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Deep Pocket

Maggiacomo v. Yumasak 2018 ONSC 3368 is an example of the adage that no good deed goes unpunished. In this case, the good deed was that of the purchaser’s father. He had planned to sell his house and give a significant amount from the sale proceeds to help his son finance the purchase of his house.

Son paid $100,000 as a deposit for the house purchase. However, when it came time to close, father was unable to sell his house for the expected sale proceeds because of a drop in real estate values. Accordingly, son defaulted in his purchase. His vendor claimed the $100,000 deposit and sued both son and father for additional damages.

Agreement

The vendor argued that son was acting as father’s agent and, additionally, that father induced son to breach his contract.

However, the vendor acknowledged that neither father nor son had made pre-agreement representations. Further, nothing in the agreement indicated that son was acting as father’s agent.

Accordingly, the vendor had to prove, from the parties’ conduct, that an agency should be found by implication.

The judge noted that everything in this transaction, other than additional financing, pointed to son as the sole party to the purchase. Father’s attendance to view the house before the purchase meant nothing more than a concerned father attempting to assist his son. This is not agency. As an homage to all those parents in today’s inflated real estate climate helping their children, the judge stated: I do not agree with the suggestion that the court should imply that someone who agrees to provide debt financing to a purchaser of a real property is, therefore, the principal, and hence the actual purchaser of the property.”

Result

The judge dismissed an argument that father had induced son’s breach of the agreement. Father did not intend to cause damage to the vendor; he just did not have the money necessary to assist son.

The judge dismissed the action against father and allowed the action against son to proceed for damages that exceeded the forfeited deposit.

Image courtesy of markgraf.

Written by Jonathan Speigel, the founding partner of Speigel Nichols Fox LLP, leads the litigation and construction practices.