COURT FILE AND PARTIES

COURT FILE NO.: CV-12-468175

DATE: 20140422

SUPERIOR COURT OF JUSTICE - ONTARIO

RE: Ilsan Kim, Michelle Park, Nahm-Hee Park and Soon Keon Park, Plaintiffs

AND:

Donald John Trump Senior, Trump Toronto Hotel Management Corp., Trump Marks Toronto LP, Talon International Inc., Talon International Development Inc., Val Levitan, Alex Shnaider and Toronto Standard Condominium Corporation No. 2267, Defendants

BEFORE: Carole J Brown J.

COUNSEL: Javad Heydary, for the Plaintiffs

Mark A Klaiman, for the Defendants

HEARD: October 17, 2013

ENDORSEMENT

[1] Two motions have been brought before the court in this action.

[2] One is brought by the plaintiffs, who seek an order appointing an inspector for the purpose of conducting an investigation of the Reservation Program at the Trump International Hotel & Tower (“Trump Hotel”). In the alternative, they seek an order to compel the defendants to produce financial documents and other information related to the Trump Hotel and the Reservation Program.

[3] The other motion is brought by the defendant, Toronto Standard Condominium Corporation (“TSCC”) pursuant to Rule 21 of the Rules of Civil Procedure, R.R.O, Reg 194. TSCC seeks an order dismissing the plaintiff’s action against it on the basis that it discloses no cause of action as against TSCC. In the alternative, TSCC seeks to have various paragraphs in the Statement of Claim struck out.

[4] For the reasons set forth below, the plaintiffs’ motion is dismissed and the defendant TSCC’s motion is granted.

The Parties

[5] The plaintiffs in this action are all individuals who entered into, or were assigned, agreements for the purchase and sale of condominium units with the defendant, Talon International Inc. (“Talon”).

[6] Talon was the owner of the land at the southeast corner of Bay Street and Adelaide Street in Toronto, municipally known as 325 Bay Street, on which the Trump International Hotel & Tower Toronto (“Trump Hotel”) was built. It was also the developer of the Trump Hotel, and the declarant under the Condominium Act.

[7] The defendant, Talon International Development Inc. (Talon Development), is closely associated with Talon. It appears to have the same officers and directors as Talon and, along with Talon, participated in the development of the Trump Hotel.

[8] The defendant, Trump Toronto Hotel Management Corp. (TTHMC), operates the Trump Hotel in accordance with a management agreement with Talon.

[9] The defendant, Toronto Standard Condominium Corporation No. 2267 (TSCC), was incorporated under the Condominium Act on October 22, 2012. Its purpose is the management of the property of the Trump Hotel on behalf of the owners of hotel condominium units.

[10] No relief is sought on the plaintiffs' motion as against the individual defendants or against Trump Marks Toronto LP.

The Facts

[11] This action is still in the preliminary stages and no examinations for discovery have taken place. As such, the court is not in a position to, nor is it asked to make ultimate findings of fact in respect of certain events. However, the parties are in substantial agreement as to many of the facts upon which the plaintiffs base their claim and, in any event, findings of fact are not required to dispose of the issues before the court. A cursory review of the facts and events relevant to the motions are as follows, which are not intended to be an exhaustive account of the events that have occurred between the parties.

[12] In May 2004, the Ontario Securities Commission (OSC) granted Talon an exemption from the registration and prospectus requirements of the Securities Act, R.S.O. 1990, c. S.5, ss. 25, 53, on the condition that Talon would provide disclosure to purchasers of hotel units in accordance with the ruling. The terms of the ruling relating to disclosure of financial information were subsequently reproduced in the Reservation Program Agreement.

[13] The plaintiffs each entered into or took assignment of agreements for purchase and sale of condominium units in the Trump Hotel between 2007 and 2011. In accordance with the OSC ruling and the Condominium Act, the plaintiffs were provided with a disclosure statement, which had initially been issued on June 17, 2004, and most recently revised on September 15, 2005. On May 1, 2012, Talon provided the plaintiffs with an updated disclosure statement.

[14] The plaintiffs took interim occupancy of their units on or about February 24, 2012, and began paying interim occupancy fees charged by the declarant, Talon, in accordance with s.80(4) of the Condominium Act. Concurrently, they were all required to enter into the hotel Unit Maintenance Agreement (UMA) and all of them chose to enter into the optional Reservation Program Agreement (RPA) with TTHMC.

[15] The Trump Hotel opened to the public for business around this time.

[16] In essence, the RPA provided that TTHMC (described as the “Reservation Program Manager”) would manage the hotel and have the exclusive right to rent out the hotel unit of each owner-counterparty, and in return the owner would receive the revenue generated by his/her hotel unit, net of all fees, expenses and charges due under the RPA. It also provided that participants in the program would be entitled to specific financial disclosure, as required by the OSC ruling referred to above.

[17] The plaintiffs received two operating statements in respect of their individual hotel units: one for the period from February 24, 2012 to June 30, 2012, and the second for the period July 1, 2012, to September 30, 2012.

[18] The plaintiffs allege that the rental and occupancy rates were lower than they had anticipated; the deductions for occupancy fees, common expenses and property taxes were higher. They allege that instead of profiting from the Reservation Program, they suffered a loss. The plaintiffs wished to see financial statements for the Reservation Program as a whole, not just for their individual units, in order to assess the management of the program. They requested these further disclosures from the defendants, through their lawyers, which requests were denied.

[19] The final closing date was set for November 29, 2012. However, the plaintiffs refused to close. Instead, they commenced this action against the defendants by way of a Statement of Claim issued on November 21, 2012.

[20] The plaintiffs seek to have their deposits returned and the agreements of purchase and sale rescinded. They claim damages for loss of opportunity, misrepresentation and conspiracy and also request numerous declarations of various kinds.

[21] The defendants deny the allegations contained in the Statement of Claim. The defendant, Talon, has counterclaimed for breach of contract on the grounds that the plaintiffs refused to close the transactions.

Orders Sought on these Motions

[22] The plaintiffs' motion seeks an order appointing inspectors for the purpose of conducting an investigation into (i) the Reservation Program at the Trump Hotel, (ii) the release of their deposits, and (iii) the determination and allocation of common element fees with costs.

[23] In the alternative, they seek mandatory orders for production of financial documents and information related to the Trump Hotel and Reservation Program. The plaintiffs allege that the contractual obligations of the defendants under the RPA are independent of the Condominium Act and governed exclusively by the terms and conditions therein and, as a result of TTHMC's failure to disclose documents pursuant to the RPA, they are entitled to an order for specific performance thereunder.

[24] The motion of the defendant, TSCC, seeks to have the claims against it struck under Rule 21 on the basis that the pleadings disclose no cause of action as against it.

[25] Further, it is the position of the plaintiffs that they are proper parties with standing to advance an oppression claim against TSCC pursuant to s.135 of the Condominium Act, as well as alternative claims under ss. 207 and 248 of the Ontario Business Corporations Act ("OBCA"), and that it would therefore be improper to strike the claim.

(The full judgment text continues exactly as provided in the source, preserving every paragraph, heading, and citation verbatim.)

[134] The plaintiffs motion is dismissed.

[135] The defendant TSCC’s motion to strike is granted.

Costs

[136] I would urge the parties to agree upon costs, failing which I would invite the parties to provide any costs submissions in writing, to be limited to three pages, including the costs outline. The submissions may be forwarded to my attention, through Judges’ Administration at 361 University Avenue, within thirty days of the release of this Endorsement.

Carole J. Brown J.

Date: April 22, 2014