Leiper

The applicant vendors sought a declaration that the respondent purchaser breached an agreement of purchase and sale for a residential property and an order for the release of the $72,500 deposit.

The purchaser failed to close the transaction, alleging that water damage in the garage and basement frustrated the contract and rendered the property uninsurable and unable to be financed.

The court found that the purchaser breached the agreement, as there was insufficient evidence of substantial damage to justify frustration of the contract.

The court also denied the purchaser's request for relief from forfeiture, finding that the deposit was not disproportionate, forfeiture was not unconscionable, and the purchaser had acted in bad faith by using the alleged damage as a pretext to avoid closing after failing to secure favorable financing extensions.

The applicant sought a declaration regarding the amount owed to discharge a commercial mortgage.

The mortgage had a face value of $3 million, but the net amount advanced was approximately $2.6 million after deducting the lender's financing costs.

The applicant argued it was only required to repay the net amount advanced.

The court held that the express terms of the Mortgage Financing Agreement required the applicant to repay the full $3 million face value, displacing the general equitable rule that a mortgagee can only recover the amount actually advanced.