Agreements were terminated as consequence of receivership

Bankruptcy and Insolvency - Bankruptcy and Receiving Orders - Effect of Order

Purchasers J and L Ltd. agreed to buy two commercial units and J agreed to buy one residential unit in vendor’s condominium development and paid deposits . After long delays, and in midst of disputes between parties concerning abatements to purchase price due to changes, vendor went into receivership. Creditor acquired purchasers’ and others’ units in court authorized sale. Purchasers brought actions against vendor for return of deposits with interest. Motion judge granted purchasers summary judgment for return of deposits with interest finding that nothing purchasers had done amounted to breach of contract or anticipatory breach, agreements were terminated as consequence of receivership through no fault of purchasers, receiver repudiated agreements when it sold units to creditor and purchasers had accepted repudiation. Vendor appealed. Appeal dismissed. Vendor suffered no prejudice from amendment to statement of claim to make specific reference to contractual term on which purchasers relied to recover deposits. Any issues related to notices of rescission with respect to commercial units became irrelevant when vendor affirmed its intention to complete transactions and thereby waived any alleged anticipatory breaches. Notice of rescission with respect to residential unit did not constitute repudiation of contract as delivery of notice of rescission was statutory, not contractual or equitable right and, in any event, vendor affirmed contract when it asked court to find notice of rescission void. Purchaser’s claim for rescission in relation to residential unit remained outstanding at time of receivership. Purchasers did not breach agreements by failing to close transactions as they had no obligation to close in face of vendor’s erroneous statement of adjustments. Motion judge’s finding that agreements were terminated as consequence of receivership, and not through any fault of purchasers, was amply supported by record.

Jung v. Talon International Inc. (2019), 2019 CarswellOnt 12633, 2019 ONCA 644, R.G. Juriansz J.A., K. van Rensburg J.A., and David M. Paciocco J.A. (Ont. C.A.); affirmed (2018), 2018 CarswellOnt 16464, 2018 ONSC 4245, Dietrich J. (Ont. S.C.J.).

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