Osajie v. Alile, 2025 ONSC 1209, offers transactional real estate lawyers valuable insights into how Ontario courts handle failed purchase transactions, misrepresentation claims, and the importance of well-drafted contractual protections. This summary judgment decision demonstrates how proper documentation and clear contractual language can protect vendors when buyers attempt to rescind agreements based on dubious claims.
Case Background
The case involved a straightforward real estate transaction gone wrong. Benny and Joy Osajie (vendors) entered into an Agreement of Purchase and Sale (APS) with Eevine Alile (purchaser) for $960,000. When the defendant refused to close, the vendors brought a summary judgment motion for breach of contract damages. The defendant counterclaimed, alleging she was entitled to rescind based on three grounds: misrepresentation of square footage, failure to deliver the property in broom-swept condition, and absence of a basement tenant.
The Square Footage Misrepresentation Claim
The defendant alleged that the vendors’ realtor, Mr. Bindlish, orally represented the property as being 1,500-2,000 square feet, inducing her to enter the APS. However, when measured by room dimensions in the listing, the property totaled approximately 840 square feet.
Justice Akbarali found no misrepresentation occurred for several critical reasons:
Documentary Evidence Contradicted the Claim: Text messages between the realtors told a different story. When the defendant’s realtor (who was also her spouse) texted asking if Bindlish “had any idea” about square footage after the APS was signed, Bindlish replied he had “no idea.” This exchange was inconsistent with the defendant’s claim that a specific representation had been made before signing.
Contractual Protection Clauses: The APS contained robust protective language, including:
- An entire agreement clause disavowing any representations not in writing
- Schedule B acknowledging no representations regarding “measurements”
- Acknowledgment that the buyer relied entirely on her own inspection
Hearsay Evidence Problems: Critically, the defendant chose not to call her realtor spouse as a witness, relying instead on hearsay evidence about the alleged misrepresentation. Justice Akbarali noted this “tactical decision” had consequences and refused to accept the truth of the hearsay evidence.
Property Condition and “Broom-Swept” Requirements
The defendant argued the vendors breached the APS by failing to deliver the property in “broom-swept condition.” The court found this claim failed on the facts. While the property required cleaning and minor repairs when the defendant visited in June 2022, the vendors subsequently undertook the necessary work. The defendant failed to visit the property before closing to confirm the condition, and when shown photos of the completed repairs during cross-examination, she refused to answer whether they depicted adequate condition.
The Tenant Issue
Perhaps the weakest of the defendant’s claims involved the absence of a basement tenant. The APS contained a clause stating that, “Buyer agreed to assume a lady Tenant renting a room in the basement on the closing date.” When the tenant left before closing, the defendant claimed this was a breach.
Justice Akbarali’s contractual interpretation analysis is instructive for transactional lawyers. Applying Sattva Capital Corp. v. Creston Moly Corp., 014 SCC 53, at para. 47, the court found the plain meaning of the clause placed an obligation on the buyer to take possession with the tenant, not an obligation on the vendor to provide possession with the tenant. The clause was negotiated for the vendor’s benefit as a departure from the typical vacant possession requirement.
Damages and Mitigation
The vendors were awarded $127,396.19 in damages after crediting the $30,000 deposit. This included the difference between the original sale price ($960,000) and the eventual resale price ($815,000), plus carrying costs and expenses. The defendant failed to prove any failure to mitigate, and the court accepted that the vendors acted reasonably in their resale efforts.
Costs Consequences
The costs award provides important lessons about litigation risk.
The plaintiffs sought costs based on a substantial indemnity scale throughout based on the defendant’s failure to prove fraud. However, the court declined to award elevated costs throughout, noting that the defendant “stopped just short of alleging fraud”. Nevertheless, the court found that the plaintiffs were entitled to costs on a partial indemnity scale up to the date of their settlement offer, and on a substantial indemnity scale thereafter.
Key Takeaways for Transactional Lawyers
- Draft Protective Clauses Carefully: The entire agreement clause and Schedule B acknowledgments were crucial in defeating the misrepresentation claim. These standard clauses deserve careful attention and should be tailored to specific transaction risks.
- Document Listing Information Precisely: The listing’s disclaimer that buyers must verify all details, combined with the absence of statements regarding the overall square footage, supported the vendors’ position. Consider how listing information might later be characterized in disputes.
- Contractual Interpretation Matters: The tenant clause demonstrates how precise drafting affects later interpretation. Consider whether clauses create vendor obligations or merely buyer acknowledgments.
- Evidence Preservation: The text message exchanges between realtors proved decisive. Advise clients to preserve communications that might later become relevant.
- Summary Judgment Standards: The case reinforces that tactical decisions about evidence have consequences. Parties must “put their best foot forward” on summary judgment motions.
Conclusion
Osajie v. Alile demonstrates how well-drafted agreements and careful documentation can protect vendors against opportunistic rescission claims. For transactional lawyers, the case underscores the importance of comprehensive protective clauses and precise drafting. The decision also serves as a reminder that buyers attempting to escape unfavorable deals might face significant litigation risks, including substantial awards for the adverse party’s costs if their claims fail.
The case reflects a practical approach to contract interpretation that favors clear, unambiguous language over creative attempts to find escape routes from binding agreements. For practitioners, it reinforces the value of thorough documentation and protective drafting in preventing disputes and providing strong defenses when litigation arises.
