Court File and Parties

COURT FILE NO.: CV-20-00646054

MOTION HEARD: 20201125

SUPERIOR COURT OF JUSTICE - ONTARIO

RE: Roman Kotler, Plaintiff

AND:

Igor Kotler, Svitlana Kotler and Margarita Asriyan, Defendants

BEFORE: Master B. McAfee

COUNSEL: L. Wallach and S. Rotman, Counsel, for the Plaintiffs

A. Schorr, Counsel, for the Defendants

HEARD: November 25, 2020

REASONS FOR DECISION

[1] The plaintiff Roman Kotler (Roman) brings this motion pursuant to section 103 of the Courts of Justice Act, R.S.O. 1990, c.C.43 and Rule 42 of the Rules of Civil Procedure for an order for the issuance of a certificate of pending litigation (CPL) with respect to two properties: 45 Wigston Place, Thornhill (the Thornhill property) and 35 Wright Street, Richmond Hill (the Richmond Hill property) (collectively the properties).

[2] The motion was previously returnable on September 16, 2020. Roman consented to the defendants’ request for an adjournment of the motion. The parties did not agree to terms of the adjournment. I ordered an interim CPL, on a without prejudice basis, pending the return of the motion. A timetable for the balance of the steps for the motion was also ordered.

[3] Roman is the son of the defendant Igor Kotler (Igor). The defendant Svitlana Kotler is Igor’s spouse. The defendant Margarita Asriyan is Igor’s accountant and an investor.

[4] In 2009, when Roman was 19 years of age, he started working with Igor in construction. It is Roman’s position that they worked together both in Canada and Costa Rica until in or about 2019, when they had a falling out. There is a dispute with respect to the nature of their working relationship.

[5] It is Roman’s position that in 2010, Roman and Igor started a 50/50 real estate partnership, buying, renovating and selling custom homes. Roman asserts that he was paid a minimal amount per project and Igor invested the balance of Roman’s draw/salary and Roman’s share of the profits. It is Roman’s position that the partnership was memorialized in a written Trust Agreement dated February 9, 2010. The properties are the two remaining unsold properties of the alleged partnership.

[6] It is Igor’s position that he did hold back monies for investment purposes, but monies were not invested in the properties. Igor denies that Roman has an interest in the properties. It is Igor’s position that they were not partners. Igor asserts that the Trust Agreement is not a genuine document. In or about 2017, Roman moved to Costa Rica. It is Igor’s position that monies that had been held back for investment purposes were agreed to be invested in a tile manufacturing factory in Costa Rica that would be owned by Roman. The tile manufacturing factory was ultimately not successful. In or about January 2020, Roman sold the remaining inventory of the roof tile factory and returned to Canada.

[7] The applicable legal principles for consideration on a motion for a CPL are set out in Perruzza v. Spatone, 2010 ONSC 841 (Ont. Master). At paragraph 20, Master Glustein, as he then was, summarizes the legal principles as follows:

(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 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 (Ont. 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 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. - Master) 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 1414 (ON SC), 1977 CarswellOnt 1026 (Div. Ct) at para. 9).

[8] I am satisfied, for the purposes of this motion, that a claim to an interest in the properties has been demonstrated. In this action Roman seeks inter alia a declaration that the properties are held in trust for him. Claims of this nature qualify as claims for an interest in land (Caroti v. Kegalj, 2019 ONSC 5772 (Ont. S.C.J.) at para. 57).

[9] I am also satisfied, for the purposes of this motion, that there exists a triable issue with respect to Roman’s claim to an interest in the properties. The court is not to assess credibility or decide disputed issues of fact. While there is a dispute with respect to the nature of their working relationship, and the nature of any investment, there is no dispute that there was a working relationship and monies were held back by Igor for investment purposes. The evidence before me is sufficient to meet the low evidentiary threshold.

[10] However, the inquiry does not end there. Even if a claim to an interest in land and a triable issue is found to be present, the court must consider the equities of granting this form of interim relief. This is not a mechanical application of a test but an exercise of discretion to achieve a result that is just in all of the circumstances. In exercising this discretion, the court will typically examine the non-exhaustive so-called Dhunna factors referred to above. Having examined the equities, it is my view that a CPL should not be ordered.

[11] Roman is not a shell corporation. There is no evidence that the properties are unique to Roman. Roman’s position is that the properties were acquired for investment purposes. There is a claim for damages. There is no evidence that damages would be difficult to calculate. There is no evidence of a peculiar or special value to the properties. Damages would be a satisfactory remedy in the circumstances. It is Igor’s intention to sell the Thornhill property. On the motion I was advised that the property has been sold with a closing in February 2021. If a CPL is granted, Igor will not practically be able to deal with the properties pending the determination of Roman’s claims, although Roman does agree that any sale can proceed subject to proceeds of sale being paid into court. On the other hand, if a CPL is not granted Roman will still have a calculable claim in damages.

[12] To the extent that Igor makes serious allegations against Roman (see defendants’ factum at para. 40), on the basis of the record before me I am unable to make any findings with respect to such conduct nor would it be appropriate for me to do so on this motion. The alleged conduct has not been relied on in determining this motion.

[13] Relying on copies of wire transfers to Igor’s bank in Costa Rica, Roman raises concerns with respect to dissipation of the partnership assets. To the extent that Roman has concerns with respect to the payment of any judgment and monies leaving the jurisdiction, there is limited evidence before me concerning Igor’s financial circumstances. The actual relief Roman appears to be seeking is security for his claim for damages. A CPL should not be used as an instrument to secure a claim for damages. If Roman has a concern about the dissipation of assets, it is open to him to seek relief by way of a Mareva order (Bains v. Khatri, 2019 ONSC 1401 (Ont. S.C.J.) at para. 37).

[14] For these reasons I decline to exercise my discretion to order a CPL with respect to the properties. The motion is dismissed. The interim CPL previously ordered on a without prejudice basis shall be discharged.

[15] With respect to the issue of costs of the motion, the defendants submitted that costs of the motion should be fixed in the all-inclusive sum of $20,000.00 payable to the successful party on the motion. Had Roman been successful on the motion Roman sought costs of the motion on a substantial indemnity basis fixed in the all-inclusive sum of $28,575.05 and in the alternative on a partial indemnity basis in the all-inclusive sum of $22,418.81.

[16] The issue of costs of the motion are reserved to the trial Judge. The trial Judge will be in a better position to determine any party’s entitlement to costs having regard to the all of the circumstances of matter including whether any serious allegations raised are ultimately proven and the outcome of the proceeding.

[17] Order to go as follows:

1. The motion is dismissed.

2. The interim without prejudice CPL on the properties issued pursuant to my order dated September 16, 2020, shall be discharged.

3. Costs of the motion are reserved to the trial Judge.

Master B. McAfee

Date: January 22, 2021