Court accepted expert report's assessment, awarded difference between original and resale price
The trial judge in a real estate action made no errors in his treatment of the seller’s expert report in the absence of admissible evidence challenging or undermining the report, the Ontario Court of Appeal has found.
In April 2017, the appellants entered into an agreement of purchase and sale with the respondent, Rosehaven Homes Limited, to buy a new home still to be constructed. The purchase price was $1,523,162, including $6,723.40 for requested upgrades.
The appellants paid an initial deposit of $20,000 plus the upgrade costs at the outset and later paid scheduled deposits amounting to $70,000. They could not close on the original closing date – Nov. 6, 2018 – but they successfully requested two extensions, first to Nov. 29 and then to Dec. 20. For both extensions, they paid additional deposits of $20,000 each.
The appellants failed to close the transaction on Dec. 20, 2018. They asked the respondent to accept a vendor-take-back mortgage for a portion of the purchase price, but the respondent refused and eventually resold the property for $1,060,000 in July 2019.
Justice Phillip Sutherland of the Ontario Superior Court of Justice granted the respondent summary judgment in the amount of $331,922.27, which was the difference between the original sale price and the resale price, plus carrying costs of $5,483.67 and less a credit of $136,723.40 for the deposits and upgrade costs.
Seller’s expert report properly admitted
First, the appellate court rejected the appellants’ argument that the motion judge wrongly admitted and relied on the respondent’s litigation expert report – made under r. 53.03 of the Rules of Civil Procedure, RRO 1990, Reg 194 – on the summary judgment motion. The report assessed the property’s value at $1,510,000 as of Apr. 13, 2017, and at $1,050,000 as of June 4, 2019.
The Court of Appeal accepted that the respondent’s expert report might not perfectly comply with the admissibility requirements in r. 53.03(2) but found that the failure to comply was immaterial. This case was different from Karami v. Kovari, 2019 ONSC 637, where there was no expert affidavit verifying the expert report and where the expert was found not properly qualified, the appellate court said.
The appellants alleged deficiencies in the respondent’s expert report and claimed that the report’s author failed to accomplish certain mandatory requirements under r. 53.03(2.1), including signing a Form 53 Acknowledgement of Expert’s Duty and listing the respondent’s instructions about the report’s preparation.
In response, the appellate court noted that the appellants failed to:
- object to the respondent’s expert report or its contents before the motion judge
- raise the alleged deficiencies on cross-examination
- file a transcript of their cross-examination of the report’s co-author
- file admissible competing expert evidence that could challenge or undermine the report’s methodology and conclusions.
Second, the Court of Appeal rejected the appellants’ contention that the judge made errors regarding the respondent’s mitigation efforts and the quantification of damages. The judge was entitled to find – given the evidence that the respondent provided and the lack of evidence on the appellants’ part – that the price that the respondent obtained on an arm's length sale was reasonable, the appellate court said.
The valuation dates on which the respondent’s expert report relied were also reasonable because they reflected the dates on which the respondent became legally bound to sell the property, first to the appellants and later to subsequent purchasers, the appellate court concluded. On the other hand, the draft report that the appellants presented was not given any weight.