Custom Homebuilders are Entitled to Specific Performance

Country Wide Homes v. Ge (COA 2016)

The Buyer is this case purchase a custom home from a Builder for over $3 million, and one week before closing wanted out of the deal.

Agreement:           October 4, 2016

Property:               located in high end neighbourhood, Thornhill

Buyer :                  Ge

Seller:                    Country Wide Homes Upper Thornhill Estates Inc.

Termination:         contract terminated by Buyer, one week before closing

Lawsuit:                Seller sues for Specific Performance

Motion:                awarded Specific Performance, in 120 days

COA:                    October 24, 2019, decision of Court of Appeal

About three years after the deal was struck the matter went before the Ontario Court of Appeal, and here are some of their comments:

“[21]      The motion judge correctly stated the law respecting when the court should consider ordering specific performance and the fact that this remedy is available to vendors: Matthew Brady Self Storage Corporation v. InStorage Limited Partnership, 2014 ONCA 858, 125 O.R. (3d) 121, at paras. 33-34, leave to appeal refused, [2015] S.C.C.A. No. 50.

As set out in Matthew Brady, at para. 40, looking at the contract broadly, and the transaction as a whole, the key factors are:

  • whether on the facts as a whole, damages will afford the vendor an adequate and complete remedy or whether a money award will be sufficient to purchase substitute performance;
  • whether the vendor has established some fair, real and substantial justification for the granting of specific performance; and,
  • whether the equities as between the parties favour the granting of specific performance.
[22]      The motion judge took into account all of the facts, including that:

There is now a flood of inventory in the housing development, making it difficult to mitigate damages or quantify a fair amount for the failure to close.

Indeed, as of the date of the motion, no houses in The Enclave had been sold for about a year.

[23]      Moreover, the motion judge concluded that there was no evidence that the property was a carbon copy of other properties without any unique characteristics and, in fact, there was evidence of a variety of changes and customizations.

As noted by the motion judge, in accordance with the APS, the respondent customized the home at the appellant’s request as it was being built. While the appellant refers to these as “cosmetic changes”, the motion just judge came to a factual conclusion to the contrary. We defer to that finding of fact.

As she pointed out, there were no fewer than five customizations, including the expansion of a bedroom and use of finishes selected by the appellant. As the motion judge said: “the bump out of the bedroom, and particular finishes on a $3 million property”, although not necessarily “highly unusual”, reflected a “set of qualities decided upon by the purchaser.”

[24]      We note that in responding to the alleged error in the motion judge’s reasons for specific performance, the respondent points to her having relied upon Landmark of Thornhill Limited v. Jacobson, 1995 CanLII 1004 (ON CA), [1995] 25 O.R. (3d) 628, in support of the proposition that:

the “defaulting party bears the onus of showing a lack of uniqueness”.

The appellant has not suggested that the motion judge erred in that statement of law.

As the matter was not argued before us, we decline to comment, but simply emphasize the holding in Semelhago v. Paramadevan, 1996 CanLII 209 (SCC), [1996] 2 S.C.R. 415, decided a year after Jacobson, where the court found that “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” [Emphasis added]. See also: Matthew Brady, at para. 31.

[25]      Regardless, the motion judge’s reasons do not turn on her view of the onus. Rather, they turn on her findings of fact, which include the determination that, at this stage, the $3 million home is unique and that damages would not be an adequate or complete remedy or substitute for specific performance.

[26]      We see no error in that conclusion.”

In conclusion, the Court of Appeal turned down the application and confirmed that Specific Performance made sense in this case.

COMMENT

It’s important to be aware of the fact that Specific Performance is available to Vendors and Builders as a remedy. In this particular case, the property was customized to suit the Buyer, who “bailed” on the deal at the very last moment.

Brian Madigan LL.B., Broker

www.OntarioRealEstateSource.com

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