Coghlan v. Unique Real Estate Holdings Inc., 2016 ONSC
Background
This case involved the sale of an apartment building at 72 McCamus Street, Kirkland Lake.
- Vendor: Brian Coghlan
- Purchaser: Unique Real Estate Holdings Inc.
- Purchase Price: $950,000
- Deposit: $50,000 (held in trust)
- Closing Date: January 9, 2014
The Agreement of Purchase and Sale (APS) contained six purchaser conditions, including financing, inspection, insurance coverage, and delivery of financial and rental information.
The financing condition was waived on November 7, 2013, which triggered a seven-business-day window for the purchaser to satisfy the insurance condition. That condition was never waived.
Despite this, the parties continued to act as if the deal was alive, exchanging emails, scheduling inspections, and sharing information.
The Buyer Backs Out
On December 7, 2013, the purchaser’s principal, Brent Lipke, emailed the vendor to say that due to local economic concerns, they would not proceed with the inspection or purchase and would prepare a mutual release.
A few days later, the purchaser’s lawyer asserted that the deal had become null and void automatically back on November 19, 2013 (when the insurance condition expired) and demanded the return of the $50,000 deposit.
The vendor disagreed, claiming that the purchaser’s ongoing conduct had revived and extended the deal, and that the buyer’s withdrawal was a repudiation.
Coghlan sued for $200,000 in damages and the forfeiture of the deposit.
The purchaser counterclaimed for return of the deposit.
The Legal Issues
Justice Wilcox had to decide:
- Did the APS terminate automatically when the insurance condition wasn’t waived?
- Did the parties’ conduct amount to a mutual waiver or extension?
- Was the vendor entitled to forfeit the deposit?
- Should there be relief from forfeiture?
- Could all this be determined by summary judgment under Rule 20?
The Law
Under the principles from Hryniak v. Mauldin, summary judgment is appropriate where there’s no genuine issue requiring a trial and the record permits a fair decision.
The Court also reviewed the nature of conditions precedent:
- A true condition precedent (like zoning approval or government consent) may void the contract if unsatisfied.
- But where a condition benefits one party, that party may waive it unilaterally.
- And where both parties act as if the condition has been met, that conduct can create a mutual waiver by implication.
The Court’s Analysis
Justice Wilcox found that:
- The insurance condition was solely for the purchaser’s benefit.
- It could have been waived unilaterally.
- Both parties continued performance well beyond the condition deadline — a clear sign that the deal was still on.
- This amounted to a mutual waiver or extension by conduct.
- The purchaser’s later attempt to rely on the expiry of the condition was inconsistent with its own actions.
As a result, the APS remained valid and binding when the purchaser withdrew.
That withdrawal was a repudiation of the agreement.
The Result
The Court granted summary judgment in favour of the vendor:
- Deposit forfeited: The $50,000 (about 5% of the purchase price) was reasonable.
- No relief from forfeiture: The purchaser had no equitable basis for return.
- Purchaser’s counterclaim dismissed.
Considerations for Real Estate Professionals
- Continued conduct matters. If the parties keep acting as if a deal is alive, the Court may find the contract still binding, even if a condition wasn’t waived in writing.
- Deposits are not automatically refundable. When a buyer walks away after treating the deal as active, the deposit is usually lost.
- Mutual waiver can be implied. Written extensions are best practice, but conduct alone can extend a condition period.
- Summary judgment works. Documentary evidence, particularly emails, can be enough for the Court to decide without a trial.
Comments
Agents and lawyers should document all waivers and extensions in writing. When conditions lapse, but discussions or inspections continue, both parties risk creating an implied extension.
If a buyer wants out, they must clearly communicate termination and stop all performance, otherwise, they may still be bound and forfeit the deposit.
Brian Madigan LL.B., Broker
www.OntarioRealEstateSource.com