Executive Summary: Key Legal and Evidentiary Issues

• A bilateral promise to purchase turned on whether a 45-day financing deadline was strict ("de rigueur") or merely directory.
   
• Financing clause 6.1.1 required the buyer to deliver a mortgage lender's written commitment within a fixed period, failing which the offer became null and void.
   
• Conduct evidence was central to the buyer's claim that the seller implicitly agreed to extend the financing deadline.
   
• Contradictory phone records and admissions of "cleaning" a phone affected the seller's credibility on the abuse-of-procedure counterclaim.
   
• Clause 7.6, concerning satisfactory financing at the buyer's discretion, was raised as an alternative basis for keeping the offer alive.
   
• Timeliness of the passing-of-title action was assessed against months of post-deadline negotiations and new offers.
   

Facts of the case

13962296 Canada inc. (Woodland), a holding company that owns several income properties in Montreal and was pursuing regional acquisitions, sought passing of title to an income property in Sherbrooke owned by 140181 Canada inc. (Mohamed Badr). Woodland initially approached Mohamed Badr with a prospecting letter in March 2023. After a first offer was rejected, a second offer to purchase was signed on April 4 and accepted on April 6, 2023, at a price of $1,926,589, with a $399,000 down payment and a $1,596,000 mortgage loan, subject to a 45-day financing condition under clause 6.1.1. That deadline expired May 21, 2023, and a further five-day grace period for the seller expired May 26, 2023, without Woodland ever producing the required mortgage commitment.

Despite this, discussions continued. Woodland pursued CMHC-insured financing through its lender, Canada ICI, but did not obtain a formal written commitment. A proposed amendment in September 2023 sought to tie the financing deadline to CMHC approval, and a third offer set a new deadline of December 1, 2023, at a revised price of $1,995,000. A fourth offer was sent by text message in November 2023 at $2,040,967. In December 2023, Mohamed Badr informed Woodland by text that he no longer wished to sell. Woodland served a formal notice of default in January 2024 and commenced an action for passing of title in May 2024, registering a notice of pre-registration against the property — though the source document gives differing dates (May 14, 2024 and May 27, 202