Canada’s Top Court Rules that Specific Performance Not Required For All Land Deals and Duty to Mitigate Applies

June 25, 2013

Miller Thomson successfully defended the Toronto Catholic District School Board (the “Board”) before the Supreme Court of Canada in a decision involving a dispute over an agreement of purchase and sale.

Southcott Estates Ltd. entered into an agreement with the Board to purchase 4.78 acres of land for $3.44 million, paying a 10% deposit. The closing was conditional upon the Board obtaining a severance from the Committee of Adjustment. Despite extending the closing date, the Board did not obtain the necessary severance in time. The Board refused Southcott’s request for a further extension, and returned their deposit.

Southcott commenced an action for specific performance of the contract, asking the court to enforce its right to purchase this particular piece of land. It made no attempt to mitigate its loss by purchasing an alternate property.

The Supreme Court held that the only unique quality to the Board’s property related to its potential profitability, which was compensable by a monetary award.  Moreover, the Supreme Court found that Southcott had failed to take any steps to mitigate its loss by investing in a substitute property, and because a plaintiff cannot recover losses that could reasonably have been avoided, Southcott’s damages were reduced to a nominal sum.


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