Ontario Court of Appeal denies builder's request for a trial on damages in a real estate dispute

Claims for additional damages and the trial must be clearly stated in the pleadings: court

Ontario Court of Appeal denies builder's request for a trial on damages in a real estate dispute

The Ontario Court of Appeal has dismissed an appeal by a builder seeking a trial to claim additional damages in a failed residential real estate transaction.

The court affirmed the lower court's decision, which denied the trial on damages, citing insufficient pleading and potential unfairness to the respondent.

The case originated from a dispute over a home sale agreement. The respondent agreed to purchase a house for $3,350,000, paying $502,500 in deposits. The respondent later refused to close the deal, alleging misrepresentations by the appellant regarding the property's specifications. In response, the appellant sought declaratory relief, asserting that the respondent breached the purchase agreement and that the deposits should be retained, alongside a request to pursue further damages.

The application judge ruled in favour of the appellant on the breach and the retention of the deposits but declined to order a trial on additional damages. The judge pointed out that the request for further damages was neither included in the notice of application nor supported by the appellant's evidence, which could lead to multiple proceedings and potentially prejudice the respondent.

Challenging the application judge's findings, the appellant contended that their request for a damages trial was implied in the pleadings and that denying such a trial resulted in unfairness. However, the appellate court found no merit in these arguments, emphasizing the importance of explicit pleading in line with procedural fairness. The court noted that claims for additional damages and the trial thereof needed to be clearly stated in the pleadings to adequately inform the respondent.

The court also rejected the appellant's assertion that their claim for additional damages was implicitly included in their initial pleadings. It highlighted that the notice of application did not expressly mention such a claim, which contradicts procedural requirements that mandate stating "the precise relief sought." The court further pointed out inconsistencies in the appellant's position during the proceedings, which failed to establish a basis for claiming damages beyond the retained deposits.

Additionally, the appellate court agreed with the lower court's concerns about bifurcating the issue of damages, which could lead to unnecessary procedural complications and inconsistencies in judicial findings regarding the quantum of damages.

Ultimately, the court underscored the significance of clear and precise pleadings in legal proceedings to ensure all parties are adequately prepared to address the issues in dispute. The appellant was ordered to pay the respondent $17,000 in partial indemnity costs.

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