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Actual Notice Deemed Insufficient Notice; Seller Avoids Bad Deal

Can a seller get out of an improvident multi-million dollar real estate deal simply because the buyer technically failed to give notice in a certain manner? That was the question for the Ontario Court of Appeal in a case called High Tower Homes Corporation v. Stevens.

The seller owned two adjacent pieces of property. To maximize the price, he decided to sell them together; to optimize his tax position, he also wanted one property to be priced much lower than other. A clause in the agreement made the sale of the lower-priced property (“Blue Water”) conditional upon the sale of the second, higher-priced one (“Avondale”). After back-and-forth negotiations with the buyer, the seller offered Blue Water for what the court called a “bargain price” of $1 million, and offered Avondale for $4.5 million.

But what the seller did not realize is that the buyer had altered the offer along the way. At some point, the buyer had revised the agreement to delete the dual-sale condition, but had not specifically brought it to the seller’s attention. Unaware of the change, the seller accepted what turned out to be the buyer’s offer for the lower-priced Blue Water only. He was later stunned to learn that the buyer had taken advantage of his mistake.

To try to get out of the deal entirely, the seller relied on a technicality: a clause in the agreement stipulated that any notices from one party to the other were to be given personally. However, the buyer’s lawyer had purported to give a certain notice (which waived specified conditions for the buyer’s benefit) by way of fax – which was not one of the agreed-to methods. Strictly speaking, according to the seller, the notice was never delivered to the seller personally as required, so the deal was at an end.

The buyer sued, claiming either specific performance or $5 million in damages. The buyer’s motion for summary judgment was unsuccessful.

On later appeal, the Ontario Court of Appeal rejected the buyer’s claim. It agreed with the motion judge that the “entire agreement” clause in the contract precluded the buyer from claiming that there were implied terms as to the manner in which notice was to be given, and that notice by fax or any other unstipulated method would suffice. As the court put it: “The device of implying contractual terms is to be used sparingly and with caution”.

Here, the agreement expressly provided the seller was to be served personally; the buyer had made no effort to do so. There was nothing to suggest that faxed notice was contemplated, nor any indication that the seller had waived or abandoned the right to insist on getting notice personally, as the agreement prescribed. The appeal was accordingly dismissed; the deal was at an end. See High Tower Homes Corporation v. Stevens, 2014 (ONCA).