Executive Summary: Key Legal and Evidentiary Issues

• Dispute over whether a $25,000 cash side payment rendered the second Agreement of Purchase and Sale (APS) for 1408 Ernest Avenue an illegal contract, allowing the vendor to refuse to close.
• Fundamental question of whether the purchaser, 2221736 Ontario Inc., was “ready, willing and able” to close despite not formally tendering on the closing date after the vendor’s lawyer withdrew.
• Sharp credibility contest between the purchaser’s witnesses (Dr. Ahmed Seksek and realtor Nabil “Bill” Rashmawi) and vendor Dr. Wagdy Botros, with the court largely rejecting Dr. Botros’ version of events.
• Reliance by the vendor on an alleged lack of spousal/shareholder consent and purported limits on his authority as director of Paner House III Inc. as a basis to avoid completing the sale.
• Detailed scrutiny of causation and proof of damages, including recoverability of due-diligence expenses, the $25,000 cash payment, and contested claims tied to a proposed sublease with Dr. Chang.
• Separate but related issue of whether StreetCity Realty Inc. and its salesperson were entitled to the reduced commission agreed in the Seller Customer Service Agreement despite the transaction not closing.

Facts and procedural history

The case arises from a failed commercial real estate transaction involving an office building at 1408 Ernest Avenue in London, Ontario. The vendor was Paner House III Inc. (Paner House), controlled by retired psychiatrist Dr. Wagdy A. Botros. The intended purchaser was 2221736 Ontario Inc. (2221736), whose directing mind is chiropractor Dr. Ahmed Seksek. 2221736 planned to consolidate two existing medical clinics at the Ernest Avenue property and sublet space to other health professionals, leveraging the building’s suitability for a growing Middle Eastern community in the area. StreetCity Realty Inc. Brokerage (StreetCity), through its sales representative Nabil “Bill” Rashmawi, acted on the transaction; StreetCity was engaged by Paner House on the sale side and by 2221736 on the purchase side. Two Simplified Procedure actions were tried together. In the first, StreetCity and Mr. Rashmawi sued Paner House and, initially, Dr. Botros personally for commission allegedly payable on the completion of the sale. In the second, 2221736 sued Paner House for damages resulting from the failed transaction, including sunk transaction costs, loss associated with preparatory business arrangements, and the return of a $25,000 cash payment. The actions were ordered to be tried together, and the claim against Dr. Botros personally by StreetCity was discontinued on a without-costs, with-prejudice basis. Earlier, 2221736 had unsuccessfully sought specific performance and then abandoned a motion for summary judgment, leaving the matter to be determined at trial on a full evidentiary record including affidavits, cross-examinations, and a joint document brief.

The agreements of purchase and sale and brokerage arrangements

On September 21, 2017, Paner House and 2221736 entered into their first Agreement of Purchase and Sale using an Ontario Real Estate Association (OREA) standard form APS. The agreed purchase price was $1,600,000, with a $25,000 deposit and a proposed closing date of November 30, 2017. The deal was conditional on several matters, including the purchaser obtaining a satisfactory environmental assessment, which was required for financing. The deposit was paid to StreetCity in trust. In parallel, Paner House signed a standard OREA Seller Customer Service Agreement with StreetCity on October 3, 2017, providing for a commission of $70,000 on closing. The first APS did not close because the environmental condition could not be satisfied in time. The parties executed a mutual release on November 25, 2017, formally ending that agreement, though they remained interested in a sale. Negotiations produced a second OREA APS, dated November 26, 2017, with the same nominal purchase price of $1,600,000 and transfer of the existing $25,000 deposit to the new agreement. By this point, the environmental condition had been satisfied, and the second APS was firm. StreetCity and Paner House also executed a new Seller Customer Service Agreement under which the commission was set at 3.5% of the sale price ($56,000). A handwritten “–3000” notation appeared below the commission line, reflecting a further negotiated reduction to $53,000 to account for recent expenditures that Dr. Botros said he had incurred on the property. Unlike an insurance case, there were no insurance “policy terms” or coverage clauses in issue; the relevant contractual instruments were the two APS documents and the brokerage agreement, all in standard OREA form, modified only as to price, dates and commission.

The $25,000 cash payment and the opposing narratives

Central to the dispute was a $25,000 cash payment made by the purchaser to the vendor during the lead-up to the second APS. According to the evidence of Mr. Rashmawi and Dr. Seksek, after the first deal failed but negotiations continued, Dr. Botros demanded an additional $50,000 to proceed, citing concerns over the capital gains tax he would face. Given the purchaser’s limited access to further formal financing, the solution they reached was twofold: StreetCity would accept a reduction in its commission (from $56,000 to $53,000), and 2221736 would pay $25,000 in cash to Paner House via Dr. Botros. The parties arranged to meet on November 26, 2017 at a Tim Hortons in Baden, Ontario, to finalize the new APS and complete the cash payment. At that meeting, the second APS and related documents were signed, and Dr. Seksek handed over $25,000 in small bills. At the suggestion of Mr. Rashmawi, a receipt was prepared and signed by Dr. Botros, and witnessed by Mr. Rashmawi, acknowledging receipt of the $25,000. The receipt described the sum as “partial payment,” which the court later interpreted as partial payment of the purchase price or, at a minimum, as consideration tied directly to the transaction. In cross-examination, Dr. Seksek acknowledged that, once the extra $25,000 was considered, the written APS no longer reflected the total economic price agreed between the parties. However, there was no evidence from him or from any lawyer that the parties had settled on misrepresenting the true consideration in the closing documents. Neither solicitor’s file was produced, and so the court could not see draft closing documents showing how the additional payment might have been recorded.

Vendor’s claims of pressure, illegality, and lack of consent

Dr. Botros offered a very different account. He presented himself as having been hounded by the realtor, asserting that after the failure of the first APS, Mr. Rashmawi “relentlessly” pressed him to agree to sell to the same purchaser on a new deal. In his narrative, he tried to resist but, in an effort to deflect the pressure, raised his capital gains tax burden as an objection. He claimed that it was Mr. Rashmawi who proposed reducing the commission and securing a $25,000 cash payment from the purchaser to offset the tax impact, and that he, reluctantly, went along. He testified that when he arrived at the Tim Hortons in Baden, he was surprised to find that the purchaser, Dr. Seksek, was present. He said he expressed concerns about recent expenditures on the property, which led to the additional $3,000 commission reduction, and that he signed the APS and accepted an envelope of cash in small bills. He maintained that the receipt was hastily written on a scrap of paper and that he later became uneasy, ultimately concluding via extensive internet research that the scheme was illegal and would expose him alone to legal consequences. Not wishing to accuse the realtor of misconduct, he said he instead informed the others that his wife, the other shareholder and alleged equal owner of Paner House, refused to consent to the sale, and on that basis he refused to close. On January 9, 2018, his solicitor advised the purchaser’s lawyer that Paner House would not complete the transaction, and shortly thereafter the solicitor came off the record, making the mechanics of a conventional closing and formal tender difficult.

Credibility findings and rejection of the illegality defence

Justice Rady found that the resolution of the case turned heavily on credibility. The court accepted the evidence of Mr. Rashmawi and Dr. Seksek as straightforward and consistent with the documentary record. Both clearly wanted the deal to close, and their behaviour, including the commission reduction and efforts to finance the purchase, matched that objective. By contrast, the judge found Dr. Botros to be an unreliable witness: he was at times argumentative and evasive, and his story did not align with contemporaneous emails and other documents. Those communications showed that before the first deal fell apart he already believed the property was being sold below value, had been speaking with prospective tenants, and was considering re-listing the property, indicating that he was seeking leverage to improve his return rather than attempting to escape unwanted pressure. The court concluded that when the first APS ended, he recognized that 2221736 remained highly motivated to buy and that he used that leverage to extract an additional $50,000 of value—$25,000 in cash and $25,000 effectively recaptured through commission savings—solely for his benefit. The court rejected his explanation that he was merely trying to be polite or to avoid offending the realtor. On the alleged refusal of his wife to consent, the court noted that she did not testify at trial and that her supposed objection was hearsay. Moreover, when Dr. Botros had sworn an affidavit in the earlier specific performance motion brought shortly after the failed closing, he did not mention either his wife’s refusal or any concern about illegality, even though those would have been crucial defences if genuine. Justice Rady drew an inference that the “spousal refusal” story was a later invention designed to justify a decision not to close. Regarding illegality, the court held that Paner House had not proven that the second APS was an illegal contract. While everyone acknowledged that the written APS did not include the $25,000 in its stated price, there was no evidence that the parties actually intended to misstate the true consideration in the formal closing documents. The solicitor’s closing files, which might have clarified treatment of the payment for tax and land transfer purposes, were not placed before the court. In those circumstances, the judge refused to deem the APS illegal on the basis of speculation. It also weighed heavily against Paner House that Dr. Botros retained, and still held, the $25,000 cash, offering to return it only in exchange for a mutual release. The court observed that if he genuinely believed the arrangement was unlawful, he would have been expected to return the money promptly; instead, he effectively held it as a bargaining chip.

Readiness to close and breach of contract

Paner House further argued that 2221736 could not recover because it had not tendered on the closing date, so it had not shown that it was ready, willing, and able to complete the transaction. The court relied on the unchallenged affidavit of the purchaser’s lawyer, Robert Wood, who stated that he was proceeding towards closing when he was informed by vendor’s counsel on January 9, 2018 that his client would not close. Subsequently, vendor’s counsel came off the record shortly before the scheduled closing date. Justice Rady accepted Mr. Wood’s evidence as neither equivocal nor undermined on any point and held that the withdrawal of vendor’s counsel made a formal tender “difficult, if not impossible.” On this record, the court found that 2221736 was indeed ready, willing, and able to close and that it was Paner House’s unjustified refusal, not any default by 2221736, that caused the transaction to fail. The earlier mutual release applied only to the first APS and did not relieve Paner House of its obligations under the second agreement.

Assessment of the purchaser’s damages

2221736 advanced several heads of damages tied to the failed closing. First were transaction-related out-of-pocket expenditures: a $16,000 broker’s fee paid to DLC Forest City Funding, required for financing and payable even though the first deal did not close; $2,938 for a Phase 1 environmental site assessment from EXP; $2,712 for an appraisal from Valco; $2,034 for a property inspection; $8,475 in architectural fees to MM Architectural Design to plan consolidation of the clinics at Ernest Avenue; and approximately $140 in website modification charges from Vivos Web to update the plaintiff’s online presence in anticipation of the move. These invoices were in some instances paid through corporations related to Dr. Seksek—Hands On Health Wellness Centre and Seksek Chiropractic Professional Corporation—but the evidence was that they were paid on behalf of 2221736 for the transaction. The court accepted that 2221736 effectively bore these costs and refused to treat corporate formality as fatal, describing it as a “triumph of form over substance” to insist that each related corporation be joined as a plaintiff or sue 2221736 for indemnity. The court also rejected the suggestion that the mutual release from the first APS barred recovery: the evidence showed that these same due-diligence and preparatory steps were necessary for the second APS, and it would make little sense to force the plaintiff to repeat them merely to circumvent the earlier release. The second major element was the $25,000 cash payment that Dr. Seksek had delivered to Dr. Botros in Baden. There was no serious dispute that the money changed hands and that it had not been returned. The court held that, with the vendor having wrongfully refused to close, 2221736 was entitled to recover this payment. Two further claims were not accepted. 2221736 sought $25,000 allegedly paid as a “penalty” to a proposed subtenant, Dr. J. Chang, to resolve difficulties arising from the failed move: a copy of a cheque was in evidence, but there was no contractual requirement or formal settlement obliging such a payment, no evidence that litigation was threatened or commenced, and no proof that the cheque had actually been negotiated. The court thus found this head of damage unproven. The plaintiff also claimed $45,000 in lost rental revenue, representing a $750 monthly rent differential over a five-year sublease between Seksek Chiropractic Professional Corporation and J. Chang Dentistry P.C. While the sublease itself was exhibited, the underlying head lease for the premises at 1080 Adelaide Street North was not produced, leaving a gap in proof of the actual rent, term, and obligations there. In addition, the sublease granted four months of rent-free occupancy, amounting to $31,000, which in the court’s view would significantly offset any claimed loss even had the claim otherwise been viable. For these reasons, both the penalty and lost-rent claims were dismissed. The defendant’s argument that the plaintiff failed to mitigate its losses by not accepting an offer to lease space from Paner House also failed, because there was no adequate evidence of the terms of any such offer, and the court did not treat acceptance of a lease as a required form of mitigation for a purchaser under a firm APS.

The brokerage commission claim

In the companion action, StreetCity and Mr. Rashmawi sought payment of the commission agreed in the revised Seller Customer Service Agreement. Under that agreement, Paner House had undertaken to pay a commission of 3.5% of the $1.6 million price, later reduced by $3,000 to $53,000, payable on closing. The court’s earlier findings—that the second APS was valid and enforceable, that the vendor wrongfully refused to close, and that the purchaser was not in default—directly informed the commission claim. Justice Rady concluded that the transaction failed solely because of Paner House’s breach and not through any fault of the brokerage or purchaser. As a result, StreetCity and its sales representative were entitled to their reduced commission as if the transaction had closed. The court therefore awarded them $53,000 plus HST, amounting to a total of $59,890.

Outcome and monetary awards

The court held that the second Agreement of Purchase and Sale for 1408 Ernest Avenue was a valid, enforceable contract and that Paner House III Inc., through its principal Dr. Wagdy Botros, breached it by refusing to close on unfounded grounds of alleged illegality and lack of spousal consent. The court further found that 2221736 Ontario Inc. was ready, willing, and able to complete the purchase and that the brokerage had fulfilled its mandate. As a result, the successful parties were the plaintiffs: StreetCity Realty Inc. Brokerage and Nabil “Bill” Rashmawi, and 2221736 Ontario Inc. The court awarded StreetCity $59,890 (being $53,000 commission plus HST) plus prejudgment interest, and awarded 2221736 $57,299 in damages plus prejudgment interest, for a combined principal judgment of $117,189 in favour of the plaintiffs; however, the precise amount of costs had not yet been determined, as the court directed the parties to exchange short written submissions and Bills of Costs following release of the reasons.