Overview

In 2730453 Ont Inc. v 2380673 Ont Inc., 2022 ONSC 6660, the plaintiff, 2730453 Ontario Inc. (the "Purchaser"), sought specific performance to enforce an oral agreement for the purchase of land. The defendant, 2380673 Ont. Inc. (the "Vendor"), was the seller and owner of the property in question, who had initially agreed to the terms but later attempted to back out of the deal.

Facts

The Purchaser was represented by a project-specific company established specifically to acquire the disputed land. The Vendor was a corporation led by a sole individual. Over several months, negotiations were conducted through intermediaries for the sale and purchase of the Vendor's 32-acre property, which directly adjoined land already owned by the Purchaser. The Purchaser's objective was to consolidate land for future industrial development.

These negotiations eventually led to the Purchaser making an offer, which the Vendor seemingly accepted and provided some necessary documentation for the closing process. Notably, the Vendor had a unique preference, which the Purchaser accommodated, regarding the postponement of formalizing the deal in writing until just prior to the closing date. Consequently, beyond initial drafts and exchanged documents, there existed no finalized, signed agreement encapsulating all agreed-upon terms.

Despite this absence of a formalized contract, the Purchaser continued preparations for the transaction, affirming their readiness to proceed with funding and tendering. However, the Vendor raised unforeseen objections at the brink of the scheduled closing, conveyed via a 4 a.m. email to their agent. The email stated: "There will be no closing."

The Vendor refused to move forward with the transaction, relying upon section 4 of the Statute of Frauds, RSO 1990, c S.19, which states that a contract for the sale of land must be in writing.

The Purchaser subsequently brought an action against the Vendor for beaching the agreement and sought specific performance for the property. Specific performance is a declaration by the court compelling a party to perform its contractual obligations. In the context of real estate, specific performance is typically granted when the prevailing party proves the property's uniqueness, indicating that a substitute is not readily available and that monetary damages would be insufficient to remedy the harm suffered by the innocent party.

Analysis

NATURE OF THE PROPERTY

The Purchaser relied upon an expert report from a land use planner, which concluded that the disputed land was unique due to a number of features, such as:

  • it is situated within Protected Future Employment Land;
  • it has extensive visibility and exposure from Highway 407;
  • it is in very close proximity to the future 407 Transitway;
  • it has proximity to access to ON-403 and ON-407 Expressways Via Trafalgar Rd Interchange;
  • it has contiguity to the adjacent westerly property owned by 2730453 Ontario Inc.; and
  • it facilitates improved opportunity to master plan an employment/business Park.

In this instance, the court concluded that the contested property possessed uniqueness due to its immediate adjacency to the Purchaser's property, with the Purchaser intending to develop both lots as part of a unified development. Given that other adjacent properties were not available for sale at the time, the contested property was deemed 'unique' as there was no suitable substitute available.

PART PERFORMANCE

Despite the absence of a written contract, the court found that the following acts constituted part performance of the oral agreement by the Purchaser:

  1. obtaining an environmental assessment of the property;
  2. obtaining survey and title searches on the property;
  3. conducting other due diligence related to the property;
  4. negotiating and preparing the commission agreement among the purchaser and the brokers;
  5. retaining legal counsel to close the agreement;
  6. drafting, revising, and negotiating the written agreement of purchase and sale for the property;
  7. delivering the documents required on closing; and
  8. obtaining, delivering and tendering the certified cheque for the full amount of the purchase price.

Furthermore, the court determined that the Vendor's following actions related to the sale of the disputed property and constituted part performance of the oral contract:

  1. retaining legal counsel to close the agreement for the purchase and sale of the property;
  2. negotiating over the status of the easement on the property;
  3. reviewing and revising the draft agreement of purchase and sale, including providing a revised version of Schedule A to that agreement to the purchaser and obtaining the consent of the purchaser to the revisions;
  4. providing draft copies of the vendor's closing certificate and statutory declaration and the owner executing those documents; and
  5. negotiating the method by which the purchaser would deliver the agreed-upon purchase price on closing.

Conclusion

The court ultimately found that there was sufficient written evidence to prove the existence of an oral agreement, supported by numerous acts of part performance. Through correspondence, all the essential terms of the deal were agreed to, which included:

  • the identity of the parties;
  • the description of the property; and
  • the purchase price.

Having concluded that there was a valid oral agreement breached by the Vendor without justification, the court then turned its attention to the appropriate remedy. Given the inadequacy of damages, particularly in light of the Purchaser's future development goals which would be challenging to quantify, the court deemed specific performance to be the more suitable recourse.

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