Court File and Parties

COURT FILE NO.: CV-14-506305 DATE: 20170419 SUPERIOR COURT OF JUSTICE - ONTARIO

RE: JAMSHID HUSSAINI, NEELOFAR AHMADI and HOMELIFE DREAMS, Plaintiffs (Defendants to the Counterclaim) AND: ALAIN CHECROUNE and 1482241 ONTARIO LIMITED, Defendants (Plaintiffs by Counterclaim)

BEFORE: Mr. Justice P.J. Cavanagh

COUNSEL: Enzo D. Iorio and Ivan M. Merrow for the Plaintiffs (Defendants to the Counterclaim) Christopher Stanek and Natasha Carew, for the Defendants (Plaintiffs by Counterclaim)

HEARD: March 28, 2017

ENDORSEMENT

Introduction

[1] This action concerns a share purchase agreement made June 6, 2012 and amended June 18, 2012 (the “Share Purchase Agreement”). The Share Purchase Agreement provides for the purchase by the plaintiffs Jamshid Hussaini (“Hussaini”) and Neelofar Ahmadi (“Ahmadi”) (together, the “Purchasers”) from the defendant Alain Checroune (“Checroune”) of, first, twenty percent of the shares of the defendant 1482241 Ontario Limited (“148”) and, second, the remaining eighty percent of the shares of 148.

[2] 148 is the owner of a commercial property in Toronto (the “Property”). The Purchasers are the principals of Homelife Dreams Realty Inc. (“Homelife”), a real estate brokerage company that operated in Toronto. Homelife was a commercial tenant at the Property until June 2016.

[3] In the action, the Purchasers seek a declaration that they own twenty percent of the shares of 148 and a mandatory order for specific performance of the Share Purchase Agreement allowing them to complete the purchase of the remaining eighty percent of the shares of 148. The plaintiffs also seek additional relief.

[4] The defendants submit that the Purchasers failed to complete the purchase of the remaining eighty percent shares of 148 on the date agreed upon for closing, October 1, 2015 (the “Closing Date”), and that, by its terms, the Share Purchase Agreement, including provisions for the sale of the initial twenty percent of the shares of 148, is null and void.

[5] The defendants move for summary judgment dismissing the action, together with related relief.

[6] It is common ground that on the Closing Date there was unresolved litigation affecting the property including an action by a company controlled by one Claude Bitton for specific performance of an agreement to purchase the Property (the “Bitton Litigation”). A certificate of pending litigation was that was obtained by the plaintiff in the Bitton Litigation (the Bitton CPL”) was registered on title to the Property.

[7] In my view, the outcome of this motion turns on paragraph 4.2 of the Share Purchase Agreement. Paragraph 4.2 provides that “[A]ll litigation shall be resolved finally by the date of the transfer of the balance of the shares.” The parties agree that this is a condition to completion of the purchase of the remaining eighty percent of the shares of 148. The question that must be decided on this motion is whether, on the evidence before me, there is a genuine issue requiring a trial as to whether Checroune used his best efforts to satisfy this condition by the Closing Date.

[8] The defendants submit that paragraph 4.2 is a true condition precedent that was not satisfied on the Closing Date because the Bitton Litigation was unresolved and, therefore, the Share Purchase Agreement, by its terms, is null and void. They submit that fulfillment of this condition was not within their control, and that there is no evidence that Checroune did anything to delay resolution of the Bitton Action. The defendants submit that the failure of the Purchasers to complete the purchase of the remaining eighty per cent of the shares of 148 on the Closing Date is fatal to their action, and that the action should be summarily dismissed.

[9] The Purchasers submit that Checroune’s failure to resolve the Bitton Litigation by the Closing Date was a breach of the Share Purchase Agreement that relieved them of the obligation to pay the purchase price for the eighty percent balance of the shares of 148. The Purchasers submit that their obligation to close is suspended while the condition in paragraph 4.2 remains unsatisfied, and that they remain willing to complete the purchase of the remaining eighty percent of the shares of 148.

[10] For the following reasons, I have concluded that whether Checroune made best efforts to resolve the Bitton Litigation and clear title to the Property by the Closing Date is a genuine issue requiring a trial and, therefore, that the defendants’ motion for summary judgment must be dismissed.

Summary of Facts

The Original Agreement, Amending Agreement and Other Related Documents

[11] The parties signed an agreement dated June 6, 2012 (the “Original Agreement”) which was amended by a separate agreement dated June 18, 2012 (the “Amendment Agreement”). These agreements, together, are the Share Purchase Agreement.

[12] Under the Share Purchase Agreement there are two closing dates. The closing date for the purchase of the initial 20 percent of the shares of 148 is June 21, 2012 and the closing date for the transfer of the balance of the shares of 148 is October 1, 2015 (defined above as the “Closing Date”).

[13] The Amendment Agreement provides for the insertion of paragraph 4.2 that provides that [A]ll litigation shall be resolved finally by the date of the transfer of the balance of the shares.”

[14] The Original Agreement provides, in paragraph 1.6, that time shall be of the essence. This did not change after the Amendment Agreement.

[15] The parties agree that the purchase price for all of the shares of 148 was based upon a value of $15,000,000.

[16] The parties entered into other legal documents on June 22, 2012. These documents included:

a. Amended Trust Declaration whereby 148, as trustee, acknowledges and declares that it is now holding a fifteen percent interest in the Property, including the chattels, fixtures, equipment and leases and rental agreements relating thereto (collectively, the “Property and Assets”) in trust for Hussaini; a five percent interest in the Property and Assets in trust for Ahmadi, and an eighty percent interest in the Property and Assets in trust for Checroune. b. Undertaking whereby the Purchasers undertake to purchase and Checroune undertakes to sell the remaining balance of the shares of 148, referencing paragraph 2.4 of the “Amended Agreement of Purchase & Sale”, and paragraph 2.5 of the “Agreement of Purchase & Sale”. The purchase price for the remainder of the shares was expressed to be $4,800,000 to be adjusted by the amount that the existing first mortgage as of June 21, 2012 exceeds or is less than $9 million. c. Lease between 148 as landlord and Homelife as tenant for a term of five years from the first day of August 2012 to the last day of July 2017. d. Resolution of the sole director of 148 approving of and consenting to the transfer from Checroune to Hussaini of 15 common shares and to Ahmadi of 5 common shares of 148. e. Warranty by Checroune that 148 has the corporate authority to enter into the Share Purchase Agreement, there were no other purchase agreements, 148 was duly incorporated and validly subsisting, property taxes will be paid and adjusted on closing and 148 is not involved in any litigation “except as set out below”.

[17] Ahmadi provided affidavit evidence that a share certificate for fifteen common shares in the capital of 148 and a share certificate for five common shares in the capital of 148 dated June 21, 2012 were issued by 148 to Hussaini and to Ahmadi, respectively.

[18] In accordance with the Share Purchase Agreement, on or around June 21, 2012 the Purchasers paid Checroune $1,000,000 in addition to the $200,000 that had previously been paid. The Purchasers submit that the $1,000,000 payment, together with the initial $200,000 deposit, represented payment of the purchase price for 20% of the shares of 148. Checroune submits that the $1,000,000 payment was an additional deposit for the purchase of 100% of the shares of 148.

[19] Checroune submits that the October 1, 2015 closing date represented a generous period of time, almost three years, within which the defendants would make best efforts to clear title to the Property, including discharging the Bitton CPL. The Purchasers submit that the October 1, 2015 closing date was also selected because the RBC mortgage on the Property was set to mature on October 1, 2015 and, because of heavy penalties for early repayment, it was cost prohibitive for Checroune to retire the mortgage before it fell due.

[20] The Purchasers provided evidence that they required the Bitton Litigation to be resolved by the Closing Date because they intended to use the Property as collateral to obtain mortgage financing to acquire the balance of the shares of 148 and that such financing would be unavailable unless the Bitton CPL was discharged.

Events Following June 21, 2012

[21] After June 21, 2012, a lease was made between 148 as landlord and Homelife as tenant. Disputes arose in relation to the lease, and the Purchasers allege that Checroune began a strategy of causing harm to them and to Homelife. The particulars of the complaints of the Purchasers are in Ahmadi’s affidavits sworn October 24, 2014 and June 4, 2015. In these affidavits, Ahmadi asserts that the reason for Checroune’s change in behaviour is that he no longer wanted to comply with the Share Purchase Agreement and wanted out of the deal, she says, because he received a better offer for the Property.

[22] According to Ahmadi’s October 24, 2014 affidavit, as a result of Checroune’s threats to sell the Property to another purchaser, the plaintiff started this action in June 2014. On June 13, 2014 the Purchasers obtained an order from Master Haberman on a motion made without notice granting them leave to issue a Certificate of Pending Litigation against the Property. This Certificate of Pending Litigation (the “Purchasers’ CPL”) was issued on June 13, 2014 and was registered on title to the Property.

[23] In her October 24, 2014 affidavit, Ahmadi states that she believes that on a date in or around August 2014 Checroune entered into an agreement with Kartelle Corporation (“Kartelle”) purporting to sell the Property. She states that Checroune told her that he received an offer for $17 million for the Property. She states that several tenants in the Property advised her that they received an email from Kartelle Corporation indicating that it has purchased the Property. Ahmadi attached, as an exhibit to her affidavit, an email from Steven Leyzac, the president and CEO of Kartelle dated August 13, 2014 advising that Kartelle “will soon be the new owner/operator of [the Property], our possession date is scheduled for September 30, 2014. Upon completion of the acquisition, a comprehensive renovation will commence, renewing the building to Class ‘A’ standards”.

[24] According to Ahmadi’s affidavit evidence, Checroune then began to engage in a campaign of intimidation and harassment so that the Purchasers would no longer wish to purchase the balance of the shares of 148. She stated that Checroune told her that if the Purchasers do not pay the increased amount of $17,000,000 he would not sell the property to them. The particulars of these statements are contained in Ahmadi’s affidavits sworn October 24, 2014 and June 4, 2015.

[25] On October 27, 2014 an interlocutory injunction order was made by Whitaker J. restraining Checroune and 148 from denying the Plaintiffs’ access to the Property, restraining them from interfering with the quiet enjoyment of the Property by the Plaintiffs, ordering relief from forfeiture in respect of the “Purported Lease”, restraining Checroune and 148 from selling, mortgaging, encumbering or otherwise dealing with the Property without the consent of the Purchasers or court order and restraining Checroune and 148 from selling, mortgaging, encumbering or otherwise dealing with the shares in the capital of 148.

[26] Checroune responded to the statements made in Ahmadi’s October 24, 2014 affidavit in an affidavit sworn October 28, 2014 that was appended as an exhibit to Ahmadi’s February 10, 2016 affidavit, and he denied the allegations of intimidation and harassment. He did not address in his affidavit the statements in Ahmadi’s October 24, 2014 affidavit concerning a sale of the property to Kartelle.

[27] On his cross-examination on his affidavit sworn November 14, 2016 in support of this motion, Checroune denied that there was another transaction with Kartelle and he said that, although he knows Kartelle, he has not dealt with Kartelle or talked to anybody at Kartelle. His evidence was that Kartelle dealt directly with the doctors in the building and not with him, and that what they did was not with his consent. He was asked to produce his lawyers’ documents with respect to Kartelle, Mr. Leyzac or any company associated with Kartelle and this request was refused on the ground that it is not relevant to the motion for summary judgment.

Events around October 1, 2015 Closing Date

[28] The Bitton Litigation was not resolved by October 1, 2015. Through correspondence exchanged on September 30, 2015 the lawyers for Checroune and the lawyers for the Purchasers took opposing positions.

[29] The lawyers for the Purchasers took the position that Checroune had failed to satisfy his obligations under the Share Purchase Agreement to resolve outstanding litigation, including the Bitton Litigation, and, therefore, the Purchasers were not required to complete the purchase of the remaining 80 percent of the shares of 148 on the Closing Date.

[30] Checroune, through his lawyers, transmitted forms of legal documents for the closing and took the position that he was ready, willing and able to close. He agreed to have the closing funds held in escrow until determination of issues in relation to the interpretation of the Share Purchase Agreement. He took the position that he is under no obligation to resolve the Bitton Litigation, or any litigation.

[31] The purchase of the remaining 80 percent of the shares of 148 did not close on October 1, 2015. Checroune offered to return the $1,200,000 that had been paid by the Purchasers, but they refused to accept the return of this money. Checroune applied these funds to the amounts that he says Homelife owes to 148 under the Lease.

[32] After October 1, 2015 the mortgagee of the Property, RBC, commenced power of sale proceedings and the Purchasers engaged in unsuccessful negotiations for the purchase of the Property directly with RBC. Checroune redeemed the RBC mortgage and the power of sale proceedings ended.

[33] Homelife continue to pay rent pursuant to the Lease after October 1, 2015. The Purchasers alleged that Checroune took improper steps to “poach” the remaining subtenants of Homelife and that Homelife had no choice but to leave the Property in July, 2016. 148 has counterclaimed against Homelife for amounts claimed under the Lease.

Adjudication of Bitton Litigation

[34] The trial in the Bitton Litigation was conducted in February 2016. The action by the plaintiff in the Bitton Litigation for specific performance of a condition providing for delivery of documents prior to closing was dismissed by judgment released on March 4, 2016: 2144688 Ontario Ltd. v. 1482241 Ontario Ltd., 2016 ONSC 1475.

Analysis

[35] In my view, the threshold question on this motion is whether there is a genuine issue requiring a trial in relation to whether Checroune failed to use best efforts to resolve the Bitton Litigation by the Closing Date. I regard this as a threshold question because, in my view, if Checroune failed to use his best efforts to do so, this would excuse the Purchasers from an obligation to complete the purchase of the remaining eighty percent of the shares of 148 on October 1, 2015, and would allow them to seek remedies against the defendants in relation to the Share Purchase Agreement.

Defendants’ Position

[36] The Share Purchase Agreement provides in paragraph 1.1 (of the Original Agreement) that “If for any reason this transaction does not close, this offer will become null and void and the deposit will be returned to the purchaser without any deduction”. Checroune submits that the October 1, 2015 closing date was agreed to and there was no agreement extending this date. He submits that the parties agreed to a generous period of time, almost three years, within which the defendants would make best efforts to clear title to the Property. Checroune submits that the transaction did not close and, therefore, the plaintiffs have no rights that arise from the Share Purchase Agreement and that their action should be dismissed.

[37] Checroune also takes the position that section 4.2 of the Share Purchase Agreement was a true condition precedent that was not within his control or the control of 148 to satisfy. Checroune submits that he did everything he could to resolve the Bitton Litigation and that there is no evidence that he did anything to delay its resolution. Checroune submits that as a result of the inability of the defendants to fulfil the true condition precedent, the Share Purchase Agreement was null and void as of October 1, 2015 and that the plaintiffs’ action should be dismissed.

Purchasers’ Position

[38] The Purchasers submit that paragraph 1.1 of the Original Agreement must be interpreted as part of the Share Purchase Agreement read as a whole. The Purchasers submit that paragraph 1.1(a) of the Original Agreement providing for “this offer” to become null and void upon a failure of “this transaction” to close, properly interpreted, relates only to the initial purchase of twenty percent of the shares of 148 and not to the purchase of the remaining eighty percent of the shares. I do not need to decide whether this interpretation is correct on this motion.

[39] The Purchasers submit that paragraph 4.2 of the Share Purchase Agreement imposed an obligation on Checroune to resolve all litigation affecting the Property by October 1, 2015, and that his failure to satisfy this obligation relieved them of an obligation to complete the purchase of the remaining 80 percent of the shares of 148 on October 1, 2015. The Purchasers submit that their obligation to complete the purchase of the remaining eighty percent of the shares of 148 is suspended until Checroune satisfies the condition in paragraph 4.2 of the Share Purchase Agreement and that they are willing to complete the purchase when this condition is satisfied.

Legal Principles

[40] The defendants rely upon the following passage from the decision of the Supreme Court of Canada in Zhilka v. Turney, [1959] S.C.R. 578, at para. 11:

The obligations under the contract, on both sides, depend upon a future uncertain event, the happening of which depends entirely on the will of a third party - the Village council. This is a true condition precedent - an external conditional upon which the existence of the obligation depends. Until the event occurs there is no right to performance on either side.

The defendants submit that as a result of their inability to fulfill the true condition precedent notwithstanding best efforts to do so, the Share Purchase Agreement was null and void as of the Closing Date.

[41] The Purchasers rely upon the decision of the Supreme Court of Canada in Dynamic Transport Ltd. v. O.K. Detailing Ltd., [1978] 2 S.C.R. 1072. In that case, subdivision approval under the Planning Act was a condition to an agreement for the sale of land, but the agreement was silent as to whether the vendor or purchaser would obtain this approval. The Supreme Court of Canada referred to the general principle that the court will readily imply a promise on the part of each party to do all that is necessary to secure the performance of a contract and held that the vendor was under a duty to act in good faith and to take all reasonable steps to complete the sale. This included an obligation on the part of the vendor to use his best efforts to obtain the subdivision approval. Dickson J., writing for the Court, concluded at para. 19 that the obligations of the vendor to sell and of the purchaser to buy “were merely in suspense pending the occurrence of the event constituting the condition precedent”.

[42] The decisions in Turney and in Dynamic Transport were cited by Blair J. in Riordan v. Chan (1991) CarswellOnt 570, an action for specific performance of an agreement for the sale of land. The agreement was conditional upon obtaining a right-of-way that was consented to by the mortgagee bank. The condition was not satisfied at the time of closing and, for this reason, the transaction did not close. Blair J. concluded that the vendor had an obligation to use his reasonable and best efforts to obtain the right-of-way and wrote that the central factual issue at the trial of the action was whether he did so.

[43] I agree with the approach taken by Dickson J. in Dynamic Transport and by Blair J. in Riordan. Paragraph 4.2 of the Share Purchase Agreement is a condition precedent to completion of the purchase of the remaining eighty percent of the shares of 148, but the defendants (as well as the Purchasers, to the extent that they could do so) were subject to an obligation to use their best efforts to satisfy this condition by the Closing Date.

Evidence Concerning Efforts of Defendants to Resolve Bitton Litigation

[44] The defendants, in their submissions, agreed that in the period of time from the date of the Share Purchase Agreement in June 2012 to the Closing Date in October 2015 they were required to use their best efforts to clear title to the Property by resolving the Bitton Litigation: see paras. 62 and 69 of the defendants’ factum. The defendants submit that they zealously defended the Bitton Litigation and were ultimately successful at trial in 2016. They submit that there is no evidence that they did anything to delay the resolution of the Bitton Litigation.

[45] In support of these submissions, the defendants point to statements in an affidavit sworn by Checroune on October 28, 2014, a copy of which was marked as an exhibit to the affidavit sworn by Ahmadi on February 10, 2017. The defendants rely upon the following statement from the copy of Checroune’s affidavit:

17. The litigation with Bitton has gone through several steps including: examinations, multiple mediations, several interim motions and a motion for summary judgment. Currently, the plaintiffs are bringing a motion in January 2015 to add the matter to the upcoming trial list.
18. It is now entirely unlikely that the Bitton Litigation will get resolved by October, 2015.

The defendants submit that the trial in the Bitton Litigation was held in February 2016 as scheduled by the court and that the defendants were successful.

[46] The purchasers rely upon the evidence of Ahmadi that:

a. Checroune told her that he received an offer for $17,000,000 for the Property and that if she did not pay the increased amount of $17,000,000 he would not sell the Property to her. b. Tenants in the Property received an email from Kartelle indicating that it has purchased the Property. c. Checroune employed a strategy of harassment and intimidation to cause the Purchasers to relinquish their interest in the Property.

[47] In addition, the Purchasers rely upon the following evidence given by Checroune on the cross-examination on his affidavit:

608. Q. Okay. From 2012 to 2015, I take it that you will agree with me that you were working towards discharging the certificate of pending litigation of Mr. Bitton? A. Not really.
609. Q. You weren’t doing anything to remove it? A. No.
610. Q. Why not? A. Because we had no obligation.
611. Q. You had no obligation to remove it? A. Yes.
612. Q. And therefore you took no steps to expedite the removal of the CPL? A. Absolutely.

At the hearing of this motion, when asked about this passage from the transcript of Checroune’s cross-examination, counsel for the defendants submitted that Checroune was mistaken when he gave this evidence and that Checroune had used his best efforts to resolve the Bitton Litigation by the Closing Date.

[48] With respect to the evidence from Ahmadi concerning Kartelle, Checroune on his cross-examination denied that there was another transaction with Kartelle and denied that he had ever dealt with Kartelle or talked to anybody there. He said that Kartelle dealt directly with the doctors in the building, and that what they did was not with his consent. He confirmed that he had not entered into an agreement to sell the Property or shares in 148 to Kartelle.

[49] The following evidence, and absence of evidence, leaves me unable to decide on the record before me whether the defendants satisfied their obligation to use best efforts to resolve the Bitton Litigation by the Closing Date:

a. The statements from the copy of the Checroune affidavit concerning the steps taken in the Bitton Litigation relate to steps taken in the litigation before October 28, 2014, but not after this date. The missing information bears upon whether best efforts were taken. b. There was no evidence of communications with counsel for Bitton, or with the court, concerning attempts to obtain a trial date for the Bitton action that would lead to adjudication of the Bitton Litigation by the Closing Date. c. There was no evidence, in re-examination, to clarify Checroune’s statements on cross-examination that he was not doing anything to remove the Bitton CPL from 2012 to 2015. This evidence supports the Purchasers’ submission that Checroune did not use his best efforts to resolve the Bitton litigation by the Closing Date. d. Ahmadi gave evidence that Checroune told her that he would not sell the Property to her unless she paid the increased amount of $17,000,000 and Checroune did not provide affidavit evidence to respond to this evidence. e. It is not clear from the record before me who Kartelle was dealing with in connection with its interest in purchasing the property, or why Kartelle advised tenants that it would soon be the owner of the Property. f. Although Checroune said on cross-examination that he knows Kartelle, and he had knowledge that Kartelle dealt with the doctors (who I presume were tenants), he did not explain how he acquired his knowledge of Kartelle’s dealings concerning the Property. The defendants refused to produce a copy of their lawyers’ file with respect to any dealings with Kartelle, so this evidence is not before the court: transcript of Checroune cross-examination, qq. 654-664.

[50] I therefore do not accept the defendants’ submission that the evidentiary record is such that I can and should decide that the defendants used their best efforts to resolve the Bitton Litigation by the Closing Date. I have concluded that this is a genuine issue requiring a trial.

[51] In Hyrniak v. Mauldin, 2014 SCC 7, the Supreme Court of Canada wrote that on a motion for summary judgment, the court should first determine if there is a genuine issue for trial based on the evidence before it. If there appears to be a genuine issue for trial, the court should then determine if the need for a trial can be avoided by using the new powers under Rules 20.04(2.1) and (2.2).

[52] In my view, resolution of the issue of whether the defendants discharged their obligation to use best efforts to resolve the Bitton Litigation by the Closing Date will likely require evidence from several witnesses, including, possibly, Checroune, Ahmadi, the executives at Kartelle, doctors who are tenants at the building who may have dealt with Kartelle, as well as documentary evidence, if available, concerning Kartelle and concerning actions taken by the defendants to secure a date for adjudication of the Bitton Litigation before the Closing Date. Given the nature and extent of this evidence, I exercise my discretion not to use the expanded powers under Rules 20.04(2.1) and (2.2).

[53] The defendants move for alternative orders if I decide to dismiss their motion for summary judgment dismissing the plaintiffs’ action. Specifically, the defendants ask for (i) an order discharging the certificate of pending litigation obtained by the plaintiffs; (ii) an order setting aside the interlocutory order of Whitaker J. dated October 27, 2014; and (iii) summary judgment for damages against Homelife for unpaid rent under the Lease.

Motion to Discharge Purchasers’ CPL

[54] With respect to the motion to discharge the CPL, subsection 103 (6) of the Courts of Justice Act provides that the court may make an order discharging a certificate of pending litigation on grounds set forth in that subsection, including on any other ground that is considered just. Rule 42.02(1) provides that an order discharging a certificate of pending litigation under subsection 103(6) of the Courts of Justice Act may be obtained on motion to the court. I accept the submission of the defendants that the court must exercise its discretion in equity and look at all relevant matters between the parties in determining whether the certificate should be discharged.

[55] I have considered the factors identified in 572383 Ontario Inc. v. Dhunna (1987), 24 C.P.C. 287, at paras. 10-18. With respect to these factors:

a. Two of the plaintiffs, the Purchasers, are individuals, not shell corporations. b. The Purchasers have offered some evidence concerning why the property is unique because of its location, size and parking relative to other nearby commercial buildings. Although Homelife is no longer a tenant at the Property, the Purchasers have provided evidence that this was the result of actions taken by the defendants. Whether this is so will be decided at the trial of the action. I am not able to conclude on the record before me that the Purchasers will not succeed on their claim for specific performance of the Share Purchase Agreement and thereby become the owner of 148 that owns the Property: 2039903 Ontario Inc. v. Parktrail Estates Inc., 2008 CarswellOnt 7036 at paras. 35-39. c. Although there is an alternative claim in damages, I am not satisfied that damages would necessarily be a satisfactory remedy. This should be decided on a more complete evidentiary record. d. Although there is evidence of another willing purchaser, Checroune’s evidence on his cross-examination was that he has received many offers to sell the Property, and that he receives offers “all the time”, “every week”: Transcript of cross-examination of Checroune, qq. 667-675. e. The Amended Trust Declaration contains an acknowledgement by 148 that it holds a twenty percent interest in the Property and Assets in trust for the Purchasers. The defendants deny that the Purchasers have any interest in the Property and Assets. Whether the Purchasers have such an interest will be determined in the action. The Amended Trust Declaration is evidence of an interest in the Property that supports the Purchasers’ CPL. f. The evidence does not demonstrate that the Purchasers have failed to prosecute this action with sufficient diligence that the Purchasers’ CPL should be discharged for this reason. The judgment in the Bitton Litigation was released in March 2016, and this motion for summary judgment by the defendants was then brought. If the plaintiffs do not prosecute the action with sufficient diligence following the release of my decision, it is open to the defendants to move again for a discharge of the Purchasers’ CPL. g. In balancing the harm done to the defendants if the CPL is allowed to remain against the harm to the plaintiffs if it is removed, I also consider that the defendants did not move to lift the CPL when it was first registered in June 2014. The motion to discharge the CPL was only brought as part of this motion for summary judgment.

[56] If the Purchasers’ CPL were to be discharged, the effect would be to limit their claim to damages. Having considered the evidence and the relevant factors, in my view, the Purchasers should not be limited at trial to a remedy in damages. The trial judge may conclude that a remedy of specific performance is not available, but the Purchasers should not be deprived of the opportunity to seek this remedy. I therefore exercise my discretion not to discharge the Purchasers’ CPL.

Motion to Set Aside Order of Whitaker J.

[57] The defendants also move for an order that the interlocutory order of Whitaker J. be set aside. They submit that the plaintiffs do not have a valid claim against the Property or the shares of 148 and that the defendants are being materially prejudiced by their inability to deal with the Property. The defendants ask that paragraphs 4 and 5 of the order of Whitaker J. be set aside so that the defendants may proceed with a sale of the Property.

[58] The Purchasers submit that they should not be deprived of the right to seek specific performance of the Share Purchase Agreement that, if successful, would allow them to become the owner of the shares of the company that owns the Property. The Purchasers also submit that there is evidence that Checroune has knowingly contravened the Order of Whitaker J. by allowing 148 to mortgage the Property on September 21, 2016. The Purchasers submit that Checroune lacks clean hands and, for this reason, is not entitled to seek equitable relief from the court.

[59] The Purchasers provided evidence of a charge registered on the Property on September 21, 2016 securing the amount of $1,420,000 in favour of Janodee Investments (“Janodee”) and Meadowshire Investments Ltd. (“Meadowshire”) (the “Meadowshire Charge”). The Meadowshire Charge was shown to have been signed by one Harvey Samuel Margel for the chargor, 148. Checroune was shown to be a guarantor.

[60] On his cross-examination, Checroune was asked about the Meadowshire Charge. He said that he did not know Janodee or Meadowshire, and that he was not involved at all in this mortgage transaction. He said that he has not met Mr. Margel or transacted business with him, and that Mr. Margel did not have authority from him to sign the Meadowshire Charge.

[61] It is difficult to reconcile Checroune’s position with 148 as controlling shareholder and President and his involvement with the Property with his evidence that he knows nothing about the Meadowshire Charge or the person, Mr. Margel, who signed the Meadowshire Charge on behalf of 148. Nevertheless, without a more complete evidentiary record, I am not able to make the finding of credibility concerning Checroune’s knowledge of the Meadowshire Charge that would be necessary for me to conclude that Checroune intentionally contravened the order of Whitaker J. I therefore do not deny the defendants’ motion to set aside the order of Whitaker J. because they lack clean hands.

[62] I have already concluded that the Purchasers should not, in the circumstances, be deprived of the right to seek specific performance of the Share Purchase Agreement. For the same reasons, I exercise my discretion not to set aside the order of Whitaker J.

Motion for Summary Judgment on Lease

[63] The defendants submit that the Lease was a requirement of the Share Purchase Agreement, that Homelife has abandoned its obligations under the Lease, and that the unpaid rent through to July 17, 2017 should be set off as against the $1,200,000 paid by the Purchasers. The defendants provided a statement of amounts due under the Lease as of September 26, 2016 of $1,541,761.58.

[64] The plaintiffs submit that there are a number of genuine issues that require a trial in respect of the claims under the Lease including factual issues in relation to the signing of the lease, the actions by the defendants that the plaintiffs assert were in breach of the Lease, steps taken or not taken by the defendants to mitigate their damages. More broadly, the plaintiffs submit that the overlap between factual issues in relation to the Lease and those that relate to the Purchasers’ claims for remedies under the Share Purchase Agreement is such that partial summary judgment for claims under the Lease should not be granted.

[65] I am mindful of the caution recently expressed by the Court of Appeal in Canadian Imperial Bank of Commerce v. Deloitte & Touche, 2016 ONCA 922 concerning motions for partial summary judgment. The Court of Appeal set aside a partial summary judgment and held that the motion judge had erred in concluding that there was no risk of duplicative or inconsistent findings at trial and that granting partial summary judgment was advisable in the context of the litigation as a whole.

[66] In my view, the factual issues relating to the Purchasers’ claims in relation to the Share Purchase Agreement are closely intertwined with the factual issues that relate to the defendants’ claims under the Lease. There is a risk of duplicative or inconsistent findings if I were to decide summarily the issues relating to the claim under the Lease without regard for the issues to be decided at the trial of the plaintiffs’ claims. I therefore decline to grant summary judgement on the counterclaim made by the defendants in respect of the Lease.

Disposition

[67] For these reasons, the defendants’ motion is dismissed.

[68] If the parties are unable to resolve the costs of this motion, the plaintiff may make brief written submission not to exceed 5 pages (not including the costs outline) within 30 days. The defendants may make a written response with 14 days of receipt of the plaintiffs’ submissions (also not to exceed 5 pages) and the plaintiffs, if so advised, may make reply submissions (not to exceed 2 pages) within 7 days of receipt of the defendants’ submissions.

Mr. Justice P.J. Cavanagh Date: April 19, 2017