Introduction
[1] The plaintiff moves for summary judgment and an order for specific performance in connection with an agreement of purchase and sale (the “APS”) for a residential property in Hamilton in September of 2020 which failed to close as anticipated in November of that year. The plaintiff says that the deal failed to close because, on the date set for closing, the defendant Ahmadi (the defendant Royal LePage played no role in this motion) could not provide vacant possession of the property and because the garage had not been emptied. She says that the property in question is unique and that specific performance is the only appropriate remedy. She says that there is no genuine issue for trial.
[2] The defendant says that, properly interpreted, the APS did not require him to provide vacant possession to the plaintiff. Accordingly, he did not breach the contract. The defendant also argues that there is nothing unique about the property and that specific performance is not the appropriate remedy. At a minimum, according to the defendant, the plaintiff has failed to show that there is no genuine issue for trial.
[3] Accordingly, the motion raises two main issues:
i. did the defendant breach the agreement of purchase and sale? and, if so,
ii. is specific performance the appropriate remedy?
[4] For the reasons that follow, I would dismiss the motion.
Alleged Breach of the APS
The Evidence
[5] The plaintiff was looking for a home for her family. After visiting 98 Balsam Avenue South in Hamilton (the “property”), which was listed for sale at $499,778.00, she decided to put in a bid for it, ultimately agreeing to pay $550,000.00 for the property. The seller, the defendant Mr. Ahmadi, accepted that bid and the APS was signed on September 21, 2020. The parties agreed on a closing date of November 23, 2020.
[6] This listing noted that the property was a duplex that had “income potential” and that it was occupied by a tenant. The plaintiff deposed that the property was to be the first family home for her family.
[7] The APS required the plaintiff to deposit $25,000.00, which she did, to prepare and execute closing documents, which she did, and to be in funds at the time of closing, which she was.
[8] The plaintiff also asserts that the APS required the defendant to provide vacant possession of the property on closing and that the garage was to be free of the tenants’ belongings and any debris. On the closing date, however, the tenants were still resident at the property and the garage had not been cleaned out. The parties agreed to extend the closing until November 25, 2020 to give the defendant time to rectify the situation. On that date, the tenants remained at the property with their belongings still in the garage. The transaction failed to close on that day.
[9] As I have said, the plaintiff alleges that the defendant breached the APS as described above. The defendant asserts that the APS did not require either that vacant possession be provided on closing or that the garage be emptied and that it was the plaintiff who failed to close the transaction. Accordingly, I turn now to the relevant portions of the APS.
[10] Paragraph 2 of the APS sets the date of closing, or “completion”, as November 23, 2020, a date chosen by the plaintiff. It also provides as follows: “Upon completion vacant possession of the property shall be given to the Buyer unless otherwise provided for in this Agreement” [emphasis added].
[11] Paragraph 26 bears the heading “AGREEMENT IN WRITING” and provides, in part, as follows:
If there is a conflict or discrepancy between and provision added to the Agreement (including and Schedule attached hereto) and any provision in the standard pre-set portion hereof, the added provision shall superseded the standard pre-set provision to the extent of such conflict or discrepancy. This Agreement including any Schedule attached hereto, shall constitute the entire Agreement between Buyer and Seller. There is no representation, warranty, collateral agreement or condition, which affects this Agreement other than as expressed herein [emphasis added].
[12] The APS attaches two schedules, marked “A” and “B” respectively. Schedule A contains five paragraphs, the first three of which provide for matters which are to be attended to by one or the other of the parties “on completion”, “at completion”, or “prior to completion.”
[13] The final two paragraphs of Schedule A read as follows [grammatical and typographical errors and inconsistencies in the original]:
The Seller agrees that the property including the garage will be emptied of any of the past or present tenants belongings and left free of any debris.
The Buyer hereby authorizes and directs the Seller, and the Seller agrees, to give to the tenant(s) the requisite notices requiring vacant possession of the property for use by the Buyer or the Buyer’s immediate family. The seller agrees to deliver copies of the requisite notices to the Buyer immediately after service of the notices upon the tenant. Upon vacant possession being provided to the Buyer, the Buyer or the Buyer’s immediate family agrees to take possession of and occupy the property forthwith thereafter.
[14] The defendant asserts that these provisions, read properly, do not require the delivery of vacant possession on closing. Indeed, he deposes that he rejected another offer for this same property precisely because it called for vacant possession, which he did not believe he could safely promise to deliver. In the proposed but rejected APS the relevant provision of Schedule A read as follows:
The Seller agrees to provide vacant possession on closing. The Seller shall provide notice in writing to the Buyer that this condition has been fulfilled by 6:00 p.m. October 21st, 2020. The Buyer and Seller agree that the Seller, upon giving a minimum of 5 days written notice to the Buyer (excluding, Saturday, Sunday or Statutory Holidays), may unilaterally extend the date set for completion, one time, not to exceed 30 days, for the purpose of obtaining vacant possession. Seller hereby agrees in the event that the tenant fails to vacate the property by November 21st, 2020, the Buyer may cancel the Agreement of Purchase and sale and have deposit returned without penalty.
Analysis
[15] I start with the observation that the vacant possession provision in the standard pre-set portion of the APS (paragraph 2) expressly contemplates that parties might modify that provision or provide otherwise elsewhere in the APS. Moreover, the entire agreement clause (paragraph 26) plainly states that in the event of any inconsistency between the pre-set portion of the APS and any added Schedule, the added language “shall supersede” the language of the pre-set portion.
[16] Accordingly, while paragraph 2 appears to reflect an intention to provide vacant possession “on completion”, the language of Schedule A must be considered carefully to discern whether it reveals any inconsistency (“conflict or discrepancy”) with paragraph 2. In my view, the following features of Schedule A, read together, do reveal such an inconsistency:
(a) The fourth and fifth paragraphs of Schedule A, which relate to the contents of the garage and to vacant possession respectively, do not set any deadline for the emptying of the garage or the departure of the tenants. By contrast, each of the other provisions of Schedule A do provide for a deadline, i.e., the date of completion. The omission of such a deadline in the final two paragraphs of the Schedule, while not necessarily, or by itself, inconsistent with paragraph 2 of the pre-set portion of the APS, is consistent with the idea that the defendant could not legally guarantee that the property would be vacant by the date of completion, as described below.
(b) The fifth paragraph of Schedule A obliged the defendant to provide notices requiring vacant possession to the tenants. No deadline was set for the service of such notices.
(c) The notices in question are twice referred to as “the requisite notices.” The parties are agreed that this phrase is a reference to the notices required by section 49 of the Residential Tenancies Act, 2006, S.O. 2006, c. 17 (the “Act”). That section, which provides for notice of the termination of a tenancy, which notice is to be served by the landlord “on behalf of the purchaser” where the property has been sold and is to be used by the purchaser. Importantly, sub-section 49(3) provides that the notice period “shall be at least 60 days after the notice is given and shall be the day a period of the tenancy ends.” Given that the APS was entered into on September 21, 2020, the earliest date upon which the tenants could be required to vacate was therefore November 30, 2020. In other words, the tenants could not be required to leave prior to closing. This, of course, does not take into account the time required for the processes of the Landlord and Tenant Board (the “Board”) to take their course should the tenants refuse to vacate as required.
(d) The fifth paragraph of Schedule A also provides that the plaintiff would take possession of and occupy the property “upon vacant possession being provided”, not upon closing or completion. As has been observed, the defendant could not guarantee vacant possession by the closing date, which date was chosen by the plaintiff.
[17] In summary then, Schedule A provides for no deadline by which the requisite notices were to be served on the tenants and, even if served on the very day that the APS was signed, such notices could not have guaranteed that the tenants would vacate by the closing date. In other words, a reading of Schedule A suggests that the defendant was not agreeing to provide vacant possession by closing date, he was agreeing to serve notices “on behalf of the purchaser” who would take possession and occupy the property once it was vacant, which may or may not be by the date set for closing.
[18] I am fortified in this conclusion by several considerations. Of course, the interpretation of the contract is to be guided first by the words chosen by the parties to it. They claim conflicting versions of their intentions when signing the APS, but the court is to derive their intention from the text. This is especially so where the contract contains an entire agreement clause as did the APS in this case. The effect of that clause is to render excluded the acts and statements of the parties which predate the signing of the APS (Soboczynski v. Beauchamps, 2015 ONCA 282, at paras 43 – 46; Sivasubramaniam v. Mohammad & Khudabakhsh, 2018 ONSC 3073, at paras. 54 – 56, affirmed, 2019 ONCA 242). Focusing on the text of the APS then, which gives precedence to the added words of Schedule A in the event of discrepancy, the contract bears the interpretation that vacant possession was not required on closing given that the tenants could not be required to leave by the date set for closing.
[19] This conclusion is supported by the principle that a contract should not be interpreted in a way which would result in an absurdity or illegality, or which would not be commercially sensible, or where the words chosen by the parties were not given meaning (Ledcor Construction Ltd. v. Northbridge Indemnity Insurance Co., 2016 SCC 37, at para. 78; Hillis Oil and Sales Ltd. v. Wynn’s Canada Ltd., 1986 CanLII 44 (SCC), [1986] 1 S.C.R. 57; Kentucky Fried Chicken Canada v. Scott’s Food Services (1998), 1998 CanLII 4427 (ON CA), 114 O.A.C. 357 (C.A.), at para. 27). While the contract could have clearly provided for the delivery of vacant possession on closing,[1] interpreting this APS in that way would mean that the provisions of the fifth paragraph of Schedule A were meaningless and that when the parties agreed that the notices were “requisite” they were nothing of the sort. In my view, the interpretation urged by the defendant is commercially sensible and gives meaning to the provisions of Schedule A: the notices were “requisite” because they were required under the Act in order for the plaintiff to be free of the tenants; the Act in turn provided for a notice period which extended beyond the closing date chosen by the plaintiff; accordingly, if the tenants remained resident at the property at closing, the plaintiff could move to enforce the notices, which, according to the Act, had been served by the defendant “on behalf of” the plaintiff. This interpretation is consistent with the fact that the defendant could not promise vacant possession by the closing date. The interpretation of the plaintiff, by contrast, would have required to the defendant to agree something he could not by law guarantee.
[20] Indeed, events post-dating the signing of the APS confirm the view that a promise of vacant possession would have been unwise. The tenants received the notices from the defendant but declined to move out before closing. The defendant hoped to entice them to move by closing by offering them money. The tenants agreed to leave for a fee but then changed their minds and remained at the property. The defendant sought to enforce that agreement in an application to the Board. The Board’s order was not delivered until January 20, 2021, gave the tenants until January 31, 2021 to vacate the property, and obliged the defendant to wait until February 1, 2021 – well over two months after the closing date – to enlist the assistance of the Sheriff to have the tenants evicted, at which point the tenants could still move to set aside the order and cause even more delay.
[21] While I am not of the view that Schedule A is ambiguous, if I am wrong in this respect, the defendant invites me to consider the doctrine of contra proferentem to resolve any ambiguity about the meaning and scope of the contract against the party who drafted the language which is now in issue (Ledcor, supra, at para. 51; Hillis Oil, supra, at para. 17; Consolidated-Bathurst Export Ltd. v. Mutual Boiler and Machinery Insurance Co., 1979 CanLII 10 (SCC), [1980] 1 S.C.R. 888, at p. 900). It is not disputed that both the closing date and the language of Schedule A were chosen by the plaintiff. In other words, it was the plaintiff who chose to invoke the provisions of the Act, which provisions required the defendant to act on the plaintiff’s behalf, and which were clearly invoked for the benefit of the plaintiff, and yet the plaintiff chose a closing date which would not allow the notice period (let alone any Board proceedings) to be complete by that date. The plaintiff (and/or her representative) must therefore have contemplated (or should have contemplated) when choosing the language of Schedule A, that the property might become vacant after the date she chose for closing, in which case she would have the benefit of the fact that the defendant had initiated the procedure set out in the Act on her behalf so that she herself could seek to have it enforced. The language of Schedule A, which imposes no deadline, is consistent with this interpretation, an interpretation upon which the defendant says he relied because he could not guarantee when the tenants would vacate the property.
[22] Similarly, if the APS is ambiguous on the issue of vacant possession, in which case evidence of the negotiations leading up to the APS – the context in which the APS was signed – may be relevant (see, Kentucky Fried Chicken, supra, at paras. 24 – 26), the plaintiff has not satisfied me that there is no genuine issue for trial. The plaintiff’s affidavit filed in support of the motion is silent on the negotiations and relies solely on her reading of the text of the contract. None of the documents attached as exhibits to that affidavit pre-date the signing of the APS. Moreover, she has tendered no other evidence related to the negotiations. For example, there is no evidence from her real estate agent. The brief cross-examination of the plaintiff by counsel for the defendant does not provide much further illumination of this issue. The plaintiff asserted that it was her real estate agent who proposed the closing date of November 23, 2020. She also testified as follows:
In terms of the tenant that wasn’t my, that’s not my issue. What kind of notice he needed to give his tenants was not my issue.
We put a closing date in for the 23rd and it was accepted, it wasn’t my job to go and see if it’s legally enough notice for the tenants to get out, they weren’t my tenants.
[23] The plaintiff said that she did not discuss the notice period with her real estate agent. Instead, the plaintiff asked what a reasonable time would be and her agent proposed two months. Since the defendant agreed to that date, she assumed it was his problem. She said:
As far as we’re concerned we’re buying a house, it’s empty, we’re going to convert it into a single family home and then – I don’t have to worry about the tenants.
[24] The text of the defendant’s affidavit does address his intentions at the time of the signing of the APS. He deposed that his realtor advised him that he could get more for the property if he were able to deliver it free of tenants but that, as he had other investment opportunities (for which he presumably needed the proceeds of the sale of the property), he “decided to sell for a reduced value with the tenants still present.”
[25] As I have already recounted, the defendant deposed that he had another formal offer for the property which he declined to accept. That offer, dated just two days before the plaintiff’s initial offer, and just four days before the signing of the APS, was for almost exactly the same price ($549,900) as that agreed to by the parties ($550,000). The significant difference, however, was the clear requirement that the defendant deliver vacant possession to the prospective buyer. The defendant deposed as follows:
My Realtor warned me that, because of complications arising from the COVID-19 pandemic, there was the potential that it could be difficult to evict the tenants or to enforce an eviction order. Upon advice of my realtor, I decided not to sign the offer that specified vacant possession was required and, instead, preferred the offer as presented in the Plaintiff’s Agreement.
[26] The defendant further states in his affidavit that he was advised by his realtor that the plaintiffs would take the property even if they had to enforce the eviction of the tenants themselves because they could move into the vacant unit in the duplex while they dealt with the tenants. After hearing this information, the defendant decided to sign the agreement. There is no affidavit from the defendant’s realtor. Moreover, none of this was put to the plaintiff in her examination. However, neither was the defendant cross-examined on this point, i.e., that he acted on what he was told.
[27] At a minimum, then, and assuming the APS is ambiguous, there is an issue for trial. The plaintiff’s version (that the parties intended and the APS contemplated vacant possession) is uncorroborated by anything other than her reading of the contract and the defendant’s version (that the parties did not intend, and APS did not require, vacant possession) while largely uncorroborated, is credibly supported by the documentary evidence of the prior offer he rejected, by his reading of Schedule A (with which I agree), and by the Act.
[28] The bulk of the documentary record on this issue – appended to the affidavits of the parties without much comment – is the correspondence between the parties’ solicitors as the closing date approaches and passes. In other words, it is evidence which post-dates the signing of the APS.
[29] In any case, the plaintiff’s solicitor prepared documents in preparation for closing which assumed and asserted that vacant possession was required. The defendant’s solicitor did not ever concede the correctness of those assertions. Indeed, on the dates fixed for closing, the defendant’s solicitor indicated that the defendant wanted to close the transaction. The defendant signed an undertaking drafted by the plaintiff’s solicitor, striking out the word “vacant” in the clause require delivery of possession of the property on closing. Correspondence from the defendant’s solicitor explained that the APS did not contemplate vacant possession.
[30] It is clear, though, that the parties did attempt to find a solution that would allow the transaction to close on or shortly after the date set for closing given the plaintiff’s insistence on vacant possession. That effort was frustrated by the refusal of the tenants to leave. Moreover, as I noted above, the defendant attempted to persuade the tenants to leave and offered them money to do so. On October 6, 2020, the defendant and the tenants entered into an agreement whereby the tenants agreed to vacate the property by October 31, 2020 in exchange for $3,650.00. Later, when the tenants failed to honour this agreement, the defendant moved to enforce it at the Board (as contemplated under section 79(1)(a) of the Act), eventually succeeding on January 21, 2021 when the Board issued an eviction order. As the defendant deposes, nothing in the APS required him to take these steps. He says, however, that he did so in order to be sure that his involvement with the property was at an end. In this regard, the defendant said that he received advice that “it might be necessary for me, as the former landlord, to assist in evicting the tenants even after the Property was transferred to the Plaintiff” and that he wanted to avoid any lingering responsibility. He was not cross-examined on this understanding.
[31] A further issue arises on the evidence before me. In correspondence to the plaintiff’s solicitor, the defendant’s solicitor reported that the tenants had advised the defendant that the plaintiff had communicated directly with them and had told the tenants that they could leave their belongings in the garage until they found a new place to live. The defendant repeats this claim in his affidavit but adds that the tenants were also contacted by the plaintiff’s lawyer before the closing date and that the tenants reported to him that they believed the plaintiff “would agree to keep them on as tenants.” This, according to the defendant, frustrated his attempts to convince the tenants to leave. On cross-examination, he maintained that the tenants told him that the plaintiffs might let them stay in the property. Nothing in the exchange of correspondence denies these assertions, nor does that plaintiff address the claim in her affidavit. On cross-examination, the plaintiff confirmed that her solicitor had contacted the tenants about their intentions. She denied that she personally had ever told the tenants that they could stay or keep their belongings in the garage, but there is no evidence from the tenants or from the plaintiff’s solicitor about their communications.
[32] Last, the defendant asserts that the true reason for the failure of the transaction is that the plaintiff discovered after the APS was signed that her mortgage funding for the purchase and the insurance she arranged for the property were contingent on vacant possession. Under cross-examination, the plaintiff confirmed that the terms of the mortgage required insurance, that the insurance available to her required that there be no tenants, and that she started looking for insurance after the signing of the APS.
[33] In summary then, the evidence post-dating the signing of the APS reveals (1) the defendant asserting that the APS did not require that he deliver vacant possession, (2) that he took steps in any case to find a solution to the problem since he wanted the transaction to close, (3) that the plaintiff’s solicitor may have suggested to the tenants that they could remain in the property, and (4) that the transaction may have failed to close because of the requirements of the plaintiff’s mortgage funding. At a minimum, each of these points raises an issue for trial. The minimal record before me, including the very short cross-examinations, does not allow me to draw any conclusions on most of these issues.
[34] For all these reasons, with respect to the alleged breach of the APS, I am of the view that the plaintiff has failed to establish that there is no genuine issue for trial. Indeed, I am of the view that the APS bears the interpretation urged by the defendant.
Specific Performance
[35] Having concluded that the plaintiff has not shown that the defendant breached the APS, it may be unnecessary for me to consider the plaintiff’s claim for specific performance. However, if I am mistaken in my view, I offer the following observations respecting this part of the motion.
[36] A request that the court exercise its discretion to grant specific performance requires that the court consider three factors: (i) the nature of the property involved; (ii) the related question of the inadequacy of damages; and (iii) the behaviour of the parties, having regard to the equitable nature of the remedy (Landmark of Thornhill Ltd. v. Jacobson (1995) 25 (O.R. (3d) 628 (C.A.) at p. 636; Lucas v. 1858793 Ontario Inc., 2021 ONCA 52, at para. 71; Sivasubramaniam, supra, at para. 72).
[37] A consideration of the first factor requires a consideration of the “uniqueness” of the property. In this context, uniqueness is not used literally, but in the sense that there is no readily available substitute for the property in question (Semelhago v. Paramadevan, 1996 CanLII 209 (SCC), [1996] 2 S.C.R. 415, at para. 22; John E. Dodge Holdings Ltd. v. 805062 Ontario Ltd. (2003), 2003 CanLII 52131 (ON CA), 63 O.R. (3d) 304 (C.A.), at paras. 38 – 39; Lucas, supra, at para. 74; Sivasubramaniam, supra, at para. 74). Recent cases demonstrate that uniqueness is more readily established where residential property is in issue given the highly subjective nature of the selection of one’s home and the financial significance of a such a purchase for most people (see, for example, the review of such cases conducted by Charney J. in Sivasubramaniam, supra, at paras. 75 – 92). Having considered these cases, while I doubt that the plaintiff would have difficulty proving uniqueness at a trial of this matter, on the evidence before me, I am not prepared to say that there is no genuine issue for trial at this time.
[38] The plaintiff asserts that the property was unique and that no other property could substitute for it. The plaintiff said in her affidavit that she decided to move her family from Toronto to Hamilton. They chose to live in the neighbourhood where the property is found because the they have several friends who live there. The plaintiff says that the “property setting and structures are unique to me and my family due to its size and location, which is close to transit, services and access to major highways.” She asserts that “there is no comparable in the entire marketplace with respect to the purchase price”, noting that prices have continued to climb since the transaction failed to close. The plaintiff planned to renovate and had contractors visit the property before the closing date. Floor plans were prepared and a structural engineer was engaged.
[39] In support of her assertions about the value of the property, the plaintiff has appended to her affidavit several very brief opinions from realtors obtained in January 2021. Those opinions place the value of the property on a range between $640,000 to $700,000 at that time. An informal text exchange with a realtor in May of 2021 suggests that the property may be worth more than $700,000. It is not clear that any of the realtors visited the property. In any case, none of the opinions indicates what effect, if any, the presence of tenants has on the value of the property, and none of them asserts that “there is no comparable in the entire marketplace.”
[40] Moreover, there is no evidence about how long it took the plaintiff to find the property, about how many other properties she considered, or on how many other properties she offered to purchase (compare the evidence led in Chai v. Dabir, 2015 ONSC 1327, at paras. 7, 27 – 28; McLeod v. Schmidt, [2007] O.J. No. 3039 (S.C.J.), at paras. 21, 23; Silverberg v. 1054384 Ontario Ltd. (2008), 77 R.P.R. (4th) 102 (Ont. S.C.J.), at paras. 138 – 141). In cross-examination, the plaintiff indicated that she did not look for any other property when the transaction failed to close and that she was not at the time of the cross-examination working with a realtor (compare Chai, supra, at paras. 12 – 13, 29; McLeod, supra, para. 23). There is no evidence before me about how competitive or “thin” the market for houses is in the neighbourhood in question (compare Chai, supra, at para. 29). There is no evidence of how many, if any, houses were for sale and at what price on the date the transaction failed to close (see Yan v. Nadarajah, 2015 ONSC 7614, at para. 49; Sivasubramaniam, supra, at paras. 84). There is no expert appraisal evidence (compare Chai, supra, at para. 15). Most of the considerations on which the plaintiff relies are bald or generalized statements that might apply to many houses.
[41] To show that the property is not unique, the defendant has provided evidence of multiple properties listed for sale on or near the street on which the property is found in the period following the failed closing date. Some of the properties appear to me to be within the affordability range with which the plaintiff was operating at the time that the transaction failed to close (see: Walker v. Jones (2008), 2008 CanLII 47725 (ON SC), 298 D.L.R. (4th) 344 (Ont. S.C.J.); Lucas, supra, at para. 74; Sivasubramaniam, supra, at paras. 84 – 92) but there has been little analysis of whether and why, or why not, any of those houses was a satisfactory substitute for the property. On this issue, in my view, neither party has put their best foot forward.
[42] Accordingly, I cannot conclude that there is no genuine issue for trial with respect to the issue of uniqueness. Further, I note with respect to the issue of the beahviour of the parties, I have already concluded that I am unable to make findings on the question of whether the plaintiff or her lawyer frustrated the ability of the defendant to convince the tenants to vacate the property. This issue may have some bearing on the third of the three factors listed in Landmark of Thornhill, supra.
Conclusion
[43] As I have found that the APS was not breached by the defendant, the plaintiff’s motion fails. Rule 20, however, permits me to grant summary judgment against the moving party (Alof v. Ikeno, 2014 ONSC 2087, at para. 25; Hazel v Rainy River First Nations, 2016 ONSC 5875, at para. 20). Here, the action cannot succeed because it is dependent on the correctness of the plaintiff’s interpretation of the APS, which interpretation I have rejected. Accordingly, I grant summary judgment in favour of the defendant Ahmadi.
[44] If the parties are unable to agree on costs, which I urge them to do, the defendant may serve and file brief written submissions on costs within ten days of the release of this judgment. The plaintiff may serve and file a brief written response within one week of the service if the defendant’s submissions. The defendant’s written reply, if any, to be served and filed within one week of the plaintiff’s response.
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