IGTH KES
SA
WHY MITIGATING DAMAGES IS
CRUCIAL WHEN OPTING TO GO 'ALL-IN'
ON CLAIMING SPECIFIC PERFORMANCE IN
A REAL ESTATE DEAL.
BY MICHAEL MCKIERNAN
D
avid Hill may not have
known it at the time, but he
was playing a high-stakes
game of poker when he
sued the Toronto Catholic
District School Board over
a real estate deal gone bad.
The co-owner of
Ballantry Homes was also a principal
of Southcott Estates Inc., the singlepurpose company created by the firm
to purchase a parcel of land from the
school board for a residential development. Southcott asked the court for
specific performance of the breached
agreement of purchase and sale, and
hedged its bet with a claim for damages
in the alternative. But when Southcott
decided not to buy a replacement property, Hill unwittingly pushed all his
chips into the middle of the table.
And while the trial judge liked his
hand, awarding Southcott almost $2
million in damages, in October, the
Supreme Court of Canada rewrote the
rules and wiped him out, upholding the
Ontario Court of Appeal's decision to
reduce the award to a nominal $1.
Hilary Book, a litigator with
WeirFoulds LLP in Toronto, says any
developer who claims specific performance without mitigating their damages is "going all-in."
"They can win big, but they can also
walk away with nothing," she said at a
recent event discussing the case.
In late 2004, Southcott arranged to
buy the five-acre plot of surplus school
property for $3.44 million, and forwarded a 10 per cent deposit. But the
agreement was contingent on the board
obtaining a severance from the City of
Toronto's Committee of Adjustment.
The board applied for severance, but
failed to get it before the closing date
We had a spark right from
the beginning.
Your lawyer. Your law firm. Your business advisor.
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