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Southcott Estates Inc v Toronto Catholic District School Board

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40: 439:, holds that it "cannot be assumed that damages for breach of contract for the purchase and sale of real estate will be an inadequate remedy in all cases," and specific performance will be available only where money cannot compensate fully for the loss, because of some “peculiar and special value” of the land to the plaintiff. 450:
believed that the trial judge was correct in finding in fact that the Board had not proved that Southcott had an opportunity to mitigate, which was sufficient to dispose of the appeal. She would have reversed the Court of Appeal's ruling and restored the original verdict. She saw no basis on which to
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The fundamental basis is thus compensation for pecuniary loss naturally flowing from the breach; but this first principle is qualified by a second, which imposes on a plaintiff the duty of taking all reasonable steps to mitigate the loss consequent on the breach, and debars him from claiming any part
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Although Southcott had admitted at trial that it made no attempts to purchase a comparable property, one can argue that a complete failure to make any efforts to mitigate is tantamount to that type of admission. Either way, damages for breach of contract continue to be the only remedy that the buyer
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Plaintiffs can never be certain that an action for specific performance will succeed, particularly as this is an equitable, discretionary remedy. Demanding that losses be mitigated unless success in obtaining specific performance is assured would deter valid claims for specific performance and hold
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It can be fairly argued that Southcott did not act unreasonably in pursuing specific performance of the contract. Though the common law presumption of the uniqueness of real property no longer holds, a claim for specific performance may still be reasonable if a property has unique characteristics
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However, the decision (although seen to be well-based in legal theory) does not reflect the commercial reality of real estate development, where lenders are normally reluctant to advance funds to a company with limited assets that is embroiled in litigation, even when backed by a large corporate
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Southcott had argued that, as a single-purpose company, it was impecunious and unable to mitigate without significant capital investment of the parent company or without the corporate mandate to do so. In addition, it would be reasonably foreseeable to those contracting with a single-purpose
510:
In the event of termination of a contract for the purchase of land, a purchaser should carefully consider its capacity to both mitigate and complete the initial transaction before proceeding with a claim for specific performance. Steps should be taken at an early stage in order to prove the
484:
Developers normally structure as single-purpose subsidiaries so that, if a market correction reduces land values, the parent company can pull the plug on the subsidiary and avoid liability for damages for not completing a purchase. If the purchaser had backed out, and the land had declined
506:
is significant because it confirms that a claim for specific performance will not insulate a plaintiff from the duty to mitigate. It is also noteworthy because the majority as well as the dissent seem to accept by implication that impecuniosity is a defence to a failure to
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In the absence of actual evidence of impecuniosity, finding that losses cannot be reasonably avoided simply because it is a single-purpose corporation within a larger group of companies, would give an unfair advantage to those conducting business through single-purpose
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As a separate legal entity, Southcott was required to mitigate by making diligent efforts to find a substitute property, because those who choose the benefits of incorporation must bear the corresponding burdens, including the duty to mitigate its
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At trial, Southcott stated it never had any intention to mitigate its loss and had not tried, that it had no assets other than the deposit from Ballantry Inc for the deposit, and it was never going to purchase any other land.
496:
appears to have significantly restricted the opportunity to pursue specific performance in relation to commercial transactions, it did not conclusively restrict specific performance to residential transactions.
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substantially in value, the seller would have been unable to recover any damages beyond the deposit. Therefore, it is arguably fair that Southcott failed to recover damages when the shoe was on the other foot.
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The claims relating to specific performance and damages were premised upon resources that were not tied up as a result of the breach alleged, which in this case did not affect Southcott’s ability to obtain
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I find that these subsequent purchases were collateral, independent transactions that did not arise out of the consequences of the breach. In all the circumstances, I do not consider these transactions as
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had the Board used its best efforts, the severance would likely have been granted, and the transaction would have been completed by the closing date; therefore, the Board’s breach caused Southcott’s loss;
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He rejected the Board's submission that Southcott had mitigated damages through several purchases subsequent to the breach of the agreement, declaring:
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created just for purchasing and developing the land. The deal was conditional upon Southcott paying a 10% deposit, and the Toronto School Board getting
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In a 6-1 ruling, the appeal was dismissed with costs. As it was therefore unnecessary to consider the cross-appeal, it was dismissed without costs.
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uniqueness of the property in question. It can also be argued that such steps should be considered prior to the acquisition of the property.
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the trial judge did not err in finding that the Board's breach was the cause of the failure to obtain a severance by the closing date, but
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Southcott, while not appealing the trial judge’s refusal to award specific performance, maintained its losses were not avoidable.
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corporation that such an entity would have finite resources and a confined corporate mandate. This was held to be insufficient:
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conclude that Southcott acted unreasonably in maintaining its suit for specific performance instead of mitigating its loss:
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On cross-appeal, the Board questioned whether the Court of Appeal was correct in law in dismissing its argument relating to
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The act of filing a claim for specific performance is inconsistent with the act of acquiring a substitute property.
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The principles have since been refined in further cases at the Court, as well as at the Federal Court of Appeal.
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for the land, which meant severance was not granted in time. Southcott sued for specific performance or damages.
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Leave to appeal and cross-appeal the decision were granted by the Supreme Court of Canada in November 2011:
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specific performance was not an appropriate remedy as the land did not have the quality of uniqueness; but
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he did err in law in finding that the Board had not shown that Southcott could have mitigated its losses,
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British Westinghouse Electric and Manufacturing Co Ltd v Underground Electric Railways Co of London Ltd
455:
It had a “fair, real, and substantial justification” for claiming specific performance of the contract.
860:"A Doctrine of Mitigation in the Supreme Court of Canada: A Triumph of Theory over Commercial Reality" 469:
Whether it could have obtained financing to buy a different property is at the very least speculative.
39: 1318: 1294: 1159: 863: 248: 215: 198: 1412: 1465: 447: 146: 123: 956:"Purchasing Property for Development or Investment? What to do if there is a Breach of Contract" 1346: 1066: 1141: 1370: 1040: 272: 260: 219: 154: 1052: 1026: 365: 349: 134: 532:
representing the loss of a 60 percent chance to make profits in the amount of $ 3,225,827
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however, Southcott failed to make out a case for either specific performance or damages.
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began by summarizing the principles for mitigation previously adopted by the Court in
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in the context of commercial land transactions (together with the related duty of
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Fish and Rothstein JJ took no part in the consideration or decision of the case.
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The decision has raised significant debate on many of the issues it discussed:
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Karakatsanis J, joined by LeBel, Deschamps, Abella, Rothstein, and Cromwell JJ
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before a certain date. However, the Committee refused without reviewing a
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Asamera Oil Corporation Ltd. v. Sea Oil & General Corporation et al.
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Asamera Oil Corporation Ltd. v. Sea Oil & General Corporation
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Southcott Estates Inc. v. Toronto Catholic District School Board
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Southcott Estates Inc. v. Toronto Catholic District School Board
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Southcott Estates Inc. v. Toronto Catholic District School Board
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Southcott Estates Inc. v. Toronto Catholic District School Board
1183: 991: 934:"Supreme Court clarifies requirements of the duty to mitigate" 843:
Southcott Estates Inc v Toronto Catholic District School Board
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Southcott Estates Inc v Toronto Catholic District School Board
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Southcott Estates Inc v Toronto Catholic District School Board
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of the damage which is due to his neglect to take such steps.
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Southcott Estates v. Toronto Catholic District School Board
921:, National Civil Litigation Section Newsletter. July 2013. 466:
such that a substitute property is not readily available.
841:"Quashing specific performance and piercing the veil in 84:
Southcott Estates Inc. v. Toronto Catholic School Board
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of a contract to sell it 4.78 acres (1.93 ha) of
751:(1824), 1 Sim. & St. 607, 57 E.R. 239, at p. 240 892:Mark S. Thompson; Mitch Dermer (13 December 2012). 177: 169: 164: 114: 106: 78: 70: 60: 53: 32: 90:, 104 OR (3d) 784 (3 May 2010), setting aside 894:"The End of the Line for Specific Performance?" 400: 315: 739: at par. 21, 2 SCR 415 (20 June 1996) 563:Part of the Ballantry Group of Companies, see 1195: 1003: 98:, 78 R.P.R. (4th) 285 (30 January 2009), 8: 209:, with significant impact in the areas of: 1202: 1188: 1180: 1010: 996: 988: 1096:Union Eagle Ltd v Golden Achievement Ltd 201:, 2 SCR 675, is a landmark case of the 1343:Woolfson v Strathclyde Regional Council 544: 525: 1111:Dunlop Tyre Co Ltd v New Garage Co Ltd 905: 903: 245:Toronto Catholic District School Board 29: 1081:Workers Trust v Dojap Investments Ltd 462:plaintiffs to an impossible standard. 307:, which were assessed at $ 1,935,500. 7: 932:Jenna Anne de Jong (November 2012). 1441:VTB Capital plc v Nutritek Int Corp 1307:Littlewoods Mail Order Stores v IRC 1245:Macaura v Northern Assurance Co Ltd 961:. Weir Foulds LLP, Property Update. 552:SCC Case Information - Docket 33778 352:were awarded in the amount of $ 1. 972:Michael B. Morgan (1 April 2013). 954:Jonathan D. Born (November 2012). 25: 858:Geoff R. Hall (25 October 2012). 664:, 1 SCR 633 (3 October 1978) 289:Ontario Superior Court of Justice 110:Appeal and cross‑appeal dismissed 1231:Salomon v A Salomon & Co Ltd 839:Peter S. Spiro (25 March 2014). 38: 1455:Lungowe v Vedanta Resources plc 877:John Mullen (23 January 2013). 243:Southcott Estates Inc sued the 1427:Prest v Petrodel Resources Ltd 82:APPEAL and CROSS‑APPEAL from 1: 1500:Supreme Court of Canada cases 1399:Trustor AB v Smallbone (No 2) 398:'s observation was endorsed: 1257:Gilford Motor Co Ltd v Horne 1018:Performance and breach cases 27:Supreme Court of Canada case 1331:DHN Ltd v Tower Hamlets LBC 1269:Lee v Lee's Air Farming Ltd 1210:Corporate personality cases 866:, Canadian Appeals Monitor. 226:piercing the corporate veil 1531: 1515:Canadian property case law 1510:Canadian contract case law 435:, when read together with 322:The Board appealed to the 303:Southcott was entitled to 1505:2012 in Canadian case law 1477: 1463: 1451: 1437: 1423: 1409: 1395: 1381: 1367: 1353: 1339: 1327: 1315: 1303: 1291: 1279: 1265: 1253: 1241: 1227: 1219:Case of Sutton's Hospital 1215: 1167: 1149: 1135: 1121: 1107: 1091: 1077: 1063: 1049: 1037: 1023: 566:"Ballantry Homes website" 185: 119: 100:Superior Court of Justice 37: 1125:Murray v Leisureplay plc 974:"Don't get too specific" 919:Canadian Bar Association 881:. Keyser Mason Ball LLP. 733:Semelhago v. Paramadevan 437:Semelhago v. Paramadevan 1357:Ord v Belhaven Pubs Ltd 1171:Remedies in English law 648: (18 November 2010) 554:Supreme Court of Canada 324:Ontario Court of Appeal 291:, Spiegel J held that: 269:Committee of Adjustment 203:Supreme Court of Canada 159:Andromache Karakatsanis 66:2012 SCC 51, 2 SCR 675 46:Supreme Court of Canada 1385:Gencor ACP Ltd v Dalby 405: 320: 257:special purpose entity 896:. Singleton Urquhart. 102:(Ontario, Canada) 1319:Wallersteiner v Moir 1295:Tunstall v Steigmann 678:, AC 673, at p. 689 375:At the Supreme Court 249:specific enforcement 216:specific performance 56:Judgment: 2012-10-17 54:Hearing: 2012-03-20 1413:Chandler v Cape plc 1472:arts 1(2)(d) and 4 1466:Rome II Regulation 596:ONSC, par. 144–146 587:ONSC, par. 128–133 147:Marshall Rothstein 124:Beverley McLachlin 1487: 1486: 1177: 1176: 1144:) Sch 2(1)(d)-(e) 1067:Bolton v Mahadeva 911:"Case comment on 864:McCarthy Tétrault 749:Adderley v. Dixon 646:2010 CanLII 67504 578:ONSC, par. 93–116 190: 189: 16:(Redirected from 1522: 1371:Lubbe v Cape Plc 1222:(1612) 77 ER 960 1204: 1197: 1190: 1181: 1155: 1097: 1041:Sumpter v Hedges 1012: 1005: 998: 989: 978: 977: 969: 963: 962: 960: 951: 945: 944: 938: 929: 923: 922: 907: 898: 897: 889: 883: 882: 874: 868: 867: 855: 849: 848: 836: 830: 827: 821: 818: 812: 806: 800: 797: 791: 788: 782: 779: 773: 767: 761: 758: 752: 746: 740: 730: 724: 721: 715: 712: 706: 703: 697: 694: 688: 685: 679: 671: 665: 655: 649: 639: 633: 630: 624: 623:ONCA, par. 24–27 621: 615: 614:ONCA, par. 11–14 612: 606: 603: 597: 594: 588: 585: 579: 576: 570: 569: 561: 555: 549: 533: 530: 383:Majority opinion 283:The courts below 273:development plan 263:permission from 155:Michael Moldaver 128:Puisne Justices: 115:Court membership 96:2009 CanLII 3567 42: 30: 21: 1530: 1529: 1525: 1524: 1523: 1521: 1520: 1519: 1490: 1489: 1488: 1483: 1473: 1459: 1447: 1433: 1419: 1405: 1391: 1377: 1363: 1349: 1335: 1323: 1311: 1299: 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825: 820:SCC, par. 95 816: 811:, at par. 22 808: 804: 799:SCC, par. 94 795: 790:SCC, par. 93 786: 781:SCC, par. 92 777: 769: 765: 760:SCC, par. 65 756: 748: 744: 732: 728: 723:SCC, par. 30 719: 714:SCC, par. 29 710: 705:SCC, par. 27 701: 696:SCC, par. 26 692: 683: 673: 669: 657: 653: 641: 637: 628: 619: 610: 601: 592: 583: 574: 559: 547: 528: 503: 493: 477: 448:McLachlin CJ 446: 436: 432: 431: 409: 406: 401: 396:Lord Haldane 391: 386: 378: 354: 347: 321: 316: 312: 286: 277: 242: 232:subsidiaries 193: 192: 191: 181:McLachlin CJ 127: 120: 91: 83: 44: 1160:2012 SCC 51 976:. Building. 941:Norton Rose 330:held that: 318:mitigatory. 199:2012 SCC 51 139:Morris Fish 131:Louis LeBel 1494:Categories 1310:1 WLR 1214 1138:UTCCR 1999 1071:EWCA Civ 5 1057:EWCA Civ 6 540:References 239:Background 220:mitigation 71:Docket No. 1334:1 WLR 852 1322:1 WLR 991 1286:1 WLR 832 809:Semelhago 507:mitigate. 504:Southcott 494:Southcott 366:causation 328:Sharpe JA 261:severance 62:Citations 1470:864/2007 1468:(EC) No 1298:2 QB 593 1044:1 QB 673 418:capital. 326:, where 170:Majority 1458:UKSC 20 1431:UKSC 34 1375:UKHL 41 1273:UKPC 33 1158:, 770:Asamera 735:, 660:, 644:, 443:Dissent 433:Asamera 426:losses. 305:damages 287:At the 265:Toronto 178:Dissent 94:, 86:, 1445:UKSC 5 1347:UKHL 5 1260:Ch 935 1248:AC 619 1235:UKHL 1 1115:UKHL 1 1101:UKPC 5 1085:UKPC 7 492:While 489:group. 474:Impact 394:where 222:), and 107:Ruling 74:33778 959:(PDF) 937:(PDF) 520:Notes 1479:see 1169:see 253:land 247:for 228:for 267:'s 1496:: 939:. 917:. 902:^ 862:. 197:, 157:, 153:, 149:, 145:, 141:, 137:, 133:, 1203:e 1196:t 1189:v 1140:( 1011:e 1004:t 997:v 943:. 915:" 845:" 568:. 368:. 20:)

Index

Southcott Estates Inc. v. Toronto Catholic District School Board
Supreme Court of Canada
Supreme Court of Canada
Citations
2010 ONCA 310
2009 CanLII 3567
Superior Court of Justice
Beverley McLachlin
Louis LeBel
Marie Deschamps
Morris Fish
Rosalie Abella
Marshall Rothstein
Thomas Cromwell
Michael Moldaver
Andromache Karakatsanis
2012 SCC 51
Supreme Court of Canada
commercial law
specific performance
mitigation
piercing the corporate veil
single purpose
Toronto Catholic District School Board
specific enforcement
land
special purpose entity
severance
Toronto
Committee of Adjustment

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