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SALE OF LAND - Remedies - Rescission or annulment

Thursday, February 15, 2018 @ 8:46 AM  

Lexis Advance® Quicklaw®
Appeal by the plaintiff from a decision dismissing its motion for summary judgment and its action for return of a deposit. The appellant agreed to purchase a property from the respondent that included residential apartments. Prior to closing, an issue arose whether the apartments were a permitted use under the existing zoning by-law applicable to the property. The respondent rejected the appellant’s requisition that required the respondent to provide an amendment to the local zoning by-laws to permit the current use to continue legally after closing and advised that the residential apartments were a legal non-conforming use. The appellant subsequently obtained advice that there might indeed be a problem regarding the residential apartments. The appellant, however, advised that it was prepared to continue with the purchase, despite its concerns related to the current use, if the respondent provided satisfactory rental and golf course documentation. The appellant proceeded right up to the date of closing as if it would close the transaction. Correspondence was exchanged between the lawyers for the parties finalizing various matters necessary for the closing. On the day set for closing, the appellant’s lawyer communicated that the appellant would be signing the closing documents and delivering the closing funds. The appellant, however, refused to close the purchase because of the issue over the residential apartments. The motion judge found that the appellant had, by its conduct, waived the objection.

HELD: Appeal allowed. The appellant was entitled to summary judgment as claimed. None of the appellant’s conduct, either individually or collectively, established an unequivocal and conscious intention to abandon the deficiency. It was consistent with the appellant placing itself in a position to close the transaction if, in the end result, it decided to waive the deficiency or some other solution came about. That never happened. In accordance with the express terms of the agreement of purchase and sale, given that deficiency, the agreement came to an end and the deposits had to be returned.

1418885 Ontario Ltd. v. 2193139 Ontario Ltd., [2018] O.J. No. 356, Ontario Court of Appeal, J.M. Simmons, L.B. Roberts and I.V.B. Nordheimer JJ.A., January 24, 2018. Digest No. TLD-Feb122018008