DATE: 20040419

DOCKET: C38451

COURT OF APPEAL FOR ONTARIO

RE: EMERY DANKO, MARGARET A. DANKO and MARIE-RENEE MELLOR (Plaintiffs (Respondents)) – and – 792207 ONTARIO LTD. carrying on business as MARBROOK HOMES (Defendant (Appellant))

AND BETWEEN: 792207 ONTARIO LTD. carrying on business as MARBROOK HOMES (Plaintiff by Counterclaim (Appellant)) – and – EMERY DANKO, MARGARET A. DANKO, MARIE-RENEE MELLOR, SUTTON GROUP MAJESTIC REALTY INC., and FRANK CAETANO (Defendants to the Counterclaim (Respondents))

BEFORE: WEILER, ABELLA and ARMSTRONG JJ.A.

COUNSEL: Marco Drudi

for the appellant

Kevin MacDonald

for the respondents Emery Danko, et al.

Bryan Skolnik

for the respondent Sutton Group Realty

HEARD: April 13, 2004

On appeal from the judgment of Justice H.D.P. Logan of the Superior Court of Justice dated May 31, 2002.

E N D O R S E M E N T

[1] We see no basis for interfering with the trial judge’s conclusion that the failure to construct a cathedral ceiling was a fundamental breach of the agreement of purchase and sale. He also correctly concluded that the provision entitling the vendor to make unilateral changes was not unlimited in scope and did not apply to fundamental changes.

[2] The parties contracted for the construction of a new home which contained a loft, for which the parties agreed to pay an additional $40,000, and a cathedral ceiling over the family room. There was evidence upon which the trial judge could find, both subjectively and objectively, that the cathedral ceiling was a crucial feature in what was to be the purchasers’ retirement home.

[3] With respect to the issue of affirmation, the evidence shows that once the purchasers had actual knowledge, via a letter from the vendor, that their home would not have this feature, they rescinded the agreement within two weeks and sought the return of their $22,200 deposit. This delay does not constitute affirmation of the ceiling’s elimination. Even if, as the vendor argued, the purchasers knew of the elimination of the cathedral ceiling in late October, it was not entirely unreasonable for them to come to a decision six weeks later.

[4] The purchasers were entitled to have the house built in accordance with their clear, contractually agreed upon expectations. Given the design of this bungalow, the cathedral ceiling was integral to the contract. The vendor therefore breached the agreement in a fundamental way and the purchasers were entitled to the return of their deposit. The appeals are therefore dismissed with costs fixed in the total amount of $10,000.

“K.M. Weiler J.A.”

“R.S. Abella J.A.”

“Robert P. Armstrong J.A.”