Annabelle Lui

Following a successful application for the return of a $50,500 deposit from an abortive real estate transaction, the applicants sought costs on a substantial indemnity basis.

The respondent also sought costs despite being unsuccessful.

The court found no clear finding of reprehensible conduct to justify substantial indemnity costs.

The court awarded the applicants costs of $25,000 on a partial indemnity basis, reflecting the fair and reasonable expectations of the unsuccessful litigant.

The applicants entered into an agreement to purchase a property from the respondent.

Prior to closing, the applicants' lawyer discovered open building permits and an active investigation by the municipality, and requisitioned that they be resolved.

Due to delays, including those related to the COVID-19 pandemic, the respondent was unable to resolve the issues or discharge certain encumbrances by the closing date.

The applicants refused an extension and demanded the return of their deposit.

The court held that the requisitions were valid matters of conveyance and requisitions simpliciter.

Because the respondent acted in good faith but could not satisfy the requisitions, the applicants were entitled to the return of their deposit, but not to damages.