Brian Madigan LL.B., Broker
BRMadigan@Rogers.com

RE/MAX West Realty Inc.,
Brokerage
Independently owned and operated

96 Rexdale Blvd. 
Toronto, Ontario 


Phone: 416-745-2300

Cell: 647-404-8150 
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Uniqueness: Both a Subjective and Objective Test for Specific Performance

September 5, 2018 - Updated: September 5, 2018

Uniqueness: Both a Subjective and Objective Test for Specific Performance
 

The Superior Court of Justice on a motion to grant Summary Judgment looked at the material filed in order to determine whether an Order for Specific Performance would be granted (Gillespie v. 1766998 Ontario Inc., 2014).
 

The Buyers sought a property in Prince Edward County near Belleville, Ontario. The deal was struck and on closing the Seller refused to close. The reason was due to the fact the Seller after agreeing to sell the property found out that the transaction would be subject to HST. Then, the Seller refused to close. The Buyer was not at fault in any way. The issue for the Motions Court Judge was to assess whether the Buyers were entitled to the property or just money.
 

The Judge had to be satisfied that:
 

  1. The property was unique subjectively,
  2. The property was unique objectively,
  3. No substitute was readily available,
  4. Damages would be comparatively inadequate to do justice,
  5. The Buyers had established from the beginning, that they had a fair, real and substantial justification to claim specific performance and were not required to purchase a replacement property to mitigate their damages.
     

Facts
 

James Gillespie is a 69-year-old artist, writer, filmmaker and educator.  Janet Jones is a 62-year-old artist.  She is a senior faculty member at York University.  Since 1982, she has been a Professor in the Visual Arts Studio Programme. The Buyers have been in a relationship since 1984, cohabiting since 1988, and were married in the summer of 2014.
 

They have been searching for a rural property for residential and professional purposes for about 10 years.
 

The contract was negotiated on 29 April 2014 and transaction was scheduled to close on 22 May 2014.
 

Buyers Arguments
 

The property is unique for them because of:  
 

(a) its size;

(b) its diverse topography including mixed deciduous forest, trails, fields;

(c) its proximity to Via Rail, Highway 401, hotels and restaurants;

(d) it is on Rednersville Road;

(e) their close friends live right next door; and

(f) the price was at the upper limit of their budget in light of their need to preserve funds for planned construction.
 

The Judge commented as follows:
 

          “Analysis
 

Subjective Uniqueness
 

[34]           Subjectively, it is apparent that the defendant’s (Sellers) property was viewed by the plaintiffs (Buyers) as being uniquely suitable for their proposed purpose. 
 

While one can argue about whether objectively one swath of Prince Edward County land is likely not much different physically from another, the plaintiffs are highly qualified artists and educators. 
 

There was no challenge to their evidence that the particular mix of topography - the mixed deciduous forest, forest, trails, water elements, made this property particularly suited to their proposed use for living and for teaching students visual arts. 
 

Again, while perhaps there are many other properties near or around the train stations and Highway 401, this property is the one which has the plaintiffs’ other desired elements and which meets that aspect of their desired use. 
 

Of greater significance subjectively, is that the plaintiff’s friends are their next-door-neighbours and that the property is on the highly desirable Rednersville Road. 
 

There is little doubt that this property meets the plaintiffs’ subjective desires and, to them, there is no substitute readily available.
 

Objective Uniqueness
 

[35]           Objectively, however, to the reasonable outside observer, is the same conclusion available – that there is no alternative property reasonably available for the plaintiffs’ proposed uses?   
 

I agree with Lax J. that in a residential situation, the subjective component will likely be the more important.  Here, the plaintiffs propose both residential and business uses for the property.  However, the business use is not commercial in the sense of being proposed as a business solely for profit. 
 

The proposed business use is artistic and educational. 
 

While the plaintiffs may be paid for their efforts, even the commercial component is at the lowest end of the range of profit motivated businesses in which profit is fungible.
 

[36]           There are indicia to give circumstantial trustworthiness to the plaintiffs’ subjective claims that support an objective assessment of the uniqueness of the land in this case. 
 

The fact that the plaintiffs searched for 10 years and literally jumped at this property provides objectively observable support for their views. 
 

The fact that they paid full listing price which their agent said was above the fair value of the property is also some objective support.  See Silverberg, supra at para. 138. 
 

The proximity of their friends is another element that provides objective support for the property not being readily duplicated for its proposed purpose.
 

The Availability of Alternatives
 

[37]           The defendant offers some 24 MLS listing forms to show that there are many vacant properties offered for sale in Prince Edward County.  In Southcott, supra, the Supreme Court of Canada held that the trial judge committed reversible error by failing to consider properly evidence of comparable properties.  Karakatsanis J. wrote:
 

[51]        The trial judge failed to consider the available and reasonable inferences of the Board’s evidence that there were 81 parcels of raw land suitable for development and 49 properties subdivided into lots suitable for building sold during the time period in issue here… it is an obvious inference that if 81 properties suitable for development were offered for sale, and were in fact sold, then investment properties were available to developers for sale, particularly in the absence of evidence to the contrary.
 

[52]        Further, the trial judge failed to consider whether the fact that all of the properties the Board’s expert testified to were capable of being brought to development in a year could support an inference that their development was profitable.  Reasonable inferences of profitability could be drawn based upon the size and price of property or the fact that land was purchased for development purposes by experienced developers.  The trial judge did not turn his mind to this evidence.
 

[53]        Finally, the trial judge also failed to consider that an adverse inference against Southcott could be drawn from the fact that it led no evidence about the profitability of the alternative development opportunities.
 

[38]           In Southcott, the plaintiff’s sole proposed use of the land was for commercial development for a profit.  The Supreme Court of Canada found that existence of other properties gave rise to inferences that similar profits were available, i.e. the plaintiff could have bought the other properties and put them to the same proposed use. 
 

Here, there is no issue of profit. 
 

The question is whether the mere existence of other properties for sale raises a triable issue as to whether at the closing date, there were reasonable substitutes for the defendant’s property for the plaintiffs’ proposed purposes.  In my view, they do not.
 

[39]           Of the 24 alternatives proposed, only 6 are in the Hamlet of Ameliasburgh in Prince Edward County which is where the defendant’s property is located. 
 

They are all further from the train station.  Two of the six have already been sold.  One listing expired in 2013.  Two are on Victoria Road, where the plaintiffs already declined to purchase.  The sixth property is only six acres.
 

[40]           None of the 24 MLS listings are for a property on Rednersville Road let alone beside the plaintiffs’ friends.
 

[41]           The plaintiffs have specific wants and needs.  They also have specific artistic, aesthetic, and educational experiences and goals. 
 

Putting together all of the numerous issues of import to the plaintiffs, the existence of the alternatives does not raise a triable issue as to whether any of them might objectively and subjectively reasonably duplicate the defendant’s property for the plaintiffs’ proposed uses.
 

[42]           One may question whether a plaintiff can define his or her proposed uses with such narrow precision that no reasonable alternative could ever exist. 
 

However, that is among the reasons why the law applies an objective view as well as a subjective view to the suitability and duplicability of the property in issue. 
 

The existence of objective factors gives circumstantial trustworthiness to the plaintiffs’ subjective claims.  They are artists and teachers. 
 

They have not suddenly claimed an interest in aesthetics.  They searched for 10 years before offering on the defendant’s land on the very day that they first saw it. 
 

The agent, Hall, confirms that for his two years of involvement, the plaintiffs consistently asserted the same proposed uses. 
 

They have not invented a narrow list of priorities for this litigation.  Rather, they established a fair, real and substantial justification for the claim of specific performance.
 

Are Monetary Damages an Adequate Remedy
 

[43]           Turning to consider the other elements of the tests set out above by Lax and McMahon JJ., the question is whether monetary damages would be adequate in the circumstances.  The assumption underlying this inquiry is that the plaintiffs did not have a proper justification to decline to mitigate their loss and that they ought to have bought an alternative property.  What would their damages have been had they done so? 
 

There is no question of measuring the difference in value of the two properties as one is not a perfect substitute for the other.  Ostensibly, whatever the plaintiff paid for the other property would have been its fair market value for whatever attributes it has.  If one could prove that there was exceptional volatility in the market, it might perhaps be possible to claim that the plaintiffs paid more for the new property than they would have paid had they bought it at the date of the agreement.  But real estate markets do not tend to be that volatile.  It is also not realistic to think that the plaintiffs could buy another property and spend some measurable amount to bring the second property up to the standards of the defendant’s property.  First, one cannot move land.  Nor is it realistic to think that topography can be changed, forests altered, paths and rivers built or moved all to meet a pre-ordained aesthetic standard.  Even if such were possible, the agreed upon price for the defendant’s land was just $195,000 inclusive of HST.  At that modest level, there is no reality to any notion of claiming damages to change or upgrade an alternative property so as to meet the plaintiffs’ expectancies.
 

[44]           Practically speaking, the plaintiffs’ damages would likely be limited to their legal fees and any moving or architects’ expenses thrown away on the aborted sale with the defendant. 
 

Put another way, the damages will put the plaintiff in the position as if the first sale had not occurred.  This is a rescissionary measure. 
 

Damages cannot compensate them for uniqueness lost which they were entitled to expect.
 

[45]           From the defendant’s perspective, it will be able to back out of a binding contract for sale by simply compensating the counter-party for expenses.  It will not be required to pay for the reasonably foreseeable losses of the plaintiffs which are not readily quantifiable in money.  When invited by the court to assist in assessing the proper measure of the plaintiffs’ damages, the defendant’s counsel respectfully declined to engage in hypotheticals. 
 

In all, I do not see monetary damages as being a comparatively fair or adequate measure of justice.
 

Summary Judgment is Appropriate
 

[46]           The defendant tries to raise contested facts so as to require a trial under a pre-Hryniak theory of summary judgment. 
 

Even on that basis, the question of whether the defendant’s pond is fed by an artesian aquifer or whether development is available under zoning laws applicable to a narrow patch of environmentally sensitive land on the property are not factors which assist the court in determining the issues. 
 

There is no indication that the existence of the environmentally sensitive piece of the property will prevent the plaintiffs from building their proposed structures elsewhere on the property as they say.  Nor does the fact that the pond may run dry in some summers affect the analysis.
 

[47]           The plaintiffs have answered the 24 alternatives put forward by the defendant. 
 

In Southcott, where fungible profit was the plaintiff’s proposed use, the simple existence of other properties presented perfectly acceptable opportunities for profit. 

 

I cannot see how a trial in which there is an inquiry into the qualities of 24 pieces of vacant land at various locations in Prince Edward County would better inform the court in accordance with the tests set out in the case law concerning the plaintiffs’ proposed uses of the property. 
 

Moreover, requiring the parties to pay for a battle of experts assessing the uniqueness of a large number of properties in subjective and objective terms is not efficient, affordable, or proportionate in the circumstances of these parties and a case involving a property worth less than $200,000. 
 

Such an inquiry is far too costly and offers far too little prospect of having any real probative value.  See Hryniak v. Mauldin, 2014 SCC 7 (CanLII), at para. 33.
 

[48]           The issue before the court is a narrow issue that can be readily resolved on the material before the court.   For all of the forgoing reasons, I have confidence that I can find the necessary facts and apply the relevant legal principles to resolve this dispute.  Doing so is in the interests of justice and promotes the most efficient, affordable and, especially, the most proportionate resolution of the dispute on the merits.  Hryniak v. Mauldin, 2014 SCC 7(CanLII), at para. 66 et seq.
 

[49]           An order will therefore issue entitling the plaintiffs to specific performance of the agreement of purchase and sale with the defendant.”
 

COMMENT
 

In this case, like some others, it is difficult to determine exactly which particular factors the Judge took into consideration in order to come up with the “unique” conclusion. However, reading the Judge’s specific reasons adds some insight.
 

This also begs the question of the role and the relationship of the real estate agent. The agent should obviously be keeping very careful notes. The search should be well-documented. The Buyer’s reasons for rejecting a particular property should be noted.

 

All of the factors to support a claim for specific performance should be in the agent’s file. It is noteworthy that damages would be assessed as of the date of the breach of contract while specific performance measures that loss as of the day of the trial. You can see that the Buyers who press and succeed with a specific performance claim, see substantial increases in market value over the several years of litigation.
 

Brian Madigan LL.B., Broker

www.iSourceRealEstate.com


Tagged with: specific performance uniqueness gillespie subjective objective analysis ontario law
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Brian Madigan LL.B. Broker

RE/MAX West Realty Inc. Brokerage

Independently owned and operated

96 Rexdale Blvd. , Toronto Ontario,

Phone: 416-745-2300

BRMadigan@Rogers.com

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