Deficient Survey Did Not Go to the "Root of the Bargain"

In Hannivan v. Wasi, the agreement of purchase and sale on a $1.15 million residential property called for the buyer to submit a $50,000 deposit. It also stipulated that within two weeks, the sellers were to provide him with a survey of the property showing "the current location of all structures, buildings, fences, improvements, easements, rights-of-way, and encroachments affecting said property."

What the sellers provided instead, was a "bare bones" document purporting to be a survey. It was dated and signed by an Ontario Land Surveyor, but did not show the current location of the items listed in the agreement. It was handed to the buyer on the day the agreement was signed.

At no time prior to closing did the buyer submit requisitions. But on the day before closing, nearly five months after the agreement was executed, he complained for the first time that the sellers had failed to provide an adequate survey as required in the agreement's schedule. The buyer took the position that the agreement was accordingly void.

The sellers did not agree, and the transaction did not close. Concluding that the buyer was in breach, the sellers kept the $50,000 deposit, and re-listed the property. They sold it to another person for $234,000 less than the price the original buyer had agreed to pay, and sued him for the difference. In response, the buyer asked the court for a return of his deposit. The matter came before the court on a summary judgment motion.

The court ruled in the sellers' favour. In these circumstances – and even though the provided survey did not technically conform to the requirements in the schedule – the buyer was not entitled to repudiate the contract. In the court's words, a more detailed or original survey did not "go to the root of the bargain" between the parties.

In coming to this conclusion, the court relied on a similar recent decision in Hatami v. 1237144 Ontario Inc., which was later affirmed by the Ontario Court of Appeal. There, the court noted that in certain circumstances a buyer may justly refuse to close where it is essential to the transaction that the seller provide an up-to-date survey and where the seller has failed to do so. But this is not necessarily the case where the seller has no unqualified obligation or commitment to provide such a survey for the property.

The court explained that in this instance, any shortcomings in the survey tendered by the sellers did not impact the "essence" of the transaction. The survey's deficiencies were unrelated to issues of financing, zoning, or any other requirement that might have affected the buyer's ability to close.

The court also noted that the buyer only complained about the alleged survey deficiencies on the day before the scheduled closing; this was in contrast to several months' worth of clear communication in which the buyer never indicated that he required a different survey.

The court ruled that this was a clear case for summary judgment in the sellers' favour, and awarded them the $234,000 difference in price obtained for the property. Conversely the buyer was not entitled to a return of the deposit. See: Hannivan v. Wasi, 2020 ONSC 1060.