Court File and Parties

Court File No.: CV-19-00621077 Motion Heard: June 11, 2019 Superior Court of Justice - Ontario

Re: Gil Shcolyar, Plaintiff/Moving Party And: 1241 Scaw Inc., Defendant/Responding Party

Before: Master J. Josefo

Date of Decision: June 13, 2019

Counsel: A. Paul Gribilas, Counsel for the Moving Party Plaintiff, Email: pgribilas@yalelaw.com Sharon M. Addison, Counsel for the Responding Party Defendant, Email: Sharon.addison@dentons.com

Reasons for Decision and Order

Background—what is the motion about?

[1] Arising out of a failed commercial real estate transaction, the plaintiff Gil Shcolyar (“Shcolyar”) moves with notice to issue a Certificate of Pending Litigation (“CPL”) on title to a property in Toronto identified as 1839 Albion Road, Toronto, Ontario (“Albion”). The defendant 1241 Scaw Inc. (“Scaw”) opposes this relief.

Brief Factual Overview:

[2] Many facts in this matter are disputed. Shcolyar swore an affidavit on June 5, 2019, while Kareem Sethi (“Sethi”), the president of Scaw, swore a responding affidavit on June 9, 2019. Each offer narratives which differ in key respects pertaining to the purported Agreement of Purchase and Sale (“APS”) between Scaw and Shcolyar (more specifically, the special purpose company which Shcolyar established for this transaction).

[3] It is not generally my role on a motion of this nature to make global findings of fact out of the disputed evidence, especially when time has not allowed the cross-examination of the two affiants. At trial, or at an appropriate motion, such factual findings can be made. Yet I am able to draw necessary conclusions and inferences as I consider the evidence. To situate this motion contextually, I also can confidently glean these key facts:

• On March 29, 2019 the parties, with the plaintiff acting through a company specifically incorporated “for the development of the subject property” (paragraph 7 Shcolyar affidavit), entered into an APS for Albion.
• There was a 10 day conditional period in the APS.
• During that period, there were ongoing negotiations involving mainly, but not exclusively, the real estate agents respectively engaged by Shcolyar and Scaw.
• Time was extended on agreement. Emails between the real estate agents continued to be sent and received pertaining to this transaction.
• Ultimately, on April 18, 2019, the deal was at an end.
• Shcolyar asserts that Scaw did not allow the conditions to be fulfilled, and that there was plenty of time for his desired phase two environmental assessment to be completed from mid April 2019 by the closing date of June 28, 2019. Scaw asserts that Shcolyar never met his obligations pursuant to the APS, including the timely waiver of all conditions. Thus, ultimately Scaw sold the property to someone else, for the same price offered by Shcolyar.
• It appears, however, that this new transaction was entered into on April 17, 2019, which the plaintiff argues was premature. Such allegation, however, will have to be determined by the trial (or summary judgment motion) Judge.

[4] Following the transaction being at an end, Shcolyar registered a Caution on title, to which step Scaw objected, and the matter turned litigious.

Discussion: the Law and Evidence:

[5] Counsel and I discussed the case-law in their respective factums. We agreed that, at this stage, the law is fairly well settled. Thus, I will not review in chapter and verse all what counsel well wrote in their briefs, or what they well said in their submissions. After all, it was agreed that the greater challenge is applying the law to the facts of this case.

[6] Section 103 of the Courts of Justice Act (“CJA”), in conjunction with Rule 42, provides for the authority to issue and discharge a CPL. The test to obtain or discharge a CPL involves a number of hurdles. These are neatly summarized in Perruzza v. Spatone, 2010 ONSC 841, [2010] O.J. No. 493, ONNSC 841, a decision upon which both counsel relied. First, the moving party must demonstrate a reasonable claim to an interest in land. If there is a triable issue that there is an interest in land, this threshold has been met.

[7] In this case, the dispute clearly involves land. The threshold is met.

[8] Other factors from Peruzza, and from Bains v. Khatri 2019 ONSC 1401, include:

• whether the plaintiff is a shell corporation,
• is the land is unique,
• the intention of the party acquiring the land,
• if there is an alternative remedy in damages, and the ease or difficulty in calculating damages,
• would damages be a satisfactory remedy,
• the presence/absence of a willing purchaser,
• the harm to each party if the CPL is, in this case, granted or not.

[9] The principles that emerge from Smith v. Vankoughnet and Rasmussen 2017 ONSC 4293 also assist. That case involved the failed purchase of lakefront property in cottage country. Ultimately, Justice DiTomaso declined to issue a CPL. Such was available, the court found, only if substitute land was not readily available. Damages must also be inadequate to compensate the moving party, and the onus to establish such inadequacy rests with the moving party. The land must also be shown to be unique.

[10] Applying the legal principles to this case, Ms. Addison emphasized that the plaintiff established a shell corporation for this transaction. Indeed, he did—that is not disputed. The affidavit of Shcolyar describes his many years developing and operating gas stations, and confirms that he owns “through various holding companies, over forty gas station properties throughout Ontario”.

[11] Individuals are free to structure their affairs in a way that they believe will be advantageous to them, through all legal means. It is legal to use special purpose companies as the plaintiff did in this case. Certainly, Scaw had no objection on that basis when it initially entered into the APS. The unchallenged evidence is that the plaintiff has an established business track-record. Accordingly, the plaintiff’s use of a shell corporation in this case does not factor into my decision-making.

[12] The plaintiff swears that “damages are not reasonably calculable, nor can monetary damages fully compensate me”. Respectfully, almost any litigant can make a similar argument. However, real estate assessments are routinely done, experts routinely testify, even about complex financial transactions and the calculations of damages arising there-from, and courts routinely award damages to successful litigants. In that regard, I adopt what my colleague Master Sugunasiri wrote in Triple Eight Asset Management Inc. and Greco 2019 ONSC 2855:

Courts are routinely determining damages for breach of contract with respect to property. While there are variables, there is nothing in the record to suggest that damages could not be determined, perhaps with the assistance of an expert.

[13] Monetary damages may not the remedy of choice for some litigants, yet such can, in the right case, provide fair compensation for a breach of contract or a tort, as the case may be. While the plaintiff subjectively believes that money cannot fully compensate him, there is no reliable evidence, from a chartered accountant or valuator for example, that money damages are, in this case, incapable of calculation, or that such calculation would be difficult.

[14] Moreover, the plaintiff at paragraph 24 of his affidavit, attests to his commercial property investments over the last 17 years involving the “purchase, sale, operation and development of gas station properties…[and his] substantial experience and knowledge about gas stations”. Based on that acknowledged experience, I conclude that Shcolyar himself could likely well estimate or quantify the degree of his loss, if he is not allowed specific performance as is claimed in the within litigation.

[15] Accordingly, damages likely are a viable alternative remedy in this case. These likely could be calculated to properly assess the value of the property, including after potential improvements to it, if necessary. This factor thus favours the defendant.

[16] Scaw sold the property to another purchaser. I am informed that this transaction is scheduled to close later this month. If that transaction is cancelled by the issuance of a CPL, harm will likely result to Scaw. I am sympathetic to the submission of Mr. Gribilas, that this would then be harm of Scaw’s own making given it, pursuant to the plaintiff, acted duplicitously by selling the property twice. Yet, as I balance all these factors, it is one that, to some degree (taking into account that, if there is a problem it arguably would be of its own making), favours the position of the defendant.

[17] I now address what I remarked at the hearing was an important issue: uniqueness of the property; and what the plaintiff intended when he purchased the property.

[18] Shcolyar, in his affidavit, testified that the property “is extremely rare and very well suited for a project [he] has been hoping to construct for some time” (paragraph 25). He then further explains why in that paragraph and in subsequent paragraphs, describing the desirable attributes of the property. Yet, as acknowledged at the hearing, the description of the zoning in the plaintiff’s materials, which description underpinned at least in part the argument by Shcolyar of why Albion was unique, was incorrect. The property is not zoned “Industrial-Residential” as the plaintiff affirmed. Mr. Gribilas acknowledged it is zoned “Employment-Industrial”, as Sethi deposed at paragraph 7 of his affidavit.

[19] Pursuant to the map attached to the defendant’s motion record, and as Sethi deposed at paragraph 41 of his affidavit, it does appear that “there are numerous areas within Toronto that are zoned Employment-Industrial”. The zoning is therefore not unique.

[20] That the property is a large one, already suitable for use as a gas station with a two story building, convenience store, and quick-serve restaurant, in my view also does not rise to the required level of uniqueness. While Albion may have more of these desirable attributes than some or even many of Shcolyar’s other properties, these attributes, either alone or in combination, do not make the property unique. I so conclude because a building of two stories may be constructed, and there is no evidence that such construction would be rare or impossible on other properties (such evidence in any event would arguably defy common sense). Parcels of land may be, if necessary and desired to accomplish an objective, purchased and combined to allow for more parking, with zoning changes sought if and as necessary. After all, that is all part of what Developers typically do.

[21] Shcolyar does not specifically affirm that he intended to buy and run this property. Rather, he describes Albion as a “project”, albeit with “a great deal of flexibility in the manner in which it can be developed” (paragraphs 25 and 26, Shcolyar affidavit). Yet, with all its attributes, it is thus still one project amongst the many other projects which Shcolyar has pursued and developed during his successful career as a developer, operator, and buyer and seller, of gas station properties. Obviously, the plaintiff has not been waiting for just this one piece of property. He has successfully developed, operated, and sold other properties over many years, even if these may have been smaller, or without a building, or absent the parking facilities found at Albion.

[22] That this project offers greater flexibility to develop, does not take away its essential element as a commercial property, for development and thus, for profit. This does not mean that a commercial property can never be unique. Of course it can be, given the right facts, as in Mariani v. 7783963 Ontario Ltd., and also given the intention of the purchaser, as discussed in the case I reference below.

[23] Contrary to the submission of Mr. Gribilas, the intention of the purchaser vis-à-vis the property is a relevant factor. In Northfield v. North American, 2015 ONSC 7352, that case I find turned at least in part on the fact that the intention of the purchaser was to not only develop, but also to operate (lease out), a commercial shopping plaza. The intention of the purchaser in that case was not just to develop any old property for profit. Rather, it intended to manage/operate this one specific property. The unique location of that property was important to its ultimate expected success, which is at least partly why the purchaser wanted that property; again, not to immediately sell it for profit, but instead to make use of or operate it, with its unique attributes. In that regard, Justice Edwards made the following observation:

“Here, the purchaser had a specific use in mind, namely the rezoning of the property in order to build and lease a commercial shopping plaza. There is evidence that the property is located in a pivotal and desirable location. The purchaser expended considerable effort to rezone the property to allow for its desired use. In addition, a substitute property was not readily available given the unique location within the City of Waterloo and its zoning.”

[24] In this within case, by contrast, the evidence of the intention of Shcolyar falls short. He does not state that he intends to run this operation. He only deposes that building “could” be used as a facility to manage all of his properties. Yet of course, that begs the question: what is so special about that location? Would not any office building, on any site, do as well?

[25] As discussed in Smith v. Vankoughnet and Rasmussen, It is unlikely that this property with a gas station, a small building, with space for parking and a restaurant, has qualities that “cannot be reasonably duplicated elsewhere” [emphasis added]. In assessing the assertion to the contrary, I again note the ordinariness of the attributes of Albion. Considering the matter, I find such attributes could likely be duplicated elsewhere, or built, as needs be.

[26] Overall, I find that Shcolyar understandably hedges his bets in his affidavit. He might have, at the end of the day if he had acquired Albion, run it himself and used it in whole or part for his own purposes. Yet then again, he may not have done. After all, he is, as he has sworn, a Developer. He is used to buying and selling properties. For example, he testified at paragraph three of his affidavit that he at one time developed 70 gas stations, yet now owns (only) 40. There is also no evidence of his having a personal attachment to any of his specific commercial properties, as for example, a would-be purchaser of a residential property may have if he or she finds something unique.

[27] None of the above should be taken as my downplaying the potential damages which Shcolyar may be able to prove arose out of the alleged breach of contract by Scaw. If such claim is ultimately capable of proof, the potential losses arising from the breach could be quite significant. Yet, again, such losses are in my view capable of compensation via the usual remedy of money damages.

[28] When balancing all the issues and factors together, ultimately on the equities of the case, I conclude that the land is not unique, other than as a sound investment which the purchaser could have made, for the various reasons stated herein. Notwithstanding the already described attributes of the property, in my view, summarizing my reasoning,

• the harm that would likely result to the defendant if I issued a CPL (despite the valid point that defendant arguably caused its own problems in that regard),
• no evidence of harm to the plaintiff other than a forfeited economic opportunity, perhaps loss of some convenience, and the denial of a sound business opportunity,
• the ability of money damages to readily compensate the plaintiff for these and other losses resulting from the alleged breach of contract by the defendant,

all lead to my decision to deny the relief sought by the plaintiff. I do not issue a CPL. It also follows that the Caution on Title should be removed.

Costs:

[29] Costs were not argued at the motion. In my preliminary view, in the circumstances of this motion, costs should be in the cause, reserved to the Judge who ultimately disposes of the action. I so suggest because, to paraphrase Mr. Churchill, the parties are not at the end of this case. They are not even at the beginning of the end. Instead, at this point the parties are only at the end of the beginning, with which party ultimately prevailing and meritorious a long way from knowing.

[30] If costs for this motion are determined by me, for example, I could award costs to the defendant. Yet Scaw could later be found to have breached its contractual obligations to the plaintiff. In that result, Scaw nevertheless obtains costs from the plaintiff, despite the defendant (allegedly) causing damages. Or, after submissions, I may award costs to the plaintiff, who is later found not to have established a breach of contract. In that result, the defendant pays costs to the plaintiff when defendant’s conduct was judged correct. For these reasons, I preliminarily suggest that, absent the parties coming to their own agreement regarding costs, costs be in the cause, decided when the ultimate outcome is known.

[31] If the parties disagree with leaving costs in the cause, and wish to argue costs, then I will hear their submissions. A tele-conference may be arranged through ATC Mr. Backes, by emailing him at david.backes@ontario.ca or by phone, 416-326-1083.

Date: June 13, 2019