



COURT OF APPEAL FOR ONTARIO

CITATION: Tribute (Springwater) Limited v.
    Atif, 2021 ONCA 463

DATE: 20210625

DOCKET: C68625

Strathy C.J.O., Feldman and van
    Rensburg JJ.A.

BETWEEN

Tribute (Springwater) Limited

Plaintiff
    (Respondent/

Appellant
    by way of cross-appeal)

and

Rashid Atif and Ansa Atif

Defendants
    (Appellants/

Respondents
    by way of cross-appeal)

Alex Flesias, for the appellants/respondents
    by way of cross-appeal

Caitlin Steven and Krista Chaytor, for
    the respondent/appellant by way of cross-appeal

Heard: May 21, 2021 by video
    conference

On appeal from the judgment of Justice
    Jane Ferguson of the Superior Court of Justice, dated August 11, 2020.

van Rensburg J.A.:

[1]

This is an appeal from a summary judgment, awarding the respondent
    damages, interest, and costs for the appellants failure to close a residential
    real estate transaction. The respondent cross-appeals the motion judges order
    respecting the rate of prejudgment and postjudgment interest.

[2]

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

A.

Facts

[3]

On March 25, 2017, the appellants, Rashid and Ansa Atif, signed an
    agreement of purchase and sale (APS) in relation to a new home to be built by
    the respondent, Tribute (Springwater) Limited (Tribute), in the Stonemanor
    Woods community in Springwater, Ontario. The purchase price was $1,115,490,
    with an initial deposit of $90,000. The Atifs paid a further deposit of $50,312.50
    toward $335,134.13 in upgrades to the property. The Atifs failed to close on
    the extended closing date of December 17, 2018, and the APS was terminated by Tribute
    in January 2019.

[4]

In February 2019, Tribute commenced an action in the Superior Court,
    claiming damages for breach of contract. In their statement of defence dated
    April 17, 2019, the Atifs (a) denied the allegations in the statement of claim;
    (b) expressly denied that they had breached the APS and pleaded that they had
    complied with their obligations; (c) pleaded that the property was not built to
    the agreed specifications for the ceiling height, and that the ceiling height
    was an essential term; and (d) pleaded that Tributes damages were exaggerated
    and excessive.

[5]

On November 2, 2019 Tribute resold the subject property for $985,000,
    and shortly thereafter moved for summary judgment. The motion judge granted
    judgment for $383,636.47, with prejudgment interest fixed at $90,717.36, and
    costs of $20,000. The motion judge fixed the postjudgment interest rate at
    4.45% per year.

[6]

The damages of $383,636.47 consisted of the difference between the
    contract price and resale price (less real estate commission) of the home ($378,045.22),
    plus carrying costs and expenses incurred by Tribute for the period between the
    APS closing date and the resale closing date ($4,861.96), and Tributes 15% administrative
    fee on such costs and expenses ($729.29).

[7]

The prejudgment interest of $90,717.36 was calculated at the annual rate
    of prime plus 2% on the outstanding balance of the sale price ($1,318,523.22) from
    December 18, 2018 to December 18, 2019, and on the difference between the sale
    and resale prices ($378,045.22) from December 18, 2019 until the date of the
    hearing of the motion (August 10, 2020).

B.

The Appeal

[8]

The Atifs no longer dispute their liability for having breached the APS.
    Rather, they take issue with the amount of the judgment. The central issue in
    the appeal is mitigation. The Atifs say that the evidence was clear that
    Tribute had not taken reasonable steps to mitigate its damages, and they
    challenge Tributes reliance on expert evidence that was inadmissible and
    deficient. They contend that the motion judges reasons are insufficient
    because they do not address mitigation. They also assert that the motion judge
    erred in awarding damages that exceeded the amount sought in the statement of
    claim.

[9]

I will address these issues in turn.

C.

Discussion

[10]

The
    question of mitigation arises because of the process that Tribute followed in
    reselling the property, and the fact that it was not resold for several months
    after the APS was terminated. The Atifs contend that Tributes practice of
    selling directly through its own agents internally instead of by listing
    through an agent and advertising the property on the multiple listing service (MLS)
    was unreasonable.

[11]

I
    accept that mitigation was implicitly raised by the Atifs in their statement of
    defence  when they challenged the amount claimed by Tribute and pleaded that
    the damages were excessive. The efforts to mitigate were also specifically
    addressed in Tributes motion materials. The main problem with this argument on
    appeal however is that the Atifs did not challenge Tributes evidence through
    cross‑examination or provide their own evidence to demonstrate that
    Tributes efforts to resell the property were unreasonable, and that the
    damages could reasonably have been mitigated.

[12]

Tribute
    relied on two affidavits with respect to the resale process. The affidavit of
    Mary Liolios, vice president of sales and marketing for Tribute, deposed that
    the property had been listed internally at Tributes sales office at a price of
    $999,990 inclusive of all upgrades. She explained why the property was only
    listed (at the same price) on the MLS in September 2019, when Tribute signed a
    listing agreement with an agent. Essentially, she indicated that Tribute
    marketed the property internally because it wanted to avoid the additional
    expense of paying commission on the sale, and to avoid a reduction in the value
    of the other new homes they were selling in the Stonemanor Woods community. She
    deposed that the property was sold in November 2019, with a closing date in
    December for $985,000. Ms. Liolios offered an opinion, supported by print-outs
    from zolo.ca and an MLS Home Price Index chart, that home values in the area
    had declined about $100,000 in 2019 from 2016-17 values.

[13]

The
    affidavit of William Ly, a qualified appraiser, provided two retrospective
    appraisals for the property. Using a direct comparison approach, he valued the
    property at $890,000 as of January 4, 2019 and $920,000 as of October 21, 2019.

[14]

As
    a general rule, a plaintiff is not entitled to recover for losses which could
    have been avoided by taking reasonable steps. Where it is alleged that the
    plaintiff failed to mitigate damages, the onus is on the defendant to prove
    both that the plaintiff failed to make a reasonable efforts to mitigate, and that
    mitigation was possible:
Southcott Estates Inc. v. Toronto
    Catholic District School Board
, 2012 SCC 51, [2012] 2 S.C.R. 675,
    at paras. 24, 45.

[15]

The
    Atifs assert that Tribute failed to mitigate its damages when, instead of
    listing the property on the MLS immediately, it listed the property internally
    for a period of nine months. They also contend that Ms. Liolios was not
    qualified to provide expert evidence, and that there were deficiencies in the
    appraisal evidence provided by Mr. Ly.
[1]

[16]

I
    would not give effect to these arguments.

[17]

Typically
    damages in respect of a failed real estate transaction are determined based on
    the difference between the agreed sale price under the parties agreement of
    purchase and sale and the market value of the property at the date set for
    closing. The court may choose a date for the assessment of damages other than
    the date set for closing, depending on the context, including the plaintiffs
    duty to take reasonable steps to avoid its loss, the nature of the property and
    the nature of the market:
100 Main Street East Ltd. v.
    W.B. Sullivan Construction Ltd.
(1978), 20 O.R. (2d) 401 (C.A.), at
    p. 421;
642947 Ontario Ltd. v. Fleischer

(2001), 56 O.R. (3d) 417 (C.A.), at para. 41. In this case
    the property was appraised at $890,000 close to the date set for closing and
    was sold 12 months later for $985,000, an amount that exceeded the appraised
    value around the time it was listed for sale.

[18]

The
    Atifs do not argue that the date for the calculation of damages was incorrect.
    Rather, they accept that damages were properly calculated based on the resale
    price, and included Tributes carrying costs of the property until it was sold.
    The focus on appeal is on Tributes delay in listing the property for sale on
    the MLS, which, according to the Atifs, constitutes a failure to mitigate.

[19]

As
    I will explain, I would not give effect to the argument that there was a
    failure to mitigate. That said, Tributes delay in listing the property with an
    agent and exposing it for sale on the MLS is relevant to the interest rate issue
    raised in the cross-appeal.

[20]

While
    I agree that Ms. Liolios was not qualified to provide an expert opinion, Mr.
    Lys evidence addresses the valuation of the property at two relevant dates:
    when the APS was terminated, and just before the property was resold. While the
    Atifs assert on appeal that Mr. Lys appraisals do not mention the parameters
    used to establish a sample of potential comparables, and make no mention of how
    the extensive upgrades on the property might have affected his opinion of fair
    market value, these issues were not explored at first instance. As already noted,
    there were no cross-examinations on the affidavits, nor did the Atifs provide
    any appraisal evidence, or any evidence at all on the issue of mitigation. It
    is too late, on appeal, to take issue with matters that were not addressed when
    the action was pending in the court below. This goes some way to explaining the
    brevity of the motion judges reasons, and the fact that she did not address the
    question of mitigation.

[21]

The
    appellants drew this courts attention to the reported decision in
Tribute
    (Springwater) Limited v. Sumera Anas
, 2020 ONSC 5277, in which the
    defendant (who is the appellant Rashid Atifs sister) was sued by Tribute for
    failing to close her purchase of the house that is located next door to the
    subject property. In that case, the court refused summary judgment in Tributes
    favour after finding there was a genuine issue as to whether the damages were
    reasonably foreseeable and whether the upgrades were what the purchaser
    expected. The motion judge went on to say that she was troubled by the
    plaintiffs mitigation efforts in selling through one of its own agents rather
    than using the MLS, without an appraisal: at para. 26. She characterized
    Tributes internal practice of doing the marketing through their own sales
    agents, not through MLS and without an appraisal, as not sufficient and
    self-serving: at para. 28.

[22]

Each
    case falls to be determined on its own facts and the law and argument that is
    advanced. In the present case, on the evidence before the motion judge, there
    is no demonstrated error in the conclusion that there was no genuine issue
    requiring a trial. The Atifs do not take issue with the conclusion in their
    case that they were liable for breach of the APS. And, although I too am
    troubled by Tributes decision to list the property internally rather than
    using a listing agent and the MLS, the Atifs did not pursue the mitigation
    issue at first instance, nor was there evidence to suggest that a higher price
    would have been obtained if the property had been listed on the MLS as soon as
    the APS was terminated. Indeed, the evidence is to the contrary: the
    uncontradicted appraisal evidence of Mr. Ly indicated that the property was
    worth
less
in January 2019 (when the Atifs contend it should have been
    listed on the MLS) than in October 2019, while it was on the MLS. If the
    property had been listed earlier, at best Tribute might have avoided some of
    the carrying costs of the property (which was not argued before us) and some of
    the prejudgment interest (which I will address in dealing with the cross‑appeal).

[23]

I
    would also not give effect to the argument that the motion judge ought not to
    have granted judgment for an amount that exceeded Tributes claim for damages
    in the statement of claim. Tribute claimed damages in the amount of $200,000 for
    breach of contract, or such further or other amount as may be determined and
    particularized at or before trial. Rule 25.06(9)(b) provides that the amounts
    and particulars of special damages need only be pleaded to the extent that they
    are known at the date of the pleading, but notice of any further amounts and
    particulars shall be delivered forthwith after they become known and, in any
    event, not less than ten days before trial. The statement of claim was issued
    before the property had been resold. The Atifs were provided with the amounts
    and particulars of Tributes claim in compliance with r. 25.06. There was no
    need for an amendment. Even if an amendment had been required, and the issue
    had been raised at first instance, there is no question that the amendment
    would have been permitted, as there is no evidence of prejudice to the Atifs: see
    r. 26.01;
McKnight v. Ontario (Transportation)
,
    2018 ONSC 52, at para. 45. The Atifs were on notice throughout the summary
    judgment proceedings of the amount sought by Tribute and of the components of
    its claim.

D.

The Cross-Appeal

[24]

In
    its cross-appeal Tribute seeks prejudgment and postjudgment interest at the
    rate provided for in the APS, and asks this court to increase the amount for
    prejudgment interest from $90,717.36 to $137,606.11. Tribute argues that the
    motion judge had no jurisdiction to depart from the contractual interest rate
    of prime plus 5%, when she substituted a rate equivalent to prime plus 2%, in
    awarding prejudgment interest and a rate of 4.45% for postjudgment interest.

[25]

I
    disagree.

[26]

Section
    127 of the
Courts of Justice Act

(
CJA
)

provides for prejudgment and postjudgment interest at prescribed rates. A court
    shall not award prejudgment interest under s. 128 or postjudgment interest
    under s. 129 where interest is payable by
a right other than under

    either statutory provision: ss. 128(4)(g) and 129(5). These provisions
    preclude the court from ordering prejudgment and postjudgment interest in
    accordance with the statutory interest rates under the
CJA
if interest is otherwise payable in some other way (such as by virtue of a
    contract). Section 130(1) provides for the courts discretion to disallow
    interest under either s. 128 or s. 129, to allow interest at a rate higher or
    lower than provided under either section, or to allow interest for a period
    other than that provided in either section. Section 130(2) sets out the factors
    relevant to the exercise of such discretion.

[27]

The
    motion judge reduced the interest rate, relying on her inherent jurisdiction.
    Contrary to the respondents argument, I do not agree that s. 130, which speaks
    to discretion to depart from prejudgment and postjudgment interest under ss.
    128 and 129, is exhaustive of the courts discretion, and that there is no
    discretion to depart from a contractual rate of interest. In the exercise of
    the courts common law and equitable jurisdiction, the departure from a
    contractual rate of interest can be justified by special circumstances:
Gyimah v. Bank of Nova Scotia
, 2013 ONCA 252, at para.
    10;
Bank of America Canada v. Mutual Trust Co.
,
    2002 SCC 43, [2002] 2 S.C.R. 601, at paras. 46-50.

The contractual
    rate of interest has also been disallowed in circumstances where it is
    extremely onerous or unfair and adequate notice of the contractual term was
    not provided: see
Tilden Rent-A-Car Co. v. Clendenning
(1978),
    18 O.R. (2d) 601 (C.A.);
MacQuarie Equipment Finance Ltd.
    v. 2326695 Ontario Ltd. (Durham Drug Store)
, 2020 ONCA 139, at
    paras. 23, 37-38;
Forest Hill Homes v. Ou
,
    2019 ONSC 4332, at paras. 19-20.

[28]

There
    may be other circumstances that would justify an award of prejudgment or postjudgment
    interest at a rate other than the rate prescribed by the parties contract,
    however we did not have the benefit of full argument on this issue. It is
    sufficient for the purpose of this cross-appeal that there were special
    circumstances to justify a departure from the contractual rate of interest in
    this case: Tribute did not expose the property to the market for nine months
    after it terminated the APS. During this period of inaction, interest accrued
    on the full outstanding purchase price, and carrying costs were incurred.

[29]

In
    these circumstances I would not interfere with the motion judges decision to
    award prejudgment interest at the prime rate, plus 2% per year and postjudgment
    interest at an annual rate of 4.45%.

E.

Disposition

[30]

For
    these reasons I would dismiss the appeal and cross-appeal. The parties agreed
    that the successful party on appeal would be entitled to costs fixed at $6,000.
    Success is mixed, with the dismissal of both the appeal and the cross-appeal. In
    the event the parties are unable to resolve the issue of costs, they may file
    written costs submissions limited to three pages each within ten days of the
    date of these reasons.

Released: June 25, 2021 G.R.S.

K.
    van Rensburg J.A.

I
    agree. G.R. Strathy C.J.O.

I
    agree. K. Feldman J.A.





[1]

The
    Atifs also assert that the expert opinion of Mr. Ly was deficient because it
    did not contain a signed acknowledgment of experts duty. This argument is
    raised for the first time on appeal, and, in any event, an acknowledgment under
    r. 53.03 was contained in Tributes materials on the summary judgment motion.


