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Jonathan Born, a real estate lawyer with WeirFoulds, says plaintiffs without a parent company, or with more limited resources, should factor in its ability to pay for both the initial deal and a replacement property before pursuing specific performance, in case they should fall into precisely the trap identified by McLachlin. "If you go forward with a specific performance claim, and then another offer is successful, you may not be in a position to complete the original transaction," he says. But Malinda Yuen, who practises litigation in Calgary with Davis LLP, says virtually no plaintiffs will end up in that position. The Southcott decision is a natural progression in a long line of Supreme Court decisions that have gradually eroded the availability of specific performance in real estate matters, she says. Although they may not like the result, she says developers should accept it and welcome the certainty it brings to the rules of the game. Generally, Yuen says, specific performance claims are a lost cause for developers, and they should focus instead on mitigating their losses. "The natural outcrop of the decision is that you're not entitled to specific performance for real estates investments, where the interest in monetary," she says. "The land might be unique in terms of development potential, but it's not unique in terms of what you're after, which is money. Rather than holding out and getting tied up in years of litigation, the business reality says move forward." David Mandell, vice president at Urbancorp Development, says he is of the same view, and the Supreme Court decision only reinforces his position. "We're in the business of making investments, which happen to be in real estate. A development parcel is not unique, it's an investment," he says. "If we don't get one, we move onto the next one. We're not emotional about it. It might be in a completely different location, but that doesn't really matter. What matters is whether it's a good investment or not." "There are tons of opportunities in Toronto," says Mandell, whose company's purchases include a number of school board properties. "We've been quite active, and I would never go for specific performance unless I was buying the CN Tower, or Union Station, or something like that." For those that insist on pursuing a specific performance claim without mitigating their losses, the Supreme Court majority leaves a small chink of light. "If the plaintiff has a 'substantial justification' or a 'substantial and legitimate interest' in specific performance, its refusal to purchase other property may be reasonable, depending upon the circumstances of the case," reads the judgment. Schein says a key lesson from Southcott is that plaintiffs should at least make an effort to find comparable properties. The search does not have to be fruitful, and a genuine failed attempt may even boost a specific performance claim, he says. "You don't have an obligation to find something, but you have an obligation to look, and the obligation is a good-faith one," Schein says. Despite the risks involved, Book said some of her clients will still be deter- mined to proceed with a specific performance claim, such as in cases involving the final parcel in a larger land assembly, or a long term land banking project. In those cases, she says there are ways to minimize risks before hitting the final table at trial. "By then it's too late. They've already mitigated or not, and they're taking this big gamble," she said. One strategy would see the plaintiff moving for a certificate of pending litigation on the land at issue. If the motion is dismissed, then the plaintiff gets an early warning that specific performance is unrealistic, and can focus instead on mitigation. If it's granted, the plaintiff can make a stronger claim at trial that it was justified in claiming specific performance. However, "it's not necessarily a cure-all," said Book, since the test for granting a certificate of pending litigation is much less rigorous than the test that would need to be satisfied at trial for specific performance. "One of the key factors on a CPL motion is whether the plaintiff has a reasonable claim to the interest in the land. But the test is whether there's a triable issue. The court isn't actually making a determination at that early stage about whether there actually is a reasonable claim," Book said. Alternatively, she said plaintiffs could move for summary judgment on the issue of the uniqueness of the land. "If you're successful, you eliminate all risk because the court has made a judgment that the land is unique, and you're entitled to specific performance if you're successful in proving the breach of contract," Book said. IH Your lawyer. Your law firm. Your business advisor. BennettJones_IH_Dec_12.indd 1 w w w. c a n a d i a n law y er m a g . c o m / i n h o u s E February 12-11-29 10:33 AM 2013 • 33

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