Fundamental Breach (Contract)

Lucas et al v. 1858793 Ontario Inc. o/a Howard Park et al., 2020 ONSC 964 (CanLII)

[33] The applicants submit, in the alternative, that if there was a breach, it was not a fundamental breach which would entitle 185 to terminate the Agreement. Relying on the Court of Appeal’s decision in Spirent Communications of Ottawa Ltd. v. Quake Technologies (Canada) Inc. (2008), 2008 ONCA 92 (CanLII), 88 O.R. (3d) 721 (C.A.) at paras. 35-36, the applicants submit that the breach is minor and cannot be said to have “deprive[d] the innocent party of substantially the whole benefit of the contract.” They submit, with some force, that a consideration of the five factors relevant to fundamental breach favour the applicants: (1) the applicants have otherwise performed their obligations by paying significant deposits; (2) the breach was not serious, as demonstrated by the failure of 185 to object to Duarte’s presence until just a few days before he left; (3), there is no likelihood of repetition; (4) there were very limited consequences from the breach; and (5) at the time of termination, the sale was ready to close, fulfilling all obligations under the Agreement.

[34] I agree that based on the five factors discussed in Spirent there has not been a fundamental breach. 185 cannot be said to have been deprived of “substantially the whole benefit of the contract” having regard to the limited period of occupancy by Duarte and the very limited impact it may have had on the completion of the sale of the Unit.