Toll & Toll v. Nesbitt & Nesbitt Date:, 2012 BCPC 339

Citation: Toll & Toll v. Nesbitt & Nesbitt Date: 20120926 2012 BCPC 0339 File No: 1240360 Registry: Prince George IN THE PROVINCIAL COURT OF BRITISH COLUMBIA BETWEEN: DEAN ALAN TOLL and BONNIE LENORE TOLL CLAIMANT AND: ART NESBITT and DIXIE NESBITT DEFENDANT REASONS FOR JUDGMENT OF THE HONOURABLE JUDGE D. J. O'BYRNE Counsel for the Claimants: G. Wright Appearing on their own behalf: A. Nesbitt and D. Nesbitt Place of Hearing: Vanderhoof , B.C.

Date of Hearing: August 27, 2012 Date of Judgment: September 26, 2012 [ 1 ] This is an action brought by the Claimants (“the Tolls”) to recover damages from the Defendants (“the Nesbitts”) as a result of a failure of the Defendants to complete the purchase of 160 acres of land and outbuildings at 1965 McNolty Road near Vanderhoof, British Columbia from the Claimants/Vendors.

FACTS [2] In early September 2011, Mr. Art Nesbitt attended at Vanderhoof, British Columbia, seeking some commercial property thatwould be suitable for processing beetle kill pine wood. [3] During the course of his investigations, Mr. Nesbitt went to the Vanderhoof ReMax real estate office, where Mr. Stan Irvineworked. According to Mr. Irvine, Mr. Nesbitt was seeking a site where he could put a plant that would manufacture pre-fabricatedhomes using pine beetle killed wood. [4] After some discussion, Mr. Irvine told Mr. Nesbitt that nothing was listed on the market that met Mr. Nesbitt’s criteria.

Infurther discussions, Mr. Irvine mentioned the 1965 McNolty Road property owned by the Tolls. However, the real estate agent told Mr.Nesbitt that the property was not on the market as of September 2011, nor was it listed for sale. However, Mr. Irvine told Mr. Nesbittthat he had personal knowledge of the property as he had acted for the Tolls when they purchased 1965 McNolty Road in 2008. [5] During this conversation, Mr. Irvine was informed by Mr. Nesbitt that he had a realtor, Penny Isabel. Mr.

Irvine realized thatany commission that would come to him would have to be from the Vendors, the Tolls, so he took steps to contact the Tolls and arrangea viewing of the property by Mr. Nesbitt. [6] Before Mr. Nesbitt viewed the property, an old Listing Agreement from 2008 for the McNolty Road property was provided toMr. Nesbitt (a copy of this Listing Agreement was marked at Tab 8 of Exhibit A). This listing agreement had been drawn up before the2008 sale by another real estate agent. At no time did the Tolls authorize or confirm the contents of the 2008 Listing Agreement.

One ofthe features mentioned in the 2008 listing agreement was the presence of three-phase power on the property. [7] Mr. Nesbitt viewed the property on September 14, 2011, taking measurements and inspecting all of the equipment, includingthe electric converters that converted the single-phase power to three-phase power. [8] By an offer titled Contract of Purchase and Sale drawn by the realtor, Penny Isabel, and dated September 17, 2011, the Nesbittsoffered to purchase the McNolty Road property from the Tolls for $300,000.00 subject to review of the current title, financing, andinspection.

Of particular note, is that within the included items in paragraph 7 of the offer, the electrical converters were specificallymentioned as being part of the sale. Of equal significance, the requirement for three-phase power was not included as a subject-toclause, nor was an electrical engineering report included as a subject-to clause. [9] The initial offer at $300,000.00 resulted in price negotiations with the final purchase price being agreed upon at $330,000.00with a deposit of $15,000.00 to be made.

The subject-to clauses were to be removed on September 30, 2011 (see Exhibit A, Tab 1). [10] By a document dated September 30, 2011, signed by both the Nesbitts, the subject-to clauses were removed and the sum of$15,000.00 was deposited with the purchasers’ realtor.

The completion of the sale of the McNolty Road property was to occurNovember 30, 2011. [11] However, by an email dated November 22, 2011, the realtor for the Nesbitts advised the realtor for the Tolls that the deal couldnot be completed as agreed due to the absence of “true” three-phase power as opposed to converted single-phase to three-phase power(see Exhibit A, Tab 7). [12] Shortly after the Nesbitts advised that they were not going to complete the Contract of Purchase and Sale on November 30,2011, the Tolls received an offer from a third party to purchase the property for $300,000.00. This offer was, as Mr.

Toll described it, a“take it or leave it” offer not subject to negotiation. The Tolls accepted the offer and sold the land for $300,000.00. [13] The Tolls now seek compensation for the reduced sale proceeds from $330,000.00 to $300,000.00, namely $30,000.00. Inorder to stay within the monetary jurisdiction of the Provincial Court Small Claims Division, the Tolls have reduced their claim from$30,000.00 to the statutory maximum of $25,000.00.

ISSUES What is the measure of damages for breach of contract? [14] There is no doubt that the parties had a binding contract for the purchase and sale of 1965 McNolty Road, Vanderhoof, BritishColumbia. [15] Although Mr. Toll and Mr. Nesbitt both acknowledge that neither of them really knew the significance of converted three-phasepower, all the parties proceeded on the assumption that the sale would complete. [16] The subject-to clauses made no reference to electrical inspection or the presence of “true” three-phase power as opposed toconverted three-phase power.

Once the subject-to clauses were removed and the $15,000.00 deposit paid into trust, the Vendors had aright to believe that the sale would complete at the agreed to sale price of $330,000.00. When the Purchasers repudiated the contract andadvised they were not going to complete, the Vendors accepted the anticipatory breech and sold the property for $300,000.00;$30,000.00 less than the agreed price with the Nesbitts. [17] An assessment of damages is an exercise in fact-finding (see Northern Thunderbird Air Inc. v.

VanHaren 2011 BCSC 837, 2011 B.C.S.C. 837 at paragraph 3). [18] Here, the facts show that the subject property was not listed at the time of the entering into the contract. On the evidence of Mr.Irvine it took two to three years to sell the property in 2008. I was not provided with any appraisal showing the value of the property, norwas I given the assessed value even from the property taxes. So what I am left with is an un-appraised rural commercial property, notlisted for sale, without any asking price, and no direct evidence of fair market value.

[ 19 ] In Waddam’s Law of Damages, second edition, the issue of the measure of damages in an action for damages by a vendor of land is addressed at pages 13-5 and 13-6 and specifically at paragraphs 13.100 to 13.110. Based on the authorities listed there, I find that “while a seller is normally entitled to recover the difference between the contract price and the market price” ... “it was not just for the defendant to have to pay the full price in the absence of showing what the actual value of the land had been.” (See 100 Main Street v. W.B. Sullivan Construction Ltd. (1978) 88 D.L.R. (3d) per Morden, J.A.) Mr.

Justice Morden continued at pages 22 and 23 as follows: The basic principle is that the onus is on the plaintiff to prove its damages on a reasonable preponderance of credible evidence. Its damages are that sum of money which would put it in the same position as if the defendant had performed. The well-established method for determining this is to give the difference between the contract price and the market value. It is basic that the plaintiff cannot have the contract price and the land.

Thus, I do not think that the plaintiff has proven its case by merely proving the contract price and then the defendant’s breach, in the expectation that he will recover the full price unless the defendant proves that “the property could be sold to someone else without loss to the plaintiff”… As I have said, with respect to the issue of mitigation, the onus is on the defendant. However, the onus on the defendant to prove failure to mitigate does not relive the plaintiff from proving an obvious element in the calculation of his damages.

McGregor on Damages … puts the matter this way: “The onus of proof on the issue of mitigation is on the defendant. If he fails to show that the plaintiff ought reasonably to have taken certain mitigating steps, then the normal measure will apply.” Included in the “normal measure” is the difference between the contract price and the market price. Thus, I think that the proper course is for the plaintiff, in presenting its case, to adduce evidence of the contract price and of the market price or resale price upon which he relies in establishing the loss of bargain.

The onus is then on the defendant to show, if he can, that if the plaintiff had taken certain reasonable mitigating steps the damages would be lower. [ 20 ] The purpose of awarding damages to an innocent seller is, as much as possible, to put the vendors in about the same position as they would have been had the sale completed. Damages are not intended to be a windfall for the vendors, but rather, they are intended to be compensatory in nature although not necessarily completely. [ 21 ] I note that the original offer by the purchasers was for $300,000.00. Negotiations increased that to $330,000.00.

A deposit of $15,000.00 was agreed upon between the parties. The vendors have reduced their claim from $30,000.00 to $25,000.00 to come within the Small Claims jurisdiction. [ 22 ] Although the Defendants had filed a counter-claim for the return of their $15,000.00 deposit and other expenses related to their aborted attempt to purchase the property, they did not pursue it at trial. Accordingly, I dismiss the Defendants’ counter-claim. [ 23 ] However, the deposit of $15,000.00 certainly represents some measure of the significance of the offer and the sincerity of the purchasers at that time.

Awarding the entire deposit to the Claimants as damages would be a good first step in compensating the Claimants for the failure of the Purchasers to complete the sale. Should the Claimants be further compensated above the $15,000.00 deposit? [ 24 ] Here, I again stress that the purpose of the damages award is to place the claimant in approximately the same position that they would have been had the sale completed. [ 25 ] In the original sale, the Tolls would have expected to pay a commission to Mr. Irvine, the real estate agent who put the parties together.

I have no evidence of such commission being payable to Mr. Irvine on the subsequent sale after the repudiation of the contract by the Nesbitts. Accordingly, given that I do not have sufficient evidence to directly gauge the quantum of the loss to the Claimants, I find the appropriate measure of the damages is $20,000.00. ORDER 1. Judgment to the Claimants in the sum of $20,000.00. 2. The deposit of $15,000.00 held by Prudential Sussex Realty is to be paid out forthwith to the solicitor for the Claimants. 3. The counter-claim of the Defendants is dismissed. 4.

The Claimants shall have their filing fees and service costs. _______________________ D. J. O’Byrne Provincial Court Judge