COURT FILE NO.: CV-21-00000078-0000
DATE: 20211130
SUPERIOR COURT OF JUSTICE – ONTARIO
RE: Lucas Berthault, Erin Gardner, Nadia Chelaru, Bogdan Manaila, Russell Clarkson, Edward Decloet, James Decloet, Sophia Haynes, Chintami Hendralin, Catharine Hendralin, Deborah Innes, Applicants
AND
Green Urban People Ltd. and 1967113 Ontario Inc., Respondents
BEFORE: Justice S. Nicholson
COUNSEL: J. Brennan, for the Applicants
D. Touesnard, for the Respondents
HEARD: September 23, 2021
REASONS
NICHOLSON J.:
[1] The eleven Applicants entered into agreements of purchase and sale (“Agreements”) with the Respondents in respect of residential units being constructed by the Respondents in Tillsonburg, Ontario. Relying upon the terms of the standard Tarion Warranty schedule (“Tarion Warranty”), the Respondents notified the Applicants that the Agreements were terminated but offered to re-enter new agreements of purchase and sale with the Applicants, at an increased price. The Applicants seek to hold the Respondents to the original terms of the Agreements.
[2] In the within application, the Applicants seek to register a Certificate of Pending Litigation (“CPL”) over the subject property in Tillsonburg. In response to the application, the Respondents raise jurisdictional issues and argue that, in any event, this is not an appropriate case for a certificate of pending litigation.
[3] I note that the parties agreed to a consent order enjoining the Respondents from selling or encumbering the property until this motion was argued and a decision rendered.
Background:
[4] Beginning in the summer of 2020, the Applicants purchased new build condominium freehold units located in Tillsonburg, Ontario from the Respondent, Green Urban People Ltd. (“Green Urban”). The purchase prices of those units ranged from $345,000.00 to $379,000.00. The eleven Applicants bought 8 units between them, as there are three “couples”. Upon entering into the Agreements, the purchasers of the 8 units each provided two deposits per unit, the first for $5,000.00 and the second for approximately $30,000.00.
[5] The Agreements are all standard form agreements, which contain a statutorily mandated standard Tarion Warranty schedule. The Tarion Warranty includes early termination conditions which allow the seller of the property to set out conditions which, if not satisfied, allows the seller to terminate the transaction and return the deposits to the purchasers.
[6] The relevant provisions of section 6 of the Tarion Warranty provide as follows:
- Early Termination Conditions
(a) The Vendor and Purchaser may include conditions in this Purchase Agreement that, if not satisfied, give rise to early termination of the Purchase Agreement, but only in the limited way described in this section.
(c) The Vendor confirms that this Purchase Agreement is subject to Early Termination Conditions that, if not satisfied (or waived, if applicable), may result in the termination of the Purchase Agreement. (There are two boxes marked “Yes” and “No”—neither box was checked off)
(d) If the answer in (c) above is “Yes”, then the Early Termination Conditions are as follows. The obligation of each of the Purchaser and Vendor to complete the purchase and sale transaction is subject to satisfaction (or waiver, if applicable) of the following conditions and any such conditions set out in the appendix headed “Early Termination Conditions”:
Condition #1 (if applicable)
Description of Early Termination Condition:
The Approving Authority approving the severance, site plan agreement, draft plan condominium exemption and part lot control exemption by-law.
The Approving Authority (as that term is defined in Schedule A) is:
Town of Tillsonburg or County of Oxford
The date by which Condition #1 is to be satisfied is the 30 day of October 2020.
(e) There are no early Termination Conditions applicable to this Purchase Agreement other than those identified in the subparagraph (d) above and any appendix listing additional Early Termination Conditions.
(f) the Vendor agrees to take all commercially reasonable steps within its power to satisfy the Early Termination Conditions identified in subparagraph (d) above.
(g) for the conditions under paragraph 1(a) of Schedule A the following applies:
(i) Conditions in paragraph 1(a) of Schedule A may not be waived by either party;
(ii) The vendor shall provide written notice not later than five (5) Business Days after the date specified for satisfaction of a condition that: (A) the condition has been satisfied; or (B) the condition has not been satisfied (together with reasonable details and backup materials) and that as a result the Purchase Agreement is terminated; and,
(iii) If notice is not provided as required by subparagraph (ii) above then the condition is deemed not satisfied and the Purchase Agreement is terminated.
[7] The Tarion Warranty also contains a dispute resolution provision, as follows:
- Disputes Regarding Termination
(a) The Vendor and Purchaser agree that disputes arising between them relating to termination of the Purchase Agreement under section 11 shall be submitted to arbitration in accordance with the Arbitration Act, 1991 (Ontario) and subsection 17(4) of the ONHWP Act.
(b) The parties agree that the arbitrator shall have the power and discretion on motion by the Vendor or Purchaser or any other interested party, or of the arbitrator’s own motion, to consolidate multiple arbitration proceedings on the basis that they raise one or more common issues of fact or law that can more efficiently be addressed in a single proceeding. The arbitrator has the power and discretion to prescribe whatever procedures are useful or necessary to adjudicate the common issues in the consolidated proceedings in the most just and expeditious manner possible. The Arbitrations Act, 1991 (Ontario) applies to any consolidation of multiple arbitration proceedings.
(e) The arbitrator may grant any form of relief permitted by the Arbitration Act, 1991 (Ontario), whether or not the arbitrator concludes that the Purchase Agreement may properly be terminated.
[8] Section 11 of the Tarion Warranty is entitled “Termination of the Purchase Agreement” and specifically provides in subsection (d) that “The Purchase Agreement may be terminated in accordance with the provisions of section 6 or Schedule C”.
[9] Schedule A to the Tarion Warranty sets out “Types of Permitted Early Termination Conditions”. Paragraph 1 of Schedule A contains a list of circumstances upon which the Vendor is permitted to make the Purchase Agreement conditional. Circumstances listed in paragraph 1(a) are noted to be for the benefit of both the Vendor and the Purchaser and cannot be waived by either party. These include receipt of approval for site plan agreements, density agreements, shared facilities agreements or other development agreements with Approving Authorities.
[10] Paragraph 3 of Schedule A to the Tarion Warranty provides that each condition must:
(a) Be set out separately;
(b) Be reasonably specific as to the type of Approval which is needed for the transaction; and
(c) Identify the Approving Authority by reference to the level of government and/or the identify of the governmental agency, Crown corporation or quasi-governmental authority.
[11] The application is supported by the affidavit of Lucas Berthault, the only Applicant to provide sworn evidence. He purchased his unit on October 2, 2020, which I note is only 28 days prior to the deadline by which condition #1 was to be satisfied. He paid deposits in the amount of $5,000 on October 2, 2020 and $32,500 on November 11, 2020. His first tentative occupancy date for the condominium was May 31, 2021.
[12] Mr. Berthault describes in his affidavit that after signing the Agreement, he had regular contact with Green Urban with respect to completing the deal. For example, on January 12, 2021, he was provided with builder approved finishings to choose from. On February 17, 2021, he was provided with a copy of a Condo Buyer’s Guide.
[13] According to Mr. Berthault, on March 1, 2021, all owners received a letter from Green Urban advising that due to “several unexpected delays” that the first tentative closing date would not be met. The letter indicated that the second closing date, in September 2021, would take effect.
[14] On June 23, 2021, Green Urban advised all the purchasers that because it had not received the required approvals by the October 30, 2020 deadline, the Agreements of Purchase and Sale were terminated. However, Green Urban did offer the same properties at a 25 % increase in purchase price. The purchasers of 18 of the other units agreed to pay the increased price. The Applicants did not.
[15] The president of Green Urban, Amer Cengic, has also sworn an affidavit on the application.
[16] Mr. Cengic deposes that the property in question was to have 26 freehold condominium units. The layout of those units is the same, although some units have a walkout basement while others do not. They are all two storey, with a double garage, three bedrooms and three bathrooms.
[17] Mr. Cengic sets out the efforts of Green Urban to comply with its obligation under the Tarion Warranty to take commercially reasonable steps to try to obtain the necessary approvals. However, he indicates that Green Urban did not obtain approval of severance, site plan agreement, draft plan condominium exemption and part lot control exemption by-law from Tillsonburg Township by October 30, 2020.
[18] Mr. Cengic further deposes that Green Urban did not provide notice that the Early Termination Condition had been waived to any buyer. However, Green Urban’s failure to meet the Early Termination Condition did not come to Mr. Cengic’s attention until May 20, 2021.
[19] Green Urban then determined that the then current fair market value of the units had increased to between $500,000 to $550,000, an increase of approximately 50%. In “good faith”, Green Urban offered to sell the units to those purchasers whose Agreements had been terminated by 25% more than their purchase prices.
[20] Despite some disagreement between the parties about the process, the deposits have now all been returned, although the Applicants have not cashed them.
Positions of the Parties:
[21] The Applicants argue that they have asserted an interest in the subject property and are accordingly entitled to a CPL. In their submission, they have met the three-part test for obtaining a CPL, namely, that:
(a) There is a triable issue as to whether the applicants have an “interest in land” over the residential units;
(b) Due to the qualities of the units, including the significant increase in value, damages would not be an appropriate remedy;
(c) The balance of convenience favours granting the CPL.
[22] The Applicants contend that Green Urban failed to comply with the requirements of Schedule A of the Tarion Warranty by failing to separate out each condition as per paragraph 3. Furthermore, it is asserted that Green Urban did not check “Yes” or “No” in section 6. These failures raise a triable issue about whether or not Green Urban is entitled to rely upon the Early Termination Clause.
[23] Furthermore, the Applicants claim that the property at issue is unique given that the units are new builds, some have been customized and that the price of the units at the time was favourable. The Applicants rely on the significant increase in price of the units to indicate that the Applicants would have substantial difficulty acquiring a comparable property at the price bargained.
[24] Finally, the Applicants argue that damages are not an appropriate remedy in the circumstances. Damages have not been sought in the Application. Secondly, the calculation of damages will be difficult by the time that the litigation is ultimately concluded.
[25] The Respondents counter that the Court does not have jurisdiction over this matter given section 16 of the Tarion Warranty. The Tarion Warranty specifically contemplates that all disputes over, among other things, the Early Termination Clause shall be pursued through arbitration in accordance with the Arbitrations Act, 1991.
[26] Even if the Court does have jurisdiction, the Respondents argue that a CPL should not be issued. First, they argue that the Applicants have failed to demonstrate a triable issue with respect to an interest in land due to the termination of the Agreements, and, secondly, damages are an adequate remedy. They point out that only one Applicant has tendered evidence and that the court should not presume that the other ten Applicants are similarly situated such that the property is unique in respect of each and every Applicant.
[27] The Respondents argue that a CPL will unfairly bind the Respondents from selling these units to other prospective purchasers while the litigation unfolds.
Jurisdiction:
[28] The Applicants rely upon 2033363 Ontario Limited v. Georgetown Estates Corp, [2006] O.J. No. 687 (Ont. Sup.Ct.), a decision of Master Albert. In that case, 203 had obtained a CPL without notice and Georgetown Estates sought to remove the CPL. The agreement between the two parties contained an arbitration clause. Both parties agreed that the dispute should be arbitrated as provided for in the agreement. Master Albert noted that the sole issue before her was whether the arbitration clause precluded 203 from obtaining a CPL.
[29] Master Albert stated as follows at paras. 6-9:
6 Counsel could find no cases where an arbitrator has ordered a certificate of pending litigation. As a practical matter obtaining a CPL from an arbitrator would be a lengthy and cumbersome process. First the parties would have to agree upon and appoint an arbitrator. In this case, the parties have not yet done so. Then the attendance to move for interim relief would have to be scheduled and argued. The issue of whether such a motion could proceed without notice (as contemplated in Rule 42) would have to be considered. Then, if obtained, the arbitrator’s order for a CPL would have to be enforced by the court pursuant to section 50 of the Arbitrations Act, and a court file would have to be opened for that purpose (see rule 42.01).
7 Mr. Justice Nordheimer recognized that a motion for a certificate of pending litigation is a special type of motion, where the expectation is that there is some urgency and such motions must usually be heard quickly and are generally brought without notice: Sunshine Films Limited v. Cleaver. In overturning the Master’s refusal to hear the motion on a without notice basis, Mr. Justice Nordheimer noted that rule 42 recognizes that notice will usually not be given on a motion for a CPL, and that requiring notice would be the exception rather than the rule.
8 In the present case, 203 moved within a reasonable time after the September 5, 2005 notice from Georgetown purporting to terminate the Agreement. The motion was before Master Peterson on September 27, 2005. It would not have been possible to have such a motion heard by an arbitrator under the Arbitration Act within such a short time. The parties have not even agreed on an arbitrator. Given that the remedy sought in this case is specific performance, delay in moving for this relief could have undermined the relief sought at the end of the day if successful. Nor would it have made sense to ask an arbitrator to decide whether the arbitrator had jurisdiction to order a CPL before going to the court for relief.
9 I find that in light of the above as well as rule 42.01(1) and a significant reason for including an arbitration clause in the Agreement, namely to expedite the resolution of disputes that arise under the Agreement, 203 acted appropriately by applying to the court for a CPL rather than initiating the arbitration process for that purpose.
[30] Accordingly, this case stands for the proposition that the court has jurisdiction to issue a CPL notwithstanding that the underlying dispute will be determined by an arbitrator pursuant to an arbitration clause.
[31] Green Urban argues that the application is clearly with respect to a determination of whether Green Urban is precluded from relying upon the Early Termination Clause contained in the Tarion Warranty. In its submissions, Green Urban claims that the Agreement clearly contemplates what happens when there is a dispute relating to termination of the Agreement, including in accordance with the Early Termination Condition at section 6. The parties must submit that matter to arbitration.
[32] Green Urban describes this as even more compelling, given that the schedule is inserted on a mandatory basis by Tarion, a statutory body that exists to protect the rights of purchasers of new homes builds in Ontario.
[33] Green Urban points out that the arbitration clause in 2033363 Ontario Limited contemplated that a party could proceed to court in the event that an arbitrator decides that he or she lacked the power or jurisdiction to grant the remedy sought. Further, Green Urban argues that the Arbitrations Act, 1991, authorizes an arbitral tribunal to grant specific performance, injunctions and other equitable remedies, in section 31, which reads as follows:
- An arbitral tribunal shall decide a dispute in accordance with law, including equity, and may order specific performance, injunctions and other equitable remedies.
[34] I am satisfied that the court has the jurisdiction to authorize the issuance and registration of a Certificate of Pending Litigation even if the underlying dispute must be resolved through arbitration pursuant to agreement between the parties.
[35] CPLs are authorized pursuant to s. 103 of the Courts of Justice Act, R.S.O. 1990, c. C.43, as amended. Subsection 103 (1) contemplates the issuance of a CPL by “the court”. Rule 42.01 of the Rules of Civil Procedure provides that a CPL may be issued by a registrar only under an order of “the court”. I need not decide for the purpose of this proceeding whether an arbitrator can also cause the issuance of a CPL, but it is clear that the court can.
[36] The Arbitrations Act, 1991, contains provisions delineating the role of the court when a matter is governed by the Act. Section 6 provides that no court shall intervene in matters governed by the Act except in certain circumstances. Notably, the exceptions include enforcing awards. Section 8 of the Act sets out certain powers of the court. That section reads as follows:
8(1) The court’s powers with respect to the detention, preservation and inspection of property, interim injunctions and the appointment of receivers are the same in arbitrations as in court actions.
[37] It is also noteworthy that the Arbitrations Act, 1991, contains provisions whereby the court can be called upon to enforce orders made by an arbitrator. For example, s. 18 (1) of the Act authorizes an arbitral tribunal to make orders for the detention, preservation or inspection of property that are the subject of the arbitration. Subsection 18(2) states that “the court may enforce the direction of an arbitral tribunal as if it were a similar direction made by the court in an action”.
[38] I conclude from the provisions of the Arbitrations Act, 1991, the Rules of Civil Procedure and the Courts of Justice Act, that the court’s jurisdiction to order the issuance and registration of CPLs remains intact despite the fact that the parties have agreed to proceed by way of arbitration.
Test for Granting a CPL:
[39] The purpose of obtaining a CPL is to warn interested parties that there is a claim against a property. The test for a motion for leave to issue a certificate of pending litigation is set out in Perruzza v. Spatone, 2010 ONSC 841, at para. 20, as follows:
(i) The test on a motion for leave to issue a CPL made on notice to the defendants is the same as the test on a motion to discharge a CPL (Homebuilder Inc. v. Man-Sonic Industries Inc., 1987 CarswellOnt 499 (Ont. Master) (“Homebuilder”) at para. 1);
(ii) The threshold in respect of the “interest in land” issue in a motion respecting a CPL (as that factor is set out at section 103(6) of the Courts of Justice Act) is whether there is a triable issue as to such interest, not whether the plaintiff will likely succeed (1152939 Ontario Ltd. v. 2055835 Ontario Ltd., 2007 CarswellOnt 756 (Ont. S.C.J.), as per van Rensburg J., citing Transmaris Farms Ltd. v. Sieber, [1999] O.J. No. 300 (Ont. Gen.Div.) [Commercial List]) at para. 62).
(iii) The onus is on the party opposing the CPL to demonstrate that there is no triable issue in respect to whether the party seeking the CPL has “a reasonable claim to the interest in the land claimed” (G.P.I. Greenfield Pioneer Inc. v. Moore, 2002 CanLII 6832 (ON CA), 2002 CarswellOnt 219 (Ont.C.A.) at para. 20);
(iv) Factors the court can consider on a motion to discharge a CPL include (i) whether the plaintiff is a shell corporation, (ii) whether the land is unique, (iii) the intent of the parties in acquiring the land, (iv) whether there is an alternative claim for damages, (v) the ease or difficulty in calculating damages, (vi) whether damages would be a satisfactory remedy, (vii) the presence or absence of a willing purchaser, and (viii) the harm to each party if the CPL is or is not removed with or without security (572383 Ontario Inc. v. Dhunna, 1987 CarswellOnt 551 (Ont. Master) at paras. 10-18); and
(v) The governing test is that the court must exercise its discretion in equity and look at all relevant matters between the parties in determining whether a CPL should be granted or vacated (931473 Ontario Ltd. v. Coldwell Banker Canada Inc., 1991 CarswellOnt 460 (Ont. Gen. Div.); Clock Investments Ltd. v. Hardwood Estates Ltd., 1977 CanLII 1414 (ON SC), 1977 CarswellOnt 1026 (Ont. Div. Ct.) at para. 9).
[40] I am persuaded that the Applicants have established that there is a triable issue that the Applicants have a reasonable claim to the property in question. There is clearly a claim for specific performance by the Applicants, who seek to hold the Respondents to the terms of the original Agreements. The Respondents seek to rely upon an early termination condition. Their position is that if such a condition existed, they were unable to waive it such that they have no choice but to terminate the Agreements. They argue that Mr. Berthault acknowledged during his cross-examination that he was aware of the early termination conditions and their import.
[41] The Respondents’ arguments require me to ignore the considerable deficiencies in how the Tarion Schedule was completed by the Respondents. Their position requires a determination that by not checking off either “Yes” or “No” in section 6(c) of the Tarion form, the Agreement should be interpreted as if they checked off “Yes”. Similarly, the Schedule required that the Respondents list separately each of the early termination conditions. They did not do so. The consequences that flow from these deficiencies is a triable issue. It may be that these deficiencies prevent the Respondents from relying upon the early termination conditions. If so, it may not matter what Mr. Berthault thought about the early termination conditions. They may simply not exist in these contracts. That is for an arbitrator to determine but keeping in mind that the Tarion Warranty is for consumer protection, clearly it is a triable issue.
[42] The biggest hurdle for the Applicants to obtaining a CPL is whether damages would be an adequate remedy. The Applicants seek specific performance in their application, not damages. Specific performance is only available as an equitable remedy when the ordinary legal measure of damages will be insufficient and this depends on the court finding that the land is so unique that its loss cannot be adequately calculated in damages alone. If damages are an adequate remedy then specific performance will not be granted even if that is the only remedy that has been claimed (see: Interrent International Properties Inc. v. 1167750 Ontario Inc., 2013 ONSC 4746, para. 31).
[43] The Respondents are correct that the eleven Applicants have put forth an affidavit from only one of them. That affidavit attempts to describe the residential unit as unique because of its location, that it was customized and that it is a walkout. The affidavit also points to the favourable price at which the unit was purchased.
[44] The Applicants rely upon Lucas v. 1858793 Ontario Inc. o/a Howard Park et al, 2020 ONSC 964, a decision of Schabas J. In that case, the disputed residential unit in Toronto increased significantly in value since the time of the agreement for purchase and sale entered into between the parties. Schabas J. held that uniqueness arose not from the subjective needs of the purchaser, or the Unit’s physical characteristics, but because the Agreement contained “advantageous terms” and could not have been readily duplicated in a competitive, volatile real estate market such as Toronto.
[45] The Lucas case was appealed to the Ontario Court of Appeal, Lucas v. 1858793 Ontario Inc. (Howard Park), 2021 ONCA 52. Brown J.A. for the Court of Appeal noted that the goal of damages in contract is to provide the victim of the breach with the financial equivalence of performance. Thus, an award of damages is the preferred option and specific performance is granted only in exceptional cases. The basic rationale for an order of specific performance of contracts is that damages may not afford a complete remedy. Noting the Supreme Court of Canada case, Semelhago v. Paramedevan, 1996 CanLII 209 (SCC), [1996] 2 S.C.R. 415, Brown J.A. stated as follows (at para. 69):
[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., 1878 CanLII 16 (SCC), a p. 668.
[46] After quoting Lax J. in John E. Dodge Holdings Ltd. v. 805062 Ontario Ltd. (2001), 2001 CanLII 28012 (ON SC) with approval, Brown J.A., continued at para. 71, as follows:
[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, operates as only one of several factors a court must consider when determining entitlement to specific performance.
[47] Brown J.A. then directs that 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 (para. 75).
[48] It should be noted that Brown J.A. ultimately upheld Schabas J.’s decision on this issue.
[49] As the evidence of the Respondents demonstrates, the residential units in question cannot be described as truly “unique” in that many of the units are similar and there are comparable units located within the general vicinity. As noted by Schabas J., uniqueness can be established if “its substitute would not be readily available”. As in Lucas, there is no doubt that real estate values have been increasing dramatically in southwestern Ontario, as evidenced by Green Urban’s significant increase in the price of the units. I do not need to take judicial notice of that fact. Green Urban’s own evidence has established that the units in question dramatically increased in price over a one-year period. Furthermore, the real estate agent testified when he was cross-examined that the comparable units are not going to be obtainable at the same price as the units had been acquired for by the Applicants. It would have to be through a “desperation sale” for that to occur.
[50] Further, Mr. Berthault has deposed that the location of the property was an important factor for he and his partner, as it was a convenient midpoint for their workplaces.
[51] Sharpe J., as he then was, in Tropiano v. Stonevalley Estates Inc., 1997 CanLII 12176 (ON SC), granted specific performance where the property was a residential property and there was evidence that the applicant attached particular significance to the ravine location and the location of the lot.
[52] In the cases cited by the Respondents, the court was prepared to grant specific performance in relation to residential properties (see: Yan v. Nadarajah, 2015 ONSC 7614, Sivasubramaniam v. Mohammad, 2018 ONSC 3078).
[53] Accordingly, I find that the subject property was unique to these purchasers, both in terms of location and the price at which the property was acquired, given the extraordinary change in the market over the one year since the Agreements were entered into. A substitute property is not readily available at even close to the same price.
[54] Mr. Berthault’s affidavit establishes that he is not a mere investor. The subject property was to be his home, and it was chosen in large part due to its characteristics, location and its price. Although I do not have similar evidence in respect of the other Applicants, I am not prepared to conclude that they were merely investors. Furthermore, a CPL may still be granted to investors.
[55] In examining whether damages would be an adequate remedy, one cannot lose sight of the fact that the Applicants are real people with real world budgets. They had found a property which fit those budgets. There is no question that acquiring a property of comparable “quality” will now significantly exceed the costs of the property in question.
[56] In examining the behaviour of the parties, it appears clear that what transpired in this case was that during the building process, the costs of material rose markedly. Facing increased building costs, the Respondents realized that, by good fortune, it had failed to meet some of the early termination conditions such that it could terminate the Agreements. While it may be fair to characterize both the purchasers and the vendors as ‘innocent” since the rise in prices was due to outside forces, the deficiencies in the Tarion warranty owing to the failure of the Respondents to properly complete it are conspicuous. It must be remembered that the Respondents accepted the Berthault Agreement less than a month before the deadline for the conditions was to be met and accepted his second deposit after that deadline had passed. Up until June 2021, the Respondents led the Applicants to believe that the Agreements were valid, meaning the Applicants were not provided an opportunity to look for replacement properties at a time when the prices were rapidly escalating. The equities, in my view, favour the Applicants.
[57] Damages have not been claimed in the Application. I should state, however, that I am not persuaded that damages will be difficult or impossible to calculate. Damages are frequently arrived at by comparing the value of a property at different times.
[58] I am mindful of the fact that there are 8 “different” Applicants making a claim in this case. Thus, there would need to be 8 different comparable properties. Furthermore, the ability of the Respondents to pay damages to 8 different parties may be more difficult. On the whole, I am persuaded that granting specific performance would better achieve justice in the within case than requiring the Applicants to pursue a claim for damages.
[59] I accept the submissions of the Respondents that the granting of a CPL causes them harm in that it prevents it from dealing with the property, including obtaining financing, while this dispute continues. That must be balanced against the harm to the Applicants in not granting the CPL. The Respondents have made it clear that they wish to resell these units. The Applicants will likely lose the ability to ever enjoy the property that they purchased and be required to find alternative housing. In my opinion, these two competing interests roughly cancel each other out.
[60] In recognition of both the Respondents’ bona fide concerns regarding the land being tied up by a CPL, and that the parties are required to arbitrate this matter, I propose to place terms on the CPL. The Applicants shall cooperate with the Respondents to initiate the arbitration process contemplated by s.16 of the Tarion Warranty within the next 20 days.
Disposition:
[61] An order is granted that certificates of pending litigation shall issue and be registered on the property legally described as:
Part of Lots 1389, 1390 and 1391, Judge’s Plan Registered as Plan 500, Designated as Part 1 and 2, Plan 41R-10140; Subject to an Easement Over Part 2, Plan 41R10140 as in 363006; Town of Tillsonburg, County of Oxford which is owned by the Respondent 1967113
[62] The Applicants are required to initiate the arbitration process, or cooperate with the Respondents in doing so, contemplated by s. 16 of the Tarion Warranty within 20 days of the date of this order.
[63] If the parties are unable to agree on the costs of this motion, the Applicants may submit written submissions no later than January 17, 2021, no longer than 3 pages in length and accompanied by a Bill of Costs. The Respondents shall file their written submissions within the same parameters no later than December 23, 2021.
“Justice Spencer Nicholson”
Justice Spencer Nicholson
Date: November 30, 2021