Semelhago v. Paramadevan
Traditionally, the standard common law remedy in the case of a Seller’s default on a real estate transaction was “specific performance”. The Court would grant title to the Buyer. In part it was based upon the premise that all real estate was unique and in the 15th century it certainly would be.
However, the Supreme Court of Canada made some changes to the common law in 1996. In Semelhago v. Paramadevan, the Court decided that damages which is the usual “go to” remedy would work equally well in many real estate cases.
The reason for the change in thinking was that so many properties were very much the same as so many other properties. Developers were now into “cookie-cutter” production of housing.
If the Buyer is seeking specific performance they will have to prove to the Court that:
- the property was “unique” , and
- damages would not be an adequate remedy.
The rationale is that the Buyer can purchase almost the same house down the block in the same subdivision, so the Buyer should sue for damages, being the difference in cost and the cost of any improvements to equalize the two properties.
The legal system would not be tied up with the case for a long period of time, and the Buyer would have his remedy sooner.
What do we mean, if a property is unique?
- the physical nature of the property;
- the subjective needs of the Buyer; and
- the “transactional” characteristics – whether the deal contains particularly advantageous terms.
Will damages be sufficient? Will damages adequately compensate the Buyer?
Those are the two tests which must be met in order to satisfy the Semelhago criteria for specific performance.
Brian Madigan LL.B., Broker