Specific Performance: Sale of Land

AuthorJeffrey Berryman
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
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.
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.).

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