Executive Summary: Key Legal and Evidentiary Issues

• Dispute centered on the enforceability of a real estate agreement of purchase and sale (APS) involving a business property.

• Plaintiffs argued the APS was void ab initio due to lack of consensus on corporate acquisition terms.

• Defendant sought partial summary judgment declaring the APS binding and sought forfeiture of a $100,000 deposit.

• Court determined the plaintiffs unilaterally repudiated a firm and enforceable APS without evidence of financing.

• No genuine issue was found for trial regarding breach of contract or entitlement to the deposit.

• Summary judgment resolved main action, allowing only the defendant’s counterclaim on damages to proceed.

Background of the transaction
The case arose from a failed agreement of purchase and sale (APS) between the plaintiffs, Joshua Gleason and Breanne Hook, and the defendant, Anita Mitchell. The transaction involved the plaintiffs’ attempt to purchase a property and its associated business, Covered Bridges Kennels, located in Tiny, Ontario. Negotiations were conducted with the help of real estate agents and legal counsel. The final APS, executed and amended several times between May and July 2022, became a firm and unconditional agreement by mid-July 2022. It included a total deposit of $100,000 and specified a closing date of August 24, 2022.

Dispute and repudiation of contract
On August 23, 2022—the day before closing—the plaintiffs’ lawyer informed the defendant’s counsel that they no longer considered the APS binding, citing a lack of consensus on material terms, including a supposed expectation of a corporate or share acquisition. This position was reiterated on the scheduled closing date. The APS ultimately did not close. The defendant, who was ready and willing to complete the sale, treated this as a repudiation and did not breach any contractual terms herself.

Litigation history and motion for summary judgment
The plaintiffs initiated legal proceedings in September 2023, seeking a declaration that the APS was void ab initio, return of their deposit, and damages for breach of contract and unjust enrichment. The defendant responded with a counterclaim for breach of contract and forfeiture of the deposit and also brought third-party claims against her broker and solicitor for alleged negligence.

Anita Mitchell moved for partial summary judgment to address the enforceability of the APS and entitlement to the deposit. The court applied the legal framework for summary judgment under Hryniak v. Mauldin and the procedural guidance on partial summary judgment from Butera v. Chown, Cairns LLP and Malik v. Attia. Justice McCarthy found that the issues raised could be effectively and fairly resolved without a full trial.

Court’s findings
The court rejected the plaintiffs’ assertion that there was no meeting of the minds. The APS was found to be a standard, enforceable commercial real estate agreement with clear terms regarding the property, price, and included business assets. No evidence supported the claim that a share purchase or corporate acquisition had been contemplated. The court further found that the plaintiffs had no financing in place, failed to tender on closing, and effectively repudiated the agreement.

The defendant’s entitlement to the $100,000 deposit was upheld. The court applied established principles from Redstone Enterprises Ltd. v. Simple Technology Inc. and Benedetto v. 2453912 Ontario Inc., affirming that forfeiture of deposit does not require proof of damages where a purchaser repudiates the APS. There was no basis for relief from forfeiture or a claim of unjust enrichment.

Outcome and next steps
Justice McCarthy granted partial summary judgment, dismissed the plaintiffs’ entire claim, declared the APS firm and binding, and confirmed the plaintiffs’ breach. The $100,000 deposit was ordered forfeited to the defendant. The remaining issues—primarily related to damages sought in the counterclaim—will proceed to trial if not resolved.