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SALE OF LAND - Agreement of purchase and sale - Breach of - Damages - Repudiation

Friday, November 08, 2019 @ 6:20 AM  


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Appeal by the defendant from $308,688 in damages awarded against him for breach of contract. The appellant was the purchaser under an agreement of purchase and sale of a residence. After he failed to close on the original and extended closing dates as he did not have the funds, the respondents relisted the property and sold it for less than the price the appellant had agreed to pay. The motion judge awarded the respondents the difference in price and several consequential loss items. She held that the deposit of $75,000 was forfeited and was not to be credited toward the damage award. She found the respondents did not take reasonable steps to mitigate and were not required to accept a 10 per cent reduction in the purchase price by the appellant.

HELD: Appeal allowed in part. The motion judge made no error in finding the reason the transaction did not close was not from any inadequate documents from the respondents but because the appellant did not have the funds to complete the purchase. The duty to mitigate did not oblige the respondents to accept an offer from the appellant for less than the agreed price and then sue for the difference. The forfeited deposit was to be credited toward the damage award. One could infer the intent of the parties was that the deposit was to be applied to the purchase price whether received on completion or as damages. Where there was a loss, the deposit was treated as part payment for the damages suffered because of the loss.

Azzarello v. Shawqi, [2019] O.J. No. 5206, Ontario Court of Appeal, K.N. Feldman, D. Paciocco and J.M. Fairburn JJ.A., October 15, 2019. Digest No. TLD-November42019012