Generally, the answer is no – especially when there’s a “time is of the essence” clause in the agreement of purchase and sale.
Recently, Dan Chitiz and Michael Crampton of CP LLP successfully represented the defendant vendor in Gil Shcolyar v. Bensher Holdings Limited, 2025 ONSC 2205. The court dismissed the purchaser’s action to compel the vendor to sell its land after the purchaser failed to close the transaction. We also successfully obtained a declaration in favor of the vendor that it is entitled to retain the deposits (called “forfeited” deposits).
The purchaser’s case is that he was unable to obtain the financing that he required to close the transaction on the closing date due to the pandemic. He further asserted that the vendor acted unreasonably or in bad faith in not agreeing to extend the closing date, and the vendor was also not ready, willing or able to close on the closing date.
The court, however, agreed with the vendor’s position. Importantly, it reiterated that “COVID-19 did not create a blanket excuse for non-performance”. This case was not one of “a minor glitch”, as the purchaser and the financial institution had months before COVID-19 to address financing. The court also rejected the purchaser’s evidence that the vendor told the purchaser on phone it would not close the transaction.
The law, the contract, and the evidence all matter. The vendor’s position is backed by the legal principle that enforcing a contractual “time is of the essence” clause generally does not constitute bad faith. Carefully crafted languages in the contract, including its amendments, reinforced the vendor’s arguments. Evidence was convincingly presented in court to show that the vendor was ready, willing and able to close on the closing date under the agreement, entitling the vendor to keep the deposits amid various challenges by the purchaser.
If you are running into a property or commercial dispute, reach out to our litigation team.
Chit Leung