Romijay Enterprises Ltd. et al. v. 11 Yorkville Partners Inc. et al.
[Indexed as: Romijay Enterprises Ltd. v. 11 Yorkville Partners Inc.]
Ontario Reports Ontario Superior Court of Justice, Cavanagh J. April 18, 2017 138 (3d) 24 2017 ONSC 2388
Case Summary
Real property — Condominiums — Plaintiffs owning one unit in eight-unit condominium property — Owners of more than 85 per cent of units proposing to sell property to non-arm's-length purchaser and calling meeting of unit holders to vote on offer to purchase — Plaintiffs invoking oppression remedy in s. 135 of Condominium Act and seeking to prevent sale — Plaintiffs moving successfully for interlocutory injunction to restrain meeting until action was finally adjudicated — Serious issue to be tried existing with respect to plaintiffs' reasonable expectation that its unit would not be sold to non-arm's-length purchaser without their consent — Plaintiffs' controlling mind having unique personal attachment to unit — Plaintiffs likely to suffer irreparable harm if injunction not granted — Balance of convenience favouring granting of interlocutory injunction — Condominium Act, 1998, c. 19, s. 135.
The plaintiff R Ltd. owned one unit in an eight-unit condominium property. The wife of R Ltd.'s controlling mind B had renovated the unit for use by B's law firm. After his wife died of cancer, B stopped practising law and transformed the unit into an alternative healing centre. The defendant Y Inc. owned five units in the property. It wished to cause the condominium corporation to sell the property to a non-arm's-length purchaser, and relied upon s. 124(2) of the Condominium Act, 1998, which provides that a condominium corporation shall not sell a condominium property unless the owners of at least 80 per cent of the units vote in favour of the sale. Y Inc. called a meeting of unit owners to consider and vote on the offer. Invoking the oppression remedy in s. 135 of the Act, R. Ltd. brought an action to prevent the sale. The plaintiffs moved for an interlocutory injunction restraining the defendants from holding the meeting until the action was finally adjudicated.
Held, the motion should be granted.
The plaintiffs were only required to show that there was a serious issue to be tried, and not a strong prima facie case, in order to satisfy the first requirement for an interlocutory injunction. There was a serious issue to be tried with respect to the plaintiffs' reasonable expectation that they would not be forced to sell their unit against their will and that any sale under s. 124 of the Act would be made to an independent purchaser. B had a unique emotional attachment to the unit. The plaintiffs were likely to suffer irreparable harm if the injunction was not granted. The balance of convenience favoured granting the interlocutory injunction.
2475813 Nova Scotia Ltd. v. Ali, 2001 NSCA 12; Esso Standard (Inter-America) Inc. v. J.W. Enterprises Inc., [1963] S.C.R. 144; Garfella Apartments Inc. v. Chouduri, 2010 ONSC 3413 (Div. Ct.), consd
Other cases referred to
BCE Inc. v. 1976 Debentureholders, [2008] 3 S.C.R. 560; Carleton Condominium Corp. No. 347 v. Trendsetter Developments Ltd.; Grigoriu v. Ottawa-Carleton Standard Condominium Corp. No. 706, 2014 ONSC 2885; Richards v. Richards, 2013 NSSC 163; RJR-MacDonald Inc. v. Canada (Attorney General), [1994] 1 S.C.R. 311
Statutes referred to
Condominium Act, R.S.N.S. 1989, c. 85, s. 40 [as am.] Condominium Act, 1998, S.O. 1998, c. 19, ss. 124, (2), 125, 132 [as am.], 135 [as am.]
MOTION for an interlocutory injunction.
Allison Speigel and Timothy Morgan, for plaintiffs. Mark Dunn and Rebecca Olscher, for defendants.
CAVANAGH J.: —
Introduction
[1] This case involves a condominium property municipally known as 17 Yorkville Avenue, Toronto (the "property") that is owned by the defendant Toronto Standard Condominium Corporation No. 1744 (the "Condominium Corporation"). The property is comprised of eight units, two residential units, four commercial units and two parking units. The plaintiff Romijay Enterprises Ltd. ("Romijay") is a holding company that owns one unit (the "Romijay unit"). The defendant 11 Yorkville Partners Inc. ("Yorkville Partners") is the owner of five units (83.33 per cent of the units).
[2] Yorkville Partners wishes to cause the Condominium Corporation to sell the property and it relies upon s. 124(2) of the Condominium Act, 1998, S.O. 1998, c. 19 (the "Act") that provides that a condominium corporation shall not sell a condominium property unless the owners of at least 80 per cent of the units vote in favour of the sale. The Act provides that dissenting unit holders have the right to challenge the sale price and receive monetary compensation if it is found to be insufficient.
[3] An offer to purchase the property has been made by RioCan Acquisitions Inc. (the "purchaser") and a meeting of unit owners is scheduled to be held on April 18, 2017 to consider the offer and to vote on whether the offer should be approved. The parties have agreed that the meeting will not be held until two days after my decision is released on this motion.
[4] Romijay opposes a sale of the Romijay unit and seeks to enjoin the meeting and prevent the sale that the meeting was scheduled to consider. Romijay relies upon the oppression remedy in s. 135 of the Act.
[5] The question on this motion is whether Romijay and the other plaintiffs should be granted an interlocutory injunction restraining the defendants from holding a meeting of unit owners to consider and, if they so decide, approve the sale of the property to the purchaser pending a final adjudication of the issues raised in this action on their merits on a summary judgment motion or at a trial.
[6] For the following reasons, I grant the plaintiffs' motion for an interlocutory injunction restraining the meeting from being held until the action is finally adjudicated or until other order of this court.
Background Facts
[7] The plaintiffs are entities that are related to Robert Berman. Romijay is a holding company incorporated by Mr. Berman's father-in-law to hold his investments and pass them on to his descendants. Upon the death of Mr. Berman's wife, Jayne, Mr. Berman and their three children became the owners of all of the shares of Romijay. Soul 7 Inc. ("Soul 7") is a corporation that operates a health and wellness clinic in the Romijay unit. Mr. Berman is the director, officer and controlling mind of Soul 7.
[8] The defendants are a collection of entities that are related to either Metropia Inc. ("Metropia") or Riocan REIT ("Riocan"). Riocan and Metropia are separately owned and operated developers. Yorkville Partners is related to Metropia. Yorkville Partners' lender, Riocan Mortgage Corp., and the purchaser are related to Riocan.
[9] The property is a mixed-use condominium incorporated in 2006. It is located on Yorkville Avenue between Bay Street and Yonge Street. When the Condominium Corporation was incorporated, the property was located in a relatively undesirable part of Yorkville. Since then, the neighbourhood has been transformed by (among other things) the construction of a new Four Seasons Hotel in the vicinity.
[10] In and around the first half of 2007, Mr. Berman's law firm was looking for new office space. His wife, Jayne, offered to use Romijay funds to purchase office space out of which she and Mr. Berman's law firm could operate. In 2007, the location of the Romijay unit on Yorkville Avenue was not as desirable as it is today. The Romijay unit itself was unfinished and in an overall state of disrepair. Jayne foresaw that this part of Yorkville would develop and become more like mainstream Yorkville and she believed that she could transform the Romijay unit into a wonderful space for a law firm. Jayne oversaw every detail of the renovation and redesign of the Romijay unit and Mr. Berman's evidence is that she poured her time, money and love into the project. Mr. Berman's law firm and Jayne began operating out of the Romijay unit around December 2007.
[11] Around November 2011, Jayne was diagnosed with terminal cancer. She died on September 4, 2012 at age 58. Mr. Berman's evidence is that in order to cope with Jayne's death, he decided that he needed to make major changes in his life, including discontinuing the practice of law. He began to learn more about the world of alternative medicine and in late 2013, Mr. Berman transformed his law firm into Soul 7, an alternative healing centre. Mr. Berman opened Soul 7 in Jayne's honour and memory in the hope of helping people like her who are in need of immune-boosting therapies.
[12] Mr. Berman has provided evidence that the Romijay unit, Soul 7 and Jayne are inextricably intertwined and that the Romijay unit is, thus, unique, irreplaceable and invaluable to the plaintiffs.
[13] As the value of the property increased, developers approached the unit owners about the possibility of purchasing the property or entering into a joint venture to develop it. Until the fall of 2014, these negotiations did not lead to the sale of the property or any of the units.
[14] Yorkville Partners was incorporated on June 10, 2015 to purchase and redevelop several adjacent properties on Yorkville Avenue, including the property (the "project"). Yorkville Partners' current intention is to build a mixed-use development comprised of a 63-storey residential tower above a three-storey commercial podium on the property and adjacent properties. The project is a major undertaking, with an anticipated budget in excess of $100 million. Yorkville Partners has already spent more than $50 million to acquire some of the land that will be required to complete the project.
[15] Real estate agents acting on behalf of Yorkville Partners began approaching the owners of units at the property in the fall of 2014. Since Yorkville Partners planned to incorporate the property into a larger land assembly and redevelop it, it was prepared to pay the unit owners a significant premium relative to what each unit was worth on a standalone basis. As a result, Yorkville Partners was able to negotiate agreements of purchase and sale with the owners of five of the six units. Yorkville Partners made efforts to reach an acceptable agreement with all of the unit owners, including Romijay. Yorkville Partners knew that Romijay was reluctant to sell its unit when Yorkville Partners entered into purchase agreements with the other unit owners. Yorkville Partners always hoped to reach a mutually acceptable agreement with Romijay and was optimistic that such an agreement could be reached.
[16] During the same period of time, Yorkville Partners was negotiating with the owners of 19 Yorkville Avenue and it has agreed to pay a $19.5 million for 19 Yorkville Avenue closing on January 18, 2018. The purchase agreement is firm. David Spiegel, the president and chief operating officer of Metropia Inc., provided affidavit evidence that Yorkville Partners would not have agreed to purchase 19 Yorkville Avenue if it had not believed that it would be able to invoke the sale right under s. 124 of the Act in the event that an agreement could not be reached with Romijay.
[17] By February 2017, it was clear that Yorkville Partners and Romijay had reached an impasse and there was no apparent way to resolve this impasse through negotiation. Yorkville Partners believed that the sale right under s. 124 of the Act provided a path forward and it approached the purchaser about making an offer to purchase the property. On February 22, 2017, the purchaser made the offer to purchase the property for $24,968,789. Since Yorkville Partners owned more than 80 per cent of the units, it believed that it would be able to approve the relevant sale in accordance with s. 124 of the Act.
[18] Yorkville Partners obtained two independent appraisals of the property. The purchaser's offer represents a significant premium relative to the appraised values of the property. Romijay's share of the offer, which would be approximately $4 million, represents a substantial premium relative to the appraised value of its unit based upon the appraisals obtained by Yorkville Partners.
[19] The plaintiffs do not agree that the amount of the purchaser's offer represents fair market value for the property. The plaintiffs intend to retain an expert in this action to give evidence on, amongst other things, (a) the fact that Yorkville Partners would easily be able to sell the five units on the open market, and (b) the extent to which property values have increased in Yorkville between 2015 and today.
[20] In the notice of the meeting of unit owners to consider the purchaser's offer, Yorkville Partners disclosed that it has a relationship with the purchaser. Metropia and Riocan have an informal agreement that a Riocan entity will, at some future date, purchase an interest in the project. Similarly, if the transaction contemplated by the purchaser's offer is completed, then Metropia may acquire an interest in the purchaser or property.
[21] At the beginning of the hearing of this motion, I was advised that the parties had reached the following agreement with respect to this action:
(1) For purposes of considering the oppression remedy, irreparable harm, balance of convenience, or fiduciary duties in this action or related actions and motions arising out of them (collectively, the "Action"), the expectations, rights, and interests, emotional or otherwise, of Bob Berman, Michael Berman, Joanna Berman, Jonathan Berman, Romijay Enterprises Ltd. ("Romijay"), and Soul 7 Inc. ("Soul 7") will be treated as being identical. To be clear, this means that, amongst other things, any harm or loss, emotional or otherwise, that may be suffered by any one of the listed party shall be deemed to be suffered by all of them.
(2) In consideration for the benefits the plaintiffs receive, by way of the elimination of issues in the Action, conferred under para. 1, Soul 7 shall not register a lease on title or raise any occupation rights in its capacity as a tenant, other than the occupation and oppression rights it raises in the Action. To be clear, this agreement is meant to cover not only Soul 7's rights as tenant, but any other similar rights as occupant, licensee or otherwise. Further, Romijay shall not enter into a lease or similar arrangement with anyone other than Soul 7.
Analysis
Requirements for interlocutory injunction
[22] A party must satisfy a well-established three-part test when seeking an interlocutory injunction: RJR-MacDonald Inc. v. Canada (Attorney General), [1994] 1 S.C.R. 311, at para. 48. On this motion, the plaintiffs bear the burden of establishing that
(a) there is a serious issue to be tried or, they have a strong prima facie case; (b) they would suffer irreparable harm if the injunction is refused; and (c) the balance of convenience favours granting an injunction.
[23] In some cases, courts have required the moving party to establish that it has a strong prima facie case and not just show that there is a serious issue to be tried. These cases include those where the result of the motion for an interlocutory injunction would amount to a final determination of the rights between the parties, where the question to be decided is purely one of law, and where there are no material facts in dispute.
[24] There are also examples of Ontario decisions on motions for injunctive relief in oppression remedy applications where the court required the moving party to show a strong prima facie case. A number of these cases were addressed by the Nova Scotia Supreme Court in Richards v. Richards, 2013 NSSC 163. In Richards, Muise J. wrote that even these Ontario cases recognized that there is no automatic application of the strong prima facie case standard in interlocutory oppression remedy cases. I agree. In my view, each case must be considered in the context of its own facts in order to decide whether the moving party needs to show that there is a serious issue to be tried or whether it must show that it has a strong prima facie case. The usual requirement on a motion for an interlocutory injunction is that the moving party need only show that there is a serious issue to be tried.
[25] In this case, the moving parties are seeking a prohibitory injunction that would restrain the holding of a meeting of unit owners to consider the offer until the action has been finally decided on a motion for summary judgment or at a trial. The evidentiary record relating to the merits of the dispute is not complete. The question to be decided is not a pure question of law. This is not a case where a mandatory order is sought, or where the relief sought is in the nature of a Mareva injunction that would tie up a corporation's assets while the action proceeded. This is not a case where the relief sought should be regarded as being a final determination of the matter. The relief sought in this motion is limited to preservation of the status quo in order to ensure that Romijay's ownership interest in the Romijay unit is not lost through a sale of the property before a final adjudication of the action on its merits.
[26] Based upon these considerations, I have concluded that the moving parties need to show that there is a serious issue to be tried, and not a strong prima facie case, in order to satisfy the first requirement for an interlocutory injunction. The moving parties also have the burden of establishing that they would likely suffer irreparable harm if the injunction is refused and that the balance of convenience favours the granting of an injunction.
Is there is a serious issue to be tried?
[27] The threshold to establish a serious issue is low. The court should not perform a prolonged or detailed examination of the merits. Instead, it must make a preliminary assessment of the merits and be satisfied that the issues raised are not frivolous or vexatious: RJR-MacDonald Inc., at paras. 54-55.
[28] The parties agree that this motion requires consideration of ss. 124 and 135 of the Act. Subsection 124(2) of the Act provides that a condominium corporation "shall not sell the property [in its entirety] unless the owners of at least 80 per cent of the units . . . vote in favour of the sale". Sections 125 and 132 of the Act provides that a dissenting order may submit a dispute regarding the fair market value to mediation and, if that fails, arbitration.
[29] Section 135 of the Act provides that an owner of a condominium unit may seek an order from the court on the grounds that the conduct of another unit owner or the condominium corporation "is or threatens to be oppressive or unfairly prejudicial to the applicant or unfairly disregards the interests of the applicant". If the court determines that the conduct is oppressive, the court may make any order that it deems proper to rectify the matter, including an order prohibiting the conduct.
[30] In a proceeding for a remedy for oppression under s. 135 of the Act, the plaintiff must satisfy the same tests for determining oppressive conduct as have been applied in corporate law actions. The plaintiff must prove that (a) the defendant's conduct undermines the plaintiff's reasonable expectations; and (b) the defendant's conduct is (i) oppressive, (ii) unfairly prejudicial to the plaintiff or (iii) unfairly disregards the plaintiff's interests: Grigoriu v. Ottawa-Carleton Standard Condominium Corp. No. 706, 2014 ONSC 2885, at para. 21.
[31] In BCE Inc. v. 1976 Debentureholders, [2008] 3 S.C.R. 560, the Supreme Court of Canada explained that the concept of reasonable expectations is objective and contextual, and that in the context of whether it would be just and equitable to grant a remedy, the question is whether the expectation is reasonable having regard to the facts of the specific case, the relationships at issue, and the entire context, including the fact that there may be conflicting claims and expectations. The Supreme Court of Canada noted that determining whether a particular expectation is reasonable is complicated by the fact that the interests and expectations of different stakeholders may conflict, and that in determining whether a particular expectation is reasonable "[f]air treatment -- the central theme running through the oppression jurisprudence -- is most fundamentally what stakeholders are entitled to aereasonably expect'": BCE, at paras. 62, 64.
[32] The plaintiffs submit that they reasonably expected that (i) they would be treated fairly; (ii) barring exceptional circumstances, they would not be forced to sell the Romijay unit against their will; and (iii) any sale under s. 124 of the Act would be made to an independent purchaser.
[33] The plaintiffs rely upon the evidence of Mr. Berman, at para. 38 of his affidavit, that neither he nor Jayne ever expected that the Romijay unit would be sold out from under Romijay. They submit that this evidence should be read to include an expectation that the Romijay unit would not be sold to a purchaser that is not independent and that Romijay would be treated fairly in any sale process. I agree that Mr. Berman's evidence concerning his subjective expectation that the Romijay unit would not be sold out from under Romijay is expressed sufficiently broadly as to include evidence of an expectation that the Romijay unit would not be sold to a purchaser that is not independent.
[34] The plaintiffs also submit that their expectations are reasonably grounded in s. 135 of the Act and BCE, and in cases that they submit involve similar factual circumstances, specifically, Garfella Apartments Inc. v. Chouduri, 2010 ONSC 3413 (Div. Ct.), 2475813 Nova Scotia Ltd. v. Ali, 2001 NSCA 12 and Esso Standard (Inter-America) Inc. v. J.W. Enterprises Inc., [1963] S.C.R. 144.
[35] In Garfella, the owners of percentage interests in an apartment building were tenants in common with one another and shared, according to their interests, in the costs and operations of the building. One of the owners believed that the building would be more valuable if converted into a regular apartment building and sought to acquire the interests of the other owners. When this was unsuccessful, this owner applied to the court for an order for sale under the Partition Act and the evidence was that this owner planned to bid on the property. The Divisional Court upheld a decision denying an order for a sale on the grounds that the proposed sale was oppressive. The Divisional Court acknowledged that there was always a possibility that someone would apply for a sale of the whole building under the Partition Act but considered that if there are no irreconcilable problems requiring such a sale, it is reasonable for the owners of percentage interests in the building who lived in apartments in the building to expect that their homes will not be sold out from under them for no reason: Garfella, at para. 53.
[36] The responding parties submit that Garfella does not assist Romijay because in Garfella there was evidence, including a co-owners agreement between the parties, that the Divisional Court relied upon to conclude that "it was clearly contemplated that property interests would simply be bought and sold in the normal course on the open market": Garfella, at para. 62. The responding parties submit that no similar evidence exists in this case. Further, the responding parties submit that the analysis in Garfella occurred in a very different statutory context and that, in this case, the question is whether the provisions of s. 124 can be overturned simply based upon Mr. Berman's alleged expectation that they would never be exercised.
[37] In Ali, the Nova Scotia Court of Appeal addressed a provision of the Nova Scotia Condominium Act, R.S.N.S. 1989, c. 85 (the "Nova Scotia Act") that is the same as s. 124 of the Act. In Ali, the owner, developer and marketer of a condominium development were corporations controlled by the same individual. Another company owned by this individual acquired units so that the individual, through this corporation, controlled in excess of 80 per cent of the units and common elements. Most of these units were rented. The appellants, who in the main occupied their units, owned roughly 14 per cent. The individual who controlled in excess of 80 per cent of the units wished to cause a sale of the condominium property to a corporation of which he was the sole shareholder and an officer and director. The appellants objected to the proposed sale and applied to the court for, amongst other things, a declaration that the resolution approving the sale was null and void. There is no oppression remedy provision in the Nova Scotia Act.
[38] The Nova Scotia Court of Appeal in Ali considered that the unit owners would reasonably have expected that the individual would exercise his voting control with respect to a sale of the property in the best interests of all unit owners and then concluded that the individual, by virtue of being the owner and controlling mind of the developer and having effective voting control of the condominium corporation, owed a fiduciary duty to all of the unit holders not to use that voting control to authorize the sale of the property where their interests and his could conflict. The court also held that, by virtue of the individual's position as a director of the condominium corporation, he owed a fiduciary duty to the condominium corporation of a similar character. The court considered that the only issue is whether the fiduciary relationship gave rise to any restriction on the right of the individual to proceed with the sale to himself which was authorized by voting his 80 per cent interest as a unit holder. The Nova Scotia Court of Appeal concluded that the fiduciary principle required, in the context of s. 40 of the Nova Scotia Act and the circumstances of the case, some substitute mechanism for assuring that the proposed sale is in the interests of the unit holders and the corporation, an assurance normally provided by the vote of a strong majority of the unit holders.
[39] The responding parties submit that Ali was not an oppression case and does not change the requirement that a plaintiff provide evidence of the existence and reasonableness of its expectations. The responding parties submit that the Nova Scotia Court of Appeal did not make any findings about reasonable expectations, let alone a finding that applies to this case. The responding parties submit that on this motion Romijay does not assert that Yorkville Partners owes it a fiduciary duty similar to the duty at issue in Ali and that a fiduciary relationship can exist in this case only if there is evidence of a mutual understanding that Yorkville Partners would relinquish its own self-interest and act in the interests of Romijay, of which there is no evidence.
[40] The plaintiffs also rely upon Esso Standard to support their submission that there is a serious issue to be tried in respect of their reasonable expectations concerning a sale of the Romijay unit to a non-arm's-length purchaser without their consent. In that case, there was a takeover bid under a legislative scheme under which if at least 90 per cent of the shares were acquired within four months, the remaining shareholders could be compelled to sell on the same terms. Esso Standard indirectly owned, through an affiliate, 96 per cent of the shares of the target corporation and the affiliate agreed to sell its shares. Esso Standard then sought an order compelling the remaining shareholders to sell. The court found that the transfer of shares from the affiliate to Esso Standard was meaningless as affording an indication of a transaction representing the wishes of 90 per cent of the shareholders because the 90 per cent is not independent. The plaintiffs submit that this authority supports their reasonable expectation that any sale of the property following the process under s. 124 of the Act would be made to a purchaser that is unrelated to Yorkville Partners and that there is a serious question to be tried of whether they had such a reasonable expectation.
[41] The responding parties submit that
(a) there is no serious question to be tried concerning Romijay's reasonable expectations because the evidence does not support a reasonable expectation that the Romijay unit would not be sold without Romijay's consent; (b) Mr. Berman's statement that neither Jayne nor he expected that the Romijay unit would be sold out from under Romijay is not supported by evidence of facts specific to this case based upon any contract, representation or conduct; (c) Yorkville Partners never did or said anything that caused (or could have caused) Romijay to reasonably expect that the sale right provided for by s. 124 of the Act would not be exercised; (d) there is no evidence of an actual expectation held by Mr. Berman that Romijay would not be forced to sell to a non-arm's-length purchaser; (e) the Act explicitly authorizes a sale of the property without Romijay's consent and, as a matter of statutory interpretation, oppression law and fact, Romijay's alleged expectation was not reasonable.
The responding parties emphasize that condominiums are creatures of statute, and that courts should be cautious about reading into the statute rights and duties that the legislature did not see fit to include: Carleton Condominium Corp. No. 347 v. Trendsetter Developments Ltd., at para. 25.
[42] I agree that there is no evidence of any conduct by Yorkville Partners that caused, or could have caused Romijay to reasonably expect that the sale right provided for by s. 124 of the Act would not be exercised. Romijay does not seek to rely upon such evidence. Romijay relies upon the affidavit evidence of Mr. Berman, s. 135 of the Act, and the jurisprudence, including Garfella, Ali and Esso Standard, as sufficient for the plaintiffs to establish a serious issue to be tried concerning the plaintiffs' reasonable expectations.
[43] I agree with the responding parties that the decision in Garfella involved a different statutory framework and different evidence than is before the court on this motion. However, in my view, this decision provides some objective support for Mr. Berman's expectation that the Romijay unit would not be sold to a non-arm's-length purchaser without Romijay's consent, absent exceptional circumstances, that is sufficient for the plaintiffs to satisfy the low threshold of showing that there is a serious issue to be tried. I also agree with the responding parties that the legal grounds upon which Nova Scotia Court of Appeal in Ali reached its decision differ materially from the legal grounds upon which plaintiffs seek relief in this case under s. 135 of the Act. The moving parties have not submitted that Yorkville Partners owed a fiduciary duty to Romijay to act in its interests in relation to steps taken under s. 124 of the Act. However, the Ali decision provides some objective support for the plaintiffs' expectation that the Romijay unit would not be sold to a non-arm's-length party without their consent that is sufficient to meet the low threshold of a serious issue to be tried. The Esso Standard decision, although also made in the context of a different statutory framework than the Act, provides some objective support for Romijay's expectation that the Romijay unit would not be sold to a purchaser that is not independent.
[44] The responding parties submit that Yorkville Partners' own expectations are also relevant in determining whether Romijay's alleged expectations are reasonable. Yorkville Partners provided evidence that it bought the other units for development and informed Romijay of this intention from the outset. Yorkville Partners provided evidence that it reasonably expected that it would be able to do what it submits that the Act permits and that it has spent (or agreed to spend) over $50 million based upon that expectation. I agree that the evidence concerning Yorkville Partners' expectations is relevant to determining whether Romijay's expectations are reasonable. I have taken Yorkville Partners' expectations into account, but have concluded that, on the record before me, the plaintiffs have satisfied the requirement of showing that there is a serious issue to be tried concerning the plaintiffs' reasonable expectations in the context of their claim for relief under s. 135 of the Act. The evidence concerning Yorkville Partners' expectations will need to be considered again when the claims made in this action are finally adjudicated.
[45] The parties also made submissions concerning the second prong of the oppression test that requires a complainant to prove that the impugned conduct is oppressive or unfairly prejudicial to or that unfairly disregards the complainant's interests. The parties agree that conduct that results in a breach of a complainant's reasonable expectations is not necessarily conduct that is oppressive or unfairly prejudicial to or that unfairly disregards the complainant's interests.
[46] The plaintiffs submit that the responding parties are seeking to utilize their superior bargaining position to force the plaintiffs to sell in accordance with an offer that is unreasonable and unfair in at least two respects: the vacancy requirement and the sale price.
[47] With respect to the vacancy requirement, the plaintiffs point to a provision in the terms of sale to the purchaser that, they say, would require Romijay to provide vacant possession three days after the meeting at which the sale is approved. This concern has been addressed by the responding parties who have agreed to consent to an order requiring the purchaser to lease the basement unit to Romijay for at least one year and that Romijay will be entitled to 120 days' notice of termination. In my view, the plaintiffs have not shown that there is a serious issue to be tried with respect to whether inclusion of the vacancy provision in the purchaser's offer constitutes conduct that is oppressive, unfairly prejudicial or that unfairly disregards the plaintiffs' interests.
[48] With respect to the sale price, the plaintiffs submit that the proposed sale is not in the collective best interests of the unit owners because the proposed price is far lower than it should be. The plaintiffs emphasize that their complaint is not about money but about the responding parties' plan to acquire the property through a process that, according to the plaintiffs, is inherently unfair to them. They submit that the sale price is far below what it should be and that this is one indication of this unfairness. The plaintiffs also submit that the process that resulted in the purchaser's offer deprived them of an ability to persuade the other unit owners not to sell their units and will result in a price that is lower than would be obtained if the property were to be sold on the open market to an independent purchaser.
[49] The responding parties submit that the Romijay and Yorkville Partners have directly conflicting interests and that nothing in the Act requires that Romijay's interests must prevail over the interests of Yorkville Partners. With respect to the purchase price, the responding parties submit that s. 125 of the Act provides dissenting owners with the right to challenge whether the sale price was fair after the fact by way of mediation and arbitration and that by passing s. 125 the legislature made a clear policy choice that disputes about the purchase price of a s. 124 offer are to be resolved by mediation and arbitration after the sale is completed, not by enjoining the sale approval meeting. The responding parties submit that this policy choice should be respected. The responding parties submit that, in any event, the evidence demonstrates that the purchaser's offer is fair.
[50] I have concluded that the plaintiffs have satisfied the requirement of showing that there is a serious issue to be tried (that is not frivolous or vexatious) concerning whether the process followed by the responding parties to achieve a sale of the property to the purchaser on the terms of the purchaser's offer, including the purchase price, amounts to conduct that is oppressive, unfairly prejudicial to or that unfairly disregards the plaintiffs' interests. In reaching this conclusion, I take into account the decisions in Garfella, Ali and Esso Standard as well as the plaintiffs' submission that, when their action is finally adjudicated, they intend to tender expert evidence concerning the fair market value of the property including the extent to which property values have increased in Yorkville between 2015 and today. I also take into account the responding parties' submission that the Act addresses and resolves the conflict between the plaintiffs' interests and those of Yorkville Partners. This submission and the evidence that relates to it will be addressed on their merits when the plaintiffs' claims are finally adjudicated.
Would the plaintiffs likely suffer irreparable harm if the injunction is refused?
[51] The plaintiffs submit that because this case involves property rights, there is a strong presumption that the harm is irreparable and that an injunction should be granted. The plaintiffs rely upon evidence that the Romijay unit is unique in that its value to the plaintiffs transcends dollars and cents because
(a) it was discovered, purchased and transformed by Mr. Berman's wife, Jayne, and Mr. Berman and Jayne worked side-by-side together in the unit before her death; (b) Mr. Berman spends time at the Romijay unit, even when not working, because it helps him remember Jayne. For Mr. Berman, memories of Jayne remain in the Romijay unit. (c) the Romijay unit has helped Mr. Berman through his healing process and it embodies his evolution after Jayne's death from cancer. The Romijay unit is a symbol of his change from lawyer to alternative healer and his commitment to helping those stricken by cancer.
[52] The plaintiffs also rely upon the location of the Romijay unit and the evidence that Soul 7 has developed relationships with nearby businesses that complement its services.
[53] If the requested interlocutory injunction is not granted and the proposed sale to the purchaser is approved and is completed, Romijay will lose its interest in the Romijay unit. The parties have agreed that the expectations, rights and interests, emotional or otherwise, of Mr. Berman, his children, Romijay and Soul 7 will be treated as being identical.
[54] The responding parties submit that, regardless of the outcome of this action, Yorkville Partners will be the owner of more than 80 per cent of the units. They submit that the commercial reality is that the property will be developed, whether by the purchaser or by another developer. For this reason, they submit that the plaintiffs' real interest in the property is one that should properly be measured in dollars.
[55] Mr. Berman has given evidence concerning his emotional attachment to the Romijay unit and he has explained why it is unique to him. It may transpire that the property becomes the subject of development, that the plaintiffs' wish to remain in the Romijay unit will be shown not to have been commercially realistic and that, ultimately, they will be compensated in money for Romijay's interest in the Romijay unit. However, on the evidentiary record before me, I am not able to reach this conclusion. I am satisfied that, based upon the uniqueness of the property to the plaintiffs, they are likely to suffer irreparable harm if the interlocutory injunction is not granted.
Does the balance of convenience favour granting the interlocutory injunction?
[56] In assessing the balance of convenience, the court must weigh which of the two parties will suffer the greater harm from the granting or refusal of an interlocutory injunction pending a decision on the merits: RJR-MacDonald Inc., at para. 67.
[57] The plaintiffs submit that the adverse consequences to them from a sale of the property if the request for an interlocutory injunction is denied cannot be compensated by an award of damages, whereas the alleged prejudice to the responding parties is purely monetary. The plaintiffs dispute that it is inevitable that the property will be sold to a developer and that Romijay will lose its interest in the Romijay unit. The plaintiffs submit that the financial costs to the responding parties during the period of delay (before a summary judgment motion can be heard or a trial conducted) can be compensated for through an award of damages. The plaintiffs have given an undertaking in damages that has value based upon the value of the Romijay unit and other Romijay assets.
[58] In assessing the balance of convenience, I have concluded that the status quo favours granting the interlocutory injunction and allowing Romijay to retain the Romijay unit pending final determination of the action. In my view, the harm to the plaintiffs that will result from a sale of the property if the injunction is not granted outweighs the harm to the responding parties resulting from a delay in having the action adjudicated. I agree that the undertaking in damages is sufficient to compensate the responding parties for their borrowing costs during the period of time until the final adjudication of the action.
Disposition
[59] I grant the plaintiffs' motion for an interlocutory injunction and order that defendants are enjoined from holding a meeting of owners of units in the property to consider the purchaser's offer and vote to approve or not to approve it without the written consent of Romijay until final determination of this action or until other order of this court.
[60] If the parties are unable to agree on costs, the plaintiffs may make written submissions not longer than five pages (excluding the costs outline) within 30 days. The responding parties may make responding submissions not to exceed five pages within 15 days of receipt of the plaintiffs' submissions. If so advised, the plaintiffs may make reply submissions not to exceed two pages within ten days thereafter.
Motion granted.