Specific Performance Ordered for Commercial Transaction (Ontario)

By
Commercial Real Estate Agent with RE/MAX West Realty Inc., Brokerage (Toronto)

Specific Performance Ordered for Commercial Transaction

 

The Ontario Court of Appeal recently looked at a case involving Specific Performance in a real estate transaction for commercial property in THMR Development Inc. v. 1440254 Ontario Ltd., 28 November  2018.

 

The purchaser, THMR Development Inc. wished to acquire certain property in Port Perry, Ontario owned by 1440254 Ontario Ltd. It was a commercial property. When the transaction didn’t close, the purchaser wanted to obtain an Order for Specific Performance, that is, not money, but the property itself.

 

Here’s what the Court of Appeal stated:

 

(2) Was specific performance appropriate?

 

[18] The application judge stated: “I would not have ordered specific performance of the agreement as I find that, on the basis of the evidence, the applicant has not met its burden of establishing that the factors which are set out in the jurisprudence referred to by the applicant have been satisfied.”

 

She concluded that “the value of that property to the applicant was for investment purposes,” so that damages would be an appropriate remedy.

 

She referred to 801 Assets Inc. v. 605446 Ontario Ltd., 2016 ONSC 2772, 71 R.P.R. (5th) 260 and Campbell Pools Inc. v.Seville Group Inc., 2015 ONSC 2314, 44 B.L.R. (5th) 312.

 

The application judge’s obiter analysis is limited to the few words that we have quoted. She did not address the evidence or the law in any detail. Her reasons are inadequate for appellate review within the meaning of R. v. Sheppard, 2002 SCC 26, [2002] 1 S.C.R. 869.

 

[19] The appellant submits that the application judge misconstrued the law relating to specific performance, and points out that in both 801 Assets Inc. and Campbell Pools Inc. specific performance was granted in commercial circumstances.

 

[20] The evidence in this case established that there were no suitable alternative commercial properties available in the Port Perry area.

 

This is significant to the appellant because its other properties, employees, staff and contractor are located in the town.

 

This is why, because of its unique attributes, the appellant has been trying to purchase the property since 2015.

 

[21] This court is in as good a position as the application judge to deal with the issue of remedy because this case was argued on a paper basis without the involvement of live witnesses.

 

In our view, the appellant has demonstrated the legal prerequisites for an order for specific performance and we would so order, subject to the following paragraph.

 

COMMENT

 

Let’s look at the reasons provided by the Court:

1)    no suitable alternative commercial properties available in the Port Perry area.

 

2)    This is significant to the purchaser because its

 

A)  other properties,

B)   employees,

C)   staff, and

D)  contractor

are located in the town.

 

3)    This is why, because of its unique attributes, the appellant has been trying to purchase the property since 2015.

Relatively speaking, Port Perry is a small area. These same guiding principles may not meet the threshold in the GTA.

Also, the purchase was struck in May 2017. It went to Motions Court, followed by the Appeal in the Ontario Court of Appeal on 28 November 2018. The relevant period of time could have been 16 months to about 29 months for the purchaser to have been looking.

For Specific Performance to be available at all, the purchaser must establish that the property was unique. This is much easier to do when we are looking at residential properties. Many cases have given the impression that the remedy is not available in commercial transactions, but, this is a good example of an exception.

Brian Madigan LL. B., Broker

www.iSourceRealEstate.com

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