Even if it were larger than customary, size of deposit, by itself, was insufficient to make forfeiture unconscionable

Ontario civil | Real Property | Sale of land | Remedies

In August 2011, plaintiff's brother agreed to purchase vendor's residential condominium unit, paid deposits of $82,498.50 (brother’s deposit) but he failed to complete and forfeited deposit in April 2016. On May 7, 2016, plaintiff signed agreement of purchase and sale (APS) for vendor's other unit in same complex for $359,999.00 requiring $54,000 in deposits, and final $18,000 deposit on occupancy date (20 per cent of purchase price). On May 26, 2016, amended APS credited brother's deposit as deposit towards plaintiff's purchase, and required $18,565 deposit on occupancy date. Plaintiff failed to pay $18,565 on August 2, 2016, and vendor allowed plaintiff to cure default on August 23, 2016. Plaintiff failed to complete on September 28, 2016 or on November 2, 2016 extended closing date. On November 3, 2016, vendor terminated APS and retained plaintiff's $18,565.00 deposit and brother’s deposit, totaling $101,063.50 (28 per cent of purchase price). Vendor ultimately sold for $11,000 over APS. On motion for determination of point of law, forfeited sum was not out of proportion to damages suffered. Deposit exceeded 20 per cent that appeared to be amount usually required by vendor for this condominium complex and was above upper range of 25 per cent found in case law. Plaintiff failed to establish that deposit was disproportionately large in circumstances, or that even if it were larger than customary, size of deposit, by itself, was insufficient to make forfeiture unconscionable. It could not be concluded that there was inequality of bargaining power, substantially unfair bargain existed, plaintiff was unsophisticated, or negotiations were not bona fide, nor did vendor's conduct support finding of unconscionability. Gravity of plaintiff's breach was significant, but vendor gave plaintiff significant benefit by allowing brother's deposit to be used as credit towards his purchase, and twice offered to extend timelines to allow plaintiff to complete. It would not be unconscionable for vendor to retain money.

Nawara v. Riverstone (2019), 2019 CarswellOnt 50, 2019 ONSC 111, L.C. Sheard J. (Ont. S.C.J.).

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