Relief from forfeiture isn’t something Ontario courts grant often. Especially when it comes to real estate deals, the law tends to take a strict view: if a buyer fails to close, the deposit is gone – end of story. Courts routinely enforce this outcome, even when it feels harsh. That’s why the recent decision in Naeem v. Bowmanville Lakebreeze West Village Ltd., 2024 ONCA 383, stands out. It’s a rare exception and a helpful reminder that while equity may be available, the threshold remains high.
In 2016, Shireen Naeem signed an agreement to purchase a new home for just under $630,000. The builder, Bowmanville Lakebreeze West Village Ltd., postponed the closing several times – delays that were allowed under the agreement but left the buyer in limbo for years. Eventually, a new closing date was set for April 23, 2019. When the transaction didn’t close on that day, the builder claimed Naeem had breached the agreement and forfeited her deposit of over $82,000.
Naeem sued. She initially sought specific performance but later narrowed her claim to the return of her deposit, with interest. The motion proceeded by way of summary judgment, and the judge sided with Naeem – granting her relief from forfeiture. The builder appealed.
At the heart of the appeal was whether the motion judge applied the proper legal test, given that Naeem admittedly failed to close. The builder argued that if the buyer was fully to blame for the breach, there should be no room for relief. Their position was simple: a buyer who misses the closing date can’t ask the court for a refund.
The Court of Appeal didn’t agree. It confirmed that the governing framework remains the test set out in Redstone Enterprises Ltd. v. Simple Technology Inc. 2017 ONCA 282. That decision requires judges to ask two key questions: is the forfeited amount out of all proportion to the vendor’s actual loss, and would it be unconscionable for the vendor to keep it? A buyer’s conduct is relevant to the analysis, but it isn’t the end of the discussion. Relief from forfeiture remains a fact-driven, discretionary remedy that depends on the totality of the circumstances.
In this case, the motion judge found that Naeem was not a commercial buyer but a widow who had worked two jobs – while undergoing cancer treatment – to save enough for the deposit on a family home. More importantly, the judge found that the builder hadn’t suffered any real financial loss from the failed closing. But what ultimately tipped the scales was the builder’s own conduct. After exercising its contractual right to extend the closing date twice, the builder attempted a further extension with inadequate notice. When Naeem requested a short additional extension, she was pressured into signing an amendment – without being told that she didn’t have to. The court found that she had been misled into believing she had no other option.
The motion judge concluded that it would be unconscionable to allow the builder to retain the deposit in those circumstances. The Court of Appeal upheld that finding and dismissed the appeal.
It is worth emphasizing how unusual this outcome is. Ontario courts have consistently affirmed the importance of upholding deposits in real estate transactions. They are not just symbolic; they are treated as serious security for performance. In most cases, if a buyer walks away – or fails to close, even by a day – the deposit is forfeited.
Naeem doesn’t change that general rule. What it does is illustrate just how exceptional the facts have to be for a court to step in. The equities in this case were particularly compelling: a vulnerable buyer, no real loss to the seller, and misleading conduct during a critical moment in the transaction. It was an uncommon set of circumstances that, taken together, persuaded the court that fairness demanded a different outcome.
For buyers, the decision is a reminder to get advice early – especially when closing dates start shifting. It’s not always clear what your rights are, and in many cases, you may have more flexibility than you’re told. For builders and developers, Naeem is a cautionary tale. Overreaching on a technical breach, especially if there’s been a history of delay or poor communication, can backfire.
Relief from forfeiture in Ontario real estate law is still the exception – not the rule. But in the right case, with the right facts, courts can – and will – intervene.