Recchia v. Ernstons, 2025 ONSC 3646

Court File No.: CV-22-00684659-0000
Date: 2025-06-20
Ontario Superior Court of Justice

Between:
Graziella Recchia and Donato Recchia, Plaintiffs/Defendants by Counterclaim (Moving Party)
and
Maris Ernstons and Zusana Chovancova and Royal Lepage Real Estate Professional, Brokerage, Defendants/Plaintiffs by Counterclaim (Responding Parties)

Applicant Counsel: A. Freedland and R. Atkinson
Respondent Counsel: D. Fogel and J. Vale
Heard: 2025-06-05
Judge: Jill Leiper

Introduction

[1] The Applicants (the “Sellers”) made an agreement with the Respondents, Maris Ernstons and Zusana Chovancova (the “Buyers”) to sell a residential property located in Vaughan, Ontario (the “Property”).

[2] Three days prior to closing, the Buyers refused to close the transaction because the Sellers had not removed a storm drain easement registered on title, as requested by their lawyer’s letter of requisition. The Sellers submit that the Buyers were using the storm sewer easement as a pretext to avoid closing because the Buyers had not been able to sell their home in Toronto.

[3] The Sellers claim their damages arising from the Buyers’ breach of the agreement of purchase and sale.

[4] At the close of submissions on the issue of repudiation of the agreement of purchase and sale, I found in favour of the Sellers.

[5] I heard submissions on the question of the amount of damages, and reserved on that question. For the reasons that follow, I award damages in favour of the Sellers in the amount of $343,728.03, and forfeiture of the deposit to the Sellers.

Background Facts

[6] On March 23, 2022, the Buyers entered into a purchase agreement with the Sellers to purchase the Property. The Buyers agreed to a purchase price of $2,023,000.00 and a closing date of June 30, 2022. They paid a deposit of $50,000 to the Sellers’ real estate agent.

[7] The Buyers did not make their purchase conditional on financing or inspection. The parties set June 15, 2022 as the requisition date.

[8] The standard term in their purchase agreement dealing with sewer easements, among other matters, can be found in paragraph 10:

10. TITLE: Provided that the title to the property is good and free from all registered restrictions, charges, liens, and encumbrances except as otherwise specifically provided in this Agreement and save and except for (a) any registered restrictions or covenants that run with the land providing that such are complied with; (b) any registered municipal agreements and registered agreements with publicly regulated utilities providing such have been complied with, or security has been posted to ensure compliance and completion, as evidenced by a letter from the relevant municipality or regulated utility; (c) any minor easements for the supply of domestic utility or telecommunication services to the property or adjacent properties; and (d) any easements for drainage, storm or sanitary sewers, public utility lines, telecommunication lines, cable television lines or other services which do not materially affect the use of the property. If within the specified times referred to in paragraph 8 any valid objection to title or to any outstanding work order or deficiency notice, or to the fact the said present use may not lawfully be continued, or that the principal building may not be insured against risk of fire is made in writing to Seller and which Seller is unable or unwilling to remove, remedy or satisfy or obtain insurance save and except against risk of fire (Title Insurance) in favour of the Buyer and any mortgagee, (with all related costs at the expense of the Seller), and which Buyer will not waive, this Agreement notwithstanding any intermediate acts or negotiations in respect of such objections, shall be at an end and all monies paid shall be returned without interest or deduction and Seller, Listing Brokerage and Co-operating Brokerage shall not be liable for any costs or damages. Save as to any valid objection so made by such day and except for any objection going to the root of the title, Buyer shall be conclusively deemed to have accepted Seller’s title to the property.

[Emphasis added.]

[9] Schedule “A” to the purchase agreement required the Sellers “to discharge any mortgages or liens or other encumbrances registered against the property on or before closing at his own expense.”

[10] On May 10, 2022, the Buyers’ real estate agent informed the Sellers’ agent that because they had not been able to sell their Toronto property, they asked the Sellers to release them from the purchase agreement. The Buyer, Mr. Ernstons, confirmed on his cross-examination that he had intended to use those proceeds to purchase the Property.

[11] The Sellers, through counsel, declined to release the Buyers. They offered an extension of time if the Buyers agreed to pay a further deposit of $50,000. The Sellers also put the Buyers on notice that if they failed to close, they would be seeking damages including their carrying costs of the property, legal expenses, their bridge financing which they obtained for the period between the closing on their Bradford property, and the closing of the property in issue, as well as interest on the balance due on closing at 8% until paid.

[12] On June 15, 2022, counsel to the Buyers wrote to the Sellers’ lawyer and asked that the Sellers relist the property to try and find another buyer. This letter was dated as of the requisition date deadline.

[13] On June 17, 2022, counsel to the Sellers wrote to the Buyers’ lawyer to confirm the requisition date had passed.

[14] On June 21, 2022, counsel to the Buyers faxed a requisition letter to the Sellers’ lawyer, dated June 14, 2022. The Buyers’ lawyer later testified that he had thought he had faxed it on the 14th of June 2022, but could not locate the fax sheet. He also testified that he believed he had emailed it but did not keep copies of the email on his computer so he was not able to establish the date he sent it. I find that it is unclear on this evidence that the Buyers’ lawyer did send the requisition letter before the due date. In any event, it was received by the Sellers’ lawyer on June 21, 2022.

[15] Item #16 in the requisition letter requested the Sellers remove the sewer easement on title, which runs the length of the property and is 1.5 m in width. The Sellers’ lawyer pointed out that this easement was not mentioned in the purchase agreement. In cross-examination, the Buyers’ lawyer testified that he had raised this issue earlier with counsel to the Buyers, orally, however he had no record of such a conversation.

[16] On June 27, 2022, three days before the closing date, counsel to the Buyers wrote to the Sellers’ lawyer to say that his clients were “willing, able and ready to close the transaction on June 30 but for a major sewer easement which is registered on title which would affect my clients use of the property. Therefore my clients want the return of their deposit monies”. Counsel requested the return of the deposit.

[17] On June 28, 2022, counsel to the Sellers responded as follows:

For the record, your clients on May 10th, 2022, requested a release from my clients through their real estate agents. We confirmed the conversation by letter dated May 10th, 2022 to you, with no response. In a subsequent telephone conversation, you advised that one of your clients was terminally ill and therefore would not be in a position to close. In a letter to us of June 15, 2022, you requested on a without prejudice basis that my clients attempt to re-sell the property. Now in your letter of June 27, 2022 two days prior to closing, you are now in a last-ditch attempt suggesting that there is an easement affecting title.

We are in receipt of your fax dated June 27, 2022. Without admitting to the validity of your objection, and as a courtesy only, we wish to respond further below.

1. Your clients' right to inspect the property expired on June 15th, 2022.
2. Pursuant to paragraph 10 of the Agreement of Purchase and Sale dated March 23, 2022, my clients' title to the property is good and free from all registered restrictions except, for (d) any minor easement for drainage, storm or sanitary sewers…which do not materially affect the use of the property. We strongly disagree with your characterization that this is a major easement.
3. My clients have owned the property since November 26, 2009. The easement you refer to is a permanent storm/sewer which also services adjacent lots 1, 2, 3, 4 and 5. The catch basin is located behind the property’s lot line, behind the chain link fence. The easement has no effect on the buyers’ use of the property.
4. Your objection does not go to the root of my client’s title.

As you failed to make this objection before June 15, 2022, being the requisition date, therefore your client is deemed to have accepted the vendors' title to the property.

Your clients' request for the return of their deposit of $50,000 is hereby rejected and denied along with any other objections going forward.

[18] On June 29, 2022, counsel to the Buyers wrote and asserted that the Sellers were in anticipatory breach of the agreement of purchase and sale. He also noted that he was not going to put his clients to the expenses associated with obtaining a private mortgage. From this I infer that his clients, having failed to sell their own property would have not qualified for a conventional bank mortgage but would have been required to take on the more expensive, private mortgage to fund their purchase.

[19] On June 30, 2022, counsel to the Sellers wrote back. She asserted that his letter made no sense, that the Sellers would be willing to offer an extension to allow the Buyers to get their finances in order, but that no extension had been requested and given this, the Sellers would be tendering by 5pm that day.

[20] The Sellers tendered on June 30, 2022. The Buyers did not close. Litigation ensued.

[21] The storm sewer easement in question is registered on lots 1, 2, 4, and 5 of Registered Plan 65M-4136 (the “R-Plan”). It runs down the easterly property line of the Property and is 1.5 metres in width at its tips, but reduces to 0.5m in the middle of the sewer Easement. The sewer easement covers approximately 8.7% of the property’s area.

Issues on the Application

[22] There are three issues on this Application:

a) Did the parties agree that the storm sewer easement was to be removed in order to close the transaction?
b) If they did not, were the Buyers able to repudiate the contract because the existence of the storm sewer easement would materially affect their use of the property?
c) If the Buyers were bound by the terms of the agreement, what damages are owed to the Sellers for the breach by the Buyers of the agreement of purchase and sale?

Legal Framework

Storm Sewers and Standard Paragraph 10 in Agreements of Purchase and Sale

[23] Where a title search reveals easements for storm sewers and the agreement of purchase and sale contains standard form paragraph 10 (as it did in this case) the agreement can only be rescinded if the storm sewer easement materially affects the use of the property. These types of easements are exceptions to the normal rule that registered encumbrances should be disclosed in an Agreement of Purchase and Sale. The court inquires into whether the vendor can convey what the purchaser contracted to get on the sale, on an objective and subjective basis. The weight to be given to the subjective factors will depend on how unique those needs are and their effect on the use and enjoyment of the property: Haghollahi v. Butt, 2020 ONSC 4082, paras 20-22; McLean v. Crotty, 2018 ONSC 6211, paras 20-21.

[24] In Joo v. Tran, 2020 ONSC 806, para 20, aff'd 2021 ONCA 107, para 9, the vendors sought summary judgment for breach of contract by the purchasers where the purchasers refused to close a transaction on a property claiming the vendors failed to show good title by not removing utility easements covered by clause 10(d) of the agreement. Justice Mulligan granted judgment to the vendors despite a provision in the Schedule “A” to the agreement of purchase and sale which stated that:

The seller agrees to discharge any existing mortgages or liens, or other encumbrances now registered against the property, on or before closing at his own expense, either from the proceeds of sale or by the solicitor’s undertaking.

[25] The Court of Appeal agreed, finding that the purchasers had failed to explain how these common service-type easements could practically have been removed given the impact on neighbouring properties. The Court of Appeal upheld Justice Mulligan, finding that this was not the agreement that the parties had made: Joo v. Tran, 2021 ONCA 107, para 9.

Damages

[27] An innocent party to a breach of contract is entitled to be put in the position they would have been in had the contract not been breached and was performed: Thangarasa v. Aziz, 2022 ONSC 6355, para 55.

[28] In failed real estate sales, the court will look to several factors, including:

• What were the circumstances of the real estate market at the time?
• How long did it take for the innocent party to put the property up for sale?
• How long was the property up for sale before it was sold?
• Was the property marketed and how was it marketed?
• What was the sale price that the property was relisted for?
• How was the property exposed for sale?
• Were there any price reductions? If so, how many and what were the price reductions?
• Were there any other offers to purchase the property?
• How many offers were made and what were the particulars of those offers?

(Thangarasa, para 57; Cuero Lorens v. Carpenter, 2017 ONCA 109)

[29] In a falling market, a vendor should receive damages amounting to the difference between the contract price and the highest price the vendor could have obtained within a reasonable time after the contract date for completing the transaction. The seller must make reasonable efforts to sell the property starting on what would have been the closing date: Akelius Canada Ltd. v. 2436196 Ontario Inc., 2022 ONCA 259, para 22; 642947 Ontario Ltd. v. Fleischer, para 41.

[30] Additional mortgage expenses and bridge financing are also proper claims for damages which arise from a breach of a purchase agreement: Akelius Canada Ltd., para 63; Bodger v. Poulin, 2013 ONSC 7267, para 11.

[31] Generally, where a deposit has been made, it will be forfeited to the sellers without further proof of damages: Azzarello v. Shawqi, 2018 ONSC 5414, paras 57-61.

[32] In Kasekas v. Tessler, [1989] O.J. No. 644, 4 R.P.R. (2d) 110 (ONCA), the Court of Appeal held that where a vendor had planned to use the sale proceeds of a given property to buy a second property, and the purchaser failed to close its purchase of that first property, this caused the vendor to incur costs in respect of the second property. These are reasonably foreseeable costs for which the purchaser may be liable.

[33] Overall, the question is what is fair in all the circumstances? See Fleischer, para 42.

[34] Here the Buyers submit that certain of the damages claimed by the applicant sellers are remote. The test for assessing whether a head of damages is too remote, which has been followed in Ontario, dates to Hadley v. Baxendale (1854), 156 E.R. 145 (U.K. Ex. Ct.), at p. 151 per Alderson B.

Where two parties have made a contract which one of them has broken, the damages which the other party ought to receive in respect of such breach of contract should be such as may fairly and reasonably be considered either arising naturally, i.e., according to the usual course of things, from such breach of contract itself, or such as may reasonably be supposed to have been in the contemplation of both parties, at the time they made the contract, as the probable result of the breach of it.

See: Saramia Crescent General Partner Inc. v. Delco Wire and Cable Limited, 2018 ONCA 519, para 35.

[35] Thus, the test for whether damages are remote requires the court to consider two aspects: what can fairly and “reasonably” have been contemplated from the breach of the agreement, as well as what was within the reasonable contemplation of the parties at the time they made the contract as to the probable results of the breach: Saramia, para 36.

[36] It is the type of loss, rather than the quantity of the proximate loss, which will be determinative: Saramia, para 36.

Analysis of the Issues

a. Did the parties agree that the storm sewer easement was to be removed to close?

[37] The Buyers submit that Schedule A which generally required the removal of encumbrances included the storm sewer easement in question. I disagree.

[38] Reading the agreement, including the standard term at paragraph 10 of the Agreement of Purchase and Sale, I find that the storm sewer easement was an exception to the encumbrances which the sellers were required to remove in accordance with Schedule A of the document.

[39] The Buyers attempted to rely on the Seller, Ms. Recchia’s definition of encumbrances as including “easements” in her cross-examination. I have read the excerpt and at its highest Ms. Recchia is defining generally (and correctly) that registered easements are encumbrances. However, she did not concede, nor is there anything in the agreement, to stipulate that the excepted storm sewer easement as described in the standard term, paragraph 10 was the type of encumbrance that required removal prior to closing.

[40] I would not give effect to this submission from the Buyers. I turn to the next issue which is whether the storm sewer easement would have materially affected the Buyers’ enjoyment of the property, such that its presence gave them a basis in law for refusing to carry out the agreement of purchase and sale.

b. Were the Buyers able to repudiate the contract because of the storm sewer easement?

[41] The Buyers submit that the storm sewer easement prevents them from enjoying the property including by preventing them from:

1. Building a fence on the Property;
2. Building a pool on the Property;
3. Installing top quality landscaping on the Property; and
4. Building a deck and cabana on the Property.

[42] The evidence on this application was to the contrary. The expert planners retained on behalf of the Sellers and the Buyers agreed that the storm sewer easement would not prevent the property’s owner from installing a pool, a deck, a cabana, or installing top-quality landscaping. The easement is on either side of a property line which would require a setback in any event for structures. The relatively small percentage of the overall yard affected by the easement would not preclude building a pool.

[43] As for whether a fence could be built, while the language of the easement provided that no fence could be erected over it, the municipal by-laws provide that fences may be built over a storm sewer easement so long as the criteria in the by-law are met by the homeowner: see By-Law 189-2020, s. 5(3). The Sellers tendered photographs showing a fence that had been put in and the required access points, in the area of the easement.

[44] As for how the storm sewer easement could otherwise affect the owners’ use of the property, the sellers tendered evidence from Ms. Recchia, that she had lived at the property for thirteen years, and at no time had the City or its subcontractors entered the property to “repair, maintain, replace, or operate the storm sewer easement.”

[45] Michael Petrow, “Team Lead, Wastewater and Stormwater Services” at the City confirmed that in the thirty-five (35) years he worked with the City he has never seen an instance where a homeowner’s property was materially damaged from stormwater drain or catch basin maintenance and/or repair. Mr. Petrow stated that the City will normally clear out debris from the stormwater drain from the street or valley using large pressurized water pumps and vacuums, and does not enter onto private property to do this work.

[46] The Buyers did not have “unique needs” as to the use of the property. The improvements which they asserted they would have made were all possible on this property, with the easement in place. I find that the storm sewer easement, given its size, location and implications for the use of the property was not an encumbrance that would materially affect their enjoyment of the property: Haghollahi v. Butt, 2020 ONSC 4082, paras 20-22.

[47] Further, the timing of the complaint about the storm sewer easement, and the prior requests to terminate the sale for other reasons, leads me to infer that this was an excuse put forward by the Buyers to seek to avoid carrying out their side of the bargain.

[48] I conclude that the Buyers were not entitled to repudiate the agreement of purchase and sale based on the storm sewer easement. They failed to close, and the Sellers lost money as a result. This brings me to the third issue, that of damages.

c. What damages are the Buyers liable to pay for their breach of the agreement of purchase and sale?

[49] By way of overview, I find that to put the Sellers back in the position they would have been had the transaction closed, they should receive damages for the difference in the sale price they negotiated with the Buyers and what they received when they sold it in mitigation, the cost of carrying the property up until the sale, and the additional, foreseeable higher costs of borrowing to fund the purchase of their replacement home in Bradford. All these costs are linked to the Buyers’ failure to close, and are reasonably foreseeable.

[50] I find that the date that damages crystallized was July 4, 2023, the date that the Property was ultimately sold to new buyers, after several unsuccessful attempts to sell it after their transaction failed to close.

[51] I further find that the Buyers have forfeited their deposit of $50,000, paid at the time they entered into the agreement of purchase and sale.

[52] My reasons for making these findings, and the amounts I find payable as reasonably foreseeable damages arising from the Buyers’ failure to close follow.

[53] The Sellers did not have time to find a new buyer within three days of being told that the Buyers would not close due to the storm sewer easement. They relisted the Property with a real estate agent, but obtained only one offer, verbally, which was $500,000 less than the price under the purchase agreement with the Buyers. Their evidence, which was not challenged by the Buyers, was that the market was in a downturn at this point.

[54] The Sellers gave evidence that they relisted the Property as follows:

1. On July 7, 2022, for a listing price of $2,098,000
2. On July 14, 2022, for a listing price of $1,879,900
3. On July 26, 2022, for a listing price of $1,779,000 and for a rental listing price of $4,500/month.

[55] On August 15, 2022, the Sellers leased the Property for 10 months, to mitigate their damages and subsequently re-sell the property. They received $4,500 per month in rental payments for that period.

[56] On April 18, 2023, the Sellers re-listed the Property for $1,699,000. They successfully sold the Property for $1,800,000 on July 4, 2023. This represented an increase of $300,000 from the sole offer which the Sellers received in July of 2022.

[57] I find that the Sellers’ evidence of the falling market, their attempts to re-list the Property and the delay in obtaining a reasonable offer, along with the decision to rent the Property prior to re-listing in 2023 were all reasonable efforts to mitigate. The damages crystallized on July 4, 2023, the date that the Property ultimately sold. This is in line with the case law cited above.

[58] From the time of the aborted sale to the mitigation sale in 2023, the Sellers were required to continue to carry their mortgage held by the TD bank on the Property, which led to interest payments for that period of $37,448.58. They paid home insurance for the same period, totalling $5,029.05. The Sellers paid legal fees to their real estate lawyer on the failed closing in the amount of $4,963.35. They paid a commission to obtain the rental of the Property to mitigate in the amount of $2,542.50.

[59] The Sellers mitigated some of these costs by receiving rent (less “cash for keys” paid to terminate the lease early) for this period in the amount of $27,000.

[60] On the July 4, 2023 closing, the Sellers received $230,000 less in purchase price than what the Buyers had agreed to pay. They are entitled to the difference in prices, with a credit to them for the paid deposit of $50,000 for a net difference in sale price of $173,000.00: Thangarasa v. Aziz, 2022 ONSC 6355, paras 71-76.

[61] Further, because the Buyers failed to close on the scheduled date, and the Sellers did not have the benefit of those funds to apply toward their purchase of a residence in Bradford, Ontario, they were required to obtain bridge financing to avoid defaulting on their own purchase agreement. That financing was for an amount of $1,182,919.18 at an interest rate of 8.2%, held by Scotiabank. The Sellers could not make the interest payment on that loan, and Scotiabank threatened enforcement proceedings. The Sellers incurred interest costs during this period of $31,459.00. The Buyers were put on notice of the bridge financing, and the caselaw supports including bridge financing in damage assessment as a foreseeable cost of breaching an agreement of purchase and sale in residential home sales. I find that this amount should be included in the damages assessment.

[62] Finally, because they did not have the funds to pay out the bridge financing and the existing TD mortgage on the Property, the Sellers were required to incur the extra expense of private lending in August of 2022. I find that this expense was also reasonably foreseeable to the Buyers, given that their own lawyer raised this as a potential cost to them had they closed on the Property after failing to sell their own property. These are higher borrowing costs directly related to the Buyers’ failure to close on the property transaction. The details of those amounts follow.

[63] The Sellers went to a private lender on August 16, 2022. The private mortgage required twelve months of prepaid interest and other fees which were paid to close that mortgage in September of 2022, when the Property sat unsold:

• Lenders fees: $14,000.00
• Brokers fees: $6,000.00
• Legal fees: $2,719.77
• Independent Legal Advice: $592.50
• Title Insurance Premium: $1,313.92

[64] These are costs that the Sellers would not have had to bear, had the Buyers closed. They would have been able to pay off the TD mortgage and fulfill the purchase requirements of the Bradford property without these additional fees or the added interest rates. The material filed from Seller Ms. Recchia shows a prepaid interest amount of $147,000 beginning on the date of closing which the signed offer letter stipulates to be August 29, 2022 and a credit for early repayment on July 5, 2023 as of closing of the mitigation sale of $28,599.40 for a net interest cost of this mortgage of $118,400.60.

[65] In April of 2023, prior to the closing, the Sellers took out another mortgage loan in April of 2023 for $70,000 secured by a rental property they owned in Windsor, Ontario. They required these funds to offset their mortgage expenses incurred during this period, and to fund the tenant “cash for keys” lump sum. I find that because these were expenses related to the borrowing during the period between failed sale and mitigation sale, that the expenses related to this additional financing are reasonably foreseeable and proximate to the failed transaction and are thus properly included in the damages assessment.

[66] The Sellers have further claimed as damages the ongoing financial costs of financing the amount remaining post-closing on July 5, 2023, due to the shortfall and ongoing costs of borrowing to address that shortfall. They have had ongoing financing costs since that have grown and continue to the current date. To resolve their damages issues, they sought urgent hearings from this Court. Their materials have updated their ongoing costs of borrowing which I summarize, next. The Buyers submit that the damages crystallized as of the date of sale, and that the ongoing costs of borrowing post-mitigation sale are not foreseeable and should not be borne by them.

[67] After the mitigation sale in 2023, the ongoing shortfall meant the Sellers could not pay out the Property mortgage in full. The remainder owing under the private mortgage was $399,163. The Sellers amended the mortgage, with an increased interest rate of 13.5% per annum, and registered it to their Bradford property.

[68] The amended private mortgage came due on March 13, 2024. The Sellers were not able to pay it out on the due date. At that point, they refinanced and increased the amount owing under the private mortgage to pay out the Windsor, Ontario mortgage, pay off other consumer debts, including car payments and credit card payments, and included the amounts owing for the above set of lenders, brokers, legal and other fees relative to the private mortgage of 2022.

[69] On April 1, 2025, the Sellers refinanced the private mortgage commitment again, because they were unable to pay out the full amount at maturity. This brought a further set of fees to extend the loan costing $165,382.60.

[70] All told, the Sellers seek total damages of $808,000 which includes ongoing interest payments required on the new extended mortgage to August 1, 2025. They have included costs of borrowing as against credit cards which are not supported by statements. In the affidavit tendered from Seller, Ms. Recchia, she describes their losses as related to expenses related to the ongoing private mortgage and other debts which the Sellers’ family links to the failed closing of 2022. The current value of the extended private mortgage is $808,000 which matures in 2026.

[71] In applying the principles of damages to these circumstances, I find that a buyer who fails to close on a residential home purchase can reasonably foresee the following types of damages experienced by the putative seller: the difference in price obtained on the sale, the cost of borrowing, both by way of bridge financing until the seller’s next house purchase is completed, and the cost of continued mortgage financing on the unsold home until it is sold. Further, given that the proceeds from the sale of the unsold property are not available to fund the subsequent purchase, the cost of borrowing pending any sale in mitigation, are also foreseeable.

[72] Thus, up to the point of the mitigation sale, I find that damages awarded should include the Sellers’ costs incurred because of the failed transaction, including those arising from the private mortgage, and interest payments: Saramia, para 36.

[73] However, I find that the ongoing costs of additional borrowing to the Sellers after their mitigation sale are not sufficiently proximate to the failed sale. There is evidence of other financial pressures, such as Mr. Recchia’s inability to work, that coincided with the ongoing costs of borrowing to cover the shortfall after the mitigation sale. There is evidence of other debts including consumer debt relative to credit cards and car loans which the Sellers seek from the Buyers. I find that it would not be fair to continue to hold the Buyers accountable for the ongoing costs of financing the Sellers’ combined debts beyond the date of the mitigation sale, on July 4, 2023. Further, I find that the ongoing costs of financing these debts three years post-failed closing would not be reasonably foreseeable by the Buyers.

Damages Table

Description	Amount
Difference in sale price (purchase price on failed sale, minus $50,000 deposit, less the amount obtained in mitigation)	$173,000.00
Borrowing costs TD first mortgage (June 29, 2022 to July 4, 2023)	$12,057.23
Home insurance payments (June 29, 2022 to July 4, 2023)	$5,029.05
Legal fees (for the sale not completed)	$4,963.35
Less net rent obtained	($27,000.00)
Lender fees 2022 private mortgage	$14,000.00
Broker fees 2022 private mortgage	$6,000.00
Legal fees 2022 private mortgage	$2,719.77
Title Insurance Premium 2022 private mortgage	$1,313.92
Independent Legal Advice 2022 private mortgage	$592.50
Carrying costs on Scotiabank bridge loan (June-August 2022)	$31,459.00
Net interest payments required on private mortgage	$118,400.60
Title insurance premium - Windsor mortgage on April 11, 2023	$507.60
Legal fees - Windsor mortgage	$685.01
TOTAL DAMAGES	$343,728.03

Conclusion

[75] For the reasons above, I make the following orders and declarations:

(a) A declaration that the Respondents, Maris Ernstons and Zusana Chovancova, breached the Agreement of Purchase and Sale, dated March 23, 2022, between the Applicants, as vendors and the Respondents, as purchasers, whereby the Respondents agreed to purchase from the Applicants, and the Applicants agreed to sell to the Respondents the lands known municipally as 251 Via Teodoro, Vaughan, Ontario L4H 0X6, for the sum of $2,023,000.00.

(b) A declaration that the deposit in the amount of $50,000.00 paid by the Respondents to Royal Lepage Real Estate Professional, Brokerage in trust, including all accrued interest thereon, is forfeited to the Applicants.

(c) An order requiring Royal Lepage Real Estate Professional, Brokerage to pay the deposit in the amount of $50,000 plus all accrued interest, to the Applicants.

(d) An order requiring the Respondents, Maris Ernstons and Zusana Chovancova, to pay $343,728.03 in damages to the Applicants.

(e) An order that the Respondents pay prejudgment interest calculated in accordance with the Courts of Justice Act, s. 127(1) on the damages assessed in the amount of $343,728.03 from June 30, 2022 to June 20, 2025. The Applicants are to provide an updated calculation on this amount along with the order.

(f) An order for post-judgment interest.

[76] The parties are encouraged to agree as to costs of this Application. If they are not able to agree, they may make in-writing submissions as to costs (maximum 3 pages) by way of Michelle Giordano (michelle.giordano@ontario.ca) on or before July 15, 2025 on a timetable to be worked out between counsel.

Appendix: By-Law 189-2020, s. 5(3) Restrictions on Fences

No Person shall Erect a Fence upon a Property boundary at a location where a maintenance easement exists, unless:
a. permitted on the registered title of the Property; or
b. the Fence contains a gate within the limits of the maintenance easement of at least 0.9 metres (approximately 3 feet) in width which provides access to maintenance easement lands; or
c. authorized by the City, municipal, provincial or federal government or their agencies, boards, commissions, departments or other bodies.

Released: June 20, 2025