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SALE OF LAND - Completion - Time for - Forfeiture of deposit

Tuesday, September 07, 2021 @ 9:30 AM  

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Appeal by the plaintiffs from trial judgment dismissing their claim for damages arising from the breach of an agreement of purchase and sale of a condominium and their request for relief from forfeiture of their deposit. The appellants purchased a condominium unit from the respondent developer before completion. The respondent extended the closing date eight times, resulting in the appellants losing their mortgage approval. They unsuccessfully applied to other banks for mortgage financing. The appellants unsuccessfully tried to assign the agreement before closing. The appellants did not complain of any of the delays on receipt of the respondent’s notices of extension. The appellants did not take possession of the unit and the transaction did not close. Without mortgage financing, they had no funds to pay and thus had no intention of taking occupation of the unit. The respondent kept the deposit funds paid by the appellants and resold the unit making a net profit of $100,000. The trial judge found that the respondent breached the Agreement but found the appellants had not accepted the respondent’s repudiation of the Agreement but had continued to press for performance and treated it as subsisting.

HELD: Appeal dismissed. The costs award in favour of the respondent was vacated. The parties were to bear their own costs. The trial judge identified and applied the correct legal test and made no palpable and overriding errors in finding that the appellants treated the Agreement as subsisting notwithstanding the respondent’s repudiation of the Agreement. The trial judge did not treat the repudiations cumulatively nor did he conflate the appellants’ conduct. He addressed each of the repudiations and culminated with a discussion of the final repudiation. None of the appellants’ conduct was consistent with acceptance of the respondent’s repudiation but was consistent with affirmation of the Agreement. The appellants’ conduct was consistent with an affirmation and an agreement to close on the closing date. Apart from the affirmatory conduct relied upon by the trial judge, additionally, the appellants did nothing for too long and the trial judge legitimately treated them as having affirmed the Agreement. There could be no question that the appellants had knowledge of the underlying facts. All the extension letters, which clearly described the cause and effect of each of the extensions, were sent to the appellants. There was no room for the appellants to assert any fraudulent misrepresentations. The appellants had access to lawyers and other real estate professionals throughout the real estate transaction. The trial judge did not err in not granting relief from forfeiture. He reasonably concluded that the respondent incurred expenses of $227,544 consequent on the appellants’ breach. The trial judge considered these expenses, the quantum of the deposit, and the increased proceeds of disposition received by the respondent on the resale of the property but chose not to exercise his discretion in favour of the appellants. The retention of the deposit by the respondent in this case was consistent with the objective of a deposit and the prospect of its forfeiture. Even though this court was extremely reluctant to interfere with a trial judge’s award of costs, in the unusual circumstances of this case where the respondent ultimately gained $100,000, it was fair and reasonable for the parties to bear their own costs of both the trial and the appeal.

Ching v. Pier 27 Toronto Inc., [2021] O.J. No. 4118, Ontario Court of Appeal, S.E. Pepall, I.V.B. Nordheimer and J.A. Thorburn JJ.A., July 30, 2021. Digest No. TLD-September62021001