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Damages - Real Property. Rosehaven Homes Limited v. Jamil [mitigation]
In Rosehaven Homes Limited v. Jamil (Ont CA, 2026) the Ontario Court of Appeal considers any duty of a real estate seller to mitigate (by later sale) when the initial purchaser defaults:[3] Where a buyer fails to close on a real estate transaction and the seller re-sells, the law as to the seller’s damages is set out in Arista Homes v. Rahnama, 2022 ONCA 759, at para. 9:Where a purchaser fails to close a real estate transaction and the vendor takes reasonable steps to sell the property in an arm’s length sale to a third party in mitigation of damages, and there is nothing improvident about the sale, the difference between the two sale prices will be used to calculate the damages: 642947 Ontario Ltd. v. Fleischer (2001), 2001 CanLII 8623 (ON CA), 56 O.R. (3d) 417 (C.A.) at para. 41; 100 Main Street Ltd. v. W.B. Sullivan Construction Ltd. (1978), 1978 CanLII 1630 (ON CA), 20 O.R. (2d) 401 (C.A.), at para. 55. In such circumstances, there will be no need for expert evidence: Marshall v. Meirik, 2021 ONSC 1687, at para. 30, aff’d 2022 ONCA 275. See also Marshall v. Hall, 2025 ONSC 910 (Div. Ct.), 66 R.P.R. (6th) 48, at paras. 52-55.
[4] The trial judge erred in not taking the approach set out in Arista Homes and in Marshall v. Hall. Expert evidence may be admitted by which the buyer can establish the seller’s failure to take reasonable steps to resell in mitigation, or to establish that the resale value was improvident. But in this case the respondent buyer adduced no expert evidence that the resale process was unreasonable, nor did the appraisal evidence establish that the resale price was improvident. There was no evidence that the appellant seller’s mitigation efforts fell short. There was no evidence that the resale price in the arm’s length transaction should not be the basis for the loss of bargain damages calculation.
[5] The appeal is allowed and the judgment amended accordingly. The $36,053.02 that was awarded to the appellant in para. 3 of the judgment is amended to $69,761.09, reflecting an additional $33,708.07 from what was ordered below. The $22,639.32 in pre-judgment interest that was awarded to the appellant in para. 4 of the judgment is amended to $43,806.14, reflecting an additional $21,166.82 based on a rate of 12% per annum. The appellant seller admits that the respondent buyer paid the judgment under appeal, leaving the respondent buyer responsible to pay the outstanding balance of $54,874.89 plus costs, fixed at $8,000. We decline to adjust the costs on the motion for summary judgment. . The Rosseau Group Inc. v. 2528061 Ontario Inc.
In The Rosseau Group Inc. v. 2528061 Ontario Inc. (Ont CA, 2023) the Court of Appeal considers 'measure of damages', here in the specific real property context:[71] The key driver of damages under the normal measure is the market value of the land on the assessment date. The normal measure of damages compensates the innocent purchaser for the loss of the market value of the lands on the closing date less the purchase price that had to be paid to acquire them. The concept of market value of the land takes into account the value the land has because it can be developed.
[72] In Musqueam Indian Band v. Glass, 2000 SCC 52, [2000] 2 S.C.R. 633, at para. 37, Gonthier J. drew on precedents from various situations in which the term value is used in connection with real estate to provide an all-compendious general definition. He said: “‘Value’ in real estate law generally means the fair market value of the land, which is based on what a seller and buyer, ‘each knowledgeable and willing,’ would pay for it on the open market”.
[73] One of the cases relied on by Gonthier J. was the decision of this court in Re Farlinger Developments Ltd. and Borough of East York, 1975 CanLII 587 (ON CA), [1975] 61 D.L.R. (3d) 193, 9 O.R. (2d) 553, an expropriation case. As that case shows, determining market value in the expropriation context relies on expert appraisal evidence that considers the highest and best use of the property, that is, the use to which the property could reasonably and probably be put in the future to maximize its economic return, including by redevelopment: at pp. 199-200.
[74] Assessing market value for the purpose of damages for breach of a purchase agreement for the sale of land employs the same concepts. It generally requires appraisal evidence: DHMK Properties Inc. v. 2296608 Ontario Inc., 2017 ONSC 2432, at para. 56, rev’d on other grounds 2017 ONCA 961. Appraisal evidence can take into account the value of the property based on what would be its reasonable and probable highest and best use and that includes development: see for example 1427814 Ontario Limited v. 3697584 Canada Inc., 2012 ONSC 156, at paras. 511-17; WED Investments Limited v. Showcase Woodycrest Inc., 2021 ONSC 237, at paras. 149, 151, and 155. In other words, the market value of the land can take into account, as at the valuation date, the market’s perspective of the value of the current and potential future uses and opportunities available to the land’s owner, including development.
[75] There was no suggestion here that a calculation of market value at the closing date would somehow miss or exclude the development value of the lands. The APS, negotiated in January 2017 between arms’ length market participants, attributed value to the property solely by reference to its potential development, as the price was $350,000 per developable acre for residential development. The trial judge found that 252 had knowledge that the value of the property had increased by the closing date based on market evidence − 252 received an offer to purchase the property of $11 million in April 2017, a Letter of Intent at $640,000 per developable acre (almost double that in the APS) in September 2017, and an additional offer to purchase the property that same month for $14 million.
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