In our previous coverage of Naeem v. Bowmanville Lakebreeze West Village Ltd., we explored the rare judicial path to recovering a deposit after failing to close on a real estate transaction. A recent decision from the Ontario Court of Appeal affirms that outcome—marking it as a rare but noteworthy exception to the general rule that forfeited deposits are final.

Ontario courts generally enforce deposit forfeiture strictly: if a buyer doesn’t close, the money is gone. Period. But this case demonstrates that the door to equitable relief, while narrow, remains open—if exceptional circumstances are proven.

A quick recap of the facts

In 2016, Shireen Naeem agreed to purchase a new-build home from Bowmanville Lakebreeze West Village Ltd. for just under $630,000, paying a deposit exceeding $82,000. The builder exercised its contractual right to delay closing multiple times, with the final date landing on Apr. 23, 2019. When Naeem didn’t close, the builder claimed breach and kept the deposit.

Naeem sued—initially seeking specific performance, but later amending her claim to request the return of her deposit with interest. She succeeded at the Superior Court, where the judge granted relief from forfeiture, finding the builder had misled her during the amendment process. The builder appealed.

What the appeal court said

The Ontario Court of Appeal upheld the lower court’s decision. Central to the appeal was whether the motion judge properly applied the legal test. That test asks two things:

1. Was the forfeited amount out of proportion to the vendor’s actual loss?

    

2. Would it be unconscionable for the vendor to retain it?

    

The builder argued that Naeem’s failure to close should bar her from relief. However the Court clarified that while a buyer’s conduct is relevant, it does not conclusively prevent relief from forfeiture. Courts must take a holistic view of the facts.

Why this case was different

What tipped the balance here was not only Naeem’s personal vulnerability—a widow, undergoing cancer treatment, working two jobs—but also the conduct of the builder. After extending the closing date twice, the builder attempted another extension with inadequate notice. Naeem requested a short extension but was pressured into signing an amendment—without being informed she didn’t have to.

This misleading conduct played a significant role in the court’s finding of unconscionability. Importantly, the builder hadn’t shown it suffered any real financial loss due to the failed closing. Taken together, the court found that equity required intervention.

Takeaways for buyers and developers

This update reaffirms the key principle: relief from forfeiture is exceptional in Ontario real estate law, not the norm. Courts will only intervene when the facts strongly compel it.

For buyers, this case underscores the importance of getting legal advice early—particularly when closing dates shift. It’s critical to know your rights, especially if the transaction timeline starts to change unexpectedly.

For developers, the case serves as a warning. Attempting to enforce forfeiture harshly, especially after contributing to confusion or delay, may lead courts to step in. Misleading or overreaching behaviour can undercut an otherwise enforceable contractual right.

Ultimately, Naeem v. Bowmanville Lakebreeze West Village Ltd doesn’t change the rule—it simply illustrates how compelling facts, particularly where one party is vulnerable and the other has engaged in unfair conduct, can shift the scales.