Written by Christopher Ferencz and Simon Crawford
"Self-induced urgency is not “urgent”."
That was the opening line, and the ultimate decision from Hon. Justice Myers in Nicholas v Ogniewicz, 2021 ONSC 4442. The case involved an application by the purchaser for a one-hour urgent hearing under the Vendors and Purchasers Act, RSO 1990, c. V.2 to determine the validity of a series of particularly onerous requisitions submitted on behalf of the purchaser in a recent real estate transaction. The urgent application was ultimately denied on the basis that there was (1) no risk of physical injury; (2) no risk to the property of irremediable waste; (3) no confidential information at risk of disclosure or misuse; and (4) no business at risk of irreparable harm.
In real estate transactions, both the content and timing of requisitions are critical. When disputes arise as to the validity of requisitions, the Vendors and Purchasers Act, RSO 1990, c V.2 provides a judicial mechanism through which the courts may consider such disputes and provide a decision. As one might expect, the ongoing COVID-19 pandemic has had a significant impact on the scheduling of judicial proceedings in Ontario, and particularly Toronto's commercial list, where there is an ever-growing backlog of motion and application hearings leading to what Justice Meyers noted to be "unacceptably long timeouts for civil motions and applications due to the effects of the pandemic and a lack of resources."
This bottleneck in Ontario courts does not mean applications cannot be brought on an urgent basis, but in such circumstances applicants must be able to show real urgency. As a result of the pandemic, the courts have provided loose guidance on what matters may be considered urgent under certain Notices to the Profession, which for civil matters is limited to "urgent and time-sensitive motions and applications in civil and commercial list matters, where immediate and significant financial repercussions may result if there is no judicial proceeding." In Nicholas v Ogniewicz, the applicant's request for a hearing was made pursuant to Notice to Profession – Toronto, Toronto Expansion Protocol for Court Hearings during COVID-19 pandemic, Part C.1.8 on the basis that the urgent request to schedule a matter could not wait until the next Civil Practice Court.
The case at hand involved an agreement of purchase and sale for real property entered into by the parties on March 23, 2021, and scheduled to close on June 25, 2021. The agreement was silent as to the deadline for the purchaser's requisitions and the parties subsequently agreed to a June 11 requisition date, just two weeks prior to closing. On June 11, 2021, the purchaser's lawyer submitted a lengthy requisition letter that contained numerous requisitions that could likely not be accomplished physically before the closing date. Upon receipt of the onerous requisitions, the vendor disputed requisitions taking the position that the sale of the property was "as-is, where is" and therefore, the purchaser's requisitions were invalid.
On June 18, 2021, the purchaser requested an urgent hearing to determine the validity of the purchaser's requisitions under the Vendors and Purchasers Act. Justice Meyers was unsympathetic and noted that "the time sensitivity to the proposed motion was self-induced by both sides." The vendor agreed to a very late requisition date and the purchaser waited too long to obtain the relief sought. This real estate transaction did not fall into any of the previously-noted categories of urgency and, though the list is non-exhaustive, in the context of this real estate deal, the risks were termination of the agreement or renegotiation, and the court will not step in to help the parties understand their own negotiating positions by determining their rights on an urgent basis.
Ultimately, the dispute was not one that could be resolved in a one-hour hearing days before the scheduled closing. There were questions of fact, questions of law and questions of mixed fact and law, all of which would have to be determined in the context of a longer-term legal proceeding if the parties chose not to close or renegotiate, and to assert their rights.
In the wake of Nicholas v Ogniewicz, it is important for both vendors and purchasers in real estate transactions to be mindful of the practical time horizons for requisitions, address them as soon as possible and be particularly cautious when negotiating late requisition dates. As long as the COVID-19 pandemic is creating a judicial log jam, the courts will reject last-minute applications to resolve these types of real estate disputes where genuine urgency cannot be shown.
Please contact the Bennett Jones’ Commercial Real Estate group or any of the authors for more information about any of the cases or issues discussed in this post.