The Ontario Court Of Appeal held in its recent decision of 2260695 Ontario Inc. v. Invecom Associates Limited 2017 ONCA 70 that Invecom had violated the terms of their Agreement of Purchase and Sale and therefore had to forfeit its deposit.
In this case the appellant gave a $400,000 deposit to three numbered corporations (collectively referred to as the “Vendors”) in order to purchase three properties in Waterloo, Ontario. This agreement stipulated that if the transaction was not completed as a result of the purchaser’s default, then the deposit would be forfeited to the vendors.
Section 4.1 of the agreement provided conditions relating to Invecom’s obligation to close which were set to expire at 5:00pm on April 15, 2014 unless Invecom gave notice in writing that the conditions had not been satisfied or waived. Three hours before closing, Invecom proposed to extend the Condition Date for five additional days. When the agent for the vendors refused to grant the extension, Invecom refused to close. A trial between the parties later ensued over whether or not Invecom was entitled to a refund of their deposit.
A lower court judge found against Invecom and concluded that the Agreement required written notice that the conditions were not waived or satisfied. The Amending and Extending Agreement did not provide this notice and was instead merely an offer to extend the closing deadline. Therefore Invecom failed to provide notice and was not entitled to receive its deposit.
On appeal, Invecom argued that the proposed Amending and Extending Agreement served both as an offer and as notice that the conditions had not been satisfied and waived. Under a deferential standard, the Court of Appeal did not accept Invecom’s argument as the proposed agreement did not contain any language suggesting that it would serve as notice regarding these conditions.
This case clarifies the need to be aware of and comply with the deadlines in Agreements of Purchase and Sale. Parties cannot assume that a request to extend the deadline for a closing date is sufficient notice that conditions have not been met. Instead, parties must use clear and concise language stating all conditions that have not been satisfied or waived to be able to claim a return of their deposit if they fail to close a sale.