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Cassels Wins Appeal on Disputed Oral Contract to Buy Family Home


On September 29, 2022, the Ontario Court of Appeal released its decision in Downey v. Arey, 2022 ONCA 673. At issue was the enforceability of an oral contract between a daughter (Downey) and her father (Arey) by which the daughter allegedly agreed to buy the family home from the father pursuant to an oral agreement. The Statute of Frauds did not come into play as it was conceded that the daughter had partially performed the alleged oral contract by moving into the family home for many months and by spending close to $200,000 in home renovations for her own use in reliance on the alleged oral agreement.

At trial, the judge found that the parties had not agreed on a fundamental term of the contract, namely the price. While both parties had asserted in their respective pleadings (and in a Request to Admit) that the agreed purchase price for the family home was $850,000, an issue arose as to whether a $100,000 “family discount” had already been applied to the purchase price (as asserted by the father) or whether there was an additional $100,000 discount to be applied as a gift at the time of closing (as asserted by the daughter). The trial judge held that this discrepancy led to the legal conclusion that the parties were not ad idem on the ultimate amount payable, which rendered the oral contract unenforceable at law. On appeal, the Ontario Court of Appeal agreed with the trial judge, and referenced the daughter’s trial testimony in which she testified that she was entitled to an additional $100,000 discount of the purchase price on closing.

While it is rare that parties agree to buy land without a written agreement (which agreements invariably prescribe the precise amount of the purchase price), the case has important implications for those who conduct business by way of oral agreements and where there is uncertainty or a discrepancy in the ultimate amount payable, including whether a discount is ultimately to be applied. Such uncertainty may be avoided by way of written contract, or at least, by some documentary evidence to provide certainty in this respect.

Counsel for the successful party (Arey) in the Court of Appeal was Robert B. Cohen, with assistance from Kayla Smith. A copy of the Court of Appeal decision may be found here.