KPA Lawyers – March 19, 2020

Specific Performance is a discretionary, equitable remedy defined as “an order by the court to a party to perform its contractual obligations…”

Pro Swing Inc. v. ELTE Golf Inc., 2006 SCC 52 (CanLII) 2 SCR 612, at para. 23.

With respect to real estate and land, there was a time when specific performance would be granted as a matter of course[1]; however, the Superior Court of Canada changed their tune in 1996 when Justice Sopinka re-clarified the appropriateness of specific performance as a remedy. In particular, he said that “specific performance should… not be granted as a matter of course absent evidence that the property is unique to the extent that its substitute would not be readily available.”[2]

The Court reiterated that the general principle for the assessment of damages is compensatory meaning the innocent party is to be placed in the same position as if the contract had been performed.[3] In most instances, money is often sufficient to compensate the Applicant. Accordingly, the onus is on the innocent party to prove that specific performance is the appropriate remedy.

Whether specific performance should be granted is based on the facts of an individual case. The Ontario Court of Appeal identified three factors to be considered when exercising its discretion:[4]

1. What is the nature of the property involved?
2. Are damages an adequate remedy? and
3. What is the behaviour of the parties?

If the nature of the property is unique, it will become more difficult to justify awarding damages, which would be put towards a substitute property, because there would arguably be none.[5]

As outlined in John E Dodge Holdings Ltd. v. 805062 Ontario Ltd., 2001 CanLII 280, at paras. 59 and 60, the Court will examine the uniqueness of a residential property both objectively and subjectively. “Uniqueness means that the property has a quality (or qualities) that makes it especially suitable for the proposed use that cannot be reasonably duplicated elsewhere,” which requires the Court to view the property through the perspective of the Applicant at the time of entering into the Agreement. This is more pertinent to residential properties as opposed to commercial or investment properties. In Sivasubramaniam v. Mohammad, 2018 ONSC 3073 at paras. 79, Justice R.E. Charney, quoting Justice Pepall, explained the reason for this being:

“The purchase of a home is one of, if not the most significant acquisition made in one’s lifetime. Not surprisingly, subjective factors feature prominently in the purchase of a home.”

The analysis of whether damages would be an adequate remedy is in most regards, a factual inquiry where the court will assess the availability of similar lands, building(s), zoning by-laws, services and nearby amenities. As stated in United Golf Developments Ltd. V. Iskandar, 2004 NSCA 35, at para. 19, “the essential question is whether damages are capable of compensating the loss and whether accurate assessment of the damages will be possible, or whether the exercise will be chiefly speculative and conjectural.”

As part of the consideration in assessing whether damages will be sufficient is the real estate market and how volatile it is. If the market is unpredictable or extremely competitive, it could make determining the appropriate quantum of damages difficult. As mentioned above, not being able to accurately quantify damages is important because it is intended to compensate for the loss resulting from the breach. The loss is the property and if finding another property is inherently difficult, damages may not be appropriate. While a difficult real estate market makes quantifying damages difficult, it also supports the assessment of a property’s uniqueness.[6]

As specific performance is an equitable remedy, both parties will serve their interests better by coming to court with “clean hands”; meaning they attempt to resolve the problem in good faith without hostility or underhanded tactics. For instance, should the breaching party have ulterior motives for breaching the Agreement, that reason might indicate bad faith and could sway the court in favour of awarding specific performance because an award of damages might not be enough to serve justice.

While the remedy is one sought mostly by Purchasers, it is not uncommon for Vendor’s to make a claim for it. There is a lot of information available on specific performance, but each situation is unique. If you are trying to buy or sell your home and the other party in your transaction is renouncing their contractual obligations, set up a consultation to find out whether bringing an Application for Specific Performance would be the right route for you.

Please note that the above information is meant to be information and does not constitute legal advice. Every situation is different and the case law changes. f you need advice about your specific circumstances, please contact our offices via telephone.

 [1] Roy v. Kloepfer Wholesale Hardware & Automotive Co., 1952 CarswellOnt 116, at para. 7.                   [2] Semelhago v. Paramadevan, 1996 CanLII 209, [1996] 2 SCR 415, at para. 22.                                         [3] Ibid, at para. 4.                                                                                                                                                         [4] Landmark of Thornhill Ltd. v. Jacobson, 1995 CanLII 1004                                                                          [5] Matthew Brady Self Storage Corp. v. InStorage Limited Partnership, 2014 ONCA 858 (Ont. C.A.), at para. 36.                                                                                                                                                                         [6] Justice R.E. Charney referencing himself in 1954294 Ontario Ltd. V. Gracegreen Reqal Estate Development Ltd., 2017 ONSC 6369, at para. 51, Sivasubramaniam v. Mohammad, 2018 ONSC 3073 at paras. 80.