Supreme Court of Canada Maintains Finding: Breach of Contract Due to Purchaser’s Failure to Close on Property

By Slonee Malhotra

Last month, the Supreme Court of Canada dismissed with costs an application for leave related to Teefy Developments (Bathurst Glen) Limited v Sun.1 The Court also dismissed a motion to serve and file new evidence. This case pertains to the purchase of a property from a developer, wherein the purchaser was subsequently unable to get a mortgage due to changes in real estate market conditions. With today’s fluctuating real estate market coupled with volatile interest rates, this case serves as a lesson in retaining sound legal and financial advice before entering into a purchase agreement.

The Purchase

On September 14, 2016, the Appellant, Mei Sun (“Ms. Sun”) signed an agreement of purchase and sale (APS) with the Respondent, Teefy Developments (Bathurst Glen) Limited (“Teefy”).2 Teefy was building a subdivision in the City of Vaughan, and Ms. Sun agreed to purchase a property on it for $1,539,990. The closing date was set for July 9, 2018.

The following day, Ms. Sun contacted Rex Cheng (“Mr. Cheng”) a real estate agent with the brokerage that Teefy hired to sell the homes in the subdivision. Ms. Sun asked Mr. Cheng whether she could revoke the APS on the basis that the property was too narrow. Though Mr. Cheng informed Ms. Sun that she could not revoke the APS, he did advise that she could assign the APS to another purchaser. Aside from this initial outreach, Ms. Sun took no other steps to try to revoke the APS, nor did she consult a lawyer.

Ms. Sun proceeded to pay Teefy deposits totaling $150,000, per the APS. These terms were confirmed on December 16, 2016, when Ms. Sun and Teefy entered into a Novation and Amending Agreement.

The Closing

Under the terms of the APS, Teefy had the right to extend the closing date. It exercised this right twice, extending first to August 15, 2018, and then to October 10, 2018.

In September 2018, Ms. Sun personally sent an email to an executive assistant at Teefy, informing them that she was having trouble obtaining a mortgage and was seeking a buyer for the property. Teefy permitted Ms. Sun to list her property for sale via assignment. Later that month, Ms. Sun emailed Teefy’s vice president, Matthew Castelli (“Mr. Castelli”), claiming that she could not get a mortgage for the property due to market changes. Ms. Sun also attempted to renegotiate the property’s purchase price but Mr. Castelli did not agree to lower it.

Despite multiple requests, Ms. Sun never provided Teefy with the contact information for her real estate lawyer. However, Teefy did eventually receive the contact information of Ms. Sun’s lawyer from Mr. Cheng on September 28, 2018. 

If you have questions, please reach out to one of our qualified Real Estate lawyers such as Slonee Malhotra (slonee@sorbaralaw.com)

 

On October 10, 2018—the closing date—Ms. Sun failed to tender the funds to purchase the property. Teefy provided Ms. Sun with a new closing date of November 7, 2018, to allow her to remedy the breach. By November 7, Teefy did not hear back from Ms. Sun, and so it terminated the APS without prejudice to its right to claim damages.

On November 8, 2018, Ms. Sun’s lawyer emailed Teefy with a request to extend the closing date, but was advised in response that the transaction had been terminated.

In a summary judgment motion, heard on July 22, 2020, Teefy claimed damages for Ms. Sun’s breach of contract resulting from her failure to complete the transaction of the property.3 Ms. Sun submitted that Mr. Cheng exercised mental pressure, undue pressure, and compulsion towards her in addition to taking advantage of her vulnerability. All of this she claimed led her to sign the agreement.4

The Superior Court found that Ms. Sun had numerous opportunities to not proceed with the transaction. Moreover, she never raised allegations about undue pressure or other pretensions.5 Ms. Sun also chose not to exercise her option to assign the APS. Consequently, the court granted Teefy’s claim for $194,155.60 for losses suffered; arising from selling the property to another purchaser at a lower price than what Ms. Sun agreed to purchase it for.6

Appeals and Applications

Ms. Sun brought a motion to the Ontario Court of Appeal to extend the time she had to appeal the case.7 As set out in Enbridge Gas Distribution Inc. v Froese, the test for extending the time for an appeal relies on the principle of whether the “justice of the case” necessitates that an extension be given.8 A single judge ruled that Ms. Sun failed to meet her obligations to satisfy the necessary factors that would warrant extending the time for an appeal. The judge dismissed the extension and awarded costs of $7,500, inclusive of disbursements and HST, to Teefy.9

Ms. Sun then sought a panel review of the order from the Court of Appeal judge.10 In addition, she also sought to admit fresh evidence. The court in Asghar v Toronto (Police Services Board) held that, absent a legal error or misapprehension of material evidence, a judge's decision is an exercise of discretion entitled to deference and non-interference by a reviewing panel.11 The panel found no errors made by the motion judge and no satisfactory explanation about why the new evidence could not have been submitted with the initial motion to extend the time to appeal. For these reasons, the court dismissed the review motion and the motion to admit fresh evidence, with $5,700 in costs awarded to Teefy.12

On April 17, 2023, all of the materials for the leave to appeal application and a motion to file new evidence were submitted to the Supreme Court of Canada for consideration.13 On May 18, 2023, the Court dismissed both the motion and the application, with costs.14

Conclusion