COURT FILE NO.: 174/07
DATE: 20070426
ONTARIO
SUPERIOR COURT OF JUSTICE
DIVISIONAL COURT
LEDERMAN, SWINTON AND HIMEL JJ.
B E T W E E N:
ROBERT SALNA
Applicant
(Respondent in Appeal)
- and -
ROFIE LOTFI-NOUSHAD, 1369450 ONTARIO INC., 1124372 ONTARIO LIMITED and 1544431 ONTARIO INC.
Respondents
(Appellants)
Charles M. Gastle, for the Applicant (Respondent in Appeal)
Leonard Ricchetti, for the Respondents (Appellants)
HEARD at Toronto: April 26, 2007
HIMEL J.: (Orally)
[1] The appellant (“Silverwoods”), the owner of a condominium project in Richmond Hill, Ontario, consisting of two condominium towers with 156 residential units, appeals the order of Boyko J., dated March 30, 2006, with leave granted by M. Brown J. on September 28, 2006, with respect to one aspect, that is, that five units be held as security pending determination of the action brought by the respondent, Salna, a purchaser of five penthouse units and five terrace rooftop units.
[2] Silverwoods argues that this decision was tantamount to granting a Mareva injunction by ordering execution before judgment which creates a serious disadvantage to the appellant. The appellant says the test of strong prima facie case and evidence of dissipating or disposing of assets were not met. Otherwise, the appellant was content that the closing proceed and other terms be imposed.
[3] The respondent argues that this was not in the nature of a Mareva injunction and that the motions Judge did not err in granting the relief she did which included enjoining Silverwoods from selling the units except to the purchaser Salna and requiring the payments into court of the disputed amount for unpaid extras provided by Silverwoods thus allowing the parties to close their transactions.
[4] It appears that the motions Judge took the middle ground between the two positions advanced by the parties and, thereby, in effect, granted a Mareva injunction. In doing so, she failed to apply the proper legal principles.
[5] The respondent takes the position that she was merely exercising her discretion under s.103(6) of the Courts of Justice Act. In our view, the motions Judge was not applying s.103(6) and expressly rejected the claim for certificates of pending litigation. There was no indication that she was expressly exercising any discretion under s.103(6).
[6] The respondent also argues that she was exercising discretion under s.101 of the Courts of Justice Act and granted injunctive relief in the context of an interest in land.
[7] While the motions Judge fashioned an order to deal with an interest in land in paragraphs 2 through 5, paragraphs 6 and 7 of the order deal with security for unliquidated damage claims and amount to execution before judgment.
[8] We find the motions Judge did not consider the relevant test for determining whether a Mareva injunction should be granted. Had she done so, we are of the view that there was not sufficient evidence to demonstrate a strong prima facie case nor was there evidence that there was a real risk that Silverwoods would remove assets from the jurisdiction or was disposing of or dissipating assets in a manner clearly distinct from the ordinary course of business or for the purpose of avoiding the possibility of judgment: See Aetna Financial Services v. Feigelman 1985 55 (SCC), [1985] 1 S.C.R. 2.
[9] A Mareva injunction is exceptional relief and should only be granted in extraordinary circumstances where the evidence is present. Furthermore, she failed to quantify the claim of Salna and determine whether the security ordered was appropriate.
[10] We agree with the appellant that the order at paragraphs 6 and 7 requiring the appellant to hold five units as security was an error. The standard of review in a case such as this is that a reviewing court should only intervene if the judge below applied erroneous principles that rendered the result clearly wrong or acted on a wrong principle or disregarded or misinterpreted material evidence: See Cosyns v. Canada (A.G.) (1992) 1992 8529 (ON SCDC), 7 O.R. (3d) 641.
[11] In our view, applying that standard of review, we are persuaded that the Court below was clearly wrong in granting relief in the nature of a Mareva injunction by ordering that five units, unrelated to the agreement, be held as security in the action, relief which we note was not requested by the parties.
[12] The respondent submits that to interfere with the order would be unfair to him as he relied on the fact of security in deciding to close on the five penthouse units and rooftops. He also submits that to grant the appeal would disturb the balance in the order as he was required to pay the full purchase price and pay $176,924.78 into court.
[13] There was no cross appeal of this portion of the order and we are not in a position to rule on the propriety of that aspect of the order.
[14] For the reasons outlined above, the appeal is allowed and paragraphs 6 and 7 of the order dated March 30, 2006 are deleted.
LEDERMAN J.
[15] Costs for the appeal and leave to appeal fixed at $10,000.00.
HIMEL J.
LEDERMAN J.
SWINTON J.
Date of Reasons for Judgment: April 26, 2007
Date Release: May 9, 2007
COURT FILE NO.: 174/07
DATE: 20070426
ONTARIO
SUPERIOR COURT OF JUSTICE
DIVISIONAL COURT
LEDERMAN, SWINTON AND HIMEL JJ.
B E T W E E N:
ROBERT SALNA
Applicant
(Respondent in Appeal)
- and -
ROFIE LOTFI-NOUSHAD, 1369450 ONTARIO INC., 1124372 ONTARIO LIMITED and 1544431 ONTARIO INC.
Respondents
(Appellants)
ORAL REASONS FOR JUDGMENT
HIMEL J.
Date of Reasons for Judgment: April 26, 2007
Date Release: May 9, 2007