COURT FILE NO.: CV-20-0011
COURT FILE NO.: CV-20-64006900CL
DATE: 20210329
ONTARIO
SUPERIOR COURT OF JUSTICE
BETWEEN:
1901952 ONTARIO INC.
Plaintiff/Moving Party
– and –
DOUGLAS BILBIJA and DEBRA SUSAN BILBIJA
Defendants/Respondents
AND BETWEEN:
Julian Binavince, for the Plaintiff/Moving Party
Jeffrey Radnoff and Charles Haworth, for the Defendants/Respondents
DOUGLAS BILBIJA and DEBRA SUSAN BILBIJA
Plaintiffs/Moving Parties
– and –
2513630 ONTARIO INC., o/a NATURASEAL BUILDING SUPPLIES INC., NATURASEAL DISTRIBUTION INC., LEDAN BUILDING SUPPLIES INC., 2551841 ONTARIO INC., LEON GOLDNSHTAIN, DANIEL GOLDSTEIN, 1901952 ONTARIO INC. and VALERI BARATOV
Defendants/Responding Parties
Jeffrey Radnoff and Charles Haworth, for the Plaintiffs/Moving Parties
Julian Binavince, for the Defendants/Responding Parties
HEARD: January 8, 2021
REASONS FOR DECISION
DIETRICH J.
Overview
[1] This matter involves two motions in two related actions. In the first, which I will refer to as the "Sale Action", the plaintiff 1901952 Ontario Inc. ("190") has brought an action to enforce its mortgage security over the real property, municipally known as 100 Broad Road, in Caledonia, Ontario (the "Residence"). The Residence is owned and occupied by Douglas Bilbija ("Mr. Bilbija") and his spouse Debra Susan Bilbija ("Ms. Bilbija"). In that action, the plaintiff brings a motion for an order for possession of the Residence, among other relief. I will refer to this motion as the "Motion for Possession."
[2] In the second action, which I will refer to as the "Oppression Action", Mr. Bilbija alleges that the affairs of the corporate defendants, including 190, have been conducted in a manner that is oppressive and/or unfairly prejudicial to or unfairly disregards his interests as a shareholder. Mr. Bilbija further asserts that the defendants Leon Goldnshtain, Dan Goldstein (together the "Goldstein Brothers") and Valeri Baratov ("Baratov") have engaged in oppressive conduct, the result of which has been an effective expropriation of his ownership interest in Naturaseal Distribution Inc. ("Naturaseal"), his intellectual property, and the Residence. Within the Oppression Action, Mr. Bilbija brings a motion seeking an injunction enjoining 190 from enforcing its rights under its mortgage over the Residence and an order that the defendants fund the prosecution of the Oppression Action. I will refer to this motion as the "Bilbija Motion."
[3] For the reasons that follow, in the Motion for Possession, I find that 190 is entitled to an order granting it possession of the Residence and Mr. Bilbija's request for injunctive relief is denied. In the Bilbija Motion, I find that the defendants to the Oppression Action are not required to fund the prosecution of the Oppression Action.
Positions of the Parties
[4] Mr. Bilbija asserts that he is prima facie entitled to the injunction he seeks, in respect of the Residence, and to an interim payment of fees to permit him to pursue the Oppression Action. He contends that this is so because the defendants in the Oppression Action a) expelled him from the operation of Naturaseal and excluded him from decisions and disclosure related to its finances and structure; b) expropriated his valuable technology and intellectual property; c) allege that he owes them money despite the fact that he has been working for them for the last four years and they have not paid him tens of thousands of dollars owed him in salary and additional profit distribution/dividends; and d) arranged for 190 to serve the notice of sale under the mortgage against the Residence, which he cannot pay because they have caused Naturaseal to stop paying him his salary and other amounts owed. Mr. Bilbija asserts that but for the defendants' oppressive conduct, he could have repaid his mortgage debt. He asserts that the defendants contrived the default to force the sale of the Residence.
[5] Mr. Bilbija states that he has little to no income apart from Canada Pension Plan Benefits and Old Age Security, amounting to about $15,500 annually, and that his expenses are approximately $9,500 per month, of which some $7,000 is related to the Residence. He is unable to borrow because he is currently fulfilling the terms of a consumer proposal and he has a poor credit score. He asserts that he is indebted to his counsel for $27,000 in legal fees related to the Actions, not including time spent on the Motions now before the court, documentary disclosure, and production. Without an order for interim fees of $54,000, his counsel has said they will not continue to represent him.
[6] 190 asserts that, under ordinary circumstances, the court will not interfere with the proper exercise of a mortgagee's power of sale except upon tender by the mortgagor of the amounts due or where the mortgagee is otherwise fully protected. It contends that the circumstances of this case are ordinary, in no way extreme or unusual, and do not attract any equitable relief.
[7] The defendants in the Oppression Action submit that Mr. Bilbija is insolvent and that his financial difficulties pre-date his relationship with them. Further, they assert that Mr. Bilbija was never an employee of the defendants or entitled to a regular salary. In addition, they assert that since the amalgamation of Naturaseal (the distributor) and 1890190 Ontario Inc. ("189") (the manufacturer) in 2018, Naturaseal, the amalgamated company, has not been profitable and that none of the relevant defendant companies ever paid dividends.
[8] The defendants also submit that Mr. Bilbija has not met the test for interim costs.
Background Facts
[9] Mr. Bilbija is 69 years of age and is in poor health.
[10] The Residence is a 100-acre farm property with a large home and a large custom-built workshop. In August 2018, the Residence was appraised and valued at $1,255,000. The mortgages registered against the Residence total $1,100,000.
[11] Mr. Bilbija is an inventor who created spray-on waterproof and fire-resistant polymer emulsion coatings. In 2006, he started Cantech Research Corporation ("Cantech"), where he created two patents relating to the spray-on coatings.
[12] Around 2013, a dispute erupted among the Cantech shareholders over a new drywall that Mr. Bilbija invented that was fireproof, waterproof, soundproof and lighter in weight (the "Fibre-wall technology"). The patent for this product is being held by a company referred to as the Panel Board Company. The shares of the Panel Board Company are held by a Bilbija family trust over which Mr. Bilbija has no control.
[13] Around the same time, Mr. Bilbija made a proposal to his creditors under the Bankruptcy and Insolvency Act, R.S.C. 1985, c. B-3 (the "BIA"). He had a debt with the Canada Revenue Agency (the "CRA"), which he was unable to pay, and he wanted to compromise it.
[14] The 2013 BIA proposal required Mr. Bilbija to pay his CRA debt within 6 months of court approval and to make 60 monthly payments of $1,000 on account of his debts to unsecured creditors.
[15] In May 2014, Mr. Bilbija was introduced to the Goldstein Brothers, who had connections to a large drywall company. They were interested in his emulsion technology and intellectual property.
[16] In April 2017, the 2013 BIA proposal was amended requiring Mr. Bilbija to pay his CRA debt within 6 months and to make 60 monthly payments of $916.67 on account of his debts to unsecured creditors.
Naturaseal
[17] In 2015, Mr. Bilbija and his brother John Bilbija agreed to become partners with the Goldstein Brothers in Naturaseal. Naturaseal was incorporated on September 8, 2015. Mr. Bilbija was not issued any shares in Naturaseal, contrary to his expectation. He assumed the role of Chief Technical Officer.
[18] Around April 2016, the Goldstein Brothers brought Baratov into Naturaseal. Baratov was issued shares in Naturaseal. The Goldstein Brothers and Baratov controlled all of the defendant corporations.
[19] On August 31, 2016, the Goldstein Brothers and Baratov executed a manufacturing and distribution agreement with respect to certain asphalt-based coatings and membranes for waterproofing (the "Manufacturing Agreement"). Pursuant to the Manufacturing Agreement, Mr. Bilbija and John Bilbija were to provide 189 with the know-how to manufacture certain coatings and membranes for waterproofing. In this Agreement, the company owned by Mr. Bilbija and John Bilbija, known as Coatit.ca Inc., acknowledged receipt of $50,000, and 189 acknowledged that Coatit.ca Inc. would receive advances with respect to a royalty on sales.
The Mortgages
[20] In the summer of 2016, Mr. Bilbija needed $350,000 to pay some debts, including a CRA debt. On December 23, 2016, Baratov/190 lent Mr. Bilbija $251,676.22 and 190 registered a mortgage in the principal amount of $350,000 against the Residence. This mortgage was in second place ranking behind the first mortgage held by the Royal Bank of Canada ("RBC").
[21] In March 2017, 190 lent each of Mr. Bilbija and John Bilbija $80,000 to pay debts. 190 registered its second mortgage over the Residence, which ranked third.
[22] Around July 2017, RBC called on the guarantee made by John Bilbija on a Cantech line of credit and Mr. Bilbija agreed to mortgage the Residence to raise funds to assist John Bilbija. RBC did not wish to be a fourth-place mortgagee so Baratov agreed to postpone 190's mortgage to fourth position in exchange for John Bilbija's ten percent interest in Naturaseal.
[23] By letter dated February 14, 2020, RBC warned that "legal action would continue" if the amount of $14,284.46 was not paid by February 21, 2020. RBC advised Baratov that it had commenced an action for possession and issued a notice of sale.
[24] 190 brought the RBC mortgage into good standing thinking that Mr. Bilbija would then sell the Residence, which he did not do.
Mr. Bilbija's Evidence
[25] Mr. Bilbija states that in May 2015 there was an oral agreement between the Goldstein Brothers and him that in exchange for using Mr. Bilbija's and John Bilbija's intellectual property, and their know-how in growing a business in the construction industry, and for developing new products, technology and intellectual property, Mr. Bilbija and John Bilbija would each receive at 25-percent share of Naturaseal, earn a salary, receive a 25-percent share in any company related to or affiliated with Naturaseal, and receive their proportionate share of the profits of the Naturaseal business.
[26] Based on the oral agreement, Mr. Bilbija expected a) to be issued shares in Naturaseal and any related company; b) to receive financial statements every year; c) to receive 25 percent of the dividends paid, if any; d) to be involved in discussions relating to new shareholders or share transfers; e) to receive a regular monthly salary; and f) that the Goldstein Brothers would not pay themselves excessive compensation.
[27] Mr. Bilbija attests that these expectations were not met. He never received any shares in Naturaseal, financial statements, or dividends from Naturaseal. When the defendant Baratov became a shareholder and principal of Naturaseal, Mr. Bilbija was excluded from the discussions and negotiations. Mr. Bilbija asserts that his salary was paid erratically or not at all and that the principals of Naturaseal have stripped him of his assets and his ability to earn a living. A new company, Naturaseal Building Supplies, was incorporated in April 2016, but Mr. Bilbija did not receive any shares in that company or any financial disclosure with respect to it.
[28] Mr. Bilbija states that in the early years at Naturaseal he was only paid about $4,000 to $5,000 per month because it was a start-up business, but by January 2018, his salary had increased to $7,000 per month. Mr. Bilbija was required to cash his cheque at Baratov's cheque cashing business where Baratov would deduct the interest owing on 190's mortgage over the Residence.
[29] Mr. Bilbija contends that the Manufacturing Agreement was never acted on, and that it was the oral agreement that was binding on the Goldstein Brothers, Mr. Bilbija and John Bilbija.
[30] Mr. Bilbija states that in September 2019, Naturaseal stopped paying Mr. Bilbija's salary. Therefore, he could not make payments on 190's mortgage. Mr. Bilbija asserts that he is owed $66,500 in salary payments from 2018 alone, and over $100,000 in salary payments since 2015. He asserts that the court has the power to order that the defendants pay his outstanding salary in the approximate amount of $110,000, which he says he would then use to bring 190's mortgage up to date. In addition, he submits that he meets the test to enjoin enforcement of that mortgage against the Residence.
[31] Around September 2018, Mr. Bilbija claims to have discovered that the principals of Naturaseal had been recording all of his salary cheques as loans. Further, he learned that they now allege that he owes them money notwithstanding the four years of work he did for them and that he gave them his technology and intellectual property.
[32] Mr. Bilbija deposed that he has little to no money. His income is limited to government pensions and he has many expenses. The value of the shares of the Panel Board Company, held by a family trust, is unknown and will not be realized until the Fibre-wall technology is sold. Mr. Bilbija states that he cannot value his shares in Naturaseal, which he has never received, because he was never provided with any financial statements.
The Defendants' Evidence
[33] The defendants in the Oppression Action assert that the Manufacturing Agreement was the binding agreement and deny that there ever was an oral agreement between the Goldstein Brothers, Mr. Bilbija and John Bilbija regarding their business partnership.
[34] The defendants assert that in exchange for terminating the Manufacturing Agreement, Mr. Bilbija received 10 percent, being 1,000 common shares, in the capital of Naturaseal.
[35] The defendants further assert that the financial statements of Naturaseal (pre- and post-amalgamation) disclose large infusions of cash by shareholders and no profits; and that neither of 189 or Naturaseal (pre- or post-amalgamation) paid dividends.
The request for an injunction to restrain 190's enforcement of its mortgage security
[36] Mr. Bilbija asserts that he is entitled to have 190 restrained from enforcing its mortgage based on s. 248(3) of Business Corporations Act, R.S.O. 1990, c. B.16 (the "OBCA"). This section provides for interim relief in the nature of an injunction. Mr. Bilbija also relies on the common law rules relating to injunctions. He further asserts that notwithstanding that it is Naturaseal that is responsible for oppressing Mr. Bilbija' rights, all of the corporate defendants in the Oppression Action, including 190, share in that responsibility. He asserts that this is so because they are affiliated corporations, and because the Goldstein Brothers and Baratov, who control those corporations, are acting in concert. Accordingly, he asserts that he is entitled to interim relief that is in the nature of an injunction against 190 under s. 248(2) and s. 248 (3) of the OBCA.
[37] Mr. Bilbija asserts that the actions of the defendants are part of a considered effort to oppress Mr. Bilbija for the improper, ulterior and illegal purpose of stealing his shares of Naturaseal and stealing his intellectual property. He asserts that 190 is now enforcing its mortgage to put further pressure on Mr. Bilbija in order to expropriate all of his shares in Naturaseal. Mr. Bilbija asserts that these acts demonstrate bad faith.
[38] To obtain the injunctive relief he seeks, Mr. Bilbija must show that a) there is a serious issue to be tried; b) he will suffer irreparable harm if the injunctive relief is not granted; and c) the balance of convenience favours granting the injunction: RJR-MacDonald Inc. v. Canada (Attorney General), 1994 CanLII 117 (SCC), [1994] 1 S.C.R 311.
[39] However, in Le Maitre Ltd. v. Segeren, 2007 CanLII 18735 (ON SC), [2007] 33 B.L.R. (4th) 224 (ONSC), at para. 30, Pepall J., as she then was, held that while the principles for the granting of interlocutory injunctive relief apply to section 248(3) where the interim relief sought is in the nature of an injunction, "there may be some circumstances where interim relief under this section is merited absent all of the traditional considerations associated with an interlocutory injunction. The dictates of fairness may be so overwhelming that it may be appropriate to forego compliance with any one or all of the balance of convenience, irreparable harm or an undertaking as to damages."
[40] Mr. Bilbija's request for injunctive relief must also be considered in light of the case of Arnold v. Bronstein (1970), 1970 CanLII 245 (ON SC), [1971] 1 O.R. 467 (Ont. H.C.), where it was held that under ordinary circumstances, a court will not interfere with the proper exercise of a mortgagee's power of sale except upon tender by the mortgagor of the principal money due, with interest and costs, or where the mortgagee is otherwise fully protected. In Berlianco Inc. v. Wee Rent It Ltd., [1999] O.J. No. 4081 (Ont. C.A.), the Court of Appeal for Ontario cited fraud and bad faith as two examples of "extreme or unusual circumstances" that might entitle a defaulting mortgagor to relief from a power of sale.
[41] Since Arnold v. Bronstein, courts have granted injunctions to restrain a mortgagee from enforcing its mortgage where the mortgagor has a claim for set-off as against the mortgagee: O'Hara v. Arkipelago Architecture Inc., [2004] O.J. 4486 (ONSC), at para. 35; and based on tortious conduct by the mortgagee: Mackovic v. Dudo Developments Ltd., [2007] O.J. No. 3134 (ONSC), at para. 6.
[42] 190 submits that there could only be extreme or unusual circumstances to warrant interference with 190's right to pursue enforcement proceedings if Mr. Bilbija could demonstrate that he would likely be successful should the matter proceed to trial. In other words, he must show a strong prima facie case.
[43] The test in RJR-MacDonald, as noted at para. 55, generally requires the motion judge to satisfy him or herself that the claim is not frivolous or vexatious and then to consider the second and third part of the test. However, RJR-MacDonald also provides, at para. 56, that the more rigorous standard of establishing a strong prima facie case should be applied where:
[T]he result of the interlocutory motion will in effect amount to a final determination of the action. This will be the case either when the right which the applicant seeks to protect can only be exercised immediately or not at all, or when the result of the application will impose such hardship on one party as to remove any potential benefit from proceeding to trial.
[44] An injunction enjoining 190 from enforcing its mortgage rights until after the Oppression Action will "remove any potential benefit from proceeding to trial" for 190 because Mr. Bilbija has testified that his monthly income from CPP and OAS is approximately $1,250, whereas the costs to service the Residence are approximately $7,000 monthly. Further, Mr. Bilbija has admitted that he has no ability to borrow. Accordingly, unless Mr. Bilbija can prove he is owed a salary or other funds from the defendant corporations, Mr. Bilbija and Ms. Bilbija would be living at the Residence at the expense of 190, whose ability to collect all of the debt owed to it would only diminish with the passage of time.
[45] I am satisfied that on the facts of this case, Mr. Bilbija must meet the higher threshold of a strong prima facie case of oppressive conduct.
[46] Mr. Bilbija argues that he has demonstrated a strong prima facie case because his rights as a minority shareholder in Naturaseal have been significantly oppressed in a number of ways. He asserts that the oppressive conduct by the Goldstein Brothers and Naturaseal include: a failure to issue shares to Mr. Bilbija; a failure to provide him with financial statements and disclosure; a failure to pay dividends; erratic or no payment of his salary; a stripping of Mr. Bilbija's assets depriving him of an ability to earn a living; and causing a cessation of his salary so 190 could bring power of sale proceedings, among other oppressive acts.
[47] To enjoin 190 from enforcing its mortgage rights, Mr. Bilbija must show that he has a means of repaying 190 the money it has lent, together with interest and costs, without selling the Residence, or would have such funds if he were successful in the Oppression Action.
[48] The mortgage held by 190, in respect of which it brings power of sale proceedings, matured in January 2018, and 190 claims entitlement to $404,979.40 plus interest and costs. Mr. Bilbija asserts that the entire principal amount of $350,000 was not, in fact, advanced by Baratov/190. There is evidence to show that at least a significant portion of that amount was lent, but the precise amount owing is disputed and will need to be resolved.
[49] Mr. Bilbija's defence to the claim in the Motion for Possession is a set-off arising from his claim in the Oppression Action. He asserts that if he were wholly successful in his claim that he is owed between $50,000 and $100,000 in salary (less source deductions) and 25 percent of dividends paid, he could repay the mortgage loans.
[50] In my view, Mr. Bilbija has not met the higher threshold of a strong prima facie case of oppressive conduct. Nor has he shown the "unusual or extreme circumstances" that could permit a court to interfere with a proper exercise of 190's power of sale. His claims for a regular salary are not claims of a shareholder, but rather an employee, and therefore do not form part of a claim of oppression (Joncas v Spruce Falls Power & Paper Co. (2000) 2000 CanLII 22359 (ON SC), 6 B.L.R. (3d) 109 (ONSC), affirmed (2001) 2001 CanLII 6156 (ON CA), 15 B.L.R. (3d) 1 (Ont. C.A.). In any event, I do not find Mr. Bilbija's evidence in support of his claim for unpaid salary to be persuasive. He has not provided any context for the alleged agreement with respect to a regular salary; nor does John Bilbija, who was apparently entitled to the same salary, provide any evidence on the point. Mr. Bilbija produced no documentary evidence to corroborate his narrative, such as T4 slips, tax returns, or written demand for salary over the five years for which he claims he should have been paid a salary.
[51] The defendants assert that no dividends were paid. The financial statements confirm the same and Mr. Bilbija has not provided any evidence to the contrary. The defendants concede that financial statements were not provided to Mr. Bilbija until he asked for them at the time of his cross-examinations.
[52] The defendants acknowledge that Mr. Bilbija owns 10 percent of the shares of Naturaseal notwithstanding that no share certificate was issued to him. Mr. Bilbija asserts that he owns 25 percent of the shares of Naturaseal and all related companies pursuant to an oral agreement, but he has not corroborated that shareholding or the existence of the oral agreement. Mr. Bilbija also alleges that his technologies were stolen but provides no details of those technologies or how their ownership affects his rights as a shareholder.
[53] I do not find that there are overwhelming dictates of fairness in this case such that Mr. Bilbija should be excused from complying with the tests pertaining to irreparable harm and the balance of convenience.
[54] I find that Mr. Bilbija has not shown that if the interlocutory injunctive relief were not granted, his interests would be so adversely affected that the harm could not be remedied if the eventual decision on the merits went in his favour. Based on Mr. Bilbija's own evidence, even if he were entitled to a salary of $7,000 per month from Naturaseal, it would be insufficient to cover his monthly expenses, including the nearly $7,000 per month associated with the Residence alone. Further, Mr. Bilbija admits that 190's mortgage matured nearly three years ago and he cannot secure financing to take out any of the four mortgages currently registered against the Residence.
[55] Mr. Bilbija admits that he has debts apart from the four mortgages registered against the Residence. The financial circumstances of Mr. Bilbija and Ms. Bilbija put them in a situation in which they simply cannot afford to live in the Residence. I do not consider downsizing to more modest, affordable accommodation to be irreparable harm.
[56] Mr. Bilbija argues that given his poor health, he could suffer irreparable harm if he is evicted from his home in the midst of a global COVID-19 pandemic. While Mr. Bilbija's medical condition is unfortunate, I do not find it likely that he will suffer irreparable harm if he is required to relocate to a new residence at this time. Based on public information, opportunities for vaccination against COVID-19 are becoming increasingly available, and all Canadians who wish to be vaccinated will likely be vaccinated with at least one dose of a vaccine within the next few months. Priority is given to those who are senior.
[57] The balance of convenience favours 190. Its mortgage matured nearly three years ago. It has, on more than one occasion, assisted Mr. Bilbija and Ms. Bilbija to stay in the Residence. At the time 190 brought RBC's mortgage into good standing, Baratov expected that Mr. Bilbija would sell the Residence, but he did not. There is no evidence to suggest that the financial situation that Mr. Bilbija and Ms. Bilbija are facing will improve between now and a trial on the merits in the Oppression Action such that Baratov and 190 could feel confident that 190's mortgage would be paid.
[58] Accordingly, I find that Mr. Bilbija and Ms. Bilbija are not entitled to the injunctive relief sought and 190 is entitled to an order granting it possession of the Residence.
The request for interim funding to pursue the Oppression Action
[59] The plaintiffs Mr. Bilbija and Ms. Bilbija seek interim funding from Naturaseal to permit them to pursue the Oppression Action. Section 249(4) of the OBCA provides for such funding in certain circumstances.
[60] The defendants argue that the test for an order for interim costs was set out in Alles v. Maurice (1992), 5 B.L.R. (2d) 154 (Ont. Gen. Div.). Under that test, the court must consider a) whether the applicant is in financial difficulty; b) whether the financial difficulty arises out of the alleged oppressive actions of the respondents; and c) whether the applicant has made out a strong prima facie case.
[61] The plaintiffs argue that in Hames v. Greenberg, 2014 ONSC 245, 23 B.L.R. (5th) 117 (ONSC), Brown J., as he then was, set out the appropriate three-part test for an order for interim costs. Under that test a) the claim can neither be frivolous nor vexatious; b) the financial difficulty must have arisen out of the oppressive acts of the defendants; and c) the financial circumstances, as fully disclosed by the party alleging the oppressive acts, would warrant compensation.
[62] The difference between the two tests is whether, at the first step, the claimant needs only to establish that the claim is neither frivolous nor vexatious, or whether he must establish something more, such as a prima facie case, or a strong prima facie case. I am satisfied that the plaintiffs' claim is not frivolous or vexatious. As noted above, I am not satisfied that their claim is a strong prima facie claim.
[63] However, I am not satisfied that Mr. Bilbija and Ms. Bilbija are in financial difficulty as a result of oppressive actions of the defendants in the Oppression Action. Based on the evidence, it is clear that Mr. Bilbija was in a financial predicament when he met the Goldstein Brothers and Baratov, and before he went into business with them. When he entered into business with the Goldstein Brothers, he had already made a proposal to his creditors, including the CRA. The proposal was amended after he went into business with them, again requiring Mr. Bilbija to make payments to the CRA and other unsecured creditors. According to the record, Ms. Bilbija has been borrowing money from family to support herself.
[64] Further, it is not apparent that compensation is warranted in this case. The extent of the equity remaining in the Residence is not apparent. The Residence was appraised nearly three years ago, in August 2018, and the value was then $1,225,000. The mortgages registered on title total $1,100,000, which, as noted, may exceed the total principal owing on those mortgages. Based on these values, there would be $125,000 in equity, not including any additional equity in respect of any part of the $350,000 principal amount which was not, in fact, advanced, if any. Some of this equity would be required to pay interest and the costs of selling the Residence. However, it is generally understood and accepted, based on information available to the public, that the real estate market in Ontario is trending upwards strongly. Therefore, it seems more likely than not, that the Residence would have appreciated in value since August 2018 creating more equity for Mr. Bilbija and Ms. Bilbija. Conceivably, some of this additional equity, if any, could be used by them to fund the Oppression Action.
[65] I find that the plaintiffs have not shown that their financial difficulty arises out of the alleged oppressive actions of the defendants in the Oppression Action and they have not shown that financial compensation is warranted. Accordingly, the Bilbija Motion is dismissed.
Disposition
[66] 190 has been successful on its Motion for Possession. An order for possession of the Residence shall issue to 190 pursuant to its right to commence power of sale proceedings.
[67] The Bilbija Motion for injunctive relief and interim funding is dismissed.
Costs
[68] The plaintiff/moving party 190 succeeded on its Motion for Possession in the Sale Action, and the defendants in the Oppression Action successfully defended the Bilbija Motion. They are entitled to their costs.
[69] The parties submitted costs outlines for both Motions. 190 and the defendants in the Oppression Action seek costs of $40,185.95 (inclusive of disbursements and HST) on a partial indemnity basis for both Motions. If successful, Mr. Bilbija and Ms. Bilbija would have sought costs of $34,478.92 (inclusive of disbursements and HST) for both Motions. I fix the costs of 190 and the defendants in the Oppression Action at $35,000 for both Motions, inclusive of disbursements and HST. Considering the factors articulated in rule 57.01 of the Rules of Civil Procedure, R.R.O. 1990, Reg. 194, I find these costs to be fair and reasonable in the circumstances of this case. The costs shall be paid by Mr. Bilbija and Ms. Bilbija, jointly and severally, within thirty days.
Dietrich J.
Released: March 29, 2021
COURT FILE NO.: CV-20-0011
COURT FILE NO.: CV-20-64006900CL
DATE: 20210329
ONTARIO
SUPERIOR COURT OF JUSTICE
BETWEEN:
1901952 ONTARIO INC.
Plaintiff/Moving Party
– and –
DOUGLAS BILBIJA and DEBRA SUSAN BILBIJA
Defendants/Responding Parties
AND BETWEEN:
DOUGLAS BILBIJA and DEBRA SUSAN BILBIJA
Plaintiffs/Moving Parties
2513630 ONTARIO INC., o/a NATURASEAL BUILDING SUPPLIES INC., NATURASEAL DISTRIBUTION INC., LEDAN BUILDING SUPPLIES INC., 2551841 ONTARIO INC., LEON GOLDNSHTAIN, DANIEL GOLDSTEIN, 1901952 ONTARIO INC. and VALERI BARATOV
Defendants/Responding Parties
REASONS FOR DECISION
Dietrich J.
Released: March 29, 2021