Legal Blog

Court of Appeal Examines Relief from Forfeiture Finding

Scicluna v. Solstice Two Limited 2018 Ont CA

A purchaser defaulted under an agreement of purchase and sale. She had already paid $264,000 of the $294,000 purchase price. Shortly after the aborted closing date, the purchaser assigned into bankruptcy, but did not list the $264,000 or any claim for it in her assets. The vendor requested that she sign an agreement in which she agree that the vendor would resell the house and return everything other than $30,000. She misread the request and assumed the vendor was to keep $60,000 and sued the vendor for the return of the full amount previously paid. The vendor then claimed the total amount – even though it ultimately re-sold the house for $435,000. The motions judge allowed the vendor to keep $30,000, granted relief from forfeiture for the remainder, and, much to the consternation of the purchaser, directed that the remainder be paid to the purchaser’s trustee in bankruptcy. Both the vendor and the purchaser appealed and the Court of Appeal dismissed both appeals. It held that a payment of 80% of the total purchase price was so grossly disproportionate that there would be relief from forfeiture. It also held that it does not lie in the mouth of a bankrupt who has hidden an asset from her trustee to claim that the trustee was not entitled to that asset – even after the bankruptcy discharge.

Written by Jonathan Speigel, the founding partner of Speigel Nichols Fox LLP, leads the litigation and construction practices.