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Damages - Real Property

. The Rosseau Group Inc. v. 2528061 Ontario Inc.

In The Rosseau Group Inc. v. 2528061 Ontario Inc. (Ont CA, 2023) the Court of Appeal considers 'measure of damages', here in the specific real property context:
[71] The key driver of damages under the normal measure is the market value of the land on the assessment date. The normal measure of damages compensates the innocent purchaser for the loss of the market value of the lands on the closing date less the purchase price that had to be paid to acquire them. The concept of market value of the land takes into account the value the land has because it can be developed.

[72] In Musqueam Indian Band v. Glass, 2000 SCC 52, [2000] 2 S.C.R. 633, at para. 37, Gonthier J. drew on precedents from various situations in which the term value is used in connection with real estate to provide an all-compendious general definition. He said: “‘Value’ in real estate law generally means the fair market value of the land, which is based on what a seller and buyer, ‘each knowledgeable and willing,’ would pay for it on the open market”.

[73] One of the cases relied on by Gonthier J. was the decision of this court in Re Farlinger Developments Ltd. and Borough of East York, 1975 CanLII 587 (ON CA), [1975] 61 D.L.R. (3d) 193, 9 O.R. (2d) 553, an expropriation case. As that case shows, determining market value in the expropriation context relies on expert appraisal evidence that considers the highest and best use of the property, that is, the use to which the property could reasonably and probably be put in the future to maximize its economic return, including by redevelopment: at pp. 199-200.

[74] Assessing market value for the purpose of damages for breach of a purchase agreement for the sale of land employs the same concepts. It generally requires appraisal evidence: DHMK Properties Inc. v. 2296608 Ontario Inc., 2017 ONSC 2432, at para. 56, rev’d on other grounds 2017 ONCA 961. Appraisal evidence can take into account the value of the property based on what would be its reasonable and probable highest and best use and that includes development: see for example 1427814 Ontario Limited v. 3697584 Canada Inc., 2012 ONSC 156, at paras. 511-17; WED Investments Limited v. Showcase Woodycrest Inc., 2021 ONSC 237, at paras. 149, 151, and 155. In other words, the market value of the land can take into account, as at the valuation date, the market’s perspective of the value of the current and potential future uses and opportunities available to the land’s owner, including development.

[75] There was no suggestion here that a calculation of market value at the closing date would somehow miss or exclude the development value of the lands. The APS, negotiated in January 2017 between arms’ length market participants, attributed value to the property solely by reference to its potential development, as the price was $350,000 per developable acre for residential development. The trial judge found that 252 had knowledge that the value of the property had increased by the closing date based on market evidence − 252 received an offer to purchase the property of $11 million in April 2017, a Letter of Intent at $640,000 per developable acre (almost double that in the APS) in September 2017, and an additional offer to purchase the property that same month for $14 million.


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Last modified: 11-12-23
By: admin