More v. Seiko Homes (2023 ONCA 527)
Introduction
Real estate transactions often hinge on one critical date ,the closing date. But what happens when one party ends the deal too soon? The Ontario Court of Appeal’s decision in More v. 1362279 Ontario Ltd. (Seiko Homes) (2023 ONCA 527) provides a clear warning: a seller who jumps the gun risks being found in anticipatory breach and ordered to complete the sale.
Background
Three purchasers, Sewa More, Gurlal Singh Gill, and Ravneet Kaur Boparai, each entered into identical Agreements of Purchase and Sale (APS) with Seiko Homes for three adjoining townhouses in Windsor. The buyers, who were family friends, planned to retire together as neighbours.
The purchase price for each unit was $369,000, with a closing date of October 1, 2020, and a total deposit of $25,000 per property.
The APS contained a standard “time is of the essence” clause, but no specific time of day was stated for closing. A related document prepared by the vendor’s lawyer, the Document Registration Agreement (DRA) stated that if no time was specified, the release deadline would be 6:00 p.m. on the closing day.
The Closing Day Dispute
On October 1, the buyers’ mortgage funds were delayed because of COVID-19 banking slowdowns. Their lawyer had certified funds in hand but couldn’t transfer them through the electronic system before 5:00 p.m.
At 5:11 p.m., the vendor’s lawyer faxed a termination notice, claiming the buyers failed to close. The next morning, the buyers’ lawyer deposited the mortgage funds and proposed completing the sale the following day. Seiko Homes refused, returned the mortgage funds, and kept the deposits.
The Court Proceedings
The purchasers sued for specific performance, asking the court to force the seller to complete the transactions. The vendor countered, claiming forfeiture of the deposits.
The motion judge found that:
- The Buyers were ready, willing, and able to close.
- The Seller acted unreasonably and terminated prematurely.
- The “time is of the essence” clause could not be used to impose a deadline where none was stated.
The judge ordered specific performance and awarded the buyers $17,500 in costs.
The Appeal
Seiko Homes appealed, arguing that:
- The Buyers were late with their funds.
- The “time is of the essence” clause entitled them to cancel.
- The costs award was unjustified.
The Court of Appeal rejected all three arguments.
Key Findings by the Court of Appeal
- No Specified Time = No Early Termination
The APS did not set a closing time. The DRA, prepared by the vendor’s own lawyer — said closing could continue until 6:00 p.m.. By cancelling at 5:11 p.m., the vendor terminated early and was in anticipatory breach. - “Time is of the Essence” Has Limits
The clause only applies when a specific time is stated in the agreement. It cannot create a time limit where none exists.
As the Court noted, such a clause dictates the consequences of missing a set deadline, it doesn’t create one.
- Bad Faith and Unreasonable Conduct
The Court agreed that Seiko Homes acted in bad faith by refusing to close despite minor, pandemic-related delays. The vendor “pounced” on the delay in a “totally unexpected fashion,” rather than working cooperatively to close. - Substantial Indemnity Costs Upheld
The Court confirmed the motion judge’s discretion to award substantial indemnity costs due to the vendor’s unreasonable conduct. The $17,500 award was found reasonable and proportionate.
The Outcome
The Court of Appeal dismissed the appeal, upheld the order for specific performance, and awarded the buyers an additional $10,000 in costs for the appeal.
Considerations for Real Estate Professionals
- Specify the closing time in the APS to avoid disputes.
- A “time is of the essence” clause only works when there’s a defined deadline.
- Vendors must act reasonably and in good faith, refusing to close due to minor or technical delays can backfire.
- During extraordinary circumstances (such as COVID-related disruptions), courts expect flexibility and cooperation.
- Courts may award enhanced costs where one party acts in bad faith or terminates prematurely.
Conclusion
The More v. Seiko Homes decision reinforces a key principle of Ontario real estate law: good faith and reasonableness govern the closing process. When a vendor terminates too quickly or refuses to accommodate practical delays, they risk losing not only the deal but also paying costs — and being ordered to complete the sale.
Brian Madigan LL.B., Broker
www.OntarioRealEstateSource.com