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But wait, I don’t want damages…I want that property!

in Real Estate by Jeremy Lum-Danson / August 18,2015

When it comes to the sale of real property, damages are generally the remedy for a breach of an Agreement of Purchase and Sale (“APS”).  However, there are times when a party doesn’t want monetary damages.  There are occasions when a real estate deal does not close and purchasers feel that the land they set out to buy has unique traits that cannot be duplicated elsewhere. In these circumstances, the prospective purchaser may choose to claim for specific performance.

Specific performance is a court-ordered, equitable remedy. When this order is made, one party to a contract is mandated to perform under the contract. In the cases involving the sale of land, an order granting specific performance means that the vendor must sell that land to the purchaser as contemplated in the APS.

In granting specific performance, the court must weigh the individual factors of the case to determine whether the remedy is appropriate.

In Semelhago v. Paramadevan, [1996] S.C.J. No. 71, 2 S.C.R. 415, the Court held that specific performance should not be granted without evidence that the property is unique such that its substitute is not readily available. Further, not all land is unique.  It cannot be assumed that damages for breach of a contract to sell real estate are inadequate and that specific performance must be granted in all cases involving the purchase and sale of land.

More recently, in Southcott Estates Inc. v. Toronto Catholic District School Board, [2012] 2 S.C.R. 675, the Court found that “[a] plaintiff deprived of an investment property does not have a fair, real, and substantial justification” or a “substantial and legitimate” interest in specific performance unless that plaintiff can show that money is not a complete remedy because the land has “a peculiar and special value” to him or her.

In general, courts are less inclined to grant specific performance in cases concerning commercial property being purchased for investment purposes.

In one case the development properties’ proximity to Canada’s Wonderland, highway 400 and hotel land already owned by the purchaser made the development property at issue especially suitable for the purchaser’s proposed use. The Ontario Court of Appeal found that there was no persuasive evidence that these features could be reasonably duplicated elsewhere and ordered specific performance – see John E. Dodge Holdings v. 805062 Ontario Ltd. (2001), 56 O.R. (3d) 341 (Ont. Sup. Ct.) aff’d (2003) 63 O.R. (3d) 304 (C.A.) leave to appeal to S.C.C. refused 29696 (April 8 2003).

In short, specific performance may be granted when the court finds that the property at issue is unique.  In determining uniqueness, courts look into whether the property is especially suitable for the proposed use such that it cannot be reasonably duplicated elsewhere.

Uniqueness is case specific. That said, the court may find a property unique if it has good visibility and accessibility from highways and certain streets, proximity to other consumer attracting locations, significant development activity, potential population growth in the area or suitable zoning by-laws and proximity to other properties owned by a prospective purchaser.