Ontario Superior Court of Justice enforces purchase and sale agreement in 18-year old real property transaction

November 4, 2021

In an October 22, 2021 decision, Justice Price of the Ontario Superior Court of Justice ruled that an Agreement of Purchase and Sale (the “Agreement”) between 384130 Ontario Inc. (the “Plaintiff”) and 520611 Ontario Ltd. (the “Defendant”) was valid and enforceable, and ordered the Defendant to complete its sale of real property to the Plaintiff, a process which began 18 years ago.

In 2003, the Plaintiff entered into the Agreement to purchase the Defendant’s property for $415,000.00. Pursuant to the contract, the Plaintiff paid a deposit to the Defendant, as well as an additional cost to enable the Defendant to remediate the environmental contamination of his property, as the Agreement required. The Plaintiff also began occupying the property for the operations of his auto repair business, and paid monthly rent to the Defendant, subject to the closing of the condition. Both parties agreed that the remediation was subject to the satisfaction of the Ontario Ministry of the Environment (the “Ministry”).

In 2019, the Defendant sold the property to new purchasers at twice the original sale amount and who did not require a remediation condition. The Defendant relied on the passage of time as rationale for the position that the original Agreement was no longer valid. Additionally, since the Ministry was required to sign off on the completed work prior to the original sale and had ultimately not done so, the Defendant took the position that the Ministry’s involvement constituted a “true condition precedent”, ultimately frustrating the terms of the Agreement in any event.

The Court agreed with the Plaintiff that there was no true condition precedent that prevented the rights and obligations in the Agreement from arising, despite the absence of a closing date, finding that the Ministry’s approval was subject to certain actions on the part of the Defendant which he did not fully complete. In review of the facts, Court further determined that the Agreement was indeed valid and binding, declaring that the Plaintiff may purchase the property for the original purchase price, less deposits paid, and the Defendant to complete the sale of the property.

This is a significant case that enforces what constitutes a true condition precedent in contracts dependant on the actions of a third party, as well as establishing a precedent related to limitation arguments associated with older agreements of purchase and sale.

Miller Thomson represented the successful Plaintiff in the proceedings with a team led by Michael McCluskey (Commercial Litigation), and comprised of Alexander Verrilli (Commercial Litigation); and Kayla Sweet (Paraprofessional) as well as Lindsay Armstrong (Student).