Executive Summary: Key Legal and Evidentiary Issues

• Summary judgment was granted in favour of Valstar despite no cross-motion being filed, as permitted under Ontario law.

• The 5:00 p.m. closing time in the APS was enforceable, and the late arrival of funds justified termination.

• Claims of contractual ambiguity were rejected; contra proferentem did not apply due to a clear and mutually understood closing time.

• The additional $113,000 payment was deemed a term of a new contract, not an impermissible penalty.

• The motion judge found no bad faith in Valstar’s conduct and no unfairness warranting judicial intervention.

• Economic duress was not established, as the appellants had legal counsel and voluntarily accepted the new terms.

The background facts and contractual dispute

On February 16, 2020, Ivy Zeena Correa and Alwin Correa entered into an Agreement of Purchase and Sale (APS) with Valstar Homes (Oakville Sixth Line) Inc. for a new home in Oakville. The APS included a closing date of “no later than 5:00 p.m.” on January 27, 2021, a “time is of the essence” clause, and a provision allowing the vendor to extend the date. Valstar extended the closing to April 20, 2021.

On that day, the Correas encountered difficulties securing financing. They requested a one-day extension, which Valstar denied. The appellants claimed that their financing institution had been unable to complete a required inspection earlier that day. They obtained private financing and transferred the required funds at 4:52 p.m., but the funds were received by Valstar’s lawyer at 5:09 p.m. Valstar treated the APS as terminated and later offered to revive it for an additional $100,000 plus HST, citing increased market value. The Correas agreed and closed the transaction the next day. In 2022, they sued for $130,000, alleging the payment was made under protest.

Proceedings and ruling in the Superior Court

The Correas moved for summary judgment, which was dismissed by the motion judge. Although Valstar did not bring a cross-motion, the judge granted summary judgment in its favour, dismissing the action entirely. Citing authority, he held it was open to the court to do so. He found no genuine issue requiring a trial.

The judge determined that the 5:00 p.m. closing time in the original APS continued to apply after the date extension and that Valstar was entitled to enforce the “time is of the essence” clause. He rejected the argument that Valstar acted in bad faith and accepted that both parties’ solicitors operated on the basis of a 5:00 p.m. closing time. The appellants’ reliance on case law involving ambiguous or unstated closing times was found inapplicable.

The $113,000 payment was not considered a penalty, as it was part of a new agreement made after lawful termination of the original APS. The motion judge further found that the appellants did not meet the legal threshold for economic duress. They had legal representation, did not protest at the time, and Valstar’s actions were not illegitimate. Accordingly, the motion judge dismissed the claim.

Appeal and decision of the Court of Appeal

The Ontario Court of Appeal upheld the lower court’s decision and dismissed the appeal. It found no reversible error in the motion judge’s application of law or evaluation of facts. The court affirmed that explicit reference to Sattva Capital Corp. v. Creston Moly Corp. was not necessary, provided the correct legal principles were applied.

The court reiterated that the APS clearly set a 5:00 p.m. deadline, which was not altered by the date extension. Warnings issued by Valstar on April 20, 2021, further confirmed the deadline. It rejected the assertion that the Addendum introduced ambiguity, as it did not conflict with the closing time in the APS. Consequently, the doctrine of contra proferentem was found inapplicable.

The appellate court accepted the motion judge’s finding that Valstar’s conduct was neither unfair nor unconscionable. The additional payment to revive the APS was upheld as a valid term of a new contract, not a penalty under the prior agreement. The court also affirmed the finding that the appellants were not under economic duress, citing their access to legal advice and voluntary agreement to the new terms.

The appeal was dismissed with costs awarded to Valstar in the amount of $11,221.47.