As an update to our prior posting on this matter, the British Columbia Court of Appeal have recently considered another factual scenario where the purchaser failed to complete on a contract of purchase and sale in the case of Amiri v One West Holdings Ltd.
In this case the purchaser entered into a contract of purchase and sale for a $3 million dollar condominium in the building known as “The Erickson” in Vancouver in November, 2005. The purchaser made several deposit payments over the years, pursuant to the contract of purchase and sale and totaling $745,325.00.
Although the project was originally set for an estimated completion during sometime in 2008, the purchaser did not receive a formal notice of completion until February 26, 2010 advising him that the completion date would be on March 15, 2010. At this stage, the purchaser was in Iran attending to business interests and did not receive the notice until early March, 2010. His lawyer attempted to obtain a one month extension and the parties eventually agreed to extend the closing date until March 29, 2010. During the time leading up to the closing date, the purchaser was involved in a car accident in Iran and suffered injuries wherein he was advised to remain on bed rest for three weeks and presumably could not return to Canada.
On the closing date of March 29, 2010, the purchaser was not able to the complete the transaction. The purchaser’s lawyer attempted to extend the closing date for two days until April 1, 2010, but unfortunately the purchaser was also unable to obtain financing by this date. There was some back and forth between the vendor and purchaser’s solicitors with without prejudice negotiations regarding the closing date. However, by April 9, 2010, the vendor’s solicitor had advised the purchaser in writing that the contract was terminated and the total amount of the deposit was forfeited.
The purchaser was in a position to close the transaction by April 16, 2010, however, by this stage the vendor had taken the position that the contract had terminated.
This case was heard by the Supreme Court of British Columbia prior to the decision in Tang vs. Zhang. Consequently, the argument made by the purchaser’s counsel to the British Columbia Court of Appeal was to assert that the payments made by the purchaser were not a true deposit and were instead a genuine estimate of pre-liquidated damages. This was based on the wording of an extension agreement signed between the parties.
The Court of Appeal did not agree, found that the funds were a true deposit and dismissed the application of the purchaser. Consequently, the entire amount of the $745,325.00 deposit was kept by the vendor.
This case serves as a warning to purchasers of the necessity to ensure that they are able to complete on the day of closing. This purchaser had almost 5 years from signing the contract of purchaser and sale until the day of closing to secure financing and it is unfortunate that a series of circumstances prevented him from completing on the closing date.