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Sales of new condominiums and townhouses may sometimes allow a
buyer to move into a unit on an “interim occupancy date”
which may be several months before the purchase is scheduled to be
finally completed. In such cases, buyers may have to pay interest
on the unpaid purchase price and other monthly expenses, but the
entire purchase price is not due until the “unit transfer
date.” While the buyer may have possession they remain
obligated to complete the purchase and may be liable for breach of
contract if they fail to do so, entitling the seller to retain the
deposit and sue for damages. Continuing to occupy a unit after the
unit transfer date without completing the transaction may also give
rise to a claim for trespass.

In 2100 Bridletowne Inc. v. Ding2021 ONSC 2119
(CanLII)
, a real estate agent with 10 years’ experience
bought a townhouse condominium under construction from the
plaintiff, a developer. The agent’s parents were added as
buyers to the Agreement of Purchase and Sale (APS) before
closing.

The “interim occupancy date” was scheduled for June
30, 2020, and the buyers took interim occupancy of the townhouse
pursuant to an Occupancy Licence. During this time, the buyers
allowed “affiliates” to stay in their unit as a
“COVID hotel”.

On July 13, 2020, the developer sent out an email to all buyers
of townhouse units, including the defendants, that the closing and
the unit transfer date would take place by October of 2020. The
developer recommended that buyers contact their mortgage
specialists to prepare for closing.

While the defendants claimed that they had not received the
email of July 13, 2020 (even though it was sent to the agent’s
work email address), there was no dispute that on September 11,
2020, the developer notified the defendants and their real estate
lawyer that the unit transfer date would take place on October 1,
2020.

On September 25, 2020, the buyers’ lawyer advised that the
buyers were “overseas”, and that they were requesting an
extension, without any further explanation. He repeated the request
for an extension on September 30, 2020, citing the “physical
impossibility of logistics for closing with such short
notice”.

The seller’s lawyer responded on September 30, 2020, and
advised that his client was prepared to grant an extension
based on terms set out in an enclosed extension agreement. The
agreement was not returned by the buyers.

After the transaction failed to close on October 1, 2020, the
seller’s lawyer notified the buyers that they were in default
of the APS but due to the unprecedented nature of the pandemic, the
seller offered on a without prejudice, good faith basis, to
continue to work with them to close the transaction.

The defendants did not take steps to complete the transaction.
Rather, they simply moved into the townhouse on October 12, 2020,
notwithstanding some complaints made by the agent about alleged
deficiencies with the construction.

On October 23, 2020, the seller’s lawyer sent a further
extension agreement and asked them to sign and return it by October
27, 2020. They did not do so. The defendants made no further
inquiries about receiving an extension or closing the transaction
until February 2021, after the seller had commenced legal
proceedings against them.

On December 17, 2020, the seller served a notice of default on
the defendants pursuant to the APS, requiring them to provide
immediate vacant possession of the unit. The notice of default
informed the defendants that they were trespassers, and that if
they failed to provide immediate vacant possession, the seller
would commence court proceedings. The defendants refused to vacate
the unit and litigation ensured.

In March  2021, the court heard a motion brought by the
seller for a mandatory injunction requiring the defendants to
vacate the townhouse. The seller was firstly required to establish
that it had a “strong prima facie case” against the
defendants: R. v. Canadian Broadcasting
Corp.

2018 SCC 5, [2018] 1 SCR 196
, at para. 18.

Based on the buyers’ failure to complete the purchase or
agree to the terms of an extension, the court had no difficultly
finding that the seller had established a strong prima
facie
 case. The buyers had also breached the terms of the
APS by carrying out alterations to the unit before the final
closing.

The seller was also required to establish that it would suffer
irreparable harm if the injunction were not granted. The seller
demonstrated that it was suffering irreparable harm to its business
reputation as a result of the defendants’ trespass and the
defendants’ conduct towards the seller’s staff.

Where a plaintiff complains of interference with property
rights, injunctive relief has been strongly favoured by the Court
of Appeal, especially in cases of direct infringement in thenature
of trespass: 1465152 Ontario Limited v. Amexon Development
Inc.

2015 ONCA 86
at para. 23.

The case at hand was clearly a case of trespass since the buyers
had failed to close and had no right to continue to occupy the
townhouse after their default under the APS and the termination of
the interim occupancy licence. Awarding damages to the seller would
not be a sufficient remedy since the interference of the
seller’s property rights would continue.

In addition, the court found that the buyers had engaged in
“horrific bullying and unbecoming behaviour” in a series
of emails disparaging the seller and its employees. Damage to a
business’ reputation or goodwill can constitute irreparable
harm meriting injunctive relief: Sadlon Motors
Incorporated v. General Motors of Canada Limited et
al.

2011 ONSC 2628
, at para. 85.

The motion judge found that the defendants’ occupation of
the townhouse was tied to their continued ability to harm the
seller’s reputation and to harass its staff. Their
communications went beyond a genuine intention to address issues
related to the transaction and represented attempts to intimidate
and belittle the seller.

Finally, the seller established that the balance of convenience
favoured granting the injunction since it would suffer greater harm
than the buyers if possession were not returned to the seller. In
this regard, the court noted that the defendants did not use the
townhouse as their primary residence and that the agent’s
parents lived in another city.

As a result, the seller obtained an order requiring the buyers
to vacate the townhouse and preventing their re-entry. The action
for damages will continue. A motion for leave to appeal the
decision was recently dismissed by the Divisional Court, with costs
of $15,000 payable to the seller pursuant to the Occupancy Licence,
which provides that the buyers shall reimburse the seller “for
all costs it may incur”: 2021 ONSC 4552 (CanLII).

The case demonstrates the issues that may arise when a buyer
takes possession of a property before the transaction is completed.
The approach taken by the buyers in this case is difficult to
understand. While they attempted to argue that the seller ought to
have offered a further extension, there is generally no legal
obligation for a seller to do so. Further, the
seller had offered an extension and to work with
the buyers. There was simply no question that the buyers were the
defaulting party under the APS as they had advised prior to the
closing date that they could not close,  had sought an
extension which was offered on terms and not accepted, and then
took no steps to complete the transaction after the closing date.
Instead, they embarked on an ill-advised email campaign and
litigation strategy which appeared doomed to fail. A PDF version is
available to download 
here.

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guide to the subject matter. Specialist advice should be sought
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