Focus On

SALE OF LAND - Express terms - Remedies - Specific performance

Wednesday, February 13, 2019 @ 8:41 AM  

Lexis Advance® Quicklaw®
Appeal by Di Millo from dismissal of an application for specific performance of a real estate contract. The appellant owned a large portion of industrial land, from which he severed certain lots to sell. Two lots were sold to the respondent, 2099232 Ontario, for $1.16 million. The respondent paid $360,000 in cash and the appellant took back the remainder as a mortgage. The parties' agreement included an option clause that permitted the appellant to repurchase the lots at the original purchase price in the event the purchaser failed to complete construction of an industrial building on the lots by a specified date. In addition, the agreement included a clause prohibiting sale, assignment or transfer by the respondent without the appellant's consent. Following expiration of the contractual deadline and a further one-year extension, construction had yet to commence. The appellant wrote counsel for the respondent advising of his intent to exercise the option. Two months later, the respondent entered an agreement to sell the property to a third party without having sought the appellant's prior consent. The appellant subsequently sent formal notice to exercise the option. The respondent requested a further 12-month extension. The appellant refused and requested two additional mortgages obtained by the respondent be discharged, with the property re-conveyed. Litigation ensued, and the appellant applied for specific performance. The application judge concluded the appellant failed to meet the timing requirements of the option provision, and that the appellant was not ready, willing and able to close a re-conveyance. The appellant appealed.

HELD: Appeal allowed. The application judge misapprehended the nature of the appellant's application and the underlying facts by miscasting the relief sought as injunctive in nature with respect to the subsequent mortgages obtained by the respondent. In addition, the application judge erred in concluding the option had expired due to a misapprehension of the nature of a "time is of the essence" clause. No time was stipulated in the parties' agreement for exercising the option. The respondent did not appear interested in timely compliance given the failure to commence building. The appellant provided notice to exercise the option within a reasonable time. The appellant's claim for specific performance was not defeated by a failure to tender, as there was evidence the appellant had the necessary funds, and it was unnecessary to take the futile steps of preparing documents given the respondent's position. The appellant was entitled to the remedy of specific performance given the uniqueness of the property at issue.

Di Millo v. 2099232 Ontario Inc., [2018] O.J. No. 6657, Ontario Court of Appeal, P.S. Rouleau, G.I. Pardu and M.L. Benotto JJ.A., December 19, 2018. Digest No. TLD-February112019005