Court File and Parties

Court File No.: CV-10-409771
Date: 20140822
SUPERIOR COURT OF JUSTICE - ONTARIO

RE: Talisman Resort GP Inc., Plaintiff

AND:

Rock Shire Woods Development Inc., Michael Spencley and John Rock, Defendants

BEFORE: Carole J. Brown J.

COUNSEL: Julia Schatz and Ilan Ishai, for the Plaintiff

HEARD: August 22, 2014

Endorsement

[1] Talisman Resort GP Inc. ("Talisman") brings this motion for judgment against the defendant, John Rock ("Rock").

[2] Talisman commenced this action for breach of contract and/or misrepresentation against Rock, Michael Spencley ("Spencley") and Rock Shire Woods Development Inc. ("Rock Shire") on September 1, 2010, in connection with Rock Shire's failure to complete the purchase of the Talisman Resort Village, a ski resort, pursuant to an executed agreement of purchase and sale by advancing the purchase monies after he became obligated to do so. Rock and Spencley were each 50% shareholders in Rock Shire, a new corporation.

[3] Talisman and Rock Shire entered into an Agreement of Purchase and Sale for the property on May 12, 2010, and amended on June 29, 2010. The purchase price was to be $16,000,000 and was to close July 14, 2010. Pursuant to the Agreement, both Rock and Spencley were fully liable for Rock Shire's obligations and liabilities arising from the transactions.

[4] Pursuant to section 5.02 of the Agreement, both Talisman and Rock Shire were obligated "to carry out and complete the transactions contemplated by the Agreement unless the Purchaser" delivered a notice in writing prior to the expiry of the due diligence, which indicated that it conducted its due diligence and was not satisfied with the results, and was therefore terminating the Agreement. In the absence of such a written notice of termination arising out of the due diligence process, Rock Shire was to complete the transaction and acquire the property and related real property assets on an "as is, where is" basis.

[5] Rock Shire failed to close the purchase transaction as obligated pursuant to the Agreement. As a result, Talisman commenced the action against Rock Shire, Spencley and Rock.

[6] By June of 2013, the action had proceeded through documentary and oral discovery and the matter was set down for trial. Counsel for the defendants was removed as counsel of record for Rock. Since that time, Rock has refused to take any steps to defend the action. He has failed to comply with his obligations pursuant to the Rules, failed to attend mandatory mediation, failed to attend the pretrial conference and has breached a court order. He has failed to respond to any correspondence or voicemail messages. On a motion brought by Talisman on May 26, 2014, the statement of defence filed by the defendants was struck as it pertained to Rock, without leave to deliver another. On June 13, 2014, Rock was noted in default. The trial, originally scheduled for June of this year, was adjourned to be rescheduled.

[7] Talisman attempted to mitigate losses by immediately placing the property with various realtors, but without success. In 2011, the property was placed into receivership and discharged on November 29, 2012. It was ultimately sold by the Municipality of Grey Highlands to satisfy tax arrears.

[8] Talisman seeks damages in the amount of $6,811,000, plus costs. It bases this on an appraisal report, prepared by James Barnes, real estate appraiser, with full AACI accreditation which is in evidence. Ms. Schatz explained the basis for the appraisal and the appraised value. I accept the valuation as set forth in the Barnes report.

[9] Talisman seeks leave to bring this motion pursuant to Rule 48.04(1) of the Rules of Civil Procedure, as the matter was set down for trial in 2013. It recognizes that for leave to be granted there must be "a substantial or unexpected change in circumstances". It submits that leave should be granted as there has been a substantial and/or unexpected change in circumstances since the matter was set down for trial. The plaintiff submits that Rock's failure, following removal of his counsel of record, to respond to any and all correspondence, his breaches of the Rules and a court order, which resulted in the striking of the statement of defence, and his ultimately being noted in default, all of which came after the matter was set down for trial, have not only been unexpected but have also been substantial. I agree and am satisfied that leave should be granted.

[10] As Rock has been noted in default, all facts asserted in the statement of claim are deemed to have been admitted by him. In this case, the deemed admissions, set forth at Talisman’s factum, para.29, support the plaintiff's claim for breach of contract and misrepresentation. Rock is jointly and severally liable.

[11] I am satisfied that the plaintiff's claim as against Rock has been established. I am further satisfied that the plaintiff's damages have been proven. Accordingly, I grant judgment against Rock in the amount of $6,811,000.00, plus costs of the motion for judgment in the amount of $9,206.55 and costs of the action as against Rock in the amount of $11,989.50.

Carole J. Brown J.

Date: August 22, 2014