Court File and Parties

COURT FILE NO.: CV-17-00569023-00CP DATE: 2019/04/23 ONTARIO SUPERIOR COURT OF JUSTICE

BETWEEN:

Ashleka Persaud and Ten Eight Vacations Ltd., Plaintiff – and – Talon International Inc., Defendant

COUNSEL: Stephen Turk, for the Plaintiff Nancy J. Tourgis, for the Defendant

Pursuant to the Class Proceedings Act, 1992

HEARD: April 16, 2019

PERELL, J.

REASONS FOR DECISION

[1] Pursuant to Rules 1.04, 2.01, 30 and 37 of the Rules of Civil Procedure, in this conditionally certified class action under the Class Proceedings Act, 1992, the Representative Plaintiffs, Ashleka Persaud and Ten Eight Vacations, bring a motion for an Order requiring the Defendant, Talon International Inc., to disclose the amount in dollars represented by insurance policies and/or deposits held by Talon's real estate lawyers of funds paid as deposits to Talon by all potential members of the Class.

[2] The Class Members sue to rescind their agreements to purchase Hotel Units in a mixed-use condominium project in downtown Toronto formerly known as the Trump International Hotel and Tower Toronto. Beginning almost twenty years ago, the project was developed by Talon, and it was comprised of 118 Residential Units and 261 Hotel Units. The Class Members sue for a refund of the deposits they paid. All of the Hotel Unit deposits are insured pursuant to an insurance policy issued by Lombard Canada Ltd. The policy remains in place.

[3] The class is defined as:

all purchasers, except "Excluded Purchasers", defined below, of hotel condominium units (the "Hotel Units") in the hotel portion (the "Trump Hotel") of the Trump International Hotel and Tower (the "Trump Tower") who: (a) signed or who had signed on their behalf agreements of purchase and sale with the developer; the Defendant ("Talon"); (b) paid or who had paid on their behalf deposits or portions of deposits to Talon; and (c) did not complete their transactions with Talon. The "Excluded Purchasers" are: (a) purchasers against whom Talon has obtained a judgment forfeiting their deposit(s); and (b) purchasers who have obtained a judgment against Talon for repayment of their deposit(s).

[4] The precondition for certification is that the Representative Plaintiffs, Ashleka Persaud and Ten Eight Vacations Ltd., replace their current Class Counsel, Levine, Sherkin, Boussidan P.C., with new Class Counsel. The Representative Plaintiffs choice of Class Counsel must be approved by the Court.

[5] Levine, Sherkin, Boussidan P.C., was disqualified in acting as Class Counsel because it was also acting for a group of approximately twenty individual purchasers who would opt out of the class action to pursue individual claims for a return of the deposit.

[6] Assisted by Levine, Sherkin, Boussidan P.C. the Representative Plaintiffs have found it difficult to retain new Class Counsel.

[7] They submit that the difficulty is that new Class Counsel requires information about the recoverable monetary value of the Class Members’ claims before taking on the risk of a class action.

[8] As it happens, Talon itself is now insolvent and the only recoverable asset is the deposits. Pursuant to s. 81 of the Condominium Act, 1998 and its regulations, the Class Members’ deposits are either being held in trust by Talon's lawyers, the Toronto law firm of Harris, Sheaffer LLP, or are insured deposits.

[9] The Representative Plaintiffs believe that 204 of the Hotel Units were under contract and that fifty transactions closed, leaving 154 Hotel Units with unperformed contracts where deposits were paid in whole or in part. Levine Sherkin Boussidan P.C. is aware of approximately 25-30 Hotel Units that have been the subject of litigation, but the firm is not aware of the disposition of the deposits in the other 124-129 Hotel Units.

[10] Levine Sherkin Boussidan P.C. estimates that the average deposit paid to Talon ranged between $200,000 to $250,000, and thus the law firm believes that the value of the deposits for the 124-129 Hotel Units is between $24.8 million to $32.25 million. However, the law firm is uncertain of the veracity and reliability of this estimate because it alleges that during the argument of the certification motion, counsel for Talon stated that the amount of money in dispute was only $2.0 million.

[11] In the effort to retain new Class Counsel for the Representative Plaintiffs, Levine Sherkin Boussidan P.C. asked Talon's counsel to confirm that between $24.8 million to $32.25 million was available should the Class Members be successful in the action.

[12] Counsel for Talon confirmed that all of the deposits that Talon received from purchasers were insured by Lombard Canada Ltd., whose parent organization is Northbridge Insurance, which continues to administer the insurance policy. Talon’s counsel confirmed that the insurance policy remains in good standing and that Talon continues to pay the premiums.

[13] Talon’s Counsel, however, refused to provide any additional information that would quantify the value of the recoverable deposits. Talon’s Counsel submitted that this information was covered by solicitor-client privilege or litigation privilege. Talon’s Counsel also denied that any representation was made during the certification motion that the amount of the money in dispute was only $2.0 million.

[14] For present purposes, I need not resolve the credibility dispute about what was said at the argument of the certification hearing because nothing would turn on it.

[15] If the statement alleged to have been made by Talon’s counsel was made, then it would have been a statement about his legal opinion about the value of potentially successful claims. As developed at the certification motion, Talon had a theory that would have differentiated the Class Members into groupings that, for one reason or another, arguably would not or could not have successful claims.

[16] The background information about Counsel’s legal opinion may or may not be privileged, but for present purposes, Class Counsel’s opinion was not and is not what is being sought by the Representative Plaintiffs. What the Representative Plaintiffs and current Class Counsel are actually seeking is raw data from which they can form their own legal opinion about successful claims. Thus, nothing turns on whether Talon’s counsel expressed a legal opinion at the certification motion.

[17] Very little if anything also turns on Rules 1.04, 2.01, 30 and 37 of the Rules of Civil Procedure, which are the rules that the Representative Plaintiffs rely on in support of their motion for disclosure of the amount in dollars represented by insurance policies and/or deposits. In the circumstances of the immediate case the pertinent legal authorities are sections 5(3) and 12 of the Class Proceedings Act, 1992, which state:

Evidence as to size of class

5. (3) Each party to a motion for certification shall, in an affidavit filed for use on the motion, provide the party’s best information on the number of members in the class.

Court may determine conduct of proceeding

12. The court, on the motion of a party or class member, may make any order it considers appropriate respecting the conduct of a class proceeding to ensure its fair and expeditious determination and, for the purpose, may impose such terms on the parties as it considers appropriate.

[18] In the immediate case what Levine Sherkin Boussidan P.C. and the Representative Plaintiffs are actually seeking are two items of information that only coincidentally are related to the insurance policies for the deposits.

[19] What they are actually seeking are: (1) copies of the agreements of purchase and sale or assignments of the agreements for which deposits or insurance policies are being held; and (2) confirmation of the amounts of the deposits paid respectively for each of those agreements of purchase and sale. This is raw data, not interpretative data.

[20] This information (which is not about resolved claims about the deposits for which no funds or insurance policies are being held) is not privileged information. It is information that would be disclosed at Talon’s examinations for discovery or during settlement discussions. The information ought to have been disclosed at the certification motion pursuant to s. 5(3) of the Class Proceedings Act, 1992, and I have the jurisdiction under s. 12 of the Act to order that this information be produced now.

[21] I, therefore, grant the Representative Plaintiffs’ motion without costs, and I order Talon to produce: (1) copies of the agreements of purchase and sale or assignments of the agreements for which deposits or insurance policies are being held; and (2) confirmation of the amounts of the deposits paid respectively for each of those agreements of purchase and sale.

[22] I make the Order without costs because although the Representative Plaintiffs were the successful party, they succeeded on a different basis than asserted in their Notice of Motion or factums and because this motion would not have been necessary if both parties had complied with s. 5 (3) of the Class Proceedings Act, 1992.

Perell, J. Released: April 23, 2019