A Failed Real Estate Deal—What's The Damage?

The Rosseau Group Inc. v. 2528061 Ontario Inc.

Overview

The Rosseau Group Inc. (Rosseau) was a real estate developer. Rosseau entered into an agreement of purchase and sale with 2528061 Ontario Inc. to buy land for development purposes. Once the land had been rezoned and subdivided, Rosseau planned to sell the serviced lots. At trial, it was estimated that Rosseau would make a profit of around C$10 million to C$12 million dollars from the sale of the serviced lots.

The vendor failed to close, and the land had gone up in value since the agreement of purchase and sale was signed.

How to measure the damages?

In instances where a vendor fails to complete an agreement of purchase and sale, the conventional measure for assessing the innocent purchaser's damages is the difference between the agreed-upon purchase price and the market value of the property as of the closing date. In Rosseau Group Inc. v. 2528061 Ontario Inc., the Ontario Court of Appeal overturned