6751067 Canada Inc. v. 16002731 Canada Inc.,
In the recent case of 6751067 Canada Inc. v. 16002731 Canada Inc., released on 18 August 2026 Justice Doyle relying on the Callow case summarized matters as follows:
“Summary
[82] I note that this was not the loss of a small tenant, and that a reduction in income of this magnitude affected the defendant’s ability to obtain financing. [83] Although caveat emptor remains an important principle in commercial real estate, it does not permit one contracting party to knowingly mislead the other during performance of the contract. [84] Although there was nothing in the contract that required the plaintiff to make such disclosure, there is a common law principle of good faith and a duty of honest performance. [85] Here, the plaintiff intentionally remained silent until after the waiver of the only condition because disclosure would likely have prevented waiver of the condition. This silence was dishonest and sufficiently serious to justify the defendant’s refusal to complete the agreement. [86] Ordinarily, the plaintiff as vendor would be entitled to retain the $150,000 deposit. The defendant is a sophisticated investor and businessman who could have included a clause in the agreement that the leases were in good standing as opposed to a clause that included a list of all the relevant leases. The defendant also had the benefit of an experienced agent, Mr. Sun, who clarified his role in obtaining financing and supporting documents for the client. [87] However, the plaintiff breached the duty of honest performance by knowingly withholding a material change affecting the property’s income until after the defendant had waived the only condition. Although the plaintiff’s caveat emptor argument is a serious one and courts are generally reluctant to rewrite sophisticated commercial bargains, I find that the plaintiff appreciated that the defendant was operating under a mistaken assumption. [88] The plaintiff’s silence was knowingly misleading in the sense described in Callow.”Brian Madigan LL.B., Broker
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