ONTARIO

SUPERIOR COURT OF JUSTICE

COURT FILE NO.: CV-12-469042
COURT FILE NO.: CV-15-522065

DATE: 20150710

BETWEEN:

SARBJIT SINGH
Plaintiff/
Defendant by Counterclaim

– and –

DONALD JOHN TRUMP SR., 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/
Plaintiffs by Counterclaim

AND BETWEEN:

SE NA LEE
Plaintiff

– and –

DONALD JOHN TRUMP SR., 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

Mitchell Wine and Kevin D. Sherkin for the Plaintiff/Defendant by Counterclaim

Mark A. Klaiman and Jennifer Wu for the Defendants/Plaintiffs by Counterclaim

Mitchell Wine and Kevin D. Sherkin for the Plaintiff

Mark A. Klaiman and Jennifer Wu for the Defendants

HEARD: June 25, 26, 2015

PERELL, J.

REASONS FOR DECISION

A. INTRODUCTION, OVERVIEW, AND METHODOLOGY

[1] Sarbjit Singh, in one action, and Se Na Lee, in a second action, sue Donald John Trump Sr., Trump Toronto Hotel Management Corp., Trump Marks Toronto LP, Talon International Inc. (“Talon”), Talon International Development Inc., Val Levitan, Alex Shnaider, and Toronto Standard Condominium Corporation No. 2267. Their actions concern their purchase of hotel condominium units in the Trump International Hotel, which is part of the Trump Tower, a 70-storey mixed-use complex at 325 Bay Street, in the City of Toronto.

[2] Before the court are two motions for summary judgment. Each Plaintiff’s damages are approximately $1 million. The Plaintiffs also seek punitive damages. The motions are test cases. There are 22 other actions with similarly situated plaintiffs claiming rescission and damages.

[3] At one level, the two test cases are conventional real estate litigation, where a vendor allegedly misrepresented the attributes of the property being sold and the purchaser seeks rescission of the Agreement of Purchase and Sale and damages because of the misrepresentations. At another level, with the complication of a ruling of the Ontario Securities Commission (“OSC”) about the manner of the sale of the hotel condominium units, the two test cases are unconventional lawsuits, complicated, and infused with a series of significant first-time factual and legal controversies about the intersection of common law and statutory claims under the Ontario Securities Act, R.S.O. 1990, c. S.5 and the Condominium Act 1998, S.O. 1998, c. 19.

[4] At its more conventional level, the critical fact is that Talon distributed a document called “Estimated Return on Investment” (the “Estimate”) that set out the hypothetical revenue stream from the occupancy of the Hotel Units and the anticipated expenses to predict a return on investment. Mr. Singh and Mrs. Lee were given Estimates before they signed Agreements of Purchase and Sale, in December 2006 and April 2007, respectively. It is alleged that their Estimates contain numerous misrepresentations. Mr. Singh and Mrs. Lee allege that they relied on the Estimates in making their decision to sign their respective Agreements of Purchase and Sale.

[5] After construction delays, in February 2012, Mr. Singh and Mrs. Lee were given interim occupancy and the hotel began operation. Final closing was scheduled for December 2012, when Mrs. Lee, but not Mr. Singh, took title to the Hotel Units. In their respective actions, Mr. Singh and Mrs. Lee seek rescission of the Agreements of Purchase and Sale, and they seek damages for their losses because of the misrepresentations in the Estimates.

[6] At the unconventional level of this legal dispute, the complicating and critical fact is the Plaintiffs’ allegation that Talon’s use of the Estimates violated an OSC ruling and breached the Securities Act. This allegation leads to a complicated argument that Mr. Singh’s and Mrs. Lee’s Agreements of Purchase and Sale are illegal and, therefore, can be rescinded with compensatory damages for their losses.

[7] From the conventional misrepresentation claim associated with the Estimates and the unconventional allegation of a violation of the Securities Act, a three-branched claim for rescission and damages emerges.

[8] The first branch of the Plaintiffs’ claim is the conventional common law and equitable claim of negligent misrepresentations and rescission. Critical issues here are whether there was a false statement and whether the Plaintiffs satisfied the reasonable reliance element of the tort of negligent misrepresentation.

[9] The second branch of the Plaintiffs’ claim is a statutory misrepresentation claim under s. 130.1 of the Securities Act. Critical issues here include the question of whether this statutory claim, which does not involve the proof of reasonable reliance, is available.

[10] The third branch of the Plaintiffs’ claim is for a private law remedy of rescission and damages for an alleged violation of a public law ruling of the OSC based on the theory of an illegal contract.

[11] For the reasons that follow, I dismiss Mr. Singh’s and Mrs. Lee’s summary judgment motions. I conclude that all three branches of their claims for rescission and damages fail. I conclude that there was no breach of the OSC’s ruling. I further conclude that Mr. Singh’s and Mrs. Lee’s statutory and common law misrepresentation claims fail on their merits. Mrs. Lee’s common law misrepresentation claim is also statute-barred under the Limitations Act, 2002, S.O. 2002, c. 24, Sched. B.

[12] In order to explain my factual findings and legal conclusions:

o First, I will set out the theory of the Plaintiffs’ rescission and damages claims against Talon, followed by the theory of Talon’s defence, followed by the Plaintiffs’ reply to the defence;

o Second, I will address the claims against Messrs. Trump, Levitan, and Shnaider and explain why these claims should be dismissed;

o Third, I will decide the unconventional part of the test cases; i.e. the claim based on an alleged breach of the ruling of the OSC.

o Fourth, I shall resume the description of the factual background from after the signing of the Agreements of Purchase and Sale until the commencement of Mr. Singh’s and Mrs. Lee’s actions. In this part of my reasons, I will analyze Mr. Singh’s and Mrs. Lee’s statutory and common law misrepresentation claims against Talon.

[13] I should note here that for the purposes of the summary judgment motions, the Plaintiffs withdrew their motions as against Trump Toronto Hotel Management Corp., Trump Marks Toronto LP, Talon International Development Inc., and Toronto Standard Condominium Corporation No. 2267. There are also counterclaims by Talon, but there was no cross-motion for a summary judgment of the counterclaims.

(Complete judgment continues exactly as provided in the source text.)

Perell, J.

Released: July 10, 2015