



COURT OF APPEAL FOR ONTARIO

CITATION: Perkins v. Sheikhtavi, 2019 ONCA 925

DATE: 20191126

DOCKET: C66785

van Rensburg, Paciocco and Thorburn JJ.A.

BETWEEN

Richard Kim Perkins and Sylvia Perkins

Plaintiffs/Defendants by Counterclaim

(Respondents)

and

Shahla Sheikhtav
i

Defendant/Plaintiff
    by Counterclaim

(Appellant)

and

Karim Samadi and Homelife Victory Team Realty Inc.

Third Parties

Brian Sherman, for the appellant

Dylan OLeary, for the respondents

Allan D. Powell, for the third parties

Heard: November 18, 2019

On appeal from the judgment of Justice Philip W.
    Sutherland, of the Superior Court of Justice, dated March 11, 2019, with
    reasons reported at 2019 ONSC 1595.

REASONS FOR DECISION

OVERVIEW

[1]

This is an appeal of a motion granting summary judgment and awarding
    damages resulting from the failure to close the purchase of a home.

[2]

The appellant, Shahla Sheikhtavi, claims the agreement of purchase and
    sale was frustrated. In the alternative, she claims there was an implied
    condition in her offer that the agreement was conditional on her selling her
    own home and obtaining mortgage financing. Lastly, she claims that the motion
    judge rejected uncontested evidence.

BACKGROUND FACTS

[3]

The respondents listed their home for sale in March 2017. The appellant
    made an offer to purchase the home on April 3, 2017. There were thirteen offers
    to purchase the home. The appellants offer was the second highest.

[4]

The appellants offer was accepted by the vendor.

[5]

The terms of the offer included a purchase price of $1,871,000 and a
    deposit of $80,000 to be held in trust by the realtor until the closing
    scheduled to take place on July 10, 2017. The offer was unconditional.

[6]

After the unconditional offer was accepted but before closing, the
    government of Ontario made a policy announcement. The evidence of two real
    estate agents, who swore affidavits at the request of the appellant, was that
    within days of this announcement, real estate prices in the area dropped 20 to
    30 per cent.

[7]

On the day of closing, the appellant advised that she could not close,
    as she had been unable to sell her own home and could not obtain sufficient
    mortgage financing.

[8]

As a result of the failure to close, the respondent put the property
    back on the market and it sold for $1,251,888. This was $619,112 less than the
    appellant had agreed to pay.

[9]

The respondent commenced legal proceedings against the appellant
    seeking:

a)

$619,112, being
    the difference between the amount the appellant had offered and the amount the
    property later sold for; and

b)

carrying costs
    of the property between July 10, 2017 and the sale of the property.

[10]

The appellant opposed the motion for summary judgment claiming that the
    government announcement frustrated the agreement. She also brought her own
    motion seeking return of the deposit.

THE DECISION OF THE MOTION JUDGE

[11]

The motion judge held that,

I am not convinced that the
    doctrine of frustration applies in these circumstances.

Though I can agree that there was a
    supervening event, that is the announcement of the policy by the provincial
    government at the time, I do not find that this event was a radical change in
    obligation to force the defendant to do something radically different from
    what the parties agreed.



Any term to relieve the defendant
    from her obligation concerning financing could have been resolved by including
    a term concerning financing.

.

[T]he defendant knowingly did not
    include a term for financing.  The reason for not including such term is clear
    from the evidence on this motion: the defendant wanted to have her offer to
    purchase accepted by the plaintiffs. She anticipated that an offer to purchase
    with the price she offered with no conditions would more likely to be accepted.



The defendant got what she wanted, the property at the price
    she was offering to purchase. She did so knowing that she took a risk; that she
    may not be able to obtain financing by not being able to sell her existing
    home. This was a risk knowingly taken by the defendant.

[12]

He therefore ordered the appellant to pay $619,112 and carrying costs in
    the amount of $4,621.05.

ANALYSIS AND CONCLUSION

[13]

We find no error in the motion judges disposition of the motions.

[14]

Though there was a supervening event (the announcement of a new
    government policy), the supervening event did not constitute frustration of the
    agreement, as the announcement was not such that performance of the contract
    becomes a thing radically different from that which was undertaken by the
    contract:
Naylor Group Inc. v. Ellis-Don Construction Ltd.
, 2001 SCC
    58, [2001] 2 S.C.R. 943, at para. 53.

[15]

Frustration applies to contracts including real estate transactions,
    when a supervening event alters the nature of the appellants obligation to
    contract with the respondent to such an extent that to compel performance
    despite the new and changed circumstances would be to order the appellant to do
    something radically different from what the parties agree to under their
    contract:
Naylor
, at para. 55.

[16]

A contract is not frustrated if the supervening event was contemplated
    by the parties at the time of contracting and was provided for or deliberately
    chosen not to be provided for in the contract:
Capital Quality Homes
    Ltd. v. Colwyn Construction Ltd.

(1975),
9 O.R. (2d) 617
(C.A.), at p. 626
.

[17]

A party claiming that a contract has been frustrated has the onus
    of proving the constituent elements necessary to establish frustration:
Bang
    v. Sebastian
, 2018 ONSC 6226, at para. 30;
Gerstel v. Kelman
,
    2015 ONSC 978
,
40 B.L.R. (5th)
    314
.

[18]

In this case, the appellant deliberately chose not to include a
    condition that she had to be able to sell her home and obtain mortgage
    financing before closing as a term of her offer to purchase.

[19]

She would reasonably have known there was a risk her home would not sell
    at the price she sought but made an unconditional offer to purchase the
    respondents home because she wanted her offer to be accepted (although she was
    not the highest bidder).

[20]

The appellant was specifically told by her real estate agent that unless
    she put in an unconditional offer, her offer would not be accepted.

[21]

It was reasonable for the motion judge to conclude that the test for
    frustration was not met, as the policy announcement relied on by the appellant
    did not force her to do something radically different from what the parties
    agreed.
The appellants contract was not
    frustrated;
it was breached by the appellant.

[22]

Secondly, the agreement contains a clause that the written agreement is
    the entire agreement between the parties. We see no error in the motion judges
    conclusion that this precluded any implied condition or term as asserted by the
    appellant.

[23]

Lastly, the motion judge did not reject uncontested evidence. He
    accepted that there was an unforeseen event. While his reasons do not
    specifically mention the 20 to 30 per cent decrease in home prices cited by the
    real estate agents who filed affidavits in support of the appellants position,
    he accepted that there was a supervening event but found it was not a radical
    change such that the appellant should be relieved of her obligations under the
    contract. There was no rejection of uncontested evidence.

[24]

For these reasons, the appeal is dismissed. Partial
    indemnity costs to the respondents in the amount of $15,019.62 as per the Bill
    of Costs submitted.

K. van Rensburg J.A.

David M. Paciocco J.A.

J.A. Thorburn J.A.


