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SALE OF LAND - Agreement of purchase and sale - Repudiation - By purchaser - Remedies

Friday, March 23, 2018 @ 8:42 AM  

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Appeal and cross-appeal from a judgment granting relief from forfeiture with a direction to distribute proceeds to a trustee in bankruptcy. The purchaser, Scicluna, advanced approximately $295,000 toward a condominium acquisition. At closing, she was unable to pay the remaining $78,000 due to a loss of employment. The vendor, Solstice, agreed to return all but $30,000 of the purchaser's monies if the unit was resold pursuant to a resale agreement. However, the purchaser refused to sign the accompanying release agreement due to a misapprehension of the amount to be retained by the vendor. The condominium resold for $435,000. The purchaser sued the vendor for the return of $265,000, as contemplated by the resale agreement. The vendor responded by invoking the forfeiture provision in the parties' initial purchase and sale agreement in respect of the entire $295,000. The application judge found the vendor's response disproportionate and granted the purchaser relief from forfeiture. However, the application judge directed payment of the monies to KTL, the trustee in bankruptcy appointed following the purchaser's loss of employment. The vendor appealed on the basis the judge erred in granting relief from forfeiture and erred in declining to find the claim statute-barred. The purchaser challenged the distribution of proceeds to KTL.

HELD: Appeal and cross-appeal dismissed. The application judge reached the correct result. The jurisprudence supported a conclusion that the purchaser's claim was covered by the ten-year period in the Real Property Limitations Act rather than the general period under the Limitations Act. The purchaser's contention that the deposit was not forfeited was rejected given her clear breach of the terms of the sale agreement. Relief from forfeiture was the obvious outcome on the facts given that the monies involved amounted to 80 per cent of the purchase price, the purchaser's unemployment, and her failure to comprehend the terms of the release. The substantial disparity between the value of the forfeiture and the damage to the vendor from the breach rendered relief from forfeiture a patently correct result. There was no basis for disturbing the distribution of the proceeds to the bankruptcy trustee.

Scicluna v. Solstice Two Ltd., [2018] O.J. No. 978, Ontario Court of Appeal, D.H. Doherty, D. Paciocco and I.V.B. Nordheimer JJ.A., February 23, 2018. Digest No. TLD-March192018011