Court File and Parties

CITATION: Bitton v. Checroune, 2017 ONSC 6731

COURT FILE NO.: CV-11-9377-00 CL & CV-10-416513

DATE: 20171114

SUPERIOR COURT OF JUSTICE - ONTARIO

RE: Claude Bitton AND: Alain Checroune, A. Checroune Realty Corporation and 500 Sheppard Avenue West Ltd. AND: Claude Bitton AND: Alain Checroune

BEFORE: Madam Justice J. T. Akbarali

COUNSEL: Stephen Schwartz, for the Applicant Christopher Stanek and Natasha Carew, for the Respondents Alain Checroune and A. Checroune Realty Corporation

HEARD: Submissions in Writing

Endorsement

[1] On April 21, 2017, I released reasons in connection with the hearing of the action and oppression application in this matter: 2017 ONSC 2434. On September 25, 2017, I released a further endorsement dealing with remedy: 2017 ONSC 5542. Among other things, in that endorsement I directed a reference to a master, and directed the parties to provide written submissions on costs incurred to date. These reasons deal with those costs.

[2] The parties disagree as to which of them has been substantially successful in the litigation, and therefore which of them is entitled to costs. The dispute between the parties relates to Mr. Bitton’s proposed development project of the lands at 500 Sheppard Avenue West in which Mr. Checroune became involved. The parties disagreed about the nature of Mr. Checroune’s involvement in the development project and the scope of the agreement between them.

[3] Mr. Bitton commenced two proceedings: an oppression application and an action against Mr. Checroune for damages for breach of contract. These two matters were brought on together, but at trial, Mr. Bitton advised that he was only seeking the relief set out in the oppression application.

[4] In order to resolve the question of which party substantially succeeded in the litigation, I set out below a summary of my key findings:

a. Mr. Checroune, through his company A. Checroune Realty Corporation, has unfairly prejudiced Mr. Bitton and unfairly disregarded his interests in connection with the corporate respondent, 500 Sheppard Avenue West Ltd. by:

i. failing to discharge an existing mortgage that A. Checroune Realty Corporation had assumed over the property at 500 Sheppard Avenue West;

ii. improperly registering a second mortgage over the property at 500 Sheppard Avenue West; and

iii. failing to fund half of the ongoing costs of the respondent 500 Sheppard Avenue West Ltd.

b. However, contrary to Mr. Bitton’s assertions, the parties had reached no agreement that Mr. Checroune would fund the significant development costs associated with the development project.

c. The development project has been set back by the lapse of site plan approval. This lapse is entirely the fault of Mr. Bitton, who made no efforts to pursue the development project once it became clear that Mr. Checroune would no longer participate in it. There is no evidence that Mr. Checroune’s failure to participate in the development project delayed it at all.

d. Accordingly, Mr. Bitton did not make out a claim for general damages.

e. The key elements of the remedy for the oppression are:

i. The discharge of A. Checroune Realty’s second mortgage over the property;

ii. The equalization of expenses of 500 Sheppard Avenue West Ltd. between Mr. Bitton and A. Checroune Realty; and

iii. The sale of A. Checroune Realty’s shares in 500 Sheppard Avenue West Ltd. to Mr. Bitton, valued as of the date of my reasons on the application, in a manner that treats Mr. Bitton and A. Checroune Realty as partners in the development project, and on additional terms that will be determined by the master on the reference.

[5] Mr. Bitton argues that he is the successful party in the litigation, because Mr. Checroune and A. Checroune Realty have been found to have acted in an oppressive manner and he has succeeded in obtaining a remedy for the oppression. He argues that the relief Mr. Checroune and A. Checroune Realty sought – a payout of A. Checroune Realty’s second mortgage with interest – has not been granted, so the respondents have not succeeded.

[6] Mr. Checroune argues that he is the successful party because Mr. Bitton bore the burden of proof and failed to prove his key allegation: that Mr. Checroune agreed to fund the development project. Mr. Checroune brought no counter-application or cross-claim, so he has not failed in his claim for any relief. Mr. Checroune also argues that he is entitled to the costs of the action in any event, which he says Mr. Bitton abandoned and which would not have succeeded anyway, because it rested on the allegation that Mr. Checroune breached a contractual obligation to fund the development project, a claim I rejected.

[7] I agree that Mr. Bitton came into this litigation hoping to charge Mr. Checroune for significant losses related to Mr. Checroune’s failure to fund the development project. He failed to prove those losses.

[8] On the other hand, Mr. Checroune may not have had a cross-application, but he did seek relief in the form of a payout of his mortgage including interest. This issue has not been finally determined, but in my endorsement on remedy, I noted that Mr. Bitton’s mortgage and A. Checroune Realty’s second mortgage must be treated in the same manner. I also noted that the treatment of the mortgages must be consistent with the relationship of Mr. Checroune and Mr. Bitton as business partners, not Mr. Checroune as lender.

[9] Moreover, Mr. Bitton did not formally abandon his action but rather stated that he sought only the relief set out in the notice of application, not the statement of claim. He would not have made out any claim for damages based on the failure to fund the development project, but he did make out a breach of other contractual obligations by Mr. Checroune through A. Checroune Realty, some of which were pleaded in the statement of claim. The oppressive conduct I found is equally conduct in breach of the contract I found Mr. Checroune and Mr. Bitton entered into.

[10] In large part, I rejected both parties’ versions of events when determining the issues. I found them both to be unsatisfactory witnesses. In my view, neither party can claim substantial success in this litigation.

[11] Costs are in the discretion of the court: s. 131(1) of the Courts of Justice Act, R.S.O. 1990, c. C.43. In my view, this is an appropriate case for the parties to bear their own costs. Neither succeeded in advancing their theory of the case. The litigation will accomplish a separation of their interests on fair terms; nothing more. They each wanted to be disentangled from the other. That it took the significant expense of the action and the application in order to achieve that separation is regrettable, but neither side bears the blame to a greater extent than the other.

[12] Accordingly, I order no costs of the litigation up to and including trial and post-trial submissions on remedy and costs. As I noted in my endorsement on remedy, the costs of the reference that I have ordered are within the discretion of the master conducting it. Nothing in these reasons is meant in any way to address those costs.

J.T. Akbarali J.

Date: November 14, 2017