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Specific Performance II

. 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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