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What Happens When Both the Vendor and the Purchaser Can’t Close?

In real estate transactions, especially in new home builds there are instances when both the vendor (builder) and the purchaser can’t close on the closing date (i.e., funds not being available). This scenario comes into play if the unwary vendor delays in a fashion that is not compliant with the agreement or the relevant legislation ( Ontario New Home Warranties Plan Act , R.S.O. 1990, c. O.31). Such acts can be construed as the ‘repudiating’ act which gives the purchaser the ability to elect to accept the repudiation and sue for damages. Alternatively, the purchaser can elect to affirm the repudiating act and in that case the agreement is not repudiated the agreement subsists. This effectively waives the purchaser’s right to terminate and sue for damages. But what happens if the vendor is in default and the purchaser can’t close? Starting from the basic legal expectation that for a purchaser to be entitled to sue for specific performance and/or damages, the purchaser must be ready, wi...
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Interpreting Releases using Sattva Capital Corp.

 A recent SCC decision that will likely not receive much attention but is an important read for lawyers and businesspersons who draft, review and/or finalize releases as a part of their practice. Justice Rowe delivered reasons for the Court in answering the question whether there is a special interpretive principle in interpreting releases and, if not, how does Sattva Capital Corp. v. Creston Moly Corp. , 2014 SCC 53 apply to the release before the court. Background. The appellant, Mrs. Bailey, struck, the respondent, struck Mr. Temple while drive a car. Mr. Temple was an employee of the City. The resulting incident attracted the Baileys to commence an action against the City for property damage to their car and physical injury to Mrs. Bailey. Mr. Temple, on the other hand, lodged a claim against Mrs. Bailey for the injuries he suffered. The Baileys and the City entered into a settlement agreement resolving the matter. The impugned section of the release is excerpted in the...
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SCJ: You Snooze You Lose: Tower Restoration v. Attorney General of Canada, 2021 ONSC 3063 (CanLII)

Background. Agreements between two sophisticated parties are generally looked at a different light by the courts. A court is likely to adopt a textual interpretation of the agreement. This contrasted to how legislation is generally interpreted nowadays, where a purposive interpretation is taken by the courts. In this recent case, the Government of Canada accepted a bid from a proponent (“Tower”) for the replacement of all the windows of a federal penitentiary. Tower was given a lump sum by Canada to complete the project. Tower incurred further charges that it sought to obtain from Canada. Tower submitted a “claim” under the governing agreement between the parties. Canada rejected the claim and issued a final decision. Tower acknowledged receipt of the decision. The terms of the dispute resolution clause required Tower to dispute the decision within 15 day of the decision. However, Tower failed to do so. It now brings an action of which Canada brought a summary judgment to d...
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Mortgagee’s Reasonable Excuse Not to Provide Discharge Statement = Suspension of Power of Sale Rights

Once a mortgagor provides a request to the mortgagee to produce a discharge statement, the mortgagee must answer the request unless it has a reasonable excuse for its failure to do so. This is a requirement under the Mortgages Act . In a recent case, 2544176 Ontario Inc. v. 2394762 Ontario Inc, 2021 ONSC 3067, a court tenaciously quarreled with a situation where the mortgagee failed to produce a discharge statement without a reasonable excuse. The court ultimately with a lot of zig zagging around the issues finally concluded that the sale by that the mortgagee’s subsequent sale to a bona fide third party was invalid. The court raised the practical issues in voiding the sale. Mortgages have been signed. Monies have been transferred. How can the transaction be properly reversed? The court asked a lot of questions but gave very little answers. What we can take away from this decision is that a court will invalidate a sale where the mortgagee does not produce a discharge statement to a...
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Appropriate Use of Expert Evidence on Summary Judgment Motions

As summary judgments become more and more the principal forum to resolve disputes in their entirety, rules around the evidence that can be used in these types of motions become paramount. Courts do allow expert evidence to come in as evidence on summary judgment motions so long as the Rules on expert evidence are complied with. In a recent case, a court criticized the defendant for not producing an expert report in line with the Rules . The report or part of it was brought in as evidence through a solicitor’s affidavit. The court found that this approach amounts to the expert evidence being insulated as there is no ability for the opposing party to cross-examine the expert. The court ultimately ruled in favour of the plaintiff as the defendant had an obligation to put their best foot forward and prove there is a genuine issue requiring trial. It had failed to do so.   Background A roofing company provided services to a city. A flood occurred and the city took the position th...
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