SUPERIOR COURT OF JUSTICE - ONTARIO

COURT FILE NO.: CV-10-3796-00
DATE: 2014-09-12

RE: GREEK CANADIAN COMMUNITY OF PEEL & HALTON – and – CLERGY PROPERTIES LIMITED, GERRY FARANTATOS and THE FARANTATOS FAMILY FOUNDATION

BEFORE: André J.

COUNSEL: Jerome R. Morse and Lionel Tupman, for the Plaintiff

John M. Buhlman and Faren H. Bogach, for the Defendants

HEARD: August 20, 2014

E N D O R S E M E N T

[1] The defendants have brought a motion to discharge a Certificate of Pending Litigation (“CPL”) obtained by the plaintiff on September 27, 2013, on property to which the plaintiff claims an interest. They submit that the plaintiff has no interest in the lands in dispute and furthermore, that there was material non-disclosure in their ex-parte application to obtain the CPL. The plaintiff disputes this and urges the court to dismiss the defendants’ motion.

[2] This motion therefore raises the following question: Under what circumstances should a court discharge a CPL?

[3] For the reasons outlined below, the motion is dismissed.

CHRONOLOGY OF EVENTS

[4] The Greek Canadian Community of Peel & Halton (“the Community”) states that on or about 1980, it reached an agreement with Mr. Gerry Farantatos (“Mr. Farantatos”) to develop a portion of a 40 acre parcel of land in Mississauga, owned by the Farantatos Family Foundation (“the Foundation”). The Community maintains that the agreement contemplated that in consideration for the Community assisting Mr. Farantatos to secure municipal and provincial approval for a residential development project, Mr. Farantatos would build a church on a portion of the property, in accordance with specific architectural plans. The Community indicates that although it fulfilled its part of the agreement, Mr. Farantatos resiled from the agreement after realizing huge profits following the rezoning of the property in question.

[5] Mr. Farantatos denies the existence of any such agreement to build a church.

[6] The Community filed a statement of claim on October 14, 2010.

[7] Mr. Farantatos filed a statement of defence on December 3, 2010.

[8] Examinations for discovery were held in June and July, 2012.

EX-PARTE COURT ORDER

[9] The Community brought an ex-parte motion on September 27, 2013, to amend its statement of claim to include a claim for a CPL and to grant a CPL.

[10] In his endorsement Justice Fitzpatrick noted that:

Ex-parte motion to amend Statement of Claim to include claim for C.P.L. The larger

claim of Plaintiff for damages or, in the alternative, specific performance arising from an alleged agreement with the Defendants to construct a church and lease related lands to the Plaintiff for 99 years at a very favourable rate. The Plaintiff appears to have leased the subject property since 1980. Amending the claim to include C.P.L. relief is not creating a new cause of action but rather seeking to preserve the substantive causes claimed. On that basis and given it is clear to me the substantive cause pleaded in the existing claim places an interest in the subject property in question, I am persuaded to grant the relief sought today, namely an amendment to the Statement of Claim to include a request for C.P.L. relief and thereafter to grant a C.P.L. in this matter.

The above order is of course, without prejudice to the Defendants to return before this court to seek its costs related to responding to the amended claim and/or to bring their own motion to discharge the C.P.L. both as provided by the Rules of Civil Procedure.

SUBMISSIONS OF MR. FARANTATOS

A. Material Inconsistencies

[11] Mr. Farantatos submits that the following representations made by the Community in its ex-parte motion to amend its statement of claim constitute material inconsistencies or material non-disclosure in the affidavit (the “Affidavit”) filed in support of the ex-parte application:

• The Community made no mention of the examinations for discovery held in June 2012 in its ex-parte application.

• The Community claimed in its ex-parte motion that Mr. Farantatos entered into an agreement with the Community, which was untrue.

• The Community claimed in its ex-parte motion that the defendants were contractually obligated to build the church, while the contract stipulates that this was the Community’s responsibility.

• Paragraph 10 of the Affidavit states that the Community was unable to build the church but makes no mention of the fact that its 2003 lease agreement with Mr. Farantatos ended in 2007.

• Contrary to paragraph 12 of the Affidavit, the agreement between the parties was a licence rather than a lease. Furthermore, the licence was for a period of 21 years rather than 99 years as indicated in the Affidavit. Finally, Mr. Farantatos was not a party to the licence.

• The Affidavit fails to disclose that the licence agreement does not give the Community an interest in land.

• Paragraph 13 of the Affidavit indicates that Mr. Farantatos “would lease” the church land whereas the agreement clearly stipulates that it was the defendant, Clergy Properties Limited, that granted the Community a licence to build the church.

• The Affidavit fails to mention that the lease agreement dated January 2003 clearly indicates that it was the intention of the landlord to lease the church lands for 99 years and that the parties did not agree to a lease for that period.

• Paragraph 14 of the Affidavit indicates that the Community “expended considerable financial and political resources to secure the necessary approvals for Farantatos’ development”, yet the affiant conceded in examination for discovery that the Community did not incur any expenses in that regard.

• Paragraph 17 of the Affidavit claims that Mr. Farantatos realized a profit on the sale of the re-zoned land despite his assertion that he made no such profit on the sale of the land.

• The Affidavit failed to indicate that there was no agreement between the parties on the following key issues:

i) long term lease;

ii) financing of the church;

iii) the exterior and height of the church

The affiant admitted, under cross-examination, on July 23, 2014, that these issues were never spelled out in an agreement.

• The Affidavit erroneously claimed that at no time did Mr. Farantatos raise the issue of operating expenses of the church during the negotiations of the 1989 and 2003 lease or the new one being drafted in 2007-2008. A number of emails confirm that the terms of the lease were still under discussion long before the Community brought its ex-parte application.

• Paragraph 31 of the Affidavit makes reference to “June Settlement Discussions” between the parties. However, it makes no mention of the fact that the parties had privileged settlement discussions.

• Paragraph 37 of the Affidavit erroneously indicates that until August 26, 2013, “the Community did not believe that the defendant might take steps to further encumber or dispose of the church lands before the conclusion of the within action”. The Community was aware that a mortgage was registered against the subject property in 2008, almost two years before it filed its statement of claim.

B. No Triable Issue

[12] Given that the Community has had no interest in the lands in dispute, there is no triable issue that warrants the retention of the CPL.

C. Delay in Bringing Ex-parte Application

[13] The Community delayed bringing their application for three years following the filing of their statement of claim. This unexplained and excessive delay justifies the discharge of the CPL.

APPLICABLE LEGAL PRINCIPLES

[14] Section 103(b) provides that:

The 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 on 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,

Courts of Justice Act, R.S.O. 1990, c. C-43, ss. 103(6)(a)(i)-(ii), 103(6)(c); 931 Ontario Ltd. v. Coldwell Banker Canada Inc. [1991] O.J. No. 1150 at paras. 55-60 (Ct. J. (Gen. Div.)), (1991), 5 C.P.C. (3d) 238, citing Clock Investments Ltd. v. Hardwood Estates Ltd. (1977), 1977 1414 (ON SC), 16 O.R. (2d) 671, at paras. 7-9 (Div. Ct.), [1977] O.J. No.2331.

[15] The court may also consider the delay of a party in seeking a certificate of pending litigation on a motion to discharge a CPL. See Time Castle Holdings Inc. v. Summit Green Land Corp. [2009], O.J. No. 1536 176 ACWS (3d) 1181, (Sup. Ct.) at para. 30.

[16] The court will also discharge a CPL obtained without notice if the party obtained the CPL without disclosing material information. See JDM Developments Inc. v. J. Stollar Construction Ltd. (2004), [2004] O.J. No. 4572 (Supt. Ct.), at para. 34; 2 C.P.C. (6th) 313; Rules of Civil Procedure, R.R.O. 1990, Reg. 194, R. 39.01(6).

[17] In exercising its equitable jurisdiction on a motion to discharge a CPL, a court should consider the following:

(i) whether the plaintiff is a shell corporation;

(ii) whether the land is unique, bearing in mind that any parcel of land has some special value to the owner;

(iii) the intent of the parties in acquiring the land;

(iv) whether there is an alternative claim for damages;

(v) whether damages would be a satisfactory remedy;

(vi) the availability of another willing purchaser; and

(vii) the harm done to the defendant if the certificate is not discharged, compared to the harm the plaintiff will suffer if the certificate is removed, and whether alternative security should be ordered.

JDM, at para. 33

ANALYSIS

[18] The evidence presented in this motion raises the following issues:

(a) Is there a triable issue concerning whether or not the Community has a reasonable interest in the land in dispute?

(b) Should the Community’s delay in seeking a CPL be a factor on the motion to discharge the CPL?

(c) Did the Community provide free and full disclosure of the material facts in its ex-parte application?

(d) Is the discharge of the CPL a just remedy in the circumstances of this case?

A. Does the Community have a reasonable interest in the disputed lands?

[19] In determining this issue, I must examine the whole of the evidence without regard to any disputed issues in fact. (York University v. Markicevic, 2013 ONSC 378, [2013] O.J. No. 249, (SCJ), at para. 20).

[20] Quite clearly, the facts relied on by Mr. Farantatos in support of his contention, that there was no agreement with the Community for him to build a church on the disputed lands, collectively indicated that the Community has no interest in the land. Those facts indicate that any interest the Community may have had in the disputed land expired in 2007 with the termination of the parties agreement signed in 2003.

[21] However, unlike Mr. Farantatos, I do not have the luxury of cherry-picking the evidence to arrive at a conclusion about whether or not the Community has an interest in the disputed land. I must examine the totality of the evidence, irrespective of any disputed issues of fact.

[22] In addition to the evidence relied upon by Mr. Farantatos, I consider the following evidence presented by both parties:

• A letter dated October 12, 2007, from the Senior Project Manager of Mattamy Development Corporation to John D. McKeller, counsel for Mr. Farantatos, indicating the following:

As you are aware on October 5, 2007, we completed the registration of a plan of subdivision containing a block to be developed by the Farantatos Family Foundation and which will be the future site of the Church. (Such block being, the “Church Lands”). Subject to the completion of the post-plan registration procedures of the local Land Titles Office and pursuant to our obligation to do so, we hope to shortly be in a position to both convey title to the Church Lands to the Farantatos Family Foundation and thereafter physically move the existing Church building onto the Church Lands.

• On October 17, 2007, the Board of Directors of the Community passed a resolution instructing Mattamy (Derry Village) Limited to demolish the existing church building due to the high cost of moving it.

• An agreement dated August 27, 1980 between Phi International Inc., Panhellenic-Canadian Community Centre and the Farantatos Family Foundation which indicates that the Landlord, Phi International Inc., leased the disputed land to the Community for a term of ninety-nine (99) years from September 1, 1980.

• A letter dated February 1, 1988 from the Panhellenic-Canadian Community Centre to Mr. Farantatos which indicated that the Community accepted Mr. Farantatos’ offer through the Farantatos Family Foundation (FCF), for the latter “to build St. Barbara’s Greek Orthodox Church and Community Centre, in a neo-byzantine style according to the architectural plans to be prepared by architect, Mr. Pasler within a time frame to be specified by FCF”.

• An agreement dated May 29, 1989, between the plaintiff, Farantatos Family Foundation and Clergy Properties Limited indicating that “the Foundation will cause a church and other such facilities as it may determine to be built on a part of the Lands generally in an area shown on the copy of the survey attached as Schedule “B” (the Church Lands)”.

• A letter dated July 9, 1991, from Ronald K. Webb, counsel for Clergy Properties, to the Mayor of Mississauga, in which he stated that “Clergy Properties had agreed to transfer land for the Greek Church within the lands owned by it in Lot 12”.

• A letter from Mr. Ronald K. Webb, dated December 4, 1996, to Mr. Michael Harris, then the Premier of Ontario, indicating, inter alia: that “Clergy agreed many years ago to convey gratuitously a Church site to Barbara’s and to use the profits generated from the development of its land for the construction of a Church”.

• Mr. Webb’s testimony, during examinations on April 17, 2014, that he believed that Clergy had agreed to gratuitously convey a Church site to the Community and to use the profits generated from the development of its lands for the construction of the church.

• The 2003 agreement, which Mr. Farantatos claims merely grants a licence, rather than a lease, is titled: “Restatement of Lease.”

[23] In my view, this additional evidence clearly indicates that the parties contemplated a transfer of a portion of the disputed land owned by Clergy Properties Limited to the Community, specifically for the building of a Greek Church. I do not have to decide which party was contractually responsible to build the Church. The fundamental question is whether, based on the totality of the evidence, the Community has a reasonable interest in the land known to the parties as the “Church Lands”. In my view, it does have such an interest.

[24] That however, does not end the analysis. A finding that the Community has a reasonable prospect of proving a breach of contract also requires that the Community has a reasonable chance of obtaining the equitable remedy of specific performance. (Interrent International Properties Inc. v. 1167750 Ontario Inc.) 2013 ONSC 6291, 234 A.C.W.S. (3d) 575. The court must be satisfied that damages would not be an appropriate remedy.

[25] Mr. Farantatos makes three submissions concerning the Community’s alleged failure to prove that the equitable remedy of specific performance is appropriate in this case. They are:

(a) The Community seeks general and restitutionary damages of nine million dollars and special damages of one million dollars. It only seeks Specific Performance as an alternative remedy.

(b) There is nothing unique about the land and its location. Indeed, the Church community no longer exists. Therefore, there is no need for a church on the disputed land.

(c) Courts do not award specific performance for construction. (Tannenbaum v. WJ Bell Paper Co., 1960 119 (ON SC), [1956] O.R. 278, 4 D.L.R. (2d) 177 (Sup. Ct.)

[26] Contrary to Mr. Farantatos’ assertion, it appears that members of the Community still reside in the City of Mississauga and have chosen to attend religious services in churches within the community. The Community has also invested significant resources to obtain the Church Lands and to build a church on this land. An architectural firm has been retained in that regard and architectural drawings have already been drafted. The size and configuration of the church have also been decided. The Community has pursued this goal since 1980. Commencing the full process of obtaining alternative land and the necessary zoning approvals for the building of the church would require significant resources which the Community maintains it does not possess.

[27] Additionally, damages may be an inadequate remedy given that Mr. Farantatos, Clergy and the Foundation may not have any assets in this jurisdiction. Mr. Farantatos presently resides in the United States of America. He maintains that he made no profit from the development of the original 40 acres of land.

[28] The fact that courts are reluctant to make an order for specific performance for construction is merely a recognition of the myriad decisions involved in construction and the fact that the duty to be enforced is continuous. Tannenbaum at para. 69. However, an exception to the general rule against granting the equitable remedy of specific performance in construction cases exists where the particulars of the work are sufficiently clear and the court concludes that damages may be an inadequate remedy for the breach of contract. (Tannenbaum at para.53).

[29] In this case, the architectural plans for the church have already been drawn up. The Church would likely have been built in accordance with those plans but for Mr. Farantatos’ decision not to proceed with what the parties appeared to have been agreed upon in 1980.

[30] Even if I am wrong that there is no enforceable agreement between the parties regarding the Church lands, actions undertaken by the Community may nevertheless constitute cogent evidence of the existence of such an agreement. Section 4 of the Statute of Frauds, R.S.O. 1990, c. S.19 provides that no action shall be brought to charge any person upon any contract or sale of lands, tenements or hereditaments, or any interest in or concerning them, unless the agreement upon which the action is brought…is in writing.

[31] However, the Ontario Court of Appeal noted in Erie Sand & Gravel Limited v. Seres’ Farms Ltd., 2009 ONCA 709, at para. 49 that:

The requirements in s. 4 of the Statute of Frauds must give way in the face of part performance because the acts of part performance fulfill the very purpose of the written document - that is, they diminish the opportunity for fraudulent dealings with land based on perjured evidence.

[32] The following evidence of part performance by the Community constitutes some evidence of an agreement between the parties:

(a) the Community’s actions in ensuring that the original parcel of land was re-zoned for residential development;

(b) the Community’s decision to remove its temporary church, religious icons and symbols in anticipation of the construction of the church on the Church land.

[33] This evidence undermines Mr. Farantatos’ claim that the Community has no interest in the land in the absence of an agreement.

B. Delay in Seeking CPL

[34] The Community has provided a reasonable explanation for the three year delay in bringing its ex-parte motion to amend its statement of claim to include a CPL on the disputed property. In 2007, the Foundation borrowed $5,000,000 from Moor Holdings Corp. (“Moor”) as security for repayment of this loan, the Foundation granted a mortgage to Moor Holdings Corp. and a security interest in all the Foundation’s freehold, real and immovable property. This mortgage became due in 2012 thereby giving Moor the right, if the terms of this agreement were not honoured by the Foundation, to claim an interest in the disputed property.

C. Did the Community disclose all material facts in its ex-parte application for a CPL?

[35] In my view it did. The majority of misrepresentations identified by the defendant relate not so much to non-disclosure but to the suggestion that the significant factual details were “buried” in the Appendices attached to the Affidavit. The plaintiff attached all the contracts it entered into with the defendants to the Affidavit in support of its ex-parte application. While there is room for divergent interpretations of the terms of the documents and contracts, the important fact is that the Community did disclose its agreements with the defendants. The defendants submit that the plaintiff did not disclose in its ex-parte application the fact that the defendants had denied making any profits on the sale of the lands in question. In my view however, this denial, even if true, was not material to the determination of the ex-parte application.

[36] It was well within Justice Fitzpatrick’s discretion to conclude that in 1980, the parties entered into a ninety-nine year lease to build a church on a specific portion of land owned by Mr. Farantatos through a company he controlled. There is simply no evidence to conclude, as Mr. Farantatos’ counsel invites the court to do, that Justice Fitzpatrick did not review the appended documents to the affidavit.

D. Is the discharge of the CPL a just remedy?

[37] The defendants did not plead any hardship flowing from the CPL. It further appears that the balance of convenience favours maintaining the CPL, given the limited assets which the defendants have in the jurisdiction. Finally, it is very likely that if the CPL is discharged and Moor asserts a claim against the disputed property, any favourable judgment the Community may obtain in its action against Mr. Farantatos and the defendant corporations, may merely be a Pyrrhic victory.

[38] For those reasons, maintaining the CPL is a just remedy in the circumstances of this case.

DISPOSITION

[39] Based on the above, the defendants’ motion to discharge the CPL on the land in dispute is dismissed.

COSTS

[40] On consent, costs in the amount of $17,500 inclusive, are payable by the defendants, Clergy Properties Limited, Mr. Gerry Farantatos and the Farantatos Family Foundation to the plaintiff, Greek Canadian Community of Peel & Halton.

André J.

DATE: September 12, 2014

COURT FILE NO.: CV-10-3796-00
DATE: 2014-09-12

SUPERIOR COURT OF JUSTICE - ONTARIO

RE: GREEK CANADIAN COMMUNITY OF PEEL & HALTON – and – CLERGY PROPERTIES LIMITED, GERRY FARANTATOS and THE FARANTATOS FAMILY FOUNDATION

BEFORE: André J.

COUNSEL: Jerome R. Morse and Lionel Tupman, for the Plaintiff

John M. Buhlman and Faren H. Bogach, for the Defendants

ENDORSEMENT

André J.

DATE: September 12, 2014