



COURT OF APPEAL FOR ONTARIO

CITATION: Aylward v. Rebuild Response Group Inc., 2020 ONCA
    62

DATE: 20200131

DOCKET: C65844

Lauwers, Miller and Fairburn JJ.A.

BETWEEN

Mary
    Magdalene Aylward

Plaintiff (Appellant)

and

Rebuild Response Group Inc.,
    Harmony Homes Quinte Ltd.

and
    Tom Streek

Defendants (Respondents)

Jonathan Mesiano-Crookston, for the appellant

John Mastorakos, for the respondents

Heard: January 28, 2020

On
    appeal from the judgment of Justice Wolfram Tausendfreund of the Superior Court
    of Justice, dated August 9, 2018, with reasons reported at 2018 ONSC 4800, 92
    C.L.R. (4th) 291 and from the costs order, dated November 29, 2018, with
    reasons reported at 2018 ONSC 7174.

REASONS FOR DECISION

[1]

The trial judge dismissed the appellants claim for the return of the
    deposit she paid to the respondents with respect to the building contract for a
    new home. The building contract provided for a 25% deposit due upon signing
    contract. - $175,432.50.

[2]

The appellant terminated the building contract because she was unable to
    agree with the respondents on modifications to the building contract that could
    be done to reduce the cost to an amount that would be covered by fire insurance
    proceeds.

[3]

The appeal turns on the meaning of the term deposit in the building
    contract.

[4]

The law relating to deposits was set out generally by this court in
Redstone
    Enterprises Ltd. v. Simple Technology Inc.
,
2017 ONCA 282, 137 O.R. (3d) 374, which the trial judge
    cited at para. 70 of the decision. At para. 20 of
Redstone
,
this court quoted with approval
Tang
    v. Zhang
, 2013 BCCA 52
,
    359 D.L.R. (4th) 104, where Newbury J.A. noted, at para. 30, that:

A true deposit is an ancient invention of the law designed to
    motivate contracting parties to carry through with their bargains. Consistent
    with its purpose, a deposit is generally forfeited by a buyer who repudiates
    the contract, and this is not dependent on proof of damages by the other party.
    If the contract is performed, the deposit is applied to the purchase price [.]

[5]

The language of the building contract expressly identified the first
    payment of 25 percent of the contract price as a deposit in the phrase: 25% deposit
    due upon signing contract. - $175,432.50. As a real estate agent, the
    appellant would have been well aware of the ordinary role of a deposit.

[6]

The appellant argues that the trial judge erred in not taking the
    Independent Contractor Agreement [ICA] into account in his interpretation of
    the deposit provision in the building contract. The appellant argues that the
    word deposit in the building contract must be interpreted differently, in
    this case, in light of the ICA, which was signed by the parties on or about the
    same day as the parties signed the building contract. particular, the appellant
    invokes cl. 8 of the ICA, which provides:

For the services rendered by the Contractor as required by this
    Agreement, the Customer will provide compensation (the Compensation) to the
    contractor as follows: 25% of contract amount upon completion of each phase of
    construction to the satisfaction of the Project Management Team as well as the
    TD Bank Adjuster.

The appellant argues that the effect of the ICA is
    that the contractor was not entitled to the deposit unless it had completed 25
    percent of the work. In other words, the deposit was not really a true deposit.
    The appellant argues that very little work had been done, as building plans had
    not been agreed to, a building permit had not been obtained, and no ground on
    the rebuild had been broken.

[7]

The trial judge analyzed the ICA at para. 34 of his reasons and pointed
    out a number of problems with it that prevented him from reading it together
    with the building contract; in essence, the ICA did not mesh with the building contract
    in material respects. He took the view, at para. 35, that the ICA was a separate
    document and is not to be read as part of the building contract. He added: That
    is so, even if I were incorrect in my finding that the ICA is not enforceable
    in the absence of consideration.

[8]

The appellant pleaded that the ICA was not an enforceable contract. Nonetheless,
    counsel argued that it properly forms part of the factual matrix. Giving effect
    to this proposition would not assist the appellant. We do not accept the
    interpretation of the term deposit proposed by the appellant. The deposit was
    paid under the building contract, not the ICA, which does not use the term
    deposit at all. The terms of the documents regarding payment and the deposit do
    not conflict. The payment provision in the ICA means that the respondent could
    appropriate the deposit as revenue at the completion of the first phase, but
    that did not affect the fundamental character of the deposit as a deposit if
    the contract were not performed. The contract was not performed, as the trial
    judge found, because the appellant repudiated it.

[9]

The appellant next argues that the trial judge erred in failing to grant
    relief from forfeiture under s. 98 of the
Courts of Justice Act
, R.S.O. 1990, c. C.43
.

[10]

The trial judge found, at para. 85, that the pleading was not
    sufficiently specific for me to find that the plaintiff has pleaded relief from
    forfeiture. But he then went on to analyze the claim and reject it, at paras.
    87-90, on the basis that the forfeited sum was not out of all proportion to the
    damages suffered and that it would not be unconscionable for the respondents to
    retain the deposit, in accordance with the principles set out in
Redstone
.

[11]

Regarding proportionality and the damages, the trial judges assessment was
    largely factual in nature. He fixed the damages suffered by the respondents at
    $150,000: at para. 82. We are not persuaded that in doing so he made a palpable
    and overriding error. The size of the deposit is not so significant that it
    would give rise to a finding of unconscionability based on proportionality alone.
    The factors referred to at para. 30 of
Redstone
for assessing unconscionability,
    such as an inequality of bargaining power, or a substantially unfair bargain, simply
    do not exist in this case. In our view, the trial judge did not err in
    concluding that there was no basis for relief from forfeiture in this case.

[12]

The appellant also seeks leave to appeal costs. The trial judge noted
    that the respondents substantial indemnity costs would have been $63,000,
    which compared favourably to the appellants claim for substantial indemnity trial
    costs of $75,000. He considered that an award of partial indemnity costs to the
    respondents in the amount of $38,000 all-in was reasonable and proportional. We
    do not see any error in the trial judges reasoning leading to the costs award.

[13]

For these reasons we dismiss the appeal with costs to the respondents
    fixed in the amount of $ 9,000, all-inclusive.

P. Lauwers J.A.

B.W. Miller J.A.

Fairburn J.A.


