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Damages - Date of Assessment (2). Preiano v. Cirillo
In Preiano v. Cirillo (Ont CA, 2024) the Ontario Court of Appeal considered (and largely allowed) an appeal from a breached APS specific performance (or alternatively, damages) action brought by the purchasers.
Here the court allowed the appeal on the measure of damages (really, on the 'date of assessment' of damage) used by the trial court:(ii) Damages
[8] We come to a different conclusion with respect to the trial judge’s assessment of the respondents’ damages. The trial judge erred in law by awarding $975,000 in damages ($1 million less their deposit of $25,000) to the respondents.
[9] The trial judge awarded the respondents damages in the amount of $975,000 for two reasons. First, he accepted the appraisal expert’s evidence that $1 million represented the difference between the contract price and the fair market value of the subject property at the time of trial. Second, while he acknowledged that the respondents had made no attempt to mitigate their damages, the trial judge concluded that they did not need to mitigate because “[t]hey had a reasonable and fair chance of obtaining specific performance, although they did not get it.”
(a) Measure of damages for breach of contract
[10] The trial judge erred in awarding the respondents the difference between the contract price and the market value of the property at the time of trial. It is well-established that absent special circumstances, which we do not have here, the ordinary measure of damages arising from a breach of an agreement of purchase and sale is the difference between the contract price of the property and the value of the property as at the date of the breach of the agreement of purchase and sale: Tribute (Springwater) Limited v. Atif, 2021 ONCA 463, 33 R.P.R. (6th) 1, at para. 17; Akelius Canada Ltd. v. 2436196 Ontario Inc., 2022 ONCA 259, 161 O.R. (3d) 469, at para. 22, leave to appeal refused, [2022] S.C.C.A. No. 183; and The Rosseau Group Inc. v. 2528061 Ontario Inc., 2023 ONCA 814, at para. 62.
[11] The trial judge’s legal error is reflected in para. 156 of his reasons:Damages in lieu of specific performance are assessed as at the date of trial (see: Semelhago [v. Paramadevan, 1996 CanLII 209 (SCC), [1996] 2 S.C.R. 415]; Sivasubramaniam v. Mohammad, 2018 ONSC 3073 [aff’d, 2019 ONCA 242]). They also represent the difference between the contract price and the fair market value of the time of trial. [Emphasis added.] [12] The trial judge’s application of the law is based on an erroneous interpretation of Semelhago and Sivasubramaniam. In Sivasubramaniam, the court awarded specific performance. In Semelhago, the court would have ordered specific performance, however, the plaintiffs elected to forego specific performance as a remedy and accept damages. As a result, the damages awarded were truly in lieu of the remedy of specific performance that the court was prepared to grant.
[13] Here, the trial judge expressly determined that the respondents were not entitled to specific performance. The evidence accepted by the trial judge is that the respondents wanted to purchase the appellants’ home as a temporary residence for two or three years while they tore down and rebuilt a new house on their existing property. The trial judge found that subjectively and objectively the appellants’ property was not unique because of the temporary nature of the respondents’ intended tenure there. He also determined that damages would be an adequate remedy for the appellants’ breach. As a result, he declined to award specific performance. He therefore turned to consider whether they were entitled to damages. He determined that they were. However, the damages were not awarded in lieu of specific performance as he determined that they were not entitled to that remedy.
[14] As a result of the trial judge’s legal error, his award of damages is incorrect and must be set aside. We are able to consider the issue afresh because we have an adequate evidentiary record.
[15] The contract price of the property was $480,000. According to the evidence of the respondents’ appraisal expert, based on a drive-by evaluation and his assumption that the condition of the interior was “in average repair yet extremely dated,” he opined the value of the property to be $550,000 as of August 21, 2013. His evidence was the only appraisal evidence before the court. While the appellants’ position appeared to be that the property was worth between $480,000 and $500,000 as of August 21, 2013, it was not supported at trial by any admissible evidence.
[16] We agree with the respondents’ alternative position that we should assess damages taking the August 21, 2013 appraised value into account and that we should follow the direction in Wood v. Grand Valley Rway. Co., (1915) 1915 CanLII 574 (SCC), 51 S.C.R. 283, at p. 289, per Davies J., to do the best we can in assessing damages with the evidence we have. Although there is no appraised value of the property on the exact date of breach, the August 21, 2013 appraisal date is sufficient for the purposes of assessing damages in this case. There is no evidence that property values went down between August and November 2013.
[17] Accordingly, we assess the respondents’ damages, as the difference between the contract price and the value of the property at the date of breach, to be in the amount of $70,000. This amount is subject to a further $25,000 deduction to account for the return of the respondents’ deposit.
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