Court File and Parties

COURT FILE NO.: CV-17-581739 MOTION HEARD: 20210825 SUPERIOR COURT OF JUSTICE - ONTARIO

RE: Mamdouh Labib Henein, Plaintiff AND: Louai Alala, Defendant

BEFORE: Associate Justice L. La Horey

COUNSEL: Arie Gaertner, Counsel for the Moving Party Defendant Joseph F. Lo Greco, Counsel for the Responding Party Plaintiff

HEARD: August 25, 2021 by videoconference

REASONS FOR DECISION

OVERVIEW

[1] The defendant brings this motion to discharge a certificate of pending litigation (“CPL”) registered against a condominium unit, Suite 1004, 100 Echo Point, Toronto (the “Property”), obtained by the plaintiff on a motion without notice on December 19, 2019.

[2] The defendant purchased the Property on November 2, 2016. The plaintiff claims a 50% interest in the Property pursuant to a written trust agreement entered into the day prior to the closing (the “Trust Agreement”). The defendant’s position is that he is the sole owner of the Property and the plaintiff’s only role with respect to the purchase was acting as the defendant’s real estate agent.

[3] The defendant brings this motion to discharge the CPL on the basis of non-disclosure on the plaintiff’s motion without notice, delay in the prosecution of this action, and the application of the equities. The defendant concedes that the plaintiff has demonstrated a triable interest in the Property.

[4] For the reasons that follow, I order that the CPL be discharged without security.

BACKGROUND AND CHRONOLOGY

Overview of the parties’ differing version of events

[5] The defendant purchased the Property on November 2, 2016. His evidence is that he bought the Property as his residence, using the plaintiff as his real estate agent.

[6] The plaintiff has put into evidence the Trust Agreement dated November 1, 2016 between the defendant as trustee and the plaintiff as beneficiary. It states that title to the Property will be taken in the name of the defendant and that defendant will hold a 50% interest in the Property for the plaintiff. It further provides that the purchase of the Property will be financed by a mortgage in favour of Equitable Bank and funds from the plaintiff and defendant in equal contribution. It states that the plaintiff will contribute the sum of $27,208.67 towards closing costs and the required down payment. The Trust Agreement further provides that all ongoing charges with respect to the Property including mortgage, taxes and maintenance will be shared equally.

[7] Under the terms of the Trust Agreement, the defendant is required to remit 50% of net proceeds of any sale to the plaintiff, the defendant will consent to a sale or refinancing of the Property if the plaintiff decides it would be in the best interest of the parties, and the plaintiff has the right to register a notice on title to the Property.

[8] The plaintiff’s evidence is that the Trust Agreement was signed by both parties on November 1, 2016 consistent with their agreement to jointly invest in the Property. The plaintiff has provided evidence that he delivered a bank draft for 50% of the remaining funds due at closing to the plaintiff’s father at the direction of the defendant. The plaintiff says that after the closing, the defendant refused to provide a set of keys to the Property to the plaintiff and the plaintiff realized that the defendant was intending to cheat him of his interest in the Property.

[9] The defendant’s evidence is that he does not recall signing the Trust Agreement, the inference being that he may have signed Trust Agreement along with other closing documents without realizing what he was signing. He says he was not provided with the opportunity to obtain independent legal advice. The defendant’s evidence is that he never agreed to hold any interest in the Property in trust for the plaintiff. The defendant says that the bank draft provided by the plaintiff was due to his father in connection with an agreement between the plaintiff and the defendant’s father.

[10] The defendant takes the position that the plaintiff owed a fiduciary duty to the defendant as his real estate agent, and that if it is found that the defendant signed the Trust Agreement, he should have been provided with independent legal advice.

[11] The plaintiff’s version of the events surrounding the execution of the Trust Agreement is supported by Matthew Hicks. Mr. Hicks, the mortgage broker on the transaction, signed the Trust Agreement as a witness. His evidence, in an affidavit on this motion and on cross-examination, is that he witnessed the defendant sign the Trust Agreement on November 1, 2016 and he was privy to conversations amongst the plaintiff, defendant and the defendant’s father whereby the fact that the plaintiff and defendant would be 50/50 partners in the Property was discussed.

[12] The defendant’s version of events is supported by the evidence of his father, Mohammad Nabil Alala (“Mr. Alala Sr.”) who provided an affidavit and was cross-examined. His evidence may be briefly summarized as follows. He referred the plaintiff real estate agent to his son who was looking to purchase a home. It was always intended that the Property was to be purchased for his son to live in. At no point prior to the closing of the purchase of the Property did the plaintiff disclose to him that he was to acquire an undisclosed interest in the Property. Mr. Alala Sr. and the plaintiff had an agreement whereby the plaintiff would act as the real estate agent on two condominiums in a project known as the Parfait at Atria that Mr. Alala Sr. intended to buy. The plaintiff would have a 50% ownership interest in one of the Parfait at Atria units. The plaintiff would split the real estate commissions for the purchase of these two properties with Mr. Alala Sr. as well as the commission on the purchase of the Property.

Chronology

[13] On August 21, 2016 the defendant’s father entered into an agreement of purchase and sale for the Property. Pursuant to an amendment to the agreement of purchase and sale dated September 25, 2016 the defendant replaced his father as the buyer. The buyer’s lawyer on the agreement was Said Mohammedally.

[14] In October 2016, the defendant’s father pre-registered for condominiums in the Parfait at Atria project.

[15] On November 1, 2016 the plaintiff says that the defendant signed the Trust Agreement prepared by Mr. Mohammedally. The defendant says that he does not recall signing the Trust Agreement and that the plaintiff did not disclose any alleged interest in the Property to the mortgagee or to the defendant’s lawyer who acted on the closing of the transaction.

[16] On November 2, 2016 the Property was transferred to the defendant for $222,000. On the same day a mortgage was registered in favour of Equitable Mortgage in the sum of $166,500 with the defendant as sole mortgagor. Natalie Hope-Selkin acted as the lawyer for the buyer on the transaction, replacing Mr. Mohammedally.

[17] On November 5, 2016 Mr. Alala Sr. entered into an agreement of purchase and sale to purchase unit in the Parfait at Atria project, using the plaintiff as his real estate agent. Four days later, the plaintiff and Mr. Alala Sr. entered into an agreement to purchase a different unit in the same condominium project. This purchase closed on November 19, 2016 with the plaintiff and Mr. Alala Sr. taking title as tenants in common. Both owners granted a charge over that property on the same day.

[18] On November 23, 2016 the plaintiff registered a Notice under section 71 of the Land Titles Act ( the “Notice”) against the Property claiming an unregistered interest in the Property.

[19] The plaintiff commenced this action on August 29, 2017. The claim was filed by Said Mohammedally who remained as lawyer of record for the plaintiff until December 17, 2019.

[20] The plaintiff attempted to serve the statement of claim in October 2017. The plaintiff contends that the defendant had notice of the statement of claim in October 2017, which is disputed by the defendant.

[21] On February 9, 2018 the plaintiff brought a motion without notice for a certificate of pending litigation before Master Graham who dismissed the motion as the statement of claim did not include a description of the land sufficient for registration.

[22] The case history of this matter obtained from the court office[^1] discloses that the previous counsel for the plaintiff booked motions which were not proceeded with. A motion was brought without notice returnable on August 2, 2018. The court file indicates that it was a motion for default judgment that was adjourned by the judge hearing the matter to a date in September 2018 so that the plaintiff could provide notice of the motion to the defendant. The motion was either withdrawn or was not properly confirmed. Other motions were booked by the plaintiff but did not proceed.

[23] The defendant entered into an agreement to sell the Property on June 16, 2019 which was scheduled to close on August 8, 2019. On August 6, 2019, the defendant’s real estate lawyer wrote to Mr. Mohammedally requesting the particulars of the Notice and requesting that it be discharged. The Notice was not discharged and the sale did not close. Mr. Mohammedally provided the purchaser’s lawyer with a copy of the Trust Agreement and statement of claim.

[24] The defendant has said that he did not know that the plaintiff claimed an interest in the Property until he found out about it in August 2019. Although there is evidence to the contrary, I do not have to making any finding on this issue.

[25] The defendant delivered a notice of intent to defend on October 24, 2019 by his former lawyer, Monica Peters of Garfinkle Biderman LLP. On the same day Ms. Peters wrote to Mr. Mohammedally and said that: “Now you have notice of my retainer, I trust that you will not take further adverse steps against Mr. Alala without reasonable notice to me.” Also on that day, the defendant’s law firm registered a $5,000 charge against the Property.

[26] On November 20, 2019 the defendant made a complaint to the Real Estate Council of Ontario (“RECO”) about the plaintiff in which he complained about the conduct of the plaintiff as his real estate agent in respect of the Property. He objected to the Notice registered against the Property which he called “fraudulent” and said the Notice prevented the sale of the Property. The defendant also said that he was surprised to discover that the plaintiff was claiming a 50% interest in the Property. He said that the plaintiff had not provided any money to justify trying to take half of his Property and that the plaintiff had already received his full real estate commission.

[27] On December 3, 2019 Ms. Peters wrote to Mr. Mohammedally asking that the plaintiff consent to a dismissal of the action and took the position that the Notice was improper and that damages would be sought in respect of its registration. A response was requested by December 5, 2019.

[28] By letter dated December 10, 2020 Mr. Mohammedally responded to the defendant’s complaint to RECO on behalf of the plaintiff, referred to the statement of claim and attached it and the Trust Agreement to the response.

[29] On December 12, 2019 the Director of Titles wrote to Mr. Mohammedally indicating that the Notice was invalid. He said he would not delete the Notice from title until December 23, 2019 so that the plaintiff could move for a CPL.

[30] On December 18, 2019 the plaintiff amended the statement of claim to include a proper legal description, the deficiency pointed out by Master Graham in his endorsement of February 2018.

[31] The plaintiff obtained an order for the CPL without notice on December 19, 2019. He was represented by new counsel, Michael Cohen.

[32] On December 20, 2020 RECO responded to the defendant’s complaint, stating that the allegations did not reasonably establish a substantive breach of ethics and advising that no action would be taken. The letter said that the allegations raised legal issues not within RECO’s jurisdiction.

[33] The defendant served a motion to dismiss the plaintiff’s action for delay. The motion record is dated December 20, 2020 and apparently was prepared without knowledge of the CPL motion. The defendant’s motion was withdrawn when it came on for hearing on January 10, 2020.

[34] The defendant’s statement of defence and counterclaim was delivered January 10, 2020.

[35] A notice of intent to act in person was delivered on behalf of the defendant on January 15, 2020.

[36] The plaintiff delivered a reply and defence to counterclaim on February 13, 2020.

[37] On March 4, 2021 the mortgagee, Equitable Bank, advised the defendant that the mortgage matured on March 1, 2021 and the mortgagee would not be renewing the loan.

[38] The defendant delivered his motion record for the discharge of the CPL in May 2021.

PRELIMINARY ISSUE

[39] The defendant objects to the admission of a supplementary affidavit sworn by the plaintiff on June 28, 2021, delivered after cross-examination of the defendant on his affidavit on June 23, 2021 and in breach of the timetable on this motion. The plaintiff did not bring a motion seeking leave pursuant to Rule 39.02(2). I heard argument on this issue at the commencement of the hearing. The plaintiff did not refer to this affidavit in his factum. At the hearing, plaintiff’s counsel advised that he was able to cross-examine on the material attached to the affidavit in his cross-examination of the defendant. Given that the plaintiff had not sought leave and as the material attached to the affidavit was cross-examined on, I ruled that the affidavit of the plaintiff sworn June 28, 2021 was not admissible on this motion.

APPLICABLE LAW

Discharge of CPL

[40] Section 103 of the Courts of Justice Act authorizes the registration of a CPL. Subsection 103(6) sets out when an order discharging a CPL may be granted. It reads as follows:

Order discharging certificate

(6) The court may make an order discharging a certificate,

(a) where the party at whose instance it was issued,

(i) claims a sum of money in place of or as an alternative to the interest in the land claimed,

(ii) does not have a reasonable claim to the interest in the land claimed, or

(iii) does not prosecute the proceeding with reasonable diligence;

(b) where the interests of the party at whose instance it was issued can be adequately protected by another form of security; or

(c) on any other ground that is considered just,

and the court may, in making the order, impose such terms as to the giving of security or otherwise as the court considers just.

[41] Both parties referred me to Perruzza v Spatone where Master Glustein (as he then was) summarized the applicable principles on a motion to discharge a CPL as follows:[^2]

(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).

Obligation to Make Full and Fair Disclosure

[42] The plaintiff moved for leave to issue the CPL without notice. The defendant submits that the plaintiff failed to make full and fair disclosure of material facts and that this is a sufficient ground to set aside the CPL. Rule 39.01(6) provides:

Where a motion or application is made without notice, the moving party or applicant shall make full and fair disclosure of all material facts, and failure to do so is in itself sufficient ground for setting aside any order obtained on the motion or application

[43] “Material facts” are those facts which must be drawn to the attention of the court and which may affect the outcome of the motion.[^3] The question is not whether the order would or would not have been granted; rather the issue is whether the omissions might have had an impact.[^4] The test for materiality is an objective one.[^5]

[44] The rationale for this rule has been eloquently expressed by Justice Myers in Moses v Metro Hardware Maintenance, Inc.,[^6] a case involving a CPL obtained without notice. In that decision Justice Myers wrote:

[20] Our system of civil justice is adversarial. It is premised upon parties each putting forward their own case and challenging each others’ cases. A dispassionate trier of fact and law is charged with the task of determining the outcome based on the idea that the parties and their professional advocates are best able to establish the truth through their own industry and self-interest.

[21] However, the adversarial system operates within the rule of law. Despite the system being adversarial, we do not have trial by battle in which the spoils go to the strongest or to the richest combatant. The rule of law requires that above all else, the resolution of civil disputes must be fair and just. Hryniak v. Mauldin, 2014 SCC 7, at para. 23.

[22] Although lawyers are duty-bound to advocate for their clients zealously and fearlessly, they too are required to do so “in a way that promotes the parties' right to a fair hearing in which justice can be done.” See: Rules of Professional Conduct, Law Society of Ontario, Commentary 5.1-1.

[23] Court proceedings without notice to one side or the other are an exception to the underlying premise of the adversarial system. When only one side is heard, the assurances of mutual self-interest and mutual, competitive advocacy by professionals committed to the fairness of the process are missing.

[24] To protect the rule of law and the fundamental assurance of a fair civil justice system, Rule 39.01 (6) imposes vital, extra burdens on parties who seek relief before the court without notice to their adversary. They are required to make “full and fair disclosure of all material facts.” The rule provides that the failure to make “full and fair disclosure of all material facts” is itself a basis to set aside an order obtained without notice regardless of the merits of the request for relief.

[25] Rule 39.01 (6) is not just speaking to witnesses’ testimony. It applies to the party who brings a motion without notice.

[26] The party who moves without notice must be fair. The regular zeal that is perfectly appropriate in face of an equally zealous adversary does not apply when a party chooses to go before a judicial officer without anyone else present to keep his or her zealousness in check.

[27] In United States v Friedland, [1996] OJ No. 4399 (Ont Gen Div) Sharpe J. (as he then was) described the issue as follows:

The rationale for this rule is obvious. The Judge hearing an ex parte motion and the absent party are literally at the mercy of the party seeking injunctive relief. The ordinary checks and balances of the adversary system are not operative. The opposite party is deprived of the opportunity to challenge the factual and legal contentions advanced by the moving party in support of the injunction. The situation is rife with the danger that an injustice will be done to the absent party. As a British Columbia judge noted recently:

There is no situation more fraught with potential injustice and abuse of the Court's powers than an application for an ex parte injunction. (Watson v. Slavik, [1996] B.C.J. No. 1885, August 23rd, 1996, paragraph 10.)

[28] The duties to make full and fair disclosure replace the checks and balances of the adversarial system. The court has no choice but to trust the moving party when he or she says they are fully disclosing and fairly presenting all material facts and the applicable law. It is the need to trust an otherwise zealously adversarial party that makes the situation so fraught with risk and renders justice so vulnerable to abuse.

[29] Justice Sharpe described the duty on a party who moves without notice in this way:

27…That party is not entitled to present only its side of the case in the best possible light, as it would if the other side were present. Rather, it is incumbent on the moving party to make a balanced presentation of the facts and law. The moving party must state its own case fairly and must inform the Court of any points of fact or law known to it which favour the other side. The duty of full and frank disclosure is required to mitigate the obvious risk of injustice inherent in any situation where a Judge is asked to grant an order without hearing from the other side.

28 If the party seeking ex parte relief fails to abide by this duty to make full and frank disclosure by omitting or misrepresenting material facts, the opposite party is entitled to have the injunction set aside. That is the price the Plaintiff must pay for failure to live up to the duty imposed by the law. Were it otherwise, the duty would be empty and the law would be powerless to protect the absent party. [Emphasis added.]

[30] Justice Sharpe also discussed the scope of the obligation to disclose all material facts. Materiality is determined objectively. He held that a party cannot be heard to say that she or he (or their lawyer) did not believe a point was relevant to the case. He adopted the following expression of the rule:

... The duty extends to placing before the court all matters which are relevant to the court's assessment of the application, and it is no answer to a complaint of non-disclosure that if the relevant matters had been placed before the court, the decision would have been the same. The test as to materiality is an objective one, and it is not for the applicant or his advisers to decide the question; hence it is no excuse for the applicant subsequently to say that he was genuinely unaware, or did not believe, that the facts were relevant or important. All matters which are relevant to the 'weighing operation' that the court has to make in deciding whether or not to grant the order must be disclosed. [Emphasis added.]

[31] The question then is whether the plaintiffs presented their case fairly and made full disclosure of all material facts. Did they recognize that they could not just present their own case in the best possible light, but that they were duty-bound to make a balanced presentation of both sides’ cases? Did they fulfil their obligation to inform the court of all material facts known to them that favour the other side? Did they disclose all facts that the Master might consider relevant as part in her “weighing operation”?

[45] Even if I conclude that the CPL was obtained without full and fair disclosure, the CPL may still be maintained. The court has a continuing discretion to act in the interests of justice having regard to the totality of the evidence.[^7]

[46] In Moses, Justice Myers held:[^8]

…on a finding being made that a plaintiff has breached the duties of full disclosure and fair disclosure, the presumptive remedy should be to set aside the order. The plaintiff should have to bear a real burden to show why it is just and equitable for the court to exercise its discretion to maintain or reissue the order on all the facts. I agree with Sharpe J. that were it otherwise, the duties would be empty and the law would be powerless to protect the absent party.

ANALYSIS

Whether there was full and fair disclosure on the motion

[47] The defendant contends that the evidence submitted by the plaintiff in support of the ex parte CPL motion omitted substantial material facts and misrepresented the purported urgency of the motion. The defendant contends that the 16 page affidavit filed on this motion is both substantively and materially different from the 11 paragraph affidavit filed on the motion before Master McAfee.

[48] On the CPL order Master McAfee added after the sentence “ON READING the motion record filed and hearing the submissions of counsel for the Plaintiff” the following words in handwriting: “who advises that the property at issue is being sold on December 23, 2019.” This was not true. The evidence is that the Notice was being deleted from title on that date. The deletion of the Notice is different than an imminent sale of the Property. There is no evidence that the Property was even listed for sale at that time. The earlier sale did not close in August 2019 due to the Notice. This is a material fact that may have affected the result on the motion. It may have caused Master McAfee to adjourn the motion to require the plaintiff to give notice to the defendant.

[49] As is evident from the chronology above, the plaintiff had notice that the defendant was taking issue with his claim for a 50% interest in the Property through the defendant’s complaint to RECO dated November 20, 2019 which took the position that the plaintiff’s claim to an interest in the Property was fraudulent. This complaint should have been disclosed on the motion. It was open to the plaintiff to also attach his lawyer’s response to RECO dated December 10, 2019 and to provide his version of events, but the fact that the defendant was disputing the plaintiff’s 50% interest was a material fact that might have influenced the Master’s decision on the motion and may have caused her to require notice to the defendant.

[50] In his affidavit sworn on the original CPL motion, the plaintiff said “The parties contributed equal amounts towards the purchase of the Property, but agreed to have the Property registered in the name of the Defendant only.” The plaintiff did not disclose that that he did not contribute to the initial $10,000 deposit.

[51] In his affidavit tendered on this motion, the plaintiff takes the position that he was not required to contribute equally to the required down payment and closing costs because of an agreement that, because of his expertise in choosing the proper investment, he would receive the real estate commission on the transaction (after the real estate broker took its cut), the plaintiff’s father would pay the initial $10,000 down payment and the balance of the closing deposit would be paid equally.

[52] The plaintiff also did not disclose the fact that he did not contribute to the mortgage brokerage fees or legal fees due on closing. Further, he did not disclose that he did not contribute to the mortgage, taxes or ongoing costs of the Property. In the plaintiff’s affidavit he says: “Louai did not provide me with an opportunity or permitted [sic] me to discuss with him how we would equally pay for maintenance, upkeep, and caring [sic] costs of the property.” The fact that that the plaintiff was not contributing to the expenses relating to the Property in accordance with the Trust Agreement was a material fact that ought to have been before the Master. It was of course, open to the plaintiff to provide the explanation that he now provides in his affidavit on this motion.

[53] The plaintiff did not disclose to the court on the motion for the CPL that he acted as a real estate agent on the purchase of the Property and earned a real estate commission. The defendant also says that the plaintiff ought to have referred to the fact that he did not disclose his alleged beneficial interest in the Property in writing to the seller of the Property pursuant to section 32 of the Real Estate and Business Brokers Act, 2002.[^9] In his affidavit, the plaintiff says that “I failed to disclose that I was a real estate agent as it would have an impact on the offer and if I had disclosed that I am a real estate agent interested in purchasing a property for myself, we would not have been able to purchase this unit for the price offered.” The fact that the plaintiff did not disclose an interest in the Property to the seller is a fact that could be seen as inconsistent with the plaintiff having an interest the Property. This is not a material fact that ought to have been disclosed.

[54] The defendant also argues that it was incumbent on the plaintiff to disclose that he had separately purchased another property with the defendant’s father and that the monies that he claims purchased his one-half interest in the Property may therefore have been attributable to his interest in the other property. The plaintiff’s evidence on this motion is that the plaintiff and the defendant’s father first entered into an agreement to purchase the Property with the intention of flipping it for profit. Later it was agreed that the defendant would take title. Given the temporal proximity of the two other real estate transactions involving the plaintiff and the defendant’s father, and the narrative now put forward by the plaintiff which connects the three real estate purchases, the involvement of the plaintiff and the defendant’s father in the other transactions is something that could have affected the result on the motion.

[55] The defendant says that the fact that the Trust Agreement was given to the defendant one day before closing was a material fact and ought to have been disclosed. The plaintiff does not dispute that the Trust Agreement was provided to the defendant the day prior to the closing but provides an explanation and he says that he told the defendant to take it to his lawyer. I am not convinced that that the plaintiff failed to disclose a material fact in this regard.

[56] In sum, I find that the plaintiff did not fully and fairly disclose all the materials facts on the motion and that these failures are, in this case, sufficient ground to set aside the CPL. In this regard, the incorrect advice to the Master that a sale of the Property was closing on December 23, 2019 and the failure to refer to the complaint made by the defendant to RECO which challenged the plaintiff’s entitlement to a 50% interest weigh particularly heavily in this regard.

Delay

[57] The defendant submits that the plaintiff has not prosecuted the proceeding with reasonable diligence and therefore the court should discharge the CPL pursuant to section 103(6)(a)(iii) of the Courts of Justice Act. The defendant relies on Deveney v Vanton Construction Inc.,[^10] where the court discharged a CPL on the ground that the plaintiff had failed to act with reasonable dispatch to bring the matter to trial within a year.

[58] The plaintiff has effectively tied up the Property since filing the Notice on November 23, 2016. The action has been outstanding over three and a half years. The plaintiff has taken no steps to prosecute the action since the close of pleadings in February 2020.

[59] The plaintiff acknowledges that he is responsible for some of the delay, however he says that the defendant is responsible for some of the delay when he delivered a notice of intention to act in person. I reject this submission. The defendant delivered his statement of defence and counterclaim around the same time he delivered his notice of intention to act in person in January 2020. Other than file a reply, the plaintiff has taken no steps to move the action forward. The filing of a notice of intent to act in person did not preclude the plaintiff from moving the matter forward.

[60] I find that the plaintiff has not prosecuted the action with reasonable diligence and this circumstance would itself justify the discharge of the CPL.

Consideration of the Equities

[61] Even without the breach of the obligation to make full and fair disclosure, and regardless of the plaintiff’s failure to diligently prosecute the action, I would have discharged the CPL on the basis of the equities.

[62] At the hearing of this motion, plaintiff’s counsel acknowledged that the Property is not unique. The Property is one of 267 units in a condominium building. The plaintiff alleges that the Property was an investment for both parties. The defendant says he purchased the Property as residence. I do not have to decide the disputed fact of the defendant’s intention. The undisputed fact that the Property is not unique and the plaintiff’s investment motive weighs in favour of discharging the CPL.

[63] The plaintiff has made an alternative claim for damages and damages are relatively easy to calculate. It will be a relatively simple matter to ascertain the current value of the Property, mortgage costs, taxes and any rental income. Damages are a satisfactory remedy for the plaintiff as it is clear that his interest was in making a profit. These are factors which militate in favour of an order discharging the CPL.

[64] The plaintiff says that the balance of convenience favours the CPL remaining on title as the plaintiff will be greatly prejudiced as the defendant will dispose of the Property before the plaintiff’s claim can be determined. The force of this submission is significantly lessened by the delay since the plaintiff first commenced this action. The plaintiff has had years to seek to obtain a judgment in this matter.

[65] At the hearing of the motion, Mr. Lo Greco candidly admitted that his client is concerned about collecting on the judgment “based on the conduct of the defendant.” The plaintiff’s position is that the defendant has filed false affidavits with the court. The plaintiff says that the defendant’s evidence in his affidavit that he was not served with the statement of claim is demonstrably false. As noted above, I do not need to decide the service issue. I do not need to decide the merits of the plaintiff’s claim and whether the plaintiff or the defendant should be believed.

[66] Whether or not the plaintiff’s concern that the defendant will take steps to make himself judgment proof is not a reason to maintain the certificate. A CPL is not intended to stand as security for a plaintiff’s claim. In Bains v Khatri, Justice Doi refused leave to issue a certificate of pending litigation stating in part: “Should the moving Plaintiffs have concerns about the dissipation of assets, it is open for them to seek relief by way of a Mareva order. A certificate of pending litigation is intended to protect an interest in land in situations where other remedies would be ineffective.”[^11]

[67] The defendant will be harmed if the CPL remains on title. The defendant wishes to sell the Property to pay off the matured mortgage and to avoid power of sale proceedings. He says he has not been able to obtain alternative financing on the Property due to the CPL. He intends to use the sale proceeds after the mortgage is discharge to pay off his credit card debts and student loans and to use the monies to start his own car detailing business. His evidence is that he has been unemployed since January 2020 and has been unable to secure employment during the pandemic.

[68] Having considered and balanced the equities, I conclude that, even absent the other reasons for discharging the CPL, it is just and equitable to discharge the CPL.

[69] The plaintiff asks for an order for security in the event that the CPL is discharged. An order for security is not just in the circumstances. The plaintiff has failed to advance the case while the defendant has continued to make the mortgage, tax and other payments. The defendant’s evidence is that he requires the closing funds available after the mortgage is paid out to purchase a business to make a living.

DISPOSITION

[70] The defendant’s motion is granted and an order shall go vacating the CPL registered against the Property without security.

[71] If the parties cannot agree on the costs of this motion, they may file written costs submissions not to exceed three pages (double-spaced) excluding costs outlines. The defendant shall deliver his costs submissions by September 24, 2021, and the plaintiff shall deliver his two weeks thereafter.

Associate Justice L. La Horey

Date: September 1, 2021

[^1]: The defendant put into evidence the case history print out for this action obtained from the court office. [^2]: 2010 ONSC 841 at para 20 [^3]: K.A. v Mitchell, 2013 ONSC 4051 at para 16; Cantor Pool Products Ltd. (Re), [2006] O.J. No. 3693 at para 7 [^4]: K.A. v Mitchell, at para 20 [^5]: Horrocks v McConville, 2021 ONSC 522 (Master) at para 12; Boal v International Capital Management Inc., 2018 ONSC 2275 at para 59 [^6]: 2020 ONSC 6684 at paras 20 - 31, motion for leave to appeal refused, 2021 ONSC 877. Emphasis in original. [^7]: Moses at para 72; K.A. v Mitchell, 2013 ONSC 4051 at para 19; Cantar Pool Products Ltd. (Re), [2006] OJ No 3693 (SC) at para 6; Gong v Neuhaus Management, 2021 ONSC 531 at para 51 [^8]: Moses at para 76 [^9]: S.O. 2002, c. 30. [^10]: 1991 CarswellOnt 3517 (Gen Div) at paras 11-12 [^11]: 2019 ONSC 1401 at para 37