In 2533619 Ontario Inc. (Calibrex Development Group) v. Lucadamo, 2024 ONCA 536, the Ontario Court of Appeal upheld a court-imposed deadline for a party’s performance of its obligations under an agreement of purchase and sale.
The appellant was the purchaser of three residential lots under an Agreement of Purchase and Sale that it had entered into with the respondent vendor in 2017 (the “APS”). The APS included a clause that allowed any deadline in the agreement to be extended or abridged by agreement. The closing of the APS was originally stipulated as a a fixed date, but the parties consented to a new closing date of “30 days following the appellant’s receipt of severance approval for the lots.”
Five years elapsed between the amendment date and the appellant’s commencement of its severance application. When the application got underway in 2022, the appellant was told by the respondent that the APS was no longer valid and had ended due to its delay. The appellant commenced an application for a declaration that the APS was still in effect but was denied.
The application judge held that the appellant had had “entirely failed to do what was necessary to perform its obligations under the contract within a reasonable time” without explanation, and that the respondent was therefore justified in treating the APS at an end. The Ontario Court of Appeal upheld this finding, and confirmed that the application judge correctly relied on the following legal principles:
“The application judge properly applied the applicable governing principles. As she correctly stated, first, where an APS has an ambiguous deadline or no fixed deadline for closing, “the law will imply a term that it must be performed within a reasonable time” and that “what is reasonable will be determined on the facts of the individual case.” Further, she considered that “the court will readily imply a promise on the part of each party to do all that is necessary to secure performance of the contract.”” [citations omitted]
The applicant had argued on appeal that the respondent needed to give reasonable notice of a deadline for completion of the severance before terminating the APS. The Court rejected this argument, finding that “The respondent had no obligation in the circumstances of this case, as found by the application judge, to give the appellant another chance to cure its default.”
Parties to agreements of purchase and sale should be aware that Ontario courts have authority to imply reasonable deadlines for performance into such agreements where none are clearly provided. They should therefore take care to eliminate ambiguity or uncertainty with respect to deadlines for performance of their respective contractual obligations.
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