Ponesse et al. v. Astoria Homes Inc. et al.
A recent Ontario Superior Court decision delivers a clear message to builders and real estate lawyers alike: if you have a contractual right to cancel, you must exercise it strictly on time or not at all.
Deal Fell Apart
In October 2020, the purchasers agreed to buy a custom home in Caledon for $2,530,000. Like many projects during the pandemic, construction costs soon surged due to supply chain disruptions and labour increases.
Faced with rising costs, the builder attempted to increase the purchase price by $400,000. There was just one problem, the builder made that demand one day after its contractual right to cancel had expired.
When the buyers refused, the builder terminated the agreement. Litigation followed.
The Court’s Analysis
1. Silence Meant the Deal Was Firm
The builder argued that the agreement had already died because the purchasers never delivered written lawyer’s approval within 72 hours.
The Court disagreed.
This clause existed solely for the purchaser’s benefit. If the buyers said nothing, the agreement became firm. Written notice was only required if they wanted out, not if they wanted to stay in.
Purchaser conditions protect purchasers. Silence can finalize the deal.
2. A Deadline Is a Deadline
The agreement allowed the builder to cancel the deal if the project became uneconomical but only by a fixed “Vendor’s Cancellation Date.”
The builder claimed it had internally decided before the deadline and could give notice later.
The Court rejected that argument outright.
The right to cancel expired on the date itself. No notice by the deadline = no cancellation right. Contractual options must be exercised strictly within their time limits.
3. Specific Performance
Rather than awarding damages, the Court found the property to be unique:
- A limited, conservation-protected development
- No comparable substitute properties
- A long, targeted search by the buyers
That justified specific performance.
However, the Court did not require the builder to construct the home. Instead, it ordered:
- Transfer of the land
- Assignment of architectural plans
- A price reduction to reflect current construction costs
The adjusted purchase price dropped to about $2.06M, significantly below the original contract.
4. No Relief from the Municipality
The builder also tried to blame the Town of Caledon for delays that allegedly increased costs.
That claim failed.
The Court held that while municipalities owe duties in processing permits, they do not guarantee a builder’s profitability especially over short timeframes.
Market risk remains with the builder unless properly shifted by contract.
Considerations
This decision reinforces several core principles in Ontario real estate law:
- Deadlines are unforgiving. Missing one, even by a day can be fatal.
- Fixed-price contracts allocate risk. Rising costs don’t excuse performance.
- Specific performance is alive and well for unique properties.
- Drafting matters. Clear timing language and proper execution are critical.
Brian Madigan LL.B., Broker