The Ishola Decision: What Ontario Buyers Owe When They Walk From a Pre-Construction APS

In Mattamy (Jock River) Ltd. v. Ishola, 2024 ONSC 6231, an Ontario buyer who failed to close on a pre-construction freehold Agreement of Purchase and Sale was ordered to pay $87,714.49 in damages, plus pre- and post-judgment interest accruing from January 11, 2024 — after a credit for the $14,000 deposit actually paid against the $18,000 deposit obligation under the APS. As pre-construction markets have softened through 2025–2026, the Ishola default judgment has become a practical reference for what the builder's remedy actually looks like when a buyer walks.

This is a plain-English breakdown of the decision, the legal principles it applies, and what Canadian pre-construction buyers should take from it before deciding whether to close, walk, or negotiate.

What happened

The buyer signed a pre-construction APS with Mattamy (Jock River) Ltd. for a freehold home in the Ottawa area. On the February 2024 closing date, the buyer did not close. Mattamy resold the property and sued the original buyer for the resale shortfall plus carrying costs and legal fees.

The defendant did not defend the action. Mattamy moved for default judgment. The court awarded $87,714.49 — the net damages after deducting the $14,000 in deposits actually paid by the defendant from the total loss — plus pre- and post-judgment interest from January 11, 2024.

The legal principles the court applied

1. Deposit forfeiture is enforceable on its own

When a buyer repudiates an APS, the deposit is forfeited as a matter of contract law. The seller does not need to prove damages to keep the deposit — it's a separate remedy from any actual losses. This has been settled Canadian law for decades, and Ishola applies it directly.

2. The seller can also sue for actual damages — even after keeping the deposit

This is the part that surprises buyers. The deposit is not a "cap" on the seller's recovery. It is a floor. The seller can:

• Keep the deposit, AND
• Sue the buyer for the difference between the APS price and the eventual resale price, AND
• Recover reasonable carrying costs (taxes, condo fees, mortgage interest) during the resale period, AND
• Recover reasonable legal fees.

The deposit is credited against these damages — it doesn't double-count — but if the actual loss exceeds the deposit, the buyer owes the difference.

3. The seller has a "duty to mitigate"

The court in Ishola made clear that where a plaintiff seeks default judgment in the context of an aborted sale of real estate, the plaintiff must satisfy the court that reasonable efforts were made to resell the property for fair market value in a timely manner. Mattamy met that bar on the facts. Builders typically meet it by re-listing within a normal marketing window.

4. Unconscionability and relief from forfeiture are very narrow defences

Buyers sometimes argue the deposit is so large it shocks the conscience or that they should be granted "relief from forfeiture" under the Ontario Courts of Justice Act. Canadian case law has long held these defences succeed only in extreme circumstances — typically requiring proof of genuine inability to perform combined with a demonstrably oppressive deposit clause. Ishola, as a default judgment, did not squarely test these defences. In a normal pre-construction transaction with a 15–20% deposit, neither is likely to succeed.

What this means for buyers in 2026

If you signed at the 2021–2022 peak and the unit now appraises 20–30% below your APS price, your downside if you walk is not just the deposit. It is:

(APS price − resale price) + carrying costs + legal fees − deposit credit = your additional liability.

A hypothetical illustration on a Toronto pre-construction condo signed at the 2022 peak:

• APS price: $850,000
• Resale price (after 6 months on market): $625,000
• Builder loss: $225,000
• Carrying costs (6 months condo fees, taxes, marketing): $18,000
• Builder legal fees (recoverable portion): $25,000
• Total claim: $268,000
• Less deposit credit: ($130,000)
• Additional liability owed by buyer: $138,000

Plus the deposit you've already lost. The hypothetical total exposure — on a contract you walked away from — is $268,000. The Ishola case confirms the legal path that gets a builder there.

What this means for sellers (yes, sellers should care too)

If you bought pre-construction in 2021–2022 and are trying to flip via assignment to recover what you can, the Ishola principle is relevant in reverse. Your assignee takes on the same exposure — if they walk later, the builder can come after them. This affects how much they'll pay you for the assignment, and whether they'll close at all.

The defences that have actually worked (when they have)

Ishola does not foreclose every escape route. Buyers in similar Ontario cases have successfully reduced or eliminated damages by proving:

• Builder breach as the cause of non-closing — e.g. material amendments, missed Tarion deadlines, finishes substituted below APS spec. If the builder breached first, the buyer's non-performance may be excused.
• Failure to mitigate — if the builder waited an unreasonable time to relist, or relisted at an inflated price that wouldn't sell, courts have reduced damages.
• Improperly disclosed material amendments that opened a fresh 10-day rescission window the builder ignored.
• Statute of limitations — claims must be commenced within 2 years of breach in Ontario under the Limitations Act, 2002.

These are fact-specific and require careful analysis of your APS, disclosure statement, all amendments, and the Tarion Statement of Critical Dates.

What to do if you're already on the wrong side of Ishola

1. Get your full contract package reviewed. A genuine breach by the builder can flip the analysis entirely. Without a complete cross-reference of APS + amendments + Tarion notices, you can't know what defences exist.
2. Don't communicate with the builder without legal advice. Anything you say (or admit) can be used against you in damage calculations.
3. Engage a real estate litigator early. If you anticipate not closing, settlement negotiations before resale are dramatically cheaper than defending a damages claim two years later.
4. Document everything. Every communication from the builder, every notice, every amendment. This is the evidence base for any defence or settlement.

Related reading

• Pre-Construction Appraisal Gap in 2026: Every Option Canadian Buyers Actually Have — the six realistic paths before walking becomes your only option.
• Can't Close on Your Pre-Construction Condo in 2026? — the decision tree with real numbers.
• Mutual Release Playbook — leverage tactics that push builders to settle instead of litigate.
• Pre-Construction Deposit Refund Rules — when you're legally entitled to your money back.
• How to Cancel a Pre-Construction Contract in Canada — every exit path, province by province.

Get your APS reviewed before walking away

The single highest-leverage move a 2026 pre-construction buyer can make right now is identifying whether their builder has breached anything material. A breach by the builder often turns the entire Ishola analysis around.

ContractCheck runs an AI review of your full pre-construction package — APS, schedules, disclosure statement, all amendments — against Canadian case law including the Ishola decision. The review surfaces every potential defence, breach ground, and settlement angle in your specific contract. Less than the cost of one hour of a real estate lawyer's time, delivered the same day.

This article summarizes a publicly available court decision for general information only. It is not legal advice. If you are facing a closing dispute or potential damages claim, consult a licensed Ontario real estate litigator. Primary source: Mattamy (Jock River) Ltd. v. Ishola, 2024 ONSC 6231 (CanLII).