In many areas of life, being a few minutes late is inconsequential.
At one time or another, everyone has been late for a dinner reservation, music concert, or appointment. In other areas of life, such as weddings, funerals, and airplane flights, being on time is important. There are a host of areas in between where the acceptable amount of tardiness is less obvious.
In Correa v. Valstar Homes (Oakville Sixth Line) Inc., 2024 ONSC 3616 (“Correa v. Valstar”) the Ontario Superior Court of Justice decided a summary judgment motion where closing funds on a home purchase were delivered nine minutes late. Nine minutes of tardiness cost the Correas $113,000.00 to revive an aborted Agreement of Purchase and Sale, and an additional $30,000 in costs awarded to Valstar Homes (Oakville Sixth Line) Inc. (“Valstar”), as a result of the Correas’ unsuccessful motion.
On February 16, 2020, the Correas entered into an Agreement of Purchase and Sale (the “APS”) with Valstar to purchase a newly built home. The APS set a closing date of “no later than 5:00 p.m. on the 27th day of January, 2021.” The closing date could be extended by Valstar, and was extended to April 20, 2021. Notably, the APS included a “time is of the essence” clause.
On the closing date, the Correas ran into some difficulty completing their financing. At 10:29 a.m. on April 20, 2021, the Correas’ appraiser was denied entry to the Property. As the Correas were unable to obtain an appraisal, their lender, TD, was not in a position to fund on the closing date. Valstar would not agree to any extensions.
The Correas arranged for last-minute alternative private financing when TD did not approve the mortgage due to lacking a property appraisal. In the words of the Correas’ solicitor, they “moved heaven and earth today to ensure the completion of this transaction.” The Correas’ solicitor sent the closing funds to Valstar’s solicitor at 4:52 p.m., in the amount of $1,341,409.72. The funds arrived in the account of Valstar’s solicitor at 5:09 p.m.
Valstar’s position was that the Correas breached the APS, relying on the “time is of the essence” clause. On April 21, 2021, Valstar offered to revive the APS and close with the Correas upon payment of a revival fee of $100,000, plus HST, for a total of $113,000. The Correas agreed to the proposal the same day. The transaction closed the following morning.
In the lawsuit, the Correas position was that Valstar was not entitled to treat the APS as terminated at 5:01 p.m. on April 20, 2021. The Correas further argued that Valstar imposed an improper penalty in connection with the revived APS, and that the revived APS was entered into under duress.
The Court ultimately decided that the “time is of the essence” clause was enforceable, and that the APS was terminated at 5:01 p.m. on April 20, 2021. The Court found that agreements where time was of the essence are rigidly enforced. The Court quoted from 3 Gill Homes Inc. v. 5009796 Ontario Inc. (c.o.b. Kassar Homes) stating that “If the Court were to excuse the default in this case, when would a person … be permitted to terminate the agreement? One hour after the stipulated time? Two hours? One day? Intervention by the court in the face of contractual language agreed to by capable contracting parties is the beginning of a slippery and precarious slope.”
Justice Kurz acknowledged that this finding may seem harsh. It was open to Valstar to be more lenient with Correas in light of their circumstances and intent to close on April 20, 2021. However, the Court could not find that Valstar acted wrongly by insisting on compliance with a contractual term to which the parties agreed.
On the issue of whether Valstar imposed an improper penalty in connection with the revived APS, the Court found that Valstar did not. Justice Kurz found that the Correas, who were represented by legal counsel, accepted the terms of Valstar’s proposal to revive the APS without condition. Lastly, the Court found that the Correas failed to prove sufficient indices of economic duress to set aside the revived APS, and that there was no illegitimacy in Valstar relying on its legal rights under the APS. Justice Kurz granted summary judgment in favour of Valstar, despite the summary judgment motion being brought by the Correas.
The finding in Correa v. Valstar serves as a warning to prospective home buyers about the importance of timeliness in Agreements of Purchase and Sale where a “time is of the essence” clause is present. Even the smallest delay can be extremely costly.
*Since this blog was written, the case went to the Court of Appeal where the initial decision was upheld on all issues, the appeal dismissed and costs awarded to the Valstar Homes.
(Correa v. Valstar 2025 ONCA 156)