



COURT OF APPEAL FOR BRITISH COLUMBIA




Citation:



Argo Ventures Inc. v. Choi,









2020 BCCA 17




Date: 20200117

Docket:
CA45925; CA45926

Docket: CA45925

Between:

Argo Ventures Inc.

Respondent

(Plaintiff)

And

Key Joo Choi

Appellant

(Defendant)

And

Tim Seo

Respondent

(Third
Party)

 and 

Docket: CA45926

Between:

Argo Ventures Inc.

Respondent

(Plaintiff)

And

Yeong Ja Choi

Appellant

(Defendant)

And

Tim Seo

Respondent

(Third
Party)




Before:



The Honourable Madam Justice Newbury

The Honourable Mr. Justice Butler

The Honourable Mr. Justice Abrioux




On appeal from:  An
order of the Supreme Court of British Columbia, dated
January 25, 2019 (
Argo Ventures Inc. v. Choi
, 2019 BCSC 85,
Vancouver Docket S166992).




Counsel for the Appellant:



J. Zeljkovich





Counsel for the Respondent:



A.P. Morrison





Place and Date of Hearing:



Vancouver, British
  Columbia

November 22,
  2019





Place and Date of Judgment:



Vancouver, British
  Columbia

January 17, 2020









Written Reasons by:





The Honourable Mr. Justice Abrioux





Concurred in by:





The Honourable Madam Justice Newbury

The Honourable Mr. Justice Butler








Summary:

The appellants entered into
a contract for the purchase and sale of a property for approximately $6.5
million, with a non-refundable deposit of $300,000 due within ten business
days. The contract was immediately binding upon signature. After signing the contract,
the appellants decided not to complete the purchase and did not pay the deposit,
which was due and owing. Ultimately, the seller accepted the appellants
repudiation of the contract for non-payment of the deposit and sued. The trial
judge awarded judgment in the amount of the unpaid deposit, plus pre-judgment
interest and costs. The appellants argue, among other things, that the judge
erred in making this award because an unpaid deposit, unlike a paid deposit,
cannot be forfeited upon repudiation of a contract. Held: Appeal dismissed. A
seller can sue for the amount of an unpaid deposit that is due and owing at the
time the seller accepts the buyers repudiation of the contract. A buyer is not
entitled to put itself in a better position than it would be in had it met its contractual
obligation to pay the deposit by simply refusing to pay the deposit.

Reasons for Judgment of the Honourable
Mr. Justice Abrioux:

Overview

[1]

On June 25, 2016, the appellants

Key Joo
Choi and Yeong Ja Choi, a married couple,

entered into an agreement (the Contract) with 534834 B.C. Ltd. (534)
for the purchase and sale of a property located at 1485 Coast Meridian Road,
Port Coquitlam, British Columbia (the Property) for approximately $6.5
million, with an initial deposit of $300,000 due within ten business days. On
July 6 or 7, 2016, the appellants purportedly repudiated the Contract and
did not pay the deposit as required by July 11, 2016. On July 25,
2016, 534 accepted the appellants repudiation of the Contract for non-payment
of the deposit, and on July 29, 2016, commenced an action seeking judgment
in the amount of the unpaid deposit.

[2]

On January 25, 2019, in comprehensive reasons for judgment indexed
as 2019 BCSC 85 (the Reasons), Justice Shergill ruled in favour of the
respondent. She awarded judgment against the appellants in the amount of
$300,000, plus pre‑judgment interest and costs.

[3]

The appellants third party proceeding against the realtor, Tim Seo, was
dismissed. No appeal is taken from that order.

[4]

The appellants challenge the order, arguing that the judge erred in
finding that an unpaid deposit that was not owing at the relevant time was nevertheless
forfeited upon their repudiation of the Contract. Of significance is that they
do not take issue with the judges conclusion that the Contract became legally
binding on the parties on June 25, 2016. The respondent submits that there
was no dispute at trial that the deposit was due by July 11, 2016. In
fact, the appellants relied upon this binding obligation to support a defence
of
non est factum.
The respondents position is that the appellants
should not be permitted to advance a contrary argument on appeal.

[5]

For the reasons that follow, I would dismiss the appeal.

Background Facts

[6]

Since 1998, 534 has owned the Propertya business park with warehouses, restaurants,
convenience stores, and industrial and office space. The Property has been encumbered
by a statutory right of way in favour of the British Columbia Hydro and Power
Authority (BC Hydro) since 1962, which is registered in the Land Title Office
as the first charge against title to the Property. BC Hydro installed overhead
wires on the Property, which were visible to visitors at all times relevant to
the underlying action.

[7]

The Property was encumbered by one mortgage at all relevant times, which
was registered in favour of Industrial Alliance Insurance and Financial
Services Inc. (the Industrial Alliance Mortgage). The principal outstanding
on the Industrial Alliance Mortgage in March 2016 was approximately $1.36
million.

[8]

In 2016, Tim Seo, a realtor, approached Mr. Eric Lee, the Director
of Operations for the respondent, which managed the Property, to see if 534 was
prepared to sell the Property if he could find a buyer. In June 2016, Mr. Seo
was informed by Mr. Lee that 534 would not accept an offer of less than
$6.5 million or any condition except an assumption by the buyer of the
Industrial Alliance Mortgage.

[9]

What then transpired is not in dispute and is set out at paras. 2253
of the Reasons:

[22]      On June 21, 2016, three days after introducing Mr. Choi
to the Property, Mr. Seo emailed Mr. Lee, seeking income and
environmental information about the Property. Also on June 21, 2016, Mr. Lee
emailed to Mr. Seo an environmental report and information about the
income and expenses earned and incurred in respect of the Property.

[23]      Further on June 21, 2016, Mr. Seo forwarded by
email an environmental report and information about income and expenses to Mr. Choi.
On or before June 21, 2016, Mr. Choi agreed to have Mr. Seo draft an
offer to purchase the Property. Mr. Seo left blank spaces to be completed
with information to be decided by Mr. and Mrs. Choi.

[24]      On June 22, 2016, Mr. Seo met with the Chois
to sign an offer drafted by Mr. Seo (the Offer).

[25]      Later on June 22, 2016, Mr. Seo delivered the
Offer to Mr. Lee, together with an email explaining some of the terms of
the Offer. With respect to subjects, the email stated: No Subjects (Mortgage
transfer only if any).

[26]

Respecting
a deposit, the Offer included the following clause (the initial deposit
clause):

The initial deposit,
$300,000
is made to Sutton Group  1st West via bank draft within
7

10
business days of acceptance. Once the deposit is made, it is non-refundable and
this contract is binding and irreversible unless the Buyer is disapproved by
the lender. [Italicized portion reflects handwriting.]

[27]      The numbers $300,000 and 10 were written in by
hand by Mr. Seo on the Chois instructions. Mr. and Mrs. Choi
placed their initials beside the initial deposit clause as amended.

[28]      On June 22, 2016, when the Offer was delivered to
534 Ltd., the only mortgage registered against title to the Property was the
Industrial Alliance Mortgage.

[29]      On June 23, 2016, 534 Ltd. entered into a fee
agreement with Mr. Seo and his brokerage (the Fee Agreement). The Chois
were not a party to the Fee Agreement. The Fee Agreement provided that Mr. Seo
was not the agent for either the seller (534 Ltd.) or the buyers (Mr. and Mrs. Choi).

[30]      On June 23, 2016, Mr. Seo delivered an email
to Mr. Choi providing information about current market lease rates in the
area near the Property.

[31]      534 Ltd. did not accept the Offer.

[32]      On June 24, 2016, Mr. Lee delivered a
counteroffer to Mr. Seo (the Counteroffer), together with an email
explaining the two changes included in the Counteroffer. The first change was
in relation to costs to be borne by the seller for prepayment penalties; the
second change was to the initial deposit clause. In the email delivering the
Counteroffer, Mr. Lee stated as follows:

Page 1: .. if any, exceeding
$70,000 (this is the prepayment penalty with the existing lender if the Buyer
is not approved and the Seller has to provide the financing)

Page 7 of 7:  The deposit is
non-refundable terms and conditions at completion date. ( this will give the
Buyer some comfort in knowing that if Industrial Alliance does not approve the
Buyer, the Seller will step up and provide the necessary financing at the same
terms and conditions)

[33]      On June 24, 2016, Mr. Lee also delivered a
text message to Mr. Seo explaining the revisions in the Counteroffer.

[34]      Respecting the deposit, the Counteroffer included
the following clause (the revised deposit clause):

The initial deposit,
$300,000
is made to Sutton Group  1st West via bank draft within
7

10
business days of acceptance.
Once

t
The deposit is
made, it is
non-refundable and this contract is binding and irreversible unless the Buyer
is disapproved by the lender,
or the seller is unable to provide the
replacement financing to the buyer at the same terms and conditions at
completion date
.

[Italicized portion reflects handwriting.]

[35]

The
representative of 534 Ltd. initialled the Counteroffer twice beside the revised
deposit clause.

[36]

On
Saturday, June 25, 2016, Mr. Choi met with Mr. Seo to consider the
Counteroffer. Mr. Choi initialled the Counteroffer on behalf of himself
and Mrs. Choi (for which he had authority from Mrs. Choi).

[37]

On
June 25, 2016, Mr. Seo delivered the fully executed Counteroffer to Mr. Lee.

[38]

On
June 25, 2016, Mr. Seo sent a text message to Mr. Lee, asking him to
obtain the information required by Industrial Alliance to determine whether it
would agree to permit the Chois to assume the Industrial Alliance Mortgage. Mr. Lee
responded by advising Mr. Seo that he would obtain a credit application
from Industrial Alliance on Monday, June 27, 2016.

[39]

On
June 27, 2016, Mr. Lee emailed to Mr. Seo the credit authorization
form required by Industrial Alliance. Also on June 27, 2016, Mr. Seo
re-forwarded to the Chois the environmental report and information about income
and expenses for the leased units (sent previously on June 21, 2016).

[40]

On
June 30, 2016, Mr. Seo emailed Mr. Lee advising him that the Chois
were preparing a credit authorization form. He also requested additional
information about the leases of the Property.

[41]

On
July 4, 2016, Mr. and Mrs. Choi met with Mr. Seo, and completed
the credit authorization form for the assumption of the Industrial Alliance
Mortgage and provided documents to support their application. Mr. Seo
emailed this information to Mr. Lee on the same day, stating: We hope
that he gets the transfer approval asap so that he could deposit $300,000. Mr. Lee
delivered the credit authorization form and financial information to Industrial
Alliance shortly after he received them from Mr. Seo.

[42]

Also
on July 4, 2016, Mr. Choi met with Gaeten Royer to discuss the development
potential of the Property. Mr. Royer was a long-time friend and associate
of Mr. Choi, to whom Mr. Choi turned for business advice from time to
time. Mr. Royer had many years of experience in land acquisition, land
development, dealing with rights-of-way and other urban planning issues.

[43]

On
July 5, 2016, Mr. Seo sent a text message to Mr. Lee asking for
environmental information about the Property.

[44]

On
July 5, 2016, Mr. Royer advised Mr. Choi that the SRW might impact
the development potential of the Property.

[45]

On
July 7, 2016, Mr. Lee emailed Mr. Seo advising him that the lender
was requesting further information from Mr. and Mrs. Choi that it was
required to consider their request to assume the Industrial Alliance Mortgage.
The Chois did not respond to these requests for information.

[46]

Around
July 6 or 7, 2016, Mr. Royer told Mr. Choi that the Property had no
development potential. Mr. Choi decided not to complete the purchase of
the Property. Shortly thereafter, Mr. Choi called Mr. Seo to tell him
that he did not want to purchase the Property due to the SRW. Mr. Chois
decision not to proceed with the purchase of the Property due to the SRW was
confirmed by Mr. Royer to Mr. Seo in a telephone conversation on July
7, 2016.

[47]      Around July 7 or 8, 2016, Mr. Choi met with Mr. Seo
and confirmed that he no longer wished to proceed with the purchase of the
Property.

[48]

Shortly
thereafter, Mr. Seo advised Mr. Lee that the Chois had decided not to
complete the purchase of the Property. Industrial Alliance had not yet agreed
to allow the Chois to assume the Industrial Alliance Mortgage.

[49]

Pursuant
to the Counteroffer, the deposit was due on July 11, 2016. It was never paid.

[50]

On
July 15, 2016, counsel for 534 Ltd. (Mr. Morrison) delivered a letter to
the Chois asserting that they had breached the Contract and provided them with
an opportunity to keep the Contract alive. They were also advised that if the
lender did not approve the assignment of the Industrial Alliance Mortgage to
them, that 534 Ltd. would provide financing on the same terms.

[51]

On
July 21, 2016, counsel for the Chois (Ms. Ducey) wrote to Mr. Morrison,
taking the position that the Chois were unaware of the changes to the Offer
that were made in the Counteroffer, and were ultimately included in the
Contract. She denied that the Chois had any obligation to complete the
Contract.

[52]

On
July 25, 2016, Mr. Morrison delivered a letter to Ms. Ducey accepting
the Chois repudiation of the Contract. This action was commenced on July 29,
2016.

[53]

The Property was subsequently
sold to a third party.

Trial Judgment

Non Est Factum

[10]

The appellants primary defence at trial was
non est factum.
The
judge noted that a successful plea of
non est factum
renders a contract
void. To achieve this result, the judge held the appellants needed to establish
that they signed the Contract by mistake in the sense that what they believed
they were signing was fundamentally different from what the Contract actually
provided.

[11]

The judge began her analysis by considering the appellants personal
characteristics, noting that they emigrated from South Korea in the 1970s and
had been successful business people, accumulating assets worth about $30
million as of June 2016. They started with a grocery store business, which they
conducted in English. By June 2016, they had been involved in at least ten real
estate transactions in British Columbia pertaining to both residential and
commercial properties. All of the contracts for these transactions were written
in English. Although Korean is their first language, they speak English as a
second language, and they can read and understand simple written English. Mr. Choi
admitted on cross-examination that he can understand real estate contracts
written in English.

[12]

The judge set out the three-part test for
non est factum
at para. 58
of the Reasons:

A party seeking to rely on the
doctrine of
non est factum
must establish that (1) the document they
signed was fundamentally different from what they believed the document to be,
(2) they signed the document as a result of misrepresentation, and (3) that
they were not careless in doing so:
Farrell Estates Ltd. v. Win-Up
Restaurant Ltd.
, 2010 BCSC 1752 at paras. 82, 100 [Farrell];
Bulut
v. Carter
, 2014 ONCA 424 at paras. 18, 24;
Marvco Color Research
Ltd. v. Harris
, [1982] 2 S.C.R. 774 [Marvco]. A successful plea of
non
est factum
renders the agreement void at common law:
Fraser
at para. 38.
The analysis is highly fact-specific and contextual:
Zhang v. Soong
,
2012 BCSC 758 at para. 78. By its very nature,
non est factum
is a
difficult defence to establish:
Tang v. Chan
, 2014 BCSC 2251 at para. 51.

[13]

First of all, the judge accepted the appellants argument that the
Contract was fundamentally different from what Mr. Choi believed he was
signing on June 25, 2016.

[14]

She found that the initial offer was a non-binding agreement, which
provided the appellants with ten days to perform due diligence inquiries. She
then concluded that the executed counteroffer was binding on the parties on
signature, rather than on payment of the deposit ten days later. The appellants
had advanced this argument in support of their position that Mr. Choi did
not understand the effect of the changes to the deposit clause in the
counteroffer, as he mistakenly understood that he still had ten days to conduct
due diligence inquiries and he and his wife would not be bound until the
deposit was in fact paid. Since, by the time of trial, Mr. Choi now
understood the Contract was binding on acceptance, it was fundamentally
different from what he believed to be the case on June 25, 2016.

[15]

The factual basis for reaching this conclusion was, in part, Mr. Chois
evidence that:

MR. CHOI: Its my mistake ...

THE WITNESS: I know its my fault
that I didnt read the details of it, but because of the other contract I also
had 10 days, and theres 10 here, so I trusted they were the same.

[16]

Secondly, despite Mr. Chois mistaken belief, the judge found that
it was not caused by Mr. Seos misrepresentation. The judge preferred Mr. Seos
evidence that he explained the revised deposit clause to Mr. Choi, rather
than misleading Mr. Choi into believing that he still had ten days to
conduct due diligence. Furthermore, the judge found that it was implausible
that Mr. Choi would initial the revised deposit clause without reading it
himself or asking Mr. Seo what the changes meant.

[17]

Finally, the judge found that Mr. Chois mistaken belief arose from
his own carelessness in failing to read the details of the revised deposit
clause, assuming unreasonably that it was the same as the initial offer, and
not seeking independent legal advice from his lawyers before signing the
Contract. Mrs. Choi was also careless in deciding to completely rely on
her husband to determine whether to enter into the Contract. As a result, the
defence of
non est factum
was unsuccessful.

Alternative Defences

[18]

The judge also rejected the appellants alternative arguments. First,
she found that the Contract was not a standing offer but binding on acceptance,
and it was not void for uncertainty. Secondly, while 534 was required to
provide the appellants with a document prescribing that the property was free
from contamination within three days of acceptance (the environmental term),
this term was a warranty and not a condition. Thus, 534s failure to fulfill
the environmental term did not amount to repudiation of the Contract.

[19]

Finally, the judge rejected the appellants argument that they were
entitled to rescind the Contract when they learned about the undisclosed statutory
right of way. The judge not only held that 534 was not responsible for Mr. Seos
alleged misrepresentation about the size of the property contained in the Brochure,
but also dismissed the appellants third party claim against him.

On Appeal

[20]

The appellants appeal is predicated on a new argument, which was not
advanced at trial. It is to the effect that the judge erred in finding that an
unpaid deposit that was not owing and due was nevertheless forfeited upon
repudiation of the Contract.

[21]

There are two aspects to this argument.

[22]

The first is that the deposit was not owing on the date they repudiated
the Contract. Of significance to this submission is that the repudiation relied
on by the appellants is the one of July 6 or 7, 2016, when they communicated
their decision not to complete the Contract on the basis that the BC Hydro
statutory right of way prevented further development of the Property.

[23]

The second is that an unpaid deposit is of a different character than
one that has been paid. On this point, the appellants argue that the deposit
could not be forfeited because it was never paid, and thus, enforcing payment
at trial amounted to an unlawful penalty.

[24]

The respondents position is that there was no dispute at the trial that
the deposit was due by July 11, 2016. In fact, the appellants relied upon
this binding obligation to support their defence of
non est factum.
The
respondent argues that the appellants should not be permitted to argue the
opposite on appeal.

[25]

The respondent further submits that the appellants repudiated the
Contract when they did not pay the deposit by July 11, 2016. According to
the respondent, the appellants owed the deposit within ten business days
immediately upon signing the Contract. Since the right to payment of the deposit
had accrued by the date of the appellants repudiation, they should not be in a
better position for having defaulted than they would have been in had they
complied with the terms of the Contract.

[26]

Finally, in response to the appellants claim that an unpaid deposit
cannot be forfeited, the respondent argues the judge did not order the deposit
to be forfeited, but instead awarded damages for breach of contract in the
amount of the deposit.

[27]

In fact, the judge did not identify whether the action was for an award
in damages or debt, which is an issue I will return to below.

Discussion

[28]

Before considering what the issues on this appeal are about, it is
necessary to state what is not disputed by the appellants, specifically:

·

the judges findings of fact and conclusions regarding the
enforceability of the counteroffer when it was initialled, that is accepted, by
the appellants on June 25, 2016; and

·

the judges conclusion that the environmental term was a
warranty, not a condition.

[29]

Essentially, what the appellants now argue in this court is that the
judge made an error of mixed fact and law by failing to find that the deposit:

·

was not unconditionally owing until July 11, 2016;

·

could not be forfeited since it was never paid; and

that in any event, they had repudiated the Contract
themselves on July 6 or 7, 2016, and thus, the deposit was no longer
payable on July 11, 2016.

[30]

In my view, it is relevant that the appellants did not advance these
arguments at trial. On the contrary, the appellants relied on their
unconditional obligation to pay the deposit by July 11, 2016 to support
their defence of
non est factum.

[31]

A distinction is to be made between raising a new issue on appeal and
resiling from a position deliberately taken in the tribunal of first instance
:
VIH Aviation Group Ltd. v. CHC Helicopter LLC,
2012 BCCA 125 at para. 44.
Generally, this court has not permitted a party that has chosen a particular
position in the trial court to abandon that position on appeal
: Sahlin v. The
Nature Trust of British Columbia, Inc.
, 2011 BCCA 157 at para. 38.
Furthermore, taking inconsistent positions in legal proceedings can constitute
an abuse of process:
Fortinet Technologies (Canada) ULC v. Bell Canada
,
2018 BCCA 277 at para. 23.

[32]

The appellants position at trial, in support of their
non est factum
defence, was that they had been misled into signing a contract that they
failed to understand was binding on acceptance and unconditionally required
them to pay a deposit of $300,000 within ten business days. As they stated in
their written closing argument:

It is submitted that a non-binding agreement subject to due
diligence is fundamentally different than a binding agreement.

In making the Offer, the Chois intended and understood that
they would not be bound by the Offer until the deposit was paid and that they
had 10 days to do so during which they could conduct their due diligence.

The Chois did not understand the impact of the changes to the
Offer when Mr. Choi initialled the Counteroffer.

Specifically, Mr. Choi
did not understand the effect of the change to the deposit clause which the
plaintiff now asserts, ie that the deposit was owing regardless of whether it
had been paid,
which is not surprising given how nuanced that
clause was in the first instance and the fact that English is not his first
language...

[Emphasis added.]

They now resile from that position on appeal by arguing
instead that the deposit was not unconditionally owing and due by July 11,
2016.

[33]

At para. 75 of the Reasons the judge found that there was no
dispute that the Contract was immediately binding on signature. The issue
raised by the appellants in this court was not before the trial judge because
it would have been inconsistent with their
non est factum
defence. In my
view, having made that decision at trial, they must now live with it in this court:
Protection Mutual Insurance Co. v. Beaumont
(1991), 58 B.C.L.R. (2d) 290
(B.C.C.A.).

[34]

While this is sufficient to dispose of the appeal, I will nonetheless
address the merits of the new arguments advanced by the appellants.

[35]

First of all, I note there was ample evidence to support the judges
findings that the Contract was binding upon signature and 534s right to
payment of the deposit accrued on July 11, 2016, before it accepted the
appellants repudiation and terminated the Contract on July 25, 2016. The
judges interpretation of the deposit clauseas negotiated between the parties
in unique factual circumstancesis a question of mixed fact and law, which is
entitled to deference, absent a palpable and overriding error:
Creston Moly
Corp. v. Sattva Capital Corp.
, 2014 SCC 53 at para. 50;
Ledcor
Construction Ltd. v. Northbridge Indemnity Insurance Co.
, 2016 SCC 37 at para. 46.

[36]

This court has held that where the sellers right to a non-refundable
deposit has accrued before it accepts the buyers repudiation, the seller can
sue for an amount equal to the unpaid deposit owed under the contract:
Vanvic
Enterprises Ltd. v. Mack
(1985), 66 B.C.L.R. 211 (B.C.C.A). In
Tang v.
Zhang
, 2013 BCCA 52, this court further clarified that a deposit is
intended to encourage parties to complete their contracts. While a deposit cannot
be excessive or unconscionable, it is an exception to the usual rule against
penalties:
Tang
at para. 30.

[37]

Nor would I accede to the appellants new argument that the judge erred
by awarding judgment against them in the amount of the unpaid deposit. The
appellants do not argue that the deposit was excessive, but only that an unpaid
deposit, unlike a paid deposit, cannot be forfeited.

[38]

Contrary to what the appellants now argue, the judge did not order that
the deposit be forfeited. The deposit could not be forfeited because it was
never paid. Rather, the judge awarded the respondent judgment in an amount
equal to the unpaid deposit.

[39]

She was entitled to make that order. In
Vanvic
,
at paras. 1718,
this court distinguished between the concepts of rescission
(which is a remedy arising in cases of mistake, fraud, or lack of consent) and
repudiation (which occurs when a party elects to treat the contract as no longer
binding). The Court held that when a party accepts a repudiatory breach, the
contract is not
void
ab initio
.

A party who accepts a repudiatory breach is discharged from
further performance and may bring an action for damages, but the contract
itself is not rescinded. Rights that have already been acquired by a party who
accepts a repudiatory breach are not divested or discharged: see also
Guarantee Co. of North America v. Gordon
Capital Corp.,
[1999] 3 S.C.R. 423 at paras. 3941.

[40]

Vanvic
involved a contract of purchase and sale of property,
which was supplemented by a trust agreement by which the buyer agreed to
provide a non‑refundable deposit to the sellers solicitor forthwith
upon acceptance. The buyers agent delivered a cheque in the deposit amount to
the sellers lawyer. Shortly thereafter, the buyer decided not to pursue his
purchase of the property and stopped payment of the deposit cheque. The seller
notified the buyer that it considered the buyers conduct to amount to a
repudiation of the contract and that it accepted the buyers repudiation. The
seller demanded immediate payment of an amount equal to the unpaid deposit. The
buyer refused to pay the amount demanded.

[41]

This court upheld the trial judges award to the seller of judgment in
an amount equal to the unpaid deposit with Hinkson J.A., for the Court, stating
at para. 17:

In my opinion that covers the
situation in the present case. When repudiation occurred the right to the
$45,000 non-refundable deposit had already accrued to the plaintiff. The
acceptance of the repudiation by the plaintiff did not affect that right. The
plaintiff was still entitled to claim under the contract for that accrued right
and, as a result, I conclude that the learned trial judge came to the correct
conclusion. In the result, I would dismiss the appeal.

[42]

Furthermore, the England and Wales High Court (Commercial Court) and
Court of Appeal (Civil Division) have rejected the argument that only a paid
deposit is valuable: see
Griffon
Shipping LLC v. Firodia Shipping Limited
,
[2013] EWHC 593 (Comm.), affd
Firodi Shipping Limited v. Griffon Shipping LLC
,

[2013] EWCA Civ.
1567,
where Mr. Justice Teare stated at para. 27:

The requirement
to pay a deposit encourages the buyer to perform. It is a guarantee that the
purchaser means business; see
Soper v Arnold
(1889) 14 AC 429 at p.435
per Lord Macnaughten.
The encouragement flows from the fact that the
deposit may indeed exceed the sellers damages.  Moreover, it has long been
recognised that a deposit which has been paid will be forfeited if the buyer
fails to perform even though the deposit exceeds the loss of bargain damages.
In those circumstances there is, in my judgment, no commercial or business
sense in permitting a buyer to improve his position by the simple expedient of
not paying the deposit. This has been recognised since at least 1868; see
Hinton
v Sparkes
[
(1868) 3 LR 3 CP 161 at p.166
].

[43]

The Court in
Griffon
emphasized, at paras. 18 and 26, the value of a commitment to pay a
deposit, as distinct from receipt of a deposit:

The right to a deposit is valuable. It is the sellers security
for the correct fulfilment of this Agreement. It has long been recognised that
a deposit remains payable notwithstanding the termination of the contract....
The court would therefore expect that if the parties intended to exclude such
right they would do so by the use of clear words

A deposit serves the commercial
purpose of providing the seller with security for the performance of the MOA.
It would not be consistent with business common sense to enable a buyer to put
himself in a better position than he would be in having paid the deposit by
adopting the simple expedient of refusing to pay the deposit...

[44]

On this point, I agree with the respondent that to accept the appellants
argument on this point would create an inequitable situation in which a party
to a contract could take advantage of its breach to obtain a better outcome
than it would have had if they had performed their contractual obligations: see,
for e.g.,
Angus v. Sian,
1982 CarswellBC 618 (B.C.S.C.) at paras. 35 and 41.

[45]

Accepting that the respondent can sue the appellant for judgment in the
amount of the unpaid deposit, a question remains as to whether this is properly
characterized as a claim for damages or debt. In this case, the judge did not
identify the award as either. The respondent says that the judge awarded
damages. As the judge made no reviewable error in making the award, it is not
necessary to decide the issue in this case. Nevertheless, it is worth noting
that both remedies are referred to in the case law.

[46]

There is authority in this province for the proposition that a claim
relating to an unpaid deposit is a claim for debt: see e.g.,
Busnex Business Exchange Ltd. v. Canadian Medical
Legacy Corp.,
1999 BCCA 78 at para. 15,
where an unpaid portion of a deposit was a claim in debt, and
Vanvic,
affg
[1982] 5 WR 530, where this court upheld an award by the trial judge, who found
that an unpaid deposit was a debt owing upon acceptance of the offer. The
English cases referred to above also addressed this issue. In
Firodi,
at
para. 4,

the Court of Appeal clarified that an unpaid deposit that
fell due before termination of the contract may be recovered as a debt. However,
if the deposit had not fallen due
as occurred
in
Damon Compania Naviera v. Hapag-Lloyd
International, the Blankenstein
[1985] 1 WLR 435, where the deposit was due on signing but the
contract was never signeda claim may still be brought for damages for loss of
bargain in the amount of the unpaid deposit.

[47]

Finally, in my view, none of the principles to which I have referred, in
particular those in
Vanvic,
was overturned by this court in
Tang
.
In
Tang,
this court held that a deposit is forfeitable regardless of
whether the other party suffered any damages, and in doing so, reversed
Agosti
v. Winter,
2009 BCCA 490. Accordingly, in my view, the principle set out in
Vanvic
that a party may sue another for the amount of an unpaid deposit
owing under a contract when it accepted the other partys repudiation remains
the law in this province.

[48]

As the authorities to which I have referred make clear, what is
important is the state of affairs that existed when 534 accepted the appellants
repudiation for non‑payment of the deposit on July 25, 2016. As
noted by the judge at para. 50 of the Reasons, on July 15, 2016, 534
had offered the appellants the opportunity to keep the contract alive, but
this was refused. The appellants repudiation was then accepted on July 25,
2016, and at that time, the unpaid deposit was due and owing.

Conclusion

[49]

The Contract required the appellants to pay the deposit within ten business
days of June 25, 2016, being July 11, 2016. This obligation was neither
optional nor conditional. It was mandatory, a finding which the appellants
urged the judge to make in support of their defence of
non est factum
.

[50]

In my view, no reviewable error was committed by the judge. In fact, the
opposite is the case.

[51]

I would dismiss the appeal with thanks to counsel for their very helpful
submissions.

The Honourable Mr. Justice Abrioux

I AGREE:

The
Honourable Madam Justice Newbury

I AGREE:

The
Honourable Mr. Justice Butler


