180 University Residential Limited Partnership v. Yours Asia Corporation

Court File No. CV-14-497157
Motion Heard: March 18, 2014
2014 ONSC 1761

ENDORSEMENT

Gregory M. Sidlofsky for the applicant
Krista Chaytor and Faren Bogach for the respondents

Master R.A. Muir -

[1] This is a motion brought by the applicant on an urgent basis pursuant to section 103(6) of Courts of Justice Act, R.S.O. 1990, c. C.43 and Rule 42.02 of the Rules of Civil Procedure, R.R.O. 1990, Reg. 194 for an order granting it leave to issue a certificate of pending litigation (“CPL”).

[2] The applicant is the developer of a condominium project located at 180 University Avenue, Toronto (the “Project”). The respondent YAC 5602 Holdings Ltd. (“YAC”) is the owner of unit 5602 of the Project. It bought the unit from the applicant by way of an agreement of purchase and sale entered into in July 2013 (the “APS”). The sale price was $4,000,000.00. The applicant alleges that this price was well under market value and was only agreed to because YAC had made certain representations regarding its intention to purchase several other units in the Project. This further purchase was known as the “Big Deal”. It appears that the parties’ efforts at negotiating the Big Deal came to an end in early January 2014. This and other litigation followed.

[3] The applicant now alleges that those Big Deal representations were false and made fraudulently. The applicant asks for rescission of the APS and that unit 5602 be returned to it. The applicant claims that YAC holds unit 5602 as a constructive trustee for the benefit of the applicant.

[4] This matter is urgent because Justice Pollak dismissed the applicant’s request for injunctive relief on March 17, 2014. She found that the applicant had not established irreparable harm. This matter is also urgent because the applicant’s caution registered on title to unit 5602 expires today and YAC is selling unit 5602 to an apparent arms’ length purchaser on March 21, 2014. I therefore agreed to add this matter to my list today and to decide this motion on an expedited basis.

[5] The test to be applied on a motion for leave to issue a CPL brought on notice is the same as a motion to discharge a CPL.

[6] In Perruzza v. Spatone, 2010 ONSC 841 (Master), Master Glustein concisely sets out the factors the court is to apply when deciding a motion to discharge a CPL. At paragraph 20 of Perruzza, Master Glustein identifies those considerations as follows:

(ii) The threshold in respect of the "interest in land" issue in a motion respecting a CPL (as that factor is set out at section 103(6) of the Courts of Justice Act, R.S.O. 1990, c. C.43) is whether there is a triable issue as to such interest, not whether the plaintiff will likely succeed (1152939 Ontario Ltd. v. 2055835 Ontario Ltd., 2007 CarswellOnt 756 (S.C.J.), as per van Rensburg J., citing Transmaris Farms Ltd. v. Sieber, [1999] O.J. No. 300 (Gen. Div. - Comm. List) at para. 62);

(iii) The onus is on the party opposing the CPL to demonstrate that there is no triable issue in respect to whether the party seeking the CPL has "a reasonable claim to the interest in the land claimed" (G.P.I. Greenfield Pioneer Inc. v. Moore, 2002 6832 (ON CA), 2002 CarswellOnt 219 (C.A.) at para. 20);

(iv) Factors the court can consider on a motion to discharge a CPL include (i) whether the plaintiff is a shell corporation, (ii) whether the land is unique, (iii) the intent of the parties in acquiring the land, (iv) whether there is an alternative claim for damages, (v) the ease or difficulty in calculating damages, (vi) whether damages would be a satisfactory remedy, (vii) the presence or absence of a willing purchaser, and (viii) the harm to each party if the CPL is or is not removed with or without security (572383 Ontario Inc. v. Dhunna, 1987 CarswellOnt 551 (S.C. - Mast.) at paras. 10-18); and

(v) The governing test is that the court must exercise its discretion in equity and look at all relevant matters between the parties in determining whether a CPL should be granted or vacated (931473 Ontario Ltd. v. Coldwell Banker Canada Inc., 1991 CarswellOnt 460 (Gen. Div.); Clock Investments Ltd. v. Hardwood Estates Ltd., 1977 1414 (ON SC), 1977 CarswellOnt 1026 (Div. Ct.) at para. 9).

[7] These are the factors and principles I have applied in determining the issues on this motion.

[8] I am satisfied, on balance, that the applicant has established, for the purposes of this motion, a claim to an interest in land. The applicant seeks rescission of the APS and claims it is the beneficiary of a constructive trust. Claims of this nature qualify as claims for an interest in land. See Century Services Inc. v. New World Engineering Corp., 2009 CarswellOnt 5011 (S.C.J.) at paragraphs 16 and 19.

[9] I am also satisfied, for the purposes of this motion, that there exists a triable issue with respect to the applicant’s claim. The applicant’s affiant, Michael Braun, has given evidence that the only reason the applicant agreed to sell unit 5602 for $4,000,000.00 was on the basis of repeated representations that the respondents would carry through with the Big Deal. There is some limited written evidence by way of email messages sent in September 2013 that may support such a finding at trial. This is certainly an unusual way to carry on business and I certainly find it surprising that the applicant, who is a very sophisticated property developer represented by competent real estate counsel, would choose to enter into such an arrangement. Nevertheless, the onus on this part of the test is on the respondents. In my view, the respondents have not met their onus to demonstrate that there is no triable issue.

[10] However, the inquiry does not end there. Even if the applicant has demonstrated an interest in land and a triable issue is found to be present, the court must still exercise its discretion in equity and make such order as is just. In exercising this discretion the court will typically look to the so-called Dhunna factors referred to above. Having done so, it is my view that a CPL should not be issued on the facts before me on this motion.

[11] I accept that the applicant is not a shell corporation. It owns many un-sold units in the Project. However, the sole business purpose of the applicant is to sell those units and it may be that all remaining units will be sold before this action reaches trial.

[12] I am also not satisfied that unit 5602 is unique in the sense contemplated by the relevant case law. Unit 5602 may be a special condominium and there may be no others exactly like it in Toronto. However, there are many luxury condominium buildings in Toronto and there are very similar un-sold units in the Project itself. Unit 5602 may have been upgraded but other units can be upgraded as well. More importantly, unit 5602 is not unique to the applicant. The sole purpose of the applicant’s interest in the unit is to sell it for a profit. See Southcott Estates Inc. v. Toronto Catholic District School Board, 2012 SCC 51, [2012] 2 S.C.R. 675 at paragraphs 40 and 41.

[13] It also appears that the value of unit 5602 can be easily appraised. At least one appraisal report was put in evidence on this motion. I see no reason why damages cannot be easily calculated based on the usual and common principles applicable to expert real estate appraisal evidence.

[14] The court should also look at the potential harm to each party. If the CPL is granted YAC will be unable to deal with its property in any way pending a determination of the applicant’s claims. In addition, YAC will be exposed to a claim from the third party purchaser who is set to complete the transaction on March 21, 2014. On the other hand, if a CPL is not granted, the applicant will still have an easily calculable claim in damages against the respondents. Most importantly, Justice Pollak made a finding yesterday, on the same evidence, that the applicant had not established irreparable harm and dismissed the applicant’s injunction application. In my view, that finding is binding on this court.

[15] In my view, the remaining Dhunna factors are of marginal importance on this motion.

[16] Having weighed and considered all relevant matters between the parties, it is my view that equity requires that I exercise my discretion not to grant leave to issue the CPL. The applicant’s motion is therefore dismissed.

[17] The respondents seek $4,576.50 for the costs of this motion. These costs are for work done last night and for today’s attendance, along with a disbursement of $2,186.55 for the cost of a video-conference examination. These costs are in addition to the $25,000.00 in costs awarded to the respondents by Justice Pollak yesterday. I am not prepared to award costs for the video-conference examination. It is unclear to me whether those costs were included in Justice Pollak’s order. However, I view the balance of costs requested as fair and reasonable. The respondents were completely successful on this motion. Argument took more than 90 minutes and counsel were in court until after 5:00 p.m. today. I am therefore ordering that the applicant pay the respondents’ costs of this motion fixed in the amount of $2,400.00 inclusive of HST and disbursements. These costs shall be paid within 30 days.

March 18, 2014

Master R.A. Muir