Don Lapowich 2007The purchaser of a condominium unit value-priced at almost $3 million paid deposits of nearly $750,000. The purchaser left the country but left a real estate agent as the go-between in the transaction.

The agent went through an inspection process and the vendor informed the agent of the completion date. The purchaser was not able to return to Canada and the vendor granted two extensions to close. When that still wasn’t enough, the vendor would not extend further.

The purchaser sued for specific performance or damages, and the vendor countered with a declaration to keep the deposit.

The court allowed the vendor’s counterclaim. The vendor had allowed extensions, which were at its sole discretion. The second closing date was not arbitrarily set,  but was three days later than real estate agent said the purchaser required.

Conclusion: Use it or lose it. (Amiri v. One West Holdings Ltd., 2012 BCSC 236)

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Statute barred mortgage: The corporation owner of a piece of property gave a mortgage to a numbered company. The owner transferred the property to its president. The president then transferred the property to his holding corporation. The president lived on the property for nine years until his death.

Meanwhile, no payments had been made within 10 years of the holding company moving to discharge the mortgage. The Manitoba Courts held that the transfers and especially the last one to the holding company did not renew the running of the 10-year limitation period.

The mortgage was statute barred because there had been no payment or acknowledgment of indebtedness for a period of more than 10 years from the date of default under the mortgage. (Abalon Holdings Ltd. v. 74486 Manitoba Ltd, 2012 MBCA 15)

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Duty of care – non-client: The husband went to India. The wife used a forged Power of Attorney to sell a property of her husband’s. The wife then refused to close and the purchasers sued for specific performance.

The husband did not appear in court, and the purchasers obtained a judgment and moved for a Vesting Order in their name. The wife hired a lawyer to resist the Vesting Order but the lawyer lost and the court ordered proceeds of the sale to be paid to this lawyer.

The lawyer did not consider the husband to be his client. Instead of holding the money in trust for the husband, he paid the proceeds to the wife.

On a lawsuit by the husband, the British Columbia Court of Appeal held the lawyer, under these circumstances, owed a duty of care to the husband. The lawyer received the funds for the husband and then breached a standard of care owed by a reasonable lawyer in these circumstances, the court ruled.

In these most unusual circumstances the lawyer could have interpleaded, which means he could by court order pay the funds into court. The court then would make the decision to whom funds are to be paid. Although the wife hired the lawyer, he should have foreseen that proceeds of sale of her husband’s property would belong to the husband. (Dhillon v. Jaffer, 2012 BCCA 156)

Full decisions are available at www.canlii.org.

Donald Lapowich, Q.C. is a partner at the law firm of Koskie, Minsky in Toronto, where he practices civil litigation, with a particular emphasis on real estate litigation and mediation, acting for builders, real estate agents and lawyers.

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