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Injunctions - Specific Performance
MORE CASES
Part 2
. Country Wide Homes Upper Thornhill Estates Inc. v. Ge
In Country Wide Homes Upper Thornhill Estates Inc. v. Ge (Ont CA, 2020) the Court of Appeal considered the availability of the remedy of specific performance to a vendor-builder of residential home:[21] The motion judge correctly stated the law respecting when the court should consider ordering specific performance and the fact that this remedy is available to vendors: Matthew Brady Self Storage Corporation v. InStorage Limited Partnership, 2014 ONCA 858, 125 O.R. (3d) 121, at paras. 33-34, leave to appeal refused, [2015] S.C.C.A. No. 50. As set out in Matthew Brady, at para. 40, looking at the contract broadly, and the transaction as a whole, the key factors are: (i) whether on the facts as a whole, damages will afford the vendor an adequate and complete remedy or whether a money award will be sufficient to purchase substitute performance; (ii) whether the vendor has established some fair, real and substantial justification for the granting of specific performance; and, (iii) whether the equities as between the parties favour the granting of specific performance. . Di Millo v. 2099232 Ontario Inc.
In Di Millo v. 2099232 Ontario Inc. (Ont CA, 2018) the Court of Appeal sets out the criteria for specific performance, with a specific comment on when tender may be avoided.
First the issue of tender:[45] For a party to be entitled to specific performance, the party must show he or she is ready, willing and able to close: Time Development Group Inc. (In trust) v. Bitton, 2018 ONSC 4384 (CanLII), at para. 53; see also Norfolk v. Aikens (1989), 1989 CanLII 245 (BC CA), 41 B.C.L.R. (2d) 145 (C.A.). While tender is the best evidence that a party is ready, willing and able to close, tender is not required from an innocent party enforcing his or her contractual rights when the other party has clearly repudiated the agreement or has made it clear that they have no intention of closing the deal: McCallum v. Zivojinovic (1977), 1977 CanLII 1151 (ON CA), 16 O.R. (2d) 721 at p. 723 (C.A.); see also Dacon Const. Ltd. v. Karkoulis, 1964 CanLII 252 (ON SC), [1964] 2 O.R. 139 (Ont. H.C.).
[46] In McCallum, at p. 723, this court explained that the renunciation of a contract may be express or implied:The renunciation of a contract may be express or implied. A party to a contract may state before the time for performance that he will not, or cannot, perform his obligations. This is tantamount to an express renunciation. On the other hand a renunciation will be implied if the conduct of a party is such as to lead a reasonable person to the conclusion that he will not perform, or will not be able to perform, when the time for performance arises.
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[48] The principles around the requirement to tender are summarized succinctly by Perell J. in Time Development Group, at paras. 56-57:Tender … is not a prerequisite to the innocent party enforcing his or her contractual rights. Tender is not required from an innocent party when the other party has clearly repudiated the agreement. Numerous cases have held that the law does not require what would be a meaningless or futile gesture. Moreover, when there is an anticipatory breach, the innocent party need not wait to the date for performance before commencing proceedings for damages or in the alternative for specific performance of the agreement. [Citations omitted.] [49] Thus, when a party by words or conduct communicates a decision not to proceed to closing, the other party is released from any obligation to tender in order to prove he was ready, willing and able to close: see Kirby v. Cameron, 1961 CanLII 203 (ON CA), [1961] O.R. 757 (C.A.); Kloepfer Wholesale Hardware v. Roy, 1952 CanLII 8 (SCC), [1952] 2 S.C.R. 465. Then the larger issue of the test for specific performance:Issue #4: Is the appellant entitled to specific performance ?
[64] I have concluded that the appellant’s failure to tender does not preclude him from obtaining a remedy of specific performance. I have also concluded that he has demonstrated that he was ready, willing and able to close, which is a prerequisite to obtaining the remedy of specific performance. I turn to one final issue – whether specific performance is an appropriate remedy on the facts of this case.
[65] In Semelhago v. Paramadevan, 1996 CanLII 209 (SCC), [1996] 2 S.C.R. 415, at para. 21, the Supreme Court of Canada stated that “[i]t cannot be assumed that damages for breach of contract for the purchase and sale of real estate will be an inadequate remedy in all cases.” Specific performance should not be granted absent evidence that the property is “unique” or, in other words, that “its substitute would not be readily available”: para. 22.
[66] In Erie Sand and Gravel Ltd. v. Seres’ Farms Ltd., 2009 ONCA 709 (CanLII), 97 O.R. (3d) 241, at para. 110, this court agreed that “specific performance is not to be ordered for breach of contract unless damages are inadequate”. Gillese J.A. cited John E. Dodge Holdings Ltd. v. 805062 Ontario Ltd. (2003), 2003 CanLII 52131 (ON CA), 63 O.R. (3d) 304 (C.A.), explaining what is meant by unique:[116] … Weiler J.A., writing for the court, referred to para. 23 in 1252668 Ontario Inc. v. Wyndham Street Investments Inc., [1999] O.J. No. 3188, 27 R.P.R. (3d) 58 (S.C.J.) and stated, at para. 39:I agree that in order to establish that a property is unique the person seeking the remedy of specific performance must show that the property in question has a quality that cannot be readily duplicated elsewhere. This quality should relate to the proposed use of the property and be a quality that makes it particularly suitable for the purpose for which it was intended. [67] Whether or not a substitute is readily available will depend on the facts of the particular case. Uniqueness is therefore a fact-specific inquiry. . 2484234 Ontario Inc. v. Hanley Park Developments Inc.
In 2484234 Ontario Inc. v. Hanley Park Developments Inc. (Ont CA, 2020) the Court of Appeal cited a common basis for specific performance:[96] The respondent did not argue the absence of any other requirements for an order for specific performance. The property is unique, in the sense that it is uniquely positioned to fulfill the requirements for the Access Road, and therefore specific performance would be an appropriate remedy: Semelhago v. Paramadevan, 1996 CanLII 209 (SCC), [1996] 2 S.C.R. 415, at paras. 21-23. . Matthew Brady Self Storage Corporation v. InStorage Limited Partnership
In Matthew Brady Self Storage Corporation v. InStorage Limited Partnership (Ont CA, 2014) the Court of Appeal comments as follows on the criteria required for the court to award specific performance (ie. an Order for actual compliance with contractual obligations) as a remedy. The case involved a claim by a real estate vendor to complete the sale:[29] In its essence, specific performance is a discretionary equitable remedy granted where damages cannot afford an adequate and just remedy in the circumstances. Almost 200 years ago, the principle was described by Sir John Leach, V.C., in Adderley v. Dixon (1824), 57 E.R. 239, at p. 240:Courts of Equity decree the specific performance of contracts, not upon any distinction between realty and personalty, but because damages at law may not, in the particular case, afford a complete remedy. [Emphasis added.] [30] Although specific performance is not in principle granted on the basis of any distinction between contracts for the sale of land and contracts involving personal property, until relatively recently that distinction has prevailed as a matter of course. That is because the law has traditionally viewed land as inherently unique such that damages could not sufficiently compensate its prospective purchaser.
[31] In Semelhago v. Paramadevan, 1996 CanLII 209 (SCC), [1996] 2 S.C.R. 415, the Supreme Court of Canada discarded that approach, however. The Court confirmed that specific performance was not to be available automatically as the default remedy for breach of a contract for the sale of lands “absent evidence that the property is unique to the extent that its substitute would not be readily available” or absent a fair, real and substantial justification for the claim to specific performance (at para. 22).
[32] Whether specific performance is to be awarded or not is therefore a question that is rooted firmly in the facts of an individual case. In Landmark of Thornhill Ltd. v. Jacobson (1995), 1995 CanLII 1004 (ON CA), 25 O.R. (3d) 628 (C.A.), at p. 636, this Court identified three factors bearing on the exercise of discretion in favour of specific performance: (i) the nature of the property involved; (ii) the related question of the inadequacy of damages as a remedy; and, (iii) the behaviour of the parties, having regard to the equitable nature of the remedy.
[33] What makes this case unusual is that it is the vendor rather than the purchaser seeking to have these factors reviewed in its favour. In such circumstances, damages will often be an adequate remedy. Indeed, there is a debate about whether the arguments in favour of granting specific performance to a vendor are weaker than those in favour of the purchaser: see Robert J. Sharpe, Injunctions and Specific Performance, looseleaf (Toronto: Canada Law Book, 2012), at paras. 8.100 to 8.220; Dick v. Dennis (1991), 20 R.P.R. (2d) 264 (Ont. Gen. Div.), at paras. 31-33.
[34] But it will not always be the case that damages are an adequate remedy where the vendor is the plaintiff, and there are authorities supporting the granting of specific performance in favour of a vendor: see, for example, Landmark of Thornhill; Dick v. Dennis, at para. 38; Westwood Plateau Partnership v. WSP Construction Ltd. (1997), 1997 CanLII 2085 (BC SC), 37 B.C.L.R. (3d) 82 (S.C.), at paras. 148-156, 163; and Comet Investments Ltd. v. Northwind Logging Ltd. (1998), 22 R.P.R. (3d) 294 (B.C. S.C.), at paras. 35-39.
[35] In an analogous context, where the claim relates to an investment property and any “unique” characteristics can be reflected in the sale price or profits from the investment and, therefore, give rise to quantifiable damages, courts have taken the position – following the approach taken in Semelhago – that there is no clear rule one way or the other as to whether specific performance is available. Its availability will turn on the uniqueness of the property and whether there is a fair, real and substantial justification for the claim. See, for example, John E. Dodge Holdings Ltd. v. 805062 Ontario Ltd. (2001), 2001 CanLII 28012 (ON SC), 56 O.R. (3d) 341 (S.C.), at para. 59, aff’d (2003), 2003 CanLII 52131 (ON CA), 63 O.R. (3d) 304 (C.A.), at paras. 37-39, 43-44, leave to appeal to S.C.C. refused, (2003) 223 D.L.R. (4th) vi; Monson v. West Barrhaven Developments Inc., [2000] O.J. No. 5209 (S.C.), at paras. 8-9; 1174538 Ontario Ltd. v. Barzel Windsor (1984) Inc. (1999), 29 R.P.R. (3d) 256 (S.C.), at paras. 7-8; 365733 Alberta Ltd. v. Tiberio, 2008 ABCA 341 (CanLII), 440 A.R. 177, at paras. 10-12.
[36] In our view, in the context of vendor claims – consistent with the approach taken in Semelhago – there is no absolute rule, one way or the other. The following passage from the Sharpe text, at paras. 7.210 and 7.220 is instructive:Where the subject-matter of the contract is “unique”, a strong case can be made for specific performance. The more unusual the subject-matter of the contract, the more difficult it becomes to assess the plaintiff’s loss.
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An award of damages presumes that the plaintiff’s expectation can be protected by a money award which will purchase substitute performance. If the item bargained for is unique, then there is no exact substitute. [Emphasis added.] [37] Two considerations emerge from that passage. First, it is the subject-matter of the contract, not the land alone that must be unique or unusual. Second, the measure of the adequacy of a money award is whether it “will purchase substitute performance”. These considerations help shed light on the analysis where the vendor is the plaintiff.
[38] The “uniqueness” analysis in such circumstances has a slightly different focus than in the usual case where the purchaser seeks the remedy. There, the issue is whether the land itself has some peculiar or special value to the purchaser who is seeking to obtain it and whether there is a reasonable substitute readily available. That paradigm does not fit into the analysis as readily where the vendor seeks specific performance. In one sense, there is nothing “unique” about the property the vendor receives when such an order is made. The vendor receives the purchase price – the value of the land in money according to the contract.
[39] It does not follow, however, that there may not be uniqueness, or a special character, to the circumstances of the transaction – the subject-matter of the contract viewed more broadly – that will justify specific performance. Where the vendor seeks the remedy the focus should be on the transaction as a whole. . Paterson Veterinary Professional Corporation v. Stilton Corp. Ltd.
In Paterson Veterinary Professional Corporation v. Stilton Corp. Ltd. (Ont CA, 2019) the Court of Appeal considered when specific performance should be ordered as a contract remedy: [22] Specific performance is a discretionary equitable remedy that should be granted “where damages cannot afford an adequate and just remedy in the circumstances”: Matthew Brady Self Storage Corporation v. InStorage Limited Partnership, 2014 ONCA 858 (CanLII), 125 O.R. (3d) 121, at para. 29, leave to appeal refused, [2015] S.C.C.A. No. 50. In determining whether to exercise this discretion I consider below (1) whether the property is unique, (2) whether the respondent remained ready, willing and able to close, (3) whether the respondent is disentitled to an equitable remedy and (4) whether damages are a suitable and just alternative in this case. For the reasons that follow, specific performance was the appropriate remedy.
[23] The Supreme Court of Canada has held that in the case of a breach of a contractual obligation to sell real property, specific performance should not be granted “as a matter of course absent evidence that the property is unique to the extent that its substitute would not be readily available”: Semelhago v. Paramadevan, 1996 CanLII 209 (SCC), [1996] 2 S.C.R. 415, at para. 22. Real property will be unique when it has a quality that cannot be replicated elsewhere that relates to the proposed use of the property and makes it particularly suitable for the purpose for which it was intended: John E. Dodge Holdings Ltd. v. 805062 Ontario Ltd. (2001), 2001 CanLII 28012 (ON SC), 56 O.R. (3d) 341 (S.C.), at para. 73, aff’d 2003 CanLII 52131 (ON CA), 63 O.R. (3d) 304 (C.A.), leave to appeal refused, [2003] S.C.C.A. No. 145. . 1465152 Ontario Limited v. Amexon Development Inc.
In 1465152 Ontario Limited v. Amexon Development Inc. (Ont CA, 2015) the Court of Appeal upheld a lower court permanent injunction against a landlord who was trying to obtain possession of leased commercial premises. On the key injunction criteria of whether failure to grant would cause irreparable harm to the applicant (ie. harm that was not compensable with a damage award), the court held that despite the modern judicial inclination to treat leases as any other contract, there was still a residual real property interest which could apply to avoid the irreparable harm rule. That is, the court acknowledged some remaining force in the previously conventional law that real estate entitlements could be subject to specific performance as of right:[22] First, the Landlord contends that in Pointe East Windsor Limited v. Windsor (City), 2014 ONCA 467 (CanLII), 374 D.L.R. (4th) 380, at para. 17, this court held that equitable relief, such as a permanent injunction, is only available where damages are an inadequate remedy. The Landlord submits that the leased premises are not unique, so an award of compensatory damages to the Tenant would serve as an adequate remedy. However, in Pointe East Windsor Limited, the issue of remedy arose in the context of an action for breach of contract, not where the holder of an interest in property, such as the Tenant, was alleging a wrongful interference with a proprietary interest.
[23] As the law in Ontario currently stands, different considerations apply in the latter circumstance, as was explained in Robert J. Sharpe, Injunctions and Specific Performance, loose-leaf (consulted on 30 January 2015), (Toronto: Canada Law Book, 2014), at 4.10 and 4.20:Where the plaintiff complains of an interference with property rights, injunctive relief is strongly favored. This is especially so in the case of direct infringement in the nature of trespass.
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The reason for the primacy of injunctive relief is that an injunction more accurately reflects the substantive definition of property than does a damages award. It is the very essence of the concept of property that the owner should not be deprived without consent. An injunction brings to bear coercive powers to vindicate that right. Compensatory damages for a continuous and wrongful interference with a property interest offers only limited protection in that the plaintiff is, in effect, deprived of property without consent at an objectively determined price. Special justification is required for damages rather than an injunction if the principle of autonomous control over property is to be preserved. A damages award rather than an injunction permits the defendant to carry on interfering with the plaintiff’s property. [Footnotes omitted.] [24] The Landlord relies on the decision of the British Columbia Court of Appeal in Evergreen Building Ltd. v. IBI Leaseholds Ltd., 2005 BCCA 583 (CanLII), 50 B.C.L.R. (4th) 250, leave to appeal to S.C.C. granted, [2006] S.C.C.A. No. 43,[1] in support of its position that the application judge should not have granted a permanent injunction. That case also involved an argument by a landlord that it should be permitted to re-enter leased premises in order to demolish a building for redevelopment even though the lease did not contain a demolition clause and the tenant had not breached the lease. The British Columbia Court of Appeal, at para. 31 of its reasons, held that the chambers judge had erred in granting a permanent injunction because he had treated the remedies related to a lease and a contract as “water-tight compartments”, leading him to ignore the issue of whether damages were an adequate remedy in the circumstances. The British Columbia Court of Appeal re-instated the interim injunction restraining the landlord from breaching the covenant of quiet enjoyment and remitted the issue of the permanent injunction back to the British Columbia Supreme Court for consideration of the equities between the parties.
[25] In the present case, the application judge turned his mind to the adequacy of an award of damages and then went on to observe, correctly, that “[i]njunctions remain a powerful arrow to preserve property rights and to restrain tortious misconduct.” The Landlord sought to trespass by seeking to enter the leased premises without any authority, terminate the Lease and demolish the leased premises. Under those circumstances it fell within the discretion of the application judge to restrain the Landlord from committing such a trespass, and I see no error in his exercise of that discretion.
[26] Second, the Landlord argues that the Tenant was seeking an injunction for an improper purpose, namely to enhance its bargaining position with the Landlord. Such a motivation, according to the Landlord, operated as a reason to deny granting an injunction. Certainly some courts have refused to grant an injunction where they have found that the request for injunctive relief was being used to force a hard bargain rather than protecting the actual enjoyment of bona fide property rights: Michael Santarsieri Inc. v. Unicity Mall Ltd. (1999), 1999 CanLII 5082 (MB CA), 181 D.L.R. (4th) 136 (Man. C.A.), at para. 25 and Denovan v. Lee (1989), 65 D.L.R. (4th) 103 (B.C.C.A.), at p. 106. In the present case, however, the application judge made no such finding of improper purpose on the part of the Tenant and, by contrast, found that the Landlord had engaged in tortious misconduct.
[27] Finally, the Landlord submits that the permanent injunction constituted a disproportionate remedy in the circumstances, arguing that it was unreasonable to permit the Tenant to continue to occupy premises which amounted to less than three per cent of the building’s total rental area when all other tenants had vacated the building. I would not accept that submission for two reasons. First, as pointed out in Injunctions and Specific Performance, at 4.590:Where there is a direct interference with the plaintiff’s property constituting a trespass, the rule favoring injunctive relief is even stronger than in the nuisance cases. Especially where the trespass is deliberate and continuing, it is ordinarily difficult to justify the denial of a prohibitive injunction. A damages award in such circumstances amounts to an expropriation without legislative sanction … In trespass, there has been less concern than in nuisance with the problem of “extortion”. Even if the plaintiff is merely holding out for the highest possible price, and suffers no out-of-pocket loss because of the trespass, the courts have awarded injunctions. Such orders may be said to vindicate the plaintiff’s right to exploit the property for whatever it is worth to the defendant and prevent the defendant from circumventing the bargaining process. [Footnotes omitted.] [28] In addition, the application judge balanced the parties’ respective interests and tailored the scope of the injunction to that which was necessary to restrain the specific unlawful conduct of the Landlord – i.e. its intention to trespass onto the leased premises pursuant to the Notice to Vacate in order to terminate the tenancy. His endorsement clearly states that the injunction would not protect the Tenant from the consequences of future breaches or future application of the Lease, nor did it address the issue of the right of the Tenant to renew the Lease upon the expiry of its current term on March 31, 2016.
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