Ontario Court of Appeal restores owner's right to repurchase property after initial buyback fails

The actions of the seller's agent obstructed the buyback process: court

Ontario Court of Appeal restores owner's right to repurchase property after initial buyback fails

The Ontario Court of Appeal has reinstated an owner's right to repurchase a 100-acre property despite the initial buyback failing to close as scheduled.

The property, consisting of farmland and residential land, was initially transferred to Elwood Quinn in 2017 as part of a financial arrangement to aid Linda Jones, who was experiencing financial difficulties. Under the terms of the Agreement of Private Purchase and Sale (APPS), the agreement included a Buyback Provision (BBP) allowing Jones to repurchase the property within eight years using a specific formula.

Despite initial cooperation between the parties concerning financing, maintaining, and improving the property, their relationship deteriorated amidst financial difficulties. In late 2019, Quinn appointed his son-in-law, Hugh Franklin, as his agent and representative in dealing with the property. The court noted that the appointment marked a serious downturn in the parties’ relationship. Before the end of the year, Franklin took multiple steps to remove Jones and her son from the property.

Jones made an unconditional offer to repurchase, but Franklin did not sign the agreement or communicate properly to finalize the sale, which led to the transaction's failure.

The Court of Appeal's decision rejected Quinn's arguments that the APPS was not correctly interpreted by the lower court and affirmed the finding that Franklin's actions obstructed the buyback process. It noted that Franklin, who aggressively removed Jones from the property, did not act in good faith, significantly complicating and frustrating Jones' attempts to reclaim her property.

The judges emphasized the necessity of good faith in contract performance and pointed out that Franklin's confrontational and uncooperative behaviour was pivotal in obstructing the transaction. They criticized his last-minute communications and lack of clarity, contributing to the buyback's failure on the scheduled closing date.

Furthermore, the appellate court slightly modified the lower court's order about returning "items" removed from the property, clarifying that it specifically pertains to vehicles known to be wrongfully removed but dismissing the vague order to return unspecified "items."

The court underscored the legal expectations for fairness and cooperation in executing contracts. Ultimately, the court restored Jones' right to repurchase the property originally sold under financially strained circumstances.

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