Fatima Vieira B.A., M.A., LL.B.
In Barresi and 6491243 Canada Inc. v. Jones Lang Lasalle Real Estate Services, 2019 ONCA 884 the Ontario Court of Appeal considered the test for repudiating a contract.
Jones Lang Lasalle (“Lasalle”) was a real estate investment management company. Ryan Barresi (“Barresi”) was a real estate broker. Barresi and Lasalle entered into an agreement whereby Barresi was to be the Ottawa Practice Lead for investment property transactions. One year after entering into the contract, Lasalle advised Barresi that he could only pursue transactions in Ottawa up to a $10 million ceiling, even though the agreement imposed no such ceiling and transactions over $10 million would be exclusively available to another party, National Retail Investment Group (“NRIG”), which would involve Barresi only as Lasalle saw fit. The trial judge found that these two limitations undermined Barresi’s reason for entering into the contract with Lasalle, which was to undertake higher value transactions in Ottawa. The trial judge held that therefore, Lasalle had repudiated the contract. The trial judge also found that Barresi accepted the anticipatory repudiation of the agreement, which resulted in the automatic forgiveness of a $225,000 loan under a promissory note that formed part of the agreement. However, the trial judge dismissed Barresi’s claim for damages for negligent misrepresentation in inducing Barresi to join Lasalle because she found that any such representations were true when made. It was the later-imposed dollar limit that repudiated the agreement.
The Court of Appeal denied the appeal of Lasalle and affirmed that the trial judge correctly applied the test for contractual repudiation. Contractual repudiation occurs by words or conduct indicating an intention not to be bound by the contract. A contractual breach is a repudiation of the contract if it is a beach of a contractual condition or of some other sufficiently important term of the contract. In this case, Lasalle had repudiated the agreement by imposing the limitations on Barresi’s commercial activities, which fundamentally undercut Barresi’s basis for entering into the agreement, which was to undertake higher-value transactions in Ottawa.