Buyer can’t terminate real estate deal over vesting order error

Home Trust Company v. 58 King Street East Hamilton Ltd. et al., 2026 ONSC 1770
Does a drafting error in an approval and vesting order allow a purchaser to walk away from the transaction?

Summary: The Ontario Superior Court of Justice has agreed to amend an approval and vesting order to correct a drafting error where the order failed to reflect the parties’ underlying agreement, rejecting a purchaser’s attempt to terminate the real estate transaction on that basis. The Court found that certain encumbrances, including a Metrolinx registration, had been mistakenly listed for deletion due to counsel’s inadvertence and properly fell within the scope of permitted encumbrances under the agreement of purchase and sale. In granting the amendment and awarding costs to the receiver, the Court confirmed that the “slip rule” can be used to align an AVO with the parties’ bargain, and that a purchaser cannot rely on a technical error to escape a deal it agreed to.

msi Spergel Inc. in its capacity as the court appointed receiver of the Respondents, moved for an order amending and varying the Approval and Vesting Order dated December 2, 2025 (the ‘AVO’) to correct an error arising from an accidental slip or omission. Specifically, the Receiver sought to vary Schedule C of the AVO to remove references to three instruments that were included among the encumbrances to be deleted from title to the lands to be conveyed by the Receiver, as vendor, to Spuric Canadian Ventures Inc., as purchaser (the ‘Purchaser’).

The three instruments that were inadvertently included in Schedule C to AVO were two City of Hamilton encroachment registrations and a Notice of Metrolinx Registration. The City of Hamilton Registrations permit encroachment onto City property for the continued operation of an outdoor patio. These registrations benefitted the Purchaser, and the Purchaser took no issue with them being deleted from Schedule C to the AVO. The Purchaser objected to the deletion of the Metrolinx Registration. The Metrolinx Registration arose from an Order in Council issued pursuant to the Building Transit Faster Act, 2020 (the ‘Act’), designating the lands as transit corridor land and requiring notice of that designation to be registered on title.

On January 12, 2026, the Purchaser’s counsel provided written notice to the Receiver’s lawyers that pursuant to section 13 of the APS, the Purchaser was terminating the APS by virtue of the Receiver’s inability to convey the lands in accordance with the APS, and in particular, “Schedule B – Permitted Encumbrances”. The Receiver brought the within motion.

Based on the enhanced record before the Court, the Court was satisfied that the inclusion of the City of Hamilton Registrations and the Metrolinx Registration in Schedule C to the AVO was due to counsel’s inadvertence. The Court went on to consider whether the Receiver’s proposed amendment to the AVO were reflective of the parties’ agreement as memorialized in the APS. The APS was the governing document that defined the parties’ bargain while the AVO was the procedural mechanism through which the court might approve the transaction contemplated by the APS. 

The Purchaser argued that it never agreed to assume the risk of the Metrolinx Registration. Because the Metrolinx Registration is not specifically listed in Schedule B (which defines the encumbrances to the lands that are permitted or agreed to by the parties to remain on title on completion of the sale transaction), the Purchaser submitted that the parties necessarily bargained that it falls outside of the scope of permitted encumbrances. The Receiver argued that the APS’ Permitted Encumbrances included rights of way, easements or covenants that run with the lands, and for this reason, the City of Hamilton Registrations were not to be expunged. Likewise, the parties intended that the Metrolinx Registration remain on title because the parties specifically agreed by the terms of the APS that Permitted Encumbrances on closing include any laws affecting the lands.

The Supreme Court directs judges to determine the intent of the parties and the scope of their understanding by reading the contract as a whole, giving the words their ordinary and grammatical meaning, consistent with the surrounding circumstances, including those facts that both parties knew or should have known at the time of entering into the contract. The surrounding circumstances, or factual matrix, include facts concerning the genesis of the agreement, its purpose, and the commercial context in which the agreement was made. The factual matrix cannot include evidence about the subjective intention of the parties. Judges are to use “commercial reasonableness as a tool to interpret the text because parties are unlikely to have intended to strike bargains that make no business sense”.

The Court accepted the Receiver’s submission. The Metrolinx Registration arose from an Order in Council issued pursuant to the Act. The registration provided notice on title that the lands have been designated as transit corridor lands under the statutory framework established by the Act. This statutory designation was not unknown to the parties at the time that their agreement was struck. The notice of designation was registered on title on February 8, 2024, well before the APS. The Metrolinx Registration formed part of the public record available to any prospective purchaser conducting a title search of the lands, an investigation expressly required of the Purchaser pursuant to the terms of the APS. Having assumed responsibility for investigating title and agreeing that the Permitted Encumbrances remain on title, the Purchaser could not resist that which it had already agreed to by asking the Court to rewrite the APS.

The Court held that the relief sought by the Receiver fell squarely within the Court’s corrective jurisdiction afforded to it pursuant to Rule 59.06(1). The Receiver was not seeking to alter the transaction between the parties, the Court’s approval of the transaction, or to revisit an adjudicated issue. Rather, the Receiver sought to amend an error that resulted in the AVO failing to express what the Court intended to do—namely, approve the terms of the parties’ APS.

Accordingly, the Court granted the Receiver’s motion and ordered that Schedule C to the AVO be amended to delete any reference to the three impugned instruments.

Judge: The Honourable Justice M. Valente

Professionals involved:

• Rosemary Fisher of SimpsonWigle for the receiver, msi Spergel Inc.

• Gregory Govedaris for the purchaser, Spuric Canadian Ventures inc.