Executive Summary: Key Legal and Evidentiary Issues

• The dispute arose from the respondents' failure to close a commercial property purchase due to financing issues

• The applicant sought to retain the deposit, asserting anticipatory breach of the agreement

• Respondents requested relief from forfeiture under section 98 of the Courts of Justice Act

• Affidavit irregularities were addressed, including non-commissioned exhibits attached to motion materials

• The court analyzed whether procedural deficiencies warranted dismissal or could be corrected without prejudice

• Ultimately, the motion to retain the deposit was granted, and partial indemnity costs were awarded

Facts of the case

This case involves a failed commercial real estate transaction between Naresh Basnandan, the applicant and vendor, and Kerry Jones and Trevor Jones, the respondents and purchasers. In May 2022, the parties entered into an Agreement of Purchase and Sale (APS) for a property in Nepean, Ontario, with a scheduled closing date of July 15, 2022. The respondents provided a $25,000 deposit as required under the APS.

As the closing date approached, the respondents informed the applicant that they could not secure financing and were therefore unable to complete the transaction. They requested an extension, which was not agreed to. When the transaction failed to close, the applicant retained the deposit and subsequently brought a motion seeking a declaration that the agreement was terminated due to the respondents’ anticipatory breach, along with an order permitting him to keep the deposit and an award of costs.

Procedural history and affidavit issues

Both parties were self-represented throughout the proceedings. The motion was initially adjourned due to irregularities in the applicant’s affidavit materials, including exhibits that were not properly commissioned. At the continued hearing, the applicant provided a corrected affidavit with commissioned exhibits. The respondents objected, arguing that the irregularities warranted dismissal of the motion or substantial cost consequences.

Justice Sugunasiri rejected the request to dismiss the motion based on the earlier procedural deficiency, noting that the applicant had remedied the problem and that the respondents suffered no prejudice as a result. The court emphasized its duty to consider the merits of the case, particularly when both parties were self-represented.

Legal analysis and outcome

The key legal question was whether the respondents had committed an anticipatory breach of contract and, if so, whether the applicant was entitled to retain the deposit. The court found that the respondents clearly communicated their inability to complete the purchase due to financing problems and requested an extension instead. This constituted an anticipatory breach, giving the vendor the right to treat the contract as terminated.

The court then considered whether relief from forfeiture should be granted under section 98 of the Courts of Justice Act. Justice Sugunasiri concluded that such relief was not appropriate in the circumstances. The deposit amount ($25,000) was neither excessive nor punitive, and there was no evidence that its forfeiture would be unconscionable or inequitable. Additionally, the applicants had been ready, willing, and able to close.

Accordingly, the court declared that the APS had been terminated by the respondents' breach and that the applicant was entitled to retain the deposit. The court also awarded the applicant $2,500 in partial indemnity costs, finding the request reasonable and supported by evidence of actual disbursements.

This case highlights the strict enforcement of real estate agreements in Ontario, particularly where a party commits an anticipatory breach and cannot demonstrate unfairness warranting equitable relief. It also underscores the court’s willingness to accommodate procedural errors when they are remedied promptly and do not cause prejudice.