In a recent Ontario decision, the court had to determine whether a daughter and her father had entered into a valid oral agreement over the transfer of the family home.
Father and Daughter Agree to Transfer Family Home
The father owned the family home in Mississauga, Ontario, which he no longer lived in.
Instead, at the time, the daughter, her partner and their two children lived in the home.
The daughter and her partner entered into an oral agreement to purchase the family home from the father. There was no written agreement.
Father Refuses to Transfer Home to Daughter
The transfer deal was originally set to close on August 31, 2016.
In April 2017, however, the father refused to close the sale of the home to the daughter and her partner. Instead, he demanded more money. When that demand was not met, he demanded that the couple and their children vacate the home so he could sell it on the open market.
The couple claimed that the father had agreed to extend the closing to May 31, 2017, which the father denied.
Daughter Sues Father for Specific Performance or Damages
As a result of the father’s refusal to sell them the home, the couple sued him for specific performance or, alternately, for damages for breach of contract, punitive and exemplary damages of $100,000, special damages of approximately $166,000 comprising the amount they spent to renovate the home and the partner’s lost profit and opportunities in his business which he suffered when he, as a contractor, did the renovations to the house. In response, the father counterclaimed for rent to be set by the court.
Recognition of Oral Agreements
The court began by setting out the four criteria to consider in determining whether an oral contract exists:
- It is necessary to distill from the words and actions of the parties, at the time the contract was entered into, what they intended;
- Evidence of the parties’ subjective intentions has no independent place in determining the terms of their bargain;
- The test of what the parties agreed to requires an objective determination; and
- The contract must include the requisite elements of offer, acceptance and consideration.
The court explained that, essentially, the question is whether there was a meeting of the minds, which must be determined objectively by asking: would an objective, reasonable bystander conclude that, in all the circumstances, the parties intended to contract?
The court further noted that an intention to contract alone is not sufficient to create an enforceable agreement as the essential terms of the agreement must also be sufficiently certain.
Additionally, the court discussed the role of art performance or continued negotiations in creating an enforceable agreement.
Finally, the court explained:
“Negotiations, however advanced, do not constitute an enforceable agreement where (1) there is uncertainty as to essential terms, (2) the provisions of what was agreed to are insufficiently certain, and (3) it is the intention that a binding agreement should not arise until a formal document has been executed.”
Court Rules That There Was No Valid Agreement
Ultimately, the court found that there had been no valid agreement to transfer the home. While the court noted that the parties had agreed to certain terms of the contract, such as the transfer date, expenses, and certain renovations, it ruled that they had failed to agree to one fundamental term: the price.
As such, the court held that, while the parties had discussed a price, they had never agreed to a certain amount. Therefore, the court found that there was no valid agreement. It further found that there had been no agreement to extend the closing date.
In the result, the court, therefore, dismissed the couple’s claim for specific performance. However, the court did award the couple damages for the costs of renovations completed in the amount of $163,000.
The court also declared the father the owner of the home and stated that he was free to market and sell the home.
Finally, while the court rejected the father’s counterclaim for past rent, it stated that the couple was entitled to remain in the home until it was sold and had to pay rent, the total of which could not fall below $1,800.00.
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