ONTARIO

SUPERIOR COURT OF JUSTICE

COURT FILE NO.: CV-11-384-OT
DATE: 20130628

BETWEEN:

Correct Group Inc.
Plaintiff

– and –

The Corporation of the City of Barrie
Defendant

E. Moore and J. Rosenstein, for the Plaintiff

A. Formosa and F. Bogach, for the Defendant

HEARD: April 24, 2013 and May 15, 2013

HEALEY J.

Nature of the Motion

[1] This is a motion to discharge a certificate of pending litigation pursuant to s.103(6) of the Courts of Justice Act, R.S.O. 1990 Chap. C.43, issued pursuant to an ex parte order granted by Justice Goodman on February 27, 2012, registered against land owned by the Corporation of the City of Barrie (the “City”) and hereafter referred as the “Allandale Station Lands” or the “Disputed Lands”.

[2] In this action Correct Group Inc. (“CGI”) has sued the City for specific performance of an agreement for the sale of the Allandale Station Lands. The City seeks an order discharging the certificate of pending litigation (the “CPL”) in order to enter into negotiations with other potential purchasers, and to complete other pending transactions related to the land in question. The agreement in question is referred to herein as the “Preliminary Agreement”.

Grounds for the Motion

[3] The City has six principal arguments in support of its motion, which are:

(1) CGI has no interest in the Allandale Station Lands because several prerequisites for the formation of a contract are absent;

(2) Even if the Preliminary Agreement is a binding agreement, it is incapable of specific performance;

(3) CGI’s claim for specific performance is statute barred;

(4) The CPL was obtained without notice and there was material non-disclosure;

(5) CGI is not entitled to specific performance because the property is not unique and damages will suffice; and

(6) The court, in any event, should exercise its discretion to discharge the CPL based on the equities of the case.

Law Applicable to Discharging the Certificate of Pending Litigation

[4] Section 103(6) of the Court of Justice Act confers discretion on a court to discharge a certificate,

(a) where the party at whose instance it was issued,

(i) claims the 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 grounds 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.

[5] Counsel for CGI submits that the court must engage in a two-step process when considering whether to discharge the certificate by first considering whether there is a reasonable interest in land, and then considering whether equity favours maintaining the certificate. However, I was not referred to, nor have I found, any authority for the proposition that the court must engage in a consideration of the equities at play once a finding has been made that the property owner has shown that the certificate holder has no reasonable claim to an interest in the land. To the contrary, GPI Greenfield Pioneer Inc. v. Moore (2002), 2002 6832 (ON CA), 58 O.R. (3d) 87 (C.A.), at para. 17, indicates that only the last subsection in s. 103(6) invites an examination of the equities between the parties. The court in that case goes on to cite the test for the exercise of such discretion as set out in Clock Investments Ltd. v. Hardwood Estate Ltd., 1977 1414 (ON SC), [1977] 16 O.R. (2d) 671 (Div. Ct.), at p. 3:

I am of the opinion that the governing test is that the Judge must exercise his discretion in equity and look at all of the relative matters between the parties in determining whether or not the certificate should vacated.

[6] Clock Investments dealt with the application of s. 42(3) of the Judicature Act, R.S.O. 1970, c. 228, the predecessor of s. 103(6)(c) of the Courts of Justice Act. .

[7] A similar approach as that being espoused by this court was taken in Hunter’s Square Developments Inc. v. 351658 Ontario Ltd. (2002), 2002 49491 (ON SC), 60 O.R. (3d) 264 (S.C.), where Pepall J. found first that there was no enforceable agreement to purchase property, and only went on to address additional issues of the property’s uniqueness, material non-disclosure, and all of the other relevant matters between the parties because the issues were argued by counsel (paras. 40 and 49). Similarly, in 931473 Ontario Ltd. v Coldwell Banker Canada Inc., 1991 CarswellOnt 460 (Ont. Ct. (Gen. Div.)), at p. 15, the court indicated that it could exercise its discretion to discharge a CPL on the sole ground that the plaintiff did not a have a reasonable claim to an interest in property, but the court considered it prudent to consider the equities or other factors disclosed in the record for the purposes of that motion. Accordingly, it is only where the court is considering other grounds for discharging the certificate that all of the relevant matters, such as the uniqueness of the property, must be looked at. The inquiry ends, however, where s. 103(6)(a)(ii) has been established In the event that I am in error, however, I will consider all of the grounds argued by the moving party.

[8] In 572383 Ontario Inc. v. Dhunna (1987), 24 C.P.C. (2d) 287, at pp. 290-291, the court enunciated the following non-exhaustive list of factors for consideration where s. 103(6)(c) is engaged and the test in Clock Investments is to be applied:

1. Whether the plaintiff is, or is not, a shell corporation;
2. Whether the land is, or is not, unique;
3. The intent of the parties in acquiring the land;
4. Whether there is an alternative claim for damages;
5. The ease or difficulty of calculating damages;
6. Whether damages would be a satisfactory remedy;
7. The presence or absence of another willing purchaser;
8. 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 requirements of alternative security.

[9] These factors have been referred to in an number of subsequent cases: Coldwell Banker, supra, at pp. 13-14; McGrath v. B.G. Schickendanz Homes Inc., [2000] O.J. No. 4161 (S.C.), at p. 12; JDM Developments Inc. v. J. Stollar Construction Ltd., 2004 35004 (Ont. S.C.), at para. 33.

[10] The law is clear that the motions judges faced with the motion to discharge a CPL is not to decide disputed issues of fact and credibility at this stage of the action, but must:

Examine the whole of the evidence as it stands after cross-examination and, without deciding disputed issues of fact and credibility, consider whether on the whole of the evidence the plaintiff’s case constitutes a reasonable claim to the interest in land claimed”: Waxman v. Waxman, 1991 11753 (ON CA), [1991] O.J. No. 81 (Ont. Ct. Gen. Div.) at page 3, see also GPI Greenfield, supra, at para. 20, and 931473 Ontario Ltd. v. Coldwell Banker Canada Inc. (1991), 5 C.P.C. (3d) 238 (O.C.J. Gen. Div.) at page 11.

[11] The onus is on the party seeking to discharge the CPL to persuade the court that its discretion should be exercised in favour of the discharge: 931473 Ontario Ltd. v. Coldwell Banker Inc., supra, at p. 11; McGrath v. B.G. Schickendanz Homes Inc., supra, at p.12; JDM Developments Inc. v. J. Stollar Construction Ltd., supra, at para. 32; 2039903 Ontario Inc. v. Parktrail Estates Inc. (2008), 2008 61232 (ON SC), 303 D.L.R. (4th) 688 (Ont. S.C.), at para. 35.

Decision

[12] Having considered the evidence, the law, and the arguments presented by counsel, the motion is granted on the basis that the City has met its onus of demonstrating that CGI does not have a reasonable claim to an interest in the Allandale Station Lands. As such, the City has shown that a trial is unnecessary to prove that CGI is not entitled to the CPL, and accordingly the certificate must be discharged on this basis alone.

[13] I find that I am able to reach this conclusion regarding CGI’s reasonable interest in the land on the basis of undisputed evidence, and the evidence provided by CGI, without weighing the evidence or making credibility findings.

[14] Further, an examination of all of the circumstances in this case, on balance, supports the discharge of the CPL.

(End of reproduced judgment content continues exactly as provided above through paragraph [83] and closing.)

HEALEY J.

Released: June 28, 2013