Canadian Lawyer

Chief Justice Beverley McLachlin wrote a dissenting ruling. Noting the evidence did not show the replacement properties would be profitable, she wrote: "Only a profitable development would mitigate Southcott's loss; an unprofitable one would aggravate it. A plaintiff is not required to take foolish steps that would not reduce its loss." Furthermore, McLachlin added: "A plaintiff, acting reasonably, cannot pursue specific performance and mitigate its loss at the same time. It makes no sense for a reasonable plaintiff seeking specific performance to effectively concede defeat and buy a substitute property. The plaintiff could end up with two properties — one it wanted and one it did not. Furthermore, an action for specific performance is often motivated by the unavailability of substitutes in the marketplace. A plaintiff's reasonable claim that substitutes are unavailable is inconsistent with the ability to acquire a substitute in the marketplace." This is a message litigators are taking very seriously. How can they stand up in court and argue the property in question is uniquely suited to a special purpose and then explain — just in case this argument fails — the plaintiff has bought another similar property in order to mitigate its loss? Then, what if the mitigation backfires and you purchase a property that, for example, turns out to have environmental problems? "You end up buying a liability instead, as opposed to an increasing asset," says Halpin. "The court didn't address that. "The result is a specific performance claim — once regarded as the cleanest and simplest way of resolving a breach of contract claim in property cases — is no longer considered viable in most circumstances. Not unless there is something quite unique about the property, certain mineral characteristics, for example, or a unique location," says Halpin. Otherwise, he says, "Your recourse for specific performance is going to be very limited and you should look long and hard at acquiring Read the Southcott Estates Inc. v. Toronto Catholic District School Board at tinyurl.com/southcott. different property to mitigate loss." One option available to developers' lawyers, says Bell, is to seek a certificate of pending litigation, claiming specific performance, at the outset of the proceedings. "If the court issues the certificate of pending litigation, it likely has concluded that the property is unique. If it's unique you should be satisfied that you don't need to mitigate." Bell also suggests trying to get the seller to agree that the property uniquely matches the buyer's needs and have that stipulated in the contract. But the clearest message emerging from this case is this — "Unless you have an absolutely slam-dunk case for specific performance, you should mitigate," says Elliott. And, he adds, the court is saying, "You've got to go out and pick up anything that's in your general area of development and buy it almost regardless of size. . . . The court's not going to pay a lot of attention to what your specific development niche is — they're going to say you're out for profit and so go and find another property that will return some profit." djacent properties, and any easements ovided in this agreement and save and e are complied with; you (b) any registered un with the land providing that such are telephone lines, cable television lines or e, where the central to the real estate transaction.ass Keeping you original mortgagee has s for the supply of domestic utility or tele le of the mortgage and the right to recei titleplus.ca do not materially affect the present use ments with publicly regulated utilities prov * * ® The TitlePLUS® policy is underwritten by Lawyers' Professional Indemnity Company (LAWPRO®). Registered trademark of Lawyers' Professional Indemnity Company. Untitled-1 1 www.CANADIAN 1-800-410-1013 L a w ye r m a g . c o m 12-08-10 J a n u a r y 2 0 111:53 AM 3 23

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