An agreement with no fixed deadline must be performed within a reasonable time: court
The Ontario Court of Appeal dismissed an appeal over a failed real estate agreement, ruling that the appellant's prolonged inaction justified the respondent's termination of the agreement.
The dispute in 2533619 Ontario Inc. (Calibrex Development Group) v. Lucadamo, 2024 ONCA 536 involved MSM Developments Ltd. and the appellant, who had entered into agreements to purchase three neighbouring lots, including the respondent's property.
Initially, the agreement of purchase and sale (APS) included a clause stating that time was of the essence and allowed for extensions by agreement. An amendment was made on July 31, 2017, setting a target closing date of April 12, 2018, allowing the appellant to obtain severance approval for the properties. The APS specified that the closing would occur 30 days after receiving the severance approval.
The appellant was explicitly responsible for applying for the severance approval. However, between 2018 and 2022, the appellant did not communicate with the respondent. Upon seeing surveyors and representatives from the town of Georgina on his property without prior notice, the respondent refused them access. He had previously inquired about the sale status and learned in August 2018 that the appellant had not started the severance application. In 2022, the respondent asserted that the APS was no longer valid and refused further dealings with the appellant and his real estate agent.
The appellant sought a court declaration affirming the validity of the APS, a declaration that the respondent was in breach, and an order for specific performance to allow surveyors and Georgina access to the property. The application judge dismissed the appellant's application, concluding that the appellant had failed to perform its obligations under the APS within a reasonable time without explanation, justifying the respondent's termination of the agreement.
On appeal, the appellant argued that the judge erred in dismissing the application, claiming that the respondent's inaction constituted acquiescence to the delay. The appellant also contended that the respondent should have provided reasonable notice of a closing date before terminating the APS.
The Court of Appeal rejected these arguments, affirming that the application judge correctly applied the relevant legal principles. The court highlighted that when an APS has an ambiguous or no fixed deadline, it must be performed within a reasonable time, determined based on the case's facts. The court also noted that each party must take necessary actions to ensure the contract's performance.
The Court of Appeal agreed with the application judge that the appellant's delay was unreasonable. By failing to fulfill its obligations for almost five years, the appellant was already in breach when it attempted to act in 2022. The respondent was justified in treating the APS as terminated and was not obligated to give the appellant another chance to rectify its default.
