The Agreement of Purchase remained alive after November 10, so, the March 2023 resale constituted a breach by the builder.
By selling the property to a third party, they made it impossible to perform their obligations under the existing contract.
When the purchasers resurfaced in May 2023 expressing interest in continuing, the builder could no longer comply. As the Court stated, “the tables had turned”, the builder became the breaching party. Up until then, it was the Buyer who was in “breach”.
The Court’s Findings
Justice Schabas ruled:
1. The APS was not terminated by the builder.
There was no clear and unequivocal communication of termination.
2. The builder breached the APS by reselling.
Resale while the contract was still alive prevented the builder from fulfilling its obligations.
3. The purchasers are entitled to a return of their deposits.
Under the Tarion Addendum, deposits must be refunded when an agreement is terminated for reasons not attributable to the purchaser’s breach.
4. The builder is not entitled to damages.
The resale had not closed and losses were unproven.
Considerations for Builders and Real Estate Agents
This case illustrates several critical points for pre-construction transactions:
1. Termination must be explicit.
Saying you might terminate is not the same as terminating.
2. Affirming the contract carries consequences.
Pressing the purchaser to perform can eliminate the ability to rely on earlier repudiation.
3. Silence is dangerous.
Failing to respond can leave the contract alive, even when a purchaser is in obvious breach.
4. Premature resale can affect liability.
Selling before properly terminating may transform the builder into the breaching party.
5. Tarion protections are strong.
When termination isn’t the purchaser’s fault, deposits must be returned with interest.
Conclusion
Caivan v. Logoteta reinforces a simple but often overlooked principle: breaking a contract is a two-step process. A repudiation by the purchaser is only the beginning. The builder must follow through with a clear election to terminate, and communicate it. Failure to do so may result in the builder being liable, even where the purchaser was initially in the wrong.
Brian Madigan LL.B., Broker