2024 QCCQ 115, 2024 QCCQ 115

Segal c. Zhong 2024 QCCQ 115 JG2338 COURT OF QUÉBEC Small Claims Division CANADA PROVINCE OF QUÉBEC DISTRICT OF BEAUHARNOIS LOCALITY OF SALABERRY-DE-VALLEYFIELD Civil Division No. : 760-32-702317-225 DATE : JANUARY 15, 2024 BEFORE THE HONOURABLE PHILIPPE DE GRANDMONT, J.C.Q. EDUARD SEGAL Plaintiff v. XIU YUN ZHONG Defendant and KATE FREITAG Impleaded Defendant JUDGMENT [ 1 ] Mr. Eduard Segal complains that Ms.

Xiu Yun Zhong did not follow through on a promise to purchase pursuant to which she undertook to sell to him, and he undertook to purchase from her, an immovable located in Vaudreuil-Dorion (the “Property”) . [ 2 ] He claims damages in the amount of $15,000 on account of lost opportunity costs as well as expenses incurred in purchasing an alternate property to house his family. [ 3 ] Ms. Kate Freitag is the broker appointed by Ms. Zhong for the purposes of the sale. Through her declaration of intervention, Ms. Zhong seeks to be indemnified by Ms. Freitag of any damages she may be condemned to pay.

QUESTION AT ISSUE [ 4 ] To decide the present case, the Court will answer the following question: h as Mr. Segal fulfilled the conditions set forth in the promise to purchase ? ANALYSIS [ 5 ] As of February 12, 2020, a promise to purchase is entered into by and between Mr. Segal and Ms. Pamela Toussaint, as buyers (the “Buyers”), and Ms. Zhong and Mr. Dean Gagné, as sellers (the “Sellers”) . Ms. Toussaint and Mr.

Gagné are not party to the present proceedings. [ 6 ] The agreed purchase price is $530,000. [ 7 ] This promise to purchase contains an undertaking by Sellers to take, as soon as possible, all steps necessary to obtain a hypothecary loan of $400,000 secured by a hypothec, and to supply to the Sellers, within ten days, with a copy of the undertaking by a lender to grant the Buyers such loan. [ 8 ] It further provides that receipt of such an undertaking within such 10-day period shall have the effect of fully satisfying such condition (“Clauses 6.1 and 6.2”). [1] [ 9 ] The Buyers and Sellers also agree as follows: In the absence of proof of such an undertaking, the SELLER may, within a period of five (5) days following the expiry of the period set out in clause 6.2 or following receipt of a notice of refusal, notify the BUYER, in writing:

a) that he is requiring the BUYER to file immediately, at his expense, with a hypothecary lender designated by the SELLER, a new application for an hypothecary loan conforming to the conditions set out in clause 6.1. Should the BUYER not succeed in obtaining, within the time period specified in the SELLER’s notice, a written undertaking from that hypothecary lender to grant the BUYER the loan applied for, this promise to purchase shall become null and void. However, the receipt of such an undertaking within that period shall have the effect of fully satisfying the conditions of this section;

OR

b) that he renders this promise to purchase null and void. (…) [2] [ 10 ] On February 21, in addition to a telephone call, Ms. Freitag and Mr. Segal have an exchange by text messages [3] , in which she writes: “Call your mortgage broker. This guy said he has financing.” She is referring to a third-party offeror who has offered to purchase the Property. According to Ms. Freitag’s testimony, t his competing offer is all-cash, with proof of funds. [ 11 ] Mr. Segal later replies: “I was thinking we qualified only for 400k mortgage the 130 has to come from us, whether from sale of house or from personal funds.

I’ll find out but I am pretty sure that’s the case. So I dont think I can use your extension”. [ 12 ] Ms. Freitag replies: “Call the man. Ask the questions.”, thereby referring to Mr. Segal’s mortgage broker. [ 13 ] On February 22, Ms. Freitag sends another text message to Mr. Segal, writing: “(…) Did you get in touch w[ith] your mortgage broker?”, to which the latter replies: “Yes but he said exact same thing, we have 23k and 25k debt on cars so 48k total. So will not be possible 530 without at least 100k down (…).” [ 14 ] The same day, Ms. Freitag writes the following by email to Mr.

Segal: “This is just a follow up email regarding our phone conversation last night, Friday February 21st at 9 pm. As discussed we received an offer. His financing was also provided, therefor the 72 hours clause began when I verbally told you over the phone.” [ 15 ] On February 24, Ms. Freitag sends another text message to Mr. Segal, asking: “Wondering if anything movement happened on your end to save this situation?” Mr. Segal replies: “When 72 hours expire?” [ 16 ] In their exchanges, Ms. Freitag and Mr.

Segal refer to “72 hours” and the “extension”, under the incorrect belief [4] that the Buyers have been granted a right of first refusal with a 72-hour notice period upon acceptance of a competing offer. [ 17 ] On February 26, the Sellers give the Buyers written notice, pursuant to clause 6.3

b) of the promise to purchase, that they render such promise null and void. [ 18 ] Mr. Segal files into evidence a document titled “ Confirmation de prêt hypothécaire préautorisé ”, dated January 7, 2020, addressed to Ms.

Toussaint and himself, whereby The Toronto-Dominion Bank (the “Bank”) confirms to them that they are admissible to a residential hypothecary loan in an amount of $610,000. [ 19 ] From the facts above, the Court draws the following conclusions. [ 20 ] The “ Confirmation de prêt hypothécaire préautorisé ” document does not satisfy the requirements of Clauses 6.1 and 6.2. [ 21 ] By its terms, it constitutes a ‘pre-approval” confirmation whereby the Bank confirms the Buyers’ admissibility to a loan, but does not constitute a certain and specific undertaking by the Bank to grant a loan to the Buyers.

It is not Property-specific and remains subject to several conditions, including an eventual valuation of the property contemplated for purchase (the identity of which is unknown at the time of issuance of this document) and the satisfactory outcome of a solvency investigation. [ 22 ] Perhaps more importantly, there is no evidence that such document was ever provided to either Ms. Zhong or Ms.

Freitag, or to both of them. [ 23 ] In addition, the Buyers did not satisfy the Clauses 6.1 and 6.2 condition within the 10-day delay, neither did they satisfy the same within the additional three-day delay they were granted by the Sellers, despite not being entitled thereto. [ 24 ] Further, there is no evidence that Mr. Segal ever received from a financial institution the kind of undertaking required by Clauses 6.1 and 6.2.

On the contrary, the aforementioned text messages demonstrate, on the balance of probabilities [5] , that the Sellers’ overall financial situation and indebtedness resulted in them being unable to fulfill their financing obligations pursuant to the promise to purchase, being a cash down payment of $130,000 together with a new loan of $400,000. [6] [ 25 ] Mr. Segal alleges that Ms. Freitag had a duty to remind him of his responsibilities under Clauses 6.1 and 6.2. It is not necessary to determine whether Ms.

Freitag indeed had such a duty, because in any event the evidence shows unambiguously that she gave him several reminders of the importance of securing hypothecary financing towards his intended purchase. [ 26 ] The law provides that parties shall conduct themselves in good faith both at the time the obligation arises and at the time it is performed. [7] In the case at hand, the Court does not find evidence of a failure on the part of Ms. Zhong to exercise her rights towards Mr. Segal in good faith and without abuse. [ 27 ] Finally, the Court rejects Mr. Segal’s contention that Ms.

Zhong was obliged, under clause 6.3

a) of the promise to purchase, to require the Buyers to file immediately a new application for a hypothecary loan, before rendering the promise to purchase null and void. The drafting of clause 6.3 does not suffer from a lack of clarity: the use of the word “may” at the beginning of the clause, combined with the use of the word “ OR ” (in bold typeface) between paragraphs

a) and b), make it clear that the seller has the sole discretion to exercise either, or none, of the rights afforded to him by such paragraphs. [ 28 ] Consequently, the Court finds that Mr. Segal did not fulfill the conditions set forth in the promise to purchase, which was validly rendered null and void by the Sellers, and does not find a fault on the part of Ms. Zhong and Ms. Freitag in the exercise of their respective rights and the performance of their respective obligations in connection with the sale of the immoveable. WHEREFORE, THE COURT: DISMISSES the claim;

WITH LEGAL COSTS awarded in favour of the Defendant and the Impleaded Defendant. Philippe de Grandmont, J.C.Q. NOTICE TO THE PARTIES FILING OF PLEADINGS AND DOCUMENTS Code of Civil Procedure (CQLR, c. C-25.01 ), Art. 108 , 2 nd par.: Any document or real evidence that is filed in the record as an exhibit must remain in the record until the end of the proceeding, unless all the parties consent to its being removed.

Once the proceeding has ended, the parties must retrieve the exhibits they have filed; otherwise, the court clerk may destroy them one year after the date on which the judgment becomes final or the date of the pleading terminating the proceeding. In either case, the chief justice or chief judge, if of the opinion that the exhibits can still be useful, may stay their destruction .