11970593 Canada Inc. v. LJ Homefinders and Property Management Inc., 2021 NSSM 51

IN THE SMALL CLAIMS COURT OF NOVA SCOTIA Citation: 11970593 Canada Inc. v. Freeman , 2021 NSSM 51 Claim No: SCCH 20- 502266 BETWEEN: 11970593 Canada Inc. and LJ Homefinders and Property Management Inc.

Claimants - and – Jennifer Freeman and Deryk Freeman Defendants Jonathan Wright appeared for the Claimant Donn Fraser and Natasha Schigas appeared for the Defendants DECISION ON DEFENDANTS MOTION FOR NONSUIT [ 1 ] This matter came before me for hearing on June 14th, 2021, and June 17 th , 2021 via a Teams video platform. [ 2 ] For the reasons below, I am granting the Defendant’s motion for a nonsuit. [ 3 ] The dispute between the parties arises out of a property transaction for a house located at 315 Marsh Street, New Glasgow, Nova Scotia (the “Property”).

The proposed purchaser was a numbered company, 11970593 Canada Inc. [ 4 ] The claim before this court is made on behalf of both claimants, by Mr. Jonathan Wright, who is the President of both entities. [ 5 ] On June 14 th , 2021 I heard evidence from Mr. Wright and his witnesses. Exhibits were filed and all were subject to cross- examination. Mr. Wright than closed his case. [ 6 ] Mr. Wright in his evidence explained that his business, LJ Homefinders, is used to purchase investment properties.

The evidence tendered established that an offer was made for the Property by LJ Homefinders & Property Management Inc (LJ Homefinders) on August 6, 2020 in the amount of $105,000. A counteroffer in the amount of $109,000 was made and accepted, with a closing date of September 30, 2020, and an Agreement of Purchase and Sale (the PSA) was executed reflecting that agreement. [ 7 ] After an inspection completed August 15, 2020, various issues were identified concerning the state of the building on the Property. An amendment to the PSA was made August 21, 2020, with the following relevant agreements:

a. The seller at the seller’s expense agrees to have the roof shingles replaced and all broken/missing soffits to be replaced on or before closing. All of said work to be completed by a professional with receipt. b.

The sellers, at the seller’s expense to have the rotten and cracked roof deck boards replaced as well as the gap filled in between the boards at the same time the roof shingles and missing soffits are replaced. [ 8 ] That same day, a $1000 deposit was paid by LJ Homefinders. [ 9 ] The evidence suggests that the effects of the 2020 COVID 19 pandemic made getting the roof done in the fall of 2020 a challenge.

A closing date of October 22, 2020 was agreed upon. [ 10 ] On October 20, 2020 a further extension was granted to November 5 th , 2020. [ 11 ] On November 5 th , 2020, the Defendant provided a paid invoice showing work performed by EW Roofing & Renovations, for “rip and tear lower and upper main roofs”, and “soffit inspection”, plus materials and labour, for a total of $8,957.60. [ 12 ] On that same date, Mr. Kevin Everill, of K2 Property Management (who testified on behalf of the Claimant before me), contacted Mr.

Wright to indicate that he thought the work was incomplete, and in fact needed to be redone, and he estimated a total cost of $8125.00. [ 13 ] Conversations between counsel for the parties ensued, Mr. David Melvin for LJ Homefinders, and Mr. Mark Comeau for the Freemans. Mr. Melvin’s paralegal wrote to Mr. Comeau’s paralegal to say that their client was not happy with the repairs, and proposed “a holdback of $9,343.75 to complete the remediation work and will supply an invoice for payment”. [ 14 ] Mr.

Comeau’s paralegal replied that the issues appeared to relate to porches and dormers, and that the client had only agreed to replace main roofs and would not agree to a holdback. [ 15 ] Mr. Melvin wrote himself an hour later that same day stating his client’s belief that the agreement was for all of the shingles, but that his client was “ready, willing and able to close provided this is properly addressed”. [ 16 ] The closing was extended to November 6 th , 2020 to allow for further attempts to resolve the issue. [ 17 ] On that date, closing funds were provided to Mr.

Comeau, with the escrow condition that they be held in trust “pending an agreement being reached on addressing the roofing issues”. [ 18 ] The matter did not get resolved, Mr. Comeau returned the closing funds, and the Defendants refused to return the deposit. [ 19 ] The above facts formed the narrative relevant to the application before me. At the close of Mr. Wright’s case on June 14 th , 2021, Mr. Fraser stated his intention to apply for a nonsuit on the grounds that Mr. Wright had not proven an arguable case.

The hearing of the nonsuit application was set down and heard on June 17th, 2021, at which time I heard argument from both Mr. Wright and Mr. Fraser. Nonsuit applications: [ 20 ] Both parties provided authorities establishing the test for nonsuit. The authorities in those common law decisions is best summarized in Civil Procedure Rule 51.06 as follows:

51.06 Non sui t

(1) At the close of the plaintiff’s case and before the defendant elects whether to open the defendant’s case and present evidence, the defendant may make a motion for dismissal of the proceeding, or a claim in the proceeding, on the ground that there is no evidence on which a properly instructed jury could find for the plaintiff. [emphasis added] [ 21 ] In layperson’s terms, the test for nonsuit is whether the claimant has led any evidence which on a balance of probabilities could lead a reasonably informed decision maker to find in favor of the claimant, if the evidence up to that point in the proceeding is accepted as true. [ 22 ] The test is a limited inquiry, and a question of law, in which two results are possible: [ 23 ] If the Claimant has brought forward some evidence which is sufficient to ground a finding in their favour, assuming the evidence is true and the decision maker draws all reasonable inferences in favour of the plaintiff, the motion for nonsuit will be dismissed. [ 24 ] If by the same standards the Claimant fails to prove any evidence which can result in a finding for the claimant, then the nonsuit application will succeed and the claimant's claim will be dismissed.

The Claim: [ 25 ] The Claimant says that the Defendant sellers were at fault by not fulfilling the terms of the PSA. The Claimant claims the following: Deposit: $1000.00 Inspection fee: $517.50 Travel costs for pre-close inspection: $141.60 Opportunity loss: $28,340 Application Fee: $199.35 [ 26 ] The total claim is for $31,466.95, reduced to the statutory maximum of $25,000 available in the Small Claims Court of Nova Scotia. [ 27 ] The Defendants filed a Defence and Counterclaim.

The Defence denies all allegations, and alleges that by its actions LJ Homefinders repudiated the PSA, which repudiation the Defendants were entitled to accept, and that they therefore did so. The Defence further alleges that the deposit is therefore forfeited to the Defendant based upon that repudiation.

Finally, it alleges that 11970593 is not a proper party to the claim. [ 28 ] The Defendant’s Counterclaim alleges that an agent of the Claimant, K2 Property Management and Renovations, entered the property on several occasions in January of 2021, representing themselves as the property manager, cutting the padlock to enter the basement and conduct work on the furnace system, and instructing tenants to make month payments to K2 for the benefit of the Claimants and Mr. Wright. Damages resulting and particulars of monies sought are to be provided at the time of hearing.

Applying the test for nonsuit: [ 29 ] The evidence provided makes it clear that this real estate transaction collapsed. It collapsed with both parties alleging that the other failed to meet its obligations. The Claimant says that the Defendant breached by not satisfactorily fulfilling the conditions relating

to repairing the roof. The Defendant says that that Claimant breached by not closing on November 6 th , 2021. [ 30 ] Applying the standard of assuming the evidence led by the Claimant to be true, it is on the one hand arguable that the roof repairs were not what was expected. The evidence makes it clear that the Claimant did not close on November 6 th , 2020. [ 31 ] To avoid a nonsuit, Mr. Wright must be able to prove evidence which can result in any finding for the Claimant.

Proof of even one head of damages will be sufficient. [ 32 ] The only part of the claim that I consider had any chance of succeeding on the evidence before me, was the claim for the damage deposit. Losses claimed relating to lost opportunity, described as nonpurchase of other properties including one in Moncton, NB, regarding which evidence was led by Mr. Wright, are too remote to attract compensation. I find that the evidence supports that like many investors in real estate, Mr. Wright’s company had multiple properties in consideration.

Not every transaction will be successful, and vendors are not required to indemnify via the PSA the external investment choices made by purchasers. [ 33 ] It goes without saying that when the Claimant is the cause of the breach, such a claim could not succeed in any event. [ 34 ] The same applies to the costs of inspection and travel, inspection being a necessary expense in no way caused by an incorrect act by the Defendants, and travel costs, which are simply a cost of doing business which the Defendant had not undertaken to be liable for by way of the PSA. [ 35 ] So what is left, is the deposit.

Could LJ Homefinders claim for return of the deposit on the evidence shown? I find that it cannot. The law is clear that failure to complete an obligation arising under a PSA is not an option where a fundamental term is not triggered. [ 36 ] Even if the roof repairs were not completed to a desired standard, that does not relieve the Claimant from the obligation of closing, nor does it justify reopening negotiations to (quoting the Honourable Justice Locke in Fraser v. Gill, [1981] B.C.J. No. 93 ) “squeeze a bit more out of the vendor”. (I note that even the affidavit filed by Mr.

Wright in support of this claim closed by proposing that the Property be sold to the Claimant for the amount of $97,428.15). On the facts before me, I find that the PSA was repudiated by the Claimant, for reasons set out below. [ 37 ] I find that the dispute between the parties did not relate to a fundamental term of the PSA. A fundamental term is one that renders the agreement impossible to complete, such as a failure to secure financing or clear title. It cannot be addressed by damages. As argued by Mr. Fraser, the issue with the roof could not prevent the closing. It required Mr.

Wright to complete the transaction and sue for damages resulting from the breach. [ 38 ] On the other hand, Mr. Wright’s action in failing to close on the required date, is a breach of the “time is of the essence” stipulation of the PSA. It justified the Defendant’s position that the PSA had been repudiated by the Claimant, and with resulting forfeiture of the damage deposit based on that breach. [ 39 ] I thank the parties for their thoughtful submissions on this matter. For all the reasons above, the Defendant’s application for a finding of nonsuit is granted.

An order will issue dismissing the claim in its entirety. Dated at Halifax, Nova Scotia on July 19th, 2021 Dale Darling, QC