Significant Deficiencies in Pre-Construction Amounting to a Breach of Contract by the Vendor
The Ontario Court of Appeal recently held that the Ontario New Home Warranties Plan Act does not preclude home buyers from taking legal action against builders for breaches beyond the statutory warranties provided by the Act. This landmark decision has significant implications for home buyers and builders alike. Fundamental Breach of Agreement of Purchase and Sale (APS) For a fundamental breach of an Agreement of Purchase and Sale (APS) by the vendor to occur, the deficiencies must be so severe that they cannot be remedied, or there must be a significant breakdown of trust between the contractor and homeowner. In 2002759 Ontario Ltd et al. v Koropeski et al, it is established that fundamental breach is a high threshold; mere deficient work does not entitle a party to terminate a contract. The deficiencies must constitute a breach of contract or demonstrate that the contractor is unwilling or unable to perform their work. Currently, there are no cases that discuss the breakdown of the contractor-homeowner relationship resulting in a loss of trust or faith as grounds for the transaction not proceeding. The prevailing case law focuses on severely deficient work. Minor deficiencies do not justify stopping the transaction; the deficiencies must be substantial. Caveat Emptor “Caveat emptor,” meaning “buyer beware,” is a basic contractual principle. However, there are exceptions in the context of building deficiencies due to the disparity in information, knowledge, and expertise between vendors and purchasers. Builders are in the best position to understand the building’s integrity, which most purchasers cannot detect, even with an inspection. Some of these exceptions include: The building being incomplete at the time of sale. Fraud on the part of the vendor. The building being substantially different from the building that was the subject of the contract of sale. The vendor has an obligation to satisfy material obligations under an APS agreement, ensuring the building is up to par and consistent with what was agreed upon. Reasonable Opportunity The law requires contractors to be given reasonable opportunities to correct their deficiencies and mistakes before the vendor can claim against them in the courts of law. This is supported by TIF Mechanical Limited v Ortolli v Lobello, which states that contractors should be afforded these opportunities unless they are in breach of contract. Contractors deserve a fair and reasonable opportunity to correct their mistakes, as a deficiency alone does not constitute a breach of contract. Without this opportunity, contractors cannot be denied payment for their work. In Rocksolid v Bertolissi, it is established that a vendor cannot prevent a contractor from entering the property after uncovering a deficiency, as this could be considered a breach and repudiation by the vendor. However, contractors must remain ready, willing, and able to fix these deficiencies and complete the contract. If the vendor does not allow for reasonable opportunity for correction, it could negatively impact their outcome in court. However, if there are numerous deficiencies that render the property non-compliant with the terms of the APS, this may be determined to be a fundamental breach of the contract. This would exempt the owner from providing the contractor a reasonable […]
Read moreLife Insurance Beneficiary Designation After Separation
Introduction Typically, separated spouses do not intend to benefit their previous partner if they pass. Unless the separation agreement includes a requirement to maintain designations to secure support obligations, most separated spouses prefer the freedom to choose who to designate their life insurance policy to. If the parties intend to not have the remaining spouse still be the beneficiary of the life insurance policy, they must use specific language that is clear and direct to revoke a predated beneficiary designation or to release a claim to such assets. General release clauses will not bar the party from claiming beneficiary status. Case law shows that a life insurance policy will usually trump a separation agreement, even with mutual releases and renounced rights. Presumption of Non-Revocation In Richardson Estate v Mew, the court states that “A former spouse is entitled to proceeds of a life insurance policy if his or her designation as beneficiary has not changed. This result follows even where there is a separation agreement in which the parties exchange mutual releases and renounce all rights and claims in the other’s estate.” This showcases the presumption of non-revocation; when a couple separates but does not yet divorce, gifts left to the separated spouse in a will are not automatically revoked. There is an exception to the presumption laid out in Richardson Estate, as demonstrated in the Martindale case. Here, the court states that it would be a breach of the separation agreement, and against the good conscience of the appellant, to keep the proceeds from the policy if they have surrendered any right they may have had to the property of the deceased. Legal Test for Revoking a Beneficiary The test for determining if a beneficiary designation can be revoked is derived from sections 51(1) and 52(1) of the Succession Law Reform Act: 51(1): A participant may designate a person to receive a benefit payable under a plan on the participant’s death, (a) by an instrument signed by him or her or signed on his or her behalf by another person in his or her presence and by his or her direction; or (b) by will, and may revoke the designation by either of those methods. 52(1): A revocation in a will is effective to revoke a designation made by instrument only if the revocation relates expressly to the designation, either generally or specifically. Therefore, a beneficiary can be revoked by an instrument signed by the testator or by an individual on their behalf in their presence or by their direction or by will, and the revocation must expressly relate to the designation. In the case of domestic contracts and separation agreements, it must be clear and in accordance with section 52(1) for the agreement or contract to revoke a beneficiary. Supporting Case Law The case law supporting the estate’s position that the estate is the beneficiary of the proceeds of the life insurance policy is highlighted below: In Eccleston Estate v Eccleston, a New Brunswick case, it was discussed how domestic contracts can revoke a beneficiary if the following elements are met: Section 15(c) and section 17 of the […]
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