The court rejected the buyer's bid to enforce the sale of a fire-destroyed century home
The Ontario Superior Court of Justice dismissed a home buyer's application to enforce the sale of a fire-destroyed century home, ruling that the buyer's demand for a guaranteed insurance payout constituted a repudiation of the purchase agreement.
The case involved a rural century home in Tillsonburg, Ontario, which the applicant agreed to purchase for $775,000, with a $25,000 deposit. Based on the Ontario Real Estate Association's (OREA) standard form, the agreement of purchase and sale included an insurance clause allowing the buyer to either complete the purchase and receive insurance proceeds or terminate the contract and reclaim the deposit in the event of substantial damage.
A fire destroyed the home before the scheduled closing on August 12, 2024. The applicant proceeded with the sale and requested details about the available insurance payout. The seller provided the insurance policy and agreed to extend the closing date to August 28, 2024, to allow for further details. The insurer eventually offered a cash settlement of $749,375.37.
As the closing date approached, the applicant sought a one-month extension to evaluate the settlement offer. The seller refused but agreed to a brief extension to August 30, 2024. On the final closing day, the seller provided an assignment of the insurance proceeds. However, the applicant did not register the property transfer and instead proposed a revised assignment, requiring the seller to guarantee a minimum insurance payout. The seller rejected this condition, terminated the agreement, and retained the deposit.
The Superior Court ruled that the applicant's insistence on a guaranteed insurance payout altered the terms of the original agreement, constituting a repudiation of the contract. The seller was entitled to accept the repudiation, terminate the agreement, and keep the deposit.
Citing the Supreme Court of Canada's ruling in Wile v. Cook, the court emphasized that the standard insurance clause does not guarantee a specific payout but only entitles the purchaser to receive whatever insurance proceeds are available. The court found that the seller had provided sufficient time for the buyer to assess the insurance settlement and was not required to agree to further extensions.
Additionally, the court rejected the buyer's request for specific performance, stating that the home's destruction destroyed any uniqueness of the property. The court also found no basis for relief from forfeiture, as this was a straightforward real estate transaction with no power imbalance or exceptional circumstances.
Ultimately, the court dismissed the buyer's application and upheld the seller's right to retain the $25,000 deposit.
