Executive Summary: Key Legal and Evidentiary Issues

• A contract of purchase and sale drafted by the buyers from an online template was held enforceable, and its express wording meant monthly occupancy payments did not reduce the $845,000-plus-GST purchase price.
   
• Applying the officious bystander test, the court implied a term requiring the seller, a licensed residential builder, to obtain an occupancy permit before completion.
   
• Industrial's lawyer's email of June 28, 2021, demanding completion on one business day's notice in a contract with no time-of-the-essence clause, was found to be an anticipatory breach and repudiation.
   
• Both parties were in essential default on June 30, 2021, but Industrial could not insist on performance given its failures on the occupancy permit, the new home warranty, listed deficiencies and clear title.
   
• Credibility findings went strongly against the Kapilas, including findings that the residential tenancy agreement existed only to defeat a realtor's commission claim and that their explanation of a 2018 warranty start date was unbelievable.
   
• Specific performance was granted because the home was unique to the buyers, with a price reduction that netted repair, permit and warranty abatements against credits owed to the seller for property taxes and utilities.
   

Facts of the case

Industrial Radiator Co. Ltd. is owned equally by Rajinder (Roger) Kapila and his wife, Reetika Kapila, with Roger as sole director. In 2016, Industrial bought a vacant lot at 6077 Sansum Drive in the Maple Bay area of Duncan, British Columbia, for $129,000 and built a home on it as a licensed residential builder, with Reetika as its nominee. Because the lot fell within a steep-slope hazard area, the municipality required geotechnical sign-off by the engineer of record. A final inspection on June 13, 2018, listed a geotechnical Schedule C-B as outstanding, and no occupancy permit was ever issued. Several listings between 2018 and 2020 produced no sale; the last, with Re/Max agent Trevor Friesen, expired on May 15, 2020, and contained a clause that could entitle the brokerage to commission on a later sale to a buyer it had introduced.

Opeyemi (Opey) and Faye Adeyemi, first-time buyers who had viewed the home with Mr. Friesen, reached an oral agreement with the Kapilas in the spring of 2020. The court accepted that Industrial insisted the Adeyemis sign a residential tenancy agreement, on the understanding that Industrial would not sign it unless Mr. Friesen claimed a commission. After moving in during mid-June 2020, the family noticed leaks from the upstairs bathroom into the kitchen ceiling and other defects. On August 26, 2020, Roger signed, on Industrial's behalf, a "Contract of Purchase and Sale – Private Deal Solely Between Seller and Buyer" (the CPS) that Opey had prepared from an online precedent, at a price of $845,000 plus GST. By later agreement, the deposit was reduced to an initial $12,500 (paid on about September 13, 2020) until deficiencies were fixed, and the monthly payment was reduced to $2,500.

According to Opey's evidence, two banks told him in January 2021 that a certificate of occupancy would be needed to finance the purchase of a new build, and Roger did not sign the authorization Opey needed to obtain municipal records. When Opey advised on January 31, 2021, that financing was in place and his approval was valid until April 16, Reetika's brother Nick replied in the group chat "Let's plan calmly what to say," then wrote "Oops, wrong group." Days later, the Adeyemis agreed to buy a Somenos Road townhouse for $475,000, which they soon arranged to rent out. At a meeting on about February 9, 2021, Opey received assurances that the occupancy permit would be obtained. A Pacific Home Warranty letter dated April 6, 2021 [the judgment at para 232 refers to it as "the letter of 4/6/2017" while concluding it was dated April 6, 2021], addressed to Roger and Reetika personally, recorded the warranty as starting on August 1, 2018, so the materials and labour and mechanical systems coverages had already expired; the Adeyemis did not see it until this litigation.

Opey delivered a letter on May 24, 2021 [the judgment elsewhere refers to this letter as dated May 28, 2021], demanding access to warranty and municipal documents or a refund with compensation, and stating that monthly payments would stop. No response followed, and the June and July payments were not made on time. An excavator arrived on June 22, 2021, to expose the footings for the geotechnical engineer, Nathaniel Tougas, but after confrontations that day, no further excavation was scheduled before the end of June. On the afternoon of June 28, 2021, Industrial's litigation lawyer, Mr. Mildenberger, emailed that if the purchase did not complete by June 30, 2021, Industrial would treat the contract as repudiated and retain the deposit. Neither side took steps to complete, and the Adeyemis sued for specific performance on June 30, 2021.

Subsequent events deepened the dispute. BC Housing suspended Industrial's residential builder licence in 2022. Industrial served notices to end a tenancy in December 2022 and May 2023, and the Adeyemis stopped their monthly payments in early 2023. After the Residential Tenancy Branch declined to proceed because the matter was before the Supreme Court, Industrial filed an application and a petition, resolved by a consent order of Justice Branch on May 31, 2024, requiring the Adeyemis to pay $40,000 for their occupation from March 2023 to June 2024 and $2,500 monthly thereafter. They paid. Trial proceeded in Victoria over dates in September 2024, January 2026 and March 17, 2026, before Justice Veenstra.

Policy and legislative provisions at issue

Section 1 of the CPS set the purchase price at $845,000, with "+ GST" added by hand and initialled. Under s 2, a $25,000 deposit was payable on signing and would form part of the purchase. Section 3, headed "Terms and Conditions," required a "New home warranty set by Homeowner Protection Act and Regulation" and listed repairs, including fixing plumbing leaks, completing tile work, fixing air conditioning circulation on the top level and repairing the stairs at the main entrance. Completion under s 4 was to occur "on or before June 30th 2021 or 10 months from when contract is signed." Possession under s 5 was immediate, with a monthly payment of $2,300 "(not included in house price)," amended by hand to $3,560 plus half of the property tax. Section 12 made the buyer responsible for all utilities from the date of signing. Missing from the CPS were a time-of-the-essence clause, subject-to-financing or inspection conditions, and any express reference to an occupancy permit.

North Cowichan's Building Bylaw No. 3172 was central to the implied-term analysis. Section 14(4)(b) requires an owner to obtain an occupancy certificate before occupying a building, and s 16(1) provides that no person may occupy a building until the Building Inspector issues an occupancy permit. Under s 16(2), a permit must not issue unless all required letters of assurance have been submitted or all work requiring inspection has been inspected and accepted. Section 20 makes a violation an offence punishable by a fine of up to $10,000 plus prosecution costs or imprisonment of up to six months, with each day of violation a separate offence. The Homeowner Protection Act, SBC 1998, c 31, supplied the licensing and mandatory home warranty framework under which Industrial built the home.

Reasoning and analysis

Justice Veenstra found that the written CPS superseded the parties' earlier oral arrangement and rejected Industrial's argument that it was void for uncertainty. It identified the parties, the property and the price, and its s 5 wording plainly excluded the monthly payments from the house price. Neither party sought rectification, and payments made before August 26, 2020, were likewise not credited, since the price was agreed after they were made. On completion, ten months from signing would be June 26, 2021, but Industrial had consistently relied on the later June 30 date.

On the implied term, the court reasoned that the fundamental purpose of the CPS was for the Adeyemis to live in the home with their children, not to take over an unfinished construction project. Occupying the home without a permit exposed anyone living there to fines and imprisonment under the bylaw. The Adeyemis were not builders, were buying their first home from a licensed builder, and did not appreciate the permit problem until several months after signing. An objective bystander would therefore have concluded that the CPS required Industrial to obtain an occupancy permit. Justice Veenstra added that the permit issue was safety-related rather than technical, since it stemmed from unverified geotechnical steps on hazard lands.

Credibility weighed heavily. The court found the Kapilas' evidence neither credible nor reliable, noting that their account of being unable to reach Mr. Tougas was contradicted by his evidence that he held the necessary licences throughout and was never retained to do anything until June 2021. Justice Veenstra found unbelievable both the circumstances in which a photograph of a Roger-signed tenancy agreement was said to have been found just before the January 2026 resumption of trial and the suggestion that the 2018 warranty start date was Pacific Home Warranty's error. Opey's partial production of an email led the court to approach his evidence with some suspicion, and his refusal to acknowledge inaccurate statements to his bank about moving into the townhouse was called problematic. Even so, the Adeyemis' evidence was preferred wherever it conflicted with that of the Kapilas.

On readiness to complete, the court held that Industrial had waived the deposit and monthly payment shortfalls, both through the post-CPS variation and through the June 28, 2021 email, which did not reserve a right to withdraw the waiver. Industrial had intentionally delayed steps toward the occupancy permit until the last moment, and Mr. Tougas could not say his work would be done within eight days of the excavator's arrival. Given the absence of a time-of-the-essence clause and Industrial's knowledge that the Adeyemis' financing commitment had lapsed in April, one business day's notice was unreasonable, making the June 28 email an anticipatory breach and repudiation that the Adeyemis affirmed by suing. Justice Veenstra added that the same result would follow even if time had been of the essence.

Industrial was found in essential default on four fronts: no occupancy permit, no full new home warranty under the Homeowner Protection Act, uncompleted listed repairs (at least the leakage from the upstairs bathrooms into the kitchen), and no steps toward clear title, such as a mortgage payout statement or a conveyancing solicitor. Having not renewed their financing commitment, the Adeyemis were also in essential default, so either party could set a new date on reasonable notice once ready. Industrial's argument that only a fundamental breach excuses non-completion was rejected, as was its claim that the buyers could not have obtained financing. The missed June 2021 payment, tied to occupancy rather than price, was not a repudiation.

Turning to remedy, the court accepted that the home was unique to the Adeyemis, relying especially on Faye's evidence that it had been the family's home for years and was where her two youngest children were welcomed into the world. Because the Adeyemis moved quickly to rent out the townhouse, it was treated as an investment rather than a replacement property, distinguishing Lal v. Grewal, 2024 BCCA 149, and Serebrennikov v. Sawyer's Landing Investments 1 Ltd., 2010 BCSC 1276. Allegations of poor maintenance had little evidentiary support, and the Adeyemis had never been asked to pay taxes or utilities after June 2021. Industrial, having launched multiple proceedings on a tenancy agreement never meant to govern the relationship, was in no position to allege inequitable conduct, and most of the delay was systemic.

For abatement, the report of contractor John Andersen was limited by instructions to avoid destructive testing, so his suggestion that the plumbing as a whole might need replacing was not adequately supported, his electrical estimate received no weight, and structural and envelope issues around the garage and sundeck were not proven. Accepted items were ensuite plumbing, tiling, sealing and drywall work at $15,000, HVAC work at $4,500 and front entry stairs at $7,000, plus $5,000 toward obtaining an occupancy permit and a $10,000 warranty credit if Industrial could not correct the warranty dates. Against that abatement of $31,500 or $41,500, Industrial was credited 50% of property taxes for 2021 to 2025, calculated at $19,720, and a $192.27 municipal bill, with total credits including 2026 taxes and other utilities estimated at about $25,000. The plaintiffs had sought a price reduction of $264,000 plus $4,600. Claims for misrepresentation against Roger and Industrial were subsumed in the specific performance order, and the $75,000 claimed for bad faith damages was declined as duplicative.

Ruling and overall outcome

Justice Veenstra ordered specific performance of the CPS in favour of Opey and Faye Adeyemi, with completion three months from the September 21, 2026 judgment and liberty to apply for directions. The purchase price is reduced by $16,500, or by $6,500 if Industrial secures confirmation from the warranty provider that the home warranty commenced no later than June 15, 2020. As substantially successful parties, the Adeyemis would ordinarily receive tariff costs and will have costs on Scale B if neither side makes written submissions within 60 days and costs are not otherwise resolved. No damages were awarded, and no fixed monetary sum was ordered: the relief takes the form of a price reduction whose amount depends on the warranty outcome, and costs were not quantified.