Specific Performance: Sale of Land

• Author: Jeffrey Berryman
• Pages: 348-382

348

CHA PTER 12

SPECIFIC

PER FOR M ANCE:

SALE OF LAND

A. INT RODUC TION

It has been repeatedly sa id that land is considered unique and therefore

there is a presumption that specif‌ic performance will be granted of any

contract involving realty. The justif‌ication for this position is t hat no

two pieces of land are identical and that each has a special a nd pecu-

liar value to a purchaser.1 With respect to the vendor’s position, the

doctrine of aff‌ir mative mutuality has created a n equivalent presump-

tion that specif‌ic performance will be granted to a vendor despite the

ease in ass essing damages. This may still acc urately ref‌lect the position

in other common law countries; however, since the Supreme Court of

Canada’s judgments in Se mel hago v. Paramadevan2 and Southcott Estates

Inc. v. Toronto Catholic District School Board,3 it does not accurately

ref‌lect the position in Canada.

1 See Ad derle y v. Dix on (1824), 1 Sim & St. 607, 57 E.R. 239 at 240–41, Leach V.C.

(Ch .).

2 [1996] 2 S.C.R. 415 [Semelhago].

3 2012 SCC 51 [Southcott].

Specif‌ic Perform ance: Sale of Land 349

B. PURCH A SER’S APPL ICAT ION

1) Adequacy of Damages

Recall from Chapter 10 that the main argument supporting the para-

mount position of damages in our remedial t axonomy is the relative

eff‌iciency of resolving disputes. However, this eff‌iciency can create an

injustice where the quantif‌ication of par ticularly subjective interests

forms an important part of the plaintiff ’s motivation for entering the

contract. With respect to the sale of land, there has been a presump-

tion that a purchaser’s motivation toward a particular piece of prop-

erty always car ries with it a desire to satisfy a number of subjective

goals. We can all readily identif y with wishing to acquire our “dream

home”; once we had found it, we would not readily part with it even

for a king’s ransom. Unfortunately, when we put this argument to scru-

tiny, we quickly realize that it does not accord with t he contemporary

marketplace or our participation in t hat market. The market is far more

dynamic th an the law presumes.

The choice to purchase is not made because one part icular property,

romantically viewed, meets our dream home ideal. Rather, the cold

reality of what a person can afford, location, and number of bedrooms

gives us a number of options unrelated to t he unique characteristics of

any individual home. We rarely reside in one house during our entire

life. The advertisers’ siren call to purchase a “starter home” or “handy-

man’s special,” or, at the other end of the life cycle, to realize savings

from a now-too-large family home, all belie the uniquenes s of those

properties. The boring similarity of our suburban housing develop-

ments, made famous by Pete Seeger’s rendition of Malvina Rey nolds’

song “Little Boxes” also undercuts any notion of uniqueness. The fact

that people in urban centres are more likely to rent than own has cre-

ated vast scope for property investors guided by principles of market

return and the commodif‌ication of property as simply another invest-

ment vehicle.

Despite prior authority that conf‌ir med the presumptive nature

of specif‌ic performance,4 the Supreme Court of Canada rev ised this

position i n Semelh ago5 and recently conf‌irmed this direction in South-

cott.6 In Semelhago, the appellant vendor refused to close a rea l estate

4 See Kloepfer Wholesale Hardware & Automot ive Co. v. Roy, [1952] 2 S.C.R. 465;

and Bashir v. Koper (1983), 40 O.R. (2d) 758 (C.A.).

5 Above note 2.

6 Above note 3.

THE LAW OF EQUITABLE RE MEDIES350

transaction for the sale of hi s residential home. The respondent agreed

to buy the appellant’s home for $205,000. The deal was to be f‌ina nced

by a cash payment of $75,000 and $130,000 raised on a mortgage of the

purchaser’s existing home. The purchaser intended to sell his exi sting

home within a six-month period of completion on his new home, and

took an open mortgage over his existing home for this period. At the

time of completion, in October 1986, the purchaser’s existing home

was worth $190,000. At the time of trial, November 1990, it was worth

$300,000. The vendor’s home was worth $325,000 at the date of trial.

At the trial the purchaser elected to take dam ages rather than specif‌ic

performance. The tria l judge awarded the purchaser $120,000, being

the difference in contract price and market value of the vendor’s home

at the date of trial. Such an as sessment was in keeping with the Onta rio

Court of Appeal’s decision in 306793 Ontario Ltd. v. Rimes.7

The vendor appealed. He argued that such an award amounted to

a windfall. The purchaser not only received the increase in value of

the property he was going to buy, but also kept the increase in value

of the house that he already owned, but which was to be sold to f‌inance

the purchase of the new home. An alternative assessment proposed

by the vendor, but rejected by the trial judge, would simply have com-

puted the difference between the increase experienced by the vendor

on his house and the increase experienced by the purcha ser retain-

ing his exist ing house. Another alternative, suggested by the purchase r,

would have computed the increase in value on the vendor’s house and

subtracted the costs incur red by the purchaser to achieve that increase.

Thus, the carry ing costs of the $130,000 mortgage between closing and

trial date s, and the notional interest the purchaser would have made

on investing the cash pay ment of $75,000 for the same period would

have to be factored in. This would give damages a s $80,810. The Court

of Appeal accepted this last alternative.

The vendor appealed to the Supreme Court of Canada. The issue

before the Supreme Court was simply the appropriate damage assess-

ment principle. The Supreme Court reluctantly aff‌irmed the approach

taken by the Court of Appeal. However, Sopinka J., speaking for the

majority, also took the opportunity to comment on the appropriateness

of seeking specif‌ic per formance. Justice La Forest declined to address

this issue w ithout the advantage of argument. Justice Sopinka f‌irst sug-

gested that any generosity in dam age assessment in these ty pes of cases

be only justif‌ied if the propert y is unique:

7 (1979), 25 O.R. (2d) 79 (C.A.).