Case information

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Case summaries are prepared by the Office of the Registrar of the Supreme Court of Canada (Law Branch). Please note that summaries are not provided to the Judges of the Court. They are placed on the Court file and website for information purposes only.

Contracts - Commercial contracts - Breach - Damages - Duty to mitigate - Agreement of purchase and sale - Respondent failing to take reasonable steps to fulfill contractual obligation to obtain severance causing Applicant to suffer loss of chance of closing transaction - Whether court of appeal erred in its approach to the duty to mitigate by a single purpose corporation, and the nature of a parent corporation’s duty to mitigate on behalf of a subsidiary - Whether court of appeal erred in concluding that a wronged party was not entitled to any damages on the basis of a failure to mitigate

The Toronto Catholic District School Board (“Board”) entered into an agreement of purchase and sale with Southcott Estates Inc. (“Southcott”), for the sale of 4.78 acres of surplus land to Southcott for approximately $3.5 million. Southcott, a wholly owned subsidiary of Ballantry Homes Inc., was a single purpose company with no assets except for the deposit it paid. Southcott intended to use the land for residential development. The land was part of a larger parcel on which school buildings were located so the agreement was conditional upon the Board obtaining a severance from the Committee of Adjustments on or before the closing date. The agreement was signed on June 14, 2004, with an original closing date of August 31, 2004. The agreement finally became firm on August 23, 2004, but there was not enough time to obtain the severance before the closing date. The Board offered to extend the closing date to a fixed number of days after the severance was obtained, but Southcott insisted on a closing date of January 31, 2005. The Board’s severance application on December 16, 2004 was deferred as premature at the municipality’s request because it was not accompanied by a development plan. This made it impossible to close the transaction by the closing date. The Board refused Southcott’s request to extend the closing date, declared the transaction to be at an end and returned Southcott’s deposit. Southcott took the position that the Board had breached its obligation to use its best efforts to obtain the severance and brought an action for specific performance or in the alternative, for damages.