IN THE SUPREME COURT OF BRITISH COLUMBIA

Citation:

Reliance Properties (Coal Harbour) Ltd. v. Austin,

 

2013 BCSC 1056

Date: 20130614

Docket: S116619

Registry: Vancouver

Between:

Reliance Properties (Coal Harbour) Ltd.

Plaintiff

And

Lawrence Austin

Defendant

Before: The Honourable Madam Justice Bruce

Reasons for Judgment

Counsel for the Plaintiff:

C. Nicole Mangan

The Defendant:

Appearing In Person

Place and Date of Hearing:

Vancouver, B.C.
May 31, 2013

Place and Date of Judgment:

Vancouver, B.C.
June 14, 2013


 

INTRODUCTION

[1]             This is an application for summary judgment by the plaintiff. The plaintiff’s claim concerns the failure of the defendant to complete a contract for the purchase of a strata lot located at 2502 – 1499 West Pender Street, Vancouver, B.C. (the “strata lot”) for the sum of $2,710,000 exclusive of GST. The plaintiff seeks damages for breach of contract equal to the difference between the purchase price of the strata lot and the actual sale price realized by the plaintiff when it sold the strata lot on May 5, 2012 for $2,050,000 including HST. The plaintiff also seeks contractual interest as well as the maintenance fees and property taxes which were paid between the completion date (June 9, 2011) and the actual sale of the strata lot.

[2]             The defendant maintains that the plaintiff committed a fundamental breach of the contract for purchase and sale by failing to provide him with a copy of the original disclosure statement prior to the signing of the contract and by misrepresenting the defendant’s ability to assign the property to a third party without restriction.

[3]             The material facts, as supported by sworn evidence before me, are not in dispute. Accordingly, I find this is a case where the summary judgment procedure is appropriate.

FACTS

[4]             In or about March 2008, the plaintiff was in the process of marketing for sale a condominium project to be built at 1499 West Pender Street, Vancouver, B.C. On March 21, 2008, the defendant entered into a contract to purchase the strata lot for $2,710,000 plus GST (the “contract”). The contract consisted of a main document and an attached Appendix A. Along with the execution of the contract, the defendant acknowledged, in writing, an agency relationship with Ina Schonberger and Dexter Associates Realty regarding the purchase and sale of the strata lot. Further, the defendant identified himself and/or assigns as the purchaser of the strata lot because he thought he might assign the strata lot prior to taking possession of it.

[5]             Pursuant to the terms of the contract, the defendant paid a deposit of $271,000 by cheque and was issued a trust receipt by the plaintiff. The balance of the purchase price was to be paid upon completion. Because the sale took place in the context of a pre-sale of the properties, before construction was completed, the completion date was to be determined by the plaintiff. The relevant term of the contract (contained in the attached Appendix A) is as follows:

4.1       The completion of the purchase and sale of the Strata Lot shall take place on the tenth day after the Vendor notifies the Purchaser or the Purchaser’s Solicitors or notary that the Vendor has received an occupancy permit whether temporary, conditional or final (the “Occupancy Permit”) or other document allowing occupancy of the Strata Lot and that a separate title to the Strata Lot has been issued by the applicable Land Title Office which the Vendor presently estimates will be July 31, 2010 (the “Completion Date”). If the Completion Date has not occurred by November 30, 2011, then the Purchaser may, subject to paragraph 4.2 hereof, cancel this agreement, by written notice delivered to the Vendor within 60 days of that date whereupon the Purchaser will be entitled to repayment of the Deposit as the Purchaser’s sole remedy.

[6]             The contract also contained a term that the purchaser acknowledged receiving a copy of the Disclosure Statement for the Development dated August 30, 2007, including any amendments thereto up to the date of the contract (A. 8.1). In addition, this term of the contract indicated that the purchaser had a reasonable opportunity to read the Disclosure Statement before signing the contract. Lastly, the purchaser acknowledged that the signing of the contract constituted a receipt for the Disclosure Statement and an acknowledgment that he had an opportunity to read it. This page of the contract contains the defendant’s initials as do the other pages of the contract.

[7]             A second amendment to the Disclosure Statement was filed on April 27, 2009 and this amendment was sent to the defendant by registered mail on June 16, 2009. Although the defendant did not sign the acknowledgment of receipt until January 10, 2011, he signed the delivery slip for the registered letter containing the amendment.

[8]             Article 9.12 of the contract negated any oral representations or collateral agreements outside its terms:

9.12     Entire Agreement/Representations. The Purchaser acknowledges and agrees that this Agreement constitutes the entire agreement between the parties with respect to the sale and purchase of the Strata Lot and supersedes any prior agreements, negotiations or discussions, whether oral or written, of the Vendor and the Purchaser, and that there are no representations, warranties, conditions or collateral contracts, expressed or implied, statutory or otherwise, or applicable hereto, made by the Vendor , its agents or employees, or any other person on behalf of the Vendor, other than those contained herein and in the Disclosure Statement, including, without limitation, arising out of any sales brochures, models, websites, representative view sets, showroom displays, photographs, illustrations or renderings or other marketing materials provided to the Purchaser or made available for his viewing. …

[9]             In addition to the contractual terms in Appendix A to the contract, the defendant and the plaintiff signed an addendum that indicated the purchase price included two parking stalls; a wine cooler and fridge; an agreement to keep all terms of the contract confidential; and an acknowledgement that a bonus commission was to be paid to the selling agent within 48 hours of the signing of a contract. The defendant also signed an addendum to the contract that indicated his selection for a colour scheme for the strata lot. Lastly, the defendant signed a realtor commission agreement with Ina Schonberger agreeing to a commission of 2.55% on the first $100,000 and 1.1625% on the balance plus a bonus of $30,000. Lastly, on March 25, 2008, the plaintiff and the defendant signed an addendum to the contract indicating the terms upon which the plaintiff agreed to a change in the strata lot’s construction by removing a wall.

[10]         The defendant deposed that he was first approached by Ina Schonberger, who he assumed was a sales agent for the plaintiff, about purchasing the strata lot. He understood that this was the only unsold unit in the development. The defendant says he did not read the contract before signing it and did not receive a Disclosure Statement when he signed the contract or before he signed the contract.

[11]         The defendant deposed that when he attended the display suite with Ms. Schonberger, there were discussions about the terms of the purchase. Whenever he and Ms. Schonberger discussed an item, she went behind closed doors and then returned with confirmation of the requested term. The defendant assumed that she was meeting with another representative of the plaintiff but cannot identify this person.

[12]         Janet Forrester, an agent with Magnum Projects Ltd. (“Magnum”) who was retained by the plaintiff to market the development, deposed that she remembers the defendant came to the display suite with his realtor, Ms. Schonberger, who is in no way connected with Magnum. She also deposed that it is standard practice to provide prospective purchasers with a copy of the Disclosure Statement for the development, including addendums, with all key provisions underlined, before they sign a contract. Further, once the contract is fully executed the purchaser is given an envelope containing the Disclosure Statement, and any existing amendments, the contract and any addendums. She deposed that this is the procedure that would have been followed with the defendant. Lastly, Ms. Forrester deposed that any changes to the defendant’s contract would have been written up as addendums; she would never have entered into oral agreements regarding any terms of the written contract.

[13]         About a year prior to completion, the defendant deposed that he informed Ms. Schonberger of his desire to exercise his right to assign the contract. They had meetings and discussions about the proposed assignment and Ms. Schonberger advised the defendant to contact Jon Stovell, a representative of the plaintiff, about the assignment. Mr. Stovell did not return his telephone calls. At this time the defendant did not believe there were any terms in the contract that restricted his right to assign it to a third party.

[14]         In or about August 2010, the defendant left a letter at the offices of Magnum that indicated he wished to have the opportunity to assign the contract due to some personal circumstances. This letter, dated August 9, 2010, said in part:

At the time when we committed to purchasing the unit, our unit was the last unit sold and we were told we could assign the unit, as long as all units were sold, which they all were by the time we bought our unit. As such, our purchase agreement states the unit could be placed in my name or “Assigns”, which pertains to other owners besides myself.

We would appreciate the opportunity to be able to assign this property as per the original agreement, so we are able to find a new owner who wishes to live in the place and own it, and therefore to facilitate their closing at the time of completion of the property.

We would very much appreciate your assistance and consideration in this matter, and are looking forward to a positive resolution of this matter. Thank you.

[15]         Mr. Stovell responded by letter dated February 5, 2011. In this letter he acknowledged that all of the units had been sold; however, Mr. Stovell reiterated that the contract also required the defendant to secure the plaintiff’s consent before it could be assigned. He advised the defendant that consent would be granted generally on three conditions: (1) the defendant would not agree to change the contract terms with the assignee and would not sell for less than the purchase price; (2) the defendant must enter into a listing agreement with Magnum; and (3) the assignment must be in the form of an assignment and consent and a fee for the consent must be paid by the defendant.

[16]         On May 31, 2011, the plaintiff’s agent (Magnum) wrote to the defendant giving him notice of the completion date. The letter indicated the contract was to complete on June 9, 2011 and possession was to occur on June 10, 2011. When the defendant did not provide the plaintiff with the expected conveyance documents to complete the purchase and sale, its lawyers issued a letter dated June 21, 2011 to the defendant advising him that it was ready, willing and able to complete the contract in accordance with the agreed upon terms. The defendant did not complete the contract but requested a one month extension of the completion date to enable him to find an assignee. The plaintiff agreed to the extension and its lawyer sent another letter to the defendant dated August 12, 2011 confirming a new completion date of September 26, 2011 and a possession date of September 27, 2011. The letter enclosed an addendum to the contract confirming the new possession and closing dates. It also set out the terms upon which the plaintiff would permit the contract to be assigned, which included an assignment fee of 2% of the purchase price, a clause specifying that the vendor would be entitled to all monies paid by the assignee in excess of the original purchase price and a prohibition upon assignment for less than the original purchase price.

[17]         The contract provided that the vendor could elect, at its option, to extend the time for completion or terminate the contract, retain the deposit and sue for damages. In this case, the plaintiff elected to extend the time for completion (A. 9.1(a) and (b)). In addition, Article A. 7 of the contract set out the terms upon which the purchaser could assign his contract to a third party. The first condition was that the strata lot could not be assigned to a third party until all of the lots were sold. In addition, this article mandated the consent of the vendor to any assignment of the strata lot regardless of whether all of the lots had been sold. Where the vendor consented to an assignment, the purchaser was responsible for payment of a handling charge of 1% of the purchase price for the strata lot plus GST (reduced to $1,000 if the assignee was a family member).

[18]         The defendant was not agreeable to the new terms of the addendum to the contract and refused to sign it. However, by letter dated August 23, 2011 he requested a 90 day extension of the completion date in order to secure an assignee. In particular, the defendant was not agreeable to using Magnum as his listing agent.

[19]         The plaintiff agreed to an extension and again its lawyer sent a letter to the defendant changing the completion date to November 28, 2011 and the possession date to November 29, 2011. This addendum to the contract (dated August 24, 2011) reduced the assignment fee to 1% of the purchase price and omitted the term requiring the purchaser to pay to the vendor all monies paid by the assignee in addition to the original purchase price. The plaintiff also agreed to the defendant’s request that he be permitted to use his choice of real estate agent to list the strata lot for sale.

[20]         The defendant did not complete the contract on November 28, 2011 and did not send a written request to the plaintiff for the assignment of the contract to a third party. As a consequence, on March 1, 2012, the plaintiff’s lawyer sent the defendant notice of its election under A. 9.1(a) of the contract to terminate and sue for damages. This letter also indicated that the plaintiff would now attempt to sell the strata lot to mitigate its loss.

[21]         The strata lot was sold on May 5, 2012 for $2,050,000 including HST. The strata lot was listed for sale on MLS as of April 13, 2012 for a price of $2,458,000. The market was slow after the defendant purchased the strata lot and thus the plaintiff was forced to reduce the purchase price in order to resell it. Other comparable lots in the same development sold in April 2012 for $1,964,000 and in October 2012 for $1,636,000. Had the defendant assigned the strata lot promptly, he would likely have secured a higher price for it. In this regard, a comparable lot in the development sold for $2,999,000 in June 2011 and was resold for $3,035,000.

[22]         The original purchase price for the strata lot was $2,845,500 when GST is included. The strata lot was resold for $1,830,357.14 when HST is excluded, but was increased to $2,092,500 when the HST rebate was received by the plaintiff.  Accordingly, the difference in price between the two contracts is $753,000. In addition, the plaintiff paid the maintenance fees for the strata lot from June 9, 2011 until the date of sale, which in total was $5,734.22. The plaintiff also paid the property taxes for the strata lot for 2011 and 2012 pro-rated for part years, for a total of $6,727.10.

DECISION

[23]         The defendant offered two reasons for his failure or refusal to complete the purchase and sale of the strata lot. First, he maintains the plaintiff failed to provide him with a copy of the original Disclosure Statement. Second, he argues it was an express oral term of the contract that he was entitled to assign the contract without restrictions once the development was fully sold.

[24]         I am unable to accept the defendant’s bare assertion that he did not receive a copy of the original Disclosure Statement in light of the terms of the contract, which contain an express acknowledgment that he received this document and had a reasonable opportunity to read it before he signed the contract. Further, the defendant’s assertion is not supported by the standard practice employed by Magnum, which was to provide copies of the Disclosure Statement to any prospective purchaser prior to the execution of the contract. Lastly, the defendant’s assertion is contrary to the formal manner in which the plaintiff provided copies of the subsequent amendments to the Disclosure Statement. These were sent to the defendant by registered mail. Had the defendant not received the original Disclosure Statement, he would have undoubtedly raised this matter with the plaintiff upon receiving subsequent amendments to it by registered mail. There is no evidence that he replied to this correspondence or raised the issue until after the plaintiff elected to terminate the contract and sue for damages.

[25]         I am also unable to accept the defendant’s position that the plaintiff agreed to a special arrangement regarding assignment of the strata lot. First, the defendant is unable to identify anyone associated with the plaintiff who represented to him directly an agreement to amend the contract in this manner. Second, while representations may have been made to the defendant by Ms. Schonberger, she had no connection with the plaintiff or Magnum.  The defendant signed an agreement acknowledging that Ms. Schonberger was his realtor for the purchase of the strata lot. This written acknowledgement is inconsistent with his assertion that he assumed Ms. Schonberger was acting as the plaintiff’s agent. Third, stipulating that the purchaser was either the defendant or an assignee did not alter the express terms of the contract, which required the consent of the plaintiff to any assignment of the contract and stipulated the terms upon which such consent may be granted. Further, the entire agreement clause in the contract (A 9.12) clearly negates any oral agreement that was inconsistent with its express, written terms. The fact that the defendant signed written addendums regarding other terms of the contract is also inconsistent with any oral representations outside of its terms.

[26]         For these reasons, I am unable to find that the defendant was excused from his obligation to complete the contract due to any conduct on the part of the plaintiff. While he may have a cause of action against Ms. Schonberger, if in fact she represented that the plaintiff agreed to a change in the terms of the contract, the defendant has no defence to the plaintiff’s claim.

[27]         The defendant failed to complete the contract on the dates specified by the plaintiff. The contract signed by the defendant provided the plaintiff with a unilateral right to choose a completion and possession date and to extend those dates at its option. In this case, the plaintiff properly notified the defendant of the date for completion and consented to two postponements at the request of the defendant. When the defendant failed to complete after the second extension, the plaintiff properly elected to terminate the contract and sue for damages. This right is clearly granted by A. 9.1(a) of the contract.

[28]         The plaintiff is entitled to damages for breach of contract due to the defendant’s failure or refusal to complete. As a general rule the plaintiff is entitled to an amount of damages that would put it in the same position it would have been in had the contract been performed. This rule is subject to the plaintiff’s duty to mitigate its loss. The plaintiff is also entitled to any consequential loss that flows from the breach of contract and for the reasonable costs of its attempts to mitigate. As recently confirmed in Gagne v. McCarthy, 2011 BCSC 493 at para. 17, the test for determining whether a head of damages is too remote is whether the losses claimed were “reasonably contemplated by the parties as liable to result from the breach” (citing from Baud Corporation, N.V. v. Brook, [1979] 1 S.C.R. 633 at 647).

[29]         While there are several dates at which the court could value the damages incurred by the plaintiff due to the defendant’s failure to complete the contract, the date of the breach is commonly chosen: Gagne at para. 18. I find this date to be appropriate; it causes no injustice to the defendant and is not inappropriate for any other reason.

[30]         The defendant was granted a postponement of the completion date until November 28, 2011. He failed to complete on that date. As of that date, the plaintiff’s loss was equal to the original purchase price of $2,710,000 plus GST. In mitigation of its loss the plaintiff marketed and sold the strata lot. I find its efforts to mitigate were adequate and reasonable in the circumstances. The strata lot had to be sold in a declining real estate market as demonstrated by the falling sale prices of other comparable lots within the development. The net difference between the original sale price and the subsequent sale price is $753,000. The plaintiff is entitled to this amount as damages for breach of contract by the defendant.

[31]         In addition, the plaintiff is entitled to consequential loss equal to the maintenance fees and the taxes paid in regard to the strata lot from November 28, 2011 to the date of completion of the sale to the subsequent purchaser (May 24, 2012). In my view, the plaintiff is not entitled to claim the cost of the maintenance fees and property taxes as of June 9, 2011, the original date set for completion. The plaintiff agreed to postpone completion until November 28, 2011. It is not an express term of their agreement that the plaintiff would be responsible for these costs during the period of postponement. Article 4.3 requires the purchaser to take responsibility for taxes and maintenance fees as of the completion date. There is no exception for cases in which the completion date is extended at the purchaser’s option.

[32]         Addressing interest, A 9.1(b) provides that the plaintiff is entitled to charge 3% per annum above prime on any unpaid balance of the purchase price during any extension of the date for completion. However, this provision does not apply if the plaintiff elects to terminate the contract under A 9.1(a). This clause permits the plaintiff to terminate the contract, retain the deposit and sue the purchaser for any further damages suffered. In my view, without an express clause permitting the plaintiff to charge interest on any unpaid balance, upon termination of the contract, the plaintiff is limited to interest payable by statute. Accordingly, the plaintiff is entitled to interest on the damages awarded pursuant to the Court Order Interest Act, R.S.B.C. 1996, c. 79.

[33]         The plaintiff is also entitled to costs at Scale B.

SUMMARY

[34]         The plaintiff is awarded damages in the amount of $753,000, less the deposit paid by the defendant ($271,000 plus accrued interest), which the plaintiff is entitled to retain by the terms of A 9.1(a) of the contract. Further, the plaintiff is awarded consequential damages for the maintenance fees and property taxes paid for the strata lot between November 28, 2011 and May 24, 2012. The plaintiff is also awarded interest pursuant to the Court Order Interest Act and costs at Scale B.

“Bruce J.”