2012 QCCQ 5772, 2012 QCCQ 5772

Saidah c. Domnita 2012 QCCQ 5772 COURT OF QUEBEC Small Claims Division CANADA PROVINCE OF QUEBEC DISTRICT OF MONTREAL TOWN OF MONTREAL Civil Division No: 500-32-119794-099 DATE: July 4, 2012 ______________________________________________________________________ BY THE HONOURABLE SUZANNE HANDMAN, J.C.Q. ______________________________________________________________________ ANDRÉ SAIDAH -and- ANNIE TAM [...], Kirkland, Qc. [...] Plaintiffs v.

ILLIE DOMNITA -and- NINA OMELINA [...], Laval, Qc., [...] Defendants ______________________________________________________________________ JUDGMENT ______________________________________________________________________ [ 1 ] Plaintiffs André Saidah and Annie Tam are claiming $7,000 from Defendants Illie Domnita and Nina Omelina for failing to execute the deed of sale, following their offer to purchase Plaintiffs' home. [ 2 ] Defendants claim the defects affecting the property were not brought to their attention. They presented a cross demand for $974, for expenses they incurred.

The Questions in Litigation: [ 3 ] Are Defendants entitled to cancel their Promise to Purchase? [ 4 ] If so, did Defendants cancel their Promise to Purchase within the delays foreseen by the said Promise to Purchase and if not, are Plaintiffs entitled to the damages they are seeking? The evidence: [ 5 ] On April 9, 2009, Defendants signed an Offer to purchase Plaintiff's property. Plaintiffs accepted their offer the same day. An inspection was carried out 2 days later, to Defendants' satisfaction. [ 6 ] Because of cadastral changes, Plaintiffs’ surveyor's certificate was no longer valid.

A new surveyor's certificate was prepared on April 23, 2009. Plaintiffs learned, to their surprise, that their property was affected by encroachments. Their 1991 surveyor's certificate contained no mention of any such encroachments. [ 7 ] On April 29, 2009, Plaintiffs brought the new surveyor's certificate to Defendants' notary, Me. Bayer, advising him of the issue

that had arisen. Plaintiffs applied to the City of Pointe-Claire for a variance of the bylaw affecting the property. [ 8 ] On April 30, 2009, the City advised Plaintiffs that the variance would be favourly considered but it had to pass a Council meeting. A copy of this e-mail was also sent to Me. Bayer, Defendants' notary. [ 9 ] On May 1, 2009, Plaintiffs informed Me.

Bayer that the City did not envisage any problem with the variance request. [ 10 ] On May 8, 2009, Plaintiffs asked Me Bayer whether everything was in order for the signing of the deed of sale, on May 18, 2009. [ 11 ] On May 12, 2009 the Director of the Urbanism Service advised Me. Bayer that Plaintiffs' property did not correspond to the cadastral operation of 1986 or to the amended zoning by-law of 1984 (no 2188-4) with respect to the space required in front of the house and on the west side of the property. [ 12 ] The Director advised Me.

Bayer that the consultative urban committee intended to send a favourable recommendation to City Council regarding the request for a minor variation so that the property conformed to the zoning by laws. The Council would make a final decision at its June 15th meeting. [ 13 ] Plaintiffs proposed to move the signing of the deed of sale to the end of June and offered to rent their premises to Defendants until the variance was passed and the problem rectified, but Defendants refused. [ 14 ] Plaintiffs tried to reach Defendants concerning their intentions.

On May 15th, Defendant Nina Omelina told Plaintiffs she wanted to cancel Defendants' offer to purchase the property. On May 15th, Me. Bayer wrote to Plaintiffs, confirming that Defendants did not intend to sign the deed of sale. [ 15 ] Defendants themselves informed Plaintiffs on May 18 they were cancelling their promise to purchase Plaintiffs’ property.

They state: “It is due to your inability to provide us with the complete package of documents required for purchase/sale of the property located at 65 Greystone St., Pointe-Claire, QC (Re: Certificate of Location).” [ 16 ] In the interim, Plaintiffs had made an offer to purchase another home. Given that their home was not sold, they were faced with paying two mortgages. [ 17 ] Plaintiffs hired Royal Lepage to assist them. They sold their property in July 2009 for the same price as that which Defendants had offered. [ 18 ] However, Plaintiffs had to pay Royal Lepage a commission for re-selling their property.

They incurred notary’s fees for the second mortgage they needed since they had not sold their home. They also had to pay interest on that mortgage. On June 1 st 2009, Plaintiffs sent Defendants a demand letter, claiming the payment of their expenses. [ 19 ] Defendants submit that Plaintiffs had not divulged the existence of servitudes and right of way as well as the encroachments on the property.

They claim they never saw the 1991 surveyor’s certificate or the new one, which was prepared in April 2009. [ 20 ] Defendants submit that although their notary told them a minor variance was required to regularize the encroachment of the property, for them it was a “major variance” . Buying a house that had a problem was not something they were prepared to assume.

Analysis: [ 21 ] The Promise to Purchase, signed by the parties, becomes the contract that establishes the conditions binding them. [ 22 ] Plaintiffs contend that Defendants' failure to advise them in a timely manner was a violation of Defendants’ obligations as foreseen by the Promise to Purchase. As a result, Plaintiffs are seeking damages [ 23 ] Defendants point to the irregularities that arose, namely that the property did not conform to the City's bylaw.

They submit the irregularities were not rectified before the date the deed of sale was to be signed. [ 24 ] The pertinent provisions of the Promise to Purchase are the following. 4.3 The Seller shall guarantee the Buyer against any violation of the restrictions of public law encumbering the immovable and that are exceptions to the ordinary law of ownership. 4.5 Should the parties be notified of any defect or irregularity affecting the titles or in the case of non-conformity with any guarantee of the Seller contained herein, the Seller shall, within ten (10) business days following the written notice he will have received to this effect, notify the Buyer in writing: 4.5.1 that he has remedied the defect or non-conformity raised at his own expense; or 4.5.2 that he cannot remedy it. 4.6 The Buyer, upon receipt of the notice stipulated in clause 4.5.2, and with two (2) business days of receipt of such notice, shall notify the Seller in writing: either that he elects to purchase with the defects or irregularities alleged, in which case the Seller's guarantee shall be reduced accordingly, or that he decides not to act on the Promise to Purchase, in which case his deposit shall be returned to him without any other recourse by either party and the expenses, fees and disbursements shall then be borne by the Seller.

[ 25 ] In the present case, the 1991 surveyor's certificate shows the existence of servitudes that are registered and reserved for public purposes, including the right of passage in favour of the neighbouring property. However, there is no indication of a lack of conformity to any applicable bylaws. [ 26 ] A new surveyor's certificate, dated April 23, 2009, shows that the position of the building with respect to the property limits does not conform to the requirements of the municipal zoning bylaws that are in effect.

The lack of conformity is specifically related to the construction margins; the lateral margin does not respect the minimum requirement of 3 meters. [ 27 ] The surveyor was of the view that obtaining a minor variance could regularize the situation: « Conformité de la position du bâtiment principal La position du bâtiment principal par rapport aux limites de propriété est non conforme aux exigences du règlement municipal de zonage en vigueur, et ce, spécifiquement en regard des marges de construction à respecter, car la marge latérale ne respecte pas le minimum requis de 3,00 mètres.

L'obtention d'une dérogation mineure (si cela est possible et si elle est accepté

e) pourrait régulariser cette situation). » [ 28 ] On April 29, 2009, Plaintiffs brought their property's lack of conformity to the City's bylaws to Defendants’ attention, through Defendants’ notary and advised him of their intention to request a variance. On April 30, 2009, the City's response to Plaintiffs' request for a variance was also transmitted to Defendants' notary. [ 29 ] While notice was not given directly to Defendants, the documents with respect to the sale as well as correspondence relating to the sale were transmitted to Me.

Bayer, who was acting for Defendants. [ 30 ] Consequently, on April 30, 2009, Defendants were well aware of the irregularity affecting the property. They were also informed of the potential delay involved to rectify the problem relating to the violation of public law restrictions, encumbering the immoveable. [ 31 ] In accordance with

article 4.6 of the Promise to Purchase, Defendants then had two (2) business days to notify Plaintiffs whether they intended either to proceed to purchase the property, despite the defects or irregularities raised, or not to proceed to execute the deed of sale. [ 32 ] Defendants were required to notify Plaintiffs of their intentions, within two (2) business days, namely by May 1, 2009 or at the latest by May 2, 2009. Defendants did not do so. It was only on May 15, 2009 that Me. Bayer confirmed that Defendants did not intend to proceed with the sale. [ 33 ] While Plaintiffs base their action on

Article 4.6 of the Promise to Purchase, this

article is imcomplete. It stipulates that the Buyer has a choice and must notify the Seller in two (2) business days as to whether he intends to proceed with the sale despite the existence of the irregularities or whether he does not intend to purchase the property. However, there is no indication as to the consequences of the Buyer's failure to reply in the time specified. [ 34 ] If the Buyer must notify the Seller, within two days, that he does not intend to proceed with the sale, the contract must state what occurs when the buyer fails to respect this delay.

One example is as follows: “Where the Buyer has not availed himself of his intentions, as indicated above, within the period stipulated, this Promise to Purchase shall become null and void, in which case each party shall bear the fees, expenses and costs incurred by him until then.” [ 35 ] Alternatively, the clause could read as follows: “Where the Buyer has not availed himself of his intentions, as indicated above, within the period stipulated, he is deemed to have waived his right to annul this Promise to Purchase and shall proceed to execute the deed of sale on the date foreseen.” [ 36 ] In the present case, there is no such clause.

What then are the consequences of Defendants' failure to notify the Seller, namely Plaintiffs, within the delays specified in the Promise to Purchase, that they did not intend to purchase the property? [ 37 ] A buyer who has promised to purchase a property is liable for damages resulting from his failure to sign the deed of sale.

The only cases of exoneration, for a buyer, who refuses to purchase an immovable, after having made a promise to purchase, are the causes of nullity of a contract, foreseen by the Civil Code of Quebec , and the non realisation of a condition foreseen by the Promise to Purchase, which is not the buyer's fault [1] . [ 38 ] In this case,

article 4.3 of the Promise to Purchase states that “The Seller shall guarantee the Buyer against any violation of restrictions of public law encumbering the immoveable and that are exceptions to the ordinary law of ownership.” [ 39 ] The property did not conform to a municipal bylaw. This violation was originally unforeseen, since the 1991 surveyor's certificate had not noted the property’s lack of conformity.

However, the non-conformity became apparent once the new surveyor's certificate was prepared. [ 40 ] Plaintiffs were therefore unable to warrant against the non-conformity of the property with respect to a municipal bylaw, prior to the date foreseen to execute the deed of sale. [ 41 ] It is unfortunate that the irregularity was discovered only after the Promise to Purchase was signed and that confirmation of the minor variance, which would rectify the problem, could not be obtained before May 18, 2009, namely the date foreseen to execute the deed of sale.

[ 42 ] However, since Plaintiffs were unable to meet the condition foreseen by

article 4.3 of the Promise to Purchase, Defendants are entitled to cancel their Promise to purchase and are exonerated from any responsability for not concluding the sale. The Cross Demand: [ 43 ] Defendants claim they could not have purchased the property with clear title and that the defects affecting the property were not brought to their attention.

They presented a cross demand for $974, for the expenses they incurred for an inspection report and their notary's fees. [ 44 ] Contrary to Defendants' position, they were made aware of the irregularity affecting the property, as soon as Plaintiffs themselves learned of the problem. [ 45 ] Defendants were also aware that Plaintiffs were attempting to obtain a minor variance from the City of Pointe-Claire and that Plaintiffs also sought to move the date the deed of sale was to be executed to the end of the month of June, 2009, in order to regularize the situation. [ 46 ] Defendants were entitled to cancel their Promise to Purchase.

However, Plaintiffs, who acted in good faith, and who were unaware of the existence of the irregularity affecting the property, did not commit a fault by failing to divulge the problem at the time they offered their property for sale. [ 47 ] Given the particular circumstances of this case, and particularly the fact that the irregularity was unforeseen, the Court considers that Plaintiffs are not responsible for the damages sought by Defendants. Moreover, Defendants did not mitigate their damages.

Had they accepted to move the date that title was to be passed, the lawsuit and cross demand would not have been instituted. FOR THESE REASONS, THE COURT: DISMISSES Plaintiffs' action against Defendants, Illie Domnita and Nina Omelina; DISMISSES Defendants’ cross demand against Plaintiffs, André Saidah and Annie Tam; EACH PARTY , paying their own costs. __________________________________ SUZANNE HANDMAN, J.C.Q. Date of hearing: May 15, 2012