Frequent readers of this blog may recall a
post from October 2012, in which we wrote about a Supreme Court
of Canada decision that some believed, at the time,
would result in the "death knell" for the remedy of
specific performance in Canada at least in respect of commercial
real estate transactions. Since then, many courts have indeed
grappled with whether that particular remedy, which permits a
purchaser to conclude a transaction and buy the property in
question by way of a court order as opposed to obtaining an award
of damages as compensation, is still part of the arsenal of
remedies potentially available to aggrieved purchasers.
In a decision which was released this past Friday,
the B.C. Court of Appeal, in practical terms, has confirmed that
reports of the demise of the remedy of specific performance have
been greatly exaggerated.
In that case, a vendor refused to close on a sale of commercial
property in Burnaby, B.C. The purchaser, who was still
interested in buying the property, sued and sought as one of its
remedies, an order for specific performance whereby it asked the
court for an order allowing the sale to go through despite the
alleged breach by the vendor. The purchaser therefore filed a
Certificate of Pending Litigation ("CPL") against title
to the property. The vendor brought an interlocutory
application under the Land Title Act to have the CPL
removed as it argued that it was suffering hardship and
inconvenience by the registration of the CPL on title to its land
and that in any event the purchaser ought not to be entitled to the
remedy of specific performance. The Chambers Judge removed
the CPL with the posting of $1.5million security by the vendor and
asserted that the remedy of specific performance was not available
to this purchaser. The purchaser therefore filed an
The Court of Appeal, in a unanimous decision, held that on an
interlocutory application pursuant to the Land Title Act,
the Court is not fully and finally determining whether specific
performance is in fact available to a purchaser but rather the test
at that stage is whether it is "plain and obvious" that a
claim for specific performance will not succeed after a trial on
the merits. Absent compelling evidence in that regard, the
claim for specific performance ought to proceed to trial. The
Court noted that the landmark Supreme Court of Canada decisions in
Semelhago and Southcott Estates were following a
trial of those matters and although the legal principles arising
from those cases regarding the availability of specific performance
are clearly to be applied, it is likely only after a trial where
those issues can be finally determined by the Court. If there
is a triable issue on the availability of specific performance, a
CPL which is filed based on that remedy ought not to be
Given the decision in Youyi, it is clear that at least
for the time being in B.C., a claim for the remedy of specific
performance in connection with failed commercial real estate
transactions, together with the usual clogging of title to property
by the filing of a CPL, is still alive and well and is a valuable
and useful tool for aggrieved purchasers. For
landowners', where property becomes encumbered by a CPL, it may
prove helpful to move quickly to trial (or summary trial) in order
to have a CPL removed, and a claim for specific performance
dismissed, as opposed to seeking to have the CPL removed by way of
an interlocutory application very early on in the litigation.
Once again, the seeking of timely legal advice regarding
parties' rights and remedies in response to a collapsing real
estate transaction is critical. We have argued as much on
many previous occasions on this blog and Youyi provides
yet another example of why that is extremely important.
The content of this article is intended to provide a general
guide to the subject matter. Specialist advice should be sought
about your specific circumstances.
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