Dhatt v. Beer (Specific Performance)

Unique

This is an interesting case. The Dhatts as Buyers are suing the Beers as Sellers.

Just prior to closing, Mrs. Beer had “sellers’ remorse and refused tom close. The Dhatts sought specific performance and damages.

The Agreement

Property: 9 Valley Ridge Crescent, Brampton

Date: January 25, 2016

Mr. Beer signed spousal consent (title in Mrs . Beer’s name)  

Purchase price: $835,000

Deposit: $10,000

Closing: May 31, 2016

The Dhatts sold their home in reliance on the closing of this transaction, and had to move, and live in rental accommodation until they could purchase another house. Given the situation, and the fact that the issues were not resolved quickly, they were forced to enter into an APS on July 11, 2016 for the purchase of another house located at 82 Sleightholme Crescent, Brampton.

Unique Features of Property

The Dhatts were a four generation family with two children, parents and grandparents living with them.

Here’s what was considered to be unique:

  • two master bedrooms with en-suite baths
  • two other bedrooms
  • office downstairs which could be converted to another bedroom
  • three-car garage, they have three cars (his, his wife’s and his parents
  • The house was 4300 sq., which would accommodate the extended family
  • unique location
  • big lot houses, in the neighbourhood
  • no high-rises
  • no townhouses
  • less traffic
  • very peaceful
  • two schools nearby, (parents drive the children to school).

Sellers in Financial Difficulty

The Sellers were looking to downsize for a home with four bedrooms, but with a smaller square footage than 9 Valley Ridge Crescent and in the range of $600,000 to $700,000 so that they could pay off their debts and have some money to buy another house.

The Sellers transferred 9 Valley Ridge Crescent from both of their names into Mrs. Beer’s name alone on October 7, 2013, due to the fact that Mr. Beer was facing a lawsuit as a result of a failed business venture.

An action for fraudulent conveyance was brought and the trial Judge Trimble J. found on July 14, 2014 that the conveyance was fraudulent and declared it void.

Madame Justice Brown stated:

“When fashioning a remedy for a breach of contract, the object is to place the injured party in the position that he or she would have been had the contract been performed.

Typically, damages are ordered. However, where damages are inadequate to compensate an injured party for its losses, specific performance may be ordered.

Accordingly, specific performance may be ordered where the subject matter of a bargain is unique or irreplaceable because, in those circumstances, damages may be inadequate.

Specific performance is an equitable remedy.

It is awarded where the property in question is unique to the buyer, in that it has a quality that cannot be readily duplicated elsewhere.

The time to determine whether a property is unique is the date on which the breach takes place, in this case on May 31, 2016, the date the defendants refused to close the transaction:

I am satisfied, given all of the evidence, that this was a residential property that the plaintiffs attached particular significance to, given all of the features and qualities that are above- indicated that made it especially suitable for the proposed use by the Dhatt extended family of four generations. In my view, this evidence, and all of the features of the property described, combined, meet the test of uniqueness contemplated by Semelhago v. Paramadevan,…”

The trial Judge further stated:

“Would Damages Be an Adequate Remedy?

[41]           While the plaintiffs argue that specific performance is appropriate, given the uniqueness of the property to them and the fact that it satisfies all of their needs and specifications, it is further the

position of the plaintiffs that, in the circumstances of this case, damages would be an inadequate remedy.

[42]           Damages in lieu of specific performance are assessed as at the date of trial: Semelhago, supra; Sivasubramaniam v. Mohammad2018 ONSC 3073

[43]           If the defendant is unable to pay the damages award, then however accurate the assessment of the plaintiffs’ losses may have been, the remedy of damages can hardly be described as adequate: 

44]           In the present case, there is sufficient evidence to conclude that the Beers do not have sufficient funds to pay a damages award.

The evidence indicates that the defendants were selling 9 Valley Ridge Crescent in order to pay off debts.

Mrs. Beer indicated that she cannot work.

Her husband’s salary is being garnished.

…. the Beers …. wanted to sell the property to clear off debts. There are numerous writs and executions filed against them…. they could not afford a lawyer.

[45]           In this case, the plaintiffs have calculated the damages award to be $505,335, being the difference between the fair market value today of 9 Valley Ridge and 82 Sleightholme.

In addition, damages would also include the two months rent they paid in the amount of $5000 plus rental of a U-Haul used to transport their possessions during their move in the amount of $66.97, for a total of $510,401.97.  

[46]           Based on the foregoing, and the caselaw regarding inadequacy of remedies,

I find that damages would not be an adequate remedy.

Awarding damages would leave the plaintiffs with a meaningless remedy.

They would be forced to pursue the defendants for damages and, based on the evidence, would be very unlikely to be successful in collecting on or recovering the damages awarded.

[47]           In conclusion, because I have found the property to be unique in any event and in the alternative, I have found that damages would be an inadequate remedy; I award specific performance to the plaintiffs.

[57]           Each party has provided their Bill of Costs. I have reviewed them and find them reasonable.

The plaintiffs are entitled to their costs on a substantial indemnity basis in the amount of $112,347.63 and the third-party defendants are entitled to their costs of the action on a substantial indemnity bases in the amount of $88,178.52. All costs awarded are inclusive of disbursements and HST.

Given all of the circumstances, and the lack of funds on the part of the defendants, all costs awarded are to be paid from the purchase price.”

COMMENT

So, the Dhatt’s deposit of $10,000 was tied up until the legal proceedings were concluded on 1 May 2020.They received the house plus $112,347.63.

The Beers also had to pay their own real estate agent’s costs of $88,178.52, for suing them and alleging “conspiracy” with the Buyers which was never proven.

This added up to $200,526.15 and is to be deducted from the purchase price of the house, therefore ranking those legal costs higher that the executions and debts filed against the property.

That deposit turned out to be a $10,000 lotto ticket!

Brian Madigan LL.B., Broker

www.OntarioRealEstateSource.com

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