Executive Summary: Key Legal and Evidentiary Issues

• Purchaser’s failure to provide the name and contact information of a qualified solicitor constituted a breach of the agreement of purchase and sale (APS).

• Vendor’s entitlement to terminate the APS, retain the deposit, and seek damages was triggered by the purchaser’s default and anticipatory breach.

• The enforceability of a 20% contractual interest rate was questioned due to lack of evidence that the term was brought to the purchaser’s attention.

• The court considered whether real estate commission fees were recoverable as damages following the purchaser’s default and declined to award them.

• Judgment was based on the difference between the original purchase price and resale price, less the deposit, plus certain additional costs.

• Prejudgment interest was awarded at the statutory rate under the Courts of Justice Act rather than the contractual rate.

Background and facts of the case

Major Weston Homes Limited (MW), a home builder, entered into a binding agreement of purchase and sale (APS) with Xiaoying Li on December 7, 2021, for the purchase of a new home at a price of $1,309,990. The defendant paid deposits totaling $195,000 toward the purchase price. The APS required the purchaser to retain a qualified solicitor and provide the solicitor’s name and contact information to MW within 15 days of notification of the vendor’s acceptance of the agreement. Failure to do so would place the purchaser in default under the APS. Despite multiple requests and reminders, the defendant did not provide the required solicitor information.

On January 18, 2024, MW set the firm closing date as April 12, 2024. As the closing date approached, MW’s solicitor made repeated attempts to obtain the defendant’s solicitor information, including emails on March 28, April 9, and April 11, 2024. The defendant’s former solicitor confirmed on April 9, 2024, that they were not retained for the transaction. On April 11, 2024, MW’s solicitor notified the defendant that she was in default under the APS for failing to provide her solicitor’s information. On April 17, 2024, MW’s solicitor sent a letter to the defendant terminating the APS, stating that MW would relist the property, that the deposits were forfeited, and that MW would seek damages.

Discussion of policy terms and clauses at issue

Clause 12 of the APS required the purchaser to retain a solicitor and notify the vendor of the solicitor’s contact information within 15 days, failing which the purchaser would be in default. Clause 12 also provided that if the purchaser did not retain a solicitor at least 30 days prior to closing and notify the vendor, the vendor would be deemed ready, willing, and able to complete the transaction without proof. Clause 7 of Schedule X of the APS entitled the vendor, upon breach, to declare the agreement null and void and to forfeit all deposit monies as liquidated damages, in addition to any other rights or remedies at law, including recovery of additional costs, losses, and damages, and interest at a rate of 20% per annum.

Court’s analysis and outcome

The court found that the defendant breached the APS by failing to provide the name of a solicitor, which was a requirement for commercial expedience and closing the transaction. The court determined that this failure constituted an anticipatory breach of the APS. MW was entitled to declare the defendant in breach, retain the deposit, resell the property, and seek to recover losses. The property was originally to be sold for $1,309,990 but was ultimately sold for $971,800, resulting in a shortfall of $338,000. After deducting the $195,000 deposit, the remaining shortfall was $143,190. The court allowed additional damages for cleaning costs ($1,776.20), property taxes ($2,000.00), and utilities ($3,468.12), totaling $7,244.32, but declined to award real estate commission as damages, finding no clear evidence that it was an additional cost due to the breach.

The court declined to award the 20% contractual interest rate, finding no evidence that the defendant was made aware of this “surprisingly onerous” term, and instead awarded prejudgment interest under the Courts of Justice Act. Judgment was granted in favor of MW for $150,434.32 plus prejudgment interest commencing from the date of issuance of the statement of claim, and costs fixed at $9,000. The exact amount of prejudgment interest was not specified, as it was to be determined under the statutory rate.