COURT FILE NO.: CV-21-00000117-00
DATE: 2021 06 24
SUPERIOR COURT OF JUSTICE - ONTARIO
RE: Global West Development Ltd., Plaintiff
AND:
16380 Jane Street Inc., QEW-EX64-10A Inc., Riaz Malik, Vikram Sundar, Tahira Malik and Purvi Patel, Defendants
BEFORE: Doi J.
COUNSEL: Evan Moore, for the Plaintiff
Philip Wright, for the Defendants, QEW-EX64-10A Inc., Riaz Malik and Vikram Sundar
Jonathan Wright and Megan Molloy, for the Defendants, 16380 Jane Street Inc., Tahira Malik and Purvi Patel
HEARD: April 7 and 9, 2021
ENDORSEMENT
Overview
[1] The moving Plaintiff, Global West Development Ltd. (“Global Development”), seeks leave to register a certificate of pending litigation (“CPL”) on a property at 4994 North Service Road in Beamsville, Ontario (the “Beamsville Property”) based on an interest under a joint venture agreement dated March 1, 2016 (the “Beamsville JVA”) that it purportedly had with the Defendant QEW-EX64-10A Inc. (“QEW Inc.”). The Defendants oppose the motion and claim that Global Development fabricated the Beamsville JVA in order to assert a fictitious claim to an interest in the Beamsville Property.
[2] In its cross-motion, QEW Inc. seeks to discharge a caution that Global Development registered on title to the Beamsville Property under s. 71 of the Land Titles Act, RSO 1990, c. L.5, and other corollary relief. Although Global Development claims that it was entitled to register the caution in light of its alleged interests under the Beamsville JVA, QEW Inc. claims that the caution has expired and should be removed.
[3] As set out below, I am satisfied that Global Development’s motion for leave to issue a CPL on the Beamsville Property should be granted. In addition, I find that QEW Inc.’s cross-motion to discharge the caution on title to the Beamsville Property should be granted.
Parties
[4] The Plaintiff, Global Development, is a property development company that acquires, develops and restores commercial gas stations. Global Development is run by Mirza Chaudhary and Masud Raja.
[5] The Defendant, 16380 Jane Street Inc. (“Jane Inc.”) was created to acquire and develop a gas station at 16380 Jane Street in King, Ontario (the “Jane Property”). Later on, the other corporate Defendant, QEW Inc., was set up to acquire and develop the Beamsville Property, which it purchased using sale proceeds from the Jane Property. The Defendants, Riaz Malik, Vikram Sundar, Tahira Malik and Purvi Patel, were involved with Jane Inc. and QEW Inc., respectively.[^1]
Background
[6] Most of the facts in this case are in dispute. Each side has a competing narrative that differs in several key respects. On this motion, the court’s role is not to resolve the conflicting evidence. However, to put matters into context, I shall mention several facts and certain contentious issues that emerge from the record.
[7] During a meeting in May 2015, Mr. Raja and Mr. Malik had initial discussions about an investment opportunity. Later on, Mr. Raja met with Mr. Malik and his associates, Mr. Sundar and Kiran Patel, to discuss an opportunity to invest in a development project to restore a gas station and a retail kiosk at the Jane Property. Intrigued, Mr. Malik, Mr. Sundar and Mr. Patel decided to invest in the Jane Property project. They invited others to invest in the development project with them, and gathered sufficient funds to purchase the property. On June 18, 2015, they arranged to incorporate Jane Inc. to purchase and develop the Jane Property.
[8] As the Defendants would come to learn, the Jane Property was the subject of an existing agreement of purchase and sale dated May 28, 2015. The purchaser to the agreement was Noreen Asghar, Mr. Chaudhary’s wife, who had agreed to buy the Jane Property in trust for a company to be incorporated. The agreement of purchase and sale listed Mr. Chaudhary and Global West Realty Limited (“Global Realty”) as the realtor and brokerage for both the buyer and seller to the transaction. Mr. Chaudhary and Mr. Raja operated Global Realty, a real estate brokerage, and Global Development, a development company, from the same office premises.
[9] On July 30, 2015, Jane Inc. acquired the Jane Property. Its purchase price was $945,000.00.
[10] Global Development claims that it entered into a joint venture agreement with Jane Inc. on July 31, 2015 (the “Jane JVA”) to develop the Jane Property. Relying on the terms of this alleged agreement, Global Development claims a 50% share of the sale profits for the property and/or a 50% right to title of the property and a right of first refusal to buy the property, among other things. According to Global Development, the Jane JVA featured the same terms which appear in the standard joint venture agreement that it has used for all of its gas station development projects.
[11] The Defendants claim that the Jane JVA was fabricated and contains terms that Jane Inc. did not agree to. They allege that Jane Inc. verbally agreed for Global Realty to have 50% of the net sale proceeds from the Jane Property only after it conducted a clean-up of the property (i.e., to remediate any environmental issues), secured a service contract with a gas station operator, secured an agreement with a coffee and donut chain to open a store at the property, and obtained municipal site plan approval for the development project.
[12] Each side has a different perspective of how the Jane Property development project either progressed or did not advance as expected.
[13] Around October 2015, Global Development came across a new development opportunity that involved the Beamsville Property. Mr. Chaudhary and Global Realty were the realtor and real estate brokerage for the buyer, who had agreed to purchase the property for $4.05 million in trust for a corporation to be incorporated. At a certain point in time, which is disputed, Mr. Chaudhary and Mr. Raja apparently spoke with Mr. Malik, Mr. Sundar and Mr. Patel about this opportunity. How or when these talks were held and what was discussed is disputed. In the end, Mr. Malik, Mr. Sundar and Mr. Patel decided to buy the Beamsville Property and arranged to have QEW Inc. incorporated to acquire title to the property.
[14] In or around November 2015, Mr. Chaudhary informed Mr. Malik and Ms. Malik of a potential buyer for the Jane Property. Thereafter, Jane Inc. decided to sell the Jane Property for $1.8 million under an agreement of purchase and sale dated November 19, 2015. The deal was scheduled to close on March 30, 2016, and was conditional on Jane Inc. completing remediation work, transferring supply and franchise arrangements to the buyer, procuring environmental compliance reports, and obtaining municipal site plan approval for the development project. The buyer negotiated a $200,000.00 holdback to secure these conditions. The parties disagree on what was done to fulfill these conditions. Ultimately, the deal closed without the conditions being met which resulted in litigation.
[15] Global Development claims that the Jane Property sale was sold because QEW Inc. needed its sale proceeds to fund the purchase of the Beamsville Property. The Defendants claim that arrangements to sell the Jane Property already had been made before Mr. Malik, Mr. Sundar and Mr. Patel learned of the Beamsville Property and decided to buy it. That said, the Defendants claim that Mr. Chaudhary and Mr. Raja promised to conclude the Jane Property sale by January 15, 2016 so that its sale proceeds would be available for use in purchasing the Beamsville Property. Global Development denies this and claims that the sale of the Beamsville Property, which closed on February 29, 2016, was always expected to conclude before the sale of the Jane Property closed, which occurred on March 31, 2016. Ultimately, QEW Inc. took out a bridging loan to close its purchase of the Beamsville Property. The parties disagree on who should bear the cost of this bridging loan.
[16] Global Development claims an interest in the Beamsville Property under the terms of the alleged Beamsville JVA which are substantially similar to the terms found in the alleged Jane JVA. It claims that the Beamsville JVA was executed on March 1, 2016 during an in-person meeting at its offices when Mr. Chaudhary allegedly signed the agreement for Global Development, and when Mr. Sundar and Mr. Patel are said to have signed the agreement on behalf of QEW Inc. that day. In support of its position on this point, Global Development relies on an affidavit by Vengayi Kanyere, a paralegal who shares office space with Mr. Chaudhary and Mr. Raja, who swears that he witnessed the handwritten signatures that appear on the Beamsville JVA.
[17] The Defendants claim that the Beamsville JVA was forged and that its purported signatures for Mr. Sundar and Mr. Malik were fraudulently copied from their signatures on other records. They allege that QEW Inc. had a verbal agreement by which Global Realty was to develop the Beamsville Property and obtain financing, appraisals and necessary municipal site plan approvals for the property, among their other responsibilities. In return, Global Realty was to share half of the net sale proceeds for the property. They claim that Mr. Sundar circulated a draft agreement to memorialize the terms of this verbal contract, but that Mr. Chaudhary and Mr. Raja declined it by saying that a written agreement was unnecessary. When the Jane Property sold, proceeds from its sale were redirected to QEW Inc. to cover the bridging loan and interest. The ownership of these proceeds of sale is disputed, as is the related issue of whether Mr. Chaudhary, Mr. Raja and Global Realty met the conditions that entitled them to share in the sale proceeds from the Jane Property.
[18] Both sides disagree on how the development project for the Beamsville Property was to be financed. Global Development claims that the funding strategy combined a vendor take back mortgage and a second syndicated mortgage, and later included its own funds after QEW Inc. struggled to meet its payment obligations for the venture. In contrast, the Defendants claim that the funding strategy contemplated parcels of the Beamsville Property being severed and sold to finance a gas bar and retail amenities on the remaining property, but that this plan proved unworkable and triggered a pressing need to secure other funding. Frustrations surfaced as the parties disagreed over Global Development’s efforts to secure refinancing while QEW Inc. depleted its remaining funds. Although negotiations ensued for Global Development to buy-out QEW Inc.’s interest in the Beamsville Property, an agreement was not reached.
[19] QEW Inc. made inquires to secure alternate financing. In doing so, it apparently learned of serious irregularities attributed to Mr. Chaudhary or Mr. Raja that involved the use of a fictitious property appraisal report, a forged municipal site plan approval document, and other falsified business records, ostensibly to inflate the actual value of the Beamsville Property. For its part, Global Developments denies any wrongdoing.
[20] On May 15, 2020, QEW Inc. sent a letter to Global Realty to give notice of its intention to sever their business relationship. Whether or not this correspondence was received is disputed.
[21] On May 26, 2020, the Jane Property litigation settled on terms that gave Jane Inc. a portion of the holdback funds. Global Development takes issue with how Jane Inc. settled the litigation, and claims an entitlement to these funds. The Defendants deny that Global Development is entitled to a share of the funds and claim that the terms of the verbal agreement to develop the Jane Property were not satisfied by Mr. Chaudhary, Mr. Raja, or Global Realty.
[22] In September 2020, QEW Inc. refinanced the Beamsville Property with a $5.96 million mortgage which it arranged without Global Development’s knowledge or involvement. QEW Inc. then arranged for a realtor to list the property for sale with an asking price of $8.5 million. The listing came to Global Development’s attention in or around late-October 2020.
[23] On October 29, 2020, Global Development registered a notice on title to the Beamsville Property by asserting its rights under the Beamsville JVA. Thereafter, it brought this action for specific performance of the agreement along with an alternative claim for damages. QEW Inc.’s realtor withdrew its sales listing for the Beamsville Property.
CPL Legal Principles and Analysis
[24] The jurisdiction to grant a CPL is found at s. 103 of the Courts of Justice Act, RSO 1990, c. C.43. Under Rule 42.01(1), a registrar may issue a CPL with leave of the court.
[25] The test for granting a CPL is well established. Master Glustein, as he then was, described this test in Perruzza v. Spatone, 2010 ONSC 841 at para 20:
(i) The test on a motion for leave to issue a CPL made on notice to the defendants is the same as the test on a motion to discharge a CPL (Homebuilder Inc. v. Man-Sonic Industries Inc., 1987 CarswellOnt 499 (S.C. – Mast.) (“Homebuilder”) at para. 1);
(ii) The threshold in respect of the “interest in land” issue in a motion respecting a CPL (as that factor is set out at section 103(6) of the Courts of Justice Act, R.S.O. 1990, c. C. 43) is whether there is a triable issue as to such interest, not whether the plaintiff will likely succeed (1152939 Ontario Ltd. v. 2055835 Ontario Ltd., 2007 CarswellOnt 756 (S.C.J.), as per van Rensburg J., citing Transmaris Farms Ltd. v. Sieber, [1999] O.J. No. 300 (Gen. Div. – Comm. List) at para. 62);
(iii) The onus is on the party opposing the CPL to demonstrate that there is no triable issue in respect to whether the party seeking the CPL has “a reasonable claim to the interest in the land claimed” (G.P.I. Greenfield Pioneer Inc. v. Moore, 2002 CanLII 6832 (ON CA), 2002 CarswellOnt 219 (C.A.) at para. 20);
(iv) Factors the court can consider on a motion to discharge a CPL include (i) whether the plaintiff is a shell corporation, (ii) whether the land is unique, (iii) the intent of the parties in acquiring the land, (iv) whether there is an alternative claim for damages, (v) the ease or difficulty in calculating damages, (vi) whether damages would be a satisfactory remedy, (vii) the presence or absence of a willing purchaser, and (viii) the harm to each party if the CPL is or is not removed with or without security (572383 Ontario Inc. v. Dhunna, 1987 CarswellOnt 551 (S.C. – Mast.) at paras. 10-18); and
(v) The governing test is that the court must exercise its discretion in equity and look at all relevant matters between the parties in determining whether a CPL should be granted or vacated (931473 Ontario Ltd. v. Coldwell Banker Canada Inc., 1991 CarswellOnt 460 (Gen. Div.); Clock Investments Ltd. v. Hardwood Estates Ltd., 1977 CanLII 1414 (ON SC), 1977 CarswellOnt 1026 (Div. Ct.) at para. 9).
[26] The threshold issue is whether there is a triable issue in respect of the moving party’s claim to an interest in land: Pauwa North America Development Group Co. Ltd. v. Skyline Port McNicoll (Development) Inc., 2021 ONSC 18 (Master) at para 37; 2254069 Ontario Inc. v. Kim, 2019 ONSC 5003 at para 21; G.P.I. Greenfield Pioneer Inc. v. Moore (2002), 2002 CanLII 6832 (ON CA), 58 OR (3d) 87 (CA) at para 20. The threshold issue is not whether the claim will likely succeed, but whether a triable issue exists: Perruzza at para 20(ii). The triable issue must relate to an interest in land as a possible remedy at trial, and not simply a right to an award of damages: Khan v. Taji, 2020 ONSC 6704 at para 50.
[27] The evidentiary bar for the threshold issue is low: Saggi v. Grillone, 2020 ONSC 4140 at para 45; Pauwa at para 38; Guz v. Olszowka, 2019 ONSC 5308 at para 49. In determining the threshold issue, the court should assess the whole of the evidence without deciding disputed issues of fact or credibility: Guz at paras 28-29; Correct Group Inc. v. Barrie (City), 2013 ONSC 4477 at para 10. Nevertheless, the court may critically consider the pleadings and affidavit evidence in the record: Damphousse v. Gosset, 2020 ONSC 5962 at para 18, citing Interrant at para 15.
[28] If the triable issue threshold is satisfied, the court will then consider whether it is just and equitable to grant a CPL having regard to all of the relevant matters between the parties: Pauwa at para 39; Gonder v. Gonder Estate, 2010 ONCA 172 at para 58, citing Clock Investments Ltd. v. Hardwood Estates Ltd. et al. (1977), 1977 CanLII 1414 (ON SC), 16 OR (2d) 671 (Div Ct) at 674. In determining this, the court may consider a number of non-exhaustive factors: 572383 Ontario Inc. v. Dhunna, [1987] OJ No 1073 (Master) at paras 10-18; Gong v. Newhaus Management Ltd., 2021 ONSC 531 at para 57; Kim at para 31; Van v. Qureshi, 2011 ONSC 5746 at para 60. Even where the moving party has a potential case for a remedy regarding an interest in land, the court may refuse a CPL where it would be unjust to order it: Khan at para 51; Bobbie Mann v. Marcus Chac-Wai, 2017 ONSC 3416 (Master) at para 5. Ultimately, the court must consider the equities to achieve a just result.
[29] In exercising its discretion on a CPL motion, the court should be mindful of the purpose and impact of this relief:
The purpose of a CPL is to provide notice to the world that there is an issue with respect to the title of the property and/or that there is an interest claimed in the property. Once registered, the CPL prevents a subsequent purchaser from asserting the defence of bona fide purchaser for value without notice. It has the same general effect on a subsequent encumbrancer. This has profound consequences for the titleholder; the CPL effectively acts like an injunction because virtually no one will complete a purchase of the property with an outstanding unresolved claim looming. This impact has been judicially recognized: see Matheson v. Gordon, 2004 CanLII 28475 (ON SC) at para. 22; Bowbriar Investments Inc. v. Wellesley Community Homes Inc., [1977] O.J. No. 66 (S.C.) at para. 9.
A CPL Should be Ordered
[30] Having regard to the totality of the record, I am satisfied that a CPL should issue in this case. As set out below, I find that Global Development has satisfied the threshold requirement by establishing a triable issue with respect to its claim to an interest in the Beamsville Property. I also find that the equities favour a CPL being granted.
a. There is a Triable Issue Regarding an Interest in Land
[31] From the evidence on this motion, I am satisfied that a triable issue exists with respect to Global Development’s claim to an interest in the Beamsville Property.
[32] In its statement of claim, Global Development claims an interest in the Beamsville Property under the alleged Beamsville JVA. Among other things, the purported agreement entitles Global Development to a 50% share in the profit or loss after the land and development costs are factored, a 50% right to title of the property, a right of first refusal, and a right to become a 50% shareholder of QEW Inc. (i.e., giving it a 50% legal or beneficial interest in the property). The Defendants acknowledge that Global Development met the threshold of showing a triable issue for its claim to an interest in land based on the alleged venture agreement.
[33] In addition, Global Development claims a beneficial interest to the Beamsville Property by asserting a constructive or resulting trust based on its purported contributions to purchase the property. It claims that its share of the sale proceeds for the Jane Property were used by QEW Inc. to purchase the Beamsville Property and acquire title. It also contributed funds to cover a portion of the costs for the Beamsville Property, which the Defendants concede. It further claims that its work to develop the property caused QEW Inc. to be enriched. It follows that Global Development has a triable claim to a beneficial interest in the property: Cambone v. Okoakih, 2016 ONSC 792 at paras 172-174. Its beneficial interest claim supports its claim for a CPL: Huntjens v. Obradovic, 2019 ONSC 4343 at para 38; Boal v. International Capital Management Inc., 2018 ONSC 2275 at para 65; Avan v. Benarroch, 2017 ONSC 4729 (Master) at paras 24-26.
[34] Despite the conflicting evidence and credibility issues in the record on this motion, I am satisfied that Global Development has met the low threshold of showing a triable issue in respect of its claim to an interest in the Beamsville Property: Saggi at para 45; Guz at para 49. Although some of the evidence adduced by Global Development may be weak, it is not the court’s role at this early stage of the proceeding to resolve disputed facts or assess credibility: Guz at paras 28- 29; Correct Group at para 10. On this motion, the court is not required to determine whether Global Development will succeed with its claims but need only decide whether there is a triable issue as to its interest in the property. From the evidence before me, I accept that Global Development has shown that such a triable issue exists: Khan at para 50; Perruzza at para 20(ii)
b. The Equities Favour a CPL
[35] Turning to the equities in this case, I am satisfied that it would be just and equitable for the court to grant a CPL.
[36] In balancing the equities, I have considered the following non-exhaustive Dhunna factors: (i) whether the plaintiff is a shell corporation, (ii) whether the land is unique, (iii) the intent of the parties in acquiring the land, (iv) whether there is an alternative claim for damages, (v) the ease or difficulty in calculating damages, (vi) whether damages would be a satisfactory remedy, (vii) the presence or absence of a willing purchaser, and (viii) the harm to each party if the CPL is or is not removed with or without security: Dhunna at paras 10-18; Gong at para 57; Pauwa at para 60. In addition, I considered whether the CPL seems to be for an improper purpose, and whether Global Development commenced the proceedings with reasonable diligence: Kim at para 31; Van at para 60. I also considered the “clean hands” doctrine which Charney J. helpfully summarized in Khan at paras 90-91 and 94:
[90] Because a CPL is a discretionary remedy, the court may also consider the “clean hands” doctrine: Morguard Residential v. Mandel, 2017 ONCA 177, at paras. 10 and 28. The clean hands doctrine of equity can be reduced to “he who comes into equity must come with clean hands” (Elford v Elford (1922), 1922 CanLII 53 (SCC), 64 SCR 125. It is a long-standing doctrine that a party seeking an equitable remedy such as a CPL must come to the court with clean hands: Asibayan v. Aghdasi, 2020 ONSC 1027, at para. 15.
[91] The clean hands doctrine requires that the misconduct considered relates directly to the conduct in the transaction before the court: 2324702 Ontario v. 1305 Dundas, 2019 ONSC 1885, at paras. 17-22, aff’d on appeal: 2324702 Ontario Inc. v. 1305 Dundas W Inc., 2020 ONCA 353. …
[94] … Courts have consistently taken a hostile view of parties who attempt to enlist the court in support of their fraudulent schemes, based on the “principle that the court will not assist a suiter to obtain relief from the consequence of his own unlawful act”: Krys v. Krys, 1928 CanLII 48 (SCC), [1929] SCR 153, at p. 164. [Emphasis added]
[37] I am persuaded that Global Development is not a shell corporation. It does not maintain a website or a functioning email address, and its expenses are largely, if not wholly, paid for by Global Realty which appears to be an affiliated company that Mr. Chaudhary and Mr. Raja have used with regularity to perform development work for Global Development. However, over the past ten years, Global Development has entered into various gas station development ventures which apparently led it to acquire about $1 million of shares in various gas station ventures. Since 2011, it has developed and sold a number of gas stations and commercial properties. It claims to have its own funds on deposit at a banking institution, albeit in an undisclosed amount. In addition, Mr. Chaudhary and Mr. Raja claims to operate Global Development as equal shareholders in the business. On balance, I find that these considerations are neutral to the equity analysis.
[38] A compelling factor in support of a CPL is the uniqueness of the Beamsville Property. In assessing this factor, I adopt the thoughtful reasoning of Lax J. in John E. Dodge Holdings Ltd. v. 805062 Ontario Ltd. (2001), 2001 CanLII 28012 (ON SC), 56 OR (3d) 341 (SCJ) at para 59; affirmed (2003), 2003 CanLII 52131 (ON CA), 63 OR (3d) 304 (CA), leave to appeal denied [2003] SCCA No 145, which considered the relationship between uniqueness and the inadequacy of damages:
[55] ... Semelhago asks us to examine in each case, the plaintiff and the property. The danger in framing the issue as one of uniqueness (a term that carries with it a pre- Semelhago antediluvian aroma) is that the real point of Semelhago will be lost. It is obviously important to identify the factors or characteristics that make a particular property unique to a particular plaintiff. The more fundamental question is whether the plaintiff has shown that the land rather than its monetary equivalent better serves justice between the parties. This will depend on whether money is an adequate substitute for the plaintiff's loss and this in turn will depend on whether the subject matter of the contract is generic or unique.
[56] What then are those factors that will determine when it is just to order specific performance? The inquiry begins with Semelhago by asking if a substitute property is readily available, but it does not end there. The jurisprudence now goes further and I have attempted to summarize below some of the emerging principles.
[57] Uniqueness is a matter of proof and the onus lies on the party seeking the remedy. However, the plaintiff is not required to prove a negative and demonstrate the complete absence of comparable properties. As Mr. Justice Ferrier said in Greenforco, this would place an expensive and unacceptable burden on a plaintiff. He also stated that the appropriate time to determine if a substitute property is readily available is at the time of breach. As he explained, this is the time that the innocent party has to assess his position and decide whether to keep the contract alive or to accept the repudiation and sue for damages.
[58] Although a plaintiff may claim specific performance and damages and make an election at trial, as a practical matter, the mitigation principle operates as a powerful disciplining tool. The plaintiff must now carefully and realistically assess if he will succeed in an action for specific performance and this will depend, in part, on whether or not there is a readily available substitute property. If there is, the plaintiff's remedy will be damages and subject to the mitigation principle. [Emphasis added]
[39] The remedy of specific performance is available in circumstances where there is no readily available substitute property and damages are not an adequate remedy: Smelhago v. Paramadevan, 1996 CanLII 209 (SCC), [1996] 2 SCR 415 at para 22. A finding of uniqueness may be based on objective and subjective considerations: 0771252 B.C. Ltd. v. 0764735 B.C. Ltd., 2012 BCSC 2039 at para 25.
[40] For the limited purpose of deciding the equities on this motion, I am persuaded that Global Development has adequately shown that the Beamsville Property is unique. Despite conflicting evidence to the contrary, I accept that Global Development has sufficiently established that the Beamsville Property has characteristics that make it a unique development property in view of its fairly large size (i.e., 10 acres of vacant land), its “prestige industrial” zoning that supports a broad range of development options (e.g., gas bar, retail amenities, warehousing, office, entertainment and travel accommodations), and its close proximity to several major urban areas (i.e., Hamilton, St. Catherine’s and Niagara Falls) and the Canada-USA border. In so far as the equities between the parties are concerned, I accept that these factors combine to make the Beamsville Property a uniquely situated development property. I recognize that it was acquired for investment purposes which may be a factor that arguably favours damages as a remedy in lieu of specific performance: Dodge (SCJ) at para 59; Monson v. West Barhaven Developments Inc., [2000] OJ No 5209 (SCJ) at paras 8-9. However, I am satisfied that Global Development has sufficiently demonstrated that no comparable substitute property with municipal site plan approval is readily available. From the record, I accept that municipal site plan approval, or the lack of approval, is a significant factor to weigh in assessing the suitability of a property for development. The Beamsville Property has distinctive features or characteristics that make it particularly suitable for development, which satisfies the uniqueness test on this motion: Dodge Holdings at para 55; Semelhago at para 22; Matthew Brady Self Storage Corporation v. InStorage Limited Partnership, 2014 ONCA 858 at para 35. This factor supports a CPL being granted.
[41] As an alternative to its claim for specific performance, Global Development has pleaded a claim for damages. In my view, its alternative damages claim should not automatically favour the Defendants: Pauwa at para 63. That said, I am not persuaded by Global Development’s submission that its damages cannot be calculated because of the stated difficulty in determining the true value of the Beamsville Property before its development is completed. Global Development has not led any reliable evidence, such as from a valuator, to suggest that its damages cannot be quantified. Although Mr. Chaudhary baldly asserts that valuing the Beamsville Property would be difficult, I see no basis to expect that an appropriate evaluation could not be performed. On this point, I share the reasoning of Master Josef in Shcolyar v. 1241 Scaw Inc., 2019 ONSC 3701 at paras 12-13:
[R]eal 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 [at para 40]:
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. [Emphasis added]
In the circumstances, I find that Global Development’s alternative claim for damages is a relatively neutral factor in assessing the equities on this motion.
[42] As an alternative remedy to a CPL, the Defendants are proposing a payment into court of half the net proceeds from any sale of the Beamsville Property before a final adjudication of the action. Citing the approach that Broad J. adopted in Guz at paras 54-55, they submit that Global Development’s claim over the Beamsville Property is not its full value, but rather, at its highest, only one-half of its value as set out in the Beamsville JVA. On this basis, they submit that Global Development’s interest in the Beamsville Property would be adequately protected by an order under ss. 103(6) of the Courts of Justice Act for half of the net sale proceeds to be paid into court. Respectfully, I am not persuaded by this submission. The trial of this action will decide what interest, if any, that Global Development should have in the Beamsville Property, whether it may acquire the property, and in the alternative, what its damages should be given the true value of the property after its development potential is taken into consideration. An order permitting a pre-trial sale of the property would prejudice Global Development’s specific performance claim to acquire it. In addition, an order that half of any potential sale proceeds realized before trial are the highest possible amount that it could receive would inappropriately predetermine the merits of its alternate claim for damages: Tambeau v. Martin, 2020 ONSC 2483 at para 119. Such an order may also cause further prejudice by limiting Global Development’s realistic ability to recover damages once the development potential of the property is factored. Given the nature of Global Development’s claim and its potential interest in the subject property, which is distinguishable from the monetary claim in Guz that had crystallized when the CPL motion in that case was heard, I conclude that the Defendants’ proposed order would not reasonably or adequately protect Global Development’s interests in this case.
[43] Although QEW Inc.’s realtor listed the Beamsville Property for sale, it later suspended its listing after Global Development threatened litigation to block the sale of the property. As such, no willing purchaser for the property came forward and there is no evidence of any offers to buy the property at this time. Accordingly, these factors are neutral to the equities analysis.
[44] In comprehensive submissions, the Defendants deny Global Development’s claim that it entered into the Beamsville JVA dated March 1, 2016 with QEW Inc. to develop the Beamsville Property. According to the Defendants, the Beamsville JVA is a complete fabrication that should disentitle Global Development from obtaining a CPL under the “clean hands” doctrine. For its part, Global Development takes the position that the Beamsville JVA is a completely valid and binding agreement. It flatly denies any wrongdoing.
[45] Global Development claims that the Beamsville JVA was executed during an in-person meeting at its offices when Mr. Chaudhary signed the Beamsville JVA on its behalf and Mr. Sundar and Mr. Malik signed it for QEW Inc. as its representatives. Mr. Kanyere, a paralegal who shares office premises with Mr. Chaudhary and Mr. Raja, claims that he witnessed all of the signatures. Mr. Sundar and Mr. Malik deny signing the agreement and claim that their signatures were forged.
[46] The Defendants retained a forensic document examiner, Graham P. Ospreay, FACFE, CSP, who opined that the questioned signatures for Mr. Sundar and Mr. Malik on the Beamsville JVA are copies of their known specimen signatures on other records.[^2] Global Development’s forensic document examiner, Samiah Ibrahim, BA BSc, similarly opined that the questioned signatures are the same as the specimen signatures.[^3] However, as the various signatures submitted for analysis were on multi-generational copies (i.e., copies of copies) of PDF documents, Ms. Ibrahim also opined that the limited quality of the records makes it impossible to assess which of the questioned and specimen signatures are “originals” or “copies,” respectively. According to Ms. Ibrahim, it is equally possible that the specimen signatures were used to create the questioned signatures, or that the questioned ones were used to create the specimens. Her opinion on this point is uncontradicted.
[47] The Defendants invited me to conclude that Global Development forged the questioned signatures on the Beamsville JVA because its purported eye-witnesses, namely Mr. Chaudhary and Mr. Kanyere, claim that Mr. Sundar and Mr. Malik signed the agreement by hand although their signatures now only appear to be in electronic format. However, the evidentiary record on this motion makes it impossible to determine whether or not their questioned signatures initially were made by hand. For reasons that are not entirely clear, the only existing record of the executed Beamsville JVA is an electronic copy in a PDF file. Due to the limited quality of this PDF file, neither forensic expert could say whether the questioned signatures initially were handwritten on a paper document or electronically applied to a digital document. Moreover, Ms. Ibrahim’s uncontradicted opinion is that the questioned signatures may plausibly have been copied from the agreement to create the specimen signatures on the various other records. Given the inconclusive nature of the evidence before me on this point, I am unable to determine whether the questioned signatures for Mr. Sundar and Mr. Malik on the Beamsville JVA are genuine or forged. As a result, I decline to apply the clean hands doctrine or otherwise make a finding as to whether the CPL is being claimed for an improper purpose based on the questioned signatures.
[48] Having regard to the chronology of Global Development’s efforts to bring its motion for a CPL, I am persuaded that it acted diligently and without undue delay. A party seeking a CPL must pursue this relief with reasonable diligence: Caroti v. Kegalj, 2019 ONSC 5772 at para 41; American Environmental Container Corp. v. Kennedy, 2020 ONSC 1662 (Master) at para 42. On May 15, 2020, QEW Inc. gave written notice to Global Realty by email and facsimile transmission that it wished to sever their business relationship. Later, on October 29, 2020, Global Development registered notice on title to the Beamsville Property under s. 71 of the Land Titles Act and brought its action to enforce its interests. The Defendants submit that Global Development waited for over five months before taking steps to address its interests and thereby failed to act with reasonable diligence. However, Global Development claims that it had been unaware of QEW Inc.’s written notice because the emailed copy was sent to Global Realty’s inactive email address, and because the fax copy was sent to Global Realty’s facsimile machine that Mr. Chaudhary and Mr. Raja had not monitored while they worked remotely during the COVID-19 pandemic which led them to not see the fax when it was transmitted or when they later attended their offices. Global Development claims that its principals first realized that QEW Inc. sought to sever its ties to the Beamsville Property project after it learned that QEW Inc.’s realtor has listed the property for sale in late- October 2020. Shortly thereafter, Global Development registered its s.71 notice and entered into discussions with QEW Inc.’s counsel to address its claim and return this CPL motion.
[49] The Defendants believe that it is highly unlikely that its written notice to sever had failed to come to the attention of Global Development’s principals, and submit that the company simply procrastinated for almost half a year before taking any steps to address and preserve its interests. However, from the evidence on this motion, I am persuaded that Global Development has given an adequate account of its actions to show that it moved with reasonable diligence to pursue its legal recourse upon learning of QEW Inc.’s wish to end the venture and sell the property. I accept that Global Development, a sophisticated commercial party, had to proceed expeditiously for a CPL and could not wait for several months before doing so, particularly after receiving notice that purported to sever its underlying business relationship for the venture. However, from the record before the court, I am persuaded that QEW Inc.’s notice did not initially come to the attention of Global Development’s principals who were not monitoring the inactive email account and missed the fax while working remotely during the pandemic. I am satisfied that Global Development took prompt steps to pursue its relief in this case once it learned of the listing to sell the Beamsville Property, which brought the dispute into sharp focus. In the circumstances, I conclude that Global Development acted with reasonable diligence, which favours granting a CPL on this motion.
[50] The Defendants submit that a CPL would prejudice QEW Inc. by placing its $2.98 million commercial loan on the Beansville Property, currently set to mature in February 2022, at risk of being recalled by the lender which had required clean and unencumbered title as a condition for extending the loan. However, they did not disclose what information, if any, the lender gave as to whether the loan actually would be recalled. They also claim that it will be almost impossible for QEW Inc. to refinance the loan with a CPL registered on title, and rely on Mr. Malik’s evidence that a commercial mortgage broker told him so. However, apart from making this simple assertion, Mr. Malik’s evidence does not indicate what steps, if any, were taken to seek refinancing with other potential lenders, and does not disclose what QEW Inc.’s other options may be to obtain refinancing. As QEW Inc.’s financing situation was not fully canvassed, I am not persuaded that a CPL on title would necessarily handcuff its ability to finance the Beamsville Property.
[51] In the circumstances, I am not persuaded that financing considerations should preclude a CPL in this case. That said, should QEW Inc. have difficulty continuing or renewing its financing for the Beamsville Property, the Defendants may ask to have this matter brought back before me.
[52] Based on the foregoing, I am satisfied that the equities support granting leave to issue a CPL on title.
The Caution under s. 71 of the Land Titles Act should be Removed
[53] As set out below, I find that the notice or caution that Global Development registered on the Beamsville Property under s. 71 of the Land Titles Act should be removed.
[54] A caution under ss. 71(1) of the Land Titles Act may be registered on title to protect a cautioner’s interest by giving notice of the interest. To this end, ss. 71(1) provides:
71 (1) Any person entitled to or interested in any unregistered estates, rights, interests or equities in registered land may protect the same from being impaired by any act of the registered owner by entering on the register such notices, cautions, inhibitions or other restrictions as are authorized by this Act or by the Director of Titles. [Emphasis added]
[55] A caution under ss. 71(1) of the Land Titles Act may be registered on title without judicial involvement. A person who is aggrieved by an entry may seek to rectify the register under s. 160 of the Land Titles Act, which provides:
160 Subject to any estates or rights acquired by registration under this Act, if a person is aggrieved by an entry made, or by the omission of an entry from the register, or if default is made or unnecessary delay takes place in making an entry in the register, the person aggrieved by the entry, omission, default or delay may apply to the court for an order that the register be rectified, and the court may either refuse the application with or without costs to be paid by the applicant or may, if satisfied of the justice of the case, make an order for the rectification of the register. [Emphasis added.]
[56] Pursuant to ss.71(1), a contractual right or interest in land, including a right of first refusal, is an “unregistered” interest in land that exists outside of the Land Titles Act. A person holding such a right may register it under ss. 71(1) to protect the interest by giving notice of it: Benzie v. Hania, 2012 ONSC 976 at paras 24-26, affirmed 2012 ONCA 766 at para 70; Fletcher’s Fields Limited v. Estate of Samuel Harrison Ball, 2018 ONSC 2433 at para 19.
[57] In Bulletin No. 2000-2 dated July 21, 2000, the Director of Titles sets out the mechanism for registering a caution under the Land Titles Act.[^4] Among other things, a caution registered under ss. 71(1) must include a statement authorizing the Land Registrar to delete the caution from the parcel register once sixty (60) days from the date of registration have elapsed:
The caution must contain a statement by the cautioner or his/her solicitor authorizing the Land Registrar to delete the caution from the parcel register upon the expiration of 60 days from the date of registration. Cautions under this section cannot be renewed. [Emphasis added] [^5]
[58] In this case, Global Development appears to have not complied with Bulletin No. 2000-2 because its caution, which was registered on October 29, 2020, did not provide for its deletion by the Land Registrar after sixty days from registration. Instead, Global Development incorrectly registered its caution for an indefinite period.[^6] As a result, the caution remains on title.
[59] A registration under ss. 71(1) may be done when expressly authorized by the Act or when authorized by the Director of Titles. A person cannot unilaterally register a caution without authority: Claireville Holdings Limited v. Botiuk, 2014 ONSC 6505 at para 19.
[60] Having regard to the foregoing, I am satisfied that Global Development’s caution on the Beamsville Property properly should have expired on December 29, 2020, being sixty days after it was registered on title, as required by the Director of Titles under Bulletin No. 2000-2. As a result, I find that an order should be made to remove the caution from title.
Outcome
[61] Based on the foregoing, an order will issue to:
a. grant leave for the Plaintiff, Global West Development Ltd., to register a certificate of pending litigation against the property municipally known as 4994 North Services Road in Beamsville, Ontario; and
b. discharge the notice or caution that the Plaintiff, Global West Development Ltd., registered against title to the property municipally known as 4994 North Services Road in Beamsville, Ontario pursuant to section 71 of the Land Titles Act, RSO 1990, c. L.5.
[62] Should the parties be unable to resolve the matter of costs in this matter, the Plaintiff may deliver written costs submissions not to exceed 3 pages (excluding its costs outline or offer(s) to settle) within 20 days, and the Defendants may deliver their written costs submissions on the same terms within a further 20 days. Reply submissions may not be delivered without leave.
Doi J.
Date: June 24, 2021
COURT FILE NO.: CV-21-00000117-00
DATE: 2021 06 24
SUPERIOR COURT OF JUSTICE – ONTARIO
RE: Global West Development Ltd., Plaintiff
AND:
16380 Jane Street Inc., QEW-EX64- 10A Inc., Riaz Malik, Vikram Sundar, Tahira Malik and Purvi Patel, Defendants
BEFORE: DOI J.
COUNSEL: Evan Moore, for the Plaintiff
Philip Wright, for the Defendants, QEW-EX64-10A Inc., Riaz Malik and Vikram Sundar
Jonathan Wright and Megan Molloy, for the Defendants, 16380 Jane Street Inc., Tahira Malik and Purvi Patel
ENDORSEMENT
Doi J.
DATE: June 24, 2021
- 2 -
[^1]: The Defendant, Tahira Malik, is the wife of the Defendant, Riaz Malik. The Defendant, Purvi Patel, is the wife of Kiran Patel, who is not named in the action. [^2]: See Report of G.P. Ospreay & Associates, by Graham P. Ospreay, FACFE CSP, dated February 12, 2021 at pp. 7, 11 and 12; Supplementary Responding and Cross-Motion Record of the Defendants dated March 22, 2021 at Tab 2. [^3]: See Critique of Ospreay & Associates Report by Samiah Ibrahim, BA BSc, dated March 2, 2021 at pp. [^4]: https://files.ontario.ca/cautions_under_section_128_and_section_71_land_titles_act_2000-2.pdf [^5]: Bulletin 2000-2 dated July 21, 2000 at p. 2. [^6]: See Notice Receipted as Instrument No. NR556125 dated October 29, 2020 at Exhibit “SS” to the Affidavit of Mirza Chaudhary sworn February 8, 2021 at p. 586 of the Supplementary Motion Record (Volume 4) of the Moving Plaintiff.