ONTARIO
SUPERIOR COURT OF JUSTICE
COURT FILE NO: 11-CV-431889
DATE: 20130116
B E T W E E N:
Bernadette DâSouza
Plaintiff
- and -
Russell Ramlochan
Defendant
AND BETWEEN:
Russell Ramlochan
Plaintiff by Counterclaim
Augustine DâSouza also known as Agustine DâSouza, Erica Gomes and Bernadette DâSouza, Manoj Biswas, Joseph Remisiar and Delishia Remisiar
Defendants by Counterclaim
No one appearing for Bernadette DâSouza, Augustine DâSouza, Erica Gomes and Manoj Biswas
Roberto Cucci,
for Responding Party Russell Ramlochan
Ronald Lachmansingh,
for Moving Parties Joseph Remisiar and Delishia Remisiar
HEARD: August 17, 2012 & November 16, 2012
GOLDSTEIN J.:
[1] This is a motion by current tenants (who are would-be purchasers) to discharge a certificate of pending litigation (âCPLâ) in relation to 60 Townley Avenue, a residential property in Markham, Ontario (âthe propertyâ). For the reasons that follow, the CPL is discharged.
BACKGROUND
[2] The history in this matter is long and tangled.
[3] The responding party Russell Ramlochan (âRamlochanâ) resided at the property as a lessee. The property was, and continues to be, owned by Bernadette DâSouza and her daughter, Erica Gomes. The moving parties before me, Joseph and Delishia Remisiar (collectively âthe Remisiarsâ), dealt primarily with Augustine DâSouza, the husband of Bernadette DâSouza (for convenience I refer to the two DâSouzas and Erica Gomes collectively as âthe DâSouzasâ).
[4] The Remisiars were interested in purchasing the property. Joseph Remisiar met Augustine DâSouza in 2010. Augustine later informed Joseph that he was preparing to sell the property. Joseph indicated that he would be interested in purchasing it. Augustine then informed him that he had already offered an option to purchase the property by June 30 2011 to the existing tenant, Ramlochan. Ramlochan signed a letter in April 2011 acknowledging that he owed back rent of $2500 per month for the lease of the property for January to April 2011, and therefore owed $10,000.00. The letter also indicated that he agreed to purchase the property for $650,000.00 and expected to complete the purchase by June 30, 2011. Augustine DâSouza indicated to Joseph that he did not think that Ramlochan could or would close by June 30 2011. Ramlochan did not tender the funds or otherwise attempt to close the purchase.
[5] In the motion materials Ramlochan produced an unexecuted copy of an Agreement of Purchase of Sale between himself and Cedric DâSouza. There is no Cedric DâSouza on title. As noted, Bernadette DâSouza and Erica Gomes are the co-owners.
[6] On June 30 2011 the Remisiars and the DâSouzas signed an agreement of purchase and sale for the property with a closing date of July 25 2011 and a $20,000.00 deposit. Anticipating that they would obtain the property, the Remisiars sold their house and prepared to move.
[7] Mr. Ramlochan did not vacate the property. On July 12 2011 the Bernadette DâSouza made an application to the Landlord and Tenant Board (âthe Boardâ) to evict Ramlochan on the grounds that he had not paid rent. On July 29 she commenced an action against Ramlochan for non-payment of rent and damages in respect of his failure to close on the property. She alleged that Ramlochan had operated a commercial business from the property. She eventually locked him out.
[8] In the meantime, because Ramlochan had not vacated the property, the closing between the Remisiars and the DâSouzas was postponed to August 12 2011.
[9] On August 8 2011 Ramlochan brought his own application to the Board for a declaration that he had been illegally locked out. On the same day, the Remisiars signed a lease agreement with the DâSouzas pending the closing of the sale, so that they could move in.
[10] On August 9 2011 Ramlochan issued a Statement of Defense and Counterclaim. He added the Remisiars as defendants, as well as Augustine DâSouza, Erica Gomes, and Minoj Biswas.
[11] There are some things about the Defense and Counterclaim that are curious. Minoj Biswas is a named party but there is no mention of him in the body of the pleading. Fraudulent conveyance is alleged but there are no particulars of fraud pleaded. The Remisiars are named defendants to the Counterclaim but there are no allegations against the Remisiars in the body of the pleading. The Defense and Counterclaim indicates that it was prepared in haste due to urgency and that particulars would be forthcoming. No amended pleading was issued and no particulars have been placed in evidence before the Court.
[12] Also on August 9 2011 Ramlochan obtained the CPL from Master Sproat. The CPL was then registered on title.
[13] The Remisiars were not served with the Defense and Counterclaim, or with the motion materials for the CPL.
[14] On August 23 2011 the Board heard the applications of Ms. DâSouza and Ramlochan together. The Board issued an interim order requiring Ms. DâSouza to allow Ramlochan to take immediate possession of the property. The Remisiars were not given notice. At a rehearing, requested by Ms. DâSouza, the Remisiars were present but not permitted representation or to give evidence. The Board eventually confirmed its original decision. The decision of the Board has been stayed and has been appealed to the Divisional Court but not yet heard.
[15] In the meantime, the Remisiars have remained in possession of the property. They have paid further deposits to the DâSouzas toward the eventual purchase of the property.
[16] The Remisiars originally brought this motion in August 2012 to strike the counterclaim against them and to vacate the CPL. The motion was not completed and was resumed in December 2012. On the return date, Mr. Cucci, then counsel for Mr. Ramlochan, indicated that the counterclaim had been withdrawn as against the Remisiars and that the only outstanding matter was whether the CPL should be discharged. (Mr. Ramlochan has since indicated to the Court that he has severed his relationship with Mr. Cucci and wishes to represent himself).
ANALYSIS
[17] There are two issues to be determined:
- Do the Remisiars have standing to bring a motion to discharge the CPL?
- Should the CPL be discharged?
Section 103(6) of the Courts of Justice Act, R.S.O. 1990, c. C.43, states:
103 (6)âThe court may make an order discharging a certificate,
(a) where the party at whose instance it was issued,
(i) claims a sum of money in place of or as an alternative to the interest in the land claimed,
(ii) does not have a reasonable claim to the interest in the land claimed, or
(iii) does not prosecute the proceeding with reasonable diligence;
(b) where the interests of the party at whose instance it was issued can be adequately protected by another form of security; or
(c) on any other ground that is considered just,
and the court may, in making the order, impose such terms as to the giving of security or otherwise as the court considers just.
[18] It is clear that as long as the Remisiars were defendants in an action, they had standing to bring a motion to discharge the CPL: GPI Greenfield Pioneer Inc. v. Moore, 2002 6832 (ON CA), 2002 CarswellOnt 291, 58 O.R. (3d) 87 (Ont.C.A.), at para. 17.
[19] Mr. Cucci argued that since the Remisiars are no longer parties to the action, they no longer have standing to bring the motion to discharge the CPL. I disagree. First, the wording of s. 103(6) does not suggest any such limitation. Second, a court considering whether to discharge a certificate of pending litigation is exercising a discretion and must examine the equities of the case: GPI Greenfield Pioneer Inc., supra. Third, the motion concerns an innocent third party who has attempted to purchase the property, has made payments towards that purchase, and is currently in possession: Sandhu v. Braebury Homes Corporation et. al., 1986 CarswellOnt 554, 8 C.P.C. (2d) 22 (Ont.H.C.). See also: Bat-Amy v. Zribi, 2010 CarswellOnt 1052, 2010 ONSC 1272 (Sup.Ct.); Somen v. Pong, [2005] O.J. No. 4440 (Sup.Ct.).
[20] I note that it would be a simple matter for the Remisiars to issue a statement of claim against Ramlochan and/or the DâSouzas if that were necessary to achieve standing. Nothing would be gained by forcing an artificial proliferation of actions that will likely go nowhere once the CPL issue is solved. I see no reason why a third party purchaser, who has undertaken the transaction in good faith, paid money towards the purchase, and taken possession as a lessee would not have a free-standing right to bring an application where the interests of justice can be invoked under s. 103(6)(c) of the Courts of Justice Act.
[21] In this case, the Remisiars have occupied the property. They have signed an Agreement of Purchase and Sale. They have made payments towards the purchase price. They were the subject of a merit-less counterclaim. It would not be equitable to dismiss their motion relief simply because Mr. Ramlochan has resorted to the tactic of suing and then withdrawing a lawsuit to suit his convenience.
[22] I turn now to whether the CPL should be discharged.
[23] In my view, the CPL should be discharged because Ramlochan does not have a reasonable interest in the land claimed.
[24] As noted, Ramlochan produced an unexecuted agreement between Ramlochan and Cedric DâSouza that included an option to purchase the property. If there was an executed copy of this agreement somewhere (with the correct parties) Ramlochan was in default, as he had failed to make his lease payments. There was no closing between Ramlochan and the DâSouzas on June 30, 2011 and no effort by Ramlochan to tender the purchase price.
[25] The record filed by Ramlochan has very little material upon which a court could find that he had a reasonable claim to an interest in the property, other than two pieces of evidence. The first is a bare statement in Ramlochanâs affidavit that he was ready, willing, and able to close on June 30 2011. There is no material to support this claim, and the evidence (such as the arrears of rent, his failure to pay costs orders, and his failure to tender the purchase amount on June 30 2011) suggests otherwise. The second is the unexecuted agreement that I have referred to. The name of the vendor is Cedric DâSouza. There is no Cedric DâSouza with an interest in the property. There is a record of payments made to the DâSouzas in respect of the property, but there is evidence that those were payments made by Ramlochan as a lessee. I appreciate that Ramlochan asserts that he made leasehold improvements, but his counsel thwarted reasonable attempts to explore that assertion. It seems to have been Ramlochanâs intention to purchase the property, but he cannot bootstrap himself into a position to assert an interest in land based on an intention to purchase and a lease upon which he had defaulted without more. If he is out of pocket for leasehold improvements he has a remedy in the counterclaim that he has commenced.
[26] I find as a fact that Ramlochan was unable to close on the property on June 30 2011. I also find as a fact that if he had in interest, it was only as a lessee with an option to purchase and that his leasehold interest was extinguished when he defaulted on the payments.
[27] On August 9 2011, Master Sproat issued the CPL. Mr. Cucci argued that this Court is bound by issue estoppel because of Master Sproatâs decision. I disagree. I can not, as Mr. Cucci in effect suggested I should, extrapolate from the decision to place a CPL on the property that the Remisiars are estopped from bringing a motion to vacate the CPL. This is a stand-alone motion under s. 106(3) to discharge a CPL. If Mr. Cucci were correct, no one could resort to s. 103(6) and no CPL could ever be discharged except on appeal, which would require demonstrating an error by the Master. It is trite to say that a CPL may be properly issued and then properly discharged because new facts emerge, the litigation is settled, or the circumstances change.
[28] There is no doubt that the legal onus is on the moving party seeking to discharge the CPL. That said, Ramlochan has an evidentiary burden to bring forward evidence to support his contention that he had an interest in the property. As noted, the motion to discharge is a substantive motion: 1376273 Ontario Inc. v. Woods Property Development Inc., 2001 CarswellOnt 2919, 8 C.P.C. (5th) 111 (Ont.Master). The party seeking to sustain the CPL cannot simply rely on the pleadings. That is, in effect, what Ramlochan has done here given the paucity of information in his affidavit setting out his interest in the property. Mr. Lachmansingh cross-examined Ramlochan on his affidavit. He tried to ask Ramlochan several questions about his ability to close on the property, the agreement of purchase and sale he supposedly had with the DâSouzas, and the payments made by Ramlochan to the DâSouzas. Mr. Cucci refused to allow Ramlochan to answer any of those questions. No light was cast on the basis for Ramlochanâs interest in the property.
[29] In 1245519 Ontario Ltd. v. Rossi, [2008] O.J. No. 691, 2008 CarswellOnt 940 (Sup.Ct.), Himel J. summarized the basis upon which a certificate of pending litigation may be discharged:
8 In the case of 572383 Ontario Inc. v. Dhunna (1987), 24 C.P.C. (2d) 287, Master Donkin outlined a number of factors a court may consider in determining whether to vacate a certificate of pending litigation including: whether or not the plaintiff is a shell corporation, whether the land is unique, the intent of the parties in acquiring the land, whether there is an alternative claim for damages, the ease or difficulty of calculating damages, whether damages would be a satisfactory remedy, the presence or absence of another willing purchaser and the harm done to the defendant if the certificate is allowed to remain or to the plaintiff if the certificate is removed, with or without the requirement of alternative security, whether there was non-disclosure of material facts and whether there was a clause in the agreement of purchase and sale prohibiting registration of the certificate of pending litigation.
[30] Applying the factors set out in 1245519 Ontario Ltd. v. Rossi, supra, there is no evidence that if Ramlochan has suffered damages that cannot be adequately calculated. There is also no evidence that the land is unique. Finally, there is a willing purchaser. Balancing the factors, I find that there would be significantly more prejudice to the Remisiars if the CPL were to remain in place than to Ramlochan if it were discharged. The Remisiars are innocent purchasers who are held hostage to a dispute between Ramlochan and the DâSouzas.
DISPOSITION
[31] The CPL is discharged with costs to the moving parties. If the parties are unable to agree on quantum, the moving party may submit, within 30 days, a brief costs submission (not exceeding 2 pages) and a costs outline. The responding party may then submit, within 15 days after that, a brief costs submission (also not exceeding 2 pages) in reply.
GOLDSTEIN, J.
DATE: January 16, 2013
COURT FILE NO: 11-CV-431889
DATE: 20130116
ONTARIO
SUPERIOR COURT OF JUSTICE
B E T W E E N:
Bernadette DâSouza
Plaintiff
- and -
Russell Ramlochan
Defendant
AND BETWEEN:
Russell Ramlochan
Plaintiff by Counterclaim
Augustine DâSouza also known as Agustine DâSouza, Erica Gomes and Bernadette DâSouza, Manoj Biswas, Joseph Remisiar and Delishia Remisiar
Defendants by Counterclaim
JUDGMENT
GOLDSTEIN J.
Released: January 16, 2013