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CONDOMINIUMS - Developers - Obligations of

Thursday, September 26, 2019 @ 8:23 AM  


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Appeal by the vendor from two summary judgments finding that the respondents were entitled to the return of deposits paid for two commercial condominium units and that the respondent Jung was also entitled to the return of the deposit paid for the purchase of a residential condominium unit in the same development. The respondents had objected to the statements of adjustments provided by appellant in respect of the commercial units. When the statements of adjustments were not amended to their satisfaction, the respondents sued for specific performance with appropriate revisions to the statements of adjustments, and abatements to the purchase price for each commercial unit. In the alternative, they sought the return of the deposits. Jung took interim occupancy of the residential unit. He then claimed the agreement was not binding because the appellant failed to deliver a current disclosure statement. In the alternative, he provided a notice of rescission because there were material changes that the appellant failed to disclose. The actions were stayed when the appellant went into receivership. The units were transferred to the appellant’s major creditor. The motion judge found that the respondents were entitled to refuse to close the transactions of the commercial units because the statements of adjustments were aggressive and overreaching. As the respondents did not breach the agreements, they remained in force when the litigation was stayed by the appointment of a receiver. The motion judge reasoned that the receiver repudiated the agreements when it sold the units to a third party. She concluded the agreements were terminated through no fault of the purchasers and the agreements mandated the deposits should be returned to the respondents. The motion judge found that the appellant did not deliver a current disclosure statement to Jung for the residential unit but rather responded by initiating an application seeking a declaration that the notice of rescission was void. The motion judge found that Jung’s position that the appellant failed to provide a current disclosure statement as required by the Condominium Act was reasonable and taken in good faith. The judge found the agreement continued to exist while the litigation remained unresolved. The agreement was then terminated through no fault of Jung entitling him to a return of the deposit.

HELD: Appeal dismissed. The motion judge’s finding that the agreements were terminated because of the receivership, and not through any fault of the respondents, was amply supported by the record. There was ample support for the motion judge’s finding that the statements of adjustments were erroneous. There was no basis to interfere with the motion judge’s conclusion that the erroneous statements entitled the respondents to refuse to close the transactions for the commercial units. The motion judge’s finding that the agreement was terminated because of the receivership, and not through any fault of Jung was amply supported by the record. The motion judge was correct to summarily reject the appellant’s argument that Jung’s notice of rescission under s. 74(7) constituted a repudiation of the contract. The delivery of a notice of rescission was the exercise of a statutory right, not a contractual or equitable right. There was no basis for revisiting the motion judge’s finding the appellant failed to provide a revised disclosure statement. The motion judge properly concluded the agreement was still in force up until the time at which the receiver conveyed the residential unit to the third party. Once the receiver completed the transfer of the residential unit, the agreement was terminated through no fault of Jung. Based on the agreement, Jung was entitled to the return of the deposit plus interest.

Jung v. Talon International Inc., [2019] O.J. No. 4090, Ontario Court of Appeal, R.G. Juriansz, K.M. van Rensburg and D. Paciocco JJ.A., August 7, 2019. Digest No. TLD-September232019012