Executive Summary: Key Legal and Evidentiary Issues

• The motion concerned whether defendants could amend their defence to clarify distinct contractual obligations of P.J.C. Land Developments Limited and Nature Ridge Homes Ltd.

• Plaintiffs alleged the amendments were made in bad faith to limit P.J.C.’s potential liability and were inconsistent with prior pleadings.

• The court assessed whether the amendments would cause serious prejudice not compensable by costs and found no such prejudice.

• Claims of bad faith based on delayed disclosure of a 2014 Memorandum of Understanding and inconsistent discovery evidence were rejected due to insufficient supporting evidence.

• The proposed amendments involved interpretation of the Agreement’s termination clause and financing condition, raising justiciable issues.

• The motion to amend was granted, with costs of $1,000 awarded to the defendants, leaving further cost consequences to the trial judge.

Facts of the case

Tanyse Lea Gardiner and James David Gardiner entered into an Agreement of Purchase and Sale with P.J.C. Land Developments Limited (PJC) and Nature Ridge Homes Ltd. The agreement involved the purchase of land and the construction of a new home. The plaintiffs alleged that the defendants wrongfully terminated the agreement on or about June 17, 2022, constituting repudiation or fundamental breach, and claimed entitlement to special and general damages, including loss of income.

The defendants asserted that Nature Ridge was the vendor and builder, while PJC’s role was limited to transferring title upon closing. They argued that the Agreement, which included a termination clause, entitled Nature Ridge to terminate it. The defendants also alleged that the plaintiffs failed to obtain financing approval for at least 95% of the purchase price by June 24, 2021, as required by the Agreement.

Procedural background

The action was commenced on July 22, 2022. The defendants filed their defence on September 6, 2022, and the plaintiffs filed an amended notice of action on November 24, 2022, adding a loss of income claim for James Gardner and further details regarding general damages. The defendants filed an amended defence on November 25, 2022.

After discovery and disclosure, the defendants sought to amend their defence further in 2025, approximately 2.5 years after filing their initial defence. They proposed clarifying PJC’s limited role, alleging the plaintiffs’ failure to secure financing, and modifying references to “Defendants” to specify “Nature Ridge.” During this process, they produced a Memorandum of Understanding dated February 4, 2014, between PJC and Nature Ridge, which had not been disclosed earlier despite prior requests.

The plaintiffs argued that the amendments introduced a new defence inconsistent with previous pleadings, were intended to limit PJC’s liability, and were brought in bad faith, partly based on delayed disclosure of the MOU and allegedly false discovery testimony.

Discussion of policy terms

The amendments related to the Agreement’s termination clause and financing approval condition. The defendants sought to plead that the Agreement required the plaintiffs to obtain financing approval for at least 95% of the purchase price by June 24, 2021, and that failure to do so constituted breach, justifying termination by Nature Ridge.

Outcome

Justice Jamieson allowed the motion to amend the defence. The court found:

• The amendments raised justiciable issues and were not absolutely unsustainable on their face.

• The plaintiffs failed to demonstrate serious prejudice that could not be compensated in costs.

• The allegations of bad faith were not supported by strong and compelling evidence; the court found no improper purpose behind the amendments.

The court awarded the defendants $1,000 in Tariff C costs for the motion, noting that further cost consequences from the amendments themselves should be determined at trial.