Kisliuk v. Algai, 2023 ONSC 1841 (CanLII)
Background
In Kisliuk v. Algai, 2023 ONSC 1841, the Ontario Superior Court of Justice considered the consequences of a purchaser’s failure to complete an Agreement of Purchase and Sale (“APS”) for residential property.
The plaintiff, Boris Kisliuk, was the Seller of a property located at 368 Highcliffe Drive, Thornhill, Ontario. The defendant, Maytal Algai, entered into an APS dated March 6, 2022, agreeing to purchase the property for $1,960,000.
The APS required a $75,000 deposit, which was paid to the listing brokerage, Signature Realty Inc. o/a Royal LePage Signature Realty, and held in trust.
The original closing date was June 1, 2022, but at the purchaser’s request, the closing was extended to June 13, 2022. The purchaser agreed to pay an extension fee of $1,847, which was never paid.
Despite the extension, the purchaser failed to close the transaction. The Seller was ready, willing, and able to complete the APS but the purchaser failed to deliver the purchase funds.
The purchaser did not defend the lawsuit and was noted in default.
Seller’s Damages Claim
The seller sought damages arising from the failed transaction, including:
- Loss of bargain, being the difference between the original APS price and the resale price;
- Additional costs caused by the failed closing; and
- Release of the $75,000 deposit held in trust.
After the purchaser failed to close, the Seller relisted the property on July 14, 2022 to mitigate his losses.
The property was ultimately resold on August 30, 2022 for $1,800,000, with a closing date of November 30, 2022. The Court accepted that this was the best offer available and represented the market value of the property at the time.
The Court found that the real estate market had declined and awarded the seller:
Loss of Bargain
The difference between:
- Original APS price: $1,960,000
- Resale price: $1,800,000
Award: $160,000
Additional Damages Awarded
The Court also awarded damages for expenses that were reasonably foreseeable consequences of the purchaser’s breach, including:
- Additional real estate commission: $6,554
- Repairs, painting, flooring, and improvements required to remarket the property: $10,124.49
- Staging and photography: $597.77
- Appraisal costs: $904
- Credit provided to the new purchaser for repairs: $700
- Additional mortgage interest: $19,223.50
- Mortgage renewal penalties and charges: $13,088.27
- Additional property taxes: $3,287.20
- Insurance costs: $1,812.20
The Court awarded total additional damages of:
$56,291.43
The Court also awarded the unpaid extension fee of:
$1,847
What Happened to the Deposit?
The $75,000 deposit was forfeited by the purchaser.
Justice Papageorgiou held:
“As a result of her breach, Ms. Algai has forfeited the $75,000 deposit, the Realtor shall release this sum to the plaintiff and this amount shall be credited against the damages awarded.”
The Court relied on the Ontario Court of Appeal decision in Benedetto v. 2453912 Ontario Inc., 2019 ONCA 149, confirming that where a purchaser breaches an APS, the deposit may be forfeited and applied toward the seller’s damages.
Accordingly:
- The brokerage was ordered to release the $75,000 deposit to the Seller;
- The deposit was credited against the damages award;
- The purchaser remained liable for the remaining damages.
Final Judgment
The Court awarded the seller:
| Claim | Amount |
| Loss of bargain | $160,000.00 |
| Extension fee | $1,847.50 |
| Additional damages | $56,291.43 |
| Total damages | $218,138.93 |
| Less deposit credited | ($75,000.00) |
| Remaining damages payable | $143,138.93 |
The seller was also awarded costs of $5,747.45, along with prejudgment and post-judgment interest.
Real Estate Considerations
Kisliuk v. Algai confirms that a purchaser who fails to close an APS may face significant financial consequences. A deposit is not automatically a purchaser’s maximum exposure. Where the Seller suffers a loss because the property must be resold at a lower price, the Seller may claim damages beyond the deposit.
The case also highlights the importance of documenting mitigation efforts. The seller was successful because he demonstrated that he:
- Relisted the property promptly;
- Accepted the highest reasonable offer available;
- Provided evidence of market value through a resale transaction and appraisal; and
- Claimed only costs that were reasonably connected to the purchaser’s breach.
For Sellers, a failed closing can result in recovery of the deposit plus damages. For purchasers, walking away from an APS can expose them to liability well beyond the amount of the deposit.
Brian Madigan LL.B., Broker
www.OntarioRealEstateSource.com