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After 4-Year Delay, Builder Hikes Condo Price by $225K

In Jones v. 2341464 Ontario Inc., the dispute was between the builder and the buyers of a condominium unit in downtown Toronto. At the time the buyers paid their $50,000 deposit toward the $650,000 purchase price, construction had not yet begun, and various permits and approvals were still needed. The Agreement included clauses allowing for delayed occupancy if needed.

As it turned out, a full four years lapsed before the builder was able to begin significant construction. Still, the buyers were willing to proceed with the deal, even after the builder advised of needed changes to the unit’s layout which included eliminating the unit’s balcony.

The turning-point in the parties’ relationship came when the builder suddenly emailed the buyers, advising that although the unit was now nearly complete, it was terminating the original deal altogether. However, the builder was willing to offer the buyers the opportunity to purchase the same unit – but at an increased price of $875,000. The builder explained that the municipality-caused delays forced it to incur significant added costs, necessitating a higher price of $925,000 – less a $50,000 “discount” the builder was willing to offer to the buyers.

The builder purported to rely on two arguments: (1) that the original Agreement was actually ripe for formal termination almost four years earlier, in 2015, when the original occupancy date had come and gone; and (2) that the Agreement had been legally frustrated due to the inevitable delays, floor plan changes, and other circumstances beyond the builder’s control. Either way, the builder felt it was now at liberty to re-sell the unit at will – even to the same buyers at a higher price.

Naturally the buyers objected, and sued the builder for specific performance of the original Agreement, at the original price.

The court sided with the buyers, declaring the Agreement valid and enforceable. Clearly, the anticipated construction timelines had not been met, due to circumstances beyond the builder’s control. But the parties had amended the Agreement along the way, removing the builder’s right to terminate for this reason. This meant that only the buyers were entitled to end the Agreement for delay, and they had never done so.

Turning to the builder’s second argument: On these facts, there was also no frustration of the Agreement. It was not that the building permits and approvals could never be obtained; there had simply been some significant delays in doing so. Indeed, the building and unit were now almost complete.

More to the point, the builder could not demonstrate that the delays made it outright impossible to perform the contract, or that they gave rise to a new contract radically different from the original one. To the contrary, by offering to sell the same unit to the buyers at a higher price, the builder actually proved that it was not unable to sell a completed unit as the contract called for – even despite the floor plan changes. As the court observed: “This is a transparent indication from the [builder] that it is able to complete the transaction, but that it wishes to receive more money.”

Having found the Agreement valid, the court considered whether specific performance was the appropriate remedy for the blameless buyers, who needed to show that: (1) the unit was unique; and (2) a substitute was not readily available. Even with the buyers’ limited proof, the court was satisfied the threshold had been met. The unit was a full floor in a small Toronto building; given the four-year delay, it was unlikely that a comparable property with the same features, in the same price range, could be found. See: Jones v. 2341464 Ontario Inc., 2018 ONSC 717.