In Preiano v. Cirillo, the purchasers sued the vendors for specific performance of an Agreement of Purchase and Sale ("APS") regarding the vendors' home. At the time they signed the draft APS by which they offered to buy the vendors' home, the purchasers delivered a $25,000 personal cheque as a deposit to the vendors' real estate agent. This real estate agent retained the personal cheque but told the purchasers that it would have to be replaced with $25,000 in certified funds if the vendors accepted the APS. He did not attempt to deposit the personal cheque. The APS required the purchasers to pay the deposit of $25,000 within 24 hours of the acceptance, and indicated that "time shall be of the essence". The purchasers delivered $25,000 in certified funds in the form of a bank draft approximately one day after the 24-hour deadline had elapsed. A few weeks later, counsel for the vendors wrote to the purchasers asserting that there was no valid APS because of the late receipt of the deposit.
The motion judge found that because the bank draft was delivered a day late, there was no APS in effect to be specifically performed. Consequently, he dismissed the action. He arrived at this conclusion after finding that the personal cheque was "not capable of yielding funds upon negotiation" because the record of the chequing account did not show a balance that could accommodate payment of the cheque.
The Court of Appeal for Ontario held that the motion judge made the error of interpreting the admission that the bank statement was authentic as an admission that the purchasers did not have the money to pay the cheque, so that upon presentation it would have been dishonoured by the bank. According to the reviewing Court, there was no evidence that the bank would not have honoured the cheque, nor was there any evidence as to the purchasers' financial capacity or their arrangements with the bank. As a result, the appeal was allowed and the action continued. This decision may entice home vendors to seek additional banking information from purchasers to verify that deposits paid by personal cheques will be honoured by the issuing bank.
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