Chu v. Kumar et al. v. Sethi et al., 2026 ONSC 2748

Citation: Chu v. Kumar et al. v. Sethi et al., 2026 ONSC 2748

Court File No.: CV-22-00685816-00A1 Date: 2026-05-19 Ontario Superior Court of Justice

Between: Yat-Leung Chu, Plaintiff – and – Manoj Kumar, Neelam Kumar and Executive Real Estate Serviced Ltd., Defendants Manoj and Neelam Kumar, Plaintiffs by Third Party Claim and Moving Parties – and – Fuhar Sethi and Gagan Sethi, Third Party Defendants and Responding Parties

Counsel: James H. Chow, for the Plaintiff Gurmeet Singh Salooja, for the Defendants, Plaintiffs by Third Party Claim, and Moving Parties Neelam and Manoj Kumar Daniel Tram and Sean Lakhan, for the Third Party Defendants and Plaintiffs by Fourth Party Claim, Fuhar and Gagan Sethi

Heard: April 23, 2026

Reasons for Decision

Callaghan J.

1This claim and the accompanying third party claim involve two failed real estate transactions. The buyers in each transaction concede that by failing to close, they breached their respective agreements. It is alleged that the failure of the first transaction led the sellers in that transaction to default on the second transaction in which they were to be buyers. This case largely involves assessing and allocating the damages sustained in the two failed transactions.

2The parties seek summary judgment on the actions involving the failed transactions. There is a fourth party claim against the real estate agent of the couple whose initial failure to close caused this daisy chain of failed transactions. That action is not before me, although the parties in that proceeding have completed discovery, are ready for mediation and, if necessary, a trial. It is said that the resolution of these actions may assist in the resolution of the fourth party action.

Background

3The plaintiff, Mr. Chu, accepted an offer to sell his home to the defendants, Mr. and Mrs. Kumar. Prior to making an offer to purchase Mr. Chu’s home, the Kumars entered into an agreement of purchase and sale to sell their current home to the third parties, Mr. and Mrs. Sethi.

4With the Sethis’ purchase of their home, the Kumars would have the funds to close their purchase of Mr. Chu’s home. The Kumars therefore arranged the sale of their home to the Sethis to close first.

5As it happened, the Sethis were unable to close. They take no issue that they defaulted on their agreement of purchase and sale with the Kumars. The Kumars scrambled to see if they could obtain alternate financing. They did not proceed with the alternate financing arrangement. As a result, they did not have the financing to close on the purchase of Mr. Chu’s home.

6Mr. Chu was eventually able to sell his home, but in a declining market. He sustained a loss of approximately $220,000 in the resale of the home. He claims that amount plus carrying and other costs against the Kumars. While the Kumars admit to breaching the agreement of purchase and sale, they challenge the damage amount and claim there was a failure by Mr. Chu to reasonably mitigate his loss.

7After the transaction with the Sethis failed to close, the Kumars decided not to sell their home. They continue to live in it. In the third party action, the Kumars seek to retain the Sethis’ deposits and to recover any amounts the Kumars owe Mr. Chu in the main action. In that regard, they claim “contribution and indemnity” from the Sethis.

8The Sethis do not deny breaching the agreement of purchase and sale with the Kumars. They say that the Kumars sustained no loss and seek the return of their deposits on the basis that the deposits amount to a penalty and seek relief from forfeiture pursuant to s. 98 of the Courts of Justice Act, R.S.O. 1990, c. C.43.

9In respect of Mr. Chu’s damages, the Sethis say that the Kumars have no common law or contractual entitlement to an indemnity, and Mr. Chu’s losses are too remote to be compensated by the Sethis.

10The Sethis have initiated a fourth party proceeding against their real estate agent. The real estate agent has not defended the third party or the main action. The Sethis ask that any judgment against them be stayed until the fourth party action is determined.

11The main action and the third party action are before me as Mr. Chu and the Kumars seek summary judgment. The Sethis are content to have this matter addressed by way of summary judgment. The summary judgment motion date was set by Justice Chalmers who was of the view that resolving these actions would be an efficient use of resources and would not give rise to any concerns regarding the fourth party action.

12I have concluded that the Kumars are indeed responsible for the losses sustained by Mr. Chu. I have concluded that the Kumars can recover those losses from the Sethis. The Sethis are entitled to their deposit being credited against the damages. I have also declined the request to stay enforcement of the judgments. My reasons follow.

Issues

13The first issue is procedural – that is, whether these matters ought to be decided by way of summary judgement. The next issue is to assess the amounts owed in respect of the two failed real estate transactions and whether the Sethis are responsible for the amounts owed by the Kumars to Mr. Chu. Finally, the Sethis request that the enforcement of any judgment be stayed pending the resolution of the fourth party action.

Summary Judgment

14Summary judgment is appropriate where there is no genuine issue for trial: Rules of Civil Procedure, R.R.O. 1990, Reg 194, r. 20. See also Hryniak v. Mauldin, 2014 SCC 7, [2014] 1 S.C.R. 87, at para. 47. All parties accept that these actions may be properly determined by summary judgment. Of course, that is not determinative.

15Summary judgment has often been utilized in actions involving failed real estate transactions: 2174372 Ontario Ltd. v. Akbari, 2023 ONSC 6047, at para. 23; Potz v. Pietrangelo, 2026 ONSC 1405, at para. 31; Briscoe-Montgomery v. Kelly, 2014 ONSC 4240, at para. 17. To that extent, the request is supported by case law.

16In Hryniak, at para. 49, the Supreme Court held 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.”

17Under r. 20.04(2.1), there is provision to make limited findings of fact if there is a genuine issue for trial, but I need not go there on this record as there is no evidence giving rise to a genuine issue for trial.

18In both transactions, the buyers failed to tender at closing. The failure to tender constitutes a breach of the agreements of purchase and sale: Tribute (Simcoe Street) Limited v. Ali, 2022 ONSC 3501, at para. 49. As such, there is no genuine issue for trial regarding the breach of the agreements.

19The issue of damages does not involve an assessment of contested facts. It is purely an issue of applying the facts to the applicable damage principles. This includes whether the Kumars can recover the damages owing to Mr. Chu from the Sethis.

20The parties have put their best foot forward in this motion; no party has indicated any additional evidence would be forthcoming if there was a trial. While parties have asked for certain inferences to be drawn, I have not been asked to make any credibility findings. I was not directed to any cross-examinations of the affiants. By and large, while the parties may take differing views on issues, the affidavit evidence has not been contested before me.

21I accept the submissions of counsel for the Sethis that the determination of the third party action will not give rise to any conflict in respect of their fourth party proceeding against the real estate agent. Instead, I accept the submission that the resolution of the third party action will clarify what, if any, damages are at issue in that fourth party action. It will be recalled that the real estate agent did not defend the third party or main action and therefore took no issue as to the damages being claimed in those proceedings.

22In my view, the main action and the third party action may properly be determined by way of summary judgment.

The Transactions

23The Kumars entered an unconditional agreement of purchase and sale with the Sethis on March 12, 2022, to sell their Brampton home for $1,040,000. The agreement was on the Ontario Real Estate Association (“OREA”) standard form. There was a $50,000 deposit. The transaction was to close on June 21, 2022.

24The Kumars then entered into an agreement of purchase and sale with Mr. Chu on April 9, 2022, to purchase Mr. Chu’s Cambridge home. That agreement was also on the OREA standard form. The purchase price was $1,085,000. The Kumars provided a deposit of $35,000. Mr. Chu’s home was to close on June 23, 2022.

25After entering into the agreement with the Kumars, Mr. Chu quit his job, as his intention was to move to Calgary with his family.

26On June 14, 2022, the Sethis informed the Kumars that they were unable to close. The reason for their failure to close was not a matter raised before me, although that issue is raised in the fourth party pleadings. The Sethis sought the Kumars’ consent to cancel the agreement. The Kumars refused. The Sethis did not tender on June 21, 2023.

27Because the Sethis backed out of the transaction, the Kumars were left scrambling to find alternate financing but needed time. They asked Mr. Chu to extend the closing. Mr. Chu declined. The Kumars did not tender on June 23, 2022.

28The Kumars then entered an agreement with Mr. Chu on June 24, 2022, to extend the closing to June 30, 2022. The Kumars agreed to pay liquidated damages to Mr. Chu of $5,000 for failing to close on June 23, 2022. They also agreed to provide an additional deposit of $25,000.

29The Kumars continued their search to find additional financing that would allow them to close with Mr. Chu. The Kumars were able to source additional financing but the carrying cost was prohibitive. They did not accept the additional financing. They did not close the transaction on June 30, 2022.

30Mr. Chu listed his home for sale shortly after the failed closing. He eventually sold the property for $865,000. That sale closed on September 25, 2022.

31The Kumars did not remarket their house for sale. They continue to live in the home.

32In 2025, the Kumars’ deposit of $60,000 was released to Mr. Chu.

Damage Principles

33In a failed real estate transaction, the plaintiff is entitled to be put back in the position they would have been in had the contract been performed (100 Main Street Ltd. v. W.B. Sullivan Construction Ltd. (1978), 20 O.R. (2d) 401 (C.A.), at pp. 414-415). This is known as expectation damage. The plaintiff is also entitled to recover wasted costs that would not otherwise have been incurred but for the failed transaction. This is known as reliance damage: PreMD Inc. v. Ogilvy Renault LLP, 2013 ONCA 412, at para 66; Tega Homes (Attika) Inc. v. Spencedale Properties Limited, 2023 ONCA 475, at para 19; Ahmad v. Ain, 2025 ONSC 4017, at para 38.

34No contractual damage may be too remote. The test for remoteness was set out in the seminal decision of Hadley v. Baxendale (1854), 156 E.R. 145 (U.K. Ex. Ct.), at p. 151 per Alderson B.:

Now we think the proper rule in such a case as the present is this: 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.

35A court must therefore ask itself "what was in the reasonable contemplation of the parties at the time of contract formation.”: Fidler v. Sun Life Assurance Co. of Canada, 2006 SCC 30, [2006] 2 S.C.R. 3, at para. 54. The answer to that question has two branches. Damages are recoverable for a contractual breach if i) the damages are “such as may fairly and reasonably be considered either arising naturally . . . from such breach of contract itself, or ii) such as may reasonably be supposed to have been in the contemplation of both parties”: Hadley, p. 151; Honda Canada Inc. v. Keays, 2008 SCC 39, [2008] 2 S.C.R. 362, at para. 54.

36The elements of both branches were reviewed by Justice Nordheimer in Saramia Crescent General Partner Inc. v. Delco Wire and Cable Limited, 2018 ONCA 519. He noted the first branch of the test is objective. That is, was the loss at issue the “type of loss that foreseeably and naturally arises ‘according to the usual course of things’” from an agreement of purchase and sale for residential real estate: para. 39. This involves a consideration of i) whether the loss was of a type that could be said to be foreseeable and flow naturally from the breach, and ii) whether the parties could be said to have objectively bargained for the loss to be the responsibility of the party breaching the agreement.

37In addition to damages naturally arising from a breach of the contract, the second branch recognizes that there may also “be actual knowledge of the contracting parties about special circumstances outside the ordinary course of things to widen the losses for which they are liable”: Remington Development Corporation v. Canadian Pacific Railway Company, 2025 ABCA 244, at para. 86. Such losses are described as being within the reasonable contemplation of the parties at the time of contracting: YG Limited Partnership and YSL Residences Inc. (Re), 2025 ONCA 591, at para. 77. However, the court must be satisfied that not only was the potential of the special loss made known, but that the contracting party expressly or impliedly undertook to bear the risk of that loss: Remington Development, at para. 87.

38In a failed real estate transaction, the courts have concluded that some damages flow naturally from the breach. For example, when a purchaser fails to close on a real estate transaction, the loss on any resale of the property is said to flow naturally from the breach. As such, a seller is entitled to recover the difference between the sale price on the breached agreement and the subsequent sale of the property from the defaulting buyer: DHMK Properties Inc. v. 2296608 Ontario Inc., 2017 ONSC 2432, at para. 49, rev’d on other grounds; 100 Main Street East Ltd. v. WB Sullivan Construction (1978), 20 O.R. (2d) 401 (Ont. C.A.), at para. 55.

39In addition, a vendor is also entitled to those expenses incurred in maintaining the home from the date of breach to the date of the resale of the property: Paradise Homes North West Inc. v. Sidhu, 2019 ONSC 1600, 6 R.P.R. (6th) 149, at para. 26; Madison Homes v. Shi, 2020 ONSC 7810, at paras. 23-36. These are wasted expenses that would not have otherwise been incurred if the house was sold.

40The other legal damage principle raised by the parties is mitigation. The law stipulates that once there is a loss, the plaintiff has an obligation to take steps to mitigate that loss. Where the defendant asserts that the plaintiff did not mitigate the loss, the defendant has the obligation of establishing that the plaintiff failed to take reasonable steps to mitigate the loss: 100 Main Street Ltd. v. W.B. Sullivan Construction Ltd. This entails establishing, on a balance of probabilities: (1) that opportunities to mitigate the loss were available to the plaintiff; and (2) that the plaintiff unreasonably failed to pursue these opportunities: Southcott Estates Inc. v. Toronto Catholic District School Board, 2012 SCC 51, [2012] 2 S.C.R. 675, at para. 73.

The Main Action

41As noted, there is no issue that the Kumars breached the agreement of purchase and sale with Mr. Chu. The only issue is what damages flow from this breach.

House Sale

42Mr. Chu seeks damages for the difference between the sale of their home to the Kumars for $1,085,000 and the amount for which he eventually sold the home, being $865,000 - a loss of $220,000.

43The Kumars say that Mr. Chu failed to fully mitigate his loss. The Kumars submit that Mr. Chu did not re-market the property until July 9, 2022, even though Mr. Chu was aware the Kumars were unable to close some ten days earlier. In addition, the Kumars questioned Mr. Chu’s negotiating strategy in reselling the home.

44Mr. Chu retained a real estate agent who provided advice and then executed a negotiating strategy when re-marketing the home. The home was re-listed for $999,000. The offering price was soon dropped to $899,000. Offers were received for $750,000 and $800,000 in mid-July. In each case, Mr. Chu countered with offers higher than the initial offer price. Those bidders did not make a counteroffer. Several weeks later, Mr. Chu received an offer for $841,000 and again countered for an amount higher than his initial offer price. This time he received a counteroffer and eventually sold the home for $865,000. The sale closed in October 2022.

45The Kumars submit that more conventional counter offers (i.e. not higher than the initial offer) would have resulted in an earlier sale or perhaps a higher sale. The Kumars advanced no expert evidence or appraisal evidence that a higher price was attainable, that the sale could have been completed sooner, or that the approach used was unreasonable. The onus to call such evidence is on the party asserting a failure to mitigate: Saramia Crescent General Partner Inc. v. Delco Wire and Cable Limited, 2018 ONCA 519. In contrast, Mr. Chu adduced an appraisal that the eventual sale price was within $2,500 of the subsequent sale price.

46The Kumars have not established that Mr. Chu acted unreasonably in his mitigation efforts. The short delay to re-market the property was not unreasonable. Mr. Chu worked with a real estate agent who guided him in the offer and counter-offer process. While the counter-offers may appear to have been unconventional, there is no evidence or basis to say Mr. Chu acted unreasonably in following that advice. Indeed, that strategy yielded the accepted offer, which was the highest received. The Kumars advanced no evidence that there was the possibility of selling the property for more than $865,000, or earlier. Accordingly, there is no basis to reduce the amount claimed for a failure to mitigate.

Other Damages

47Mr. Chu claims the insurance premiums, mortgage interest, property taxes, and utility bills that they paid on the home for the period between June 30 and the eventual closing with the subsequent buyer in October. These are all damages naturally flowing from the breach and compensable: Ahmad v. Ain, 2025 ONSC 4017 at para. 31. These amounts are:

Insurance $243.78 Mortgage Interest $4,529.46 Property Tax $1,637.81 Water $570.58 Electricity $400.76

48Mr. Chu was required to provide vacant possession of the home soon after the sale to the Kumars. He therefore stored the family’s furniture in anticipation of the closing. Rather than incur the cost of moving the furniture back into his home, he left it in storage. He seeks the cost of the storage and mattresses he bought so that his family could sleep comfortably in the home. Given the circumstances, these expenses are reasonable. Mr. Chu also seeks the thrown away legal fees for his real estate lawyer. These expenses are recoverable. Mr. Chu also lost the first month’s rent on an apartment which he had rented for his family in Calgary. In my view, the lost rent flows from the breach. Each of these expenses are the type of expense that the parties would objectively, at the time of contracting, view as flowing from a failure of a buyer to close a transaction and have been recognized as compensable in other cases: Ahmad v. Ain, at para. 40. Mr. Chu is entitled to $1,068.85 for storage, $1,112.98 for the mattresses, $2,100 in forfeited first month rent, and real estate legal fees of $1,410.98.

49There is a claim by Mr. Chu for his lost employment income. As already noted, Mr. Chu was moving to Calgary where he was going to take on a new job. He had quit his old job days before the sale to the Kumars was to close. He claims $15,000 in lost salary. This was calculated based on the number of workdays that Mr. Chu remained in Ontario so as to re-sell the house. I find the claim for lost wages to be too remote to be recoverable. It is not a loss that flows naturally or foreseeably from the failure to close a real estate transaction. There was no knowledge on the part of the Kumars that Mr. Chu was selling the house because he was moving to Calgary for a new job. As such, there was no express of implied understanding at the time of contracting that the Kumars would be exposed to such a wage loss claim or that they would assume such a loss in the event of a breach of the agreement. The claim for lost income is denied.

50The total award is therefore $220,000 for the loss on the sale of the home and $13,075.22 in expenses. The Kumars are entitled to a credit of $60,000 for their deposits. The total outstanding loss is $173,075.22.

51In respect of the main action, Mr. Chu is entitled to judgment as against the Kumars in the amount of $173,075.22.

The Third Party Claim

52The Kumars seek to retain the Sethis’ deposits and seek to recoup from the Sethis the amounts owing to Mr. Chu. The Kumars had claimed other damages, including exemplary and punitive damages. However, to facilitate this hearing, at CPC, counsel for the Kumars limited the claim to seeking for recovery anything owing to Mr. Chu and the retention of the Sethis’ deposit. They describe this as a claim for breach of contract and contribution and indemnity.

Mitigation

53Because the Kumars stayed in their home, the only loss at issue are those owing from the Kumars to Mr. Chu. The Sethis claim that the Kumars could and should have closed on Mr. Chu’s home. In essence, the Sethis claim that the Kumars failed to mitigate by failing to go through with the purchase of Mr. Chu’s home. I disagree.

54The Kumars took steps to determine if they could close the Chu transaction after the Sethis failed to close with the Kumars. The Kumars were required to take reasonable steps to mitigate. In my view, they acted reasonably. They located financing but concluded that they lacked the cash flow to support mortgage payments on two houses. They sought a solution, but placing themselves in a position where they could not manage the monthly mortgage payments was not reasonable. Likely, had they taken on the additional financing, they would have defaulted. As the Court of Appeal noted in Saramia, “… importantly, the duty to mitigate only requires[ the plaintiff] to take reasonable steps, not any and all steps”: at para.80. In this case, the Kumars were not obliged to take on another mortgage which they could not support.

Deposit

55On the issue of the deposits, the Sethis argue that they amount to a penalty, as there was no damage sustained on the failure to close the transaction. They rely on s. 98 of the Courts of Justice Act which provides that "[a] court may grant relief against penalties and forfeitures, on such terms as to compensation or otherwise as are considered just." There is a two-step test to ascertain if a deposit amounts to a penalty:

(1) whether the forfeited deposit was out of all proportion to the damages suffered; and (2) whether it would be unconscionable for the seller to retain the deposit.

See Varajao v. Azish, 2015 ONCA 218, at para. 11.

56In Redstone Enterprises Ltd. v. Simple Technology Inc., 2017 ONCA 282, 137 O.R. (3d) 374, at para. 17 Justice Lauwers commented that freedom of contract allows parties to agree on what may or may not be forfeited upon the breach of a contract. His Honour noted that relief from forfeiture is an exceptional remedy. He cited the Privy Council in Workers Trust & Merchant Bank Ltd. v. Dojap Investments Ltd., [1993] A.C. 573, [1993] 2 All E.R. 370 (P.C.), at p. 578 which noted, since ancient times, deposits on the sale of land have been forfeited, provided the forfeited amount is not excessive. In that case, the Privy Council had accepted that a deposit of 20% of the contract value was excessive. In Redstone, the Court of Appeal refused to endorse a specific numerical limit.

57Subsequently, in Rahbar v. Parvizi, 2023 ONCA 522, 485 D.L.R. (4th) 239, at para. 55, the Court of Appeal upheld the forfeiture of a deposit that was 5% of the purchase price, even where the plaintiff resold the property at an increased price. In this case the deposit was $50,000, less than 5% of the purchase price. In my view, such a deposit, by itself, is not grossly disproportionate so as to be unconscionable. Accordingly, I do not find the deposits to constitute a penalty requiring relief from forfeiture.

58It was argued that because the Kumars did not sell their house for a loss, it would be unconscionable for them to retain the deposits. As noted in Redstone, there need not be a loss to retain a deposit if it is not otherwise unconscionable. Moreover, it is not correct to say the Kumars have not sustained a loss. The failure of the Sethis to close has left the Kumars indebted to Mr. Chu. That is a loss which arises from the aborted sale to the Sethis for which the deposit should be forfeited.

59Deposits are generally to be credited as against any damage arising from the failed transaction: Sundial Homes (Sharon) Limited v. Wei, 2025 ONCA 102, at para. 23; Bang v. Sebastian, 2018 ONSC 6226, aff’d 2019 ONCA 50, at para. 68; Goldstein v Goldar, 2018 ONSC 608, at para 25. As discussed below, I accept that the Sethis are responsible to the Kumars for the loss on their failure to close the Chu transaction. However, the Sethis are entitled to have their deposit credited against that loss.

The Loss

60The Kumars seek judgment against the Sethis for the amounts owing by them to Mr. Chu. The Kumars have framed the request as one of “contribution and indemnity” and breach of contract. In my view, the concept of “contribution and indemnity” does not apply. Contribution and indemnity applies where two wrongdoers owe a duty to a third party. Put another way “the circumstances must be such that the putative party against whom the indemnity was sought could have been liable to the third party for all or part of the claim against the party seeking the indemnity”: Addison & Leyen Ltd v. Fraser Milner Casgrain LLP, 2014 ABCA 230, 1 Alta L.R. (6th) 166, at para. 35. The Sethis owed no duty to Mr Chu. Moreover, the concept of indemnity usually arises where there is a contract for indemnity or, in limited common law situations, none of which apply here: Ryan v. Dew Enterprises Limited, 2014 NLCA 11, at para. 54. Frankly counsel for the Kumars was unable to articulate how that principle would apply in such a case as this.

61In my view, the analysis is a contractual one using the aforementioned principles from Hadley v. Baxendale. In Kasekas v. Tessler, (1998), 4 R.P.R. (2d) 110 (Ont. C.A.), the Court considered the same situation that exists here and employed the Hadley v Baxendale remoteness analysis. Like this case, in Kasekas, a residential real estate transaction did not close, and the trial Judge found the purchaser liable in damages. The vendors had agreed to purchase another property on the strength of the first sale. That second transaction in turn failed to close.

62In considering the issue, the Court of Appeal cited with approval Lysyk J. in Cuttell v. Bentz (1986), 70 B.C.L.R. 85 (B.C. S.C.) at pp. 106-107:

This claim is relatively straightforward and the issue is essentially one of causation. It turns on the answers to three questions. First, could it reasonably have been anticipated that vendors in the position of the Cuttells would, on the strength of an unconditional contract to purchase their property for cash, commit themselves to purchase of another property? I have no difficulty answering that question in the affirmative. Secondly, was it reasonably foreseeable that vendors in their position might rely on the proceeds of sale to meet their contractual obligations on another house and, if deprived of those moneys, be driven to default on their contract of purchase? That question too requires an affirmative answer. The cost of carrying two homes is beyond the means of many, if not most, people. Thirdly, could it reasonably have been foreseen that vendors in the Cuttells' position might not be able to find another purchaser for their home in time to permit them to complete their purchase of the other property, with consequent financial loss. That question ought also to be answered affirmatively. Liability results for losses incurred on the Richmond transaction and, as previously noted, the figures in Ex. 56 appear not to be in dispute.

63The rationale adopted above has been applied in other cases where a purchaser failed to close resulting in the failure of a subsequent purchase: Harris v. Garcia, 2016 ONSC 3140, at para. 56; Bonner v. Gill, 2024 ONSC 3270, 172 O.R. (3d) 309, at para. 25; Kienzle v. Stringer (1982), 35 O.R. (2d) 85 (Ont. C.A.), leave to appeal refused (1982) 38 O.R. (2d) 159 (S.C.C.). In Bonner v. Gill, at para. 27, Justice Chown summarized the situation as follows:

...it was reasonably foreseeable that sellers in the Bonners position might rely on the proceeds of sale to meet their contractual obligations on another house and, if deprived of those moneys, be driven to default on their contract of purchase. One of the lessons from Kasekas is that, as a broad and rough proposition, other parties can reasonably expect this. This is subject of course to exceptions depending on all the facts of the case, but as a general rule, it is not unreasonable for parties to real estate deals to coordinate closing dates on more than one deal.

64That rationale applies here. As Justice Chown puts it, there is a broad and rough proposition that a purchaser of a home would be aware that the seller would likely require the money from the sale to close on the purchase of a new home. In my view, it was reasonably foreseeable by the Sethis at the time of contracting that the Kumars required the funds from the sale of their home to purchase a new home and that the failure by the Sethis to close would cause the Kumars to default on that transaction. As such, I find that the Sethis are responsible for the loss incurred by the Kumars because of the Kumars’ inability to close their transaction with Mr. Chu.

Damage Conclusion

65The Kumars are therefore entitled to judgment in the amount of $188,075.22, being $173,075.22 plus their lost deposit of $60,000 and the $5,000 liquidated damages, less the $50,000 deposit from the Sethis.

Stay of Enforcement

66The last issue is whether I should stay the enforcement of the summary judgment until the Sethis’ fourth party action against the real estate agent is completed. Rule 20.08 of the Rules of Civil Procedure provides authority to stay the enforcement of a summary judgment motion where there are other proceedings. That rule states:

Stay of Execution

20.08 Where it appears that the enforcement of a summary judgment ought to be stayed pending the determination of any other issue in the action or a counterclaim, crossclaim or third party claim, the court may so order on such terms as are just.

67The issuance of a stay is a matter of discretion. The Court of Appeal reviewed the history of rule 20.08 in Heliotrope Investment Corporation v. 1324789 Ontario Inc., 2021 ONCA 589, a para. 56. It adopted a multi-factor test. Like many cases addressing 20.08, Heliotrope Investment involved a counterclaim, not a third/fourth party claim. Fundamental fairness underpins rule 20.08 and requires an assessment of the equities between the parties: at para.68. Whether a stay is appropriate is fact specific and is a discretionary order dependent on all the circumstances. There is no reason a stay may not be issued in the circumstance with a third/fourth party action.

68Justice Chalmers in Bowie v. Bhandari, 2023 ONSC 3129, at para. 24, set out several criteria that might be considered. This is not a closed list. Those criteria were as follows:

In exercising its discretion, the court is to consider the following factors:

a. The connection of the issues between the main action and the third party proceeding;

b. The risk of inconsistent findings in the third party proceeding;

c. The merits of the third party proceeding (i.e. has it been brought for tactical reasons?);

d. Have the Plaintiff’s actions in the main action been influenced by improper motives; and,

e. What is the potential prejudice to the successful party on the motion for summary judgment if the stay is granted: Pomata Investment v. Yang, 2021 ONSC 6786, at para. 52.

69In this case, there is clearly a connection between the third party action and the fourth party action. There is no suggestion that the fourth party claim is tactical. There is no suggestion that any party is acting with an improper motive.

70The allegations in the fourth party claim include allegations of potential mortgage fraud and conspiracy by the agent which takes that claim beyond allegations of simple professional negligence and misrepresentations. The allegations in the fourth party claim involve allegations of misconduct that do not involve the Kumars or Mr. Chu. The Sethis’ affidavit evidence on this motion does not delve into the merits of the fourth party action. Instead, the affidavit evidence is conclusory as it relates to the fourth party action. There is insufficient evidence for me to assess the strength of the Sethis’ claim against their real estate agent; the fourth party action may or may not be a strong claim. As such, I am unable to assess the likelihood of the Sethis recovering this loss in the fourth party action.

71There is no evidence of the Sethis’ financial circumstances. In the absence of evidence, I am unable to make a determination of financial hardship on the Sethis if a stay is not granted. While the fourth party is ready for mediation, it will be a year or more before a trial. This delay may be lengthened by any appeal. In the meantime, the Kumars will be subject to enforcement by Mr. Chus as there is no similar request in that proceeding for a stay of enforcement. The Kumars would also be left bearing the risk of any decline in the financial ability of the Sethis to honour any judgment while the fourth party action winds its way to a final resolution.

72As between the Kumars and the Sethis, in my view, it is more just that the Sethis bear the cost of the judgments until they can prosecute their fourth party action against their real estate agent, an action over which the Kumars have no control. Accordingly, I am not prepared to stay the enforcement of the judgments in this proceeding.

Disposition

73Judgment shall be entered in favour of the Chus as against the Kumars in the amount of $173,110.22. The Chus are entitled to pre and post-judgment interest in accordance with the Courts of Justice Act.

74Judgment shall be entered in favour of the Kumars as against the Sethis in the amount of $188,075.22. The Kumars are entitled to recoup any pre-judgment interest owing to Mr. Chu and post judgment interest in accordance with the Courts of Justice Act. The Kumars are also entitled to the release of the Sethis’ deposit.

75It was by the Kumars that the Sethis should simply assume the judgment owed by the Kumars to Mr. Chu and, thus, bypass their liability to Mr. Chu. In my view, Mr. Chu is entitled to judgment against the Kumars. Mr. Chu is not required to take the risk of collecting against the Sethis. Of course, the parties are free to co-ordinate the payments of the judgments.

76The parties shall provide an appropriately drafted judgment for my review and approval. If necessary, I may be spoken to about the draft order.

Costs

77On the issue of costs, the parties provided bills of costs. Both counsel for the Sethis and the Kumars have presented partial indemnity bills of costs in the $30,000 range inclusive of HST and disbursements. Counsel for Mr. Chu has presented a bill of costs that is approximately double. The difference largely reflects a higher hourly rate by counsel for Mr. Chu he is a much more senior counsel.

78The general rule that a successful party is entitled to partial indemnity costs applies in this case: McBride Metal Fabricating Corp. v. H. & W. Sales Co. (2002), 59 O.R. (3d) 97, [2002] O.J. No. 1536 (C.A). This means that Mr. Chu is entitled to costs from the Kumars who, in turn, are entitled to costs from the Sethis. The Kumars are also entitled to recoup the costs paid to Mr. Chu.

79The exercise now is “to fix an amount of costs that is objectively reasonable, fair, and proportionate for the unsuccessful party to pay in the circumstances of the case”: Apotex Inc. v. Eli Lilly Canada Inc., 2022 ONCA 587, [2022] O.J. No. 3632, at para. 61, citing Boucher v. Public Accountants Council (Ontario) (2004), 71 O.R. (3d) 291 (C.A.). This is not a mechanical exercise but rather involves consideration of the criteria set out in rule 57.01 and an exercise in judgment.

80There was no conduct that shortened or lengthened the proceeding or that would otherwise warrant any enhanced costs in this case. This case was rather straightforward. The third party action involved more legal issues of complexity than the main action. The case was clearly important to the parties.

81Parties obtaining costs have the reasonable expectation that they will recoup a reasonable amount of their reasonably incurred costs. This is balanced by what an unsuccessful party might reasonably expect to pay in the circumstances. I accept that the $30,000 being requested by counsel for the Kumars and Sethis to be reasonable and are amounts that an unsuccessful party should pay. In applying to the indemnity principal, I also accept that Mr. Chu should receive an additional amount to reflect the seniority of their counsel. In that regard, I award Mr. Chu $45,000 in costs which, in my view, is a reasonable and proportionate amount that an unsuccessful party would reasonably expect to pay in the circumstances.

82As such, the Kumars shall pay $45,000 in partial indemnity costs to Mr. Chu in the main action. Such amount shall accrue post-judgment interest in accordance with the Courts of Justice Act.

83The Sethis shall pay $30,000 in partial indemnity costs to the Kumars for the third party action. Such amount shall also accrue post-judgment interest in accordance with the Courts of Justice Act. The Sethis shall also compensate the Kumars for the $45,000 in costs owed to Mr. Chu.

84Finally, in assessing costs, it is necessary to “step back and consider the result produced and question whether, in all the circumstances, the result is fair and reasonable”: Apotex Inc., at para. 60, applying Restoule v. Canada, at para. 356. Having considered the factors above and the circumstances of this case which effectively involved two actions, I am of the view that the proposed cost awards are fair and reasonable.

85As noted, the parties may forward a draft judgement for my review and approval or seek an attendance to resolve any issues.

Callaghan J.