Focus On

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

Monday, January 04, 2021 @ 9:17 AM  


Lexis Advance® Quicklaw®
Action by 956126 Alberta Ltd. (956) for damages in relation to the aborted sale of a gasoline station, convenience store, and liquor outlet collectively known as St. Brides Esso. The defendant Kim agreed to buy St. Brides Esso from 956 under a contract by which the purchase price was to be paid in instalments over 14 months. The purchaser took immediate possession, but legal title to the property remained with 956 while payments were being made. When he purchased the property, Kim knew it suffered from some hydrocarbon contamination. After assigning the contract to his company, the defendant JMS Alberta Co. Ltd, and taking possession of the property, Kim and JMS embarked on a remediation program and discovered that the contamination was more extensive than anticipated. JMS made the instalment payments, except for the final payment. Title to the property did not transfer. JMS returned the property to 956 pursuant to a court order made without prejudice to the parties’ respective positions. JMS took the position that 956 and Doh, the sole director and owner of 956, deceived JMS, through Kim, into buying the business by concealing material facts, including the extent of the environmental contamination. JMS took the position that the purchase agreement should be rescinded and damages awarded to it for deceit or unjust enrichment.

HELD: Action allowed. JMS repudiated the purchase agreement by not providing the balance of the purchase proceeds by the due date. 956 replied by extending the deadline for delivery of the proceeds, but JMS still did not make the payment. The breach crystallized after the expiration of the extension. Even if 956 had been obligated to unconditionally provide the transfer of title prior to JMS delivering the balance of the purchase funds, JMS’s position would have been defeated by anticipatory repudiation. JMS’s lawyer had communicated unreservedly that his client would not make the final payment by the due date. 956 did not engage in deceit or fraudulent misrepresentation. JMS’s claim for unjust enrichment was without merit. Monthly payments flowed to 956 by operation of a contract, which 956 did not breach. Inventory was returned to 956 by operation of the repossession order. Even if the alterations made to the property enhanced its value, it would not have been unjust for the vendor to keep the value of the improvements since JMS repudiated the contract. 956 was awarded $134,060 in damages for breach of contract and lost use after termination.

956126 Alberta Ltd. v. JMS Alberta Co., [2020] A.J. No. 1253, Alberta Court of Queen’s Bench, K. Feth J., November 19, 2020. Digest No. TLD-January42021001