COURT OF APPEAL FOR ONTARIO

CITATION: Dhatt v. Beer, 2020 ONCA 799

DATE: 20201211

DOCKET: M51990 & M52026 (C68375 & C68539)

Brown J.A. (Motion Judge)

BETWEEN

Mandeep Dhatt and Kulwinder Dhatt

Plaintiffs

(Respondents/Moving Parties)

and

Derek Beer and Indira Beer

Defendants

(Appellants/Responding Parties)

and

Jay Brijpaul and Re/Max West Realty Inc., Brokerage

Third Parties

(Respondents/Responding Parties)

Arnie Herschorn, for the for the moving parties, Mandeep Dhatt and Kulwinder Dhatt

David P. Lees and Zachary Silverberg, for the responding parties, Derek Beer and Indira Beer

Serena L. Rosenberg, for the responding parties, Jay Brijpaul and Re/Max West Realty Inc., Brokerage

Ethan Rogers, for the moving intervenor, Rogers & Company Professional Corporation

Melvin Rotman, for the execution creditors, Mahadi Singh and Chait Singh

Heard: December 9, 2020 by video conference

REASONS FOR DECISION

OVERVIEW

[1] There are two motions before me on these appeals from orders granting specific performance of an agreement of purchase and sale (the “Agreement”) for a residential property in Brampton (the “Property”).

[2] The successful purchasers, the respondents Mandeep Dhatt and Kulwinder Dhatt (the “Purchasers”), move for orders expediting the appeals, requiring the appellant vendors Derek Beer and Indira Beer (the “Vendors”) to post security for costs, and lifting the stay of the trial judge’s cost order. The Vendors oppose the motion.

[3] A non-party, the former lawyers for the Vendors, Rogers & Company Professional Corporation (“Rogers”), move for leave to intervene as an added party on the Purchasers’ motion and request a delay of that motion until the disposition of a proceeding initiated by Rogers in the Superior Court of Justice (“SCJ”).

THE TRIAL AND APPEALS

[4] A bit of background is required to put the motions into context.

[5] These appeals are from two orders made by the trial judge, C. Brown J.

[6] The trial was held in March 2020. After failing to obtain an adjournment, the Vendors did not participate in the balance of the trial. By judgment dated May 1, 2020 (the “Trial Judgment”), the trial judge: (i) granted the Purchasers specific performance of the 2016 Agreement for the Property; (ii) dismissed the Vendors’ third party claim against their real estate broker, Jay Brijpaul and Re/Max West Realty Inc. (the “Broker”); and (iii) awarded costs to the Purchasers ($112,347.63) and Broker ($88,178.52): 2020 ONSC 2729. Paragraph 3 of the Trial Judgment ordered that of the Agreement’s purchase price of $835,000, “(a) the [Purchasers] are entitled to withhold the sum of $112,347.63 in payment of their substantial indemnity costs of the action (b) the [Purchasers] pay to the [Broker] the sum of $88,178.52 for the [Broker’s] substantial indemnity costs in the third party action.”

[7] The second order was made by the trial judge on July 30, 2020, establishing a process for the transfer of the Property to the Purchasers (the “Transaction Order”). As part of that order, the trial judge ordered the Vendors to deliver up to the Purchasers vacant possession of the Property and appointed Robert Aaron as the transaction lawyer for the Vendors to complete the sale of the Property to the Purchasers.

[8] The Vendors moved before Zarnett J.A. for a stay of the Trial Judgment and Transaction Order. Upon the undertaking of the Purchasers not to deal with the Property pending the disposition of the appeals, Zarnett J.A. denied the stay: 2020 ONCA 545, 449 D.L.R. (4th) 263. In the course of his reasons, Zarnett J.A. stated that the cost components of the Trial Judgment were subject to the automatic stay provisions of the Rules of Civil Procedure.

[9] All appeal materials have been filed; the appeals are ready to be heard.

THE EVENTS LEADING UP TO THESE MOTIONS

[10] The Purchasers took possession of the Property on September 2, 2020. They do not intend to sell their previous home until the disposition of the appeals.

[11] The sale of the Property has not closed.

[12] Mr. Aaron prepared a September 16, 2020 statement of estimated proceeds of sale from the Property based on the Agreement’s $835,000 purchase price. The statement is attached to these reasons. He calculated that the “encumbrances” in respect of the Property amount to approximately $1 million, leaving a shortfall of about $178,000. The “encumbrances” fall into six categories: (i) first and second mortgages; (ii) the cost orders in the Trial Judgment made in favour of the Purchasers and Broker; (iii) real estate commission, taxes, HVAC; (iv) an execution registered by Mahadi Singh; (v) an execution registered by Chait Singh; and (vi) executions registered by Rogers.

[13] Mr. Aaron proposed that Mahadi Singh accept less than the face value of his claim and that Chait Singh and Rogers lift their executions voluntarily to enable the sale to close.

[14] Chait Singh and Rogers are not prepared to do so. They take the position that all the unsecured creditors, including claims for costs by the Purchasers and Broker pursuant to the Trial Judgment, should be treated equally on a pro rata basis.

[15] No agreement has been reached on that issue, which has led to the Purchasers’ motion seeking, in part, to lift the stay of the cost orders.

[16] On its part, Rogers has moved in the SCJ seeking to vary the Trial Judgment’s grant of specific performance and award of costs to the Purchasers and Broker. The economic rationale for that motion can be found in a December 7, 2020 appraisal of the Property that Rogers has filed in its intervention record. The appraisal puts the current fair market value of the Property at $1,437,000. The appraisal has not been tested but it highlights the concern expressed by the execution creditors. They contend that if the Property were sold for fair market value, all creditors would be paid in full. However, the ordered sale at $835,000, when coupled with the cost order, will see the Purchaser and Broker fully reimbursed for their trial cost claims while requiring the execution creditors to take a haircut or receive nothing. This result, the execution creditors contend, is manifestly unfair, especially when they were not given notice of the cost order the trial judge intended to make.

[17] A case conference for Rogers’ motion is scheduled to be held by a judge of the SCJ Toronto Region Civil List on December 17, 2020. It is anticipated that a date for the Rogers motion will be set at that time.

ANALYSIS

The Purchaser’s motion

[18] The principle guiding my disposition of the motions is a simple one: this court will determine the appeals from the Trial Judgment and Transaction Order; the SCJ is the proper forum to deal with the priorities dispute amongst the Purchasers, Broker, and execution creditors.

[19] Applying that principle, the Vendors have offered no persuasive reason to oppose setting an early date for the hearing of the appeals. Accordingly, I order that the appeals shall be heard on February 10, 2021, for two hours.

[20] Purchasers’ counsel advised that in light of that appeal date, his clients were not pursuing their further requests for security for costs or lifting the stay of the cost awards.

[21] That disposes of the Purchasers’ motion.

Rogers’ motion

[22] Rogers seeks leave to intervene as an added party on the Purchasers’ motion and an order delaying the hearing of that motion pending the outcome of Rogers’ SCJ motion. The materials filed by Rogers on its motion certainly helped me to understand the “big picture” in this dispute, and they helped me formulate the guiding principle that I set out in para. 18. However, consistent with that principle, I am not persuaded that Rogers should be granted leave to intervene in this court. The proper forum for its submissions on the priorities dispute is the SCJ.

[23] Nor, as can be seen, am I persuaded that the Purchasers’ motion should be delayed. Quite the contrary. By setting an early hearing date for the appeals, I am attempting to fix a timeframe in which the parties should resolve their priorities dispute in the SCJ. The longer that priorities dispute is allowed to fester, the more disproportionate the legal costs will become to the amount truly in dispute.

[24] Rational economic actors can easily resolve the priorities dispute. If the priorities dispute is resolved, it may well be that the appeals also resolve.

[25] In any event, I am sending a copy of these reasons to Myers J., the co-Team Leader of the SCJ Toronto Region Civil List, with my respectful request that he make the appropriate arrangements for the most effective use of the parties’ time and resources in the matter now pending in that court.

[26] Accordingly, while the Rogers materials have been helpful, I formally dismiss their motion to intervene and delay the Purchasers’ motion.

DISPOSITION

[27] By way of summary, I grant the Purchasers’ motion for an early appeal hearing and set February 10, 2021 as the date for a two-hour hearing of the appeals. The Purchasers withdraw the balance of their motion. I dismiss the Rogers motion.

[28] As to the costs of the Purchasers’ motion, each party seeks costs of $5,000 from the other. That is an unreasonable ask for a simple procedural motion in this court. I fix the costs of the Purchasers’ motion at $1,500, payable to either the Purchasers or Vendors in the cause of the appeals.

[29] Rogers seeks costs of its motion in the amount of $5,000 against the Purchasers. Although I have dismissed the Rogers motion, its materials were quite helpful. Consequently, I award Rogers costs of its unsuccessful motion in the amount of $500, payable in equal pro rata shares by the Purchasers and Vendors within 30 days of the release of these reasons.

[30] I thank counsel for their assistance in dealing with these motions in an efficient, cost-effective manner.

“David Brown J.A.”