Superior Court of Justice – Ontario

Divisional Court

CITATION: 1186708 Ontario Inc. v. Attara Developments Limited, 2013 ONSC 6611

DIVISIONAL COURT FILE NO.: 371/13

DATE: 20131031

RE: 1186708 ONTARIO INC., 746190 ONTARIO LIMITED AND 746191 ONTARIO LIMITED, Applicants (Moving Parties)

AND:

ATTARA DEVELOPMENTS LIMITED, BELLCREST BUILDERS LIMITED, BRENTHALL APARTMENTS LIMITED, CHELSANDY DEVELOPMENTS LIMITED, GROVER REALTY MANAGEMENT (A PARTNERSHIP), GROVER REALTY CABLE (A PARTNERSHIP), LILLIANA BUILDINGS LIMITED, LURAY INVESTMENTS LIMITED, PAULDOR DEVELOPMENTS LIMITED, 375685 ONTARIO LIMITED, 678678 ONTARIO LIMITED, MATANAH INVESTMENTS CORP., SYDNEY GERSTEIN, DAWN TRADING LIMITED, 497505 ONTARIO INC., 781527 ONTARIO INC., KILBARRY HOLDING CO., STAN VINE CONSTRUCTION LTD., MERNICK CONSTRUCTION LIMITED, 781526 ONTARIO INC., ESTATE OF BELLE MERNICK, SAUL MINTZ, IRWIN MINTZ, HOWARD MINTZ, RHONDA STRASBERG, MINKIDS HOLDINGS (A PARTNERSHIP), ETTIE WOSNICK, MORRIS WOSNICK, 2135637 ONTARIO INC., AND FAYE MIN, Respondents (Responding Parties)

BEFORE: Mr. Justice H.J. Wilton-Siegel

COUNSEL: Richard B. Swan and Emry Davis, for the Applicants Theodor Kerzner Q.C. and Frank Caruso, for the Mintz-Gerstein Respondents Jeffrey Rosekat, for the Sales Officer

HEARD: October 22, 2013

ENDORSEMENT

[1] The applicants seek leave to appeal an order of Morawetz J. dated August 9, 2013 (the “Order”).

[2] The applicants brought a motion seeking to have a sales officer, previously appointed pursuant to section 101 of the Courts of Justice Act by order dated December 23, 2011, distribute the sales proceeds of properties covered by that order directly to the ultimate owners of the properties, among other relief.

[3] The applicants seek leave under Rule 62.02(4)(b) of the Rules of Civil Procedure. I will address each component of the requirements under this provision.

[4] The applicants submit that there is reason to doubt the motion judge’s decision insofar as: (1) it did not order distribution of the sale proceeds in the manner proposed by the applicants; and (2) it did not grant the applicants a role in the direction of the Roselawn property.

[5] The effect of the Order was to continue the existing banking arrangements in respect of the nine properties that have been sold and the existing management arrangements in respect of the Roselawn property.

[6] The motion judge granted the order appointing the sales agent in 2011. That order provided for continuation of the banking and distribution arrangements respecting the properties that had been in place for many years among the parties. No circumstances have occurred since then to raise a concern regarding these arrangements, apart from receipt of a large amount of proceeds of sale. The applicants do not allege a concern for fraudulent diversion of funds.

[7] The applicants’ concern regarding the distribution arrangements is that continuation of the existing banking arrangements under the control of the respondents provides an opportunity to the respondents to raise issues concerning possible deductions and to delay the distributions. In his endorsement dated August 9, 2013, the motion judge accepted the respondents’ submissions as described in paragraphs 34 and 35 of his endorsement. In particular, the motion judge concluded that, if the respondents were to withhold distributions unreasonably, the applicants had remedies available to them in the on-going litigation between the parties. I see no basis for doubting the correctness of these conclusions.

[8] The applicants’ principal argument on this motion is that the motion judge misapprehended the evidence regarding the matters to be addressed before distributions could be made in respect of any property, particularly in respect of the joint venture properties, and, as a consequence, proceeded on the incorrect premise that such distributions would require active involvement on the part of the sales officer.

[9] I do not agree for the following reasons. First, the emails in the record setting out the holdback items in respect of each property reflect at least a certain amount of active involvement on behalf of the owners of the joint venture properties that is required to be addressed before the distributions can be completed. The motion judge quite reasonably considered that this was not appropriate activity for the sales officer for a number of reasons. Further, as acknowledged by the applicants, there are additional reasons for flowing the sales proceeds through the bank accounts of the corporate owners of the three corporation-owned properties. Third, the respondents have undertaken to make prompt distribution of the sales proceeds as recognized in paragraph 31 of the endorsement of the motion judge. In addition, as mentioned, the motion judge observed that the applicants have remedies available to them if the distributions are unreasonably withheld. Accordingly, the decision of the motion judge was based on a number of factors rather than a single consideration based on an incorrect premise.

[10] I would add that the motion judge has been actively involved in this matter as the case management judge since the original order in December 2011. Further, this is a highly discretionary order for which deference is owed to the motion judge, absent a clear error of law or misapprehension of the evidence. Lastly, there is no obvious legal principle at issue in the decision of the motion judge, other than the alleged misapprehension of the extent of the involvement required of the sales officer if the applicants’ proposal were implemented which, as mentioned, is not as pristine as the applicants suggest.

[11] For the foregoing reasons, I conclude therefore that there is no reason to doubt the correctness of the Order in respect of the failure to extend the responsibilities of the sales officer to making the distributions of the sales proceeds directly to the ultimate owners of the properties.

[12] Similarly, I see no reason to doubt the correctness of the decision of the motion judge not to order that the applicants be granted a role in the direction of Roselawn as the 50% owner thereof. The existing management arrangements have existed for 50 years. There is no evidence before the Court that requires a change to such arrangements. There is no principle of which I am aware that entitles the applicants to such an order in the present circumstances.

[13] The courts do not write contracts between co-owners for the management of joint venture properties owned by them if they choose not to reach agreement between themselves. An exception might be made in certain circumstances of oppressive behavior, but such circumstances require demonstration on a strong prima facie case standard. There was no such evidence before the motion judge.

[14] Accordingly, the motion for leave to appeal must fail.

[15] In addition, and in any event, the proposed appeal does not involve a matter of such importance that leave should otherwise be granted. The matter is entirely fact-specific as well as being highly discretionary. There is no legal issue at play as evidenced by the absence of any applicable case law. As the respondents suggest, the circumstances are similar to those described by Molloy J. in Farmers Oil & Loan Inc. v. Ontario (Ministry of Natural Resources) [2013] O.J. No. 1373 (Div.Ct.) at para 16.

[16] Accordingly, leave to appeal is denied. Costs in the amount of $6,500 are awarded in favour of the respondents.

Wilton-Siegel J.

Date: October 31, 2013