Background
In 2017, Lin Zhou agreed to purchase a newly built home in a Treasure Hill Homes development for $1,680,151.38, paying deposits of $127,500. Two weeks before the scheduled September 28, 2017 closing, Zhou’s counsel notified the builder that she was terminating the agreement of purchase and sale. Eyelet Investment Corp., operating as Treasure Hill Homes, treated the termination as an anticipatory breach and undertook to mitigate its damages. Six months later, the property sold for $1,300,000 — roughly $380,000 below the contract price.
Eyelet sued Zhou for breach of contract, claiming $253,981.97 representing the difference between the APS price and the eventual resale price, plus carrying costs, less the deposit. The matter proceeded by summary judgment before Justice Des Rosiers of the Superior Court of Justice. Notably, the builder had not listed the property on MLS, citing a concern about “flooding” the market and depressing prices across its development, and its affiant could not recall what specific marketing steps were taken for this particular property in the six months between repudiation and resale.
Justice Des Rosiers dismissed the appellant’s motion and the claim entirely. She drew an adverse inference from the builder’s failure to produce records of its marketing efforts, found that Eyelet had delayed and insufficiently marketed the property, and assessed damages as of the date of repudiation (September 11, 2017) using the builder’s own appraisal. Under that methodology, after subtracting the deposit from the difference between the APS price and the appraised September 2017 value, no net damages remained. Eyelet appealed.
The Court’s Holding
The Court of Appeal (Copeland, Monahan and Gomery JJ.A.) dismissed the appeal on all grounds. The court confirmed that findings on damages and mitigation are questions of mixed fact and law attracting deference on appeal absent a legal error, citing Housen v. Nikolaisen, 2002 SCC 33. The panel found no reversible error in the motion judge’s conclusion that the respondent had discharged her burden of proving Eyelet’s failure to mitigate — a burden that, consistent with Southcott Estates Inc. v. Toronto Catholic District School Board, 2012 SCC 51, rests on the party in breach.
The court upheld the motion judge’s adverse inference drawn from Eyelet’s lack of records. Three factors supported the failure-to-mitigate finding: the absence of property-specific marketing evidence; the six-month delay before resale; and a final sale price below both parties’ appraisals as of both the repudiation date and the eventual sale date. The court also noted that on cross-examination, Eyelet’s affiant admitted he did not know whether any other offers had been made on the property, and the undertaking response confirmed the builder held no relevant records.
The court rejected the argument that proceeding by summary judgment was improper once the motion judge found Eyelet’s evidence insufficient. Both parties had agreed to summary judgment, and it is well-established that parties must put their best foot forward on such motions; the fact that Eyelet failed to do so did not retroactively render the process inappropriate.
Key Takeaways
- A vendor-plaintiff seeking damages for a purchaser’s failure to close bears no burden to prove mitigation, but once the defendant raises credible evidence of failure to mitigate, the plaintiff must produce particularized, property-specific evidence of its marketing efforts — general testimony about usual business practices is insufficient.
- Failure to list a property on MLS is not automatically a failure to mitigate, but it triggers an obligation to demonstrate a reasonable alternative marketing strategy with documentary support; unexplained record gaps invite adverse inferences.
- Where a seller fails to mitigate, courts may depart from the conventional measure of damages (difference between contract price and resale price) and instead assess damages as of the date of breach using appraisal evidence — potentially eliminating any recovery if the appraised value is sufficiently close to the contract price.
- Agreeing to proceed by summary judgment is a strategic commitment: a party cannot argue the process was inappropriate after the fact simply because it failed to adduce sufficient evidence.
Why It Matters
This decision serves as a practical warning to residential developers and other vendors who face anticipatory repudiation of purchase agreements. A deliberate choice to delay re-marketing — even for commercially understandable reasons such as protecting price levels across a larger development — must be supported by contemporaneous records documenting the rationale and the marketing steps actually taken for each specific property. Without such records, a vendor risks both an adverse inference and a damages assessment anchored to the breach date rather than to the (lower) eventual resale price, potentially wiping out the claim entirely.
More broadly, the decision reinforces the appellate courts’ deference to motion judges on mixed fact-and-law questions of mitigation and damages, and underscores that summary judgment is a high-stakes procedural choice: plaintiffs who agree to that process and then fail to marshal their evidence cannot obtain a second bite at trial.