The Ontario Court of Justice recently dealt with the issue of specific performance in a real estate transaction (see Sivasubramaniam v. Mohammad, released 16 May 2018).
Shripragas Sivasubramaniam was looking for a house and Yar Mohammad had his property “for sale”.
A deal was struck on 8 March 2015 to close 29 April 2015. The Buyer paid a $10,000.00 deposit on a $525,000.00 transaction.
The transaction did not close. The Buyer required “vacant possession” and the Seller still had tenants.
The tenants moved out of the property on 15 December 2015, and the Seller moved into the property on 25 December 2015. On 10 May 2016, The Seller re-listed the property for $649,900.
The Buyer sued for specific performance.
The Motions Court Judge, Charney J. commented with approval of Landmark of Thornhill Ltd. v. Jacobson where the Ontario Court of Appeal:
identified three factors bearing on the exercise of discretion in favour of specific performance:
- the nature of the property involved;
- the related question of the inadequacy of damages as a remedy; and,
- the behaviour of the parties, having regard to the equitable nature of the remedy.
Charney J. also stated:
“ Finally, I reference my own decision in 954294 Ontario Ltd. v. Gracegreen Real Estate Development Ltd., 2017 ONSC 6369 (CanLII), where I stated, at para. 151:
I would observe that while the premise upon which the Supreme Court’s decision in Semelhago was based—that “Residential, business and industrial properties are all mass produced much in the same way as other consumer products”— may have been true in 1996, it does not necessarily reflect the current real estate and development market in the Greater Toronto Area.
In a housing market in which land is in increasingly limited supply and home sales are often characterized by bidding wars among prospective purchasers, it is no longer accurate to assume that residential properties are “mass produced”, at least within the GTA.
This does not abrogate the stated principles applicable to granting specific performance, but it does suggest that the criteria will be more easily met within the present GTA housing market.
Uniqueness In the present case, the applicant has provided a list of reasons why the property was “particularly suitable for the purpose for which it was intended”. The intended purpose was to live in with his family. The applicant lists the following factors that made this home particularly suited for that purpose:
a) One of his primary concerns was to find a property in a neighbourhood with a Tamil-Canadian cultural community for his wife and mother (whose English language proficiency is limited).
b) The home was a detached home with 4 bedrooms and a front and back yard on a quiet residential street.
c) The home was located within a close proximity to the children’s elementary school and other amenities such as grocery shopping, since his wife and mother do not have access to a car.
d) The home was located a short drive from Highway 401, which would permit the applicant to commute to his job in Toronto.
e) The applicant had limited financial resources and could not afford more than the $525,000 agreed to for this home. Several of these factors are fairly generic descriptions of any detached home in a typical modern subdivision.
Indeed, the respondent’s evidence is that the home is part of a subdivision with approximately 500 homes of different sizes and styles, and approximately 200 homes are similar to the respondent’s home in the same community. I accept the applicant’s evidence that this house was particularly suited for its intended purpose because it was in a neighbourhood with a significant Tamil-Canadian cultural community and was within his price range.  The question of uniqueness is not just whether there are other similar homes in the same neighbourhood or subdivision, but whether any of those homes were “readily available” for the applicant to purchase when the respondent breached the APS.
When the housing market is characterized by rapid price increases, affordability becomes an important factor in the analysis: Sutton v. Sodhi, 2017 BCSC 325 at para. 22 (CanLII).
The availability of similar homes outside of the applicant’s price range does not, in my view, qualify as a “readily available” substitute.”
You will notice the Charney’s conclusion in paragraph 83 was largely based upon the fact that there was a “Tamil-Canadian cultural community” in that area. Naturally, other factors too, came into play.
Brian Madigan LL.B., Broker