Superior Court of Justice – Ontario
Court File No.: CV-23-149
Date: 2025-01-22
611 Ninth Avenue East, Owen Sound ON N4K 6Z4
Re: Cook et al v. Singh et al
Before: Justice Robert N. Sproat
Counsel:
John A. Tamming, for the Plaintiffs/Moving Parties
Ben Thind, for the Defendants/Responding Parties
Heard: January 16, 2025, via Zoom
ENDORSEMENT – Assessment of Damages
Introduction
[1] This endorsement should be read in conjunction with my endorsement of December 27, 2024.
Date on Which Damages Are to Be Assessed
[2] I must first determine the date on which damages are to be assessed. The Responding Parties submitted that the damages should be assessed on June 30, 2022, which was the date on which they were scheduled to close on their purchase of the subject property. The Moving Parties submitted that the assessment date should be August 18, 2022, being the date upon which the Moving Parties completed the sale of the subject property to a new purchaser.
[3] In The Rosseau Group Inc. v. 2528061 Ontario Inc., 2023 ONCA 814, at para. 62, Zarnett, J.A. stated:
The normal measure of damages for a failed real estate purchase is the difference between the contract price and the market value of the land on the “assessment date”. The assessment date is usually the date on which the purchase was scheduled to close. Although the court may set a later date if the party seeking damages satisfies certain criteria, the presumption is that damages are to be assessed as of the date of the breach. That presumption is not easily displaced; any deviation from it must be based on legal principle: 100 Main Street Ltd. v. W.B. Sullivan Construction Ltd. (1978), 20 O.R. (2d) 401, 88 D.L.R. (3d) 1 (C.A.), at para. 55, leave to appeal refused (1978) 20 O.R. (2d) 401 (S.C.C.); 642947 Ontario Ltd. v. Fleischer (2001), 56 O.R. (3d) 417, 209 D.L.R. (4th) (C.A.), at paras. 41-43; Rougemount Capital Inc. v. Computer Associates International Inc., 2016 ONCA 847, 410 D.L.R. (4th) 509, at para. 50; Akelius Canada Ltd. v. 2436196 Ontario Inc., 2022 ONCA 259, 161 O.R. (3d) 469, leave to appeal refused, [2022] S.C.C.A. No. 183, at para. 27.
[4] Zarnett J.A. does, however, go on to state at para. 83, that:
The first issue has to do with calculating damages as of an assessment date. The assessment date is presumptively the date of closing. It can be moved, in the discretion of the court, where to do so is fair, which usually has to do with when the innocent party should re-enter the market so they can engage in mitigating transactions. As this court stated in Akelius: “the date of breach remains a starting point for the assessment of loss, modified only to the extent that the innocent party satisfies the court that a later date is appropriate on the grounds that it is the first date upon which the party could reasonably have been expected to re-enter the market and mitigate its damages”: at para. 27.
[5] The Responding Parties gave only three days' notice that they were not prepared to close the transaction. The Moving Parties obviously could not secure an alternate purchaser on June 30, 2022.
[6] I accept that the delay between the original closing date of June 30, 2022, and the actual closing date to the new purchaser of August 18, 2022, was reasonable. As such, I find that August 18, 2022 is the first date upon which the Cooks could have been expected to mitigate their damages.
Value of the Subject Property on August 18, 2022
[7] Paul Dombrow gave opinion evidence for the Moving Parties, and Darcy McPhail gave opinion evidence for the Responding Parties. Both are qualified appraisers. They originally prepared reports opining as to market value on August 18, 2022. Mr. Thind then raised the argument that damages should be assessed as at June 30, 2022. This resulted in both appraisers submitting supplementary reports opining as to market value on June 30, 2022. Having determined that the damages should be determined as of August 18, 2022, I take into account both reports, but my reasons will focus on the original reports.
[8] In Mr. Dombrow’s opinion, the subject property had a market value of $650,000 as of August 18, 2022.
[9] Mr. Dombrow cited five comparables: 280 Queen Street East in Acton, which sold for $758,000 on August 19, 2022; 173 Main Street South in Acton, which sold for $616,000 on August 15, 2022; 166 Tyler Avenue in Acton, which sold for $850,000 on June 6, 2022; 216 Main Street in Acton, which sold for $750,000 on March 31, 2022; and 44 Guelph Street in Acton, which sold for $680,000 on November 8, 2021.
[10] Mr. Dombrow then made adjustments to each of the comparable properties to take account of differences in market condition, location, lot frontage and size, building size, quality of improvements, landscaping and parking.
[11] Mr. Dombrow provided a very detailed narrative explaining how he adjusted the comparables:
Comparable Sale No. 1 transacted at $750,000. Although it shares numerous attributes with the subject property, several adjustments are necessary to accurately reflect market value. Initially, a downward revision is needed due to the superior location of the comparable property, which is conveniently close to the Acton GO Station. Following this, despite the comparable and subject properties having similar frontage and depths, a minor downward adjustment is required to account for the larger lot size of the comparable. Another reduction is justified as the comparable property, with 2,350 square feet of total living space, exceeds the subject property’s 1,587 square feet. The quality of the improvements on the comparable has been assessed as somewhat inferior to those of the subject, necessitating an upward adjustment. Separately, a modest downward adjustment is essential given that the subject lacks air conditioning, while the comparable includes this feature. Finally, a slight downward correction is warranted because the comparable has a carport, whereas the subject does not offer any parking facility. After considering all adjustments, Comparable Sale No. 1 suggests a value of $638,000 for the subject property as of the effective date.
Comparable Sale No. 2 closed at $616,000. While it shares many characteristics with the subject property, various adjustments are required to accurately determine its market value. Firstly, an upward adjustment is warranted to reflect the impact of the motivated seller, as the property was sold through an estate sale. Although the comparable dwelling, with 1,755 total square feet, is slightly larger than the subject's 1,587 square feet, a minor upward adjustment is appropriate since the comparable has one less bathroom. The overall quality of the comparables improvements has been evaluated as inferior to those of the subject, thus requiring another upward adjustment. On the other hand, a modest downward adjustment is necessary because the subject lacks air conditioning, a feature present in the comparable. Lastly, a slight downward correction is needed due to the comparable having a single-car detached garage, whereas the subject property lacks any parking structure. After applying all necessary adjustments, Comparable Sale No. 2 indicates a value of $647,000 for the subject property as of the effective date.
Comparable Sale No. 3 was finalized at $850,000. Although it bears many similarities to the subject property, a series of adjustments are required to accurately gauge its market value. Firstly, a downward adjustment is necessary to account for the slightly more advantageous market conditions that existed at the time of the comparable sale. Additionally, a downward revision is needed to reflect the superior location of the comparable, which is situated on a quieter, interior street, as opposed to the subject's location on a busier road adjacent to a rail corridor. While the comparable dwelling, measuring 1,848 total square feet, is somewhat larger than the subject's 1,587 square feet, a slight upward adjustment is justified due to the comparable having one less bathroom. The overall quality of the comparable's improvements has been judged as superior to those of the subject, necessitating a downward adjustment. Moreover, a modest downward correction is required because the subject lacks air conditioning, a feature included in the comparable. Finally, a slight downward adjustment is necessary given that the comparable features a single-car attached garage, whereas the subject property lacks any parking facility. After applying all necessary adjustments, Comparable Sale No. 3 indicates a value of $673,000 for the subject property as of the effective date.
Comparable Sale No. 4 closed at $750,000. Although it shares numerous features with the subject property, several adjustments are necessary to accurately assess its market value. Firstly, a significant downward adjustment is required to reflect the more favorable market conditions at the time of the comparable sale. Additionally, a downward revision is necessary due to the larger lot frontage and overall size of the comparable property compared to the subject. Despite the comparable dwelling having 1,770 total square feet, which is larger than the subject's 1,587 square feet, a minor upward adjustment is justified because the comparable has one less bathroom. The overall quality of the comparable improvements, particularly the absence of a basement area, has been assessed as inferior to those of the subject, necessitating another upward adjustment. Lastly, a slight downward correction is warranted due to the comparable featuring a double car attached garage, while the subject property lacks any covered parking facility. After applying all necessary adjustments, Comparable Sale No. 4 indicates a value of $655,000 for the subject property as of the effective date.
Comparable Sale No. 5 closed at $680,000. Although it shares several key attributes with the subject property, a series of adjustments are necessary to accurately establish its market value. Firstly, a significant downward adjustment is needed to account for the more favorable market conditions at the time of the comparable sale. Additionally, though a sizable upward revision is necessary due to the smaller lot frontage, this adjustment is tempered by the larger overall size of the comparable property relative to the subject. While the comparable dwelling offers 1,937 total square feet, which is larger than the subject's 1,587 square feet, a slight upward adjustment is still appropriate because the comparable has one less bathroom. The overall quality of the comparable improvements has been judged as superior to those of the subject, which necessitates a downward adjustment. Lastly, a modest downward adjustment is required because the subject lacks air conditioning, a feature that is included in the comparable. After applying all necessary adjustments, Comparable Sale No. 5 indicates a value of $627,000 for the subject property as of the effective date.
[12] Mr. Dombrow also specified in a chart, within a 10% range, how much he adjusted the comparables for each of seven attributes being: conditions of sale; market conditions; location; lot frontage and size; building size (beds and baths); quality of improvements; and landscaping and parking.
[13] Mr. Dombrow also relied upon market conditions, including that the Halton Hills detached dwelling average sale price declined 19% from $1,914,560 (607 sales) in March, 2022, to $1,550,053 (280 sales) in July, 2022.
[14] The Responding Parties relied upon a real estate appraisal prepared by Darcy McPhail. He assessed the value of the property as $750,000 as of June 30, 2022, and as of August 18, 2022.
[15] Mr. McPhail considered four comparables: 40 Victoria Avenue (sale 1), which sold for $750,000 on June 22, 2022; 280 Queen Street East (sale 2), which sold for $758,000 on July 20, 2022; 62 Bower Street (sale 3), which sold for $843,500 on July 20, 2022; and 27 Rachlin Drive (sale 4), which sold for $870,000 on July 22, 2022. All comparables were in Acton, and all were within 2.5 km of the subject property.
[16] Mr. McPhail explained how he adjusted the comparables:
As the subject is unique in terms of age, architectural and lot size/configuration, chronological parameters were expanded to find recent sales for comparison purposes. The 4 comparables used are sales of detached houses located within Acton that were felt to offer reasonable data for the purpose of this appraisal. Sales 1, 3 and 4 were adjusted for their superior settings on less travelled streets.
Sale 1 is a circa 1906 2 storey dwelling with an inferior crawl space, but has been renovated and contains, superior landscaping and benefits from larger living space and superior 8 room 4 bedroom utility. The value of this sale is considered similar to the subject due to more or less offsetting adjustments.
Sale 2 is an older bungalow and is somewhat inferior in terms of condition but with similar 3 bedroom utility and basement finish. However, this sale is superior in terms of parking amenities (carport), contains 2 full bathrooms and benefits from a sunroom addition. Accordingly, this sale is considered of slightly more worth than the subject by comparison.
Sale 3 is an older dwelling with an unfinished basement that has been adequately maintained and upgraded over past years. However, this sale is superior to the subject in terms of building size, utility, lot size and also benefits from superior landscaping that includes a sunroom addition. Due to the aforementioned factors, this sale has been adjusted downward by 10%.
Sale 4 is situated on a much smaller lot and contains an unfinished basement, however, this is substantially more than offset by its age (13 years old), superior building size, utility (extra full bathroom), parking (1 car garage), landscaping and condition.
Conclusion:
The 4 comparables used in the report are good indicators of market value within Acton and reflect an adjusted value range of between $745,000 to $755,000. Given the subject’s attributes and condition and state of the market, the final estimate of value is concluded at $750,000 as of August 18, 2022. The adjustments made on the previous adjustment grids are reflective of differences between the comparable properties and the property being appraised.
[17] Mr. McPhail did not address market conditions. He explained that since he had four actual comparable sales in the market, close in time to August 18, 2022 (in fact, between June 22 and July 22, 2022), and because, in his opinion, the market in Acton was stable (not trending up or down) at the relevant time, it was not necessary to make any adjustment for general market conditions.
Analysis and Conclusion
[18] The parties agreed that I could base my decision on the affidavits, cross-examination on the affidavits, the expert reports in their entirety, and the testimony of the expert witnesses in court.
[19] I accept that both Mr. Dombrow and Mr. McPhail are qualified appraisers who provided their honest opinions as to market value.
[20] I do, however, regard the report by Mr. Dombrow to be more persuasive. I prefer and accept his opinion for the following reasons:
a) While I accept Mr. McPhail’s point that there are many similarities between conducting a “retrospective” valuation as opposed to a current market valuation, there are some differences. Mr. Dombrow has done over 100 retrospective valuations. Mr. McPhail, in the cross-examination on his affidavit, said he had done three to four. In court, he testified that he had done an unspecified greater number if he considers valuations he has done for family law cases. In any event, Mr. Dombrow clearly has greater experience in retrospective valuations.
b) Mr. Dombrow’s report is more detailed and provides a more solid rationale for each of the adjustments he made to the comparable properties.
c) Mr. McPhail did not refer to market conditions as a factor in his report. When he was cross-examined, he stated that the only reason he did not factor in market conditions was because he had two comparables sold within two months of August 18, 2022. When he testified in court, however, he added that he had reviewed sales data and saw no evidence of a trend in prices between March 13, 2022, when the Responding Parties agreed to pay $749,000 for the subject property, and August 18, 2022, when the Moving Parties sold the subject property for $549,000.
d) Mr. Dombrow, however, testified, and I accept, that the Halton Hills data, based on hundreds of sales, provides a reliable indication of the price trend for detached dwellings in Acton from March to July, 2022. He said that this number of data points would prevent outlier transactions from having a significant impact. By outlier, I mean a sale at an unusually high or low price.
e) Mr. Dombrow identified a Halton Hills market decline of approximately 19% from March to July, 2022. He noted that houses, such as the subject property, at the lower end of the price range would tend to have a lower than average percentage decline. In the absence of any evidence to the contrary, I assume that the original $749,000 sale price as of March 13, 2022, was market value. Mr. Dombrow’s opinion that the subject property had a value of $650,000 on August 18, 2022 would represent a decline of 13%. This is generally supportive of his conclusion as to value based on the comparables.
f) I do not accept Mr. McPhail’s opinion that the market was flat from March to July, 2022. As such, market conditions are a factor he should have considered. I regard this as a weakness in his report.
[21] While I appreciate that I can accept some, none, or all of the expert evidence, and so could arrive at an intermediate value, I accept the opinion of Mr. Dombrow as to the value on August 18, 2022.
[22] I, therefore, conclude that the Moving Parties suffered damages of, and are entitled to judgment for, $99,000, being the difference between the $749,000 the Responding Parties agreed to pay and the $650,000 value of the subject property as of August 18, 2022.
[23] The Moving Parties shall provide written submissions as to costs and interest within ten days. The Responding Parties shall provide submissions within ten days of receiving submissions. Reply, if any, within a further five days.
Robert N. Sproat
Released: January 22, 2025