



COURT OF APPEAL FOR ONTARIO

CITATION: Yan v. Nadarajah, 2017 ONCA 196

DATE: 20170308

DOCKET: C61531

Sharpe, Lauwers and Hourigan, JJ.A.

BETWEEN

Chang Pu Yan and Qiu Lin Yan

Plaintiffs (Respondents/

Appellants by way of Cross-Appeal)

and

Ravichandran Nadarajah, Kalaiyarasi
    Nanthakumar
, and Red Carpet Realty Ltd. also known as Red Carpet Royal
    Realty Ltd., Brokerage

Defendants (
Appellants
/

Respondents by
    Cross-Appeal
)

Ronald Lachmansingh and Ioulia Vinogradova, for the
    appellants/ respondents by way of cross-appeal

James H. Chow, for the respondents/ appellants by way of
    cross-appeal

Heard: March 1, 2017

On appeal from the judgment of The Honourable Justice Mary
    E. Vallee of the Ontario Superior Court of Justice, dated December 4, 2015.

ENDORSEMENT

[1]

The appellants were the vendors and the respondents were the purchasers
    in a residential real estate transaction that the appellants refused to close.
    The respondents sued for specific performance and eventually brought a
    successful motion for summary judgment.

[2]

The appellants submit that the motion judge erred in granting summary
    judgment and that the case should have proceeded to trial. In the alternative,
    they argue that the appropriate remedy is damages and not specific performance.

[3]

The respondents cross-appeal, submitting that the motion judge erred in
    not awarding them damages for various expenses flowing from the aborted
    transaction.

[4]

For the reasons that follow, we dismiss the appeal and cross-appeal.

A.

Background

[5]

The appellants are the registered owners of 39 Dairis Crescent in
    Markham, Ontario (the residence). They live at the residence with their
    spouses, who are not registered on title.

[6]

The respondents allege that they entered into an agreement of purchase
    and sale for the residence dated December 3, 2010, with a purchase price of
    $470,000 and a closing date of December 27, 2011. According to the respondents,
    following a home inspection, the parties renegotiated the purchase price, reducing
    it to $468,000 and extended the closing date to January 5, 2011.

[7]

It is common ground that the appellants refused to close the transaction
    on the specified closing date or at any time thereafter. The respondents sued
    for specific performance and obtained a Certificate of Pending Litigation
    (CPL).

[8]

The appellants did not file a statement of defence within the requisite
    time and were noted in default. On a motion before Edwards J. seeking leave to
    file a statement of defence and discharge the CPL, the appellants filed nearly
    identical affidavits, dated July 24, 2011. In those affidavits, they both
    denied that they ever intended to sell the residence. They swore that they
    never met with a real estate agent or signed any agreement with a real estate
    agent.  Further, they testified that no one came to see the residence with the
    intention of purchasing it and that there was never a for sale sign on the
    property. According to the appellants, someone attempted to sell their house
    without their knowledge.

[9]

The evidence of the appellants real estate agent contradicted their
    testimony in the July 24, 2011 affidavits. He swore an affidavit stating that
    he met with the respondents, obtained their identification and witnessed their
    execution of a listing agreement for the residence. He further testified that
    he witnessed the respondents sign and initial the agreement of purchase and
    sale and the revised agreement of purchase and sale.

[10]

Prior to the motion for summary judgment, the appellants were
    cross-examined on various affidavits they filed in the action. During his
    cross-examination, Mr. Nadarajah initially maintained his position from his
    July 24, 2011 affidavit, but he eventually conceded that: he had signed the
    listing agreement; a for-sale sign was on the property for a week in December
    2010; and he knew that the residence was on the market in December 2010. In her
    cross-examination, Ms. Nanthakumar denied that there was ever a for-sale sign
    on the property but admitted that she signed the listing agreement. Both
    appellants maintained that they never signed the agreement of purchase and
    sale.

[11]

The motion judge found that the appellants were not credible and concluded
    that they executed the agreement of purchase and sale, which they subsequently
    breached. Further, she held that the respondents were entitled to specific
    performance as a remedy for the appellants breach.

B.

Analysis

(1)

Summary Judgment Analysis

[12]

The appellants submit that the motion judge erred in her summary
    judgment analysis by using the new fact-finding powers under r. 20 of the
Rules
    of Civil Procedure
, R.R.O. Reg. 194, to conclude that they were not
    credible. They argue that this finding coloured all of her subsequent findings
    and resulted in her wrongly concluding that summary judgment was appropriate.

[13]

We would not give effect to this submission. The trial judge found that
    she was able to determine the issues in this action on the material before her
    without resort to the fact-finding powers under r. 20. This case turned on
    credibility issues, and the motion judge found that the appellants were not
    credible. There was ample evidence to support this finding. Indeed, such a
    finding was virtually inescapable, given that the appellants had offered
    inconsistent accounts regarding their participation in the transaction and
    their evidence was inconsistent with that of their own real estate agent. We
    see no error in the motion judges summary judgment analysis.

(2)

July 24, 2011 Affidavits

[14]

The appellants argued on the motion and the appeal that the respondents
    counsel violated the rule in
Browne v. Dunn
(1893), 6 R. 67 (H.L.).
    They submit that the breach of the rule occurred during their cross-examination
    when the respondents counsel failed to tender their evidence in their July 24,
    2011 affidavits, ask them whether they made the statements and give them an
    opportunity to explain them. The appellants submit that as a consequence of
    this breach the respondents cannot rely on the evidence in the affidavits.

[15]

We agree with the motion judge that the appellants seem to have
    misunderstood the rule in
Browne v. Dunn
. The application of that rule
    is generally restricted to situations where a party cross-examining a witness
    called by the opposite side is planning on adducing contradictory evidence to
    impeach the witnesss credibility. The cross-examiner must put the
    contradictory evidence to the witness to allow the witness to provide an
    explanation for it:
R. v. Quansah
, 2015 ONCA 237, 125 O.R. (3d) 81, at
    paras. 75-76, leave to appeal to S.C.C. refused, [2016] S.C.C.A. No. 203. The
    rule reflects fairness to the witness whose credibility is attacked and to the
    party whose witness is impeached. It prevents the ambush of a witness by not
    giving him an opportunity to state his position with respect to later evidence
    which contradicts him on an essential matter:
R. v. Verney
(1993), 87
    C.C.C. (3d) 363 (Ont. C.A.), at p. 376, cited in
R. v. M.B.
, 2009 ONCA
    524, 68 C.R. (6th) 55, at para. 73.

[16]

In the present case, there was no element of the kind of unfairness or
    surprise that the rule in
Browne v. Dunn
protects against. The
    contradictory evidence used to impeach the appellants came in the form of the
    appellants own affidavits. Moreover, at the beginning of the cross-examination
    the appellants were asked whether there was anything in their affidavits that
    was incorrect or needed to be changed. They declined to make any changes or
    corrections. In the circumstances, there was no violation of the rule in
Browne
    v. Dunn.


(3)

Service of Spouses

[17]

The appellants submit that the motion judge should not have proceeded
    with the motion for summary judgment because the appellants spouses had not
    been served. The appellants were unable to provide any authority in support of
    their position that service of the spouses was required.

[18]

The motion judge found that the spouses agreed to the sale of the
    residence and that it was highly likely that they were aware of this proceeding
    and that the respondents were seeking a transfer of the residence. Accordingly,
    she found that service of the motion record was unnecessary.

[19]

We see no error in this analysis. There was ample evidence to suggest
    that both spouses agreed to the sale of the residence. There was no evidence
    that they took any steps to assert any rights under the
Family Law Act
,
R.S.O. 1990, c. F3, to set aside the
    sale of the residence.

(4)

Specific Performance

[20]

The appellants submit that specific performance should not have
    been ordered because the respondents delayed in the prosecution of their
    action. They argue that ordering specific performance in such circumstances
    permits a purchaser to sit back and strategically take advantage of an increase
    in the market value of a property.

[21]

We agree that litigants should not be permitted to unduly delay seeking
    specific performance so that they can obtain an economic advantage. However,
    the motion judge carefully considered the issue of delay. She reviewed the
    progress of this action from the issuance of the statement of claim in February
    2011 to the hearing of the motion in March 2015. She found that during a one
    year period the respondents took no steps to advance the action and during two
    other periods, totalling approximately one year, they took some steps to
    advance their claim but could have moved the matter forward more efficiently.
    The motion judge also found that the appellants delayed in serving a proper
    affidavit of documents until December 31, 2014. She concluded that the pace of
    the respondents prosecution of the claim did not disentitle them from
    obtaining an order for specific performance.

[22]

The granting of an order for specific performance is discretionary:
Matthew
    Brady Self Storage Corp. v. InStorage Limited Partnership
, 2014 ONCA 858,
    125 O.R. (3d) 121, at paras. 29, 32, leave to appeal to S.C.C. refused, [2015]
    S.C.C.A. No. 50. We are not satisfied that the motion judge made any error in
    principle in the exercise of her discretion regarding the issue of delay.
    Therefore, there is no basis for appellant interference.

[23]

The appellants also submit that the motion judge erred in awarding specific
    performance because the residence was insufficiently unique. We disagree. The
    motion judge found that the residence was unique because the size of the lot, as
    well as its proximity to Ms. Yans sister and public transit. There is no basis
    to interfere with that finding.

(5)

Damages

[24]

The respondents submit that the motion judge erred in not awarding
    damages in addition to specific performance. They also note that the motion
    judge provided no reasons for rejecting this claim.

[25]

We would not give effect to this submission. The respondents tendered
    evidence on the motion regarding costs they incurred as a result of the aborted
    transaction, including evidence of the cost of rent for alternative
    accommodation and insurance costs. They did not, however, provide details
    regarding the carrying costs they would have incurred had the transaction
    closed. Consequently, it is not possible for this court to quantify any damages
    that might have resulted from the appellants breach.

(6)

Costs

[26]

The appellants submit that the motion judge erred in awarding costs of
    $90,415 on a substantial indemnity basis. The motion judge found that costs on
    a higher scale were justified because the appellants tendered misleading
    evidence.  There is no basis to interfere with that finding.

[27]

We are also satisfied that the quantum of costs is reasonable given that
    the appellants costs on a substantial indemnity basis were approximately
    $124,000.

C.

Disposition

[28]

For these reasons, we dismiss the appeal and cross-appeal. The
    respondents are entitled to their costs of the appeal, which we fix at $18,000,
    inclusive of fees, disbursements, and taxes.

Released: March 8, 2017

RJS

Robert J. Sharpe J.A.

P. Lauwers J.A.

C.W. Hourigan J.A.


