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

Thursday, July 29, 2021 @ 6:35 AM  

Lexis Advance® Quicklaw®
Appeal by the purchasers from summary judgment awarding the respondent damages for the appellants’ failure to close a residential real estate transaction. Cross-appeal by the respondent from the order respecting the rate of prejudgment and post-judgment interest that was lower than the contractual interest rate. The appellants agreed to purchase a new home from the respondent builder but failed to close the transaction. The respondent relisted the house for sale and sued for breach of contract. The appellants argued the motion judge failed to consider that the respondent did not take reasonable steps to mitigate when, instead of listing the property on the MLS immediately, it listed the property internally for a period of nine months. The respondent argued that the motion judge had no jurisdiction to depart from the contractual interest rate.

HELD: Appeal and cross-appeal dismissed. The appellants did not pursue the mitigation issue at first instance, nor was there evidence to suggest that a higher price would have been obtained if the property was listed on the MLS as soon as the agreement of purchase and sale with the appellants was terminated. The uncontradicted appraisal evidence indicated that the property was worth less when the appellants argued it should have been listed on the MLS than while it was on the MLS. If the property had been listed earlier, at best the respondent might have avoided some of the carrying costs of the property and some of the prejudgment interest. The motion judge reduced the interest rate, relying on her inherent jurisdiction. In the exercise of the court’s common law and equitable jurisdiction, the departure from a contractual rate of interest could be justified by special circumstances. There were special circumstances to justify a departure from the contractual rate of interest in this case as the respondent did not expose the property to the open market for nine months after it terminated the agreement of purchase and sale. During this period of inaction, interest accrued on the full outstanding purchase price, and carrying costs were incurred.

Tribute (Springwater) Limited v. Atif, [2021] O.J. No. 3485, Ontario Court of Appeal, G.R. Strathy C.J.O., K.N. Feldman and K.M. van Rensburg JJ.A., June 25, 2021. Digest No. TLD-July262021008