



COURT OF APPEAL FOR ONTARIO

CITATION: Varajao v.
    Azish, 2015 ONCA 218

DATE: 20150401

DOCKET: C59019

Epstein, Pepall and Benotto JJ.A.

BETWEEN

Michael Varajao

Plaintiff/Defendant by
    Counterclaim

(Respondent)

and

Samaneh
    Azish, Mohammad Reza Eskandari Dorostkar

also
    known as Mohammad Reza Eskandari
, and Kingsbury Realty Ltd.

Carrying
    on business as Royal Lepage Kingsbury Realty

Defendants/Plaintiffs
    by Counterclaim

(Appellants)

Wendy Greenspoon-Soer and David Fenig, for the
    appellants

Scott Rosen, for the respondent

Heard: March 13, 2015

On appeal from the judgment of Justice Victoria R. Chiappetta
    of the Superior Court of Justice, dated May 27, 2014.

ENDORSEMENT


[1]

The appellants agreed to purchase a home from the respondent for $2.9
    million.  The agreement of purchase and sale set the closing date for Saturday,
    July 30, 2011 and time was of the essence. The transaction did not close.  The
    appellants sought return of the $75,000 deposit.  The trial judge found that
    the appellants had repudiated the agreement and were not entitled to return of
    the deposit.  She declined to grant relief from forfeiture.

[2]

Real estate registrations cannot occur in Ontario on Saturdays.  The next
    business day was August 2, 2011.  Neither party was ready, willing and able to
    close on July 30, 2011 or on August 2, 2011.

[3]

On August 2, 2011 the solicitors for the appellants and the respondent
    exchanged correspondence about closing documentation.  There was no suggestion
    that the agreement was at an end if it did not close that day.  On August 3,
    2011 the respondents solicitor provided the appellants with a court order
    which, he asserted, resolved all the title issues. He said the respondent was
    ready to close and suggested that the closing take place the next day.

[4]

On August 4, 2011, the appellants said they did not want to proceed with
    the purchase and demanded return of the deposit. The respondent refused to do
    so and treated the agreement as remaining in force.  The respondent established
    a new closing date and tendered at that time.

[5]

Following a three day trial, the trial judge concluded that the
    appellants had repudiated the agreement on August 4, 2011 and therefore had forfeited
    the deposit. She found as a fact that on July 30, 2011, neither party was ready
    to complete the transaction.  She found that either party was free to
    re-instate time of the essence but did not do so.  The trial judge further
    found that as of August 3, 2011, both parties intended to complete the
    transaction.  The contract was therefore still alive.

[6]

When the appellants advised the respondent on August 4, 2011 that they
    did not intend to close the transaction, they repudiated the contract.  The
    trial judge found that this decision on the part of the appellants did not flow
    from a lack of information from the respondent or his counsel, but from a
    decision to resile from the transaction.  The respondent did not accept the
    repudiation and instead restored the time of the essence by setting a new
    closing date. The respondent tendered correctly on that date. The deposit was
    therefore forfeited.

[7]

The trial judge found no evidence of bad faith on the part of the
    respondent.  Even though the property eventually sold for $3.25 million, she
    refused to grant relief from forfeiture.

[8]

The appellants submit as follows:

1.

The trial judge erred in finding that they had repudiated the agreement
    on August 4, 2011.  It was the respondent who repudiated on August 2, 2011 
    the date at law when the closing should have taken place.  Time was of the
    essence and remained of the essence. On August 2, 2011 the respondents were not
    able to deliver clear title.   Furthermore, the lack of communication from the
    respondent disentitled the respondent to rely on the contract.

2.

The trial judge erred in refusing to grant relief from forfeiture.

[9]

We reject both submissions.

[10]

The
    trial judges finding that the appellants repudiated the contract on August 4,
    2011, was supported by the evidence.  The appellants submit that the respondents
    failure to close on August 2 meant that he, not the appellants, repudiated the
    contract.  However, the correspondence between the parties on August 2 and 3
    demonstrates that each side believed the contract remained in force.  On August
    4 the appellants decided not to proceed with the transaction.  This finding of
    repudiation by the appellants is dispositive of the appeal.

[11]

The
    trial judge correctly noted that in order to obtain relief from forfeiture the
    appellants were required to establish that i) the forfeited sum was out of
    proportion to the damages suffered; and ii) it would be unconscionable for the
    vendor to retain the money.  Although the respondent did not suffer damages,
    the trial judge determined that it was not unconscionable for him to retain the
    deposit.  She considered and rejected the submission that the respondents
    counsel used sharp practice.  We would not interfere with this exercise of
    discretion on the part of the trial judge.

[12]

The
    appeal is dismissed with costs payable to the respondent fixed in the amount of
    $11,500, inclusive of disbursements and HST.

Gloria Epstein J.A.

S.E. Pepall J.A.

M.L. Benotto J.A.


