Vandyk: a new declarant at Lakeview is not a material change

The Lakeview Project in Mississauga is two towers with 478 residential units, a commercial space and underground parking, and the respondents to the application over it all bought their pre-construction units in or around April to June 2022, per the Reasons for Decision of Justice Steele, Sept. 29, 2026, para. 7. Those deals were struck "at the peak of the condo market," the reasons say; condo prices in the Greater Toronto Area have since fallen by about 25 percent from their 2022 high, "and the deals are no longer economically viable for many of the purchasers," per the Reasons for Decision, Sept. 29, 2026, para. 5. After the court approved the sale of the project out of Vandyk's receivership to KS Lakeview Dixie Holdings Inc., a single-purpose entity in the KingSett Group, purchasers of more than 70 units delivered notices purporting to rescind their agreements. The notices were virtually identical, the reasons record; the form they quote gives as its ground "a material change consisting of the change in declarant" and demands "the return of all deposit monies paid under the Agreement, together with interest," per the Reasons for Decision, Sept. 29, 2026, paras. 11–12, 18.

On September 29, 2026, in reasons on an application heard September 15, Justice Jana Steele of the Commercial List declared under s. 74(8) of the Condominium Act, 1998 that KS Lakeview's acquisition of the project "does not constitute a material change," and that the respondents' purported notices of rescission are invalid. The decision is reported as 2026 ONSC 5491, in court file CL-26-00000253-0000. Having found no material change, the reasons conclude: "As noted above, at this time there has been no actual change to what purchasers will receive. Further, the agreements were assigned in accordance with the APSs," per the Reasons for Decision, Sept. 29, 2026, caption, paras. 48–49.

How the declarant changed

KSV Restructuring Inc. was appointed receiver in November 2023, when the Lakeview Project had not yet been built but numerous purchasers had bought pre-construction units. Soon after its appointment the receiver decided to complete the project, and in June 2024 it obtained an order authorizing construction and approving the continued retainer of PCL Constructors Canada Inc., the construction manager Vandyk had selected, per the Reasons for Decision, Sept. 29, 2026, paras. 2, 9–10. On April 27, 2026, the court granted an approval and vesting order approving a stalking-horse agreement between KingSett Mortgage Corporation and the receiver, per the Notice to Unrepresented Pre-Sale Purchasers, June 9, 2026, p. 1. That sale, and the objection of an association of Lakeview buyers to it, were reported here on June 10.

The rescission letters came after the order and before the transaction closed, Justice Peter J. Cavanagh recorded on June 9, and KS Lakeview, "as the then-prospective declarant," and the receiver, "acting on behalf of the then-current declarants," commenced an application for a determination of the material-change question, per the Endorsement of Justice Cavanagh, June 9, 2026, para. 2. The transaction closed on May 13, 2026, and the application under s. 74(8) was filed that day, according to the June 9 notice to unrepresented purchasers, per the Notice to Unrepresented Pre-Sale Purchasers, June 9, 2026, p. 1. It was transferred to the Commercial List by order dated May 29, and on June 9 Addario Law Group LLP was appointed representative counsel for the unrepresented purchasers who had purported to rescind, members of the association or not, per the Representative Counsel Appointment Order, June 9, 2026, paras. 2, 6.

The market, and Chen v. Brookfield

The analysis opens on the market. "There is no question that the respondents would like to get out of their agreements to purchase the units," the reasons say, and requiring them to close "will undoubtedly cause tremendous financial hardship to some purchasers"; counsel for the applicants "acknowledged the unfortunate circumstances that these purchasers faced," per the Reasons for Decision, Sept. 29, 2026, para. 15. A footnote quotes the evidence the respondents filed on the sale-approval motion, which in the court's view "made it clear that this case is really about the negative change in the price of the condo units": "Many purchasers cannot close. The market value of the units in the Project has decreased since the APS were agreed to due to a combination of market conditions and impacts on the Project arising from [Vandyk's] insolvency. As a result, the equity gap between the market value of the units and the purchase price makes it impossible for many to obtain financing," per the Reasons for Decision, Sept. 29, 2026, para. 15 n. 2.

"The new assertion that there has been a 'material change' is an attempt to get out of deals that are now not financially attractive," the reasons continue. They cite Chen v. Brookfield Residential (Ontario) Limited, 2022 ONCA 887, where a purchaser who had told the developer of an inability to close then asserted a right of rescission for a material change, and where the Court of Appeal called the notice "a strategy to evade the agreement" and agreed that a notice of rescission not delivered in good faith is not valid. In the passage the reasons quote, the Court of Appeal said that treating a notice not given in good faith as a notice of rescission under s. 74(7) "would create an absurd result by enabling purchasers to strategically use the rescission mechanism provided under the Act to side-step their otherwise valid contractual agreement, pressure vendors to negotiate releases or unjustifiably extend closing timelines," per the Reasons for Decision, Sept. 29, 2026, para. 17.

The declarant is not the developer

Under s. 74(2), as the reasons set it out, a material change is one "that a reasonable purchaser, on an objective basis, would have regarded collectively as sufficiently important to the decision to purchase" that the purchaser would likely not have signed, or would have rescinded within the 10-day cooling-off period that s. 73 gives at the outset, after which, the reasons say, the purchaser is "effectively 'locked in' to the deal," per the Reasons for Decision, Sept. 29, 2026, paras. 19–21. The reasons fix the time at the signing: "what would a reasonable purchaser in the 2022 condo market have done in the circumstances?" per the Reasons for Decision, Sept. 29, 2026, para. 27.

The developer had changed from Vandyk to KingSett, the reasons accept, but "there is nothing in the disclosure statement that speaks to the identity of the developer." The statement does name Vandyk as declarant, the reasons go on, and a declarant "is a statutory construct, distinct from the developer," whose role "is to hold title to the property and register," per the Reasons for Decision, Sept. 29, 2026, paras. 28–30. One purchaser gave affidavit evidence that the agreement would not have been signed had the purchaser known that an entity in the KingSett Group would be acting as declarant and developer instead of Vandyk. On cross-examination, the reasons say, the affiant indicated not understanding what a declarant or developer does and was unable to point to any specific expertise "that Vandyk has or that KingSett does not have." The reasons continue: "Even if [the affiant] had a personal preference for Vandyk, this would be subjective and not decisive for the objective test under the Condominium Act," per the Reasons for Decision, Sept. 29, 2026, para. 31.

The applicants pointed to what had stayed the same, and the reasons set it out: the same construction manager, PCL, and the same trades are building the project, and "Nothing has changed thus far regarding the buildings, amenities, or units — that is, the purchasers are getting the same units they contracted for, on the same floors, with the same floor plan, with the same amenities." On cross-examination, the reasons record, the affiant acknowledged that the unit to be received was the same unit, at the same price, in the same location. "Making a single change to the identity of the declarant itself, while keeping intact exactly what was bargained for in the APSs, is not objectively a material change," per the Reasons for Decision, Sept. 29, 2026, para. 32.