Facts of the Case:

In Goncalves v. 958041 Ontario Limited, the Ontario Superior Court dealt with a failed commercial real estate transaction. On February 28, 2023, plaintiff Filipe (Philip) Goncalves entered into an Agreement of Purchase and Sale (APS) with defendant 958041 Ontario Limited to buy a 7,839 sq. ft. industrial unit in Stoney Creek, Ontario. Goncalves was acting in trust for a company to be incorporated. The $1.835 million deal included a vendor take-back mortgage (VTB) for 75% of the purchase price.

The APS contained a due diligence clause (para. 7 of Schedule A) allowing the buyer 30 days from receipt of a status certificate (received March 3, 2023) to waive or satisfy conditions. If not waived in writing by that date—originally April 2, extended twice to May 5, 2023—the APS would automatically terminate under the Automatic Termination Clause, and the deposit would be returned.

Before the May 5 deadline, the buyer raised concerns about potentially hazardous materials on the premises after observing labeled chemical containers. He proposed a third amendment seeking environmental testing and remediation at the seller’s cost. This amendment was rejected. On May 19, the seller restated its position: waive the conditions and close, or walk away. The buyer did neither.

Between June and August, the seller sent multiple requests for the buyer to sign a mutual release and offered to return the deposit. The buyer remained silent until August 14, when his lawyer claimed the APS was still enforceable and threatened litigation. The buyer now offered to close the deal “as is” but alleged a breach of the seller’s representations regarding hazardous materials.

Key Contract Clauses:

• Clause 7 (Buyer’s Conditions): The APS would automatically terminate if conditions were not waived in writing by the deadline.

• Clause 23 (Time is of the Essence): All time limits are binding unless extended by written agreement signed by both parties.

• Clause 15 (Completion Date): The closing date would be 30 days after waiver of conditions.

Arguments and Court’s Analysis:

The buyer argued the seller waived strict reliance on the time limits by conduct and that the APS was revived through continued communication. He sought specific performance of the APS based on alleged bad faith and breach of representations.

The court rejected these arguments. Justice Sheard found:

• The Automatic Termination Clause terminated the APS on May 6, 2023, when the buyer failed to deliver a written waiver.

• The seller's May 19 email was not a waiver of rights, but a proposal to extend the deadline—one that was never accepted in writing.

• No new agreement was reached, and the buyer’s attempts to impose new terms were a repudiation of the contract.

• The seller accepted this repudiation through its continued position that the APS had ended.

The court also found the buyer offered no proof of hazardous waste and failed to establish that the property was unique or that damages would be an inadequate remedy. Therefore, specific performance was denied.

Outcome:

• The APS was terminated on May 6, 2023.

• The buyer repudiated the contract; the seller accepted the repudiation.

• The seller’s motion for summary judgment was granted.

• The buyer’s claim, including for specific performance, was dismissed.

• The buyer’s motion for a certificate of pending litigation was denied as moot.