Executive Summary: Key Legal and Evidentiary Issues

• Enforceability of Schedule “I” as an early termination condition in light of the mandatory Tarion Addendum and its closed list of permissible early termination conditions.
• Characterization of “registration of the Plan of Subdivision” versus “approval” by an approving authority, and whether a builder can rely on delayed registration it effectively controls to terminate agreements.
• Application of consumer protection principles under the Ontario New Home Warranties Plan Act and Tarion Addendum to resolve inconsistencies between standard form protections and builder-drafted clauses.
• Appropriateness of summary judgment where the main dispute is contractual interpretation and the builder provides little competing evidence on liability or valuation.
• Evidentiary weight of resale prices and appraisals in fixing market value and calculating loss-of-bargain damages for failed real estate transactions.
• Use of adverse inferences against a party who refuses to disclose resale agreements and related information relevant to damages and timing.

Background and parties

This case arises from two agreements of purchase and sale for new residential homes in a Napanee subdivision. The plaintiffs – 13405176 Canada Inc., Sumeet Anand and Cinni Deol – agreed to purchase Lots 54 and 56 in a development being built by the defendant, James Selkirk Custom Homes Ltd. The transactions were structured as typical new-build purchases, with deposits, tentative closing dates, and standard new home documentation, including the mandatory Tarion Addendum. The builder later refused to close and resold the properties at substantially higher prices, triggering a dispute over whether it was entitled to terminate and, if not, the quantum of damages.

Agreements for Lots 54 and 56

Both lots were purchased under agreements of purchase and sale dated October 2, 2020. For Lot 54, the purchase price was $364,900, with a tentative closing date of December 13, 2021. The financing condition was waived by December 2020, making the agreement firm. Later, by amendment dated November 29, 2021, the closing date was extended to May 27, 2022 and title was to be taken in the name of 13405176 Canada Inc. When counsel for that corporation requested closing documents in May 2022, Selkirk refused to close, citing alleged lack of responsiveness by the purchaser. For Lot 56, the purchase price was $374,900. Deposits were paid, conditions were waived and the agreement became firm. The initial tentative closing date was November 1, 2021, later extended twice at Selkirk’s request, ultimately to April 29, 2022. On January 18, 2022, Selkirk purported to terminate this agreement as well, again alleging “unresponsiveness” by the purchasers. The purchasers’ solicitor confirmed readiness to close on April 29, 2022, but Selkirk did not complete the transaction.

The late reliance on Schedule “I” and litigation

Initially, Selkirk’s position was framed around alleged purchaser unresponsiveness. After the plaintiffs retained litigation counsel, they issued a joint statement of claim on August 24, 2022, electing to treat both agreements as terminated and suing for damages for breach of contract. At that point, Selkirk shifted its position and relied on Schedule “I” to the agreements. Schedule “I”, added on November 2, 2021, stated that if the Plan of Subdivision was not registered on or before December 31, 2021, the agreements would become null and void and the purchasers’ deposits would be returned. The plaintiffs responded that this was an impermissible early termination condition under the Tarion Addendum and that, in any event, all necessary municipal approvals had been obtained well before December 31, 2021. They argued that registration was a purely administrative step under the builder’s control, and that Selkirk could not rely on a delay of its own making to escape the contracts.

Tarion Addendum and early termination conditions

A central legal issue was how Schedule “I” interacted with the Tarion Addendum, which is mandated by the Ontario New Home Warranties Plan Act and forms part of every new home agreement in Ontario. The Addendum contains strict rules about early termination conditions (ETCs). Paragraph 6(a) allows parties to include ETCs only in “the limited way” described in that section, while paragraph 6(b) prohibits vendors from inserting any conditions other than those listed in Schedule A or in specified paragraphs such as (j), (k) and (l). Any non-compliant condition in favour of the vendor is deemed null and void and unenforceable by the vendor, without affecting the validity of the rest of the purchase agreement. Under paragraph (j), the agreement may be conditional on compliance with the subdivision control provisions of section 50 of the Planning Act, with compliance to be obtained by the vendor at its sole expense by closing. Schedule A then permits ETCs only for a closed list of matters, typically tied to approvals from an “Approving Authority,” defined as a governmental or statutory body. In prior authority such as Reddy v. 1945086 Ontario Inc., the court stressed that the Tarion regime is consumer-protection legislation and that any ambiguity must be resolved in favour of the purchaser. The Addendum is treated as prevailing over inconsistent builder-drafted clauses, and the requirement that the vendor take “all commercially reasonable steps” to satisfy ETCs is viewed as inconsistent with clauses that give builders an unfettered, discretionary termination right.

Approvals, registration and the content of Schedule “I”

The factual sequence around approvals and registration was largely undisputed. Selkirk obtained Draft Plan of Subdivision approval on October 27, 2020. On August 17, 2021, the Town of Greater Napanee Council granted final approval of the plan of subdivision. According to the plaintiffs, the Chief Building Official confirmed that by August 17, 2021 all municipal approvals necessary for the plan had been secured. One step remained: registration of the M-Plan on title. That task consisted of the surveyor depositing the M-Plan to be processed by the Land Registry Office. Selkirk admitted that the plan of subdivision was registered by its representative or agent, underscoring that this was a step within the builder’s sphere of control. In fact, the M-Plan was not deposited until April 2022, and the Plan of Subdivision was not registered until May 26, 2022, months after the December 31, 2021 deadline imposed by Schedule “I”. The plaintiffs argued it would be commercially absurd, and inconsistent with Tarion’s consumer-protection purpose, to equate “registration” in Schedule “I” with the “approval” concept in Schedule A. If that were allowed, any builder could insert a registration-based condition, then deliberately delay or neglect registration to unilaterally collapse firm purchase agreements.

Resale of the properties and proof of loss

After refusing to close with the plaintiffs and without notifying them, Selkirk resold the two lots in 2022 at significantly higher prices. Lot 54 was resold for $530,000 and Lot 56 for $650,000, generating differences of $165,100 and $275,100 over the original contract prices. During examinations, Selkirk refused to answer questions about the dates of the resale agreements and would not produce copies of those agreements. In response, the plaintiffs obtained appraisal reports for each lot. For Lot 54, the appraiser assessed a value of $575,000 as of May 27, 2022 (the scheduled closing) and $545,000 as at the date of claim, August 24, 2022. For Lot 56, the appraised value was $600,000 at the April 29, 2022 closing date and $570,000 as of the claim date. Selkirk did not cross-examine the appraiser or file its own valuation evidence. At the damages stage, the court concluded that the actual resale prices achieved with third-party arm’s-length purchasers were the best evidence of market value and preferred them even to the supporting appraisals. The court also drew an adverse inference against Selkirk based on its refusal to disclose the resale agreements or to identify their timing, finding it fair to infer that the resale dates aligned with the relevant assessment dates.

Suitability of summary judgment

The plaintiffs brought a motion for summary judgment on both liability and damages. The court applied the well-established framework from Hryniak v. Mauldin and Rule 20 of the Rules of Civil Procedure. It noted that summary judgment is appropriate where there is no genuine issue requiring a trial, or where any factual gaps can be filled using the judge’s enhanced fact-finding powers (such as weighing evidence, assessing credibility on a paper record, drawing reasonable inferences, or, if necessary, hearing limited oral evidence). The judge emphasised that the process must remain proportionate and that parties are expected to put their “best foot forward” on a summary judgment motion. In this case, the court found that the central issue was the interpretation and enforceability of Schedule “I” in the context of the Tarion Addendum, together with straightforward damages calculation. Contractual interpretation questions of this nature are often resolved on a paper record, especially where the documentation is clear. Selkirk’s suggestion that it needed to examine the Chief Building Official or test the appraisal evidence was undermined by its own failure to put forward competing evidence or to attack the record in a meaningful way. The court held that there was no genuine issue requiring a trial and that summary judgment was the most proportionate way to resolve the dispute.

Enforceability of Schedule “I” and builder’s duty of diligence

Turning to the heart of the dispute, the court held that Schedule “I” was an impermissible early termination condition and therefore null and void. It reasoned that the Tarion Addendum allows only the ETCs expressly provided in Schedule A and specified paragraphs such as (j), (k) and (l). Schedule A speaks to conditions based on receiving “approval” from an approving authority – a statutory or governmental decision-maker – not mere registration steps under the builder’s own control. Allowing a builder to rely on failure of “registration” as if it were a Tarion-compliant ETC would undermine the consumer-protection framework and invite abuse, since a builder could deliberately delay registration to escape disadvantageous contracts. The court also tied this analysis to an express contractual obligation – Clause 34 of the main agreement – which required Selkirk to diligently obtain Planning Act compliance. By August 2021, the approvals necessary to permit registration had been granted, but registration did not occur until May 2022. Selkirk provided no evidence of any diligent efforts to move registration forward. Given that the plan was to be registered by the builder’s own representative or agent, there was no basis for treating the delay as a legitimate reason to terminate. On these facts, permitting Selkirk to rely on Schedule “I” would be unjust and inconsistent with the Tarion regime and general principles of contractual interpretation favouring commercially sensible results.

Breach of contract and calculation of damages

Having found Schedule “I” unenforceable, the court held that Selkirk unilaterally terminated valid and binding agreements and resold the plaintiffs’ properties at a profit. The remaining question was how to calculate the plaintiffs’ damages. Relying on the Ontario Court of Appeal’s reasoning in The Rosseau Group Inc. v. 2528061 Ontario Inc., the judge applied the conventional rule for real estate transactions: the innocent purchaser’s loss is the difference between the contract price and the market value of the property on the date the sale was to be completed. While a court can in some circumstances choose a later assessment date, the presumption is that damages are assessed as of the breach date, and departures from that presumption must rest on legal principle. Here, the plaintiffs argued that, in light of the flexible nature of Tarion closing dates, damages should instead be fixed as of the claim date. The court rejected that invitation and adhered to the usual closing-date measure, finding that it best promoted commercial certainty and aligned with the goal of placing the plaintiffs in the position they would have occupied had the contracts been performed. On the evidence, the judge accepted the actual resale prices as the most reliable indicators of market value on the relevant dates. For Lot 54, the scheduled closing date was May 27, 2022, and the property was later resold for $530,000; the court therefore fixed the plaintiffs’ loss of bargain at $165,100. For Lot 56, the closing date was April 29, 2022 and the resale price was $650,000, producing a loss of bargain of $275,100. Combined, the plaintiffs’ damages totalled $440,200. The court granted summary judgment in favour of the plaintiffs, declared that Selkirk had breached both the Lot 54 and Lot 56 agreements, and ordered Selkirk to pay $440,200 in damages. Issues of costs and pre- and post-judgment interest were left to be dealt with later if the parties could not agree, so no specific dollar figure was fixed for those items in this decision. As a result, the successful parties were the plaintiffs – 13405176 Canada Inc., Sumeet Anand and Cinni Deol – who obtained a total monetary award of $440,200 in damages, with any additional amounts for costs and interest to be determined separately.