Court File and Parties

Court File No.: CV-24-34215 Date: 2025-10-16 Ontario Superior Court of Justice

Between: Lora and Alfio Caradonna – Applicants and Robert Gabriel Covach and Corcoran Horizon Realty – Respondents

Counsel:

• Michael Wills, for the Applicants
• Dennis Crawford, for the Respondent, Robert Gabriel Covach

Heard: June 20, 2025

Ruling on Motion

Hebner J.:

Introduction

[1] The applicants (purchasers) and the respondent, Robert Gabriel Covach (vendor), entered into an Agreement of Purchase and Sale (APS) dated July 22, 2024, whereby the purchasers agreed to purchase the vendor's property at 74 Paddock Court in Kitchener, Ontario. The purchase price was $2,840,000 with a closing date of August 26, 2024. The agreement had no conditions. At the time of signing the APS, the purchasers paid a deposit of $150,000.

[2] The sale did not close on August 26, 2024, as scheduled. The parties agreed to an extension to August 27, 2024, and then a further extension to August 28, 2024. The sale did not close on August 28, 2024, or at all.

[3] Corcoran Horizon Realty continues to hold the $150,000 deposit in trust.

[4] The property eventually sold on February 25, 2025, for $2,790,000.

[5] The purchasers commenced this application on November 14, 2024, seeking the return of their deposit. The vendor brought a motion for an order converting the application to an action along with other relief.

[6] The application and motion were returnable on June 30, 2025. The argument focused on the applicants' claim for the return of the deposit. This is my ruling.

Background Facts

[7] The purchasers put forth two grounds for the return of the deposit on this motion. These grounds are:

1. that matrimonial consent was not provided; and
2. that a writ of execution was not removed.

[8] The purchasers also assert that on a pre-closing walkthrough, they discovered water damage and rotting beams in a storage area under the garage and driveway. This area had been locked and not available for inspection on their previous viewings of the home.

[9] The purchasers conducted a further walkthrough on August 25, 2024, and discovered additional issues including: a sump pump not working; a disassembled soaker tub; a patio door that would not lock; toilets not working; an ice dispenser not working in fridge; and other similar problems.

[10] An argument on the water damage and other issues was not made on the motion and was left for final disposition if necessary.

Matrimonial Consent

[11] The respondent, Mr. Covach, was the only seller named on the APS. Paragraph 22 of the agreement provides:

FAMILY LAW ACT: Seller warrants that spousal consent is not necessary to this transaction under the provisions of the Family Law Act, RSO 1990 unless the spouse of the Seller has executed the consent hereinafter provided.

[12] The consent in para. 29 was not signed, thus signaling that spousal consent was not required.

[13] The vendor signed a statutory declaration on August 22, 2024, that included the following paragraph:

8. I am a spouse and my spouse, Carolina Kyoko Bando Soria, has consented to this transaction.

[14] The declaration was provided by email on August 28, 2024, at 6:02 p.m. as an attachment to the tender letter. It is inconsistent with the APS.

[15] A signed consent from Ms. Soria was never provided.

Writ of Execution

[16] Mr. Halliwill was the purchasers' solicitor acting on the purchase. In his requisition letter to the vendor's solicitor, Mr. Clarke, dated August 19, 2024, he advised that the search of executions against the vendor's name disclosed one execution against Robert Covach in the sum of $10,000. Mr. Halliwill demanded that the execution be satisfied and removed from title or, alternatively, proof that the debtor is not the same person as the vendor.

[17] On August 26, 2024, Mr. Halliwell sent an email to Mr. Clarke at 4:57 p.m. that states:

Unfortunately we also cannot accept an undertaking to discharge the writ without more information and/or comfort that funds are available to satisfy same and/or confirmation from the creditor that they will accept less.

[18] There is no evidence that more information was provided.

[19] Mr. Clarke included an undertaking document as an attachment to the tender letter dated August 28, 2024, sent by email to Mr. Halliwell at 6:02 p.m. The undertaking is signed by Mr. Clarke and contains the following in the list of undertakings with respect to the execution:

3. Pay to Simpson Wigle Law LLP in trust forthwith upon completion of the transaction, the sum of $_______, an amount sufficient to outstanding judgement in favour of Grand River Natural Stone Ltd. Simpson Wigle Law LLP;

Without limiting the generality of the foregoing, with respect to each mortgage or charge referred to above, we personally undertake as follows:

b. To obtain and register a proper form of discharge as soon as possible after closing and to

[20] The purchasers point out that the amount to be paid is missing, and paragraph 'b' is incomplete. I take nothing from the obvious error of the missing word "pay."

Tender Letter

[21] The tender letter dated August 28, 2024, enclosing the documents referred to above, asserts that the vendors are "ready, willing and able to complete the APS in accordance with its terms. The date of closing is today." It concludes with: "We confirm we have provided all required documentation to your office and we are ready and willing to close this transaction as scheduled today."

Position of the Purchasers

[22] The purchasers take the position that the APS was void from the beginning because the vendor's spouse did not sign the consent clause, thus violating the Family Law Act. Moreover, the vendor was unable to deliver unencumbered title to the property on the closing day. The purchasers assert that the deposit is therefore not forfeit and should be returned to them.

Position of the Vendor

[23] The position of the vendor is that neither of these arguments void the APS and the deposit must be forfeit.

Analysis

[24] I deal first with the spousal consent issue and then the writ of execution issue.

Spousal Consent

[25] The Family Law Act, R.S.O. 1990, c. F.3, s. 21(1) provides:

21 (1) No spouse shall dispose of or encumber an interest in a matrimonial home unless,

(a) the other spouse joins in the instrument or consents to the transaction;

(b) the other spouse has released all rights under this Part by a separation agreement;

(c) a court order has authorized the transaction or has released the property from the application of this Part; or

(d) the property is not designated by both spouses as a matrimonial home and a designation of another property as a matrimonial home, made by both spouses, is registered and not cancelled.

[26] The purchasers rely on Bergmann v. Burns (1982), 36 O.R. (2d) 4 (C.A.). The since repealed Family Law Reform Act, R.S.O. 1980, c. 152, s. 42(1) was a similar section to the current s. 21 of the Family Law Act. The matrimonial home in that case was owned by Mrs. Burns. The parties had separated. Mrs. Burns sold the home but later regretted it. Mr. Burns signed the consent in a counteroffer, but Mrs. Burns did not provide it to the purchasers before their counteroffer expired. The purchasers sued Mrs. Burns for specific performance of the transaction. The action was dismissed. Eberle J. concluded that without the communication of the consent, there was no binding contract between the parties.

[27] The result in Bergmann is consistent with the intent of the provisions of s. 21 of the Family Law Act, and the wording in the APS. One spouse cannot sell the matrimonial home without the other's consent. It is that simple. If the consent of the non-titled spouse is not communicated to the purchasers, then the agreement is at an end and the deposit must be returned.

[28] The vendor relies on Yan v. Nadarajah, 2017 ONCA 196. I fail to see how Yan assists the position of the vendor. In that case, the motion judge found that both spouses had agreed to the sale of the residence.

[29] The vendor also relies on Warner v. Ahmadi, 2022 ONSC 2679. In that case, the non-titled spouse of the vendor had obtained a court order requiring the proceeds of any sale of the property be held in trust on closing pending further court order. The motions judge found that the court had already authorized the sale, and the non-titled spouse's interests had been protected thereby allowing the vendor to complete the sale.

[30] In both of these cases, the non-titled spouse was found to have consented, or the court authorized the sale. The facts of this case are different. There is no independent evidence from the non-titled spouse to indicate her consent and there is no authorization of the sale from the court.

[31] The vendor's spouse, Ms. Soria, did not sign the consent in the APS. The presumption, then, was that the house was not a matrimonial home within the definition of s. 18(1) of the Family Law Act and accordingly, consent was not required. Then, in a declaration signed August 22 and sent August 28 at 6:02 p.m., the vendor states that he is a spouse and his spouse had consented. The implication is that the property is a matrimonial home and consent to the sale must be provided directly from the non-titled spouse. It was not. In my view the term of the standard clause in the APS is clear. The agreement is at an end and the deposit must be returned.

Writ of Execution

[32] The standard terms in the APS include the following:

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]

[33] The title to the property in this case was not clear of the writ of execution. The defect was not waived by the purchasers. According to the terms of the APS, the agreement is at an end and the deposit must be returned.

[34] In Zender et al. v. Ball et al., [1974] 5 O.R. (2d) 747 (H.C.), a similar issue arose. A discharge of mortgage was presented on closing that was not in registrable form (there was also a declaration of possession difficulty). The court wrote:

Where the evidence supplied by a vendor falls short of showing good title, he cannot insist on completion, as a Court will not force upon the purchaser anything less than a marketable title unless the purchaser has specifically contracted otherwise. Therefore, where there is a valid objection to title which is not answered by the vendor nor waived by the purchaser, the agreement is by its terms void and the deposit should be returned. [Citations omitted.]

[35] In this case, the purchasers of the property contracted to obtain good and clear title to the property, free of encumbrances. The vendor did not provide it. The principle was put thusly by Lococo J. in Kennelly v. Hashemi, 2017 ONSC 5502, at para. 32:

As agreed between the parties, in order to determine whether there has been a breach of the purchase agreement in this case, the test is whether Mr. Hashemi was in a position to convey substantially what the Applicants contracted to get. In this case, the Applicants contracted to get good title to the property, free of encumbrances, specifically the registered charges and the Mifsud caution. After considering the evidence before me, including the surrounding circumstances outlined above, I have concluded that Mr. Hashemi was not in a position to convey good title to the Applicants, and accordingly was in breach of the purchase agreement.

[36] On August 26, 2024, Mr. Halliwell told Mr. Clarke that he could not accept an undertaking to discharge the writ without more information or comfort that funds are available or confirmation from the creditor that they would accept less. There is no evidence that any of that information was provided. An undertaking to discharge, particularly an incomplete one, was not enough in those circumstances. Accordingly, the vendor was not able to close the sale, the agreement is at an end, and the purchasers are entitled to the return of their deposit.

Disposition

[37] For these reasons, I order that the purchasers' deposit be returned to them. The respondent, Corcoran Horizon Realty, is directed to release the deposit to the applicants along with any interest earned on it forthwith.

[38] The applicants filed a bill of costs seeking $6,902.49. The bill of costs does not include preparation for the motion and attendance for argument. I would increase the amount by $3,000 to account for these costs and round the award to $10,000. Accordingly, the respondent shall pay to the applicant costs in the sum of $10,000.

Pamela L. Hebner Justice

Released: October 16, 2025