Executive Summary: Key Legal and Evidentiary Issues

• The plaintiff sought summary judgment after the defendant failed to close on an agreement of purchase and sale.
   
• Real estate market conditions declined between contract signing and the scheduled closing date.
   
• Schedule Q of the agreement addressed the purchaser's assumption of market fluctuation risk.
   
• Defendant alleged misrepresentation regarding the property's original pricing but did not substantiate reliance.
   
• No genuine issue requiring a trial was found on the evidentiary record.
   
• Damages were reduced by the court for the commission and legal fee components before judgment was granted.
   

Facts of the case

Mattamy (Jock River) Limited, the plaintiff and vendor, entered into an Agreement of Purchase and Sale with Tripple S & A Inc., the defendant and intended purchaser, for a new home in Ottawa priced at $789,301.00 inclusive of extras and HST. The APS was signed in November 2022, with closing scheduled for the end of May 2024. During the intervening period, rising interest rates coincided with a decline in the value of the property. In late 2023, the defendant informed the plaintiff that it wished to market the home prior to closing, and the plaintiff agreed to permit a sale by way of assignment. The defendant listed the property in September 2023 and again in April 2024 for $770,000.00 but was unable to find a buyer. On May 28, 2024, just days before closing, the defendant's solicitor advised that the client would be unable to close the transaction due to market conditions. The plaintiff accepted this as an anticipatory breach and proceeded to resell the property, ultimately selling it in July 2024 for $699,999.00 — a price both parties agree reflected fair market value at that time.

Policy and legislative provisions at issue

The APS incorporated "Schedule Q," which set out the purchaser's acknowledgements regarding price certainty and market risk. Under its terms, the purchaser acknowledged that the purchase price was firm and binding, that real estate market conditions might fluctuate upward or downward between signing and closing, and that the vendor bore no responsibility for or control over such fluctuations. The schedule further provided that the vendor would not agree to any changes or reductions to the purchase price, nor be obligated to offer incentives or adjustments to the agreement's terms. The court noted that this schedule formed part of the executed agreement and that both parties had specifically assumed the risk of market fluctuations when they signed.

Reasoning and analysis

The defendant argued, without proof, that the property had been originally overvalued, pointing to an affidavit stating that the plaintiff had sold comparable homes in the same vicinity for between approximately $664,900 and $699,990. The court found this argument disingenuous, since the listing prices relied upon were from 2024, not 2022 when the APS was signed, and there was no evidence the plaintiff was pricing similar homes at those levels in 2022. Because real estate values had dropped by roughly 20% over that period, the comparison did not support a finding of misrepresentation, and the allegation was also found to be vague and unparticularized. The court further held that a decline in property value and rising interest rates would not amount to frustration of contract, even had that defence been pleaded, since price fluctuation risk was expressly contemplated by Schedule Q. Applying summary judgment principles, the court concluded that a responding party must put its best evidence forward on the motion itself, and that adjourning to trial merely in hopes of developing better evidence was not appropriate absent a legitimate reason, such as a motion brought before production and discovery.

Ruling and overall outcome

Finding no genuine issue requiring a trial, the court granted summary judgment in favour of the plaintiff, Mattamy (Jock River) Limited. The plaintiff had claimed total damages of $97,945.65, comprising the shortfall between the original and resale prices, real estate commission, legal fees, and a deduction for forfeited deposits; however, the court reduced the commission component by 50% and the legal fees by $1,000.00, resulting in a judgment of $78,845.9 in the plaintiff's favour. The court also awarded the plaintiff costs of the action, fixed at $8,000.00 inclusive of disbursements and HST, on a partial indemnity scale.