Ontario Superior Court awards damages after real estate deals fail due to broker's conflicting roles

The plaintiffs sold their properties to finance transaction for dining facility

Ontario Superior Court awards damages after real estate deals fail due to broker's conflicting roles

The Ontario Superior Court of Justice has ruled in favour of the plaintiffs, awarding them damages after multiple real estate transactions failed due to a real estate broker's conflicting roles.

In Graf v. Periyathamby, 2024 ONSC 1062, Gary and Valentina Graf, the plaintiffs, owned and operated a restaurant and hoped to purchase and run a second restaurant.  To that end, they agreed to purchase a restaurant called Oscar’s in Kitchener.  To fund that purchase, the plaintiffs listed for sale two income properties which they owned, a duplex and a triplex, one in Waterloo and one in Kitchener. However, the plaintiffs encountered significant setbacks when initial buyers failed to complete the transactions on the agreed dates.

The court handed down a default judgment against Via Realty Inc., the entity holding the deposits for the transactions, and ordered that these funds remain with the sheriff pending further judicial instructions. The proceedings followed a complex web of relationships and undisclosed connections among the defendants and a real estate broker, Waran Nathans, who represented both the Grafs and the defendants.

The Superior Court noted that the transactions for the two properties, one in Waterloo and another in Kitchener and the restaurant purchase were interconnected. This connection involved multiple defendants and revealed that Waran Nathans had dual roles.

Throughout the trial, the court examined various accounts and documents, revealing discrepancies and conflicting narratives about the transactions' initiation and actual terms. The defendants argued that a verbal agreement stipulated the return of deposits and mutual release from the deals if the transactions failed. However, the court found the plaintiffs' documented evidence and narrative more convincing, ruling out any supplementary verbal agreements.

The court underscored the importance of transparency and adherence to documented agreements in real estate transactions. The court emphasized the repercussions of misrepresentation and the critical nature of full disclosure among parties involved in real estate dealings.

The Grafs had planned to use the proceeds from selling their two properties to buy Oscar’s restaurant. However, the deals’ collapse disrupted their business plans and led to a legal battle to recoup losses and hold the responsible parties accountable. Ultimately, the court dismissed the defendant's counterclaims, affirming that the documented agreements were binding and that no additional verbal agreements altered the written contracts.

In awarding damages, the court ordered the forfeiture of deposits made by the defendants to the plaintiffs and further compensation for the economic losses incurred due to the transaction failures.

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