Fred Morton Holdings Ltd. v. Davis

Fred Morton Holdings Ltd. v. Davis

The grant of an option to a third party does not amount to constructive possession and where the contract's closing and right to possession remained conditional on rezoning (with no entitlement to specific performance before rezoning), the equitable principle requiring interest from date of possession does not apply; therefore vendors were not entitled to interest for the period prior to closing.

Citation
[1979] 1 SCR 783
Parties
Appellant (defendant): Fred Morton Holdings Ltd.; Respondent (plaintiffs): Harvey Davis as Administrator of the estate of Ralph Zilberman, deceased, and as Administrator of the estate of Esther Zilberman, deceased
Court
Supreme Court of Canada
Jurisdiction
Canada
Judgment Date
21 December 1978
Procedural Posture
Civil Appeal (contract for Sale of Land) / Appeal to Supreme Court of Canada From Court of Appeal for Manitoba
Outcome
Appeal allowed; judgment of the Court of Appeal set aside; judgment at trial dismissing claim for interest restored; costs to appellant throughout.
Legal Topics
Specific Performance, Interest on Unpaid Purchase Money, Constructive Possession, Rezoning Condition, Adjustment Clauses
Source Language
English
Property Law Contract Law Equity Specific Performance Interest on Unpaid Purchase Money Constructive Possession Rezoning Condition Adjustment Clauses

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Parties

Fred Morton Holdings Ltd.

Appellant (defendant)

Harvey Davis as Administrator of the estate of Ralph Zilberman, deceased, and as Administrator of the estate of Esther Zilberman, deceased

Respondent (plaintiffs)

Procedural Posture

Civil Appeal (contract for Sale of Land) / Appeal to Supreme Court of Canada From Court of Appeal for Manitoba

Legal Issues

  1. 1 Whether purchaser liable to pay interest on unpaid purchase money for period between adjustment date and closing
  2. 2 Whether granting an option to a third party constitutes constructive or notional possession triggering liability for interest
  3. 3 Whether the equitable principle from International Railway Co. v. Niagara Parks Commission applies where closing is conditional on rezoning and specific performance not available

Ratio Decidendi

The grant of an option to a third party does not amount to constructive possession and where the contract's closing and right to possession remained conditional on rezoning (with no entitlement to specific performance before rezoning), the equitable principle requiring interest from date of possession does not apply; therefore vendors were not entitled to interest for the period prior to closing.

Court Disposition

Appeal allowed; judgment of the Court of Appeal set aside; judgment at trial dismissing claim for interest restored; costs to appellant throughout.

Orders

  • Appeal allowed
  • Judgment of the Court of Appeal for Manitoba set aside