Losani Homes (Applicant) and Paris Land Development Ltd. (Respondent) entered into a 2016 Agreement of Purchase and Sale for development land in Paris, Ontario for $6 million, with a $3 million vendor-take-back (VTB) mortgage registered as a first charge.
A dispute arose regarding a parcel called "Heinbuch land", with conflicting interpretations of obligations under three legal documents.
In March 2021, Losani attempted to transfer the Heinbuch land back, but the vendor objected, claiming the draft plan of subdivision needed to include six approved lots before discharging the VTB mortgage.
Losani later contracted to sell Lot 002, unrelated to Heinbuch land, and sought partial discharge of the VTB mortgage to facilitate the sale.
Court's Analysis
Contractual Terms: The vendor argued that no contractual provision allowed partial discharge except for municipal dedications. The court agreed, emphasizing the vendor’s right to refuse discharge until six lots were conveyed per the agreement.
Statutory Relief (s. 12(3) Mortgages Act): The court declined to exercise discretion, finding the dispute over the six-lot condition central to determining entitlement to a discharge.
Equitable Relief: The court rejected Losani’s argument that there was no prejudice to the vendor, noting that entering a sale with pending litigation was a business risk.
Decision
Motion denied; the VTB mortgage remains.
Case adjourned to February 14, 2025, for scheduling.
Costs to be determined later.
No monetary damages or costs were awarded at this stage.
