COURT FILE AND PARTIES

COURT FILE NO.: CV-12-455311
DATE: 20120924
SUPERIOR COURT OF JUSTICE – ONTARIO
(COMMERCIAL LIST)

RE: 2194210 ONTARIO LIMITED, Plaintiff

AND:

ASPEN ACQUISITION INC., Defendant

BEFORE: CUMMING J.

COUNSEL:
Michael Miller and Michael Arbutina, for the Plaintiff
Keith A. Landy and David Fogel, for the Defendant
Romesh Hettiarachchi, for Aspen Parkway Inc., Proposed Intervenor

HEARD: SEPTEMBER 21, 2012

ENDORSEMENT

Background

[1] The Defendant, Aspen Acquisition Inc. (“Aspen”), is the sole owner of the property in issue, being 76 separately titled townhouse condominium units known as 399 and 400 Vodden Street, Brampton, Ontario (the “subject property”). The units are operated as a block of residential rental units.

[2] The Plaintiff, 2194210 Ontario Limited (“219”), is owned by Mr. Allen Gramsh. 219 entered into an Agreement of Purchase and Sale (the “First Agreement”) in respect of the subject property on April 20, 2012. 219 agreed to purchase the subject property for $11,275,000, with a deposit paid of $50,000 and with a closing date (paragraph 8 of the First Agreement) being the first business day which is 30 days after waiver of the “Diligence Condition in Paragraph 3”.

[3] The Agreement provides for a due diligence period of 30 business days for the purpose of the purchaser’s inspections of the subject property, determining due diligence materials and to obtain mortgage financing. Aspen claims the conditions of the First Agreement were not complied with by 219. Aspen claims the First Agreement was terminated by 219, with the $50,000 deposit returned by Aspen.

[4] 219 claims that the due diligence conditional period was extended in accordance with the terms of the First Agreement beyond May 20, 2012.

[5] 219 initiated a Statement of Claim on June 5, 2012, seeking a declaration that the First Agreement is valid and enforceable and seeking specific performance of the First Agreement. 219 claims the subject property is unique and irreplaceable. Mr. Gramsh states 219 intends to “create a Muslim community” (with a community prayer centre, a children’s daycare and/or community centre) at the subject property, marketing the units to foreign residents of the Muslim religion.

[6] 219 obtained ex parte a Certificate of Pending Litigation (“CPL”) on June 6, 2012.

[7] Aspen entered into an Agreement of Purchase and Sale July 18, 2012 (the “Second Agreement”) with 1701099 Ontario Ltd. (“170”) in respect of the subject property, the interest of 170 being assigned later to Aspen Parkway Inc. (“Parkway”). Parkway agreed to purchase the subject property for $11,400,000.

[8] In entering into the Second Agreement, 170 and Aspen were aware of the litigation commenced by 219 and aware of the CPL obtained by 219. Indeed, paragraph 4 of the Second Agreement makes express reference to the existing litigation and CPL.

[9] The plaintiff 219 seeks an injunction restraining the defendant Aspen from transferring its interest in the subject property to Parkway pursuant to the Second Agreement. This injunction motion has been scheduled for November 6, 2012 on an urgency basis by Madam Justice Pollak in Civil Court Motion Scheduling Court on August 21, 2012. Aspen and Parkway unsuccessfully sought an earlier date for the hearing of the injunction motion.

The Motions

[10] There is a plethora of motions initiated which have led to the appearances today on short notice on a claimed urgency basis.

[11] Parkway has brought a motion on an urgency basis seeking “Intervenor” status in respect of the claim advanced by 219. Parkway has follow-on motions, seeking a mandatory order and declaratory relief to compel Aspen to specifically perform its obligations under the Second Agreement and seeking an order for security for costs.

[12] Aspen does not oppose this motion by Parkway but cannot consent thereto because of an undertaking to 219 by Aspen via its counsel on August 15, 2012 that no steps would be taken to dispose of, or transfer, the subject property pending the decision of the Court on 219’s injunction motion, provided that the motion was scheduled as soon as possible. As mentioned above, the injunction motion brought by the plaintiff, 219, has been scheduled for November 6, 2012, being the earliest date available.

[13] Aspen also brings a motion today to have the Court give leave to allow Aspen to withdraw its undertaking. Aspen also has a motion scheduled for November 23, 2012 to vacate the CPL registered by 219.

The Parkway Motion for Intervenor Status

[14] Rule 13.01 (1) provides that a non-party to a proceeding may move for leave to intervene as an added party, if the party claims: an interest in the subject matter of the proceeding; or that the person may be adversely affected by a judgment in the proceeding; or that there exists between the person seeking intervenor status and one or more of the parties to the proceeding a question of law or fact in common with one or more of the questions in issue in the proceeding.

[15] The claimed interest of Parkway in the subject property is dependent upon the First Agreement between 219 and Aspen having no force and effect or, at the least, 219 not being entitled to specific performance but only to damages.

[16] In considering a motion for intervenor status, a court has discretion to determine whether the non-party seeking leave will make a useful contribution to the analysis of the issues before the Court. Oakwell Engineering Limited v. Enernorth Industries Inc. (2006), 148 A.C.W.S. (3d) 39 (C.A.)

[17] In my view, the proposed intervenor, Parkway, would not add or contribute to the resolution of the essentially private legal issues between the parties to the First Agreement, 219 and Aspen. Parkway would simply repeat the position taken by Aspen.

[18] Parkway says it will suffer damages as a result of not completing the Second Agreement. Any damages it might suffer would be consequential to 219’s First Agreement being enforceable, and would relate to a dispute as between Aspen, as seller, and Parkway, as purchaser, under the Second Agreement. Any such possible claim of Parkway for damages has nothing to do with the action at hand as between 219 and Aspen.

[19] The inclusion of Parkway as intervenor would add nothing to the action at hand other than unnecessary delay and further costs.

[20] To the extent that Parkway seeks follow-on relief to being given intervenor status, including a declaration, mandatory order and security for costs, such sought relief is not properly part of the proceedings brought by 219 against Aspen.

[21] Moreover, I note that the so-called mandatory order sought by Parkway is arguably inconsistent with Rule 40.01 as Parkway is not a party to any pending proceeding and there is no apparent intent on the part of Parkway to initiate a proceeding. Rather, Parkway apparently claims, if given intervenor status, that it would then be a party to the present proceeding at hand brought by 219. However, injunctive relief is a remedy ancillary to a cause of action. I am doubtful that, even if given intervenor status, Parkway would then be a “party” within the meaning of Rule 40.01 for the purpose of seeking a mandatory order.

[22] Moreover, any financial loss suffered by Parkway as a result of not closing the Second Agreement would be compensable by an award for damages. The mandatory order sought by Parkway is, in effect, a permanent order for specific performance of the Second Agreement. Specific performance is not available unless damages would be inadequate. Finally, any damages suffered by Parkway because of a failure to close the Second Agreement are properly claimable by Parkway against Aspen and not against 219. There is no apparent serious and irreparable harm to Parkway in not granting the requested mandatory order.

[23] Parkway also seeks declaratory relief that completion of the sale of the subject property to Parkway pursuant to the Second Agreement does not prejudice the rights of 219; however, as I have emphasized above, the proposed declaration does not at all resolve the question in dispute between 219 and Aspen. If Parkway were to receive an immediate transfer of the subject property there would be further complexities and costs in unwinding the transfer if 219 is ultimately successful in its action for specific performance. Moreover, if 219 is successful in its claim that the First Agreement is enforceable against Aspen, 219 is in a stronger position in arguing for specific performance as the appropriate remedy if Aspen, the vendor under the First Agreement, still has title to the subject property.

[24] Parkway also seeks an order for security for costs against 219; however, while security for costs may be sought under Rule 56.01 (a) by a defendant against a plaintiff, Parkway is not a defendant in the proceeding at hand.

Disposition in Respect of Parkway’s Motions

[25] For the reasons given, I am not prepared to grant leave to Parkway to intervene in the present proceeding initiated by 219 and, accordingly, Parkway’s motion for intervenor status is dismissed. For the reasons given, Parkway’s follow-on motions for a mandatory order, declaratory relief and security for costs, are dismissed.

[26] If 219 and Parkway cannot agree upon the issue of costs, 219 may make its written submission within seven days and Parkway has seven days thereafter to respond with its submission.

Aspen’s Motion for Leave to Withdraw its Undertaking to 219

[27] Aspen argues that there is no prejudice to 219 if the property is sold to Parkway immediately pursuant to the Second Agreement as 219 is protected by its CPL. (However, as noted above, Aspen has a pending motion scheduled for November 23, 2012 to vacate the CPL.)

[28] It is true that, given the CPL, anyone dealing with the subject property does so subject to the ultimate outcome of 219’s action. However, in my view, the undertaking given by Aspen’s counsel was certainly reasonable and appropriate in the circumstances and the sensible course of action.

[29] The injunction motion of 219 is returnable on November 6, 2012, only some six weeks away. I see no real practical difficulty to Aspen and Parkway in title to the subject property remaining with Aspen until there would be a determination of the injunction motion and 219’s rights under the First Agreement. The operation of the rental properties can be easily managed without a change in title prior to a determination as to 219’s rights.

[30] Moreover, Parkway and Aspen entered into the Second Agreement with their eyes wide open as to 219’s claim and proceeding commenced in respect of the First Agreement.

[31] For the reasons given, I am not prepared to give leave to Aspen’s counsel to withdraw his undertaking given to counsel for 219.

219’s Motion for an Injunction

[32] In my view, this proceeding has been unduly ‘over-lawyered’ to date, with two bankers’ boxes of filed briefs, resulting in inordinate costs and delay. What is really needed to resolve this dispute is an expedited trial in respect of 219’s relatively straightforward and discrete claim.

[33] The claim of 219 relates to a commercial contract and can properly be transferred to the Commercial List. On the Court’s initiative, the parties, 219 and Aspen, have consented to such transfer and to an expedited two-day trial fixed for November 5 and 6, 2012 in Commercial Court. I reiterate that Parkway has no status as a party in 219’s proceeding and the trial.

[34] Examinations for discovery have been completed save in respect of two persons as intended witnesses and counsel have advised they will complete these examinations forthwith. The affidavit evidence filed by 219 and Aspen in 219’s injunction motion can be submitted as evidence in the trial with the affiants taking the stand and being subject to cross-examination.

[35] Aspen’s undertaking is to remain in force until a disposition of 219’s claim by the trial judge. The November 6, 2012 date in civil court for the return of the injunction motion is vacated. As well, the November 23, 2012 date in civil court for Aspen’s motion to remove the CPL is vacated, as the disposition in respect of the CPL will be dealt with by the trial judge.

[36] An Order will issue in accordance with these reasons and Endorsement.

CUMMING J.

Date: September 24, 2012