Purchaser Must Pay Damages for Repudiation of Contract
The Ontario Court of Appeal dealt with the repudiation of a contract arising out of a boundary issue by a Purchaser in LeMesurier v. Andrus, 1986.
The purchasers (Andrus) submitted an Offer for 9 Dinnick Crescent described as:
"having a frontage of 50 feet more or less by a depth of 150 feet more or less and described as 9 Dinnick Crescent, being a three storey detached dwelling with private drive to the West of the property".
The Boundary Issue involving the Driveway
I have set out the description from the Court below with my annotations which appear in italics.
Mr. Justice Grange on behalf of the Court stated:
The property was on the south side of the street and there was indeed a private drive to the west extending from the street past the west wall of the house to the south, a total distance of 88.54 ft.
The driveway was paved and bounded on each side by a cement curb.
Immediately to the west of the westerly curb was a wooden fence which extended the full depth of the property.
The property had been conveyed to the vendors as "the whole of Lot 70 Plan 1485" which was indeed 50 ft. fronting on Dinnick Cres. by a depth of 150 ft. to the south.
Note: this was the legal title description
The difficulty was that when a survey was obtained by the purchaser it disclosed that the fence to the west was uniformly west of the lot limit
although at no point as much as one foot,
generally between one-third and three-quarters of a foot.
The west face of the west curb of the driveway was also west of the lot limit but obviously by an even shorter distance.
The solicitors for the purchaser by letter of requisition required a conveyance by the owners of the land to the west of the necessary property to give title to all land to the fence including of course the strip of land under that part of the curb which encroached.
Note: here the purchaser is looking not only for the 50 ft x 150 ft lot, but also for that extra strip of land to the west on the neighbours’ property
There was considerable correspondence relating to the validity of the requisition but eventually the vendors were able to obtain a quitclaim for the strip of land under the northerly 47.54 ft. of the westerly curb.
It appears that that portion of the curb had been in place for more than 10 years and the quitclaim was readily forthcoming.
The remaining and southerly 41 ft. had not been in place so long and a quitclaim could not be obtained.
The vendors offered to relocate the rear portion of the curb to remove the portion of it which encroached upon Lot 69 but this was not acceptable to the solicitors for the purchaser.
Note: the purchasers wanted the extra land which they had seen
Nevertheless, prior to closing the vendors removed and replaced the west curb for that portion with a curb which was slightly to the east and two inches narrower so that it was all within the borders of the lot.
Before the removal, the curb had encroached upon the adjoining Lot 69, .25 ft. at the north end and .34 ft. at the south end for a total area of 12.09 sq. ft. so that after the removal, while there was no longer any curb encroachment, there remained an area 12.09 sq. ft. between the curb and the fence which was not part of the paper title of the vendors and could not be conveyed.
Note: the purchaser wanted this now missing 12.09 sf
I think it is important to note the following:
(a) The new curb commenced at the south end of the most westerly extension of the house. It did not therefore reduce the width of the driveway from the narrowest point (7.91 ft.) where it passed the chimney.
(b) The reduction in the actual paved portion of the driveway was minimal, being no more than two inches at any point.
In any event, the efforts of the vendors did not satisfy the purchaser who as I have said repudiated the contract for failure of title.
Vendors’ Argument on Title
Mr. Morphy for the vendors argued that there was indeed no failure of title.
- The purchaser bargained for "50 feet x 150 feet" and "9 Dinnick Crescent, being a three storey detached dwelling with private drive to the West of the property" all of which she obtained.
- Indeed, she received slightly more, namely, that portion of the curb at the north end, quitclaimed by the owner to the west.
- He further contended that if the purchaser assumed that the strip of land under the curb throughout its length was part of the contract she did so upon some subjective basis of her own.
There was no such holding out by the vendors and no statement from the purchaser of her understanding. That being so, no extrinsic evidence to vary the contract was admissible.
What You See is What You Get
I cannot accede to the Vendors’ argument. A reasonable person entering into the contract would assume that the purchase of "9 Dinnick Crescent ... with private drive to the West" would include everything which to the eye appeared part of the driveway, and the curbs clearly were part thereof.
I would find that the contract included:
- the driveway with its curbs,
- the whole being 50 ft. more or less by 150 ft. more or less.
- the property was slightly more than 50 ft. in frontage by a depth of 150 ft.
- the shortfall was 12.09 sq. ft. in more than 7,500 sq. ft. or
a discrepancy of .16% of the total property.
The Court of Appeal effectively said:
If it looks like part of the property, then, it is included, so the curbs on the neighbours’ side are included
Issue on Appeal (Damages and Specific Performance)
Mr. Justice Grange on behalf of the Court stated:
And that brings me to what I conceive to be the real question. Is the defect sufficient to enable the purchaser to repudiate?
I will examine the problem first from the viewpoint of the vendors' entitlement to the equitable remedy of specific performance.
On any objective test the deficiency is very minor indeed.
The materiality cannot be determined on a subjective basis; otherwise no purchaser could ever be subject to specific performance and the test in Rutherford v. Acton- Adams, supra, would be meaningless.
The only reason specifically stated by the purchaser was rejected by the trial judge.
It follows that on an objective test the loss is not substantial; that the purchaser would obtain substantially what she contracted for and would have had to submit to specific performance with an abatement.
Assuming that the purchaser could have been forced to submit to specific performance with an abatement, what is the effect of sale of the property pendente lite by the vendors?
I think we should first appreciate the motive for the sale. It was an effort to minimize their loss, to mitigate their damage. The real estate market was falling drastically and had been so falling since the contract was entered into. This mitigation I think was their duty.
On principle it is clear that a plaintiff may not merely by instituting proceedings in which a request is made for specific performance and/or damages, thereby shield himself and block the court from taking into account the accumulation of losses which the plaintiff by acting with reasonable promptness in processing his claim could have avoided.
Similarly, the bare institution of judicial process in circumstances where a reasonable response by the injured plaintiff would include mitigative replacement of property, will not entitle the plaintiff to the relief which would be achieved by such replacement purchase and prompt prosecution of the claim.
Before a plaintiff can rely on a claim to specific performance so as to insulate himself from the consequences of failing to procure alternate property in mitigation of his losses, some fair, real, and substantial justification for his claim to performance must be found.
Otherwise its effect will be to cast upon the defendant all the risk of aggravated loss by reason of delay in bringing the issue to trial.
Justice Grange further explained:
In the case at bar the purchaser is not seeking specific performance with an abatement for the deficiency in the depth of the property nor is the vendor in a position to give it.
The purchaser is seeking by way of counterclaim only the return of his deposit. The vendor, in order to succeed on this appeal, must persuade the Court that she was in a position on the closing date to convey what she contracted to convey, not as in a case of specific performance with an abatement, that she was able to convey substantially what she contracted to convey.
All that is here necessary to decide is that a vendor in a contract for the sale of land who is willing and able substantially to perform his part of the bargain is, upon the repudiation of the contract by the purchaser, entitled either:
- to specific performance with an abatement, or
to damages with compensation for that minor part of the bargain he is unable to perform.
The Appeal was allowed, Judgment was entered for the vendors for damages, less the sum of $1,000.00 for the deficiency in size, which was only 0.16% of the total area.
This is a very interesting case and an important one for the court of Appeal with the Chief Justice and Justice Grange a noted expert in real estate law participating in the decision.
There are a few interesting points:
- What you see is what you get. The contract was based upon the purchasers’ view of the property. No one had a survey, so no one knew the exact dimensions by looking at the property.
- The argument of “you are actually getting more property than you bargained for”, compared to the Deed was rejected.
- The deficiency was a small defect.
- The defect did not permit the purchaser to withdraw from the agreement.
- The Purchaser could have sued for specific performance with an abatement of the purchase price due to the defect.
- Even if the Vendor sues, the Vendor is still under an obligation to mitigate damages.
If the Vendor mitigates by selling to a second purchaser, the Vendor is still entitled to damages after giving credit for the defect.
Brian Madigan LL.B., Broker