ONTARIO – SUPERIOR COURT OF JUSTICE

Iraj Nabizadeh v. Touraj Manifar

2015 ONSC 5503

Court File No.: CV-14-511175

Motion Heard: September 1, 2015

Counsel: Elena Mazinani for the plaintiff
Bruce Robertson for the defendant

ENDORSEMENT

Master R.A. Muir -

[1] This is a motion brought by the plaintiff pursuant to section 103 of Courts of Justice Act, R.S.O. 1990, c. C.43 and Rule 42.01 of the Rules of Civil Procedure, R.R.O. 1990, Reg. 194 for an order granting him leave to issue a certificate of pending litigation (“CPL”).

[2] The plaintiff is a real estate agent. He is also in the business of purchasing and redeveloping residential properties. The defendant is a chemical engineer employed in the pharmaceutical industry. He is also involved in a business partnership with his brother and father. Their partnership has been involved in the purchase and renovation of at least two residential properties.

[3] The plaintiff alleges that in the spring of 2014 he entered into an oral joint venture agreement with the defendant for the purchase and redevelopment of a property located at 160 Finch Avenue East, Toronto (the “Property”). The plaintiff was to contribute his construction expertise and arrange for the construction mortgage. The defendant was to take title to the Property, make the required down payment and arrange for the purchase mortgage. The plaintiff also acted as the buyer’s agent for the purchase and earned a significant commission.

[4] The parties did not enter into a formal written agreement to govern the operation of the alleged joint venture. In fact, there are no documents in evidence that make any express reference to a joint venture. The plaintiff’s documentary evidence does show that he had some involvement with obtaining necessary permits from the city of Toronto, arranging for the demolition of the existing structures, excavation services, the removal of trees, electrical issues and obtaining various surveys, drawings and plans. The plaintiff has also provided affidavit evidence from a witness who stated that he was present at a meeting where the plaintiff and the defendant discussed the potential of a joint venture to redevelop the Property.

[5] The defendant denies that any such joint venture ever existed. He takes the position that the redevelopment of the Property was a project undertaken through his partnership with his brother and father. According to the defendant the plaintiff had no involvement in the project. The plaintiff was nothing more than the defendant’s real estate agent for which he has been adequately compensated.

[6] During the course of argument, the plaintiff’s lawyer made reference to a current multiple listings service posting for the Property. This document was not part of the evidence on this motion. The plaintiff’s lawyer sought leave to provide the document to the court during the middle of her argument. The defendant’s counsel objected. I refused to allow the document into evidence. If the plaintiff intended to rely on the document it should have been attached to a supplementary affidavit and served on the lawyer for the defendant. The plaintiff should have then sought leave to introduce this additional evidence at the outset of the hearing of this motion and not part way through argument. I have not considered any of the submissions made in connection with this document in determining the issues on this motion.

[7] The factors the court is to consider when deciding a motion brought on notice seeking leave to issue a CPL are found in Perruzza v. Spatone, 2010 ONSC 841 (Master). 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).

[8] These are the factors and principles I have considered in determining the issues on this motion. Having done so, I have concluded that the plaintiff’s motion should be dismissed.

[9] I am satisfied on the evidence before me on this motion that there exists a triable issue with respect to the plaintiff’s claim to an interest in the Property. I do find the complete absence of a written agreement to be troubling. It is obviously an unsatisfactory manner of carrying on business. However, the record does contain sufficient evidence to meet the relatively low threshold applicable to this element of the test.

[10] The plaintiff’s involvement with the Property appears to have gone well beyond the role of a real estate agent. He was involved, at least to some extent, in dealing with trade contractors, suppliers, municipal authorities and professional consultants. It makes no sense for the plaintiff to be involved in this manner if he was only acting as the buyer’s real estate agent. All of these activities are consistent with the actions of a person who has an ownership interest in the Property beyond that of real estate agent. They are also consistent with the plaintiff’s partial performance of his obligations under the terms of the alleged oral joint venture agreement.

[11] In addition, the court has the evidence of the non-party witness who allegedly overheard discussions between the plaintiff and the defendant with respect to a proposed joint venture. The defendant did not cross-examine this witness.

[12] In my view, the plaintiff has met the initial threshold of showing that there exists a triable issue with respect to his claim to an interest in the Property. I come to this conclusion despite what I view as very significant issues in terms of the plaintiff’s potential damages claim. As matters have turned out, the plaintiff has contributed very little in terms of time and money to the purchase and redevelopment of the Property. This is clear from the plaintiff’s own evidence. The only potentially significant loss to the plaintiff would appear to be a lost opportunity based on his allegedly superior construction management skills.

[13] Despite my finding that the plaintiff has met the initial threshold, I have concluded that a consideration of all of the other applicable factors favours the defendant’s position on this motion.

[14] First, there is simply no evidence of the uniqueness of the Property other than the plaintiff’s statements to that effect. The court was not provided with any independent evidence to suggest that other such residential redevelopment opportunities cannot be found elsewhere in the city of Toronto. This redevelopment is a simple project involving the demolition of an existing residential structure and the construction of two residences in its place. It does not appear to be a particularly rare opportunity.

[15] Second, the Property was acquired solely for investment purposes. Even if I accept that the joint venture was agreed to as the plaintiff alleges, the purchase of the Property was simply an economic investment made with a view to earning a profit.

[16] Third, damages can be easily calculated. The assessment of damages would appear to involve a calculation of the cost of purchasing and redeveloping the Property and subtracting those amounts from the ultimate purchase price of the two new properties. A quantification of the plaintiff’s contributions would appear to be straightforward. The court is fully able to consider and decide the potential issues raised by the plaintiff such as inflated construction costs, inefficiencies and improvident sale. Moreover, these issues will need to be addressed in any event as the new construction is complete and the new properties are ready to be sold. The construction cannot be undone.

[17] Fourth, the statement of claim includes an alternative claim for damages. I accept that initially the main thrust of the plaintiff’s claim was for a measure of control over the redevelopment and ultimate sale of the Property commensurate with his rights as an alleged part owner. Those claims may have been of central importance when this claim was issued over a year ago. However, the plaintiff has already lost the right he is claiming to be involved with the redevelopment. The construction is finished. Of course, the plaintiff could have sought some form of injunctive relief at the very outset that would have allowed him some control over the redevelopment. He now seeks some ability to control the potential sale of the Property and distribution of any profit. In this sense, the plaintiff’s claim still extends beyond a simple claim for damages. However, any claim in relation to an improvident sale of the finished properties can be easily calculated and adequately remedied by an award of damages.

[18] Finally, it is my view that the balance of convenience is a neutral factor on this motion. On the one hand, the registration of a CPL will inconvenience the defendant and complicate the sale of the new properties. The plaintiff’s input and consent will be required. However, these would appear to be minor issues, especially in view of the plaintiff’s willingness to consent to a discharge of any CPL if the proceeds of sale are paid into court.

[19] On the other hand, the plaintiff argued that a CPL is necessary as security for his claim. However, the defendant is not a shell corporation that will be left without assets after the sale of the new properties. The defendant is an individual who is currently employed in Ontario. If the plaintiff had concerns about the defendant dissipating assets, he could have sought relief by way of a Mareva order. A CPL is intended to protect an interest in land in situations where other remedies would be ineffective. It is not intended to be an instrument to secure a claim for damages.

[20] For these reasons, I have concluded, on balance, that the equities on this motion favour the defendant. The plaintiff’s motion is therefore dismissed.

[21] If the parties are unable to agree on the issue of costs they shall provide the court with brief written submissions. The defendant’s submissions shall be filed by September 25, 2015. The plaintiff’s submissions shall be filed by October 8, 2015. Any reply from the defendant shall be filed by October 14, 2015.

Master R.A. Muir

DATE: September 3, 2015