In Prowse v. Noroozi 2021 ONSC 3099 (CanLII), Justice McCarthy of the Superior Court of Justice recently granted summary judgment for $806,380.59 against a purchaser of a luxury home in King City (the “Property”) in an aborted real estate transaction.
The facts in Prowse v. Noroozi are not uncommon. The sellers listed the Property on March 15, 2017 for $2,600,000.00. On the same day, the parties entered into an Agreement of Purchase and Sale for $2,450,000.00 (the “Agreement”) which required a series of deposits to be made on certain dates up to the closing date of December 18, 2017. Notably, the Agreement was not subject to a financing condition.
Shortly after entering into the Agreement, the purchaser breached the Agreement as he did not deposit $80,000.00 at the time listed in the Agreement.
Over the next several months, the parties negotiated various amendments to the Agreement to give the purchaser a number of extensions to pay various deposits on different dates and agreed to amend the closing date. A final extension was agreed upon to push the closing to December 3, 2018, almost a year after the original closing date.
On December 3, 2018, the purchaser could not close.
The sellers re-listed the Property and after several price reductions, were only able to sell the Property for $1,600,000.00, a loss of $750,000.00.
The sellers sued the purchaser on March 12, 2019, and later brought a motion for summary judgment.
The court had no hesitation in finding that there was no genuine issue requiring a trial and granted judgment in the sellers’ favor for $806,380.59. Of course, all of the deposits that the real estate agents were holding were released to the sellers to satisfy part of the judgment.
In granting the judgment, the court confirmed that the goal of damages awards in the law of contract is to put the innocent party back into the monetary position it would have enjoyed had the breach not occurred. In this case, the court found that to consist of the following:
- The difference between the original sale price and the new sale price of $750,000.00;
- Staging costs of $8,540.54;
- Property taxes for the property from December 7, 2018 to the closing date of April 16, 2020 for $11,144.00;
- Gas costs for $1,826.77;
- Grass cutting costs for $1,560.00;
- Property insurance for $1,256.56;
- Hydro charges for $819.52;
- Water charges for $765.51;
- Snow removal for $500.00; and
- Gardening costs for $300.00.
From a litigator’s standpoint, while every case will turn on its own facts, the facts of this case are fairly common, and the result is not surprising. But from the perspective of a purchaser who is caught up in a competitive market where buyers are offering to buy properties at $100,000’s more than their listing price, it may be easy to forget the very costly repercussions. This case serves as a reminder of the magnitude of liability that a purchaser may face in such a situation.
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About the Author:
Sahar Cadili is a Partner in Dickinson Wright’s Toronto office. She is a commercial litigator with a focus on shareholder disputes, oppression cases, injunctions, breaches of contract, as well as disputes over land and personal property. Sahar can be reached at 416-646-6875 or scadili@dickinsonwright.com and her firm bio can be viewed here.
