COURT FILE AND PARTIES

COURT FILE NO.: CV-10-8970 CL
DATE: 20120831

SUPERIOR COURT OF JUSTICE – ONTARIO
COMMERCIAL LIST

RE: ZORAN COCOV and DITA COCOV

Applicants

• AND –

DIMITAR GORGIEV and LYRIC CENTURY APARTMENTS INC.

Respondents

BEFORE: NEWBOULD J.

COUNSEL: Richard J. Worsfold , for the Estate of Dimitar Gorgiev, moving party

John Gray , for the Applicants, responding party

HEARD: August 27, 2012

ENDORSEMENT

[ 1 ] Vasa Gorgiev, the widow of Dimitar Gorgiev who died on June 19, 2012, brings this motion on behalf of the Estate of Dimitar Gorgiev to vary the order of Justice Marrocco dated May 3, 2011 and to obtain an order providing for the sale of vacant land municipally known as 12-14 Mary Street, Hamilton, Ontario.

[ 2 ] The applicant Dita Cocov and the respondent Dimitar Gorgiev each owned 50 percent of the shares of the respondent Lyric Century Apartments Inc. (“Lyric”). The only asset of Lyric at relevant times has been the property on Mary Street in Hamilton, Ontario.

[ 3 ] In 2010, the applicants applied to wind up Lyric. They asked for an order that the property be sold and the proceeds split between the shareholders. The respondent Dimitar Gorgiev wanted to purchase the property and develop it.

[ 4 ] On May 3, 2011, Marrocco J. ordered that Mr. Gorgiev purchase Dita Cocov’s shares in Lyric at a fair market value to be determined by independent appraisals. On September 14, 2011 Marrocco J. ordered that Mr. Gorgiev pay Dita Cocov $466,000 for her shares in Lyric. On January 13, 2012, the Divisional Court allowed an appeal from the second order and remitted the matter to a Commercial List judge to again consider the value of the property on certain terms.

[ 5 ] On May 25, 2012, Mr. Gorgiev moved before Pattillo J. to set aside the order of Marrocco J. and for an order that the property be sold. This motion was partly on the basis that his health had deteriorated to the extent that he was no longer able to physically continue to pursue his goal of developing the property. Pattillo J. dismissed the motion on the basis that the decline in Mr. Gorgiev’s health and any decline in interest from developers were not new facts permitting the order of Marrocco J. to be varied or set aside under rule 59.06(2).

[ 6 ] On June 19, 2012, Mr. Gorgiev died. His widow, on behalf of his estate, asserts that his death is a fact arising or discovered after the orders of Marrocco J. and Pattillo J. were made and therefore constitutes grounds to vary the order of Marrocco J.

[ 7 ] Rule 59.06(2) provides that a party who seeks to have an order set aside or varied on the ground of facts arising or discovered after it was made may make a motion in the proceeding for the relief claimed. The moving party must establish that there are facts which have arisen after the order was made and which could not have been discovered prior to the order by the reasonable diligence of the moving party.

[ 8 ] The Cocov applicants take the position that the death of Mr. Gorgiev is not a new fact which would permit an order under rule 59.06(2). I disagree. The basis of the order of Marrocco J. was that Mr. Gorgiev was going to purchase the property and develop it. He obviously can no longer do that. His widow, Vasa Gorgiev, was born and raised in Macedonia. She cannot read or write English and from time to time worked in a factory in Canada. She had no dealings with her husband’s properties and states that she is incapable of carrying out any plans to develop the property. She has no business experience.

[ 9 ] I do not see this motion as an end run around the decision of Pattillo J. He held that Mr. Gorgiev’s health issues were known at the time of the initial order of Marrocco J. He said that it was known at that time that his health could deteriorate and affect his ability to conduct his business affairs. Mr. Gorgiev’s death ends any ability on his part to either develop the property or arrange for others to do so.

[ 10 ] In my view, grounds have been established to permit an order to be made varying the order of Marrocco J. Mrs. Gorgiev is in no position to be trying to develop the property. It makes sense from her point of view to have the property sold.

[ 11 ] The Cocov applicants contend that the valuation process ordered by Marrocco J. should continue. That process calls for the market value to be established as of April 2011. A valuation as of that date made sense at the time it was made, but makes no sense now. Mr. Gray, on behalf of the applicants admitted that it likely did not make sense to have such an old valuation carried out and that the only reason that could be justified for continuing it was that Marrocco J. ordered it.

[ 12 ] In his reasons, Pattillo J., after stating that Mr. Gorgiev had not established facts that would permit an order to be made varying the order of Marrocco J., stated in obite r that he did not think that a sale would expedite a final resolution as it was unlikely that the parties would agree on a sales agent, a listing price or any offer to purchase, and assuming that they could agree, the evidence indicated that it would likely take a year and a half to two years to sell the property.

[ 13 ] The Cocov applicants submit that the same situation now pertains and it would be unfair to them to have to wait that much time before receiving funds for their 50 percent of the property.

[ 14 ] The evidence before Pattillo J. consisted of an affidavit of Mr. Cocov complaining to a great extent of the actions of Mr. Gorgiev. He stated that given the history of the matter, and an inability to agree with Mr. Gorgiev on issues of importance, it was likely that court assistance would be required to enable the parties to agree on an agent, a listing price, marketing et cetera and that it thus could take one and a half or two years to sell it.

[ 15 ] There is no further affidavit from Mr. Cocov about any difficulties now that Mr. Gorgiev has died and it is his widow who would be involved in a sale. Vassa Gorgiev states in her affidavit that she is content to have any real estate agent with a major brokerage appointed to list the property and that she is prepared to abide by the recommendation of the listing agent with respect to the sale price. She was not cross-examined and there was no contradictory evidence regarding this. I view this situation as being entirely different than that before Pattillo J.

[ 16 ] I do not see the applicants being prejudiced by a sale order. The delay, if any, caused by a normal marketing process must be viewed against further delay that would be involved in having appraisals finalized and a further hearing scheduled and decided. There could well be an appeal from any valuation decision made.

[ 17 ] The applicants also contend that they would be prejudiced by a sale order because of all the expenses that have taken place in the litigation. That, however, is water under the bridge. Those expenses have been incurred and whether the property is sold on the market or sold pursuant to an appraisal process will not change that.

[ 18 ] It seems to me that a sale at current market value is the fairest procedure for both parties. It is possible that it will fetch a price higher than the price that would be determined by an appraisal process setting the value as of April 2011. Regardless of whether that is the case, a sale should result in a real market value so long as the property is properly marketed.

[ 19 ] In the circumstances, I direct that the property be listed for sale on the open market. If the parties are not able to agree on a listing agent or a listing price, which I trust should not be the case, further directions from the court may be obtained. The parties should be reminded that there will be cost consequences if unreasonable positions are taken regarding these matters. If a final sale price is not agreed, the same will pertain.

[ 20 ] The applicants have asked that in the event that a sale is ordered, they should be paid the costs of the hearings before Marrocco J. In my view, there is no basis for any such order being made. What has occurred has been caused by Mr. Gorgiev’s death, hardly the result of his estate. The applicants also ask for the expenses incurred in the appraisals being updated. In my view, for the same reasons, there should be no such cost order made.

[ 21 ] It would appear to me that there should be no cost of this motion, but if either party wishes to claim costs, they may do so in writing, not to exceed three pages in length, with an appropriate cost outline to be filed within ten days and the responding party shall have ten days to respond in writing not exceeding three pages.

NEWBOULD J.

Date: August 31, 2012