FH Development Group Inc. v. Brooks, 2026 NSCA 13 (CanLII)
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By: Fiona Costello (Articled Clerk)
Stephen and Marianne Brooks entered into a contract with FH Development Group to purchase a newly constructed home in Halifax for $597,490, with a closing date of October 14, 2021. In April 2021, FH Development (“FH”) sought to increase the purchase price by $15,000 and delay the closing, citing COVID-19-related supply and labour issues. The Brooks refused to pay more and insisted on adherence to the original terms. FH halted construction of the house. When the closing date passed, the Brooks purchased a similar home elsewhere for $853,000 and sued FH for the difference in price between the two homes.
The Nova Scotia Supreme Court allowed the Brooks’s claim, finding that they acted reasonably in mitigating their damages. FH appealed, arguing that the trial judge misapprehended legal principles regarding the obligation to mitigate damages. Specifically, FH contended that the Brooks should have begun mitigating their losses before the October 14, 2021 closing date, and attempted to negotiate with FH rather than refusing further dealings. FH further argued that the judge erred in concluding that the Brooks acted reasonably in spending $255,510 more than the original contract price to secure a replacement home.
The Court of Appeal rejected these arguments. The court upheld the trial judge’s finding that in cases of anticipatory breach, where a party clearly indicates they will not perform when performance is due, the innocent party may either accept the repudiation and pursue remedies or insist on performance. Since the Brooks elected to insist on performance rather than treat the contract as repudiated, the contract remained in force, and FH’s failure to close on October 14, 2021 constituted the breach that triggered the Brooks’s duty to mitigate. The trial judge therefore correctly disregarded any alleged failure to mitigate before that date. The Court of Appeal also noted that FH led no evidence concerning the housing market which would demonstrate the Brooks’s loss could have been avoided or diminished had they acted sooner.
It was also held that the trial judge reasonably concluded that the Brooks were justified in declining further negotiations with FH. Relying on Payzu Ltd. v. Saunders [1919] 2 K.B. 581 (C.A.), the court confirmed that whether an innocent party must negotiate with a faithless vendor depends on what is reasonable in the circumstances. In light of FH’s shifting demands, repeated delays, and the uncertainty surrounding completion, it was open to the trial judge to conclude that the Brooks had lost trust in FH and were therefore justified in refusing to continue negotiations.
Finally, the Court of Appeal found no error in the trial judge’s reasoning regarding the Brooks’s purchase of the replacement home. At trial, evidence including testimony from the Brooks’s real estate agent established that between October 2021 and February 2022 the housing market was highly competitive, with frequent blind bidding and sales above asking price. The evidence further showed that, despite offering above asking on multiple properties, the Brooks were repeatedly outbid, including an instance where they offered $566,000 on a property listed at $380,000 that ultimately sold for $585,000. In light of this evidence, and FH’s failure to identify any suitable alternative properties available during that period, the trial judge concluded that FH had not shown the Brooks could reasonably have purchased a comparable home for less than $853,000. The Brooks were therefore found to have acted reasonably in purchasing the replacement home.
