An Ontario Superior Court judge has ordered a home buyer to pay more than $200,000 in damages for breaching a purchase agreement and backing out after discovering water in the basement of a Hamilton house just weeks before the deal was set to close1. The decision, released on September 11, 2025, found that the buyers were not entitled to walk away from the transaction and were responsible for the sellers’ significant financial losses.
The legal dispute began in May 2023, when Cole Coppendale and Jordanna Cvitkovic entered into an Agreement of Purchase and Sale (APS) to buy a home on Leckie Avenue from Adam and Tracey Mills for $1,075,000. During their initial viewing of the 1958-built house, the buyers noticed some staining on the walls of a basement cold cellar but, according to court documents, were not concerned. Attributing it to humidity and noting a dehumidifier was running, they proceeded to make an unconditional offer, striking out the standard clause that would have allowed for a home inspection. Mr. Coppendale explained that he waived the inspection due to his extensive background in construction. A $20,000 deposit was paid and the closing date was set for July 24, 2023.
Relying on the firm agreement, the Mills family, who had lived in the home for five years, signed a lease on a rental property from July 2023 to February 2024 to ensure they could provide vacant possession of the house on the closing date. The APS permitted the buyers to visit the property three times before taking ownership. The first two visits were uneventful. However, the situation changed dramatically during the third visit on July 2, 2023, a rainy day. Mr. Coppendale, accompanied by his realtor and a contractor, discovered what he described as “considerable wetness” in the basement cold cellar. He stated in an affidavit that water appeared to be flowing from behind the foundation, creating a pool on the floor he estimated to be about one inch deep.
The buyers’ realtor, Gregory Meleca, immediately contacted the sellers’ realtor, Massimo Iudica, to report what he termed “substantial leaking.” The sellers responded that the cold cellar walls sometimes “sweat” with condensation on hot or damp days but insisted they had never experienced water penetration or pooling. Shortly after, the buyers’ legal counsel alleged “substantial water damage” in a letter, claiming the sellers had tried to conceal the issue and that a key warranty clause in the agreement had been breached. The buyers’ litigator followed up, declaring the APS “void ab initio,” or invalid from the beginning, based on the sellers’ alleged misrepresentation.
The clause at the heart of the dispute stated: “THE SELLER WARRANTS AND REPRESENTS THAT, to the best of the seller’s knowledge and belief, there exists no detrimental physical or psychological condition affecting the property that might negatively affect the value of the property, or influence the Buyer’s decision to proceed… This warranty shall survive closing of this transaction, but shall only apply to circumstances existing at or before closing.” The buyers argued that the sellers’ awareness of the water issue prior to closing constituted a material breach of this warranty. The sellers’ lawyer denied any defects and insisted the transaction must be completed as planned.
In an attempt to resolve the standoff, the sellers permitted the buyers another visit on July 21, 2023, this time with an engineer, Salvatore De Rose. Mr. De Rose’s subsequent report identified various concerns related to water, mold, and drainage, and concluded that he would “personally not occupy the residence until the water issues and mold issues are resolved.” Based on this report, the buyers formally advised the sellers they would not be closing the deal.
Left with an unsold home, the Mills family relisted the property in a real estate market that had cooled since their initial sale. They eventually sold the house in January 2024 to a new purchaser for $915,000, which was $160,000 less than the price agreed to by Coppendale and Cvitkovic. The new buyers conducted their own inspection before the sale closed without issue on February 9, 2024. The sellers then sued the original buyers for their losses, which they calculated at $206,703.56. This total included the $160,000 difference in sale price, $21,600 in rent for their temporary accommodation, over $12,000 in carrying costs and legal fees for the failed transaction, and over $12,000 in lost interest on the sale proceeds.
In his reasons for judgment, the Honourable Justice I.R. Smith focused on the proper interpretation of the detrimental condition clause. The buyers argued that the warranty applied up to the moment of closing, meaning the sellers’ knowledge of the water problem discovered on July 2 gave the buyers the right to rescind the contract. The sellers contended the warranty was limited to their knowledge and belief as it existed only at the time the APS was signed on May 13, 2023.
Justice Smith relied heavily on a 2018 Ontario Court of Appeal decision, Beatty v. Wei, which interpreted a similar warranty clause concerning illegal substances. In that case, the court found that such clauses represent the sellers’ knowledge at the time of signing, not at closing, unless the contract explicitly states otherwise. Justice Smith noted that other clauses within the Coppendale and Mills APS did contain specific language extending warranties to the closing date, such as clauses about the working order of chattels and the sellers’ residency status for tax purposes. The absence of such language in the detrimental condition clause, he reasoned, showed the parties intended it to apply only to the sellers’ knowledge when the deal was made.
The judge found no evidence that the sellers were aware of any significant water issue on or before May 13, 2023. The sellers testified they had only ever seen minor condensation and that they were not challenged on this point during cross-examination. Justice Smith concluded that the sellers did not make a misrepresentation when they signed the agreement. Therefore, the sellers had not breached the contract. It was the buyers who breached the APS by refusing to close.
Justice Smith also addressed whether the water in the basement even constituted a “detrimental condition.” He found that the buyers had failed to prove that it did. He gave little weight to the evidence of the buyers’ expert, Mr. De Rose, criticizing his reports as being biased and unprofessional. In contrast, he preferred the evidence of the sellers’ expert, Marianne Brown, who described the dampness as “typical and expected” for a home of that era and stated there was “no indication of leakage.” The judge also noted that his own review of the photos taken by the buyers’ realtor showed a wet or damp floor, but not the “pooling” of water the buyers had described.
Ultimately, the buyers’ application was dismissed and the sellers’ application was granted. Justice Smith ordered the buyers’ $20,000 deposit to be forfeited and paid to the sellers. He awarded the sellers total damages of $206,703.56, with the forfeited deposit to be credited against that amount, leaving the buyer, Ms. Cvitkovic, responsible for the remaining balance.
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