A Court in Newfoundland had to consider the application of the laws of specific performance. Not unexpectedly, a good number of the cases were drawn from Ontario.
In Johnson v. Benjamin on 26 March 2012, the Superior Court considered such a case. The property involved was newly constructed. The vendors lived in Vancouver and were arranging for the construction through their parents and real estate agent. There had been some delays associated with the closing date, but in the end, the Court concluded that the Vendors were in breach. That left one question: specific performance and/or damages.
When it came to the issue of specific performance and the “uniqueness test”, the Court stated:
(Italics and underlining mine)
“Are the Plaintiffs entitled to Specific Performance? In this case the plaintiffs submit that damages alone would be an insufficient and inappropriate remedy.
They are not looking for a monetary award but rather an opportunity to move in as a family to the home that they purchased as specifically meeting their needs.
The case law supports that the most common way to demonstrate that damages are an insufficient remedy is to establish that the property is unique. The plaintiffs submit that this property is unique in their circumstances. The plaintiffs claim that the property is well located in terms of schools and amenities.
The house sits on a one-half acre lot only minutes from St. John’s, in Portugal Cove-St. Phillips near Oliver’s Pond. Oliver’s Pond Road is described by the plaintiffs as a prestigious road in a highly sought after community close to both Oliver’s Pond and many walking trails located nearby.
The plaintiffs described the area as very quiet with no through traffic.
Beachy Cove Elementary is a school which offers a French immersion program beginning in kindergarten and this property would be zoned for Beachy Cove Elementary school.
The plaintiffs note that not all elementary schools have an early French immersion program and they want to avail of this opportunity for their child. The plaintiffs further testified that the house itself is well situated on the lot, leaving room for them to add both a swimming pool and an additional garage.
They also describe the house as having four larger than average bedrooms plus a bonus room and double car garage. They noted that many of the homes they looked at had three bedrooms plus a bonus room.
Although they did not design the house themselves, they really liked the inside layout and the way it was set on the lot. In addition, because they purchased the house prior to completion, all finishing decisions and color choices were theirs.
They chose the granite countertops and also purchased the appliances. The cost of the appliances, vanities, lighting and other items, which they purchased and which remain in the house, amount to approximately $22,000.
The plaintiffs testified that they purchased this property with the intention of making it their home and not for the purposes of investment. The vendors’ realtor has lived in the same neighborhood as this property for 18 years. She testified that she is on the neighbouring property to this one and sold the one-half acre lot to the vendors.
She described the Oliver’s Pond Road area as an extremely sought after area which is quite hard to get into, partly because it is in an agricultural freeze area, and very little land has been released in the last few years.
She testified there are always discussions about taking land out of the agricultural freeze area, but this has not happened and she is unaware of future plans to do so. She describes the area positively as it has two access points to the city, one to the east via Portugal Cove Road the other to the west via Thorburn Road.
The area is served by a very good school and is close to good amenities including restaurants, doctors and other service providers and has access to water activities, boating, swimming and walking trails near Oliver’s Pond and Hughes’ Pond.
(Vendors’ Position – Not Unique) The defendants state that the property in question is not unique.
Plans for the house were stock plans and the house was new construction which was essentially interchangeable with any other new build of similar quality.
They note that the plaintiffs were not involved in the design of the house and the lot itself has no particularly defining characteristics such as a view or water access.
The vendors state that it is effectively a subdivision lot in a rural setting which can be readily duplicated elsewhere. In addition, counsel for the vendors argued that because the remedy of specific performance is an equitable remedy the parties requesting the remedy must have “clean hands”. It was argued that the actions of the plaintiffs, including several purported breaches of the agreement disentitled them to this relief.
I have reviewed the actions of the plaintiffs previously with respect to misrepresentations, with respect to financing as well as other purported breaches of the agreement put forward by the defendants and I have found nothing which would rise to the level necessary to defeat the plaintiffs ability to seek the equitable remedy of specific performance. Several appraisals were submitted to the court to support the notion, among other things, that the property was not unique. Mr. David Gruchy did two appraisals on the property first, while the house was under construction on June 11, 2009. His appraisal at that time was $415,000 when 100% complete.
The second appraisal was conducted on January 20, 2010 and the appraised value at that time was $510,000. Mr. William Balsom also completed an appraisal on September 28, 2011 at which time he appraised the value at $585,000. In each of these cases, the appraiser provided some comparable properties in what was described as the North Metro Region which included the area from Torbay and Outer Cove through Portugal Cove-St. Phillips and on to Paradise.
Counsel for the defendants urged me to conclude that because the appraisers found comparable properties upon which to base their financial valuation, I should conclude that this property did not meet the test of uniqueness required to support the remedy of specific performance. Based on the case law which I have previously reviewed,
it is my view that there is both a subjective and objective element which must be considered in determining whether the property could be considered unique to the extent that its substitute would not be readily available.
The subjective aspect will be less significant in commercial transactions and more significant in residential purchases, unless the motivation in the latter case is principally to earn profit.
In this case we are dealing with a residential and not a commercial property.
On both a subjective and objective basis there would appear to be many features that would make this property unique to these purchasers and quite difficult to find a suitable substitute. From an objective perspective we have the view of both vendors’ and purchasers’ realtors that it is hard to acquire property in this particular area.
In fact, the testimony of the realtors that in the two years since this dispute arose there have been no comparable properties for sale on Oliver’s Pond Road.
I do not accept the view that the appraisers’ lists of comparable properties can be considered anything other than price point comparators to allow them to establish a reasonable valuation of a subject property. The properties cover a large geographic area with a number of different types of neighborhoods and amenities. They do not consider any of the subjective elements felt to be important by the purchasers. In Ali, as in this case, the vendors attempted to show that the house was not unique because there were other homes in the same general area of the same general size being offered for sale at comparable prices. This does not, however take into account the subjective factors which the courts have concluded are important considerations particular in residential properties.
In Ali andSilverberg as well as other cases, the courts have said that
it may be only one aspect of a home that will render it unique to a purchaser making it unlikely that a substitute will be readily available but it is more likely that a number of features, viewed in combination will do so or that the premises have a quality that makes it especially suitable for the proposed use which cannot be reasonably duplicated elsewhere. When the transaction failed to close in February 2010, the purchasers had no living accommodation other than the very small apartment where they had been residing awaiting the completion of the home that they were expecting to purchase. Following the failure of the transaction to close on February 11, 2010, and after filing a lis pendens and commencing an action for specific performance, they along with their real estate agent began to search for other properties as they needed to find accommodations which would allow them to get their possessions out of storage and provide a suitable home for their young child.
They were unable to locate a similar property and moved into a house in Southlands near Mount Pearl in August 2010 while they pursued their action for specific performance.
The plaintiffs paid $385.000.00 for this house with a basement apartment on a 50 x 100 foot lot which they described as interim housing. They have continued to look at properties from time to time but have found nothing to compare to the subject property. Based on the combination of factors, on both a subjective and objective basis, put forward by the purchasers, they have, in my view, satisfied their burden to show that the property was unique to the extent that a substitute was not readily available. They shall be entitled to specific performance of the agreement of purchase and sale.”
You will notice that the Court didn’t really list the specific factors but simply concluded that there were many. I have marked the specific items in Italics and underlining above, so that you can see the characteristics that the judge took into consideration in making the decision to award specific performance.
Brian Madigan LL.B., Broker