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Shaneka Shaw Taylor

  • Shaneka Shaw Taylor

Buyer Can’t Walk Away Just Because the Seller Transfers Title
Buyer Can’t Walk Away Just Because the Seller Transfers Title 150 150 Shaneka Shaw Taylor

In a recent decision, Hunter v. Atwal (2025 ONSC 5960), the Ontario Superior Court once again reminded buyers that an Agreement of Purchase and Sale (APS) is not a “maybe” – it is a binding contract. A purchaser who refused to close after the seller transferred title for estate-planning reasons was held liable for the seller’s loss on resale and related costs.

This decision sits comfortably alongside the themes in our earlier article on enforcing real estate bargains and reinforces the same core message: courts will look at the substance of the deal and the parties’ obligations, not technical manoeuvres or last-minute buyer’s remorse.

Esther Hunter, age 99, owned a home in Brampton. Due to her declining health, her children, William and Catherine, acted under a valid Power of Attorney (POA).

In April 2022, they listed the property and entered into an APS with buyer Harbrinder Atwal to sell the property for $1,120,000, with a $40,000 deposit and a June 30, 2022 closing date.

Shortly after the APS was signed, title was transferred from Esther to her two children (the attorneys) for estate-planning reasons — specifically, to avoid complications if Esther passed away before closing. Sadly, she did pass away on May 17, 2022. The buyer’s agent was told about the title transfer almost immediately, but no formal amendment to the APS was signed.

Once Mr. Atwal focused on the fact that title was now in the attorneys’ names, he took the position that the deal was off. He argued that the property was no longer in Esther’s name, that his title insurer (Chicago Title) refused coverage, and that he could not be assured of receiving “good title.”

The sellers’ lawyer tried to solve the problem: he offered an extension of closing and provided documentation, including the Will and the POA, confirming that good title could be conveyed. The sellers remained ready, willing, and able to close.

Despite that, the purchaser refused to complete the transaction. The sellers eventually resold the property for $876,000 – a $244,000 shortfall from the original price – and sued the purchaser for their loss, plus legal fees and carrying costs. They moved for summary judgment and asked the Court to award them damages and dismiss the purchaser’s counterclaim for a return of his $40,000 deposit.

The Competing Positions

The Hunters argued that the title transfer from Esther to her children was authorized under the POA; that the APS remained valid and binding; that the purchaser failed to deliver a written objection to title by the contractual deadline; and that the real reason for non-completion was financing, not any legitimate concern about title.

Mr. Atwal argued that he never agreed to deal with the attorneys as sellers, that the APS was not assignable, that the transfer of title to the attorneys broke privity of contract, and that he was justified in refusing to close because his title insurer would not provide coverage. In effect, he treated the estate-planning transfer and the insurer’s refusal as an escape hatch from the deal.

The Court’s Decision: No Justification to Walk Away

Justice Wilkinson rejected the purchaser’s arguments and granted summary judgment in favour of the Hunters.

Key findings included:

  • The APS itself showed that Esther was acting “by her Attorneys under Power of Attorney.” The use of the POA was built into the contract from the outset.

  • The transfer of title from Esther to her attorneys did not invalidate the APS.

  • The sellers were always able and willing to convey good title on closing.

  • The purchaser did not submit a written objection to title by the contractual deadline in the APS and could not later rely on alleged title issues as a reason to refuse closing.

  • The absence of title insurance was irrelevant: the APS did not make title insurance a condition of closing.

The Court also accepted that the real problem was financing, not title. Buyer’s remorse (or a failed mortgage) is not a legal defence dressed up as a title concern.

Justice Wilkinson relied on the Court of Appeal’s decision in Nguyen v. Zaza (2023 ONCA 34), which confirms that a vendor does not need to hold legal title at all times — only the ability to convey good title on the closing date.

On damages, the Court awarded:

  • $244,000 – loss on resale (difference between the original and subsequent sale prices)

  • $1,496.12 – legal fees

  • $2,822.48 – carrying costs

Total damages were $248,318.60. After applying the $40,000 deposit, judgment was granted for $208,318.60 in favour of the Hunters, and the purchaser’s counterclaim for the return of his deposit was dismissed. That is an expensive way to find out that “my title insurer doesn’t like it” is not a contractual excuse.

This approach is consistent with how Ontario courts deal with failed real estate transactions, including cases enforcing oral agreements or granting specific performance where the property is unique. Courts focus on the parties’ actual contractual obligations under the APS, whether the vendor can convey good title on closing, and whether a party is using technical arguments to escape a deal for purely financial reasons.

Practical Lessons for Sellers, Buyers, and Real Estate Professionals

For sellers and families using Powers of Attorney: an APS signed “by Attorneys under Power of Attorney” remains binding even if title is later transferred to those attorneys for estate planning. If you are dealing with elderly owners or anticipating health issues, proactive planning (including POAs and possible title transfers) can avoid uncertainty if the owner passes away before closing.

For buyers: if you have concerns about title, you must raise them in writing within the time limits in the APS. Missing the objection deadline is risky and may bar you from relying on title complaints later. Title insurance is not an automatic contractual condition; unless your APS expressly makes insurance a condition of closing, your insurer’s refusal to issue a policy will not, by itself, justify refusing to close.

For agents and lenders: how the vendor signs matters. If the seller is acting by attorney, ensure the APS clearly reflects that from the outset (as it did here). If there are changes to the registered owner for estate-planning reasons, consider whether a simple amendment to the APS is advisable to avoid later arguments — even though this case shows that such a transfer is not necessarily fatal.

Hunter v. Atwal is a clear signal: courts will not let buyers use estate-planning title transfers or title-insurance decisions as a pretext to walk away from a deal they no longer want. When the APS is clear, the seller can give good title on closing, and the buyer’s real issue is financing, the bargain will be enforced – with significant financial consequences for the defaulting party.

  • Shaneka Shaw Taylor

Court orders builder to return deposit following “misleading conduct”
Court orders builder to return deposit following “misleading conduct” 600 400 Shaneka Shaw Taylor

Once a purchaser provides a deposit for an Agreement of Purchase and Sale (APS), there are very limited circumstances in which that purchaser can recover their deposit in cases where the purchaser refuses or is unable to close. 

The case of Naeem v. Bowmanville Lakebreeze West Village Ltd. illustrates the limited scenario can lead to the purchaser getting their deposit back. 

Facts

Shireen Naeem (the buyer) entered into an APS with new home builder, Bowmanville Lakebreeze West Village (the seller), to purchase a new home at 39 Larkin Lane in Bowmanville, Ont. The terms of the APS were as follows: 

(a) A purchase price of $629,900; 

(b) A deposit of $82,916.19 which included décor and structural upgrades; 

(c) A requirement that Lakebreeze comply with certain conditions if it sought to change closing dates; 

(d) A closing date of Sept. 14, 2017; and 

(e) An outside closing date of Jan. 14, 2019

A Tarion addendum was also included in the APS, which outlined how the closing date would be altered. 

 

The sequence of events

Lakebreeze requested to change the “firm” closing date of May 14, 2018, to a “delayed” closing date of Mar. 21, 2019 (which was beyond the “delayed” closing date stipulated in the APS). Lakebreeze provided notice of this change on May 2, 2018 (which was well beyond the required notice period). 

Shortly thereafter, a representative of Lakebreeze left a voicemail for the buyer on Aug. 27, 2018, to advise her that the dates were being moved. The representative then sent an email to the buyer requesting that she call them regarding the new closing date. 

The call was returned by the buyer’s son, who was advised — by the representative — that the buyer could send in a request for a preferred closing date. The son then asked whether or not the buyer could get her deposit back. The representative told him that someone would call back to provide a response, but, according to the buyer, no one ever did. 

The buyer emailed Lakebreeze on Aug. 28, 2018, asking for a closing date of either Apr. 30, 2019, or the first week of May 2019. Lakebreeze’s representative emailed the buyer back the following day advising her that the latest possible closing date was Apr. 23, 2019 because this was the latest date in order to “stay in the delayed compensation eligibility.” (This was a misstatement because, according to the APS, the buyer was already entitled to delayed compensation eligibility because the closing date was beyond the “firm” closing date). 

The representative followed up by sending an email to the buyer, attaching a draft amendment to the APS for her to sign. The buyer signed the amendment, and the closing date was delayed to Apr. 23, 2019. At the time she signed the amendment, the buyer was not aware — nor was she told — that she did not have to sign the amendment and that the APS was actually voidable at this juncture. The buyer did not seek legal advice before signing the amendment. 

On Apr. 12, 2019, the buyer asked Lakebreeze if the APS could be amended to add two new parties (her daughter-in-law and her son). Lakebreeze reminded the buyer that Apr. 23, 2019 –— the closing date —was approaching. On the closing date, the buyer responded, asking if she could add three new parties to the APS and delete herself from the agreement entirely. Lakebreeze refused and advised the buyer that they were terminating the APS. 

On May 16, 2019, the buyer attempted to reinstate the APS. Lakebreeze responded by advising her that the APS had been terminated and that the deposit was forfeited. 

The buyer’s Arguments

The buyer submitted that she was misled (deliberately) by Lakebreeze’s representative because the representative did not inform her that Lakebreeze had breached the APS by setting an improper “delayed” closing date and that the requested amendment would have had the effect of alleviating Lakebreeze of said breach. 

The buyer also submitted that she was not advised of the fact that signing the amendment was voluntary and that she could have either set a new closing date herself or accepted Lakebreeze’s repudiation of the APS and gotten her deposit returned. 

The buyer argued that the court should exercise its discretion to grant her relief from forfeiture of the deposit because the forfeiture was out of proportion to the damages suffered by Lakebreeze and because allowing Lakebreeze to keep the deposit would be unconscionable. 

Lakebreeze’s Arguments

Lakebreeze claimed that it was not in breach of the APS by moving the closing date because the Tarion addendum functioned as a “guideline” rather than a binding agreement. The agreement was also voidable by the buyer, yet she chose to sign the amendment. 

Lakebreeze further submitted that the buyer should be barred from making any argument that she should be relieved of her obligation because she voluntarily signed the amendment and because she should have obtained legal advice (as was contemplated in the APS) before she signed the amendment. 

Lakebreeze also pointed out that the buyer made a last-minute request to add parties to the APS and to remove herself (which made it clear that she was unable to close the transaction because of her financial situation) and that the buyer did not attempt to reinstate the APS until well after she was advised that the APS was terminated. Additionally, the buyer offered no evidence that she was able to close the deal on any of the prior closing dates. 

Finally, Lakebreeze submitted that “(t)he delay of the closing date as agreed to in the amendment inured to the benefit of the Buyer due to her difficulty in financing.”

 

Court’s decision: Altering the closing date

The court determined that the Tarion addendum was a “guideline,” and therefore, the parties were not precluded from amending the dates set out. The court also noted that since section 4(a) of the addendum stated that “any amendment not in accordance with this section is voidable at the option of the Purchaser,” any amendment that was non-compliant and that altered a closing date was voidable (but not invalid). 

The court also held that:

1) The parties were able to alter the closing date by virtue of a mutually agreeable amendment (as was argued by Lakebreeze);

2) The buyer could have sought legal advice, and she could have better understood her rights with respect to voiding the APS and getting her deposit back;

3) At the time of the request to extend the closing date, the buyer agreed to extend it;

4) The buyer could not close the deal on the extended closing date of Apr. 23, 2019, as a result of her financial situation. 

 

Did Lakebreeze mislead the buyer?

The evidence before the court demonstrated that the buyer was misled by Lakebreeze’s representative because the buyer “was told that she had to agree to a closing date of no later than Apr. 23, 2019 or she would lose her eligibility for delayed compensation” (which was untrue) and because she “was not alerted to the fact that the notice period for a request by Lakebreeze to further delay the closing date had passed nor that the extension of the closing date rendered the contract voidable should she wish to do this.” 

The court acknowledged that Lakebreeze was not required to provide the buyer with legal advice. Ultimately, however, Lakebreeze’s conduct went beyond merely making a request of the buyer without explaining the options available to her. 

In response to the buyer’s request for a closing date later than Apr. 30, 2019, Lakebreeze’s representative should have told her that she was entitled to a later date — instead, the representative chose to deliberately mislead the buyer. At this point, the buyer was actually entitled to void the APS and get her deposit returned. 

Another reason why the court held that Lakebreeze misled the buyer had to do with “the failure to answer the Buyer’s son’s question about the possibility of getting the deposit back.” 

 

Forfeiture of the buyer’s deposit: The law 

Lakebreeze sought to hold the buyer to the strict terms of the agreement despite the fact that it deliberately misled her about the terms of the agreement. The court found that Lakebreeze’s conduct did not necessarily amount to a breach of the APS, but it did factor strongly into the court’s analysis with respect to whether or not the buyer would be relieved from forfeiting her deposit.

The court pointed out that section 98 of the Courts of Justice Act, which allows a court to “grant relief against penalties and forfeitures, on such terms as to compensation or otherwise as are considered just” — was to be given a fair, large and liberal interpretation. 

The court also held that granting relief from forfeiture is a “power is predicated on the existence of circumstances in which enforcing a contractual right of forfeiture, although consistent with the terms of the contract, visits an inequitable consequence on the party that breached the contract.” 

Furthermore, since courts grant relief from forfeiture of a deposit (in the context of agreements of purchase and sale) “where the deposit constitutes a penalty,” the court found it important to determine whether the deposit was out of proportion to the damages suffered and whether retention of the deposit would be unconscionable. The court also clarified that a finding of unconscionability “must be exceptional and strongly compelled on the facts of the case.” 

The court then referred to paragraph 30 of the Redstone Enterprises Ltd. v. Simple Technology Inc. decision, which outlined factors to be considered in determining whether forfeiture should be considered unconscionable. Some of these factors include: 

a) The relative bargaining powers of the parties

b) The relative sophistication of the parties; 

c) The existence of bona fide negotiations; d) The nature of the relationship between the parties; 

e) The gravity of the breach; and 

f) The conduct of the parties.

 

Forfeiture of the buyer’s deposit: Application of the law to the facts 

Lakebreeze was a builder and vendor of residential homes who was in the business of negotiating agreements of purchase and sale with prospective homebuyers. The buyer was a widow who worked two jobs whilst undergoing cancer treatment in order to save enough money to put down a deposit on a home for her family. 

Negotiations between Lakebreeze and the buyer (regarding the extension of the closing date) involved Lakebreeze failing to answer the buyer’s question (regarding the return of her deposit), misstating the facts (with respect to the period of eligibility for delayed compensation), and going ahead with producing an amendment with a closing date that was contrary to what the buyer requested. Lakebreeze also engaged in such conduct whilst knowing that the APS was voidable at the request of the buyer without any penalty. 

Lakebreeze suffered no loss as a result of the failure to close the transaction yet wished to hold the buyer to the amendment. The court found that it would be unconscionable to do so.  

Lakebreeze was to return the deposit of $82,916.19 as well as pre-judgement interest to the buyer.

 

Summary

When a purchaser and a builder and vendor of residential homes (in the business of negotiating agreements of purchase and sale with prospective homebuyers) enter into an APS, there may be issues with the agreed-upon closing date. 

Negotiations regarding amendment of a closing date will be found to be misleading if: 

1) One of the parties misstates the facts to the other party with respect to agreeing to a certain date and then forges ahead with producing an amendment with a closing date contrary to what was requested by the other party;

2) One of the parties fails to answer the other party’s question regarding the return of a deposit and/or 

3) One of the parties was not alerted to the fact that the notice period for a request by the other party to delay the closing date has passed (thereby rendering the contract voidable). 

Such misleading conduct will not necessarily amount to a breach of the APS, but it will factor into a court’s analysis of whether or not a requesting party should be relieved from forfeiting his/her deposit. 

  • Shaneka Shaw Taylor

Mitigation of Damages Following Breach of Agreement of Purchase and Sale
Mitigation of Damages Following Breach of Agreement of Purchase and Sale 150 150 Shaneka Shaw Taylor

When a purchaser fails to close a real estate transaction, in addition to showing that the seller was ready, willing and able to close on the scheduled closing date, in order to obtain judgment for any losses the seller may have suffered, the seller is required to show that they took all reasonable steps to minimize their loss, this is know as mitigation. In Madison Homes v. Yiman Shi, 2020 ONSC 7810, the Ontario Superior Court of Justice, recently considered what a seller must do to show that he/she did all they could to minimize their losses arising from the failed real estate transaction.

The buyers and seller (a developer) had signed an Agreement of Purchase and Sale for a property within the Cornell Rouge subdivision in Markham, Ontario for $1,717,224.57. The Agreement was scheduled to close on October 30, 2018. The closing date was then extended to November 9, 2018. It did not close on November 9. After several months, the seller resold the property for  $1,242,964.11.

The buyers did not dispute that they were in breach of the Agreement. They rested their case on the seller’s failure to get a higher resale price.

The court agreed with the seller and awarded it judgment for $353,582.28.

In outlining the law in this area of mitigation, the court stated that a seller has the initial burden of proving that it has suffered loss from the buyer’s failure to close. One the seller has proven its loss, the onus then shifts to the buyer to show that the seller’s losses could have been reduced had the seller taken more reasonable steps. But what are the “reasonable steps” that a seller must take?

The answer lies in the market. The price the market will bear at the time of a resale is largely determinative in a seller’s litigation attempts. A seller will rarely be faulted for evaluating and watching the market, over time, to see if it will increase. As long as the length of time is not entirely unreasonable. In this case, the court found that the seller was not required to immediately relist the property when it was told by the buyers that the deal would not close on November 8. In fact, an innocent party (in this case the seller) has options available to it in the face of a default – elect to terminate the contract and sue for damages or reject the repudiation and insist on performance of the contract. Here, the seller chose to insist on the closing of the transaction. When that did not occur, the seller weighed its options and listed the property when it felt the timing was right.

A buyer cannot argue with the resale value obtained by the seller, unless:

  1. The buyer provides their own market evaluation or expert evidence from a realtor about the value of the Property and that that the seller could have obtained a higher price whether through exposing the property more widely or taken additional marketing steps; and
  2. The buyer can prove, again through professional opinion, that the seller’s delay in listing the property was unreasonable and negatively affected the resale price.

Absent positive proof by a buyer that a seller did not do its best when remarketing and reselling the property, the seller is entitled to be put in the same position it would have been in, had the original contract been performed. That is, the seller is entitled to the difference between the original purchase price bargained for and the price it obtained on resale (in this case, the difference of $350,260.46). In addition, the seller may also be entitled to an additional carrying costs between the original closing date and resale closing date as well as any additional costs that should have been foreseeable by the buyer, such as extra interest, legal fees, etc. The key here being foreseeability.

In summary, it is important that any buyer wishing to challenge the reasonableness of a seller’s mitigation efforts must present evidence to the court, from a professional such as an appraiser, real estate salesperson or broker, as to market conditions at the time of the breach and the time of resale, in order to mount a viable mitigation defence.

  • Shaneka Shaw Taylor

Joint Ventures: Reasonable Expectation of Partners May not survive an Application under the Partition Act
Joint Ventures: Reasonable Expectation of Partners May not survive an Application under the Partition Act 150 150 Shaneka Shaw Taylor

When parties co-own a property, either as joint tenant or tenants in common, they retain the prima facie right to compel either a partition or sale of the property. However, a co-owner can be deprived of the right to compel a sale in circumstances of malice, oppression, or vexatious intent. Specifically, the Court has recognized that in order to prevent a partition or sale, there must be conduct that undermines the reasonable expectations of the parties. In Green et al. v. Gardeazabal, 2023 ONSC 2683, the Court clarified what constitutes “reasonable expectations” in this regard.

Facts

In mid-2021, the Applicants, Ms. Green and Mr. Dutra, and the Respondent, Ms. Gardeazabal, contemplated purchasing an investment property together. Prior to their purchase, the parties had discussed achieving a return on investment within two years of owning the property. Green and Dutra had also inquired with a mortgage broker and real estate agent about the possibility of a return on investment within one to two years. The parties then purchased a property in Severn, Ontario in April 2022, and each held a 50% share as tenants in common, with Green and Dutra holding their 50% share as joint tenants. There were no written contracts or agreements among the parties governing their joint venture. Shortly after the purchase, Green and Dutra told Gardeazabal that they wished to sell the property. Green and Dutra gave Gardeazabal a number of options, including a potential buy-out of their interests. Instead of doing so or presenting a counteroffer, Gardeazabal indicated she would simply allow the mortgage to renew automatically to prevent Green and Dutra from getting out of it.  Green and Dutra then brought an application for the sale of the Property. Gardeazabal sought a dismissal of the application and an interim injunction preventing the sale until the end of April 2024.

Gardeazabal’s Position

Gardeazabal opposed the sale of the property on the basis that Green and Dutra’ conduct and representations before the purchase, created a reasonable expectation that the parties would hold the property for at least 2 years. She had formed a company with Green and Dutra to handle property management and rentals and had rented the property for the summers of 2022 and 2023. She stated that she relied on the reasonable expectations to secure her portion of the down payment, which amounted to her life savings, and that after the parties purchased the property, Green and Dutra wanted to purchase other properties but could not finance these projects while they owned the subject property. She submitted that as a result, Green and Dutra’ conduct was coercive and abusive, and unfairly disregarded her interests.

Green and Dutra’s Position

Green and Dutra submitted that the evidence did not support Gardeazabal’s reasonable expectation claims, as there was no formal agreement as to how long the parties would own the, property. They argued that any references to this timeline in their discussions were projections subject to the ordinary considerations of real estate investment. Further, any communication done prior to purchasing the property was done for the purposes of planning or for due diligence.  Finally, Green and Dutra argued that neither of them acted in a coercive/abusive/unfair manner, and they no longer trusted Gardeazabal as they were concerned she did not account for all the funds she received from vacation renters.

Rights Under the Partition Act

Justice Harper first canvassed the legal considerations governing the partition and sale of land pursuant to the Partition Act. Per sections 2 and 3 of the Act, all tenants in common have a prima facie statutory right to compel a partition or sale. The presumption is in favour of partition, although a sale will be ordered if found to be more advantageous to the parties, or if the land is not suitable for partition. The Court has the discretion to refuse either a partition or sale; however, the party resisting the request has the onus of demonstrating the other party’s malice, oppression, or vexatious intent, such that the remedy sought would cause them hardship. In exercising this discretion, the Court should account for any agreements between the parties about the land in question.

Oppressive Conduct and Reasonable Expectations

Justice Harper then reviewed the legal concepts surrounding oppressive/coercive conduct and reasonable expectations within the context of the Partition Act. The oppression remedy, as it appears in corporate law, contains two elements: 1) conduct that undermines the reasonable expectations of the parties; and 2) conduct that is coercive/abusive/unfairly disregards a party’s interests. A claimant’s reasonable expectations to be treated a certain way will depend on the facts of the case, the relationship at issue, and the entire context of the matter. A party’s oppressive conduct is also usually merged or tied up with conduct that may defeat the reasonable expectations of the parties. The Court found this contextual approach should be considered when deciding whether or not to grant a remedy under the Partition Act, as a determination of oppressive conduct requires an examination of the relationship between the parties, their reasonable expectations, the nature of the conduct, and the impact on the person seeking to avoid a sale.

Application of the Law to the Facts

Justice Harper found that while the parties embarked on an investment venture, there was never any agreement among them on the terms of this venture, and any conversations, planning, or due diligence leading up to the purchase of the property did not amount to establishing a reasonable expectation to hold the Property for at least two years. While he noted that Gardeazabal did have an expectation of the length of time the Property was to be held, this expectation was subjective, as setting a minimum time to hold an investment is not a reasonable expectation, given the nature of investing in real estate.

Justice Harper then went on to find that Green and Dutra did not act in a manner that was oppressive or in bad faith. They no longer saw the Property as profitable, it did not suit their needs, and they had lost confidence in Gardeazabal’s ability to manage it. He further noted that when Green and Dutra communicated this to Gardeazabal, she did not consider any of the options Green and Dutra had given her to retain the property. In the end, Justice Harper ordered a sale of the property,

Summary

Parties who wish to purchase an investment property together should document their expectations and intentions in writing and have such documentation reviewed by a lawyer prior to execution. Even with such documentation governing the relationship between parties, a court will take a contextual approach when assessing whether or not one party has behaved in an oppressive manner outside of another party’s reasonable expectations. This context will include the nature of the real estate market, which means that any expectations the parties may have about a minimum amount of time to hold a real estate property will likely not be considered valid by the court.

  • Shaneka Shaw Taylor

Specific Performance Remedy for An Agreement of Purchase And Sale Breach
Specific Performance Remedy for An Agreement of Purchase And Sale Breach 150 150 Shaneka Shaw Taylor

When a party to a failed real estate transaction is not at fault for the deal’s failure and can demonstrate the property in question is unique, rather than damages, that innocent can request a court order requiring the breaching parties to complete the transaction.  This remedy is known as specific performance.  In Warner v, Ahmadi, 2022 ONSC 2679, the court clarified what constitutes ‘uniqueness’ when awarding an order for specific performance.

The buyer and seller has signed an Agreement on August 18t, 2021, with an agreed upon purchase price of $340,000 for a co-operative unit.  In advance of closing, the buyer – Warner, fulfilled all the conditions, which included financing and co-op board approval.  At the seller’s request the closing date was extended twice before settling on November 22, 2021.  On November 4, the seller – Ahmadi, advised Ms. Warner he would not be able to close because his spouse opposed the sale.  Mr. Ahmadi’s lawyer then asked Ms. Warner to sign a Mutual Release terminating the Agreement, but she refused.  Four days before the expected closing date, Mr. Ahmadi’s spouse obtained a court order requiring any proceeds of property sales made by Mr. Ahmadi to be held in trust for further court deliberation in their ongoing dispute which essentially allowed the sale to proceed.  When the expected closing date of November 22 arrived, Mr. Ahmadi failed to close, despite a binding contract and his alleviated family law obligations.

Anticipatory Breach

Justice Morgan found that Ms. Warner was the innocent party in the transaction because she was willing and able to close after securing financing with no significant changes having occurred such to suggest that the bank would not extend their arrangement. He also found that Mr. Ahmadi was the defaulting party because he breached the contract by failing to close as required by the Agreement.

Remedy: Specific Performance

Specific performance is a court ordered remedy which requires parties to complete their obligations stemming from a valid and binding Agreement of Purchase and Sale.  It is only available where there is evidence that the property in question is ‘unique’.  However, the “uniqueness test” does not require a real estate property to be ‘one of a kind’.  Instead, uniqueness refers to qualities that make a property suitable for a buyer’s intended use in conjunction with comparable alternatives not being reasonably available to purchase.  Ultimately, uniqueness requires that damages be an unsatisfactory outcome as an alternative to a buyer acquiring the property through specific performance.

Factors the courts have considered when assessing a property’s unique value from a purchaser’s perspective include: their wish list (of features), market conditions, the location, type of home and its condition/state, the lot, completed aspects (for homes under construction), finishes and their level of quality, proximity to certain amenities, and the availability of substitute-homes in the same price range.

For alternative properties to be suitable substitutes, they must be (a) available on financing terms similar to those which were available for the original property and (b) realistically available for a plaintiff to purchase.  Simply put, a comparable home outside the price range of a would-be purchaser is not a readily available substitute.

In determining whether to grant specific performance in this case, the court assessed four properties submitted by Mr. Ahmadi to determine if they were comparable alternatives for Ms. Warner to have purchased at the time of the Agreement breach.  Two of the four properties sold for more than $100,000 over asking, putting them outside the requisite price range.  The third has higher maintenance fees (an extra $200 per month) than the original property, without including hydro or taxes (which are included in the original’s maintenance fee) and was expected to sell over asking price due to the building’s sales history.  Lastly, the fourth property was smaller and listed at $28,000 more than the property Mr. Ahmadi had soled to Ms. Warner.  Thus, the court concluded that none of the properties submitted by Mr. Ahmadi were comparable alternatives to the original property, which was unique because it was in a desirable neighborhood at an ideal price point for Ms. Warner, who described it as becoming her “forever home”.

Mitigation

Despite a defendant bearing the burden of proof to establish that a plaintiff failed to mitigate, and that mitigation was possible, in the context of specific performance, a purchaser is not required to mitigate in any capacity if they have a “fair, reasonable, and substantial justification for their specific performance claim”.  Mr. Ahmadi, by not introducing comparable properties for Ms. Warner to have purchased, failed to establish that mitigation was possible.

Motion to Vary

After successfully arguing for specific performance of the Agreement, Ms. Warner brought a request to vary the court order granting her specific performance to include out of pocket expenses she incurred as a result of the breach.  In a subsequent decision, 2022 ONSC 4499, the court granted Ms. Warner’s request, awarding her  $9,157.81 worth of out of pocket expenses as a result of Mr. Ahmadi’s failure to close.  In addition, Ms. Warner requested compensation for the increased cost of servicing a mortgage due to rising interest rates.  At the time of Ms. Warner’s request, her original interest rate of 3.84% had risen to 4.505% for a comparable mortgage.

While siding with Ms. Warner, the court noted that she should receive compensation for any increased mortgage carrying costs resulting from a rise in interest rates over and above her original rate of 3.84%.  However, should Ms. Warner be able to secure a mortgage at an equal or lesser interest rate, she will not be entitled to compensation for that aspect of her request.

The court further granted Ms. Warner’s claim for transaction and legal costs she would not have otherwise incurred had the deal closed.  As part of granting this award, the Court allowed Ms. Warner to provide updated cost figures for ongoing expenses she was paying because the parties have yet to close the transaction.  These costs included; $3,516.86 for legal fees, appraisal fees, $600 for moving to a rental property, and $292.67 for per-month storage fees, to be added cumulatively until the closing date.  The court based its ruling on the premise that had Mr. Ahmadi not breached the Agreement, Ms. Warner would not have incurred these additional expenses.  Therefore, Mr. Ahmadi should pay Ms. Warner for costs she incurred as a result of his breach of the Agreement.  For convenience, the court ruled that these expenses are simply to be deducted from the purchase price of the home on closing day.

The only expense to which Ms. Warner was not entitled was the cost of her monthly rent.  In its reasoning, the court found that regardless of whether the deal had closed, Ms. Warner would need to be living somewhere.  Incidentally, Ms. Warner’s monthly rent is actually less expensive ($500 per month) than what she would have been paying in mortgage payments ($1,057.63 per month).  Due to her rental charges being less expensive than what she would otherwise have been paying toward her mortgage had the deal closed, the court noted that Ms. Warner should not be compensated for her rent payments.

Summary

Sellers wishing to combat a buyer’s claim for specific performance must demonstrate that there were comparable properties of similar type and price at the time of the Agreement breach and that those properties were reasonably available to the buyer as a substitute.  This task may become more challenging in an inflated real estate market where properties routinely sell over the asking price.

Sellers who breach a binding agreement of purchase and sale may also be liable for additional out of pocket costs incurred by an innocent buyer as a result of their breach.  These costs could include moving and legal fees as well as the difference between the cost of mortgage payments based on the buyer’s original interest rate and the interest rate available to them on the date of closing.  In a financing market where interest rates look to be ever increasing for the foreseeable future, the cost of an increased monthly mortgage rate may amount to a substantial financial penalty for a vendor forced to pay such expenses are part of an order for specific performance.

The author wishes to thank Gordon Stuart (Student-at-Law) for assisting with this article.

  • Shaneka Shaw Taylor

Anticipatory Breach in an Agreement of Purchase and Sale
Anticipatory Breach in an Agreement of Purchase and Sale 150 150 Shaneka Shaw Taylor

Parties to a real estate transaction can, through words or conduct, repudiate an agreement or show an intention before the closing date to not complete the contract. This is known as anticipatory breach. In Sheik v. Lebovic Enterprises Limited, the court analyzed the actions of the parties to an Agreement of Purchase and Sale (APS) to determine if there was an anticipatory breach of the contract.STORY CONTINUES BELOW

In this case, the buyer, Sheik, entered into an APS with the seller, Lebovic, a new home builder. The APS was scheduled to close on August 19, 2021. The APS provided that Lebovic would install a door from the garage into the home, subject to the grade being permitted by the municipality. At the time the APS was signed, the grade had not been determined. The APS also contained a provision barring the buyer from visiting the site, prior to closing, due to safety and insurance reasons.

In mid-July 2021, the buyer visited the site and found that there was no door from the garage to the home. He inquired with the municipality and took measurements of the as-built garage. Shortly after his site visit, the buyer emailed his measurement and the information he obtained from the municipality about the permitted grading to Lebovic. The next day, the buyer personally called Harry Lebovic to discuss the lack of door. After the phone call, Mr. Lebovic emailed Mr. Sheik and advised that their site superintendent had determined that more than three steps would be required to access the door (which was more than the municipality would permit), so therefore, the grading did not allow for a door to be installed.

The following week, Mr. Sheik took some more measurements and photographs, sent those to Lebovic and requested the “legal reason and measurement details” that informed the site engineer’s decision. When Mr. Sheik did not hear back from Lebovic, he sent another email to Lebovic, claiming unfair treatment and discrimination. In this further email, Mr. Sheik stated he was going to go “knock on the justice door of legal”.

A few days later, Lebovic’s lawyer wrote to Mr. Sheik’s lawyer informing him Mr. Sheik was in breach of the APS, and further advised that he will no longer be representing Lebovic in that transaction. Shortly thereafter, Mr. Sheik’s lawyer wrote to Lebovic’s lawyer, confirming that the buyer was ready and willing to close the transaction. Mr. Sheik’s lawyer further requested the contact information for the new lawyer for Lebovic. No response was provided.

Two days before the scheduled closing, Lebovic transferred title to the property to a third party. Unaware of the transfer, the following day Mr. Sheik emailed Mr. Lebovic, apologizing for his previous email and further confirmed his ability and willingness to close the transaction. Again no response was provided. It was not until well after the closing date that Mr. Sheik learned that Lebovic had transferred title to the property to a third party.

Repudiation of the agreement

Upon learning of the transfer, Mr. Sheik brought a claim against Lebovic, seeking damages for breach of contract. Lebovic defended the claim on the basis that Mr. Sheik had an anticipatorily breach of the APS. Anticipatory breach occurs when a party repudiates a contract prior to the date that performance is due or shows an intention not to be bound by the contract before performance.

The test is whether a reasonable person would conclude that the breaching party no longer intends to be bound by it. In applying this test, the court found that at no point did Mr. Sheik show an intention to repudiate the contract. His intention was merely to get to the bottom of the issue relating to garage door access to the home. Further, at the time, Lebovic did not take Mr. Sheik’s action to be a repudiation of the contract.

The court rejected Lebovic’s reliance on Mr. Sheik’s failure to tender on the closing date as repudiation because Lebovic had failed to respond to Mr. Sheik and his lawyer’s communications and had not provided a statement of adjustments or other information required by Mr. Sheik’s lawyer.

These failures, the court noted, amounted to Lebovic’s repudiation of the agreement before closing.

Finally, Lebovic’s action of transferring title to a third party made it clear that it was not ready, willing and able to complete the agreement on the closing date.

Breach of good faith

In recognizing the general principle of good faith in contract, the court determined that parties must generally perform their contractual duties honestly and reasonably, and not capriciously or arbitrarily. The court concluded that nothing in Mr. Sheik’s conduct was dishonest. Therefore, he did not breach his duty to act in good faith.

In determining the damages payable by Lebovic to Mr. Sheik, the court relied on the presumption that damages are assessed as of the date of the breach, except in certain special circumstances.

There was nothing before the court to show any special circumstance to deviate from this norm, therefore damages for breach were calculated based on the value of the property at the date of closing. The court ordered Lebovic to pay the buyer $94,682 in damages.

 

The author wishes to thank Nkiru Nwabudike (LPP student) for assisting with this article

  • Shaneka Shaw Taylor

Specific performance in a hot housing market
Specific performance in a hot housing market 150 150 Shaneka Shaw Taylor

Between 2020-2021, there was an increasingly limited supply of homes for sale. The available homes on the market have fetched dramatically increased prices due to aggressive bidding wars. In Thillairajan v. Sivasubramaniam, 2021 ONSC 7610. the court contemplated the remedy of specific performance in this hot housing market climate and concluded that it is a relevant factor in granting this remedy.

In this case, the buyer, Thillariajan, entered into an Agreement of Purchase and Sale with the seller, Sivasubramaniam, with a closing date of February 24, 2021. On February 16, 2021, the seller’s real estate agent informed the buyers that they no longer wished to sell the property. The next day, the buyer’s lawyer wrote to the sellers that the buyers were ready, willing and able to close the transaction as scheduled. The lawyer confirmed her client’s intention to seek specific performance if the defendant did not comply with the terms of the APS. On the closing date, the buyer’s lawyer again emailed the seller that the buyers were ready willing and able to close in accordance with the terms of the APS. The seller advised that she was not going to sell her house. On March 4, 2021 the buyers issued their Statement of Claim claiming specific performance. The seller was later noted in default on April 16, 2021.

Specific Performance

The three factors in the test for specific performance are:

  1. The nature of the property involved
  2. The related question of the inadequacy of damages as a remedy
  3. The behaviour of the parties, having regard to the equitable nature of the remedy

The Superior Court of Justice evaluated the buyer’s evidence and concluded specific performance was an appropriate remedy in these circumstances.

Uniqueness

Most significant in their decision was the court’s conclusion that 1) it was no longer accurate to assume that residential properties are “mass produced”, when the housing market has an increasingly limited supply of homes and 2) subjective elements of a property are also highly relevant and important in establishing uniqueness.

In this case, the Court accepted the buyers’ evidence that the seller’s property was purchased for significantly less money than properties in the same area and that the property was very close to the buyers’ place of employment. As such, these two factors made the property sufficiently unique to the buyers.

The court added that the question of uniqueness did not merely contemplate whether there are other similar homes in the same neighbourhood but whether those homes were “readily available” for the buyers to purchase when the seller breached the APS. Furthermore, because the prices of the houses in the neighbourhood were going for nearly $100,000.00 more, damages would not be an adequate remedy. Therefore, specific performance was an appropriate remedy since there were no other homes available on the date of the breach that could have been obtained at a comparable price,

What does this mean for future sellers?

While this case may be considered an outlier to the well-established principles articulated by the Supreme Court of Canada in Semelhago v. Paramadevan, [1996] 2 SCR 415, sellers should be aware that in a hot housing market, specific performance may be a remedy available to purchasers. In addition, a hot housing market will assist a purchaser’s case because whether a house is unique is not merely contingent on the house itself, but also if there are similar houses readily available at the time a seller has breached the APS.

  • Shaneka Shaw Taylor

A Proposed Amendment in An Agreement of Purchase and Sale Deleting Conditions is Not a Waiver or Notice of Fulfilment?
A Proposed Amendment in An Agreement of Purchase and Sale Deleting Conditions is Not a Waiver or Notice of Fulfilment? 150 150 Shaneka Shaw Taylor

When entering into an Agreement of Purchase and Sale (“APS”) for a property, buyers and sellers must remain cognizant of the precise language used and conditions they need to follow for an offer to be binding. If they neglect to do so, they run the risk of seeing their purchase or sale voided because they failed to meet certain obligations. This was the case in the recent decision of Feynes v Nellipudi, 2021 ONSC 3913.

On March 23, 2021, the buyers (the Nellipudis) and the sellers (the Feynes) entered into an APS for a $2.5 million property in Coboconk, Ontario. The terms of the APS stated that the buyers would pay a $100,000 deposit to Kawartha Waterfront Realty Inc., the real estate company representing both parties in a multiple representation agency. The APS contained two conditions in favour of the buyers: (1) a satisfactory home inspection and (2) obtaining a mortgage. The APS was conditional until the end of business on April 2, 2021 (10 calendar days). If the 10 calendar days passed without written notice or waiver, the offer was then considered null and void and the deposit would be returned to the buyers.

The buyers paid the real estate company the deposit and the two parties subsequently commenced further email negotiations, which culminated in the buyers sending over an amendment deleting the inspection and mortgage conditions and adding in clauses about furniture removal and work to be completed prior to closing. The amendment was delivered to the sellers on April 2, 2021 and was to be accepted by 11:59pm that day. The sellers refused to sign it.

On April 3, 2021 at 9:01am, the real estate agent (who acted for both the buyer and seller) emailed the sellers telling them the buyers decided not to improve the terms of the APS. Later that day, the sellers entered into a second APS with a different set of buyers, which did not contain any conditions. The sellers then sent a Mutual Release to the buyers so that their deposit could be returned.  The buyers refused to sign it. Instead, they maintained that there was a legally enforceable APS and that the unsigned amendment constituted a waiver of the conditions or notification for the purposes of the 10-day period. They also claimed that the sellers violated their duty to act in good faith.

The sellers took the position that the buyers failed to waive or fulfil the conditions within the 10-day period and the APS was therefore null and void as of April 2, 2021. They claimed the proposed amendment was not a waiver or notification of fulfillment because they did not agree to the terms and did not sign it. They also maintained that they not only acted in good faith, but when they did not sign the amendment, the gave the buyers an opportunity to revise the proposed amendment in order to rectify the problem but they did not do so by the following morning. The buyers later registered a Notice of a Purchaser’s Lien on the title of the property.

The court in this case had to address 3 issues: 1) whether there was a valid legally binding APS; 2) whether the Purchaser’s Lien should be discharged and 3) whether the sellers had breached a duty to act in good faith.

Regarding the first issue, Justice Sutherland found that there was a clear, unambiguous, and binding written APS between the parties which was executed and fully accepted on March 23, 2021. There was no question that the two conditions about the home inspection and mortgage were for the benefit of the buyers and were required to be confirmed or waived by April 2, 2021. While there were several emails back and forth between the two parties about additional conditions as part of the APS, none of these emails amounted to a new APS and waived the old one. Justice Sutherland found that the buyers were hedging their bets that the sellers would accept the terms of the proposed amendment as it was set to expire one minute before the expiry of the APS conditions. However, since the sellers did not sign the proposed amendment and the buyers did not provide written notice regarding the conditions of the original APS, it then became null and void.

Justice Sutherland clarified that an agreement requiring the signatures of all parties, such as the amendment, did not constitute a waiver, but instead simply represented an offer to amend the agreement which required the acceptance of all parties concerned. Additionally, the buyers had it within their power to send the required written notification and subsequently request the proposed terms of the amendment. By not proceeding in this manner, the buyers demonstrated they did not want to be bound by the terms of the APS whether the sellers accepted the terms of the proposed amendment or not.

Justice Sutherland further noted that in accordance with precedent, evidence was needed to determine whether the buyers had the intent and ability to close the transaction. They had not provided any evidence in this regard. Taken all together, this meant that the APS was null and void and the buyers no longer had an interest in the property as of April 3, 2021 at 12:00am.

Regarding the second issue, because the buyers no longer had an interest in the property, the Purchaser’s Lien was to be discharged and deleted from the property title. Regarding the third issue, Justice Sutherland found that there was no evidence indicating that the sellers acted dishonestly, and the buyers had the onus of waiving the terms and conditions of the APS but chose not to do so. If the court were to find that the sellers breached their duty of good faith, it would confer an “unbargained benefit” to the sellers outside the terms of the APS.   The buyers were unable to purchase the property in the eyes of the court and their $100,000 deposit was returned to them since the APS was null and void.

In sum, attention to and communication regarding the conditions of an APS are of the utmost importance when working with such agreements. Parties need to be mindful of expiration periods for conditional offers and remember that any new agreements or additions they wish to make are signed and agreed upon in writing by both parties.  If a seller is not prepared to amend an agreement during the conditional period, the buyer has to decide whether he/she wants to proceed with the agreement (and property) as is and potentially try to negotiate for changes later, all the while being fully aware that the seller may not agree to any further amendments. If that risk is too great for the buyer, he/she may wish to consider walking away from the transaction and getting back their deposit.

Final thought – a proposed amendment deleting conditions in an APS does not constitute waiver of those conditions nor is it notice of fulfilment of the condition(s).

**The author wishes to thank Maya Koparkar (summer student) for assisting with this article**

  • Shaneka Shaw Taylor

Sharing is Caring: Prescriptive Easements of Shared Driveways
Sharing is Caring: Prescriptive Easements of Shared Driveways 150 150 Shaneka Shaw Taylor

Shared driveways are a common feature of many residential properties, and it can often be hard to define exactly where one person’s property ends and another’s begins. Because of this, many neighbors have unspoken agreements about how to share and access this space even if they aren’t sticking strictly to their side of the property line. This unspoken agreement is known as an easement, which is a legal right of someone other than the original owner of a property to use it.

In the hopes of better defining such boundaries, some owners have taken it upon themselves to build fences down the property lines of their shared driveways, at times to the detriment of their neighbour. This was the kind of dispute the Ontario Court of Appeal grappled with in the case of English v Perras, 2018 ONCA 649.

The two parties were next-door neighbours who shared a 14-foot wide driveway that they both utilized to access their respective garages. The property line ran down the middle of this driveway. The Perrases decided to build a fence just inside their side of the property line down the length of the driveway. Unfortunately, the fence prevented the Englishes from accessing the driveway and their garage. The Englishes had a retaining wall on their house which also contributed to the narrow driveway on their side, but there was no one knew when the retaining wall was built and for what purpose. In order to regain access to their driveway, the Englishes applied for a prescriptive easement to confirm their rights to the space and get the Perrases to take their fence down.

The application judge found that the Englishes were entitled to the prescriptive easement because of the historical use of the shared driveway, and ordered the Perrasses to remove their fence. The Perrases appealed, arguing that an easement had not been made out. The Court of Appeal agreed, overturning the order of the application judge. The Court of Appeal held that the Englishes had not made out a prescriptive easement based on two important grounds: land use as of right, and reasonable necessity for enjoyment.

In Ontario, prescriptive easements started being phased out as properties became registered in the Land Titles system. These days, a prescriptive easement can still be obtained by following the Doctrine of Lost Modern Grant (although this is a very strict threshold to meet). To prove the doctrine, it must be shown that an easement existed prior to the property being converted from registry in the Land Titles system. Unless the current owner seeking to obtain the easement has lived at the property for decades, this will often involve seeking out evidence from previous owners of the properties in question. To obtain the easement, it must be proven that there was a period of 20 years of uninterrupted, unchallenged use of the property in question and that use was not done with permission. In other words, if there is evidence that the party seeking the easement had expressly asked the other party for permission to use their property, an easement cannot be made out.

In this case, the Court of Appeal followed this logic to determine that an easement did not exist. While the shared driveway had been used mutually by the previous owners of the properties, they had created an Agreement, which noted the rights of each property owner and also gave permission for the use of the shared driveway by both parties. This differed from “use as of right” which is an unspoken and unacknowledged but continuous use of the shared driveway for the 20 year period prior to Land Titles registry.

Next, the Court of Appeal looked to the four essential characteristics of an easement to see whether they existed in this case:

  1. There must be a dominant and servient tenement (the dominant tenement is the one who gains the benefit of the easement);
  2. The dominant and servient owners must be different persons;
  3. The easement must be capable of forming the subject matter of a grant; and
  4. The easement must be reasonably necessary for the enjoyment of the dominant tenement.

The onus to prove these elements rests on the party seeking the easement. While the first 3 elements are mostly straightforward, courts will assess the final element on a case-by-case basis. In order for the fourth element to be made out, there must be a connection between the easement and the normal use of the property by the applicant. In this case, the Perasses’ fence in combination with the retaining wall on the Englishes’ property narrowed the Englishes’ access to the driveway. The application judge mistakenly reversed the onus for the final stage of analysis. She required the Perasses to show that an easement was not necessary and that the retaining wall could be taken down. The Court of Appeal held that it was in fact the Englishes’ responsibility to show that an easement was necessary because the retaining wall could not be taken down, which they did not fulfil. Without this information, the Court could not conclude that the easement was reasonably necessary for their normal use of the driveway.

In sum, prescriptive easements in Ontario have been harder to come by since the advent of the Land Titles registry. While the requirements for a prescriptive easement might seem straightforward on paper, the standard that courts require to establish one via the Doctrine of Lost Modern Grant is high. Driveways, parking spaces, and similar spaces might seemingly lend themselves well to the establishment of a prescriptive easement, but it is crucial that the applicant ensures they are prepared to demonstrate why it is necessary.

  • Shaneka Shaw Taylor

There is Equity in Considering Societal Reality : a Case of racial bias in a commercial tenancy
There is Equity in Considering Societal Reality : a Case of racial bias in a commercial tenancy 150 150 Shaneka Shaw Taylor

To one degree or another and whether we acknowledge it or not, we all eschew some form of unconscious bias. If left unchecked, our biases can negatively affect the way we interact with other of differing, races, cultures and socio-economic backgrounds. In some instances, unchecked unconscious bias can manifest itself as systemic anti-black racism.

Can a court account for the reality of racial prejudice when considering an equitable remedy?  The answer is yes. The Ontario Superior Court of Justice in Elias Restaurant v. Keele Sheppard Plaza Inc.[1], a case concerning a commercial tenancy, is proof positive that such biases can be taken into consideration in the determination of an appropriate equitable remedy.

Elias Restaurant is a family restaurant, owned by a husband-and-wife team. Located in a shopping plaza on Keele Street and Sheppard Avenue, the restaurant caters primarily to the Black community, serving Caribbean, African, and Black cultural foods. Keele Sheppard Plaza Inc., took over as Landlord in 2016 and hired Castehill Properties Inc. as the Property Manager.

In 2013, Elias Restaurant took over a five-year lease dated August 1, 2012, for a 1500 square foot restaurant and bar. Under the original lease, Elias Restaurant had the option to extend the lease upon expiry for two more five-year terms. Elias Restaurant was required to provide written notice to the Landlord that it was exercising its renewal option, at least six months prior to the end of the lease.

Six months before the lease expired, in 2017, Elias Restaurant tried to contact the Landlord and the Property Manager to exercise the renewal option. Despite numerous phone calls, neither the Landlord nor the Property Manager got back to Elias Restaurant. In the end, Elias Restaurant continued its tenancy as an overhold tenant. And in 2020, Elias Restaurant was served with a notice terminating that tenancy.

In its application to the Court seeking relief from eviction, Elias Restaurant convinced the Court that the Landlord never responded to its attempts to renew the lease, because the Landlord did not like the restaurant’s primarily black clientele. Even though Elias Restaurant was family owned, the Landlord said that it did not attract “like minded family-oriented customers”.  And the Landlord’s contractor complained that, people who he assumed were patrons of the restaurant, were often smoking, drinking, gambling and engaging in otherwise “undesirable” activities. The restaurant had a license to serve alcohol.

The Court found these comments resembled a caricature of racially derogatory themes. And that they pointed to a mindset that condemned the minority population for what is considered normal behaviour by the majority. Unsurprisingly, the Tenant was granted its relief.

The Court made significant comments about the racial prejudice Black Canadians face every day. It stressed the importance of considering this racial bias and injustice when awarding equitable remedies. At the very least, the Court held, it must consider the societal realities that face Black businesspeople.

This case is a powerful reminder that, not only do Black Canadians suffer racial bias on a frequent basis, but that the law will not act as a mask for such bias. Parties such as a Landlords must be careful to act in good faith, and parties like Elias Restaurant can rest knowing that any racial prejudice will be accounted for by the Court when it considers granting an equitable remedy.

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