Executive Summary: Key Legal and Evidentiary Issues

• Authenticity and legal relevance of one allegedly forged signature in section 26 of the Agreement of Purchase and Sale (APS), contrasted with multiple undisputed signatures by the same buyer.
• Credibility of the seller’s principal, including his shifting explanations (litigation “stay,” COVID-19 “force majeure,” and signature concerns) for refusing to close.
• Application of the Ontario summary judgment test under Rule 20, including whether the record allowed the court to determine liability and remedy without a trial despite conflicting expert evidence.
• Weight to be given to a forensic handwriting expert’s opinion versus direct testimony from the buyers about how and when they signed the APS.
• Contract law issue of whether an allegedly inauthentic signature in an initial offer remained legally relevant once that offer was extinguished by a counteroffer and acceptance.
• Remedy question of whether specific performance was justified for a commercial property, based on the property’s subjective and objective uniqueness and the inadequacy of damages alone.

Factual background

The dispute arises out of an Agreement of Purchase and Sale (APS) for industrial land at 762 McKay Road in Pickering, Ontario. The plaintiffs, Andrew Markew and Richard Araujo (in trust), each operated businesses that required industrial space: Mr. Markew owned Whitby Shores Landscaping Ltd., a landscaping and construction company, while Mr. Araujo owned So-Pic Auto and Tire Ltd. They developed a business plan premised on operating both businesses from a single property that would allow outside storage of large equipment, be located within the Durham Region, and be zoned appropriately for a contractor’s yard and automotive use. After searching from early 2019 and retaining realtor Christopher Ennis in October 2019, they identified the McKay Road property in August 2020 as fitting their operational needs. The property, however, was then under contract, so no offer was made at that time.

In November 2020, the property was re-listed. Mr. Ennis prepared an offer on November 27, 2020 for $1.4 million. The seller, Tidol Corporation, through its principal, Masilamany Subramaniam, responded with a counteroffer of $1.45 million. On December 1, 2020, the plaintiffs accepted that counteroffer and returned a fully executed APS, paying a $50,000 deposit and agreeing to close on February 12, 2021. In the weeks that followed, the plaintiffs waived their conditions: on December 28, 2020 they waived municipal approval conditions for their proposed use, and on January 25, 2021 they waived environmental and geotechnical conditions, confirming their readiness to close on the agreed date.

Events leading to the failed closing

Despite the plaintiffs’ clear intention to complete the transaction, Mr. Subramaniam began expressing resistance to the deal. On December 30, 2020, after receiving the first waiver, he sent a cryptic email asking the parties to “read The Agreement of Purchase and Sales on OREA form 500 fully,” but without specifying a concrete objection. On January 5, 2021, he escalated matters by emailing the plaintiffs and the agents to say he was “suspending all further actions” on the sale. This email did not mention signatures or fraud; instead he cited two supposed obstacles: ongoing litigation between Tidol and a previous would-be purchaser, Mocon Group Inc., and a generalized claim that the COVID-19 pandemic created a “force majeure” situation that prevented the transaction from proceeding.

The court later found both justifications hollow. The prior litigation concerned a deposit and did not legally encumber the property or prevent a sale, and Tidol had listed the property despite that litigation being unresolved. As for COVID-19, there was no evidence that the pandemic made electronic completion of a commercial real estate transaction impossible. The court regarded the January 5 email as an early attempt to avoid the APS rather than a sincere effort to address a real impediment.

In early February 2021, the focus shifted to alleged irregularities in the paperwork. In letters dated February 2, 8, 9 and 12, 2021, Mr. Subramaniam contended that (a) the buyers had signed on a line reserved for the seller, and (b) some signatures by Mr. Araujo looked inconsistent, particularly the signature in section 26 of the APS. He raised the spectre of “criminal violations” such as fraud and forgery, and even threatened complaints to the Real Estate Council of Ontario and the Law Society of Ontario. At the same time, he insisted that the transaction would not close unless he received a “legally enforceable” APS that corrected these supposed deficiencies, despite already having a fully executed copy that had been delivered to him both in hard copy and electronically.

Notably, the defendants had not retained closing counsel even as the February 12, 2021 closing date approached. On the actual closing date, Tidol again questioned the signatures and refused to complete the sale. The deposit was not returned.

The disputed signatures and evidentiary conflict

The central factual controversy concerned one of Mr. Araujo’s signatures in the November 27, 2020 initial offer, specifically the signature appearing in section 26 of the APS. That signature did look different from Mr. Araujo’s other signatures executed on the same date and from his signatures on December 1, 2020 when the plaintiffs accepted the counteroffer. The defendants argued that this discrepancy pointed to forgery and justified their refusal to close.

Mr. Araujo and Mr. Markew both testified on cross-examination that they executed the initial offer on November 27, 2020 in the presence of Mr. Araujo’s father. Mr. Araujo candidly acknowledged the visual difference in the section 26 signature and suggested it may have been affected by the circumstances of signing—he could have been signing in an awkward position, such as sitting on the side of a sign in front of his building. Their evidence was that all of the signatures were, nonetheless, his.

The defence retained a forensic document examiner, Wendy Carlson, who compared the section 26 signature with several “known” examples of Mr. Araujo’s signature from the APS package. She concluded that the person who signed in section 26 was not the same person who signed the other samples. The plaintiffs did not challenge her qualifications or cross-examine her, so her report was technically uncontradicted expert evidence on that narrow point.

The court, however, treated the alleged forgery as legally and practically irrelevant for two main reasons. First, it found as a matter of credibility that Mr. Subramaniam was not genuinely motivated by concerns about fraud. His failure to mention signatures in his early “suspension” email, the implausibility of his theory that Mr. Araujo would sign properly in five places but allow someone else to forge his name in one spot on the same day, and his refusal to accept a statutory declaration from the witness to the signing all pointed to a manufactured excuse. Second, the allegedly inauthentic signature appeared only in the initial November 27 offer. Under basic contract principles, that initial offer became null and void once Tidol responded with a counteroffer on November 30, 2020. The binding contract arose when the plaintiffs accepted the counteroffer on December 1, 2020, and all signatures relating to that acceptance were undisputed. As a result, any defect in the earlier offer could not undermine the validity of the later, properly executed APS that the parties were obliged to perform.

Summary judgment framework

The plaintiffs brought a motion for summary judgment seeking a finding of breach and an order for specific performance, rather than a trial. The court applied Rule 20 of the Ontario Rules of Civil Procedure and the Supreme Court’s guidance in Hryniak v. Mauldin, which require the judge to decide whether there is any “genuine issue requiring a trial” and allow the use of enhanced fact-finding powers where appropriate. The moving party bears the evidentiary burden to show that no such genuine issue exists, and the court assumes on a summary judgment record that all parties have put their “best foot forward.”

Here, the judge concluded that the record was sufficiently complete to decide both liability and remedy. The existence of the handwriting expert’s report did not prevent summary judgment because, even assuming a discrepancy, that discrepancy did not affect the enforceability of the December 1 APS and did not credibly explain Tidol’s refusal to close. The court also rejected the defendants’ argument that additional evidence from the listing agent or Mr. Araujo’s father might be needed at trial, noting that both sides had strategically chosen not to file that evidence and that the court was entitled to treat the existing record as the one that would be led at trial.

Breach of the Agreement of Purchase and Sale

On liability, the court held that Tidol, through Mr. Subramaniam, clearly breached the APS by refusing to close on February 12, 2021 without a valid contractual justification. The attempts to rely on pending litigation and the pandemic as bases for a “stay of process” or “force majeure” were rejected as non-starters: the underlying lawsuit did not legally prevent a sale, and COVID-19 did not make an ordinary commercial closing impossible, particularly where transactions were routinely completed electronically.

The court was highly critical of the seller’s conduct. The repeated letters about signature concerns, sent close to the closing date while no closing lawyer was retained, were characterized as part of an effort to “scuttle” the transaction and pressure the plaintiffs to walk away. When the plaintiffs’ counsel offered a statutory declaration from the witness who observed the signing to address any lingering doubts about authenticity, Tidol did not pursue it. The judge concluded that Mr. Subramaniam was searching for excuses to avoid a deal he no longer wanted, rather than trying in good faith to consummate the transaction. Motive for backing out was ultimately deemed legally irrelevant, but the pattern of conduct was central to the conclusion that the seller was acting in bad faith and had no legitimate reason to avoid its contractual obligations.

Remedy and the analysis of specific performance

Having found a breach, the court turned to remedy. The default remedy for breach of contract is damages, but specific performance—an order requiring the breaching party to complete the contract—is available in exceptional circumstances where damages are inadequate, particularly for real property that is objectively and subjectively unique. The plaintiffs bore the onus of proving that the McKay Road property was unique in a way that made monetary compensation an insufficient substitute.

On the subjective side, the property had several features that were integral to the plaintiffs’ business plan: it was near a major interchange (Brock Road and Highway 401), making it accessible to their workforce and customers; it was zoned M2S Industrial, which was critical because it allowed both automotive repair and the large-equipment storage needed for their landscaping operations; and it was large enough to accommodate both their own use and additional storage areas they intended to rent out for income. While generating rental income had an investment flavour, the court accepted that the property was not a mere “investment property” but a key operational asset for their active businesses.

Objectively, the evidence showed that comparable properties were scarce. Mr. Ennis had been searching within the Durham Region for industrial parcels specifically zoned to allow outdoor storage and a contractor yard. From February 2019 through November 2020, none other than the McKay Road property met the plaintiffs’ needs. Following the failed closing, he continued to monitor the market from fall 2021 through summer 2022, identifying more than ten sales in the area. None offered the same combination of size, permitted uses, and location. His unchallenged affidavit evidence was that he had not seen any alternative parcels available for purchase that would meet the plaintiffs’ requirements, and he gave concrete reasons why two superficially similar properties did not in fact meet their needs. The defendants filed no evidence to counter this, despite arguing in their factum that heavy industrial parcels and similar locations should be easily substitutable.

On this record, the court found the property both subjectively and objectively unique, and thus concluded that damages would not adequately protect the plaintiffs’ interest in having this specific parcel. If suitable alternative properties had been available, damages could in theory have compensated them by covering their out-of-pocket loss, the return of the deposit, and any extra cost of acquiring a replacement property. But the absence of any realistic alternative meant that money could not put them in the same position as performance of the APS would.

The court also weighed equitable considerations. While motive did not affect the finding of breach, it was highly relevant to remedy. The judge found that Tidol and Mr. Subramaniam had acted in bad faith—listing the property despite pending litigation, invoking COVID-19 and a “stay of process” without foundation, and then pivoting to exaggerated fraud allegations tied to one inconsistent signature in a superseded offer. This bad-faith pattern supported granting the strong equitable remedy of specific performance against the seller.

Terms of the order and overall outcome

In the result, the court granted the plaintiffs’ motion for summary judgment. It declared that the defendants had breached the APS and ordered specific performance, compelling Tidol to complete the sale on the original contractual terms, subject to practical adjustments for the passage of time. The new closing date had to be set within 120 days of the judgment, on the earliest reasonable date after the plaintiffs confirmed they had the necessary funds, and ordinary real estate adjustments would be made as of the new closing date, taking into account the deposit held in trust. The court retained jurisdiction to deal with any further directions needed to implement the transaction.

With respect to monetary relief, the decision did not award separate contractual damages such as loss of bargain or consequential loss. The primary remedy was the non-monetary order of specific performance, which ensures that the plaintiffs receive the property itself rather than a cash substitute. However, the court did address costs: pursuant to the parties’ agreement, it ordered the defendants to pay the plaintiffs $10,000 in costs, inclusive of HST and disbursements, within 30 days. Thus, the successful parties are the plaintiffs, Andrew Markew and Richard Araujo (in trust), who obtained an order requiring completion of the $1.45 million property sale together with a monetary award in their favour of $10,000 in costs.