IN THE SUPREME COURT OF BRITISH COLUMBIA

Citation:	Lally v. Singh,
	2008 BCSC 609

Date: 20080418

Docket: S070226

Registry: Vancouver

Between:

Swaran Kaur Lally

Plaintiff

And:

Gursharan Singh, Harvinder Singh, Manjit Singh Mudhar, Pritam Kaur Mudhar, Bhupinder Litt and Tapestry Realty Ltd. Doing Business As Royal Group Tapestry Realty

Defendants

And:

Bhupinder Litt and Tapestry Realty Ltd., doing business as Royal Group Tapestry Realty

Third Parties

Before: The Honourable Mr. Justice Masuhara

Oral Reasons for Judgment

In Chambers

April 18, 2008

Counsel for the Plaintiff:	R.R.S. Uppal
Counsel for Defendants G. Singh, H. Singh, M. Mudhar and P. Mudhar:	L. Barron
Counsel for Defendants and Third Parties Litt and Tapestry Realty:	D. Plunkett
Place of Hearing:	Vancouver, B.C.

[1]                THE COURT:  These are my reasons for judgment on the two applications heard April 11, 2008 and which the parties agreed should be determined under Rule 18A. 

[2]                In the first, the plaintiff seeks an order that the property located at 10872 on 133A Street in Surrey, British Columbia, by reconveyed into the name of the plaintiff free and clear of any encumbrances.

[3]                In the second, all of the defendants seek dismissal of the plaintiff's action.  Alternatively, they seek an order that the plaintiff's damages be limited to $25. 

[4]                In addition to the affidavits submitted, the parties agreed to certain facts.

[5]                In terms of background, this action arises from a settlement agreement relating to an action started by the defendants Singh, Singh, Mudhar and Mudhar, who I will refer to as the "purchasers," against the plaintiff for specific performance related to the sale of the subject property.  The dispute was resolved at a mediation that took place on November 16, 2006, and the terms of settlement were recorded in the minutes of settlement.

[6]                Mr. Doran was the solicitor representing the plaintiff in the negotiations.  The settlement agreement included the following terms: 

(a)        the sale of the property would be completed at the purchase price of $292,500; 

(b)        the completion, adjustment, and possession date would be December 15, 2006; 

(c)        The $7,000 deposit held in the realtor’s trust account was to be applied to the purchaser's share of the new purchase price and paid to the vendor on December 15th; and

(d)        if the purchaser's failed to complete the transfer on December 15th, it was understood and agreed that the purchasers would forego any and all right, title and interest in the property.

[7]                The purchase price for the property under the Settlement Agreement was stated to be $292,500, the Purchasers were to pay $265,000 and Bhupinder Litt (“Litt”) and Tapestry Realty Ltd. (“Tapestry”) together were to pay $27,500 toward the purchase price.  The purchase price was greater than the original price that was the subject of the action for specific performance. 

[8]                On December 17, 2006, plaintiff's counsel forwarded to counsel for the purchasers fully executed copies of documents received from the purchasers necessary for the transfer of the property.  Counsel for the purchasers registered these documents in the New Westminster Land Title Office on December 15, 2006.  On December 15th, Mr. Barron, counsel for the purchasers, wrote to Ms. Marks, counsel for the realtor defendants Litt and Tapestry, and stated:

We confirm that we are now releasing the $27,500 previously provided by yourself to the vendor solicitor.  Please instruct your client to release the deposit in the sum of $7,000 to the vendor or vendor's solicitor, Robert Doran.  Please contact Mr. Doran 604-542-9455, to confirm who the cheque should be payable to.

[9]                The deposit was not paid to the plaintiff or plaintiff's vendor, Mr. Doran, on December 15, 2006.  The deposit remained in the realtor's trust account.  Mr. Doran, the plaintiff's lawyer at the time, continued to seek payment of the deposit after December 15 on more than one occasion.  Mr. Doran sent a letter on December 29th to the realtor demanding payment of the deposit.

[10]            On the next business day, being January 2, 2007, the realtor Tapestry forwarded to Mr. Doran a cheque for the required amount of $7,000.  Mr. Doran received and accepted the deposit on January 3, 2007, and deposited the cheque into his trust account.  Neither the deposit nor any other funds from the transaction has been returned to the purchasers or to any of the defendants.

[11]            Returning to December 19, 2006; notwithstanding having not received the deposit, counsel for the plaintiff signed and forwarded to counsel for the realtor a consent dismissal order of the original action.  The order was entered January 9, 2007, and no objection prior to that date was provided from the plaintiff or her counsel.

[12]            On December 21, 2006, the plaintiff was aware that her counsel had not yet received the deposit from the realtor.  The plaintiff on that day did not give her solicitor instructions to prevent the transaction or transfer from completing.  The registration of the transfer of the subject property, through the usual process of the Land Title Office, did not complete until December 22, 2006.

[13]            On January 11, 2007, the plaintiff commenced the within action. 

[14]            The critical issue raised by the plaintiff is whether the late payment of the deposit was a fundamental breach.  The position of the plaintiff is that as a result of the failure to pay the total purchase price, the agreement was terminated on December 15, 2006, and that the purchasers gave up any right, title and interest in the property on that date.  The plaintiff argues that this is the result contemplated in the settlement agreement and that it is further supported in the statements of Mr. Manjit Mudhar from his examination for discovery.  The plaintiff further submits that since the agreement was terminated as of December 15, 2006, any arguments raised by the defence regarding waiver is inapplicable.  In support of this proposition, the plaintiff referred to two cases:  Smitty’s Pancake Houses Ltd. v. Marathon Realty Co. 1976 CarswellAlta 288 (Alta. S.C.) and Westward Farms Ltd. v. Cadieux (1982), 16 Man. R. (2d) 219. 

[15]            In response, the defendants argue that the delay in transferring the deposit to the plaintiff was not a fundamental breach of a settlement agreement and therefore the plaintiff's remedy is in damages.  The defendants also argue that the plaintiff's actions through their solicitor waived the right to terminate and to the extent that there was a repudiation, the plaintiff's actions cannot be construed as acceptance of the repudiation.

[16]            In The Law of Contract in Canada (5th ed. 2006) by G.H.L. Fridman, Q.C., the question of fundamental breach at p. 588-589 is commented as follows:

In each and every instance, it is a question of fact whether the breach complained of by the innocent party amounts to a fundamental breach.  That question, in turn, depends upon:  The terms of the contract; the intended benefit to the innocent party; the purpose of the contract; the material consequences of the breach; and, perhaps, though this has never been discussed in the cases, the extent to which the loss incurred by the innocent party can be remedied adequately by an award of damages.  One point is clear.  Whether a breach is fundamental does not appear to depend upon any express terms of the contract.  The determination of a fundamental breach is a teleological question not one that involves construction of the contract in the narrow, literal sense.  The concept of fundamental breach seems to transcend the normal issues of contractual interpretation.  It involves investigation of the underlying nature and purpose of the contract into which the parties have entered, and the respective benefits designed to be obtained or ensured by the agreement.

[17]            The breach must be of a nature that deprives the innocent party of a substantial benefit to which it was entitled under the agreement.

[18]            Having considered all of the foregoing, I conclude that the delay in the payment of $7,000 was not a fundamental breach.  It did not deprive the plaintiff of a substantial part of the benefit to which she was entitled.

[19]            There is no question that Mr. Doran was the agent of the plaintiff in this entire transaction.  The actions of Mr. Doran as solicitor and agent contradicts the argument that the breach was fundamental and at an end.  Rather they indicate the opposite.  There was no communication to the defendants as to Mr. Doran not having any authority.  His actions are consistent with the transaction as entered into and the desire of the plaintiff to complete it.

[20]            Further a review of the settlement agreement and the vendor's statement of adjustments indicate arguably that Mr. Doran was to pick up the cheque for $7,000 as opposed to it being delivered to him. 

[21]            A fundamental breach in any event, if it were to be so found, does not lead to immediate termination of an agreement, an election by the innocent party is required.  In this case, there is no evidence of the acceptance by the plaintiff of an alleged repudiation.  See Agrifoods International Corp. v. Beatrice Foods Inc. [1977] B.C.J. No. 39 and Ainsworth Lumber Co. v. KMW Energy Inc. [2004] B.C.J. No. 1575 (B.C.C.A.)

[22]            Again as I have mentioned, the evidence suggests the opposite.  Accordingly, while this matter was obviously continued the tensions between the parties, the plaintiff's remedy is not as she seeks, but it lies in damages.

[23]            Damages have been calculated by the parties as one of the time value of money, which in this case is in the order of $25.  Accordingly that amount is awarded.  That concludes my judgment.

(Submissions)

[24]            THE COURT:  All right.  In the circumstances, there will be the order for costs as I have indicated, double costs from May the 28th, 2007, to Mr. Barron's clients.  And the regular costs at Scale B for Mr. Plunkett's clients.

“The Honourable Mr. Justice Masuhara”