Roberge v, 2012 ABQB 717

Court of Queen ’ s Bench of Alberta Citation: Roberge v 1102940 Alberta Ltd., 2012 ABQB 717 Date: 20121120 Docket: 0703 12142 Registry: Edmonton Between: Greg Roberge and Kandi Roberge Plaintiffs - and - 1102940 Alberta Ltd. Defendant _______________________________________________________ Reasons for Judgment of the Honourable Madam Justice J.M. Ross _______________________________________________________ Introduction [ 1 ] In this trial, the Plaintiffs (the Roberges) seek specific performance of their agreement to purchase a condominium.

The Defendant (the Developer) claims that the agreement was terminated according to its terms when the condominium could not be completed by the contract date or within a reasonable time afterwards.

Facts The Roberges [ 2 ] The Roberges have lived in Pigeon Lake, Alberta and worked at their jewelry retail business in Edmonton, Alberta since 1994. They love their lake home and do not want to give it up, despite the stress of a long daily commute, over an hour each way.

It was especially difficult when their teenaged children were in high school and involved in extracurricular activities in Leduc, Alberta, which lies between Pigeon Lake and Edmonton. [ 3 ] In 2006 the Roberges decided to look for a second home in Leduc, where they could live during the week and still return to their primary home in Pigeon Lake when time permitted. Because it was a second home, they were looking for something new and easy to care for, with no yard work.

They also wanted a location that would be convenient for commuting to either Edmonton or Pigeon Lake. [ 4 ] When they saw a billboard advertising the soon to be constructed Shannara Court Condominiums in Leduc, they felt the location was ideal for their purposes. They inquired further, and concluded that the new condominium project would suit them perfectly. For one thing, there was no age restriction. They had found that most condominiums in Leduc would accept only residents over 45 years old. They also liked the design of the condominiums.

They preferred a bungalow, a corner unit, with an attached garage, and they wanted a gated community to provide security for periods when they were not residing in the home. [ 5 ] Mrs. Roberge visited the Shannara Court sales office and spoke to realtor, Craig Murray.

She called her husband from the sales office concerned to act promptly, as she believed the units in the first two phases of the project were selling fast and it was anticipated that prices for units in later phases would increase. [ 6 ] On April 11, 2006, the Roberges signed an Offer to Purchase Unit 101 in Shannara Court for a price of $211,000 (excluding GST). The Offer was accepted by the Defendant on April 13, 2006. [ 7 ] The Unit fulfilled all the Roberges ’ criteria. The estimated completion date of the Unit was August 31, 2006.

This suited the Roberges as they planned to register their son in school in Leduc commencing in September. They understood that August 31 was an estimated date only. Their plan was that, if there was some delay in completion, they would continue to commute from Pigeon Lake to Edmonton, dropping off their son at his school in Leduc on their way. [ 8 ] The Roberges paid a $3000 deposit when they signed the Offer, and an additional $8022 payment required upon excavation in June 2006.

The Offer provided that it was subject to the Roberges ’ approval of specifications of the Unit and quality of the finishes within 10 days of acceptance of the Offer. The Roberges signed extensions of this condition to May 19, 2006 and later to June 30, 2006. So far as the Roberges were concerned, there was no difficulty regarding specifications and finishes, the builder simply did not yet have samples available for their approval. Neither of the parties are relying on this condition. [ 9 ] In May 2006, Mrs.

Roberge obtained an updated price list for Shannara Court, which indicated that the asking price for available units had increased. Later she obtained a further updated price list dated July 17, 2006 which showed prices of available units as “ TBA ” . [ 10 ] The Roberges left in early August 2006 for a two-week holiday. Before they left they inquired of Mr. Murray whether they could choose finishes after their holiday, and he indicated that would be acceptable. [ 11 ] When the Roberges returned from holidays in mid-August, there was a letter dated August 11, 2006 from the Developer ’ s

solicitors waiting for them. The letter included a cheque for $11,022, the combined amount of the Roberges ’ two deposits. It stated: In the currently overtaxed construction industry in Alberta, the Seller has encountered very serious and unanticipated difficulties with many of its trades with whom it had previously contracted for construction of the building which is to contain your unit. In accordance with clause 18 of the Agreement, your unit was scheduled to be available for occupancy on or about August 31, 2006 (the “ Closing Date ” ).

Despite the diligent efforts of the Seller, the actions of numerous trades have very significantly impacted the Seller ’ s anticipated ability to achieve order and timely completion of the building which is to include your unit. It has consequently become apparent that the Seller will be unable to substantially complete the unit for occupancy within a reasonable time after the Closing Date.

It is with much regret and disappointment that the Seller has realized as a result of the above, that it must exercise its option under clause 18 of the Agreement to terminate the Agreement and return to you your deposit in the sum of $11,022, which is enclosed with this letter. The Seller is very sorry to have to take this extraordinary step which has been forced by the very unusual construction and labour conditions which presently exist.

The Seller appreciates your expressed interest in this project and hopes that it may have opportunity to do business with you in the future, if circumstances permit. [ 12 ] The Roberges were surprised and upset. They did not cash the cheque. Instead, they spoke to a lawyer. They felt they had an enforceable contract, although they understood completion would be delayed. [ 13 ] At the beginning of September 2006, Mr. Roberge met with Craig Murray and David McDonald, a representative of the Developer. At the meeting, Mr. Roberge was given a letter dated September 1, 2006 from the solicitors for the Developer.

The letter provided “ additional information ” including the following: As a result of the refusal by the trades to honor their original contracts with the Developer, ongoing financing for the project has been terminated, and it is expected that there will be a full shutdown at the project within the next week or so. Resumption of project construction cannot occur until refinancing has been arranged, and new agreements come to with the trades.

The market in Alberta is such that seeking to force the trades to honor their original contracts by legal means is effectively suicide for a Developer, as replacement trades would be impossible to obtain. It is hoped that these serious impediments can be resolved before too long, but at present timing is uncertain and, as already reported, very significant delay is unavoidable.

As a result of these very serious difficulties brought about by the unilateral actions of the trades, the Developer has further been forced to revise the plan for the overall project. . .Once renegotiation with the trades and arrangements for refinancing have been achieved, the first four phases are expected to proceed and to be constructed in due course. . .

Construction on all of the phases yet to be undertaken for this project is significantly delayed. . . . . . . . . it is hoped that arrangements for refinancing and trades, as well as revision of sales documents, can be in place by approximately September 15, 2006 or shortly thereafter, although that may be a bit optimistic. If you are interested in having opportunity to make an offer on properties in the four phases which are proceeding as above described, please contact or have your agent contact Craig Murray to advise him of the same prior to September 15, 2006. [ 14 ] During the meeting, Mr.

Roberge was advised that they could purchase the Unit for a “ preferred ” price of $275,000 plus GST. This was $15,000 less than the new asking price of $290,000. [ 15 ] On November 7, 2006, the Roberges received a fax from Craig Murray asking them to call him and let him know what they

decided about the offered preferred price for the Unit. [ 16 ] On November 8, 2006 the Roberges attended at their lawyers ’ office and signed a caveat claiming an interest in the Shannara Court property under the Purchase and Sale Agreement. Later they were asked to sign a second caveat in the same terms on December 12, 2006. The second caveat was registered against title to the property on December 12, 2006. The first caveat was not registered until January 15, 2007.

The Certificate of Title only reflects registration of the Plaintiffs ’ December 2006 caveat. [ 17 ] During the fall and winter, the Roberges observed and photographed construction activity at Shannara Court. They were aware that the condominiums were completed in the summer of 2007. [ 18 ] After receiving the August 11, 2006 letter, the Roberges immediately started to look for another property. There was very little for sale. They ended up buying a detached home for $330,000.

The offer to purchase was signed on August 21, 2006, the sale closed on September 15, 2006 and they moved in at the end of October 2006, after completing renovations at a cost of approximately $25,000. Their plan was to sell this home and move into Shannara Court when it was ready. [ 19 ] The Roberges lived in the replacement home for three years until their son finished high school. They found the payments to be a burden. They tried to sell the home, but were unable to, so they rented it, and returned to living in Pigeon Lake and commuting.

They eventually sold the replacement home in June 2011 for $350,000. [ 20 ] Both of the Roberges acknowledged that they read the Purchase and Sale Agreement. [ 21 ] At the time of trial, the Roberges were living in Pigeon Lake. They still want a residence in Leduc and Unit 101 of Shannara Court remains “ perfect ” for them. They are aware that other purchasers, the Wrights, have been living in Unit 101 under an arrangement with the Developer since 2007, and have made modifications to the Unit, but they continue to desire specific performance of the Purchase and Sale Agreement.

The Developer [ 22 ] The Developer was incorporated for the purpose of developing the Shannara Court Condominium project in Leduc, Alberta. David McDonald acted as a consultant to the Developer, and was responsible for arranging financing. Robert Howe was the project construction manager. [ 23 ] The land was purchased by early 2005. A budget was prepared based on written and verbal quotes from trades. Unit prices were determined.

Development approval was obtained on March 18, 2005. [ 24 ] Financing for the project was provided via an initial investment from the Developer and through a first mortgage loan from MCAP Real Estate Finance Group Inc. The MCAP financing requirements were set out in a September 5, 2005 loan agreement, and included: 1. Initial equity in the amount of $675,000.00 was required to be injected into the project prior to the initial advancement of $300,000.00, and $1 million in equity prior to the advance of the remaining funds; 2.

The principal amount of the mortgage totaled $7,663,902.00 on aggregate draws to a maximum outstanding at any time no greater than $2 million;

3. The term of the loan was for 18 months with interest charged at the rate of the Royal Bank of Canada Prime plus two percent (2%) per annum, calculated daily and compounded monthly; 4. Conditions precedent to the disbursement of funds included: a. A report on the project budget by an independent Project Inspector certifying the adequacy of the budget for the purpose of completing construction of the project; b. All advances to complete the construction of the project shall be funded on a cost to complete basis, supported by satisfactory inspection reports. 5.

The Project Inspector was to supply to the lender his professional opinion with regard to: a. Review and approval of the project budget submitted by the borrower; b. Evidence of firm contracts covering the cost of all trades and suppliers; c.

The borrower will provide the lender ’ s Quantity Surveyors with copies of all hard and soft cost contracts for construction of the project, including all change orders, amendments to contracts, upgrade costs, etc. on a timely basis so as to allow the Quantity Surveyors to review and approve same prior to the Quantity Surveyors submitting their monthly inspection and draw request report to the Lender. 6.

The borrower was required to supply the lender with written draw requests supported with invoices indicating disbursement of funds, and confirm that the unused portion of the construction financing would be sufficient to fully complete the project. The Project Inspector was to confirm that the construction work was being done in accordance with the approved plans and specifications, that the construction work was progressing within the original time schedule, and that the remaining construction budget as approved by the lender was sufficient to complete the project. 7.

Joint and several personal guarantees for the loan were issued by Mr. David McDonald and Mr. Robert Howe. [ 25 ] Site work commenced in 2005. Due to unavailability of concrete in the late summer and fall of 2005, the completion of site work was delayed. Curbs could not be installed until the spring of 2006, with construction of the condominiums to follow. When construction got underway in 2006, it was necessary to obtain new tenders and updated costs from the trades.

With a very busy construction industry, many of the 2006 quotes were higher than the 2005 quotes on which the original budget was based. [ 26 ] In June 2006, the Developer determined that its original budget would not be adequate for the purpose of completing the project. Mr. McDonald prepared and submitted to the Quantity Surveyors a revised budget reflecting an increase in the estimated cost to complete the project from $11,870,302 in the original budget to $13,319,235 in the revised budget.

The revised budget was submitted to MCAP, which responded on July 31, 2006 by cancelling its financing of the project and demanding repayment of amounts disbursed under the mortgage by August 31, 2006. [ 27 ] Following the cancellation of financing, the Developer directed many of the trades to cease work. Construction at Shannara Court proceeded on a “ lock-up ” basis, meaning that only construction necessary to preserve the interior of the units from deterioration was completed. This included completion of the framing, installation of the windows and doors, and completion of the roofs.

The lock- up stage of development was completed in late 2006.

[ 28 ] The Developer concluded that having to negotiate new financing would mean a significant delay and budget overrun, and decided to cancel existing contracts under Clause 18 of the purchase and sale agreements. Letters were sent to all 14 purchasers of condominium units, including the Roberges. Mr. McDonald met with 11 of the 14 purchasers, including Mr. Roberge, to explain the problems with trades and financing and the new prices.

At that point, it was hoped that the project could be complete by December 2006 or early spring 2007; however, this was dependent on new financing which had not yet been obtained. [ 29 ] The project, which had originally been contemplated in two stages, was reduced to one stage only. To facilitate refinancing of stage one, stage two was sold to another developer. On September 21 st , 2006, interim financing was arranged with Ironwood Financial Services Inc. The interest rate was 16%.

This financing was used to pay out the MCAP mortgage, to pay existing trade invoices, and to pay the costs incurred to get the project to the lock-up stage. A preservation mortgage was registered in favour of Ironwood on November 2 nd , 2006. [ 30 ] The Developer concluded that it could not complete the project with financing at this rate, as interest costs would have led to bankruptcy. [ 31 ] Negotiations for financing continued and in June 2007, the Developer obtained financing with the Canadian Western Union Bank.

Construction was able to proceed and the Unit was completed in August 2007. [ 32 ] The Developer agreed to sell the Unit to new purchasers, the Wrights, before it was aware of the Roberges ’ caveat. On October 31, 2006 the Wrights entered into a Sale and Purchase Agreement for another unit in Shannara Court. That agreement was later amended to be for the sale and purchase of the Unit, accepted by the Developer on November 10, 2006. [ 33 ] At this time, title to the Unit remains in the name of the Developer, subject to the Roberges ’ caveat.

The Wrights have been occupying the Unit pursuant to an agreement with the Developer. With the Developer ’ s knowledge, the Wrights have made modifications and additions to the Unit, including a finished basement, heated underground flooring, jacuzzi bathtubs, custom cabinets, an interior sound system, central vacuum and air conditioning. 2006 Market Conditions [ 34 ] Expert evidence was tendered by both parties as to the circumstances surrounding the construction and real estate markets in 2006. A boom in construction caused trade subcontractors to be in high demand and short supply.

As the demand increased, so too did the price. This caused construction projects, such as this one, to experience significant budget overages. [ 35 ] Real estate was similarly affected in 2006, with an expert for the Roberges describing the conditions as unprecedented. The limited number of properties on the market and the speed at which those properties would go off the market combined to create difficulties for potential purchasers.

In August 2006, there were only 18 total listings in Leduc only one of which was a condominium listing, and that was within the yet to be completed Shannara Court development. [ 36 ] The Roberges ’ experts gave their opinions that there were no available comparable properties to Shannara Court. Although the building structure was not in and of itself unique, the additional features such as the gated community, the lack of an age restriction, and greater livable square footage area were not found in similar properties.

The Purchase and Sale Agreement [ 37 ] The following provisions of the Purchase and Sale Agreement are relevant:

Closing and Completion Date 18. The Unit is scheduled to be available for occupancy on or about [August] 31, 2006 and the Seller shall proceed to complete construction of the Unit with all due diligence, and shall use its best efforts to deliver possession to the Buyer by the date aforementioned. Where construction is incomplete at the time of execution of the Agreement, however, the Buyer acknowledges that the Closing Date is an estimated date only and that the Seller shall have no liability or responsibility if such estimated Closing Date is not reached, even by a substantial degree.

If the Seller shall be unable to substantially complete the Unit for occupancy within a reasonable time after the designated Closing Date, the Seller may at its sole option return any Deposits it holds and the Seller shall not be liable to the Buyer for any damages in that regard. 19. Where the Seller is unable to meet the scheduled date for possession referred to above, it shall so notify the Buyer as soon as it is reasonably feasible after such inability becomes apparent to the Seller, providing to Buyer a new estimated occupancy date.

The Seller shall, in any event, give the Buyer 10 days notice in writing of the actual date of possession (the “ Closing Date ” ). Adjustments 23. The balance of the Total Purchase Price to be paid on Closing shall be adjusted on the Closing Date as to all prepaid and accrued expenses . . . Risk and Damage to Unit 43. The Unit shall be at the risk of the Seller until the Closing Date, and in the event... Parties ’ Positions [ 38 ] The Roberges argue that the Developer breached the Purchase and Sale Agreement by failing to complete.

They contend that the Developer was not entitled to terminate the Agreement under Clause 18. They seek specific performance of the Purchase and Sale Agreement, or in the alternative, damages. [ 39 ] The Developer submits that the Purchase and Sale Agreement was validly terminated in accordance with Clause 18. The Developer argues that construction delays and increases in trade subcontractor prices caused financing for the project to be withdrawn, and subsequently an unreasonable delay in completion was foreseeable, justifying the decision to terminate under Clause 18.

If there was a breach, the Developer claims that damages would be an adequate remedy and that the Roberges failed to take proper steps to mitigate. Law and Analysis Termination of the Agreement

[40] The Developer claims that the Purchase and Sale Agreement was validly terminated in accordance with Clause 18.Construction delays and increases in trade subcontractor prices caused financing for the project to be withdrawn. The result was that anunreasonable delay in completion was foreseeable.

This justified its decision to terminate under Clause 18, as it was “unable tosubstantially complete the Unit for occupancy within a reasonable time after the designated Closing Date”. [41] The Roberges respond that there was no “designated Closing Date”, as the Developer had not given notice of the date underClause 19. Clause 19 required the Developer to give them 10 days notice in writing of the “Closing Date”, defined as the “actual date ofpossession”.

In Clause 19, August 31, 2006 is referred to as the “scheduled date for possession”. [42] The Roberges point to the principles of contract construction as summarized in Shaw GMC Pontiac Hummer Ltd. v PolarisExplorer Ltd., 2009 ABCA 390, at paras 18, 19: (

i) Where there is no ambiguity in a written contract it must be given its literal meaning. (ii) Words must be given their plain, ordinary meaning, at least unless to do so would result in absurdity. (iii) The contract should be construed as a whole, giving effect to everything in it if at all possible. (iv) In cases of doubt, as a last resort, language should always be construed against the grantor or the promisor under the contract; thecontra proferentem rule. (

v) The ejusdem generis rule. [43] The Developer does not disagree with these principles, but also relies on Scanlon v Castlepoint Development Corp. (1992), (ON CA), 11 OR (3d) 744, 99 DLR (4th) 153 (Ont. C.A.). Scanlon concerned an agreement for the purchase and saleof a condominium, and held that commercial documents of this type “should be construed in accordance with sound commercialprinciples and good business sense”. [44] It is clear that under Clause 19 and subsequent provisions of the Purchase and Sale Agreement, the term Closing Date refersto the actual date of possession.

For example, adjustment of the purchase price under Clause 23 and assumption of risk under Clause 43only make sense if the Closing Date referred to in those provisions is the actual date of possession. [45] It is equally clear that the term Closing Date as used in Clause 18 does not mean the actual date of possession. Thisinterpretation would result in absurdity.

Interpreting Closing Date in Clause 18 as the actual date of possession would mean that theBuyer would be acknowledging that the actual date of possession is “an estimated date only” and that the Seller would have “no liabilityor responsibility” if that “estimated” date were not met. Clause 18 only makes sense if Closing Date in that provision refers to thescheduled date for possession. [46] The reference at the conclusion of Clause 18 to the “designated” Closing Date is arguably ambiguous.

However, wheninterpreted in context it must refer to the scheduled date for possession which is “designated” in Clause 18 to be August 31, 2006. Thedesignated Closing Date cannot be the actual date of possession, as the termination of the agreement means that there will be no actualpossession. There is no reason for the Developer to give 10 days notice of a meaningless date. The

interpretation argued by the Plaintiffsis, if not absurd, at least not in accordance with good business sense. [47] Has the Developer established that it was “unable to substantially complete the Unit for occupancy within a reasonable time”after August 31, 2006, so that it was entitled “at its sole option” to return the Roberges’ deposits and terminate the Agreement?

[48] The Purchase and Sale Agreement gave the Developer two options in the event of delay. It could extend the estimatedpossession date under Clause 19 and have no liability for the delay under Clause 18. Or alternatively, it could terminate the Agreementunder Clause 18. [49] The Developer acknowledges that it was obliged to exercise its discretion in good faith and within the terms of theAgreement. It could not evade its obligation to proceed “with all due diligence” and to “use its best efforts to deliver possession” byAugust 31, 2006.

It could terminate only if it was actually “unable” to complete within a “reasonable time” after August 31, 2006.

Thetest as to whether the Developer’s discretion was properly exercised thus involves both subjective good faith and objectivereasonableness: Partec Lavalin Inc. v Meyer, 2001 ABCA 145. [50] As to the subjective element, I am satisfied that the Developer acted in good faith and complied with its obligation to proceedwith due diligence and to use its best efforts to complete construction, notwithstanding several issues that were raised in cross-examination and argument. [51] First, there were inaccuracies or misrepresentations in the Developer’s letters to the Roberges in describing the source ofconstruction delays.

The letters indicated that trades were not honouring their contracts, and that the Developer could not compel them todo so due to the overheated nature of the construction industry. In fact, the evidence was clear that few if any of the trades had enteredinto contracts with the Developer; they had simply given quotes for goods and services in 2005. These quotes were stated to be orunderstood to be guaranteed for a limited time only, typically 30 days.

Thus the trades had no legal obligation to honour those quoteswhen construction commenced in 2006. [52] While the letters did not accurately describe the situation, the evidence was that the practice employed by the Developer ofobtaining and relying on trade quotes, rather than contracts, was typical in the industry. Trade subcontractors would not bind themselvesto future prices so that developers were obliged to prepare budgets based on quotes, assuming that goods and services would be availablewhen needed and that prices would not increase by more than 10%.

In an ordinary market, this practice did not cause significantdifficulties. In 2006 the market was affected by a construction boom, and developers faced unforeseen price increases and difficulties ingetting work done. [53] Despite the inaccuracies in the letters, I am satisfied that the Developer followed the typical practice in the industry.

Itsdifficulty in obtaining trades and keeping to its budget in 2006 was not due to a lack of due diligence or best efforts, but due to factorsaffecting the industry as a whole. [54] The Developer’s witnesses were cross-examined regarding the differences between 2005 and 2006 quotes in relation to alarge number of trade subcontractors. The effects of the construction boom varied. In some cases, there was little effect: the work wasdone as anticipated. In many cases, prices increased.

In other cases, the work was done by different subcontractors because the originalsubcontractor was not available, or because the Developer had sought new quotes in an effort to obtain the best price. These detailscould have been important if the Developer claimed to be unable to complete because of a lack of available trades.

But the Developer didnot terminate the Purchase and Sale Agreement because of these difficulties; it terminated when project financing was withdrawn. [55] Under the terms of the MCAP financing, every time the Developer requested a draw on the loan, it was required to satisfy thelender that its approved budget was sufficient to complete the project. In June 2006, Mr. McDonald was of the view that rising costsmeant that the Developer would not be able to meet this requirement. That is why he prepared a revised construction budget.

He wascross-examined on the budget, and it was pointed out that the revised budget included increases not only in trade costs, but also in softcosts and anticipated profits. Mr. McDonald explained that the bank required that these elements be included in the budget for financingpurposes. There was no suggestion that Mr. McDonald was acting in bad faith or with a lack of skill or care when he prepared the revisedbudget. He was taking steps he was required to take by the terms of the financing. The result of those steps, unfortunately, was thatfinancing was withdrawn.

I am satisfied that the withdrawal of financing was not caused by any fault on the part of the Developer. [56] With the withdrawal of financing, the Developer concluded that it would be unable to complete construction within areasonable time after August 31, 2006. The Developer’s conclusion must be both subjectively honest and objectively justified. TheDeveloper must show that its inability to complete construction within a reasonable time was due to reasons beyond its control: Cull et alv Heritage Mills Development Ltd. et al (1974), (ON SC), 5 OR (2d) 102, 49 DLR (3d) 521 (Ont. H.C.J.). What

constitutes a reasonable period of time is not fixed. It is dependent upon the factual matrix within which a dispute arises, and a flexible approach must be taken in making such a determination: Laflamme c Prudential-Bache Commodities Canada Ltd. , 2000 SCC 26 at para 53 ; see also Kokesch v Kokesch , 2005 ABQB 611 at para 13 .

In relation to delay determinations, consideration must be had to the nature and character of the subject-matter, the normal or usual course of business, the circumstances of the delay, and the conduct of the parties: Kokesch , at para 13 . [ 57 ] The Defendant submits that the delay experienced here was unreasonable and caused by no fault of its own. The initial development was scheduled to be completed in two years with 62 units being constructed; in reality, the development took five years with only 28 units being completed.

The estimated closing time on the Roberges ’ Unit was approximately 4 1/2 months from the date of the Purchase and Sale Agreement; in fact construction of the Unit took approximately 16 months, an increase of over 350%. [ 58 ] The Developer argues that this is clearly an unreasonable delay when compared to other construction delays that have been considered by the courts, as summarized in the Chart below: Citation Facts

Summary Justein v 3900 Yonge Street Ltd (1983) , 29 RPR 80 (Ont. H.C.J.) . The plaintiff purchaser agreed to buy a new condominium unit from the developer on June 19, 1981. The closing date in the contract was not fixed, but provided that the purchaser was to be notified at least six months prior to closing. At a minimum, this date was to be 18 months after commencement of construction. Construction commenced March 30, 1981, making the earliest closing date September 30, 1982.

The plaintiff brought an application that the contract was uncertain and therefore void, for failing to define the maximum period of time from commencement of construction to the closing date. The court held that there were sufficient certainties in the agreement that the contract was valid. However, the vendor was obligated to specify the closing date within a reasonable time. Vendor indicated by letter on March 9, 1983 that closing date would be December 6, 1983. 14 months over was reasonable in the circumstances. Haqq v Steininger (c.o.b. Quality Homes Construction) , [1975] B.C.J. No. 703 (B.C. S.C.) .

A building contract was entered into on May 31, 1974 with a 4 week time frame. Delays occurred due to a lack of effort of the defendant builder. The four week deadline passed. The builder requested a further advance of funds for a lumber purchase. The plaintiff denied the request and terminated the contract in September 1974. Although no time for completion had been specified by the parties the “ law will imply completion within a reasonable time ” : at para 12. August 1, 1974 implied as reasonable completion date. Double estimated time was unreasonable: (2 months/8 wks.)

Faulkner vChallengeHomes Ltd,[1976] A.J. No.128 (A.B. Dist.Ct.). The plaintiff brought an action for specificperformance of an agreement for the saleand purchase of land, due to the defendant’sfailure to complete construction by thespecified date, or alternatively within areasonable period of time. The parties signedthe agreement on May 3, 1972 with an initialclosing date of August 1, 1972. Theyextended the closing to August 15, 1972.Despite the property being incomplete, theplaintiff moved into it on August 21, 1972.It was not completed until January 1974.

Even with no firm date ofpossession given,completion must be withina reasonable time. 18 months over wasunreasonable. Carter v Leahey(1994), (NS SC), 134NSR (2d) 93(N.S. S.C.). The plaintiff building contractor entered intoa contract with the defendants forconstruction of their home. The contractrequired the plaintiff to completeconstruction of the home within 90 days ofthe defendants’ obtaining a building permit.A building permit was obtained onSeptember 2, 1991, and excavation beganOctober 1, 1991. The contract wasterminated on March 5, 1992.

The home wasnot completed until October 1992 by anotherparty. “Termination took placeover five months aftercommencement ofconstruction. At that timethe contract wassubstantially incomplete... Ifind that there wasunreasonable delay to thepoint there was a breach ofcontract”: at para 35. 5 months over wasunreasonable. AfonsoConstructionLtd v Wang,[1996] AJ No1361 (A.B.Q.B.). The parties entered into an agreement onFebruary 9, 1990 with an initial closing dateof June 30, 1990. They agreed to anextension to September 30, 1990.

OnOctober 5, 1990, the owners wrote a letterindicating their intention to terminate theagreement if the work was not completedwithin two weeks. The work remainedincomplete and on October 26, 1990 theowners terminated the agreement.

The owners were entitled toterminate the contract as thedelay by the contractoramounted to repudiation.“...It was an impliedcondition that constructionwould be effected earlierthan the 8 ½ months thatpassed after February 9,1990": at para 31. 8 ½ months over wasunreasonable. [59] I note that at the time that the Developer decided to terminate the Purchase and Sale Agreement, it did not know that it wouldtake a year to complete the Unit, or several years to complete the project.

This is relevant as the Developer’s state of mind and itsconclusion that there would be unreasonable delay should, in my view, be considered in the context of the circumstances as they wereknown at the time of the decision. [60] The circumstances as known at the time of the decision to terminate included: ∙ The Purchase and Sale Agreement provided an estimated time for construction of approximately 4 ½ months. ∙ The market conditions at the time created uncertain construction schedules and increased prices due to demand for trades.

Thesemarket conditions had already caused delays and led to the loss of financing on the project. ∙ Arranging new financing can take time. The MCAP financing itself had taken between 4 and 6 months to arrange. Having had alender withdraw, and the unusual market conditions, could make it even more difficult to obtain new financing. In fact, the Developerdid not obtain new financing until June 2007, almost a year later. It was forced to obtain interim financing at a high interest rate to deal

with outstanding bills and to bring the buildings to lock-up stage. ∙ The Developer’s actions in seeking interim financing and stopping construction, other than measures needed to bring thebuildings to lock-up stage, indicates that it was anticipating a substantial delay. ∙ Even the Roberges’ actions at the time indicated that they anticipated a substantial period of delay. They did not continue tocommute from Pigeon Lake, or look for property to rent. They bought another home and renovated it.

Of course, this was in the contextof a rapidly rising market; they wanted to purchase while they could still afford to and assumed there would not be a difficulty in sellinglater.

Still, the decision to buy and renovate suggests that they anticipated a substantial delay. [61] I conclude based on the circumstances of this case, and the case law referred to above, that both the actual and anticipateddelays were such that the Developer reasonably concluded that it would be unable to substantially complete the Unit within a reasonabletime after August 31, 2006. [62] The Roberges raise another issue as to whether the Developer was “unable” to complete construction.

They argue thatinability due to financial considerations does not justify termination under Clause 18. [63] I begin by repeating that the withdrawal of financing was not due to any fault on the part of the Developer. The unavailabilityof financing was due to reasons beyond their control. Further, there is no doubt on the evidence that, as a matter of fact, constructioncould not be completed without new financing. The equity in the project was not sufficient to cover construction costs. The Developerwas a company formed for the Shannara Court project and was without other resources.

The evidence is that construction could notproceed to the point of substantial completion utilizing high interest interim financing. It would not have been an answer to use interimfinancing for the Unit, or the building in which the Unit was located, and await construction on other parts of the project. While thePurchase and Sale Agreement speaks to completion of the “Unit”, the Roberges were not purchasing only their Unit, but an undividedshare in the condominium project.

The project had to proceed as a whole. [64] However, the Roberges’ argument is not based on whether or not new financing was necessary as a matter of fact, butwhether inability to complete due to financial considerations is a ground for termination under Clause 18. The Roberges characterizeClause 18 of the Purchase and Sale Agreement as a force majeure clause.

They argue that a force majeure clause may be resorted to onlywhere an unforeseen event beyond the control of a party makes performance of that party’s obligation impossible, and that it cannotprovide relief where a change in financial circumstances affects the profitability of a contract. The Developer responds that Clause 18 isnot a force majeure clause but a valid termination provision in which the contracting parties bargained to allocate the ordinary businessrisk of delay. [65] H.G. Beale, ed, Chitty on Contracts, 29th ed., Vol.

I, General Principles (London, UK: Sweet & Maxwell, 2004) ¶ 14.137describes force majeure clauses as follows: . . .a contractual term by which one (or both) of the parties is excused from performance of the contract, in whole or in part, or is entitledto suspend performance or to claim an extension of time for performance, upon the happening of a specified event or events beyond hiscontrol. [66] The Supreme Court of Canada described the operation of force majeure clauses in Atlantic Paper Stock Ltd. v St. Anne-Nackawic Pulp & Paper Co.

Ltd., (SCC), [1976] 1 SCR 580 at p 583: “An Act of God clause or force majeure clause.. . generally operates to discharge a contracting party when a supervening, sometimes supernatural, event, beyond control of either party,makes performance impossible”. The Court went on to say that “the common thread is that of the unexpected, something beyondreasonable human foresight and skill”: Atlantic Paper, at p 583.

Force majeure clauses do not apply to normal business risks or toreallocate bargained for contractual risks: Wal-Mart Canada Corp. v Gerard Developments Ltd., 2010 ABCA 149. [67] In a typical force majeure clause, a number of circumstances excusing performance are specified and then followed by thewords “or any other causes beyond our control”: Chitty on Contracts, at ¶ 14.138. Typical specified events include:

an Act of God, storm

tempest or flood, fire, perils and dangers or accidents of the sea, war, warlike operations, civil war, riot, civil commotion, strikes, acts ofthe Queen’s enemies, etc.: Chitty on Contracts, at ¶ 14.146. [68] Courts have held that force majeure clauses may not be resorted to where circumstances affect the profitability of a contractor the ease with which a party’s obligations can be performed. [69] An example is found in Domtar Inc. v Univar Canada Ltd., 2011 BCSC 1776.

The force majeure clause is set out at para 9: The term “force majeure” means any contingency beyond the reasonable control of Supplier or Customer (for example, war or hostilities,Acts of God, accident, fire, explosion, public protest, breakage of equipment, governmental actions or legislation, or labour difficulties)which interferes with Supplier’s or Customer’s production, supply, transportation or consumption practices. [70] The Defendant sought to rely on this clause when market changes made it more expensive to supply caustic soda at thecontract price. The Court held that the clause did not apply.

Performance was not impossible and the fact that the contract became moreexpensive to perform was not a ground for relief under the force majeure clause. [71] In Re: Tom Jones & Sons Ltd and the Queen in right of Ontario (1981), (ON SC), 31 OR (2d) 649 atpara 13, 119 DLR (3d) 684 (Ont.

H.C.J.) the force majeure clause commenced as follows: If by reason of strikes, lockouts, governmental restriction, acts of God, non-availability of labour or materials, unavoidable casualty, civilcommotion, war, fire, hindering subsurface condition existing on the site, extreme weather conditions . . . or, any other cause beyond thecontrol . . . [72] After having contracted to construct a building and lease it to the government, the defendant informed the government that itcould not arrange financing. This failed financing was due to the volatility of interest rates in the market at the time.

The Defendant couldnot get financing at a rate which would make the project an economically advantageous one to it upon the terms of its accepted bid. TheCourt held that the force majeure clause did not apply.

While the rise in interest rates was a matter beyond the defendant’s control, thefailure to obtain financing was not the result of a cause beyond their control. [73] In Tandrin Aviation Holdings Ltd. v Aero Toy Store LLC, [2010] EWHC 40 (Comm), the defendant claimed it was unableto accept delivery of an executive jet aircraft that was the subject of the contract because of the “unanticipated, unforeseeable andcataclysmic downward spiral of the world’s financial markets”.

The Court disagreed, observing that “it is well established under Englishlaw that a change in economic/market circumstances, affecting the profitability of a contract or the ease with which the parties’obligations can be performed, is not regarded as being a force majeure event” (para. 40). This followed from proper construction of thewording of the clause in issue, as “force majeure is not a term of art” (para 43). In interpreting the clause, the court noted at para 44: The phrase “any other clause beyond the Seller’s reasonable control” should be read in the context of the entire clause.

The specificinstances of force majeure in the preceding words are as follows: “act of God or the public enemy; war; insurrection or riots; fires;governmental actions; strikes or labour disputes; inability to obtain the aircraft materials, accessories, equipment or parts from thevendors”.

Whilst there is no requirement to construe the phrase “any other cause beyond the Seller’s reasonable control: ejusdem generiswith those earlier specific examples, it is telling that there is nothing in any of those specific examples of force majeure in cl.7.17 whichis even remotely connected with economic downturn, market circumstances or the financing of the deal. [74] In the contract at issue before me, the wording of Clause 18 is markedly different from the force majeure clauses consideredabove.

The only similarity is that it is dealing with an inability to complete construction by a designated date that is not caused by a lackof diligence on the part of the Developer. [75] The major difference between Clause 18 and a force majeure clause is that Clause 18 does not concern unanticipated orunforeseen events, but rather the risk of construction delays. This is a known and expected risk in the context of condominiumconstruction, as commented on by the Ontario Court of Appeal in Schneeberg v Talon International Development Inc., 2011 ONCA687, at para 52:

There is no dispute over the fact that purchases and sales of condominiums are commercial transactions within an industry plagued bydelays. These delays are caused by the market, as the sale of units in a new development dictates the availability of financing, by thevagaries in the construction process, and by the complexities associated with the registration process. Delays in the closing ofcondominium units are expected.

They are part of the business of developing condominium projects and, it follows, part of purchasing anewly-constructed unit. [76] In Clause 18, the Roberges and the Developer specifically anticipated the risk of construction delay. [77] Clause 18 also lacks the typical list of circumstances excusing performance, such as acts of God, weather, accidents andunrest.

There is nothing in the language of Clause 18 that suggests it would not extend to construction delays due to financial difficulties,if those difficulties were significant enough that the Developer was unable to complete construction within a reasonable time after thedesignated Closing Date. [78] Apart from a force majeure clause, it is open to contracting parties to provide for termination of a contract and discharge ofcontractual obligations by one party in certain circumstances.

Whether the unilateral cancellation of a contract under such a provision isjustified depends on a proper reading of the provision and proper exercise of the power arising under it: Marathon Canada Ltd. v EnronCanada Corp., 2009 ABCA 31, leave to appeal to SCC refused, [2009] SCCA No. 93. “This right of termination may be exercisableupon a breach of contract by the other party or upon the occurrence or non-occurrence of a specified event other than breach, or simplyat the will of the party upon whom the right is conferred”: Chitty on Contracts, at ¶ 22.047.

Such termination provisions are valid clausesused by contracting parties to allocate ordinary business risks. [79] Clause 18 of the Purchase and Sale Agreement placed the risk of significant construction delay on the Roberges. Had theDeveloper elected to continue with the contract, the Roberges would remain bound under the Agreement and would not have beenentitled to damages for even substantial delay. This would have been the case even in a falling market. As the Developer elected to returnthe deposits, the Agreement is terminated and, again, the Roberges are not entitled to damages, even in a rising market.

The Developer’sobligations were to use due diligence and best efforts to proceed with construction, and to exercise its power to terminate in good faithbased on a reasonable conclusion that it would be unable to complete within a reasonable time. The Developer complied with theseobligations. While the clause may seem to favour the Developer, this reflects the commercial reality of an industry in which constructiondelays are expected and unavoidable, and pose significant risks to developers. [80] I conclude that the Developer properly terminated the Purchase and Sale Agreement.

Remedy [81] As I have found that the Purchase and Sale Agreement was properly terminated by the Developer, the Roberges are notentitled to a remedy. However, I will provide findings relevant to their requested remedy of specific performance. When is specific performance an appropriate remedy? [82] Historically under the common law, every piece of real estate was considered to be “unique” such that there was no readilyavailable substitute for the property and damages were an inadequate remedy.

Specific performance was therefore awarded as a matter ofcourse for the innocent purchaser of a breached agreement for the sale and purchase of land. This approach was fundamentally altered inSemelhago v Paramadevan, (SCC), [1996] 2 SCR 415, 136 DLR (4th) 1. [83] Specific performance should “not be granted as a matter of course absent evidence that the property is unique to the extentthat its substitute would not be readily available”: Semelhago, at para 22.

Purchasers seeking to specifically enforce contracts for the saleand purchase of land, bear the onus of establishing that damages would be an inadequate remedy and that the property is unique:1244034 Alberta Ltd. v Walton International Group Inc., 2007 ABCA 372 at para 5; Neher v Marathon Homes Inc., 2011 ABQB 92at para 60.

[ 84 ] Uniqueness does not refer to a one of a kind property, but to a property with “ qualities that make it especially suitable for the proposed use that could not be reasonably replicated elsewhere and distinctive features that make an award of damages inadequate ” : 1534818 Alberta Ltd v Tissot Management Ltd , 2011 ABQB 75 at para 95 . In the determination of uniqueness, there are both subjective and objective considerations.

The plaintiff must not only demonstrate that they subjectively believed this property to be especially suited to their needs, but also that a reasonable person would objectively arrive at the same determination: Tissot , at para 73. While the appropriate point to evaluate the subjective uniqueness is at the time of contracting, the determination of whether a substitute property is readily available is at the time of the breach: Tissot , at para 75. [ 85 ] I am satisfied that the Roberges met their burden of establishing the uniqueness to them of the Shannara Court development.

At the time of contracting, the Roberge family was seeking a second residence located at a mid-point between their home in Pigeon Lake and their employment in Edmonton. They also sought a property that was convenient for their son ’ s school and extracurricular activities. A condominium development met their needs in a way that a detached home could not. It would be low maintenance and provide security during their absences. The evidence was that other condominium developments in Leduc had age restrictions, while Shannara Court did not.

This made the development uniquely suited to the Roberges ’ needs. [ 86 ] The issue of whether the Unit itself was unique is more problematic. The Developer argued that the Purchase and Sale Agreement was for a pre-construction home, and therefore the appropriate substitute would be for another pre-construction home and not a completed unit. Thus, according to the Defendant, at the time of breach there were plenty of substitute properties available in Shannara Court itself. [ 87 ] The Roberges did not in August 2006 or later, pursue the possibility of purchasing another unit in Shannara Court.

There was no specific evidence as to other units on the market at that time, but I do infer that there were likely comparable units available. There were 28 units in the project as it proceeded. Fourteen contracts were cancelled when the MCAP financing was pulled. Eleven of the original purchasers agreed to purchase on the new terms, but that still left a majority of the units available for purchase. The Unit selected by the Roberges was not unique within the project; there were other bungalows of similar size.

The appraiser who gave evidence for the Roberges, referred to sales of three other bungalows in Shannara Court as comparable properties used in determining the value of the Unit. I infer that, had the Roberges made inquiries, there would have been substitute properties in Shannara Court available at the relevant time. [ 88 ] It was argued that, at the time of breach in August 2006, there were no substitute properties readily available in Shannara Court, as the project was on hold. The Developer had cancelled all purchase and sale agreements, and it was uncertain when the project would continue.

The difficulty with this argument is that the availability of other units in Shannara Court was precisely the same as the availability of the Unit that was the subject of the Roberges ’ Purchase and Sale Agreement. The evidence is that units in Shannara Court were available for sale. When financing was obtained the project would be completed, including the Unit and other comparable units, albeit after a substantial delay. This was all the Roberges would have been entitled to under the Purchase and Sale Agreement.

There was no guarantee that the Unit would be completed by August 31, 2006, and Clause 18 provided that the Developer had “ no liability or responsibility if such estimated Closing Date is not reached, even by a substantial degree ” . [ 89 ] Why did the Roberges not buy another unit in Shannara Court? Mrs. Roberge said that it was because of the increased price. But the issue of whether there was a substitute property is an issue of availability, not price.

The Roberges could have obtained a substitute unit and then sued for the difference in price. [ 90 ] Is it reasonable to require a party to deal with a party who is alleged to have breached a contract when seeking a substitute property? Neither party has provided me with case law on this point in relation to the availability of substitute property.

However, an analogy may be drawn to cases involving the duty to mitigate, where the issue has been considered. [ 91 ] In the recent decision of Southcott Estates Inc. v Toronto Catholic District School Board , 2012 SCC 51 , the Supreme Court of Canada reviewed the law related to a plaintiff ’ s duty to mitigate where specific performance has been claimed. The Court began by stating the general rule of mitigation of damages, that a plaintiff is not able to recover for those losses which he could have avoided by taking reasonable steps: Southcott , at para 24.

The burden of proof lies with the defendant to show that the plaintiff failed to mitigate, and that mitigation was possible: Southcott , at para 24. The duty to mitigate generally requires some form of action on the part of the plaintiff.

[92] The duty to mitigate is difficult to reconcile with a claim for specific performance. In relation to real property, a claim forspecific performance is advanced by the plaintiff in the hopes of obtaining a specific, “unique”, piece of property. The plaintiff istherefore unlikely to mitigate damages by obtaining a replacement property. Moreover, if a replacement property is purchased, this factmay draw a negative inference against the plaintiff’s claim for specific performance.

Therefore, where specific performance is claimed, aplaintiff is not likely to engage in mitigating action, which is inconsistent with the general duty to mitigate. Stemming from this, thefollowing issue emerges: “When can a plaintiff seeking specific performance justify inaction and recover losses which may otherwisehave been classified as avoidable?”: Southcott, at para 31. [93] Relying on the decision of Asamera Oil Corp. v Seal Oil & General Corp., (SCC), [1979] 1 SCR 633, at pp668-69, the Court addressed the issue as follows: [35] . . .

Before a plaintiff can rely on a claim to specific performance so as to insulate himself from the consequences of failing toprocure an alternate property in mitigation of his losses, some fair, real and substantial justification for his claim to performance must befound. . .

Where ... circumstances reveal a substantial and legitimate interest in seeking [specific] performance as opposed to damages,then a plaintiff will be able to justify his inaction and on failing in his plea for specific performance might then [be able to] recoverlosses which in other circumstances might be classified as avoidable and thus unrecoverable. [36] This Court thus recognized that there may be situations in which a plaintiff’s inaction is justifiable notwithstanding its failure toobtain an order for specific performance where circumstances reveal “some fair, real, and substantial justification” for his claim or “asubstantial and legitimate interest” in seeking specific performance. (Asamera, at pp. 668-69 (emphasis added)) This does not mean thata plaintiff with such a claim should not attempt to mitigate; rather it recognizes that such a claim for specific performance informs whatis reasonable behaviour for the plaintiff in mitigation.

See N. Siebrasse, “Damages in Lieu of Specific Performance: Semelhago v.Paramadevan” (1997), 76 Can. Bar Rev. 551. [37] Asamera set out the general principles governing mitigation: was the plaintiff’s inaction reasonable in the circumstances, andcould the plaintiff have mitigated if it chose to do so. Those principles apply to a plaintiff seeking specific performance.

If the plaintiffhas a “substantial justification” or a “substantial and legitimate interest” in specific performance, its refusal to purchase other propertymay be reasonable, depending upon the circumstances of the case. [38] The statements in Asamera dealing with specific performance and the determination of what is reasonable conduct must be readin light of Semelhago v. Paramadevan, (SCC), [1996] 2 S.C.R. 415.

In that case, the court acknowledged that “[w]hileat one time the common law regarded every piece of real estate to be unique, with the progress of modern real estate development this isno longer the case” (para. 20). The court thus found that it “cannot be assumed that damages for breach of contract for the purchase andsale of real estate will be an inadequate remedy in all cases” (para. 21).

Specific performance will be available only where money cannotcompensate fully for the loss, because of some “peculiar and special value” of the land to the plaintiff” (para. 21, citing Adderley v.Dixon (1824), 1 Sim. & St. 607, 57 E.R. 239, at p. 240. [94] The test can be summarized as one of reasonableness. The fact that specific performance is sought is but one factor toconsider in determining what would be reasonable behaviour for the plaintiff in mitigating in the circumstances: Southcott, at para 36.The analysis framed by the Supreme Court is as follows:

(1) Was the plaintiffs’ inaction reasonable in the circumstances, considering their claim for specific performance; and

(2) Could the plaintiffs have mitigated if they chose to do so. [95] Regarding the second questions, I have already indicated that I am satisfied, based on the evidence, that the Roberges couldhave purchased a comparable unit in Shannara Court if they chose to do so. [96] In considering the first question, I return to the issue of whether the Roberges’ inaction was reasonable given that, in order topurchase a unit in Shannara Court, they would have had to deal with the Developer, whom they considered to be in breach of thePurchase and Sale Agreement. Does this make their inaction reasonable?

[97] This issue has been addressed in the context of assessing mitigation in relation to contracts for sale, and employmentcontracts. The courts have distinguished between the former as commercial contracts, and the latter as contracts of personal service.

This distinction was summarized in McGregor on Damages, 18th ed., (London: Sweet & Maxwell, 2009), ¶ 7-053 at 264: In certain cases of personal service it may be unreasonable to expect a plaintiff to consider an offer from the other party who has grosslyinjured him; but in commercial contracts it is generally reasonable to accept an offer from the party in default. [98] The relationship between the parties and whether through some action of the defendant it has become more difficult for theplaintiff to mitigate, will also be considered in determining whether the plaintiff has failed to adequately mitigate: Pathak v JannockSteel Fabricating Co. (1996), (AB KB), 186 AR 277 at paras 39-46, 8 WWR 355, (Q.B.), rev’g on other grounds1999 ABCA 8; 2438667 Manitoba Ltd. v Husky Oil Ltd., 2007 MBCA 77 at paras 55-56, cited with approval in Globex ForeignExchange Corporation v Kelcher, 2011 ABCA 240 at para 55.

In mitigating, a plaintiff is not required to accept an offer from thedefaulting party that would result in abandoning rights against the defendant: Waddams S.M., The Law of Damages, looseleaf ed.,(Toronto: Thomson Reuters, 2011), ¶ 15.210 at 15-11-12. [99] In my view, the Purchase and Sale Agreement is a commercial contract, lacking the personal aspects of a contract of personalservice.

There was nothing in the evidence suggesting that any action of the Developer would have made it difficult for the Roberges topurchase another unit in Shannara Court, or even to purchase the Unit itself and maintain their right to seek damages for the difference inprice. [100] The Roberges should have dealt with the Developer. The fact that there were substitute properties available in ShannaraCourt undermines the legitimacy of their claim to specific performance.

In order to justify inaction, a plaintiff must have a “substantialjustification” or a “substantial and legitimate interest” in specific performance: Southcott, at para 37. The modern reality is that“[r]esidential, business and industrial properties are all mass produced much in the same way as other consumer products”: Semelhago,at para 20. This is certainly the case when it comes to multiple units within the same condominium development. The Roberges hadopportunities to obtain a substitute property and to mitigate their damages which they did not pursue.

Their inaction was not reasonablebehaviour in the circumstances. [101] Thus, had I found that the Purchase and Sale Agreement was not properly terminated, I would have found that the Robergeswere not entitled to specific performance and that their damages were properly the difference between the price of the Unit under thePurchase and Sale Agreement ($211,000 plus GST) and the price for which they could have obtained either the Unit or a substitute unit,which I infer would have been the list price for a comparable unit ($290,000 plus GST).

Hardship to third parties [102] Alternatively, I would also have declined to order specific performance on the equitable ground of hardship to third parties.

According to Di Castri, Law of Vendor and Purchaser, 3rd ed., Vol. 2, looseleaf ed., (Toronto: Carswell, 2010) at §789: While the hardships of third persons, entirely unconnected with the property, are generally immaterial, the court, in the exercise of itsdiscretion, may take into account third persons so connected with the defendant that he owes them a legal or moral duty. [103] The courts have found that hardship to a subsequent purchaser who has spent money on improving the land may be groundsfor refusing specific performance to the original contracting party: Mitz v Wiseman, (ON SC), [1972] 1 OR 189 at para14, 22 DLR (3d) 513 (Ont.

H.C.J.); see also Babcock v Carr (1981), (ON SC), 34 OR (2d) 65 at para 28, 127 DLR(3d) 77 (Ont. H.C.J.). In both cases, the fact that improvements had been made subsequent to the writs issued did not prevent this finding.

[ 104 ] The Wrights dedicated a considerable amount of money, time and effort to making improvements to the Unit. In addition to the multiple upgrades they installed in the Unit, they reconfigured the entire layout by changing it from a three bedroom to a two bedroom home and completing the basement. If the Plaintiffs were to obtain specific performance as relief, they would receive a unit fundamentally different than what they contracted for and a significant windfall at the expense of the innocent Wrights.

Counterclaim [ 105 ] The Developer counterclaimed for removal of the Roberges ’ caveat and for damages for wrongful filing of the caveat resulting in loss of use of the $275,000 purchase funds for approximately five years. The Developer argued that it should receive prejudgment interest on $275,000 from September 1, 2007. The Judgment Interest Act , R.S.A. c. J-1, s. 2 does not apply to this damages claim, as the Developer was not entitled to judgment against the Roberges for the payment of $275,000.

The Developer did not provide any evidence of its actual loss arising from loss of use of the purchase funds, nor of its efforts to mitigate any loss by, for example, charging rent for the Unit. Conclusion [ 106 ] The Plaintiffs ’ claim is dismissed in its entirety. The Defendant ’ s counterclaim for removal of the caveat is allowed; the counterclaim for damages is dismissed for lack of proof. The parties may speak to me regarding costs if they are unable to agree. Heard on the 18 th to the 22 nd days of June, 2012 inclusive, and on the 9 th day of August, 2012.

Dated at the City of Edmonton, Alberta this 20 th day of November, 2012. J.M. Ross J.C.Q.B.A. Appearances: Mr. Roger C. Stephens Simons & Stephens for the Plaintiffs Mr. Todd A. Shipley Reynolds, Mirth, Richards & Farmer LLP for the Defendant