3999581 Canada Inc. et al. v. 1394734 Ontario Inc., 2007 ONCA 312

JudgeGoudge, Blair and LaForme, JJ.A.
CourtCourt of Appeal (Ontario)
Case DateJanuary 19, 2007
JurisdictionOntario
Citations2007 ONCA 312;(2007), 224 O.A.C. 29 (CA)

3999581 Can. v. 1394734 Ont. (2007), 224 O.A.C. 29 (CA)

MLB headnote and full text

Temp. Cite: [2007] O.A.C. TBEd. AP.113

3999581 Canada Inc. and 1514594 Ontario Inc. (appellants) v. 1394734 Ontario Inc. (respondent)

(C43707; 2007 ONCA 312)

Indexed As: 3999581 Canada Inc. et al. v. 1394734 Ontario Inc.

Ontario Court of Appeal

Goudge, Blair and LaForme, JJ.A.

April 26, 2007.

Summary:

The plaintiffs sued the defendant seeking specific performance of an agreement for the purchase and sale of land and a $100,000 abatement in the purchase price. The defendant counterclaimed for prejudgment interest on the purchase price during the period of delay in closing. The dispute arose out of an erroneous description of the size of the property being purchased.

The Ontario Superior Court, in a decision reported at [2005] O.T.C. Uned. 726, dismissed the action and allowed the counterclaim. The plaintiffs appealed.

The Ontario Court of Appeal allowed the appeal. The court held that the purchasers were entitled to an abatement of the purchase price in the amount of $83,848.

Interest - Topic 866

Equity - Real estate transactions - Where buyer acquires possession of land before payment of purchase price - After an agreement for the purchase and sale of land was executed, but before the date fixed for closing, it was discovered that the description of the land was erroneous; it was approximately 12% smaller than described (innocent mistake) - The purchasers sued the vendor for specific performance with an abatement - The vendor counterclaimed for prejudgment interest on the purchase price during the period of delay in closing - The trial judge dismissed the action and allowed the counterclaim - The purchasers appealed - The Ontario Court of Appeal allowed the action - The court dismissed the vendor's counterclaim because (i) as the purchasers were entitled to an abatement, they were justified in commencing the action and registering the Certificate of Pending Litigation against the property to protect their position; (ii) there was no evidence that the vendor was ever prepared to close the transaction and pay the disputed amount into court prior to a motion judge's order that it do so; and (iii) there was no evidence as to which party was responsible for the delay in moving the case forward - See paragraphs 41 to 46.

Interest - Topic 5117

Interest as damages (prejudgment interest) - Breach of contract - Sale of land - [See Interest - Topic 866 ].

Sale of Land - Topic 6175

Completion - Abatement of purchase price - General - The Ontario Court of Appeal stated that courts will more readily grant specific performance with an abatement to a purchaser than to a vendor - See paragraph 36.

Sale of Land - Topic 6178

Completion - Abatement of purchase price - When available - [See Sale of Land - Topic 6175 ].

Sale of Land - Topic 8566

Remedies of purchaser - Specific performance - With abatement - [See Sale of Land - Topic 6175 ].

Sale of Land - Topic 8566

Remedies of purchaser - Specific performance - With abatement - The Ontario Court of Appeal stated that "In the case of a contract for the sale of land, where there is a discrepancy between what the vendor has agreed to convey and what the vendor can convey, the rule is that a purchaser is generally entitled - if the purchaser is otherwise entitled to specific performance, and so elects - to specific performance of the contract with an abatement in the purchase price." - See paragraph 16.

Sale of Land - Topic 8566

Remedies of purchaser - Specific performance - With abatement - The parties entered into an agreement for the purchase and sale for lands described as "Block 59, Plan 4M-916 ..., being approximately 98,950 square feet as outlined on [a Schedule] attached" - The purchase price was $680,000 - After the agreement was executed, but before the date fixed for closing, it was discovered that this description was erroneous (innocent mistake) - The vendor had title to only part of Block 59 Plan 4M-916, measuring approximately 86,745 square feet, a difference of 12,205 square feet - The purchasers sued the vendor for specific performance with an abatement in the purchase price - The defendant counterclaimed for prejudgment interest on the purchase price during the period of delay in closing - On appeal, the Ontario Court of Appeal held that the purchasers were entitled to an abatement of the purchase price in the amount of $83,848 ($680,000 ÷ 98,590 sq. ft. = $6.87 per sq. ft.;12,205 sq. ft. missing land x $6.87 = $83,848) - The court dismissed the counterclaim.

Sale of Land - Topic 8566

Remedies of purchaser - Specific performance - With abatement - After an agreement for the purchase and sale of land was executed, but before the date fixed for closing, it was discovered that the description of the land was erroneous; it was approximately 12% smaller than described (innocent mistake) - The purchaser sued the vendor for specific performance with an abatement - The vendor counterclaimed for prejudgment interest on the purchase price during the period of delay in closing - The trial judge dismissed the action and allowed the counterclaim - The purchasers appealed - The vendor relied on an "anti-abatement" clause (Article 10) in the agreement - It argued that there was a defect in title that it was unable to remedy and the effect of Article 10 was to entitle it to treat the agreement of purchase and sale as terminated and to limit the purchaser's remedy to the return of their monies without interest - The Ontario Court of Appeal held that the vendor could not rely on an "anti-abatement clause" in an agreement for purchase and sale where the transaction had closed and the title had passed - See paragraphs 23 to 27.

Cases Noticed:

Mortlock v. Buller (1804), 10 Ves. 292; 32 E.R. 857 (Ch.), refd to. [para. 16].

Rutherford v. Acton-Adams, [1915] A.C. 866 (P.C.), refd to. [para. 16].

Ontario Asphalt Block Co. v. Montreuil (1913), 29 O.L.R. 534 (C.A.), affd. (1916), 52 S.C.R. 541, refd to. [para. 17].

LeMesurier v. Andrus (1986), 12 O.A.C. 299; 54 O.R.(2d) 1 (C.A.), refd to. [para. 18].

Vulcan Packaging Inc. v. Capital Ventures Group Inc. (1990), 38 O.A.C. 157; 71 O.R.(2d) 554 (C.A.), refd to. [para. 19].

Khanna v. Mysko, [1993] O.J. No. 2697 (Gen. Div.), affd [1995] O.J. No. 2614 (C.A.), refd to. [para. 20].

Wilson Lumber Co. v. Simpson (1910), 22 O.L.R. 452 (H.C.), refd to. [para. 28].

Gray v. Chadwick (1922), 49 N.B.R. 144 (S.C.), refd to. [para. 28].

Bowes v. Vaux (1918), 43 O.L.R. 521 (H.C.), refd to. [para. 37].

Authors and Works Noticed:

Di Castri, Victor, The Law of Vendor and Purchaser (3rd Ed. 1988) (Looseleaf), para. 256 [para. 37].

Perell, Paul M., Specific Performance with an Abatement (2001), 41 R.P.R.(3d) 302, generally [para. 24].

Counsel:

John Dempster, for the appellants;

Philip W. Augustine, for the respondent.

This appeal was heard on January 19, 2007, by Goudge, Blair and LaForme, JJ.A., of the Ontario Court of Appeal. Blair, J.A., delivered the following decision for the court on April 26, 2007.

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5 practice notes
  • Table of Cases
    • Canada
    • Irwin Books The Law of Equitable Remedies. Second Edition
    • June 18, 2013
    ...333 523 The Law of equiTabLe Remedies 524 3999581 Canada Ltd. v. 1394734 Ontario Ltd., 2007 ONCA 312 ..............374, 375 410675 Alberta Ltd. v. Trail South Developments Inc., 2001 ABCA 274, leave to appeal to S.C.C. refused, [2001] S.C.C.A. No. 602 .............................................
  • Specific Performance: Sale of Land
    • Canada
    • Irwin Books The Law of Equitable Remedies. Second Edition
    • June 18, 2013
    ...(C.A.). 109 See Di Cenzo Construction Co. v. Glassco (1978), 21 O.R. (2d) 186 (C.A.). 110 3999581 Canada Ltd. v. 1394734 Ontario Ltd. , 2007 ONCA 312. 111 Ibid at para. 32. 112 For example, it has been suggested in Grant v. Dawkins , [1973] 1 W.L.R. 1406 (Ch.), that abatement compensation c......
  • North Pacific Properties Ltd v Bethel United Churches of Jesus Christ Apostolic of Edmonton, 2020 ABQB 791
    • Canada
    • Court of Queen's Bench of Alberta (Canada)
    • December 16, 2020
    ...the quantity of land that is available and a credit or abatement to account for the shortfall: 3999581 Canada Inc v 1394734 Ontario Inc, 2007 ONCA 312 at paras 16, 36; 11 Suntract Holdings Ltd v Chassis Service & Hydraulics Ltd (1997), 36 OR (3d) 328 at para 54 (Ont CJ, Gen [308] &......
  • Greenway Estate Homes Ltd. v. McDonald et al., [2011] O.T.C. Uned. 1705 (SC)
    • Canada
    • Superior Court of Justice of Ontario (Canada)
    • May 30, 2011
    ...misrepresentation are satisfied, then the purchaser may have a claim for damages: see 3 999581 Canada Inc. v. 1394734 Ontario Inc. , 2007 ONCA 312. The Court of Appeal in 3999581 Canada Inc. dealt with a situation where the parties had entered into an agreement of purchase and sale which di......
  • Request a trial to view additional results
3 cases
  • North Pacific Properties Ltd v Bethel United Churches of Jesus Christ Apostolic of Edmonton, 2020 ABQB 791
    • Canada
    • Court of Queen's Bench of Alberta (Canada)
    • December 16, 2020
    ...the quantity of land that is available and a credit or abatement to account for the shortfall: 3999581 Canada Inc v 1394734 Ontario Inc, 2007 ONCA 312 at paras 16, 36; 11 Suntract Holdings Ltd v Chassis Service & Hydraulics Ltd (1997), 36 OR (3d) 328 at para 54 (Ont CJ, Gen [308] &......
  • Greenway Estate Homes Ltd. v. McDonald et al., [2011] O.T.C. Uned. 1705 (SC)
    • Canada
    • Superior Court of Justice of Ontario (Canada)
    • May 30, 2011
    ...misrepresentation are satisfied, then the purchaser may have a claim for damages: see 3 999581 Canada Inc. v. 1394734 Ontario Inc. , 2007 ONCA 312. The Court of Appeal in 3999581 Canada Inc. dealt with a situation where the parties had entered into an agreement of purchase and sale which di......
  • Benlezrah v. Dietz, 2017 ONSC 7485
    • Canada
    • Superior Court of Justice of Ontario (Canada)
    • December 12, 2017
    ...sought in the case at bar.[8] The Plaintiff relies on the Court of Appeal’s decision in 3999581 Canada Inc. v. 1394734 Ontario Inc., 2007 ONCA 312, where the Court of Appeal reversed a trial judge who had refused to grant an abatement in circumstances similar to the case at bar. The Court o......
2 books & journal articles
  • Table of Cases
    • Canada
    • Irwin Books Archive The Law of Equitable Remedies. Second Edition
    • June 18, 2013
    ...333 523 The Law of equiTabLe Remedies 524 3999581 Canada Ltd. v. 1394734 Ontario Ltd., 2007 ONCA 312 ..............374, 375 410675 Alberta Ltd. v. Trail South Developments Inc., 2001 ABCA 274, leave to appeal to S.C.C. refused, [2001] S.C.C.A. No. 602 .............................................
  • Specific Performance: Sale of Land
    • Canada
    • Irwin Books Archive The Law of Equitable Remedies. Second Edition
    • June 18, 2013
    ...(C.A.). 109 See Di Cenzo Construction Co. v. Glassco (1978), 21 O.R. (2d) 186 (C.A.). 110 3999581 Canada Ltd. v. 1394734 Ontario Ltd. , 2007 ONCA 312. 111 Ibid at para. 32. 112 For example, it has been suggested in Grant v. Dawkins , [1973] 1 W.L.R. 1406 (Ch.), that abatement compensation c......

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