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Injunctions - Specific Performance (2). Roalno Inc. v. Schaefer
In Roalno Inc. v. Schaefer (Ont CA, 2024) the Ontario Court of Appeal considered an appeal of a dismissal of a purchaser's action for "specific performance with an abatement" in an APS breach case, here involving a dispute over a perceived easement.
Here the court considers the remedy of specific performance, with an abatement:[25] On appeal, Mr. Bieber makes two principal arguments on behalf of Roalno. First, he takes issue with the trial judge’s statement in her reasons that “Mr. Semple should have closed and argued about the interpretation of the agreement later”. He argues that this conflicts with decisions of this court holding that a purchaser who seeks specific performance with an abatement is not required to close at the original purchase price in order to preserve the right to seek this remedy.
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[28] With respect to the first argument, I accept that in situations where a purchaser of land is entitled to claim the remedy of specific performance with an abatement, because “there is a discrepancy between what the vendor has agreed to convey and what the vendor can convey”, the purchaser is not required to close at the original purchase price as a precondition for obtaining this remedy: see e.g., 3999581 Canada Inc. v. 1394734 Ontario Inc., 2007 ONCA 312, 282 D.L.R. (4th 461, at para. 16. . 9725440 Canada Inc. v. Vijayakumar
In 9725440 Canada Inc. v. Vijayakumar (Ont CA, 2023) the Court of Appeal considers the law of specific performance:General principles
[24] The ordinary remedy for breach of contract is damages. The exceptional equitable remedy of specific performance is available as a potential remedy where damages may not serve as an adequate remedy in the particular circumstances of the case. Specific performance is not to be ordered for breach of contract unless damages are inadequate: Erie Sand & Gravel Limited v. Tri-B Acres Inc., 2009 ONCA 709, 97 O.R. (3d) 241, at para. 110.
[25] In cases involving land, damages may be inadequate where the subject property is subjectively and objectively unique having regard to the purchaser’s intended use for the property and the property’s particular characteristics. The overarching consideration is whether “the plaintiff has shown that the land rather than its monetary equivalent better serves justice between the parties”: John E. Dodge Holdings Ltd. v. 805062 Ontario Ltd. (2001), 2001 CanLII 28012 (ON SC), 56 O.R. (3d) 341 (Sup. Ct.), at para. 55, aff'd (2003) 2003 CanLII 52131 (ON CA), 63 O.R. (3d) 304 (C.A.), leave to appeal refused, [2003] S.C.C.A. No. 145; Lucas v. 1858793 Ontario Inc. (Howard Park), 2021 ONCA 52, 25 R.P.R. (6th) 177, at paras. 70-71.
[26] There is no categorical presumption that all real estate is unique and that damages for the breach of an agreement of purchase and sale of real estate will be inadequate in all cases: Semelhago v. Paramadevan, 1996 CanLII 209 (SCC), [1996] 2 S.C.R. 415, at paras. 20-21. As this court stated in Lucas, at para. 69, citing to Semelhago, at para. 22, “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’”.
[27] This consideration requires an analysis of the uniqueness of the subject property to the purchaser at the time of contracting, including the purchaser’s subjective interests or intentions in purchasing the property, the property’s physical attributes, and the circumstances of the underlying transaction. As this court explained in Lucas, at paras. 74-75:Uniqueness does not mean singularity or incomparability. Instead, it means that the property has a quality (or qualities) making it especially suitable for the proposed use that cannot be readily duplicated elsewhere…. The court should examine the subjective uniqueness of the property from the point of view of the plaintiff at the time of contracting. The court must also determine objectively whether the plaintiff has demonstrated that the property or the transaction has characteristics that make an award of damages inadequate for that particular plaintiff. [Citations omitted.] [Emphasis added.] [28] The objective and subjective uniqueness of the property informs the question of whether damages are an adequate remedy. Courts should be “reluctant to award specific performance of contracts for property purchased solely as an investment, since money damages are well-suited to satisfy purely financial interests”: Lucas, at para. 78; Southcott, at paras. 40-41. The analysis of a property’s objective and subjective uniqueness was further explained by Lax J. in Dodge, at para. 59:There is both a subjective and objective aspect to uniqueness. While it is difficult to be precise about this, it strikes me that normally, the subjective aspect will be less significant in commercial transactions and more significant in residential purchases, unless the motivation in the latter case is principally to earn profit. In terms of the subjective aspect, the court should examine this from the point of view of the plaintiff at the time of contracting…The court will determine objectively whether the plaintiff has demonstrated that the property has characteristics that make an award of damages inadequate for that particular plaintiff. Obviously, investment properties are candidates for damages and not specific performance. [Notes omitted.] [Emphasis added.] [29] A further helpful discussion of the juxtaposition between the question of a property’s uniqueness and the adequacy of damages was provided by Barry J. Reiter and Robert J. Sharpe (as he then was) in “Wroth v. Tyler: Must Equity Remedy Contract Damages?” (1978-79) 3 Can. Bus. L.J. 146 at pp. 154-55:[I]f the only available investments are less attractive, damages can be awarded to “compensate” the plaintiff for the diminished quality of his investment. The argument that all land is somehow “unique” should not be allowed to obscure the fact that it is not “unique” in any contract-remedial sense to a commercial purchaser, in respect of whom the land is little more unique than fungible chattels. Its only “uniqueness” to him rests in its unique market value, but market value assessment of real estate is usually available. [30] The time for determining whether a property is unique and whether damages are inadequate is at the time of entering into the agreement of purchase and sale: Lucas, at para. 75. The party seeking the remedy has the onus of demonstrating entitlement to specific performance: Lucas, at para. 70; Dodge, at para. 57.
Principles Applied
[31] Ordinarily, a trial judge’s determination that specific performance is an appropriate remedy would be subject to appellate deference because it is rooted in the facts of the case: Matthew Brady Self Storage Corporation v. InStorage Limited Partnership, 2014 ONCA 858, 125 O.R. (3d) 121, at para. 32, leave to appeal to SCC refused, [2015] S.C.C.A. No. 50. ... . Giannopoulos v 1781994 Ontario Inc.
In Giannopoulos v 1781994 Ontario Inc. (Div Court, 2023) the Divisional Court considered an appeal of an an interlocutory order that, in a business dispute, ordered that the parties jointly-retain an accountant, and production of related records. The court analogized the orders to ones of contractual 'specific performance' and allowed the appeal:[5] On or about December 1, 2020 the parties retained the services of an accountant on a voluntary and non-determinative basis. The parties agreed that the accountant’s findings would be non-binding. ...
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[10] The parties argue this appeal on the basis that the motions judge effectively granted an injunction. While this is potentially one way of viewing the motion, the effect of the order is that the motions judge ordered specific performance of the retainer agreement. Specific performance of the contract is generally a secondary remedy imposed by the courts: see Co-operative Insurance Society Ltd. v. Argyll Stores (Holdings) Ltd., [1998] A.C. 1 (H.L.(E.)). In The Law of Contracts, (seventh edition) S.M. Waddams quoted Flint v. Brandon (1803), 8 Ves. Jun. 159, 32 E.R. 314 and stated that:“[t]he general principle was that specific performance was available whenever the legal remedy was insufficient to satisfy the needs of justice” (p.477). [11] In the case before the court a number of items stand out:1. the accountant’s retainer is not subject to any mandatory provision contained within the Rules of Civil Procedure;
2. the retainer agreement does not contain any mandatory language requiring the parties to continue with the retainer until the accountant completes the task;
3. the retainer agreement does not contain any provisions for the termination of the retainer;
4. the accountant communicated with the respondents without copying the appellants; and
5. the appellants have lost faith in the accountant’s independence and impartiality. ....
[13] The motions judgment enforced specific performance of a professional relationship where the client has lost confidence in the professional providing services. As noted above, specific performance is an unusual remedy and generally requires that monetary damages are incapable of remedying a breach of contract. That is certainly not the case in this instance in so far as there is nothing unique about the provision of services that would require specific performance. Requiring specific performance on a voluntary accountant-client relationship does not meet the legal threshold necessary for ordering specific performance.
[14] Put another way the motions judge did not have a basis in law to order that the joint retainer continue until the accountant completes the task assigned. . U.S. Steel Canada Inc. (Re)
In U.S. Steel Canada Inc. (Re) (Ont CA, 2023) the Court of Appeal considered factors to be taken into account when deciding to award specific performance:[26] It is well established that “[w]hether specific performance is to be awarded or not is … a question that is rooted firmly in the facts of an individual case”: Lucas v. 1858793 Ontario Inc. (Howard Park), 2021 ONCA 52, 25 R.P.R. (6th) 177, at paras. 71, 75. Moreover, “[w]hether a property is unique, either by virtue of its nature or the features of the contract for its purchase and sale, operates as only one of several factors a court must consider when determining entitlement to specific performance”: para. 71. . Halliday-Shaw v. Grieco
In Halliday-Shaw v. Grieco (Ont CA, 2023) the Court of Appeal considered the uniqueness of real estate and specific performance:[12] Nor did the motion judge err in awarding specific performance, or in explaining his decision to do so. The ultimate test for specific performance is whether “a plaintiff has shown that the land rather than its monetary equivalent better serves justice between the parties”: Lucas v. 1858793 Ontario Inc. (Howard Park), 2021 ONCA 52, 25 RPR (6th) 117, at para. 71. The motion judge clearly came to this conclusion, holding that on the facts before him, “specific performance of the contract is the most appropriate remedy, given the unique characteristics of the subject Property.”
[13] In his reasons for decision, the motion judge explained why the property was unique by expressing his acceptance of the respondents’ evidence and that of their real estate broker, evidence that leaves no reasonable room for disputing the finding that the property is unique. Mr. Grieco nonetheless argues that the motion judge erred by failing to expressly address all of the factors “typically” considered by judges considering specific performance, namely, “(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”: Lucas, at para. 71. Mr. Grieco argues that he committed a legal error by considering only factor (i). We do not accept this submission. The typical factors considered are non-exhaustive, overlapping factors, and not all need to be present to support a finding of specific performance. Moreover, judges are presumed to know the law and are not required to deal explicitly in their reasons with every factor they consider. A judge’s reasons must be read in the context of the evidentiary record as a whole. The evidentiary record in this case burgeoned with reasons supporting the motion judge’s decision to grant specific performance. . Fram Elgin Mills 90 Inc. v. Romandale Farms Limited
In Fram Elgin Mills 90 Inc. v. Romandale Farms Limited (Ont CA, 2021) the Court of Appeal sets out basics of specific performance:B. Governing Legal Principles
[287] Specific performance is not to be ordered for breach of contract unless damages are inadequate. When damages are found to be inadequate, it is generally because of the unique nature of the property bargained for. It is for this reason that specific performance has historically been granted in cases involving the purchase and sale of real property: Erie Sand & Gravel Ltd. v. Series’ Farms Ltd., 2009 ONCA 709, 97 O.R. (3d) 241, at paras. 110-11.
[288] However, it 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 “the property is unique to the extent its substitute would not be readily available”: Semelhago v. Paramadevan, 1996 CanLII 209 (SCC), [1996] 2 S.C.R. 415, at para. 22. Whether a substitute is readily available depends on the facts of the particular case. Therefore, uniqueness is a fact-specific inquiry: Di Millo v. 2099232 Ontario Inc., 2018 ONCA 1051, 430 D.L.R. (4th) 296, at para. 67, leave to appeal refused, [2019] S.C.C.A. No. 55.
[289] Laches is an equitable doctrine that offers a defence to delayed equitable claims. Mere delay is insufficient to trigger laches. The party asserting laches must establish one of two things: (1) acquiescence on the claimant’s part; or (2) a change of its position arising from reasonable reliance on the claimant’s acceptance of the status quo: Manitoba Metis Federation Inc. v. Canada (Attorney General), 2013 SCC 14, [2013] 1 S.C.R. 623, at paras. 145-47; Intact Insurance Company of Canada v. Lombard General Insurance Company of Canada, 2015 ONCA 764, 128 O.R. (3d) 658, at paras. 8-11. . Dhatt v. Beer
In Dhatt v. Beer (Ont CA, 2021) the Court of Appeal considered principles governing an award of specific performance in a real estate conveyance:[40] The Beers submit that the trial judge erred in granting “the extraordinary remedy of specific performance”. They contend that the characteristics of the property did not make it unique and the Dhatts’ losses could be quantified and remedied by an award of damages.
[41] I do not accept that submission.
[42] To describe the remedy of specific performance as an “extraordinary remedy” is a misdescription. In determining whether to grant specific performance, the fundamental question is whether the plaintiff has shown that the land rather than its monetary equivalent better serves justice between the parties: Lucas v. 1858793 Ontario Inc. (Howard Park), 2021 ONCA 52, at para. 70, quoting, with approval, Lax J. in John E. Dodge Holdings Ltd. v. 805062 Ontario Ltd. (2001), 2001 CanLII 28012 (ON SC), 56 O.R. (3d) 341 (S.C.), at para. 55, aff’d (2003) 2003 CanLII 52131 (ON CA), 63 O.R. (3d) 304 (C.A.), leave to appeal refused, [2003] S.C.C.A. No. 145. As stated by this court in Lucas at para. 71: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 determining whether a plaintiff has shown that the land rather than its monetary equivalent better serves justice between the parties, courts typically examine and weigh together three factors: (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 … Whether a property is unique, either by virtue of its nature or the features of the contract for its purchase and sale, operates as only one of several factors a court must consider when determining entitlement to specific performance. [Citations omitted.] [43] The trial judge identified and applied the governing principles. Her conclusion, at paras. 39 and 40, that the Dhatts had demonstrated that the property possessed unique qualities was fully supported by the evidence. As was her finding that damages would not be an adequate remedy in the circumstances given the evidence that the Beers lacked sufficient funds to pay a damages award: at paras. 43-46. . Lucas v. 1858793 Ontario Inc. (Howard Park)
In Lucas v. 1858793 Ontario Inc. (Howard Park) (Ont CA, 2021) the Court of Appeal considers at length the test for specific performance:[68] The most appropriate place to start the analysis is by recalling first principles. In general, contractual remedies are intended to provide the non-breaching party with what the contract was to provide: Angela Swan, Jakub Adamski & Annie Na, Canadian Contract Law, 4th ed. (Toronto: LexisNexis Canada, 2018), at §6.14. That usually is done by requiring the party in breach to pay, as damages, an amount of money that will provide the victim of the breach with the financial equivalent of performance: John D. McCamus, The Law of Contracts, 3rd ed. (Toronto: Irwin Law, 2020), at p. 971. However, as observed by The Honourable Robert J. Sharpe in Injunctions and Specific Performance, loose-leaf (2020-Rel. 29), 4th ed. (Toronto: Thomson Reuters, 2012), at §7.50:The existing regime of remedial law strongly favours the first option of damages and awards specific performance only in exceptional cases. Yet in many cases, specific relief may seem to be the only sure way to put the plaintiff in the position he or she would have been in had the contract been performed …The assessment of damages the innocent party has suffered can be a difficult, expensive and time-consuming task. Specific performance has the advantage of avoiding the problems and costs the parties and the judicial system must incur if damages are to be assessed. Perhaps more significant is the very real element of risk that the translation into money terms of the effect of the breach on the plaintiff may be inaccurate. Some cases will present more risk than others but it cannot be denied that the element of risk of error is virtually swept away if the court is able to make an order of specific performance. The innocent party receives the very thing bargained for rather than a monetary estimate of its worth. [Emphasis added.] The overarching test for granting specific performance
[69] The basic rationale for an order of specific performance of contracts is that damages may not, in the particular case, afford a complete remedy: Adderley v. Dixon (1824), 57 E.R. 239 (Ch.), at p. 240; Semelhago, at para. 21; Matthew Brady, at para. 29. In Semelhago, the Supreme Court noted that at one time the common law regarded every piece of real property as unique. However, in the contemporary real estate market, which is characterized by the mass production of urban residential housing, it cannot be assumed that damages for breach of contract for the purchase and sale of real estate would be an inadequate remedy in all cases: at para. 21. Accordingly, 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”: at para. 22. Therefore, a party seeking specific performance must establish a fair, real, and substantial justification by showing that damages would be inadequate to compensate for its loss of the subject property: Asamera Oil Corp. v. Seal Oil & General Corp., 1978 CanLII 16 (SCC), [1979] 1 S.C.R. 633, at p. 668.
[70] In his article “Death to Semelhago!” (2016) 39:1 Dalhousie L.J. 1, Professor Bruce Ziff commented, at p. 9, that “the change ushered in by Semelhago can be seen as one of degree, not principle.” The point was made, in a slightly different way, by Lax J., in John E. Dodge Holdings Ltd. v. 805062 Ontario Ltd. (2001), 2001 CanLII 28012 (ON SC), 56 O.R. (3d) 341 (S.C.), aff’d (2003) 2003 CanLII 52131 (ON CA), 63 O.R. (3d) 304 (C.A.), leave to appeal refused, [2003] S.C.C.A. No. 145. She ventured the view, at para. 55, that Semelhago did not replace the presumption of uniqueness with a presumption of replaceability.[2] Certainly the plaintiff bears the onus of demonstrating entitlement to the remedy of specific performance. But what does that require the plaintiff to demonstrate? Lax J. stated, at para. 55:Semelhago asks us to examine in each case, the plaintiff and the property. The danger in framing the issue as one of uniqueness (a term that carries with it a pre-Semelhago antediluvian aroma) is that the real point of Semelhago will be lost. It is obviously important to identify the factors or characteristics that make a particular property unique to a particular plaintiff. The more fundamental question is whether the plaintiff has shown that the land rather than its monetary equivalent better serves justice between the parties. This will depend on whether money is an adequate substitute for the plaintiff's loss and this in turn will depend on whether the subject matter of the contract is generic or unique. [Emphasis added.] [71] Whether specific performance is to be awarded or not is therefore a question that is rooted firmly in the facts of an individual case: Matthew Brady, at para. 32. In determining whether a plaintiff has shown that the land rather than its monetary equivalent better serves justice between the parties, courts typically examine and weigh together three factors: (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: Landmark of Thornhill Ltd. v. Jacobson (1995), 1995 CanLII 1004 (ON CA), 25 O.R. (3d) 628 (C.A.), at p. 636. Whether a property is unique, either by virtue of its nature or the features of the contract for its purchase and sale[3], operates as only one of several factors a court must consider when determining entitlement to specific performance.
[72] Against that backdrop of general principles, I shall examine the case law regarding each factor.
(i) The nature of the property
[73] In assessing whether a property is unique, courts may have regard to: (a) a property’s physical attributes; (b) the purchaser’s subjective interests, or (c) the circumstances of the underlying transaction. While physical and subjective uniqueness of property will usually be significant in cases where a purchaser – as opposed to a vendor – seeks specific performance, the types of uniqueness are not exclusive and no difference in evidential weight should be given to one form over another: Jeffrey Berryman, The Law of Equitable Remedies, 2nd ed. (Toronto: Irwin Law, 2013), at pp. 355-57.
[74] Uniqueness does not mean singularity or incomparability. Instead, it means that the property has a quality (or qualities) making it especially suitable for the proposed use that cannot be readily duplicated elsewhere: Dodge (S.C.), at para. 60. For example, a rising real estate market, particularly where the purchaser’s deposit remains tied up by the vendor, may indicate that the transaction could not have been readily duplicated or that other properties were not readily available at the time of breach within the plaintiff’s price range: Walker v. Jones (2008), 2008 CanLII 47725 (ON SC), 298 D.L.R. (4th) 344, at para. 165; Sivasubramaniam v. Mohammad, 2018 ONSC 3073, 98 R.P.R. (5th) 130, at paras. 84 and 92, aff’d 2019 ONCA 242, 100 R.P.R. (5th) 1.
[75] The court should examine the subjective uniqueness of the property from the point of view of the plaintiff at the time of contracting: Dodge (S.C.), at para. 59. The court must also determine objectively whether the plaintiff has demonstrated that the property or the transaction has characteristics that make an award of damages inadequate for that particular plaintiff: Dodge (S.C.), at para. 59; Di Millo v. 2099232 Ontario Inc., 2018 ONCA 1051, 430 D.L.R. (4th) 296, at paras. 70-73, leave to appeal refused, [2019] S.C.C.A. No. 55.
[76] While units in cookie-cutter townhouses or condominium units may be considered less unique than other forms of property, some condominiums are truly unique: Gillespie v. 1766998 Ontario Inc., 2014 ONSC 6952, 49 R.P.R. (5th) 65, at para. 26; Landmark of Thornhill, at p. 636. Even in the case of mass-produced condominiums, the issue remains whether the plaintiff has shown, upon the consideration of all the factors, that the land rather than its monetary equivalent better serves justice between the parties.
[77] Put another way, the specific performance analysis is not merely a search for uniqueness. As the case law discloses, other factors such as the inadequacy of damages as a remedy and the behaviour of the parties also play a role: Landmark of Thornhill, at p. 636; Dodge (S.C.), at para 55; UBS Securities Inc. v. Sands Brothers Canada Ltd., 2009 ONCA 328, 95 O.R. (3d) 93, at para. 100.
(ii) Adequacy of damages
[78] As indicated above, one other factor is whether damages would be adequate to remedy the purchaser’s loss. For instance, courts should be reluctant to award specific performance of contracts for property purchased solely as an investment, since money damages are well-suited to satisfy purely financial interests: Southcott Estates Inc. v. Toronto Catholic District School Board, 2012 SCC 51, [2012] 2 S.C.R. 675, at paras. 40-41.
[79] By contrast, if damages would be particularly time-consuming, difficult, or complex to compute, this may point in favour of specific performance: Sharpe J., Injunctions and Specific Performance, at §7.220; Neighbourhoods of Cornell Inc. v. 1440106 Ontario Inc. (2003), 11 R.P.R. (4th) 294, at paras. 112-14, aff’d (2004), 22 R.P.R. (4th) 176 (C.A.), leave to appeal refused, [2004] S.C.C.A. No. 390.
(iii) The behaviour of the parties
[80] A final factor involves considering the behaviour of the parties and weighing the equities at play in the transaction: Paterson Veterinary Professional Corporation v. Stilton Corp. Ltd., 2019 ONCA 746, 438 D.L.R. (4th) 374, at para. 31, leave to appeal to S.C.C. refused, 38927 (April 2, 2020); Matthew Brady, at para. 32. A vendor’s bad faith attempt to terminate a valid agreement of purchase and sale may support an order of specific performance against that party: Gracegreen, at para. 170.
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