CITATION: Benlezrah v. Dietz, 2017 ONSC 7485

COURT FILE NO.: CV-17-587958

DATE: 20171212

SUPERIOR COURT OF JUSTICE - ONTARIO

RE: ARMANDO BENLEZRAH, IN TRUST, Plaintiff

AND:

GERTRUD DIETZ and HANS DIETZ, Defendants

BEFORE: PERELL J.

COUNSEL: Larry J. Levine, Q.C., for the Plaintiff

HEARD: December 12, 2017

ENDORSEMENT

[1] This is a novel motion in an abortive real estate transaction action. The Plaintiff, Armando Benlezrah, in trust, before the scheduled closing of a $1.5 million purchase of a property in Toronto, instead of seeking a certificate of pending litigation, which would tie up the land, seeks an Order that upon the closing of the transaction on December 15, 2017, the Plaintiff be permitted to pay into court to the credit of this action $210,000 pending a determination of the parties’ entitlement to the funds.

[2] The Plaintiff’s motion is made without notice because personal service has not been made on the defendant vendors Gertrud Dietz and Hans Dietz. Their real estate lawyer has refused to accept service and has indicated that the Dietz’s are ready to close the real estate transaction on December 15, 2017 without any abatement of the purchase price.

[3] The Plaintiff wishes to close the transaction, but he submits that he is entitled to a reduced purchase price, an abatement, because he was deceived when he signed the agreement of purchase and sale by the Defendants’ real estate agent about the size of the property. After signing, he discovered that the property is 14% smaller in size than represented. He says that had he known the truth, he would not have purchased the property for $1.5 million.

[4] In these circumstances, the Plaintiff may or may not have a right of rescission, but he has sued for specific performance with an abatement and seeks the interlocutory relief of being permitted to close (i.e., to achieve specific performance) with $210,000 paid into court for determination later of his entitlement to abatement.

[5] The Plaintiff deposed that in making this request for interlocutory relief, he is not seeking execution before trial but rather seeking only to secure the appropriate abatement as the court may determine. His counsel argues that this is fair to both parties and more equitable than tying up the land with a certificate of pending litigation.

[6] Despite the disavowal of the Plaintiff of seeking execution before judgment, in my opinion, he is doing precisely that and his request for relief is akin to the extraordinary order of a Mareva injunction which freezes the defendant’s assets. In the case at bar, if the transaction closes, the purchase moneys are assets of the Defendants and there is no basis for granting a Mareva injunction on the facts of this case. For this reason alone, I shall not grant the relief requested.

[7] Moreover, there is no precedent in the law of abative real estate transactions for the relief requested. In circumstances like the case at bar of an alleged misrepresentation cause of action, an innocent purchaser has three choices: (1) rescind and refuse to close; (2) close and sue for breach of contract; i.e., for damages; or (3) obtain a certificate of pending litigation and sue for specific performance with an abatement or in the alternative for damages. There is no precedent for the remedy sought in the case at bar.

[8] The Plaintiff relies on the Court of Appeal’s decision in 3999581 Canada Inc. v. 1394734 Ontario Inc., 2007 ONCA 312, where the Court of Appeal reversed a trial judge who had refused to grant an abatement in circumstances similar to the case at bar. The Court of Appeal did not address the issue now before the court of an interlocutory order but noted in its recitation of the facts that a motions judge who coincidentally was later the trial judge on a motion to vacate the certificate of pending litigation had ordered the parties to close with $100,000 paid into court as a potential abatement.

[9] It is not clear whether the motions judge ordered the payment into court because both parties wished to close and only litigate about the abatement, but in my opinion absent the consent of the parties, the motions judge was wrong in law, in effect, ordering specific performance with an abatement by way of interlocutory relief.

[10] An abatement is a subsidiary remedy that may accompany specific performance. I do not have the jurisdiction on an interlocutory motion to order specific performance with an abatement to be determined.

[11] I do not see the new interlocutory remedy proposed by the Plaintiff as fair in the context of a dispute about whether the Plaintiff is entitled to an abatement. Under the current law, the purchaser is not given this choice which avoids the litigation risk of successfully suing for specific performance in order to obtain an abatement. Freezing the defendant’s assets before judgment is not fair to the defendant unless the criteria for a Mareva injunction are satisfied.

[12] Accordingly, I dismiss the Plaintiff’s motion.

PERELL J.

Date: December 12, 2017