as a whole, and, in particular, the definition of “property” in the Listing Agreement, I conclude that “the transaction contemplated” by the Agreement of Purchase and Sale was the purchase of “Lot 2 project – Hampton Heights in Barrie by Stateview Homes (Hampton Heights Inc.)”, which did not close. The Assignment Agreement – for which only $256,000 changed hands - was only the first step of the $1,280,000 transaction, not, as the Third Party argues, the final transaction.

[65] If the transaction was not completed “owing to the Seller’s default or neglect”, the commission would still have been payable to Hometown. But there is no dispute that there was no default or neglect on the part of the Defendant; the transaction was not completed owing to the bankruptcy of the builder, Stateview. As such, Hometown is not entitled to retain the commission, and it must be repaid to the Defendant.

[66] The fact that the Third Party did its job, incurring “advertising, marketing, and operational expenses, along with significant time and effort on negotiations”, does not change the outcome. As Morgan J. explained in Green v. Shamash, 2018 ONSC 1810, para 12:

Green [the real estate agent] has no contractual right to a commission since the deal never closed and there was no default or neglect on Shamash’s part. Likewise, Green has no right to payment on a quantum meruit basis, since that claim requires some reasonable expectation of payment. A real estate broker’s contract is not a contract for payment for services rendered on a time and effort basis. It is, as everyone knows and everyone here concedes, a contingency agreement whereby payment will only occur when and if the deal closes, with payment based on the value of the sale.

[67] Under the Listing Agreement, the real estate agent gets paid only if the deal closes, or if the failure to close is attributed to the Seller’s default or neglect. As stated in Green, at para. 8:

In other words, where parties go all the way to the closing date, with all of the input that that requires from their real estate agent, and on the closing date the buyer [1] either intentionally or for neglectful reasons fails to close, the real estate agent deserves and expects to be compensated for his or her efforts. If the transaction fails to close for any other reason, the real estate agent is not contractually entitled to compensation and can have no reasonable expectation of compensation.

[68] In the present case, the transaction was the sale of the “property” defined as “Lot 2 project – Hampton Heights in Barrie by Stateview Homes (Hampton Heights Inc.)” for $1,280,000. That $1,280,000 transaction failed to close, and the real estate agent is not contractually entitled to compensation, even though the first step of that transaction – the Assignment Agreement – did close.

[69] As such, the commission paid to Hometown by the Defendant must be repaid.

Conclusion

[70] The Plaintiffs’ motion for summary judgment is granted in accordance with the reasons set out above.

[71] The Defendant’s motion for summary judgment/counterclaim against the Plaintiffs is dismissed.

[72] The Defendant’s motion for summary judgment against the Third Party Hometown Inc. is granted.

[73] If the parties are not able to agree on costs, the Plaintiffs may deliver costs 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 Defendant may deliver costs submissions on the same terms within a further 15 days, and the Third Parties may deliver costs submissions on the same terms within a further 10 days after receiving the Defendant’s costs submissions.

Justice R.E. Charney
Released: June 18, 2025

[1] In Green, the real estate agent was seeking his commission from the buyer rather than the seller, but the analysis is the same.