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ARTICLE · 12 JUNE 2025

Annulment Clauses And Good Faith

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The Ontario Superior Court of Justice has recently reaffirmed the importance of good faith—or the lack thereof—and reasonableness in real estate transactions...

CanadaReal Estate and Construction
Scott Martyn
Scott Martyn
Samuel Judson
Samuel Judson
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Introduction

The Ontario Superior Court of Justice has recently reaffirmed the importance of good faith—or the lack thereof—and reasonableness in real estate transactions, particularly when disputes arise over title defects, third-party claims and the operation of the annulment clause in a standard real estate agreement of purchase and sale. Brighton Breeze Ltd. v Noel Property Management Ltd.1 demonstrates the careful balance courts strike between enforcing contractual rights and ensuring fair dealing.

Key Facts

On March 3, 2021, Noel Property Management Ltd. (Noel), as vendor, entered into an Agreement of Purchase and Sale (APS) with Sivanandarajah Sivarajan (Sivarajan), as purchaser, for a waterfront property in Brighton, Ontario. Sivarajan, the sole officer and director of Brighton Breeze Ltd. (Brighton), subsequently assigned the APS to Brighton. Brighton intended to develop a townhouse project on the property.

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