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Know When to Fold ‘em

It’s important to know when you have a losing case. In fact, that’s what lawyers are for: to tell you when your case is worthy of litigation and when your smartest move is to try to reach a settlement. Doing so can save hundreds of thousands of dollars in legal fees.  

Mr. Ravichandran Nadaraja and Ms. Kalaiyarasi Nanthakumar (the “appellants”) listed a residential property located at 39 Dairis Cresecent in Markham, Ontario. Following negotiations and the execution of an agreement of purchase and sale, the appellants refused to close the transaction. The respondents sued for specific performance and won on a summary judgment. On appeal, the appellants claimed that the dispute should have proceeded to trial and that the remedy awarded was inappropriate.

The Facts

In their respective affidavits, the appellants denied having ever intended to sell the property—they denied meeting with a real estate agent, signing any agreement, showing the house to prospective buyers or placing a “For Sale” sign on the property. Upon cross-examination, however, both Mr. Nadaraja and Ms. Nanthakumar changed their stories. Mr. Nadarajah admitted that he did in fact sign the listing agreement and that there had been a “For Sale” sign on the property prior to the sale. Ms. Nanthakumar denied that there was a “For Sale” sign on the property but admitted that she signed the agreement of purchase in sale, contrary to her own affidavit. Further, the appellants’ real estate agent swore an affidavit stating that he witnessed the appellants sign the listing agreement and the agreement of purchase and sale.

On summary judgment, the motion judge found that the appellants were not credible because their testimonies were mutually inconsistent and further contradicted their own affidavits and the affidavit of their real estate agent.

The appellants appealed the summary judgment and the remedy awarded. The appellants argued that the motion judge’s finding on the issue of credibility coloured her decision on the issue of whether or not the matter was appropriate for proceeding by way of summary judgment. The appellants further argued that the respondents violated the rule in Brown v Dunne during cross-examinations by failing to give the appellants an opportunity to explain their contradictory evidence. Further, the appellants appealed the order for specific performance, arguing that the respondents should not be able to profit from the increase in value of the house during the four-year period of litigation and that the house was not unique and therefore inappropriate for a specific performance remedy. The Court of Appeal dismissed every argument.

A summary judgment is appropriate where the court is satisfied that it can: (1) make the necessary findings of fact; (2) apply the law to the facts; and (3) the process is a, proportionate, more expeditious and less expensive means to achieve a just result. In this case, the Court of Appeal found that the issue of credibility was central to the dispute and that the there was “ample evidence” to support the motion judge’s findings.

The rule in Browne v Dunn requires counsel to allow a witness to review contradictory evidence and explain any discrepancies during cross examination. The purpose of the rule is to prevent a situation where counsel can ambush a witness with seemingly contradictory evidence. In such instances, it is necessary for the proper administration of justice to allow the witness to first review the evidence and provide a response. In this instance, however, the contradictory evidence came by way of the appellants’ own testimonies. As such, there was no concern that the appellants were being ambushed and the rule did not apply in this instance. The Court of Appeal found, therefore, that the respondents did not violate the rule in Browne v Dunn.

The Court of Appeal deferred to the motion judge’s finding that specific performance was appropriate in this circumstance because the property was unique and any delays caused by the respondents were insufficient to disentitle them from a remedy for specific performance. The Court of Appeal upheld the motion judge’s award of costs to the plaintiffs of $90,415, and awarded an additional $18,000 for the costs of appeal.

Our Thoughts

This case serves as an important reminder that in litigation, you have to pick your battles wisely. In this case, the appellants did not seem to have a fighting chance. The respondents produced a signed listing agreement and a signed agreement of purchase and sale. The appellants’ testimonies were internally inconsistent and inconsistent with that of the real estate agent. The weight of the evidence strongly favoured the respondents. The appellants lost the case on summary judgment and, in addition to losing their house, they lost an additional $108,415 in legal costs for the motion and the appeal combined. This is not taking into account the legal fees they incurred in paying their own lawyer, which could have easily been around $100,000 for the summary judgment motion and the appeal.

Providing false information in an affidavit is never a good idea in litigation because it exposes litigants to both criminal and civil sanctions. In this case, the appellants would have saved, at the very least, $108,415 if they agreed to settle the case before it went to trial. Likely, they could have saved more.
 
See: Yan v. Nadarajah, 2017 ONCA 196

The above article is for general information purposes only and does not constitute legal advice. If you have concerns with regard to the foregoing issues, please make an appointment with one of our lawyers or a qualified legal practitioner elsewhere.