No Specific Performance: Commercial Investment Property
Rabinowitz v. 2528061 Ontario Inc. 2026 ONCA 21
The Ontario Court of Appeal has delivered a practical lesson for commercial real estate lawyers: don’t count on specific performance but do rely on clear financial terms.
The Deal That Didn’t Close
The case arose from a failed commercial real estate transaction where the purchaser advanced $600,000 to the vendor through a short-term mortgage arrangement tied to the deal.
When the transaction collapsed, the purchaser sued for:
- Specific performance (to force the sale), and
- Repayment of the mortgage with 12% interest
No Forced Sale
Even though the Vendor repudiated the agreement, the Court of Appeal upheld the trial judge’s refusal to grant specific performance.
The reasoning was straightforward:
- This was an investment property, not a unique asset
- The Purchaser failed to show that damages would be inadequate
- Specific performance remains a discretionary, exceptional remedy
In commercial real estate, that bar is high and often not met.
Specific performance is an equitable, discretionary remedy, not an automatic right. To obtain it, a buyer must demonstrate that the property or the agreement itself is unique in a way that makes monetary damages insufficient. For residential properties, uniqueness is often presumed. For commercial investment properties, it is not.
No Do-Over on Damages
After losing at trial, the Purchaser tried to change course by adding a damages claim. The Court of Appeal refused.
The Purchaser had made a deliberate litigation choice not to claim damages earlier. Allowing a late amendment after trial would be unfair and prejudicial.
A litigant does not get a second chance to fix your pleadings after judgment.
Mortgage: 12% Interest
Where the Purchaser did succeed was on the mortgage.
The agreement provided:
- 0% interest for six months, then
- 12% interest thereafter
The Trial Judge had refused to enforce the 12% rate, but the Court of Appeal disagreed. The Trail Judge focussed on the increase being due to a default. The Court of Appeal concluded that is was triggered simply by a calendar date.
It found:
- The clause was clear and commercially reasonable
- The interest increase was not tied to default
- It reflected the parties’ bargain if the deal did not close
The result: full enforcement of the 12% interest rate.
Considerations
This decision reinforces several key points for real estate practitioners:
- Specific performance is not guaranteed, especially for investment properties
- Plead alternative remedies early or risk losing them entirely
- Courts will enforce clear financial terms, even at relatively high interest rates
- Deal-related financing can survive a failed transaction and be enforced on its own terms.
If you are a real estate agent acting for a Buyer of commercial property, document the specific reasons the property is unique to your client. Is there an irreplaceable location advantage? A particular zoning feature? A relationship with a tenant or an adjacent owner? This documentation will permit a claim for specific performance later, but, of course, you have to prove it.
Brian Madigan LL.B., Broker