A recent decision by the Ontario Superior Court of Justice serves as a stark reminder to real estate developers regarding the legal consequences of terminating purchase agreements1. In the case of Ambria (Bloomington) Limited v. Esmaeili, the court dismissed a builder’s claim for over $1 million in damages against two buyers who had defaulted on a pre-construction home purchase. The ruling highlights the critical distinction between keeping a contract alive for performance and accepting a repudiation that brings the contract to an end. Justice J.K. Penman granted what is known as a boomerang summary judgment, dismissing the plaintiff’s case entirely despite the fact that the buyers had admittedly breached the agreement.
The dispute originated from a high-value real estate transaction involving a property in Aurora, Ontario. In February 2022, the defendants entered into an Agreement of Purchase and Sale with Ambria (Bloomington) Limited to purchase a newly constructed home on Old Bloomington Road. The purchase price for the property, identified as Lot 20, was set at just over $4 million. Upon signing the agreement, the buyers paid an initial deposit of $30,000. However, the financial obligations that followed proved to be a hurdle the buyers could not clear. The agreement stipulated that a second deposit of roughly $70,000 was due in March 2022. The buyers missed this deadline and requested an extension, citing difficulties in selling their existing property.
Ambria granted a one-month extension, but the financial issues persisted. By August 2022, when a third deposit was due, the buyers defaulted again. Their cheques for both the second and third deposits were returned due to insufficient funds. On August 10, 2022, the buyers informed the builder that the current market situation prevented them from selling their own home and that they lacked the funds to proceed with the deposits. This communication marked a turning point in the relationship between the parties. While Ambria initially gave the buyers a deadline in November 2022 to remedy the default, the buyers were unable to comply.
On November 30, 2022, Ambria took decisive action. The builder sent a letter to the buyers stating that the purchase agreement was terminated effective immediately. The correspondence made it clear that all monies previously paid were forfeited to the vendor as liquidated damages. Ambria did not proceed with building the specific home outlined in the contract and retained the initial deposit. Despite terminating the agreement and keeping the deposit, Ambria commenced a lawsuit in February 2023, seeking damages in excess of $1 million for breach of contract. The builder argued that it was entitled to recover losses associated with the failed transaction, including carrying costs, construction discrepancies, and the loss of bargain due to a decline in property value.
The matter came before Justice Penman on a motion for summary judgment brought by Ambria. The builder sought a declaration that the agreement was still binding and enforceable, alongside a judgment for the claimed damages. The defendants, while acknowledging their default, argued that Ambria had no further claim to damages because the builder had explicitly accepted their repudiation of the contract. They contended that once the contract was terminated, the builder could not sue for damages as if the contract were still in force. The defendants also argued that Ambria had failed to provide sufficient evidence to prove the alleged financial losses.
A significant portion of the hearing focused on the evidentiary record Ambria presented to support its claims. The builder sought to rely on opinion evidence from a realtor who served as the general manager for the sales team exclusively representing Ambria. The court found this evidence problematic. Justice Penman ruled that the realtor lacked the necessary independence and impartiality required of an expert witness. The court noted that the realtor had personally sold the property to the defendants and had been involved in strategic advice regarding mitigation. The judge described the opinion as being borne out of an echo chamber and ruled it inadmissible due to bias and a lack of proper qualification in property valuation.
With the expert evidence excluded, the court turned to the central legal issue of whether the agreement had been terminated. The law provides that when one party repudiates a contract, the innocent party has a choice. They can either hold the contract open and insist on performance, or they can accept the repudiation and terminate the contract. If the innocent party chooses termination, both parties are discharged from future obligations. Justice Penman found that the buyers’ email in November 2022 constituted a clear declaration of anticipatory breach. When Ambria responded on November 30 by stating the agreement was terminated effective immediately, they exercised their option to end the contract.
The court held that by accepting the repudiation, Ambria relieved both itself and the buyers from future performance obligations. The agreement specifically provided that upon default, the vendor could terminate the agreement and forfeit the deposits. Justice Penman reasoned that this clause made commercial sense, as a defaulting purchaser would not expect the vendor to continue building the property after termination. Because Ambria chose to terminate the contract rather than keep it alive, the builder was precluded from seeking damages that would only be available if the contract were still being performed. The builder could not claim loss of bargain damages or future costs because the contractual relationship had ceased to exist upon the issuance of the termination letter.
Even if the contract had not been legally terminated in a way that precluded damages, the court found that Ambria failed to prove its financial losses. The judge was critical of the evidence provided by Ambria’s director of corporate and legal affairs. The initial affidavit filed in support of the motion contained only bald assertions of costs without supporting documentation such as invoices, agreements, or policies. For instance, the builder claimed over $240,000 in carrying costs and $210,000 in construction costs but did not provide the calculations or source data to back up these figures.
The situation was further complicated by Ambria’s attempt to file supplementary evidence just days before the hearing. The builder sought to introduce a new affidavit to fill the gaps in its evidence, a move the defendants opposed as impermissible case splitting. The court agreed with the defendants, noting that it was unfair for a plaintiff to add new evidence after the defendants had already responded to the original case. Justice Penman dismissed the request to adjourn and refused to admit the late affidavit. However, the judge noted that even if the supplementary affidavit were admitted, it contained unreliable assertions.
The court scrutinized the specific claims for damages and found them lacking in credibility. Regarding the claim for interest, the builder argued it would have earned interest on the deposit money had the default not occurred. The judge rejected this, noting that construction costs would have likely consumed those funds, meaning they would not have been sitting in an account earning interest. Similarly, a claim for increased construction costs was dismissed because the supporting opinion came from an unidentified source and appeared to be baseless. The judge remarked that the figure appeared to have been picked out of thin air.
The builder also claimed distinct damages for remarketing the property and administrative fees. Ambria asserted that marketing costs had increased by 38 percent, but the court found no explanation for this calculation. The affidavit referenced marketing budgets for 50 unsold lots, which the judge found confusing given that the number of unsold lots remained constant between 2021 and 2025. The claim for $50,000 in administrative fees was equally unsuccessful. The builder justified this amount by citing costs associated with other defaulting purchasers, an argument the court rejected. Justice Penman ruled that the defendants in this case could not be held responsible for costs incurred due to defaults by other buyers.
The procedural outcome of the case was a boomerang summary judgment. While Ambria had moved for judgment in its favor, the rules of civil procedure allow a judge to grant judgment to the responding party if there is no genuine issue requiring a trial. The court determined that the parties had put their best foot forward and that the record was complete enough to make a final determination. Since Ambria had terminated the agreement and failed to prove any valid damages, there was no legal basis for the claim to proceed further.
Justice Penman ultimately dismissed Ambria’s motion and granted judgment in favor of the defendants. The ruling clarified that while the builder was entitled to keep the forfeited deposit as per the contract terms, no further remedy was available. The decision emphasizes the importance for builders and vendors to carefully consider their legal strategy when a purchaser defaults. Electing to terminate an agreement “effective immediately” can unintentionally close the door on substantial future damages claims. The court encouraged the parties to settle the issue of costs, marking the end of a lawsuit where the plaintiff’s own motion resulted in the dismissal of their case.
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