Executive Summary: Key Legal and Evidentiary Issues

• A buyer's failure to close a real estate transaction due to insufficient funds gave rise to the seller's claim for loss of bargain damages.

• Central to the appeal was whether the trial judge correctly calculated damages following the respondent buyer's default.
• Established Ontario law requires that, where a seller resells in a reasonable arm's length transaction, the difference between the two sale prices governs the damages calculation.
• No expert evidence was adduced by the respondent buyer to show the resale process was unreasonable or that the resale price was improvident.
• Failure by the trial judge to apply the framework in Arista Homes v. Rahnama, 2022 ONCA 759, and Marshall v. Hall, 2025 ONSC 910 constituted a legal error warranting appellate intervention.
• Pre-judgment interest was also recalculated on appeal at a rate of 12% per annum.

Facts of the case

Rosehaven Homes Limited and Bram-Rose Homes Inc. (the appellant sellers) entered into a real estate transaction with Salman Jamil (the respondent buyer). The transaction failed to close because the respondent buyer did not have the funds. The sellers subsequently resold the property and commenced an action for damages. Justice Phillip Sutherland of the Superior Court of Justice issued judgment on February 20, 2025 (2025 ONSC 1159), followed by a costs judgment on March 26, 2025 (2025 ONSC 1881). The appellant sellers appealed, seeking an increase in the damages award.

Legal principles at issue

The core legal framework governing the damages calculation was set out in Arista Homes v. Rahnama, 2022 ONCA 759, at paragraph 9. That authority establishes that where a purchaser fails to close and the vendor takes reasonable steps to resell in an arm's length transaction, and there is nothing improvident about the resale, the difference between the two sale prices is used to calculate the loss of bargain damages — without the need for expert evidence. The Court of Appeal also referenced Marshall v. Hall, 2025 ONSC 910 (Div. Ct.), at paragraphs 52–55, as further support for this approach.

Reasoning and analysis

The Court found that the trial judge erred by not applying the approach set out in Arista Homes and Marshall v. Hall. While the Court acknowledged that a buyer may lead expert evidence to show the seller failed to take reasonable mitigation steps or that the resale price was improvident, the respondent buyer in this case adduced no such expert evidence. The appraisal evidence did not establish that the resale price was improvident, and there was no evidence that the appellant sellers' mitigation efforts fell short. Accordingly, there was no basis to depart from using the resale price in the arm's length transaction as the foundation for the damages calculation.

Ruling and overall outcome

The Court of Appeal allowed the appeal and amended the judgment accordingly. The appellant sellers were successful. The damages award, originally $36,053.02, was increased to $69,761.09 — an additional $33,708.07 over what was ordered below. Pre-judgment interest, originally $22,639.32, was increased to $43,806.14, reflecting an additional $21,166.82 calculated at 12% per annum. As the respondent buyer had already paid the original judgment under appeal, the outstanding balance remaining payable was $54,874.89 plus costs fixed at $8,000, for a total of $62,874.89. The Court declined to adjust the costs on the motion for summary judgment.