Executive Summary: Key Legal and Evidentiary Issues

• Purchaser failed to close on a residential real estate agreement despite receiving extensions and a price reduction.

• Plaintiff sought default judgment after the defendant was noted in default for not filing a defence.

• Legal entitlement to damages required affidavit evidence due to unliquidated damages claim.

• Court upheld a contractual clause allowing damages to be assessed using the original (pre-reduction) purchase price.

• Interest was awarded from the amended closing date, not the original, as per standard contractual interpretation.

• Plaintiff was granted legal costs, resale commission, and post-judgment interest at a 20% contract rate.

Facts and outcome

The plaintiff, a property developer, entered into an agreement of purchase and sale with the defendant for a property priced at $1,176,490 with $15,461 in upgrades. The agreement was originally set to close on July 24, 2023. The defendant requested and received a price reduction of $50,000, lowering the final price to $1,126,490, along with an extension to October 10, 2023, as the new closing date.

Despite these concessions, the defendant failed to complete the transaction by the extended date. The plaintiff, having been ready, willing, and able to close, commenced legal proceedings when the defendant did not deliver closing funds or documentation. The defendant did not file a statement of defence, resulting in a default status.

The court considered the plaintiff’s motion for default judgment. Under Ontario Rules of Civil Procedure, a defendant noted in default is deemed to admit the facts alleged in the statement of claim. However, for unliquidated damages, a plaintiff must still provide affidavit evidence to substantiate the claim. The court found that the plaintiff had done so and granted judgment on the basis of the deemed admissions and supporting affidavits.

In assessing damages, the court relied on a contractual clause allowing the use of the original purchase price for calculating losses if the defendant defaulted after receiving a price reduction. The resale price of the property was $925,990, which formed the benchmark for loss calculation. The court awarded damages of $166,715.55, accounting for the original price, adjustments, deposit credits, resale price, and additional costs for legal fees and resale commission.

Interest was a contested point. The plaintiff argued that it should be calculated from the original July closing date, citing principles of fairness and reference to precedent. The court disagreed, finding no contractual basis or market circumstances to justify deviating from the standard rule. Interest was therefore awarded from the date of the actual breach—October 10, 2023—rather than the original closing date. A 20% contractual interest rate was applied, resulting in an interest award of $89,949.65.

The final judgment totaled $256,665.20. The plaintiff was also awarded costs in the amount of $8,684.73. The court ordered that post-judgment interest would continue at the contractual rate of 20%.