Court of Appeal of Quebec

Ly c. Construction Sainte Gabrielle inc.

September 06, 2018

500-09-026163-162

Doyon, Savard, Mainville

Appeals from a judgment of the Superior Court dismissing an application for the specific performance of preliminary contracts, granting in part an application for damages, and granting in part a cross-application. Allowed in part.

Shortly after the appellants moved into a home built by the respondent, the parties signed preliminary contracts for the construction of two more homes to be located nearby, where the appellant’s family members would live. The respondent failed to perform the contract, committing instead to build a home for third parties on the lots in question. The appellants sought the performance of the preliminary contracts or, in the alternative, a condemnation of nearly $500,000 for damages suffered. The trial judge found that there was no serious ground justifying the unilateral resiliation of the preliminary contracts and refused to order the main remedy sought, but she granted the appellants $50,000 in non-pecuniary damages for the loss of proximity of the homes for their family members.

The preliminary contract under art. 1785 of the Civil Code of Québec (S.Q. 1991, c. 64) is a bilateral promise to purchase or sell a property, whether already built or to be built. This mere promise is not equivalent to the proposed contract but in fact consists of the parties binding themselves to enter into it. In principle, there is nothing preventing its specific performance from being ordered. However, circumstances must allow it. In this case, the judge could find that the order sought was vague and that it would potentially be exceedingly complex for the Court to oversee its enforcement. She could not define exactly or with certainty what the respondent would have to build, at what price, and in what time period. The facts did not ground enforceable conclusions concerning the construction of the homes to be built, making it impossible to rule on the transfer of title.

An intervention is necessary with respect to the damages awarded. First, by refusing to award pecuniary damages representing the difference between the agreed price of the planned residences and the market value of comparable homes in the same neighbourhood, the judge ignored evidence that was  before her. The homes that the respondent undertook to build for third parties were sufficiently similar to be accepted as comparable. In light of this evidence, the appellants’ financial loss should have been set at $50,000 per residence. Second, the judge erred in law by increasing the amount of non-pecuniary damages because of the bad faith marking the respondent’s conduct, indirectly transforming compensatory damages into punitive damages. Because the harm suffered by the appellants can result only from the loss of ideal proximity to their family members, an amount of $10,000 should be substituted for the $50,000 awarded under this head.

*Summary by SOQUIJ

Text of the decision: Http://citoyens.soquij.qc.ca. . This link open an external website in a new window.

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