When a party walks away from a pre-construction deal, the affected party often expects to be compensated for the lost value. The Ontario Court of Appeal’s decision in Shiralian v. Wyldewood Creek Inc. 2026 ONCA 163, released March 6, 2026, is a reminder that the answer is usually found in the contract, and that Ontario courts will hold sophisticated and unsophisticated parties alike to the risk allocation they agree to.
The Dispute
The case arose out of the Wyldewood Creek condominium development in Collingwood. The agreements of purchase and sale contained a limitation of liability clause, providing that if the developer failed to complete the transaction, the purchasers’ remedy was limited to the return of their deposit. In other words, no damages for lost appreciation, no claim for the difference between the contract price and market value, no consequential losses. Deposit back, and the parties go their separate ways.
When the transactions failed to close, the purchasers commenced an action, arguing that the clause should not preclude a damages award because it undermined the protections afforded to purchasers by the prescribed termination deadlines set out in the Tarion Addendum. The application judge disagreed and gave effect to the clause. The purchasers appealed.
The Court of Appeal’s Decision
The Court of Appeal dismissed the appeal and upheld the limitation of liability clause. Three aspects of the reasoning are worth noting.
1. Interpretation is a matter of plain language read in context. Applying the Supreme Court of Canada’s framework in Sattva Capital Corp. v. Creston Moly Corp. 2014 SCC 53, the Court confirmed that the application judge had done exactly what an interpreting court should do: he followed the ordinary meaning of the limitation clause and read it in the context of the agreement as a whole.
2. The Tercon framework governs enforceability. The purchasers’ attack on the clause was assessed under the three-part test from Tercon Contractors Ltd. v. British Columbia, 2010 SCC 4: does the clause, properly interpreted, apply to the circumstances; was it unconscionable when the contract was made; and is there an overriding public policy reason to refuse enforcement? The purchasers cleared none of these hurdles. The clause squarely covered a failure to close, there was no unconscionability at formation, and no public policy, including the consumer protection scheme under the Ontario New Home Warranties Plan Act, that displaced the parties’ bargain.
3. This decision follows the Court’s 2021 ruling in Ritchie v. Castlepoint Greybrook Sterling Inc. 2021 ONCA 214, which likewise enforced a limitation of liability clause in a failed pre-construction project. Shiralian confirms that Ritchie was not an outlier: freedom of contract remains the governing principle in this space, even in consumer-facing residential transactions.
Why It Matters
For developers, the decision validates a standard risk-management tool. A clearly drafted clause limiting purchaser remedies to a deposit refund will generally be enforced, provided it is unambiguous and there is nothing unconscionable about how the deal was made. Drafting discipline matters: the clause survived because its language squarely covered the event that occurred.
For purchasers, Shiralian is a caution. Pre-construction agreements are lengthy, developer-drafted documents, and the remedies section deserves as much attention as the price. A purchaser who signs an agreement limiting recovery to the deposit is unlikely to persuade a court to rewrite that bargain after the fact, even where the market has moved significantly and the loss of the bargain is real. Legal advice before signing, not after termination, is where value is added.
The Takeaway
Shiralian v. Wyldewood Creek confirms that Ontario courts will give full effect to well-drafted limitation of liability provisions in pre-construction residential sales. Risk allocation agreed to at signing is risk allocation the courts will enforce. Parties on both sides of these transactions should review these types of agreements, and their expectations, accordingly.
If you are a developer seeking to ensure that limitation of liability provisions in your agreements are clear, enforceable, and effective in allocating risk, or a purchaser involved in a pre-construction dispute who wants to understand the remedies available to you, our team can help. Contact our litigation and real estate lawyers to book a consultation.
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