Zhao v. Leksikova, et al., 2021 ONSC 6665

COURT FILE NO.: CV-21-00666599-0000

DATE: 2021 10 01

ONTARIO

SUPERIOR COURT OF JUSTICE

XING ZHAO

-and-

OLENA LEANNA LEKSIKOVA and SUTTON GROUP

-ADMIRAL REALTY INC.

BEFORE: Associate Justice Ilchenko

COUNSEL:

Leon Li for the Moving Party, Plaintiff, Xing Zhao (the “Plaintiff” or “Zhao”)

Alex Hora for Defendant Olena Leanna Leksikova (“Leksikova”)

Sean Zeitz for Responding Parties Luxury Castle Homes Inc. (“Luxury Castle”) 1st and 2nd Mortgagee and Saeid Sarrafian (“Sarrafian”)

No one appearing for Defendant Sutton Group- Admiral Realty (“Sutton Group”)

HEARD: September 17, 2021

RELEASED: October 1, 2021

REASONS FOR DECISION

I) Procedural Context in which the Motion is Brought

1On August 4, 2021 the Plaintiff commenced an Action, CV-19-00632504 (the “Action”) against the Defendants Leksikova and Sutton Group by issuing a Statement of Claim (the “Statement of Claim”) requesting the following relief:

1. specific performance of an agreement of purchase and sale between Zhao and Leksikova dated February 2, 2021 (the “APS”) for the purchase and sale of a residential property municipally known as 91 Burncrest Drive, Toronto, Ontario M2M 3M3 (the “Burncrest Property”); as well as

2. for a Certificate of Pending Litigation (the “CPL”) against the Burncrest Property; and

3. an Order granting Zhao leave to register the CPL against title to the Burncrest Property.

2On August 6, 2021 the Plaintiff filed a Motion Record (the “Original Motion Record”) for an urgent ex-parte motion in writing to obtain the CPL requested in the Statement of Claim. The Motion (the “Original CPL Motion”) was submitted as an Urgent Motion. The Original CPL Motion was supported by the Affidavit of Zhao sworn August 5th, 2021 (the “Zhao Affidavit”) and exhibits thereto.

3On August 10, 2021 Master Frank (as he then was), sitting as the Duty Master that week reviewed the Original Motion Record submitted by the Plaintiff and ordered that this Original CPL Motion proceed by way of an Urgent Motion on Notice to the Defendants and the real estate solicitor involved, to be heard prior to October 10, 2021. On review of the materials for the Original Motion Record, Master Frank stated in the Endorsement:

“In terms of the timing of the motion, there is currently no evidence of an imminent closing date with a subsequent purchaser or any indication why a caution could not be registered against the property at this time. Therefore, the motion shall be scheduled to be heard prior to October 10, 2021 unless the plaintiff provides further reasons why the motion should be heard sooner.”

4The Original CPL Motion for the relief requested in the Notice of Motion was scheduled by the Motions Court Office and added to the end of my full list on September 17, 2021 as an Urgent Motion.

5On August 25th, 2021 the Plaintiff filed a Supplementary Motion Record (the “Supplementary Motion Record”). The Notice of Motion in the Supplementary Motion Record amended the Notice of Motion to the Original Motion Record (the “Amended Notice of Motion”).

6The Plaintiff was, at this point, still seeking the same relief as the Original CPL Motion, namely specific performance of the APS and the CPL, but amended the grounds of the Motion, as the Plaintiff had discovered that the First Mortgage and the Second Mortgage (as defined below) on the property had been assigned to Luxury Castle, that Luxury Castle had listed the Burncrest Property for sale and that Luxury Castle would be opposing the Original CPL Motion. I will describe these issues in more detail below. The Supplementary Motion Record provided the Supplementary Affidavit of Zhao sworn August 25, 2021 (the “Supplementary Zhao Affidavit”).

7The Amended Notice of Motion and the Supplementary Zhao Affidavit advised that Leksikova had issued an Application on July 14, 2021 (the “Leksikova Application”) under the Mortgages Act as Application CV-21-665543 against Luxury Castle and Sarrafian requesting declarations for discharges in relation to the First Mortgage and the Second Mortgage (as defined below) on the Burncrest Property, an Order quantifying the amounts payable under the First Mortgage and the Second Mortgage (as defined below) and an Order discharging these mortgages upon paying the quantified amounts owing.

8Attached to the Supplementary Zhao Affidavit at Exhibit “A” was the Notice of Application for the Leksikova Application, as well as the Endorsement of Justice Ramsay at Civil Practice Court dated July 20, 2021 (the “Ramsey J. Endorsement”) scheduling the Leksikova Application for a two hour hearing before a Justice of the Superior Court on October 22, 2021 and setting a timetable.

9It is anticipated in the Ramsey J. Endorsement that Zhao would be summoned as a witness on the Leksikova Application. Counsel for the Plaintiff advised the Court that the Plaintiff would be intervening in the Leksikova Application.

10On or about August 31, 2021 Luxury Castle served a Responding Motion Record containing a Cross-Motion (the “Cross-Motion”) to the Original CPL Motion, also returnable on the hearing date for the Original Cross Motion for Orders declaring that:

1. the First Mortgage and Second Mortgage (each as defined below) that Luxury Castle had assigned to it had priority over any interest of the Plaintiff in the Burncrest Property;

2. that Luxury Castle is at liberty to continue to exercise its legal rights under the First Mortgage and Second Mortgage (as defined below) and may market and sell the Burncrest Property and may grant a Transfer of Title to the Property to a purchaser for Value; and

3. should the Plaintiff succeed on the Original CPL Motion, an Order directing the Land Registrar to expunge and discharge the CPL from title to the Burncrest Property upon the registration of a Transfer Under Power of Sale by Luxury Castle.

11The Responding Motion Record attached the Affidavit of Sarrafian sworn on August 30, 2021 (the “Sarrafian Affidavit”). Sarrafian was cross-examined (the “Sarrafian Cross-Examination”) on the Sarrafian Affidavit by Counsel for the Plaintiff and the Transcript of the examination was filed in support of the Original CPL Motion (the “Sarrafian Transcript”).

12I can find no record that Luxury Castle ever sought approval from the Court to bring the Cross-Motion as an Urgent Motion, or that the Court granted such approval, on the same return date as the Original CPL Motion, or otherwise, and no such motion was approved for hearing before me along with the Original CPL Motion.

13Counsel for Luxury Castle advised the Court that the Cross-Motion was more of a response to the Plaintiff’s Original CPL Motion, but Counsel for Leksikova and the Plaintiff objected to the bringing of the Cross-Motion, particularly given that issues relating to the discharge of the First and Second Mortgages (as defined below) are already being dealt with by the Superior Court in the Leksikova Application.

14As the Cross-Motion was not properly approved for hearing as an Urgent Motion, the Cross-Motion was not be heard on the hearing date. To the extent that the evidence in the Sarrafian Affidavit and the Sarrafian Transcript is relevant to the relief sought in the Original CPL Motion, I will consider that evidence with respect to issues relevant to the determination of the Original CPL Motion.

15In response to the Responding Motion Record of Luxury Castle, and the Luxury Castle Cross-Motion, the Plaintiff served the Reply Motion Record containing the Second Amended Notice of Motion, which adds as relief requested an Order granting leave to the Plaintiff to amend the Statement of Claim to add Luxury Castle and Sarrafian as Defendants, and validating service of the Amended Statement of Claim.

16The Reply Motion Record of the Plaintiff attaches the Affidavit of Nanda Singh (“Singh”) sworn September 6, 2021, a law clerk for Counsel for the Plaintiff (the “Singh Affidavit”). The Singh Affidavit provides evidence for the motion for Leave to Amend the Statement of Claim and the amendments made in the Proposed Amended Statement of Claim, but also appends at Exhibit A the entire Application Record of Leksikova on the Leksikova Application, including the Affidavit of Leksikova sworn August 11, 2021 (the “Leksikova Application Affidavit”).

17For the same reasons as set out above for the Cross-Motion, the addition of a Motion for relief to amend the Statement of Claim was also not properly approved for hearing as an Urgent Motion and was not heard on the hearing date. To the extent that the evidence in the Singh Affidavit (and exhibits thereto) is relevant to the relief sought in the Original CPL Motion, I will consider that evidence with respect to the determination of the Original CPL Motion.

18Counsel for Leksikova advised that Leksikova was filing no materials in response to the Original CPL Motion and was not opposing the relief sought on the Original CPL Motion, as amended by the Amended Notice of Motion. He advised that his attendance was to oppose the bringing of the Cross-Motion. To date it does not appear that Leksikova has filed a defence in response to the Statement of Claim.

19Zhao has not been cross-examined on the Zhao Affidavit and the Supplementary Zhao Affidavit. Singh has not been cross-examined on the Singh Affidavit. I am not aware whether Leksikova has been cross-examined on the Leksikova Application Affidavit, however the Ramsay J. Endorsement indicates that Cross-Examinations in that proceeding are to be completed by October 11, 2021. Counsel for Luxury Castle advised that he would be delivering responding materials on the Leksikova Application on September 17th, 2021.

20Accordingly, I will be solely determining whether the relief requested in the Original CPL Motion, as set out in the Amended Notice of Motion, should be granted. Counsel were permitted to use the evidence contained in the Luxury Castle Responding Motion Record and the Plaintiff’s Reply Motion Record in their arguments on the Original CPL Motion, and I will consider this evidence in my decision.

21The Plaintiff’s materials filed, including the Sarrafian Transcript, are 649 pages in three different Motion Records with 4 total volumes. Luxury Castle’s materials are 184 pages. No Compendia were filed by the Parties. None of the Motion Records or the factual parts of the Facta are tabbed pdfs or are hyperlinked to the exhibits referred. This greatly slowed the preparation of these reasons.

III) Statutory Provisions and Jurisprudence

1) General Legal Framework for Granting a CPL on a Motion with Notice:

22Section 103(1) of the Courts of Justice Act, R.S.O. 1990 c. C-43 (“CJA”) grants the authority for issuing and registering a CPL and s. 103(6) of the CJA provides the court’s jurisdiction to discharge a CPL:

103(1) The commencement of a proceeding in which an interest in land is in question is not notice of the proceeding to a person who is not a party until a certificate of pending litigation is issued by the court and the certificate is registered in the proper land registry office under subsection (2). . . .

(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.

23Rule 42 provides the authority to issue and discharge a CPL:

Issuing of Certificate

Court Order Required

42.01 (1) A certificate of pending litigation (Form 42A) under section 103 of the Courts of Justice Act may be issued by a registrar only under an order of the court. R.R.O. 1990, Reg. 194, r. 42.01 (1).

Claim for Certificate to be in Originating Process

(2) A party who seeks a certificate of pending litigation shall include a claim for it in the originating process or pleading that commences the proceeding, together with a description of the land in question sufficient for registration. R.R.O. 1990, Reg. 194, r. 42.01 (2).

Motion Without Notice

(3) A motion for an order under subrule (1) may be made without notice. R.R.O. 1990, Reg. 194, r. 42.01 (3).

Order to be Served Forthwith

(4) A party who obtains an order under subrule (1) shall forthwith serve it, together with a copy of the notice of motion and all affidavits and other documents used at the hearing of the motion, on all parties against whom an interest in land is claimed in the proceeding. O. Reg. 219/91, s. 4.

Discharge of Certificate

42.02 (1) An order discharging a certificate of pending litigation under subsection 103 (6) of the Courts of Justice Act may be obtained on motion to the court. R.R.O. 1990, Reg. 194, r. 42.02 (1).

Factum

(2) Each party to a motion under subrule (1) shall, unless the motion is made on consent, serve on every other party to the motion a factum consisting of a concise argument stating the facts and law relied on by the party. O. Reg. 14/04, s. 24.

(3) The moving party’s factum shall be served and filed with proof of service in the court office where the motion is to be heard at least seven days before the hearing. O. Reg. 394/09, s. 19.

(4) The responding party’s factum shall be served and filed with proof of service in the court office where the motion is to be heard at least four days before the hearing. O. Reg. 394/09, s. 19.

24The Parties both cite in their facta (albeit with different emphasis) the decision of Master Glustein (as he then was) in Perruzza v. Spatone, 2010 ONSC 841 regarding when the Court should exercise its discretion to grant or discharge an order issuing a CPL. At para. 20 Master Glustein (as he then was) states:

“ [20] I rely on the following legal principles:

(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 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)(“Dhunna”); 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).

25In 2526716 Ontario Inc. v. 2014036 Ontario Ltd., 2017 ONSC 1762 at paragraph 48, dealing with the discharge of a certificate of pending litigation, Emery J. states:

“The practical approach on a motion to discharge a CPL is to first determine if there is a triable issue as the threshold question mandated by Clock Investments. If and when this threshold question has been answered to the satisfaction of the court, the equities on all matters between the parties may then be considered for the exercise of the court's discretion on a principled basis as to whether a certificate should be allowed or discharged.”

26Although trite, Courts have found that a valid agreement of purchase and sale creates an interest in land sufficient to support the granting of a CPL as stated in THMR Development Inc. v. 1440254 Ontario Ltd., 2017 ONSC 5411 at para 15.

272676547 Ontario Inc. v Elle Mortgage Corporation 2020 NSC 4463 Master Josefo (as he then was) states at para 10:

“Section 103 of the CJA, along with Rule 42, delineates the authority to issue and discharge a CPL. The test to obtain a CPL is not a very high hurdle to overcome. In essence, the moving party must demonstrate a reasonable claim to an interest in land. Phi (in trust) v. Laidlaw Transit Ltd. 2006 CarswellOnt 5681 described the “burden on the moving party [as] not high”. Even if the plaintiff/moving party’s claim is not strong, so long as there is a “triable issue sufficient to find a reasonable claim to an interest in land”, the CPL will be granted. That, however, presumes full and candid disclosure to the Court asked to make the requisite Order. I will return to that point subsequently.”

28As the Original CPL Motion was brought ex parte in writing, was then required by Master Frank (as he then was) to be brought on Notice, the provisions of R.39.01(6) may be relevant to my decision:

39.01(6) 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.

2) Determinations of Credibility of Witnesses on the Original CPL Motion:

29Counsel for the Plaintiff in his submissions, and at paragraphs 35 to 48 of the Plaintiff’s Factum, takes the position that I should make adverse findings regarding the credibility of Sarrafian based on his cross-examination testimony in the Sarrafian Transcript.

30In 2676547 Ontario Inc. v Elle Mortgage Corporation 2020 NSC 4463 Master Josefo (as the then was) made the following statement with respect to the Master making findings of credibility on a motion to remove a CPL:

“Ontario Inc. v. Denofrio, 2000 CarswellOnt 2842 is a decision which discusses the equitable test. Therein, Justice Panet reviews that “a Judge must exercise …discretion in equity and look to all of the relevant matters between the parties in determining whether or not the certificate should be vacated”. That decision also provided that, “genuine disputes as to issues of fact should not be decided on a motion such as this” [my emphasis], with questions of and findings upon credibility preferably reserved to the trial judge.

“In this case, counsel each addressed the credibility (or alleged lack thereof) of the main individuals, Mr. Frisoni and Mr. Tavares. Given that is how the case was framed, it becomes necessary that I make findings pertaining to credibility. Yet I do so only as required in order to properly address the live issues and so dispose of the motion.”

31On appeal of that decision to the Superior Court in 2676547 Ontario Inc. v. Elle Mortgage Corporation, 2020 ONSC 4595, Pinto, J. upheld the Order of Master Josefo (as he then was) discharging the CPL and stated the following regarding the fine line that an Associate Justice must walk in making determinations of credibility on a motion to discharge a CPL:

“[10] After instructing himself on the correct law regarding credibility decisions per Denofrio, the Master stated that since counsel themselves had addressed credibility of the main principals, Frisoni and Tavares, it became necessary for him to make findings of credibility but "only as required to properly address the live issues and so dispose of the motion." (para. 13). The Master pointed out that he was not deciding issues "in finality" such as whether the plaintiff has an interest in land, "but rather if, on the equities, the CPL should or should not be discharged because of where that evidence leads me."

“[11] The Master was acutely aware of the proper and limited role of credibility decisions on the motion. The Master found that the motion could not be resolved without making some credibility findings (para. 15). In fact, the plaintiff invited the Master to do so, except the plaintiff argued that the credibility issues should be resolved as against Tavares.”

32This is especially important in this case as many of the issues being dealt with in the Sarrafian transcript are precisely the same issues as are being determined in the Leksikova Application by the Superior Court Justice hearing that matter, on proper materials and with cross examination of both parties.

33Accordingly, I will only consider the credibility of Sarrafian, and Zhao, on the evidence they have provided for this motion to determine “…if, on the equities, the CPL should or should not be discharged [granted] because of where that evidence leads me."

The Threshold issue – Is there a triable issue in respect of an interest in land?

34Following the test under Perruzza, set out above, the threshold issue that needs to be determined is whether there is a triable issue in respect of an interest in the subject land, being the Burncrest Property, but not whether the Plaintiff will likely succeed at Trial.

35On this issue Perruzza followed the ruling of the Court of Appeal in G.P.I. Greenfield Pioneer Inc. v. Moore58 O.R. (3d) 87 [2002] O.J. No. 282, 2002 6832 (ON CA), the test on a motion under s.103(6)(a)(ii) is whether there is a triable issue in respect to whether the party applying for a CPL has a reasonable claim to the interest in the land claimed, but not to determine whether the party has or has not a reasonable claim to an interest in land.

36The Court of Appeal in G.P.I Greenfield Pioneer v. Moore, Supra at 20 confirms that 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”.

37In RJM56 Holdings Inc. v. Treemart Farms Inc., 2021 ONSC 4422, Master McGraw (as he then was) ruled that in determining if there is a triable issue, the evidentiary bar is low and the court is not to assess credibility or decide disputed issues of fact.

38As noted previously, and in the submissions of counsel for the Plaintiff, the Responding Party Luxury Castle has never cross-examined Zhao or Singh on any of the affidavits sworn in support of the Original CPL Motion. Leksikova, to my knowledge, has also not been examined on the Leksikova Application Affidavit.

39The Defendant Leksikova has filed no affidavit evidence on the Original CPL Motion. Counsel for Leksikova advises that Leksikova is not opposing the Original CPL Motion.

40As there were no Compendia filed and as there has been a considerable volume of contradictory evidence filed on this motion, I have summarized from each of the affidavits the evidence of relevance filed in order to resolve which assertions of fact have been contradicted and which remain uncontradicted. This assists both in the balancing of the equities in this Motion and assists my future colleagues in dealing with this Action and the Leksikova Application.

41The evidence relevant to this threshold issue in the Zhao Affidavit is:

-On February 2, 2021, the Plaintiff, Zhao and the Defendant, Leksikova entered into the APS whereby Zhao agreed to purchase, and Leksikova agreed to sell, the Burncrest Property for $1,365,000 (para. 7 and Exhibit C)

-Closing was originally scheduled for April 21, 2021 (para. 7)(the “Original Closing Date”)

-Leksikova and Zhao agreed on $50,000 as the amount of deposit to be paid by Zhao to Leksikova’ s listing broker the Defendant Sutton Group. (para. 7)

-On February 2, 2021, Zhao paid the deposit of $50,000 by way of bank draft payable in Trust to Sutton Group pursuant to the APS. (para. 11 and Exhibit D)

-The APS contains, inter alia, the following terms (para. 8):

(a) By section 20 – “TIME LIMITS: Time shall in all respects be of the essence hereof provided that the time for doing or completing of any matter provided for herein may be extended or abridged by an agreement in writing signed by Seller and Buyer or by their respective lawyers who may be specifically authorized in that regard.”; and

(b) By Schedule A – “The Seller agrees to discharge any mortgage or liens or other encumbrances registered against the property on or before closing at his [sic] own expense either from the proceeds of the sale or by solicitors under taking [sic].”

-The APS was a firm deal without the conditions of home inspection, due diligence, or financing. (para. 9)

-On February 2, 2021, Leksikova, Zhao and their respective real estate agents executed a Confirmation of Co-operation and Representation (para. 12 and Exhibit E)

-Leksikova and Zhao agreed to extend closing from April 21, 2021 to May 27, 2021. (para. 14 and Exhibit G)

-As term of the extension, Zhao agreed to pay an additional deposit of $20,000 to Sutton in trust. (para. 14 and Exhibit H)

-On May 27, 2021, Leksikova and Zhao agreed to further extend closing from May 27, 2021 to June 4, 2021 and as a term of the second extension, Zhao agreed to pay an additional deposit of $10,000 to Sutton in trust. (para. 15 and Exhibit I and J).

-As of May 27, 2021, Zhao had paid deposits in the total amount of $80,000 to

Sutton Group.(para. 16) (the “Deposit”)

• “On the extended closing date of June 4, 2021, I was ready, willing and able to close the purchase of the Burncrest Property.” (para. 26 and Exhibit R)

-On June 4, Leksikova’ s lawyer sent an email to Zhao’s transactional lawyer, requesting to extend the closing to July 7, 2021 due to Leksikova’ s inability to discharge the second mortgage on title of the Burncrest Property. (para. 26 and Exhibit R)

(I note that there is a typographical error in paragraph 26 that states July 7 instead of June 7, but the Exhibit R emails indicate the June 7 extension date requested and the Statement of Claim does not contain that error)

-On June 4 Zhao agreed to grant the extension to June 7, 2021 as requested by Leksikova. (para. 26 and Exhibit R) (the “Final Closing Date”)

• “On June 7, 2021, I was ready, willing and able to close the purchase of the Burncrest Property and had tendered the closing documents and closing funds upon Leksikova’ s lawyer. Leksikova failed to discharge the mortgagees on title of the Burncrest Property and failed to close the transaction, thereby breaching the APS.” (para. 27)

-No further extension of closing was agreed upon between the parties. (para. 28)

-On June 10, 2021, Leksikova’ s lawyer returned Zhao’s closing funds to Zhao’s transactional lawyer. (para. 28 and exhibit S)

-the deposits by Zhao in the total amount of $80,000 continue to be held in trust by Sutton Group.(para. 32)

• “On July 30, 2021, I passed by the Burncrest Property and discovered that there was a “For Sale” sign on the front lawn of the Burncrest Property.” (para. 34 and Exhibit T)

-Prior to the signing of the APS, Leksikova had already obtained zoning approval from the City of Toronto that is necessary for the construction of a new house on the Burncrest Property. (para. 4,5, 6 and 33 and Exhibits A and B)

-Zhao considered and relied upon the zoning approval in agreeing to purchase the Burncrest Property. (para. 6)

-Between February 2, 2021 and June 7, 2021, Zhao obtained a zoning certificate, a demolition permit, a building permit, a drainage permit and a plumbing permit from the City of Toronto for the demolition and rebuilding of the Burncrest Property. Zhao also arranged other work in relation to the demolition and rebuilding of the Burncrest Property. (para. 17-24 Exhibits K-Q)

-Zhao was planning to commence construction on the Burncrest Property as soon as the subject transaction closed. (para. 25)

-Zhao’s evidence is that it is unlikely, if not impossible, that Zhao will be able to locate other residential properties for sale that: are similar in size, are at a similar location, have pre-approved zoning for rebuilding, and have a demolition permit, building permit, drainage permit and plumbing permit required for the demolition and rebuilding of the property. (para. 33)

-Subsequent to Leksikova’s breach of the APS, Zhao has not found another residential property for sale that is similar to the Burncrest Property.(para. 33)

-On July 30, 2021, Zhao discovered that the Burncrest Property had been listed for sale to the public following Leksikova’s breach of the APS, with a higher listing price of $1,489,000. (para. 34-35 and Exhibits T and U)

42The evidence relevant to this threshold issue in the Supplementary Zhao Affidavit is:

-On August 10, 2021 Zhao was advised by his counsel that (para. 5):

(a) On or around June 4, 2021, Luxury Castle assumed both the first and second mortgages against the Burncrest Property;

(b) Luxury Castle is a corporation owned by Leksikova’s ex-partner with

whom Leksikova is presently in the midst of a family law dispute;

(c) There are disputes between Leksikova and Luxury Castle with

respect to, among other things, the discharge amount under the

second mortgage against the Burncrest Property, which disputes

prevented the sale of the Burncrest Property to Zhao from closing;

(d) Leksikova has brought an application against Luxury Castle and her

ex-partner Sarrafian for, among other things, an Order discharging the first and second mortgages against the Burncrest Property in order to close

the sale of the Burncrest Property to Zhao;

(e) Leksikova’s application is scheduled to be heard on October 22,

2021;

(f) Luxury Castle, not Leksikova, was currently listing the Burncrest Property for sale.

-From emails exchanged by counsel for Zhao and Luxury Castle on August 16th, Zhao learned (para. 5):

(a) Luxury Castle was aware that Zhao had brought the urgent Original CPL Motion, and Luxury Castle had been served with the Motion Materials for the Original CPL Motion;

(b) Luxury Castle was advised that Zhao wished to maintain the status quo and preserve the Burncrest Property, at least until the Leksikova Application was adjudicated by the Court on October 22, 2021;

(c) Luxury Castle demanded, specifically on a with prejudice basis, that Zhao purchase the Burncrest Property from Luxury Castle for $1,450,000 which is $85,000 higher than the purchase price in the APS;

(d) When Zhao did not agree to purchase the Burncrest Property from Luxury for $1,450,000, Luxury Castle confirmed that it will continue to list the Burncrest Property for sale.

-“On August 17, 2021, the Ontario Land Registry Office advised my real estate lawyer that a Caution that I registered on title of the Burncrest Property was being withdrawn. The Ontario Land Registry Office directed that I register a “Caution –Agreement of Purchase and Sale” instead.” (para. 8 and Exhibit C)

“-Therefore, on August 19, 2021, I registered a Caution – Agreement of Purchase and Sale (the “Caution-APS”) on title of the Burncrest Property. I had to pay land transfer tax in the total amount of $47,615.30 in order to be able to register the Caution-APS. My payment of this amount has been reflected on the registration of the Caution-APS. The registration of the Caution-APS states that “The Land Registrar is authorized to delete this caution 60 days from the date of closing, which is 2021/10/18.” (para 9 and D)(the “Caution APS”)

-“I am a bona fide purchaser for value without notice. The subject transaction was made at arm’s length. The purchase price under the APS and the lot size of the Burncrest Property for rebuild are suitable for me given my financial ability.”

-Zhao corrected the Zhao affidavit to testify that in addition to the two amendments to the APS that were described in the Zhao Affidavit dated May 3, 2021 and May 27, 2021, there was a third amendment to the APS dated April 7, 2021 which extended closing from April 21, 2021 to May 3, 2021. (para 14 and Exhibit G)

-The Extensions to the closing date under the APS agreed to by Zhao and Leksikova were: April 21,2021 → May 3, 2021 → May 27, 2021 → June 4, 2021 → June 7, 2021.(para. 15)

-The first three extensions were requested by Zhao due to the delay in the approval of his mortgage application. (para. 15)

-The fourth extension was requested by Leksikova due to her inability to discharge the second mortgage on title of the Burncrest Property. (para. 15)

-All four extensions were negotiated between, and agreed upon by, Leksikova and Zhao either directly or through agent. (para. 15)

43The Plaintiff has by filing the Singh Affidavit, which attaches at Exhibit A the entire Application Record of Leksikova, entered into evidence the Leksikova Application Affidavit sworn August 11, 2021 in response to the Responding Motion Record of Luxury Castle and the Cross Motion. I will not be deciding the issues on the Cross-Motion, nor on the Leksikova Application which will be fully litigated before a Superior Court Justice.

44To the extent that any of the information in the Leksikova Application Affidavit is relevant to dealing with the issues on the Original CPL Motion and the balancing of the equities under the Perruzza test, I will consider that evidence. Counsel for the Plaintiff referred extensively to the Leksikova Application Affidavit in his factum and oral submissions, and counsel for Luxury Castle and Leksikova made no objection and similarly referred to the evidence in the Leksikova Application Affidavit at the hearing.

45The evidence relevant to this threshold issue in the Leksikova Application Affidavit is:

-Leksikova is the registered owner of the Burncrest Property which she purchased on September 8, 2017 for the purchase price of $1,255,000. (para. 2 and Exhibit A)

-On September 8, 2017, while Leksikova and Sarrafian were still partners in a relationship, they entered into a mortgage registered as AT4676067 in favour of mortgagee Tribecca Finance Corporation (“Tribecca”) for the principal sum of $440,000.00 (the “Second Mortgage”). (para. 6 and Exhibit C)

-The Second Mortgage was cross-collateralized across two properties, one being a home at 31 Montfort Drive in Toronto, Ontario (the “Montfort Home”) which Leksikova states is owned by Sarrafian and the second being the Burncrest Property, which was owned entirely by Leksikova. (para. 6 and Exhibit C).

-There was a first mortgage registered against the Burncrest Property in the amount of $850,000 (the “First Mortgage”) in favour of Yogesh and Rita Shah.(the “Shahs”)(para. 7 and Exhibit A)

-When the relationship between Leksikova and Sarrafian broke down, payments were no longer being made on the First Mortgage and the Second Mortgage.(para. 10)

-Leksikova decided to sell the Burncrest Property and received seven (7) offers which ranged in price from low ball offers in the $800,000s to offers to over $1.3 Million. (para. 14) and Exhibit D)

-The Burncrest Property borders a concrete barrier wall along Highway 401 and is closer to Bathurst Street than it is Avenue Road, in Lekiskova’s view positioning it in a less desirable part of its area. (para. 12)

-It is Leksikova’s opinion that the Burncrest property is mostly attractive to builders. (para. 12)

-Tribecca began enforcement proceedings when the Second Mortgage went into default which included the service of a Notice of Sale (the “Tribecca Notice of Sale”) and a Statement of Claim on Leksikova. (para. 18 and Exhibit G)

-Leksikova entered into the APS with Zhao for the purchase of the Burncrest Property for the purchase price of $1,365,000 (para.15 and Exhibit E)

-The Zhao APS had an original closing date of April 21, 2021. (para.16)

-Leksikova was forced to extend the closing date to May 3 with Zhao’s consent to “…as I could not deliver vacant possession on that date as the tenants present at the Leksikova Property at the time had not left yet.” (para. 16)

-The APS was amended again twice at the Zhao’s request to further extend the

closing date, from May 3 to May 27, 2021 and again from May 27 to June 4, 2021. (para. 17)

-Zhao told Leksikova that the financing for the purchase was taking longer than

expected and that was why more time was needed to close. (para. 17)

-Leksikova asked for and received additional deposits of $20,000.00 and $10,000.00 as reassurance to obtain her consent to extend the closing date. (para. 17 and Exhibit F)

-Sarrafian made a $275,000 payment to Tribecca on May 5, 2021 (the “Sarrafian Payment”) to forestall enforcement on the Tribecca mortgage, which was against both the Burncrest Property and the Montfort Home. (para. 19 and Exhibit H)

-On May 27, 2021, Tribecca provided Leksikova’s solicitor on the Transaction under the APS with a discharge statement totalling $454,962.87 with a per diem of $131.46, (the “Tribecca Second Mortgage Discharge Amount”) which discharge statement included a credit of $275,000.00 for the payment already received from Sarrafian on May 5, 2021 the “Tribecca Mortgage Statement”).(para.21 and Exhibit I)

-On June 4, 2021 Leksikova learned that the Second Mortgage had been transferred by Tribecca to Luxury Castle and a Transfer of Charge was registered on title to the Burncrest Property on June 4, 2021.(para. 23 and Exhibit J)

-On June 4 Luxury Castle advised Leksikova’s real estate solicitor that the amount to discharge the Second Mortgage was now the increased amount of $729,962.87 which included the $275,000 Sarrafian payment and other charges (the “June 4 Second Mortgage Discharge Amount”).(para. 24 and Exhibit K)

-as a result of this increased June 4 Second Mortgage Discharge Amount required to discharge the Second Mortgage, the June 4 closing under the APS with Zhao was unable to proceed.(para. 26)

-Leksikova states at paragraph 27:

“I had otherwise been set to finalize the sale as I had spoken to the prior holder of the Tribecca Mortgage who had agreed to take less money in order to ensure the Zhao APS closed on time.”

-On June 21, 2021 Leksikova learned from her lawyers that Luxury Castle. had also taken

an assignment of the First Mortgage from the Shahs and that Luxury Castle was now the Mortgagee under both the First Mortgage and the Second Mortgage.(para. 32 and Exhibit O)

-On July 6 Luxury Castle sent to counsel for Leksikova a Mortgage Statement under the First Mortgage in the amount of $901,284.77 and under the Second Mortgage in the amount of $742,446 (the “July 6 Second Mortgage Discharge Amount”). (para. 37 and Exhibit S)

46The evidence relevant to this threshold issue in the Saraffian Affidavit sworn in opposition to the relief sought by the Plaintiff in the Original CPL Motion is:

-Sarrafian is the sole officer and director of Luxury Castle.(para. 1)

-Luxury Castle is the Mortgagee for both the First Mortgage and the Second Mortgage on the Burncrest Property.(para. 2)

-Leksikova is the sole registered owner of the Burncrest Property and Sarrafian has no registered interest in the Burncrest Property. (para. 6 and Exhibit B)

-Tribecca commenced Power of Sale proceedings in late 2019 and the redemption period expired in December 2019. (para. 8)

• Luxury Castle listed the Burncrest Property for sale through a realtor in July of 2021 with a sale price of $1,489,000.(para.10)

-Sarrafian’s position is that Leksikova was not married to Sarrafian and the Burncrest Property is not a matrimonial home as defined at section 18(1) of the Family Law Act, as neither Leksikova nor Sarrafian ever resided at the Burncrest Property.(para. 14)

-The Property has always been an investment property for Leksikova. (para. 14)

-Sarrafian does not claim any right to possession of the Burncrest Property on behalf of himself. (para. 14)

-Sarrafian’s position is that the only family law matters outstanding between the Leksikova and Sarrafian are a determination of spousal support and child support obligations which will be determined at a future trial.(para.16)

-Leksikova purchased the Burncrest Property on September 8, 2017 and title to the Property was registered in the name of Leksikova. (para. 19)

-Sarrafian believes that Leksikova purchased the Burncrest Property as an investment property to develop and sell at a profit.(para. 20)

• To the best of Sarrafian’s knowledge Leksikova never resided at the Burncrest Property. (para. 19)

• Leksikova is the sole Mortgagor of the First Mortgage she granted to the Shah’s on September 8, 2017 in the amount of $850,000 and there is no guarantor. (para. 21 and Exhibit D)

• Sarrafian is the Co-Mortgagor with Leksikova on the Second Mortgage in the amount of $440,000 which is also registered as a Mortgage against the 31 Montfort Home. (para. 22 and 24 and Exhibit E)

• Sarrafian did not receive any of the mortgage proceeds under the Second Mortgage. (para. 25)

• Leksikova leased out the Burncrest Property for the rental amount of $2900 per month, but in or about October 2019 ceased making payments under the First Mortgage, the Second Mortgage and the property taxes (para. 28 and Exhibit F- Endorsement of Monaghan, J. dated April 16, 2021. (the “Monaghan J. Endorsement”) para. 13)

• On November 5, 2019, counsel for Tribecca wrote to Leksikova and Sarrafian, notifying them that the Tribecca Mortgage was in default and demanding the payment of $4,300 that had been due on November 1, 2019. (para. 30)

• Tribecca also advised that in both October and November 2019, it had made payments of approximately $4,950 to the Shahs, in order to prevent the First Mortgage from going into default and demanded reimbursement for the amounts paid to the Shahs. (para. 30)

• No further payments were made by either Sarrafian or Leksikova in regard to the First Mortgage or the Second Mortgage, the only reason the First Mortgage did not go into default was that Tribecca continued making the monthly payments of $4,950 to the Shahs throughout 2020. In addition, in March 2020, Tribecca also paid nearly $16,000 to the City of Toronto in property tax arrears associated with the Burncrest Property.(para.31 and Exhibit F - Monaghan J. Endorsement at para. 19)

• On or about November 18, 2019, Tribecca issued the Tribecca Notice of Sale claiming the sum of $496,604,93 by December 28, 2019.(par. 32 and Exhibit G)

• Tribecca commenced an Action and on January 12, 2021, Tribecca obtained judgment (the “Tribecca Judgment”) in the amount of $528,247.62 against Leksikova and Sarrafian, and as well as Orders for possession of both the Montfort Home and the Burncrest Property to Tribecca. (para. 33 and 34 and Exhibit H)

• Tribecca obtained a Writ of Seizure and Sale under the Tribecca Judgement on February 18, 2021 (the “Tribecca Writ”) and applied for a writ of possession for both the Montfort Home and the Burncrest Property. (para. 35 and 36)

• While obtaining financing to purchase the First Mortgage and the Second Mortgage, in order to forestall the sale of his Montfort Home until this financing could be completed Sarrafian made the Sarrafian Payment of $275,000 to Tribecca (para 39 and 40)

• Sarrafian’s position is that he loaned the money to make the Sarrafian Payment to his company Luxury Castle and the loan was recorded in the books of Luxury Castle. (para. 40)

• On June 4, 2021, Luxury Castle took an assignment of the Second Mortgage by paying Tribecca the full amount due and owing under the Second Mortgage and registered a Transfer of Charge on title to the Burncrest Property and the Montfort Home. (para. 41 and Exhibit J and K)

• The total amount paid by Luxury Castle to Tribecca to purchase the Second Mortgage was $731,014.55 ($275,000 on May 5, 2021 and $456,014.55 on June 3, 2021. (para. 41)

• Luxury Castle also purchased the Tribecca Judgment and the Tribecca Writ and Luxury Castle has been substituted as plaintiff in the place of Tribecca so Luxury Castle is now a judgment creditor of Leksikova. (para. 43)

• Leksikova has not paid any amount to Luxury Castle with respect to the Tribecca Judgment.(para. 43)

• On June 7, 2021, Luxury Castle took an assignment of the First Mortgage by paying the Shahs the full amount due and owing under the First Mortgage of $867,330.50.(para. 44 and Exhibit M and N)

• Luxury Castle paid the aggregate sum of $1,598,345.05 to purchase the First Mortgage and the Second Mortgage. (para. 46)

• Luxury Castle has taken over Tribecca’s power of sale proceedings by way of assignment and relies on the Notice of Sale Under Mortgage. (para. 47 and Exhibit G.)

• After Luxury Castle purchased the Second Mortgage, Tribecca ceased paying the First Mortgage which is in default as well.(para. 48)

• In early July of 2021, Luxury Castle became a mortgagee in possession by changing the locks on the Burncrest Property. (para. 49)

• Once Luxury Castle became aware that Leksikova had let the fire insurance lapse, Luxury Castle arranged for its own policy of fire insurance. (para. 49)

• Luxury Castle also demanded that the Burncrest Property’s tenant(s) begin paying rent to it, instead of to Leksikova.(para. 49)

• After taking possession Luxury Castle determined that the Burncrest Property is occupied by a tenant and various subtenants and that the Burncrest Property is currently being used as a ‘rooming house’ with many different people residing there, making obtaining of vacant possession to close the transaction under the APS an issue. (para. 56)

• Luxury Castle required that both the First Mortgage and the Second Mortgage be paid out in full in order that it discharge the Mortgages on the Burncrest Property and that the Tribecca Judgment be paid in full in order for Luxury Castle to lift the Writ binding the Burncrest Property.(para. 59)

• On July 6, 2021, Luxury Castle delivered a joint payout statement to the Vendor for both the First Mortgage and the Second Mortgage. On July 6, 2021, the sum of $901,284.77 was due and owing under the First Mortgage and the sum of $742,446.00 was due and owing under the Second Mortgage. (para. 61 and exhibit Q)

• Leksikova failed or refused to pay these amounts, resulting in the failure of sale.(para. 61)

• Sarrafian denies that Luxury Castle “demanded” that Zhao purchase the Burncrest Property from Luxury Castle for its current fair market value of $1,450,000 (being an $85,000 increase in value from January 2021). (para. 67 and Exhibit R)

• Luxury Castle offered the Burncrest Property to the Plaintiff for $1,450,000 so the Plaintiff could mitigate its damages in this manner and seek the $85,000 difference in the purchase prices from Leksikova as damages. (para. 67 and Exhibit R)

• This purchase price being offered ($1,450,000) was what Sarrafian believed the Burncrest Property’s current fair market value to be at the time of the offer. This price would not satisfy the outstanding balance of the Second Mortgage. (para. 67 and Exhibit R)

47From this cascade of contradictory evidence, and the answers given at the Sarrafian Examination on the statements made in the Sarrafian Affidavit, which do not clarify the evidence, the following appear to be facts relating to the threshold issue whether there is a triable issue in respect to whether the party applying for a CPL has a reasonable claim to the interest in the land claimed, being the Burncrest Property.

48Under this test I am not to determine whether the Plaintiff has or has not a reasonable claim to an interest in land, or that the Plaintiff will likely succeed at trial of the Action for the relief requested in the Statement of Claim against the Defendant Leksikova, namely the specific performance of the APS.

49I find the following facts to be uncontradicted:

a) On February 2, 2021, Zhao and Leksikova entered into the APS whereby Zhao agreed to purchase, and Leksikova agreed to sell, the Burncrest Property for $1,365,000;

b) Closing was originally scheduled the Original Closing Date of April 21, 2021;

c) Leksikova and Zhao agreed on $50,000 as the amount of deposit to be paid by Zhao to Leksikova’ s listing broker the Defendant Sutton Group;

d) On February 2, 2021, Zhao paid the deposit of $50,000 by way of bank draft payable in Trust to Sutton Group pursuant to the APS;

e) The APS contains, inter alia, the following terms:

(a) By section 20 – “TIME LIMITS: Time shall in all respects be of the essence hereof provided that the time for doing or completing of any matter provided for herein may be extended or abridged by an agreement in writing signed by Seller and Buyer or by their respective lawyers who may be specifically authorized in that regard.”; and

(b) By Schedule A – “The Seller agrees to discharge any mortgage or liens or

other encumbrances registered against the property on or before closing at

his [sic] own expense either from the proceeds of the sale or by solicitors

undertaking [sic].”

e) The APS was a firm deal without the conditions of home inspection, due diligence, or financing;

f) On February 2, 2021, Leksikova, Zhao and their respective real estate agents executed a Confirmation of Co-operation and Representation;

g) Leksikova and Zhao agreed to extend closing from April 21, 2021 to May 27, 2021;

h) Extensions to the closing date under the APS agreed to by Zhao and Leksikova were: April 21,2021 → May 3, 2021 → May 27, 2021 → June 4, 2021 → June 7, 2021;

i) the first three extensions were requested by Zhao due to the delay in the approval of his mortgage application;

j) The fourth extension was requested by Leksikova due to her inability to discharge the Second Mortgage on title of the Burncrest Property;

k) All four extensions of the closing date were negotiated between, and agreed upon by, Leksikova and Zhao, either directly or through agent;

l) As of May 27, 2021, Zhao had paid the Deposit in the total amount of $80,000 to Sutton Group;

n) On June 4, Leksikova’ s lawyer sent an email to Zhao’s transactional lawyer, requesting to extend the closing to June 7, 2021 due to Leksikova’ s inability to discharge the Second Mortgage on title of the Burncrest Property;

o) On June 4 Zhao agreed to grant the final extension to June 7, 2021 as requested by Leksikova as the Final Closing Date;

p) On June 7, 2021 Zhao tendered the closing documents and closing funds upon Leksikova’ s lawyer;

q) Leksikova failed to discharge the mortgages on title of the Burncrest Property and failed to close the transaction, thereby breaching the APS;

r) No further extension of closing after June 7, 2021 was agreed upon between the parties;

s) On June 10, 2021, Leksikova’ s lawyer returned Zhao’s closing funds to Zhao’s transactional lawyer;

t) the Deposit by Zhao in the total amount of $80,000 continues to be held in trust by Sutton Group.

50No evidence has been led by Luxury Castle or Leksikova that contradicts Zhao’s evidence that:

i) the APS created a valid interest in favour of Zhao in the Burncrest Property;

ii) Zhao had paid the Deposit to the Defendant Sutton Group;

iii) the Plaintiff had performed all of his contractual obligations under the APS, had paid the closing funds to Leksikova’ s solicitor in Trust prior to the closing date and was ready, willing and able to close the transaction on the final closing date of June 7, 2021; and

iv) the Plaintiff tendered the closing documents and closing funds upon Leksikova’ s lawyer on June 7, 2021 or that the tender was properly made.

51Zhao states that Leksikova breached the APS by failing to close the transaction on June 7, 2021. Leksikova admits at paragraph 26 of the Leksikova Application Affidavit that as a result of this increased June 4 Second Mortgage Discharge Amount required to discharge the Second Mortgage, the June 4 closing under the APS with Zhao was unable to proceed. Leksikova also presents no evidence in that affidavit that Zhao improperly tendered.

52Luxury Castle takes the position that the closing of the APS was futile as there are insufficient funds from the closing proceeds under the $1,365,000 purchase price under the APS to pay out the First Mortgage and the Second Mortgage, whether at the date of the hearing after the First and Second Mortgages had been assigned to Luxury Castle, or at the date the APS was entered into when the Mortgagees were the Shahs and Tribecca respectively.

53The various amounts claimed to be owing to Tribecca and then Luxury Castle under the Second Mortgage that were put into evidence by the Parties were:

a) the Tribecca Notice of Sale at Exhibit G to the Sarrafian Affidavit dated November 18, 2019 at $496,604;

b) the Tribecca Judgment at Exhibit H to the Sarrafian Affidavit issued January 12, 2021 at $528,247;

c) the February 23, 2021 payout statement from Agueci Calabretta at Exhibit O to the Sarrafian Affidavit at $701,914.49;

d) the May 27th, 2021 Agueci Calabretta payout statement at Exhibit I of the Leksikova Application Affidavit at $454,962.87;

e) the June 3, 2021 Assignment Agreement for the Second Mortgage to Luxury Castle at Exhibit to the Sarrafian Affidavit at $454,962.87;

f) the July 6, 2021 Lipman Zener Waxman payout statement at Exhibit P to the Sarrafian Affidavit and Exhibit S to the Leksikova Application Affidavit at $742,446.00.

54Similarly, the various amounts claimed to be owing to the Shahs and then Luxury Castle under the First Mortgage that were put into evidence by the Parties were:

a) the March 23, 2021 Mortgage Discharge statement at Exhibit O to the Sarrafian Affidavit at $855,423.34 including legal fees;

b) the June 7, 2021 Assignment Agreement from the Shahs to Luxury Castle at Exhibit N to the Sarrafian Affidavit which cites a $855,006.72 amount as at March 21, 2021, but does not precisely define the “Indebtedness”;

c) the July 6, 2021 Lipman Zener Waxman Payout statement at Exhibit P to the Sarrafian Affidavit and Exhibit S to the Leksikova Application Affidavit at $901,284.77.

55From reading the Sarrafian Transcript entered into evidence, the testimony given by Sarrafian on the amounts owing under the First Mortgage and the Second Mortgage did not clarify the determination of the proper amounts owing.

56Sarrafian’s answers to the questions raised regarding the circumstances of the $275,000 Sarrafian Payment, and the addition of this payment to the Second Mortgage discharge amount by Luxury Castle, and in particular answers to Q.123, 124, 238, 232, 135 , 137, 138, 176, 291, 375, and 381 in the Serrafian Transcript were non-responsive, combative and evasive.

57They do not assist Luxury Castle as the Party opposing the granting of the CPL to meet its onus 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”.

58The issue of whether the May 5, 2021 $275,000 Sarrafian Payment is or is not properly added to the amounts claimed by Luxury Castle as being secured by the Second Mortgage and required to discharge the Second Mortgage, is clearly a triable issue in the Action as the basis given by the Plaintiff in the Statement of Claim for the breach of the APS by Leksikova is:

“18. Leksikova breached the APS by failing to discharge the mortgages registered against the Burncrest Property and failing to close the transaction on June 7, 2021.”

59Other issues that may arise with respect the determination of the proper payout amounts under the specific terms of the First and Second Mortgage may be:

• Whether the interest was properly calculated and compounded;

• Whether the legal fees claimed are proper and properly secured;

• Whether the amounts paid by Tribecca to the Shahs to pay the First Mortgage when Leksikova failed to do so are properly secured under the terms of the First Mortgage;

• Whether the Shahs properly accounted for these payments when they were applied to the amounts owing under the First Mortgage to calculate the payout amount under the First Mortgage;

• Whether Luxury Castle in these factual circumstances can step into the shoes of Tribecca in the Power of Sale proceedings that Tribecca commenced.

60All these appear to be a “…triable issue(s) in respect to whether the party applying for a CPL has a reasonable claim to the interest in the land claimed” as per the Perruzza and the G.P.I. Greenfield Pioneer Inc. v. Moore test.

61All of these issues require determinations of disputed facts and credibility and are properly decided at trial. Witnesses on behalf of Tribecca and the Shahs may need to be deposed on events that occurred prior to the assignment of the First Mortgage and the Second Mortgage to Luxury Castle. It appears that many of these triable issues will actually be tried at the hearing of the Leksikova Application on October 22, 2021.

62I am therefor satisfied, on balance, that the Plaintiff has established, for the purposes of this motion, a claim to an interest in land under the APS.

63I am therefore also satisfied, for the purposes of this motion, that there exists a triable issue in respect to whether the Plaintiff has a reasonable claim to the interest in the land claimed.

64The onus on this part of the test is on the party opposing the granting of the CPL, Luxury Castle. In my view, Luxury Castle has not met its onus to demonstrate that there is no triable issue.

Balancing of the Equities: The Dhunna Factors

65As I have found that that there exists a triable issue in respect to whether the Plaintiff has a reasonable claim to the interest in the land claimed, under the Perruzza test, the Court must now exercise its discretion in equity and make such order as is just. In exercising this discretion, the court will look to the Dhunna factors referred to in Perruzza.

66Counsel in their facta have summarized these Dhunna factors using different word formulations. The following is the original wording of Master Donkin’s reasons in Dhunna at para.10-18:

“While the decided cases contain statements of general considerations entering into the decision of a motion such as this, most of them contain a combination of facts not present in this case. Further, the presence or absence of some particular factors give grounds to remove the certificate, but do not require that the certificate be removed. The claim of damages in the alternative does not bind the Court to vacate the certificate, see Pete & Martys (Front) Ltd. v. Market Block Toronto Properties Ltd. 1985 [sic] 5 C.P.C. (2d) 97 at 102. The factors taken into account in the decided cases appear to include:

1. whether the plaintiff is, or is not a shell corporation Pete & Martys (Front) Ltd. v. Market Block (1986) [sic] 5 C.P.C. (2d) 97 at 99.

2. whether the land is, or is not unique (ibid) bearing in mind that in a sense any parcel of land has some special value to the owner – Clock Investments v. Hardwood Estates Ltd. (1977) 16 O.R. (2d) at 674.

3. the intent of the parties in acquiring the land – Tru-Style Designs Inc. v. Greymac Properties Inc. (1987) 56 O.R. (2d) 482 at 479.

4. whether there is an alternative claim for damages.

5. the ease or difficulty of calculating damages – Holden Corp. v. Gingerfield Properties Ltd. (1987) 1987 4283 (ON SC), 59 O.R. (2d) 304 at 310.

6. whether damages would be a satisfactory remedy Pete & Martys (Front) Ltd. v. Market Block (supra) at 101 to 102.

7. the presence, or absence of another willing purchaser Holden Corp v. Gingerfield Properties Ltd. (supra) at 310.

8. the harm done to the defendant if the certificate is allowed to remain, or to the plaintiff if the certificate is removed, with or without the requirement of alternative security – Heron Bay Investments Ltd. v. Peel Elder Developments Ltd. (1977) 2 C.P.C. 338 at 339.

Factor 1) Not a Shell Corporation:

67I accept that Plaintiff is not a shell corporation. No evidence was led by any party about the financial wherewithal of Zhao, or lack thereof. Therefore, this is not a factor to be considered in this case.

Factor 2) Uniqueness:

68Counsel for Luxury Castle concentrated his arguments on the Dhunna Factor of Uniqueness, and counsel for Zhao devoted a large proportion of his materials and argument to advocating for the uniqueness of the Burncrest Property.

69In his factum Counsel for Luxury Castle states (37-38):

“Notwithstanding the foregoing, the Plaintiff here adduced no evidence of uniqueness to support a claim for specific performance which is critical to his request for a CPL.”

“ At the case at bar, the Plaintiff claims that the Burncrest Property is “unique” because it has a pre-existing permit, and because the Plaintiff unwisely expended money on various development matters before he even knew that the purchase and sale transaction was going to close. LC submits that none of these reasons make the Burncrest Property — a standard “run of the mill” residential property among thousands in Toronto – so “unique” as to trigger specific performance.”

70Counsel for Luxury Castle is wrong when he says that the Plaintiff has adduced no evidence of uniqueness. For reasons that will soon become clear, I am attaching the precise wording of the Zhao Affidavit on this topic as the specific evidence cited in the Zhao Affidavit that the Burncrest property is unique:

“2. In the beginning of 2021, I was looking to purchase a residential property in North York, Ontario. More specifically, I was looking to purchase an old and affordable bungalow with the intention to demolish the existing dwelling structure and build a new house which I will move into as my principal residence.

4. I was particularly interested in the Burncrest Property because Leksikova told me that she had already obtained the zoning approval from the City of Toronto for the construction of a new house on the Burncrest Property. Leksikova ended up not proceeding with the rebuilding of the Burncrest Property but the zoning approval remained valid.

5. Attached hereto and marked as Exhibit “A” are true copies of an email and attachments sent from Leksikova to me on January 23, 2021 showing the relevant drawings already completed by Leksikova for the Burncrest Property. Attached hereto and marked as Exhibit “B” is a true copy of the Notice of Decision of the zoning approval for the Burncrest Property dated November 9, 2017.

6. The zoning approval was desirable as it would save me all the time and efforts that I would otherwise have to spend in obtaining the same zoning approval for the purpose of rebuilding the Burncrest Property. I considered and relied upon the zoning approval in agreeing to purchase the Burncrest Property.

7. As further explained below, between February 2021 and May 2021, with Leksikova’s consent and authorization, I completed a significant amount of preparation work in relation to the demolition and rebuilding of the Burncrest Property at my own expense.

8. In early February 2021, I hired PMP Luxury Homes Corp. (“PMP”) to prepare permit drawings for the Burncrest Property. On February 4, 2021, I approved a permit drawings proposal from PMP and instructed PMP to proceed with the architectural, structural and HVAC designs and permit drawings for $10,000 plus HST in support of my permit applications for the Burncrest Property. Attached hereto and marked as Exhibit “K” are true copies of the permit drawings proposal prepared by PMP and executed by me, as well as the email correspondence between me and PMP in this regard.

9. On or about February 8, 2021, I hired Cinerea Urban Forestry Services (“Cinerea”) to prepare a construction related arborist report and tree protection plan for the proposed construction of a new house on the Burncrest Property, which cost me $678. Attached hereto and marked as Exhibit “L” are true copies of the emails between me, Cinerea and the City of Toronto, as well as the relevant application, report and invoice prepared by Cinerea.

10. On February 23, 2021, I obtained the Zoning Certificate for the Burncrest Property. Attached hereto and marked as Exhibit “M” are true copies of the Zoning Certificate and email from the City of Toronto.

11. In February 2021, I hired Alex Marton Ltd. – Ontario Land Surveyors (“Alex Marton”) to conduct a topographic survey required for the proposed construction of a new house on the Burncrest Property. The topographic survey cost me $1,900 at my own expense. On March 15, 2021, I received the new survey from Alex Marton. Attached hereto and marked as Exhibit “N” are true copies of emails and the new survey from Alex Marton.

12. On March 31, 2021, I acquired Leksikova’s signature on various documents that were required for the demolition and rebuilding of the Burncrest Property, including a Tree Declaration, the Owner’s Acknowledgement of Demolition Control Conditions, the Letter of Undertaking regarding the lot grading criteria, the Municipal Road Damage Deposit and the Demolition Permit Application, Attached hereto and marked as Exhibit “O” are true copies of these documents signed by Leksikova and my email to PMP in this regard.

13. In the process of completing the abovementioned work, I have incurred significant costs payable to the City of Toronto. Attached hereto and marked as Exhibit “P” are true copies of the four emails enclosing four receipts in the total amount of $8,842.18 from the City of Toronto, which I incurred at my own expense.

14. On May 11, 2021, I obtained a demolition permit, a building permit, a drainage permit and a plumbing permit from the City of Toronto for the demolition and rebuilding of the Burncrest Property. Attached hereto and marked as Exhibit “Q” are true copies of the four permits issued by the City of Toronto.

15. It is unlikely, if not impossible, that I will be able to locate other residential properties for sale that: are similar in size, are at a similar location, have pre-approved zoning for rebuilding, and have a demolition permit, building permit, drainage permit and plumbing permit required for the demolition and rebuilding of the property. Subsequent to Leksikova’s breach of the APS, I have not found another residential property for sale that is similar to the Burncrest Property.”

71In addition, in the Supplementary Zhao Affidavit Zhao states:

“12. I am a bona fide purchaser for value without notice. The subject transaction was made at arm’s length. The purchase price under the APS and the lot size of the Burncrest Property for rebuild are suitable for me given my financial ability.”

72There is no further evidence on this issue in the Singh Affidavit.

73Zhao was not cross-examined on these statements and this evidence has not been tested. However, when the exhibits supporting these statements are examined, they reveal some inconsistencies from the evidence given by Zhao in the preceding paragraphs.

74The Sarrafian Affidavit contains the following evidence relevant to the uniqueness issue:

• Sarrafian believes that Leksikova purchased the Burncrest Property as an investment property to develop and sell at a profit.(para. 20)

• To the best of Sarrafian’s knowledge Leksikova never resided at the Burncrest Property. (para. 19)

• Leksikova leased out the Burncrest Property for the rental amount of $2900 per month, but in or about October 2019 ceased making payments under the First Mortgage, the Second Mortgage and the property taxes. (para. 28 and Exhibit F-Monaghan J. Endorsement – para. 13)

• In early July of 2021, Luxury Castle became a mortgagee in possession by changing the locks on the Burncrest Property. (para. 49)

• Luxury Castle also demanded that the Burncrest Property’s tenant(s) begin paying rent to it, instead of to the Vendor.(para.49)

• After taking possession Luxury Castle determined that the Burncrest Property is occupied by a tenant and various subtenants and that the Burncrest Property is currently being used as a ‘rooming house’ with many different people residing there, making obtaining of vacant possession to close the transaction under the APS an issue. (par.56)

Obtaining Zoning Approval

75It is Zhao’s evidence that the Permit to redevelop the Burncrest Property obtained by Leksikova was key to his decision to enter into the APS as it would shorten the time for the obtaining of the same zoning approval for the purpose of rebuilding the Burncrest Property. It is Zhao’s evidence that he relied on the Zoning Approval in deciding to enter into the APS.

76At Exhibit B to the Zhao Affidavit is the Notice of Decision for the Burncrest Property dated November 9, 2017. On the second page of this document (A41 on Caselines) is the following condition:

This decision is subject to the following condition(s):

1. The proposal be developed substantially in accordance with the west and east elevations submitted to the Committee of Adjustment, date stamped received by the City of Toronto Planning Division, October 27, 2017.

Any other variance(s) that may appear on these plans but are not listed in the written decision are NOT authorized.

77In comparing the Plans at Exhibit A sent to Zhao by Leksikova and the elevations stamped by the Planning Division B, there appear to be significant differences, although it is very difficult to determine whether the approved dimensions are different due to the poor quality of each document that makes the dimensions in many cases illegible.

78From the dimensions approved to the Zoning Bylaw at Exhibit B it appears that the change in the lot coverage was from 30% to 35%, with increase in the side height to 8.39 meters, the building height to from 8.0 to 9.27 meters and the maximum building length from 15.3 meters to 15.82 meters. From the APS the size of the Burncrest Property appears to be 40x115 feet.

Obtaining of Permits

79With respect to the Zoning and the preparation of permit drawings for the Burncrest Property it is Zhao’s evidence that on February 4, 2021, 2 days after executing the APS, he instructed PMP Luxury Homes Corp. (“PMP”) to submit a permit drawings proposal and to proceed with the architectural, structural and HVAC designs. Those communications and submissions are at Exhibit K.

80I note that in Exhibit K, the proposal to Zhao from PMP is signed by Mehran Haydari, the President of PMP. Meyran Haydari is listed as the Agent for Leksikova in the Notice of Decision amending the Zoning at Exhibit B to the Zhao Affidavit.

81In the communications regarding the obtaining of the Tree Permit at Exhibit L Zhao appears to be the contact point in his own name. The Application to Injure or Remove Trees at Exhibit L (A116 in Caselines) is also in the name of Zhao personally. This application is garbled and illegible in the exhibits filed with the Court. Leksikova does not appear to be copied on these communications. This is repeated in the communications with the Surveyor at Exhibits M and N to the Zhao Affidavit.

82It appears from Exhibit M to the Zhao Affidavit that the City accepted the plans submitted by PMP conformed to the Zoning, as varied by the new drawings Zhao obtained from PMP and issued a Zoning Certificate. It is unclear from Exhibit M, who the applicant for the Permit was, Zhao or Leksikova, the actual owner of the Burncrest Property.

83However in Exhibit O Leksikova is the signatory of the “Tree Declaration”, the “Lot Grading Criteria for Infill Housing”, the “Municipal Road Damage Deposit” and the “Demolition Permit Application” all dated March 31, 2021 as the owner, as would be expected as there had been no closing of the transaction under the APS.

Payments for Permits

84At Exhibit P are receipts for various applications that Zhao submits prove the amounts he says he expended before the closing to prepare the property for demolition and redevelopment. In each case under Exhibit P, the receipts are issued to “PMP Design Group c/o Mehran Haydari” or PMP Design which presumably are related to PMP, that Zhao testifies he personally retained in paragraph 18 of the Zhao Affidavit.

85Except for one receipt. I will deal with that particular receipt at Exhibit P (A163 and A164 in Caselines) and its implications in greater detail below.

86At Exhibit Q are the permits obtained for the Burncrest Property. In each case the Building and Demolition Permit and supporting documentation totaling 59 pages attached at Exhibit Q are in the name of Leksikova as Owner. In each case of each permit there is a notation that states:

“The validity of this permit is restricted to the person/company named as owner. Permit ownership cannot be transferred unless prior written authorization is given by the Chief Building Official.”

87The Person named as owner on each permit under Exhibit Q is Leksikova, not Zhao. That is to be expected given that the transaction under the APS had not closed. But Zhao did not reveal in his affidavit evidence that these permits were non-transferable from Leksikova without the consent of the Chief Building Official, whether such permission would be expected, or how long it would take to obtain such permission.

88Given that a significant portion of the Zhao Affidavit, and the sheer physical weight of the exhibits, submitted for the purpose of providing evidence to support Zhao’s argument that his obtaining of these permits prior to the closing of the transaction under the APS made the Burncrest Property unique to him, and requiring the intervention of the Court to grant of the relief sought on this motion, a significant limitation on the transferability of these permits, evident on the face of the permits proffered as evidence by Zhao, should have been brought to the attention of the Court, and explained. An adverse inference against Zhao must be drawn that this information was not voluntarily revealed.

Exhibit P to Zhao Affidavit (A163-A164)

89Even more seriously, I return to the receipt dated April 15, 2021 tendered as evidence for payment of $2,764.48 for the Municipal Road Damage Deposit at Exhibit P (A163-A164 in Caselines). That Receipt is issued to “Craftasker Group Inc. c/o Jerry Zhao, 503 Hood Rd. Unit 1, Markham Ontario, L3R 5V6”

90As far as I, and Caselines, can determine, that is the only instance in the entire 842 page Caselines Bundle for this Motion that the word “Craftasker” appears. On this receipt.

91During the hearing I questioned Counsel for Zhao regarding my surprise at the seeming ease and alacrity with which Zhao obtained all of the required permits that are exhibits to the Zhao Affidavit, in the period between signing the APS on February 2, 2021 and May 11, 2021 the date that they were issued. The explanation was that Zhao had building plans prepared. Perhaps there is an additional explanation.

92A simple Google search reveals that Craftasker Group Inc. is a CBCA Corporation whose sole director is Zhao and was incorporated in 2018.

93The Home Construction Regulatory Authority (the “HCRA”) lists “Craftasker Group Inc.” as having been licensed as a builder for the period July 27, 2018 to July 28, 2021. “Xing Zhao” is listed as the “Director, Officer, Principal”. The email contact for Craftasker Group Inc. listed with HCRA is the same email address that Zhao is using in all of the emails that he has proffered as evidence for this Motion.

94Craftasker Group Inc. has one enrolled warrantied property at 11 Simpson Avenue in Toronto which was enrolled in May of 2019. That property at 11 Simpson Avenue as of the Google photo currency of May 2021 appeared on Google Streetview to have been under construction. An orange “Craftasker Group Inc.” sign was affixed to the fencing on the site.

95It appears that the Plaintiff Zhao, by profession, is a builder.

96Given the statement in paragraph 2 of the Zhao Affidavit:

“More specifically, I was looking to purchase an old and affordable bungalow with the intention to demolish the existing dwelling structure and build a new house which I will move into as my principal residence.”

and given that the factual determination of whether the Burncrest Property is a development property to be sold at a profit, or a residential property to be lived in, is very material to the jurisprudential tests under Dhunna Factors 2, 3, 4, 5, 6 and 8, the omission of this fact is very material.

97As noted above, Zhao was never cross-examined on the evidence he submitted for this Motion, and there is no evidence filed by Sarrafian or Leksikova that directly contradicts the statement by Zhao “…which I will move into as my principal residence.”

98However, I cannot ignore the omission of a fact this material to the determination of 6 of the Dhunna factors, and an adverse inference against Zhao must be drawn that this information was not voluntarily revealed.

99Had this Motion proceeded ex parte, this material omission alone could have constituted grounds for vacating any CPL granted under R.39.01(6).

Paragraph 33 of Zhao Affidavit

100All of the evidence cited by Counsel for Zhao in the Fresh as amended Factum under the uniqueness issue relates to paragraphs 2 and 33 of the Zhao Affidavit which reads:

33. It is unlikely, if not impossible, that I will be able to locate other residential properties for sale that: are similar in size, are at a similar location, have pre-approved zoning for rebuilding, and have a demolition permit, building permit, drainage permit and plumbing permit required for the demolition and rebuilding of the property. Subsequent to Leksikova’s breach of the APS, I have not found another residential property for sale that is similar to the Burncrest Property.

101I note that these are all bald statements of fact and there is no detail provided by the Plaintiff as to:

-what specific steps he has taken to determine whether alternative properties exist;

• the availability of comparably sized 40x115 foot properties;

-why this location of the property is unique and important to Zhao;

-any evidence, expert or otherwise, that there are no other properties for sale in the locality of the Burncrest Property, or the larger GTA, with similar zoning and similar 40x115 foot size.

102I have already dealt with the factual omission that the permits obtained for the property by Leksikova as owner may not be transferrable to Zhao, or only with permission of the Chief Building Officer.

103I also note the statement by Leksikova at para. 12 of the Leksikova Application Affidavit filed by the Plaintiff as evidence that:

“12. The Leksikova Property is not an easy property to market. It borders a concrete barrier wall along Highway 401. The property is also closer to Bathurst Street than it is Avenue Road, positioning it in a less desirable part of its area. It is my belief that the property is mostly attractive to builders whom at present with the cost of construction materials are not buying as many properties.”

Application of these facts to the legal test for Uniqueness

104Counsel for the Plaintiff only cites Perruzza for the issue of uniqueness. But in Perruzza Master Glustein (as he then was) accepted that (at para.39(i)):

“The Property was not unique since it was an investment project from the outset with the intention of selling the Property at the earliest opportunity;”

and it does not appear that the issue of uniqueness was in contention in Perruzza.

105Counsel for Luxury Castle cites John E. Dodge Holdings Ltd. v. 805062 Ontario Ltd, 56 O.R. (3d) 341 [2001] O.J. No. 4397 2001 28012 (ON SC) for the proposition that uniqueness is a matter of proof and the onus lies on the party seeking the remedy, but that the plaintiff is not required to prove a negative and demonstrate the complete absence of comparable properties.

106John E. Dodge Holdings states that the key factors for determining uniqueness are (1) that the remedy of damages is comparatively inadequate to do justice, and (2) that, in the words of Estey J. “the Plaintiff show some fair, real and substantial justification for the claim”.

107In John E. Dodge Holdings at para. 59 to 60 the Court states:

“[59] There is both a subjective and objective aspect to uniqueness. While it is difficult to be precise about this, it strikes me that normally, the subjective aspect will be less significant in commercial transactions and more significant in residential purchases, unless the motivation in the latter case is principally to earn profit. In terms of the subjective aspect, the court should examine this from the point of view of the plaintiff at the time of contracting. [See Note 20 at end of document] In some cases, there may be a single feature of the property that is significant, but where there are a number of factors, the property should be viewed as a whole. [See Note 21 at end of document] The court will determine objectively whether the plaintiff has demonstrated that the property has characteristics that make an award of damages inadequate for that particular plaintiff. Obviously, investment properties are candidates for damages and not specific performance. [See Note 22 at end of document]

60It is important to keep in mind that uniqueness does not mean singularity. It means that the property has a quality (or qualities) that makes it especially suitable for the proposed use that cannot be reasonably duplicated elsewhere. [See Note 23 at end of document] To put this another way, the plaintiff must show that the property has distinctive features that make an award of damages inadequate. The plaintiff need not show that the property is incomparable.”

108In applying this test to these circumstances, the difficulty arises whether to treat this as a residential property, or an investment property, given my evidentiary findings with respect to the possibility that Zhao is purchasing the property as a developer for resale, rather than as a residential property for him to live in.

109Clearly from the evidence in the Sarrafian Affidavit and the Leksikova Application Affidavit, Leksikova treated the property as an investment property, either to be developed by her, which was the purpose of the zoning variation she obtained, or for sale to other builders for redevelopment.

110Also given the issues of the possible non-transferability of the permits from Leksikova to Zhao, the value of the permits obtained by Zhao may not be evidence of uniqueness if the permits are not transferrable.

111The only other characteristic put forward by Zhao as evidence of uniqueness is the Zoning. However, other than a bald statement the he has not found and is unlikely to find a similarly zoned property, no evidence is put forward supporting this statement that there are no similar sized 40x115 foot building properties with similar zoning for sale in the entire City of Toronto or the GTA.

112On the evidentiary record that has been put into evidence, I find that the Plaintiff has not discharged his onus to prove that the Burncrest Property has qualities that makes it especially unique and suitable for the proposed use by Zhao of building the house contemplated in the plans filed as evidence, that cannot be reasonably duplicated elsewhere and that make an award of damages inadequate. I will deal with the issue of damages as an adequate remedy separately below.

Factor 3) Intent of the Parties in acquiring the land:

113As noted above the issue with disclosure by Zhao raised above does not allow the statement by Zhao that he intended to build a house on the Burncrest Property as his principal residence to be treated as uncontroverted, and therefore I cannot determine that to be the intent on the evidentiary record before me.

Factor 4) Whether there is an alternative claim for damages:

114The Plaintiff has not made a claim for damages in the Statement of Claim, as it is currently worded, against the Defendant Leksikova, only a claim for specific performance of the APS.

115As noted above, the Plaintiff attempted to bring a motion to amend the Statement of Claim to add Sarrafian and Luxury Castle as Defendants requesting an Order that they be restrained from interfering with the closing of the APS and damages for intentional interference with the contractual relations of the Plaintiff.

116As noted in John E. Dodge Holdings at para. 58 the claiming of both specific performance and damages in the Claim does not disentitle the Plaintiff to specific performance at trial provided an election is made.

117As noted in s.99 of the CJA, the Court has the discretion to grant damages in addition to in substitution for specific performance claimed by a party.

118I do not view the Plaintiff not claiming damages in the Statement of Claim initially against Leksikova or subsequently wishing to amend the Statement of Claim to claim, inter alia, damages against Sarrafian and Luxury Castle as assisting or harming the Plaintiff’s case to obtain a CPL.

Factor 5) The ease or difficulty of calculating damages:

119Unlike the case in Holden v. Gingerfield cited for this factor in Dhunna where damages were difficult to calculate as they related to the calculation of possible future profits under a joint venture agreement to build and operate a commercial development, given my finding on uniqueness, damages would be relatively easy to calculate.

120Whether Zhao is approaching this transaction to truly build his principal residence, or whether the ultimate intention is as a builder to resell the property after completing the building of the planned building, the Plaintiff has laid out in his affidavit materials the calculation of his claim against Leksikova for breach.

121The calculation would be the difference in cost of a replacement property as compared to the $1.365 Million purchase price under the APS, the cost of having to possibly obtain zoning approval if the substitute property is not zoned to permit a similar development, the additional carrying costs to be paid until such approval is obtained, and the costs thrown away to date such as permit costs and plans, provided that these damages are not too remote as having been expended while the Plaintiff did not actually own the Burncrest Property. Those permit amounts that may be claimable are neatly itemized in the Zhao Affidavit.

122I find that damages are easily calculable in this case.

Factor 6) Whether damages would be a satisfactory remedy:

123Much time was spent in argument and in the Plaintiff’s factum as to whether Luxury Castle and Sarrafian, through their conduct, had voluntarily assumed risk by having the First Mortgage and the Second Mortgage assigned to them, and were interfering with the APS transaction in the hopes of having the Plaintiff take the risk of not collecting a damages judgment from an allegedly insolvent Leksikova.

124Sarrafian responds that he was forced to assume the Second Mortgage to save the Montfort Home from being sold by Tribecca under the Second Mortgage and to reduce the increasing interest claims against him by Tribecca under the Second Mortgage, and the Tribecca Judgement.

125Many allegations were made by Zhao and Sarrafian that Leksikova was insolvent, based on her failure to pay the First Mortgage and the Second Mortgage, or that she had “effectively” admitted insolvency to Monahan, J.

126The actual quote I was directed to from the Reasons of Monahan J. at Exhibit F of the Sarrafian Affidavit at paragraph 60 reads: “It is the Respondent’s continued possession of the property, combined with her refusal or inability to make any payments to Tribecca, that is frustrating the Applicant’s efforts in that regard.” I do not find that to be a determination of insolvency by Monahan J. as advertised.

127Paradoxically during the Sarrafian Cross Examination, Serrafian claimed that Leksikova was both insolvent and had hidden a million dollars (Q.227).

128There is no evidence before me that I can rely on to determine the solvency of Leksikova. As noted, Leksikova has filed no materials in response to the Original CPL Motion.

129Counsel for Luxury Castle cites Bains v. Khatri, 2019 ONSC 140 for the proposition that damages is an adequate remedy, but it Bains the Court clearly makes the determination that the defendant was an employed individual and not a shell corporation, thus making damages an appropriate alternative remedy to a CPL, and in this case Luxury Castle is alleging that Leksikova is insolvent, undermining his own argument. There is no evidence before the Court of Leksikova’ s employment status other than that she is a real estate agent.

130The solvency or insolvency of Leksikova is a problem for BOTH Zhao and Sarrafian/Luxury Castle. Issues relating to alleged attempts by Zhao and Sarrafian/Luxury Castle to shift collection risks on each other do not really assist the determination of whether damages are an adequate remedy.

131The solvency of Leksikova may ultimately be dependent on the outcome of the Leksikova Application and the determination of the proper amounts owing under the First Mortgage and the Second Mortgage and whether the $1.365 Million purchase price under the APS is sufficient to discharge the First Mortgage and the Second Mortgage and permit the transaction under the APS to close.

132As I cannot make an evidentiary finding that Leksikova is incapable of paying a potential damages judgement, and given my findings on uniqueness and the ease of calculation of damages, I find that damages would be a satisfactory remedy for the Plaintiff’s claim, particularly in the circumstances that the Plaintiff is now seeking to add Sarrafian and Luxury Castle as defendants and seeks damages against them along with other relief.

Factor 7) The presence, or absence of another willing purchaser:

133There is no evidence before me that there is another willing purchaser of the Burncrest Property. This has not changed since Master Frank reviewed the materials on August 10, 2021 and stated:

“In terms of the timing of the motion, there is currently no evidence of an imminent closing date with a subsequent purchaser or any indication why a caution could not be registered against the property at this time. “

Factor 8) The harm done if the certificate is allowed to remain, or if the certificate is removed, with or without the requirement of alternative security:

134As noted the Perruzza test for Motions on Notice for the granting of a CPL is the same as that for the removal of CPL granted ex parte, so restated this Dhunna Factor is “The harm done if the certificate is granted, or not granted, with or without the requirement of alternative security.”

Prejudice to Luxury Castle

135As a threshold issue Counsel for Luxury Castle provides jurisprudence to the effect that a realization by a Mortgagee should not be stayed by the imposition of a CPL citing in its factum, and in argument the case of Maletta v. Thiessen (1996) 28 O.R. (3d) 251 [1996] O.J. No. 893, 1996 11765 (Div Ct.) (“Maletta”) as standing for the proposition that:

“It is well established law that, in the absence of fraud, a mortgagor may not obtain a CPL to stop power of sale proceedings without having offered to redeem the mortgage.”

136This was an adaptation of the argument and jurisprudence put before the Court prematurely to argue the Cross-Motion for a declaration of priority for the First Mortgage and the Second Mortgage, repurposed for the argument on the equities as to whether a CPL should issue, and I permitted counsel to argue on that basis pro and con.

137On review of that case the finding of the Divisional Court in Maletta is more nuanced. In Maletta, the defendants commenced mortgage power of sale proceedings with respect to two mortgages granted by the plaintiffs on two properties described respectively as the "developed lands" and the "undeveloped lands". The mortgages had matured in 1991 and had not been repaid by reason of the plaintiff's inability to refinance. In June 1994, the two properties were sold. In December 1994, the Plaintiffs sued the Defendants moving to set aside the CPL, and others, to set aside the sale as fraudulent, to redeem the mortgages, and for damages for improvident sale and fraud.

138The plaintiffs plead that their request for partial discharges to permit sales of parts of the mortgaged lands had been wrongfully refused. They alleged that the defendants conspired to defeat their claims. They alleged that the sale was improvident and fraudulent. There was no allegation that the sale proceedings were incorrect or irregular, and the plaintiffs admitted that they never tendered funds to redeem and that, had lots been sold, they could have repaid only the indebtedness on the undeveloped lands and half of the indebtedness on the developed lands. The plaintiffs obtained an order issuing a CPL. The defendants appealed the order issuing the certificate.

139The Court in Maletta set aside the granting of the CPL on the basis that it was essential that the mortgagor can show a connection between the alleged fraud and its inability to redeem. However, the Court found, it was not the alleged fraud that caused the inability to for these Plaintiffs to redeem, but the plaintiffs' own inability due to market conditions. There was nothing to assure that market conditions would not be the same at the end of the trial. There was no connection between the fraud and the loss of the plaintiffs' rights.

140Accordingly, the Court in Maletta found that a certificate of pending litigation ought not to have been issued, because the Plaintiffs could not prove a valid interest in the land over which the CPL was granted because the Plaintiffs at trial could not set aside the purchase as a fraudulent conveyance that prevented their opportunity to redeem. That opportunity to redeem was lost due to their lack of funding to redeem.

141The facts of this case differ from Maletta significantly. In this case there was no subsequent purchase that the Plaintiff is seeking to set aside on the basis of a claim of a fraudulent conveyance or improvident sale, the Plaintiff’s Statement of Claim is for the specific performance of the APS.

142Applying the Maletta facts to this case, neither the Mortgagor Leksikova nor the Mortgagor Sarrafian are seeking to obtain the CPL to prevent the Mortgagee Luxury Castle, by assignment from Tribecca, to enforce the power of sale under the Second Mortgage. Instead Leksikova has brought the Leksikova Application to determine the proper amounts owing under the Second Mortgage, and for other relief.

143Both Leksikova and Sarrafian are the Mortgagors under the Second Mortgage, and have both failed to redeem the Second Mortgage, although Sarrafian did eventually purchase the Second Mortgage. No details are provided in the Sarrafian Affidavit about the service of the Notice of Sale under the Second Mortgage at Exhibit G to the Sarrafian affidavit, dated November 18, 2019 or the reasons why neither Sarrafian nor Leksikova redeemed the Second Mortgage when apparently served with the Notice of Sale other than the general speculation about the solvency of Leksikova.

144On my review of the Sarrafian Transcript it does not appear that Sarrafian was cross-examined on the issue of the validity of the Notice of Sale and whether there were any issues of the conduct of Tribecca as Mortgagee that would have invalidated the issuance of the Notice of Sale or restarted the redemption period under the Second Mortgage.

145These and other issues, such as the discrepancy between the redemption amount on the Notice of Sale and the amount in the Discharge Statement of Tribecca dated February 23, 2021 and the Discharge Statement of Luxury Castle at Exhibit S of the Leksikova Application Affidavit, and whether the addition of the $275,000 amount affects the validity of the earlier Tribecca Notice of Sale, restarting the redemption period, are issues that would appear to be squarely within the issues being determined by the Superior Court Justice hearing the Leksikova Application on proper materials from the Plaintiff, Leksikova, Luxury Castle and Sarrafian, which are not before me as part of the evidentiary record.

146Accordingly, I do not view Maletta as being a complete bar on the ability of the Plaintiff to seek to obtain a CPL in these circumstances. At best it suggests another factor for the balancing of the equities under the Perruzza and Dhunna tests.

147Counsel for Luxury Castle also cites Duffin v. Norina Holdings Inc., 2011 ONSC 6431 for the proposition that a Mareva Injunction will not be granted to restrain a power of sale unless the Mortgagor pays the amount claimed under the Mortgage into Court provided no case of fraud is made out.

148Duffin has the same factual distinction as Maletta, namely that Leksikova and Sarrafian are not the parties bringing this Motion to obtain the CPL, and obviously the test for the granting of a Mareva Injunction is far more stringent than the test to grant a CPL.

149Heron Bay Investments Ltd. v. Peel-Elder Developments Ltd., 1976 CarswellOnt 355 is also distinguishable on the facts as in that case there was a pending sale of land that the CPL was preventing. Here there is not. If granted the CPL “would interfere with normal trading” of the Burncrest Property, but that is the case with any CPL, and as noted above, it is unclear whether this is an “investment property” for Zhao, although it is for Leksikova.

150Counsel for Luxury Castle also cites Mutual Trust Co. v. Creditview Estate Homes Ltd., 1997 1107 (ON CA) and Durrani v. Augier, 2000 22410 (ON SC) which are both cases where the Courts have dealt with the invocation of the doctrine of subrogation, to deal with the subrogation of CPLs to pre-existing mortgages, which would have been more applicable to the premature Cross-Motion, should a CPL be granted by me, only then creating an interest that Luxury Castle could request to be subrogated.

151However, all of these cases are applicable for the determination of whether a CPL should be granted in balancing of the equities where a secured creditor is affected by the possible issuance of a CPL, and support the position of Luxury Castle that it will be prejudiced by the registration of the CPL due to the loss of its ability to otherwise enforce its mortgage to recover the amounts secured under the First Mortgage and the Second Mortgage.

152I discussed with the Counsel for the parties whether there was any jurisprudence on point with this situation, namely where a third party purchaser attempts to obtain a CPL with respect to an APS on a property signed by the owner and a Mortgagee is also marketing the same property under Power of Sale. They assured me there was not.

153In his Factum Counsel for Zhao states that:

67. Zhao is entitled to an Order restraining Sarrafian and Luxury Castle from interfering with the APS.

154That truly is “saying the quiet thing out loud”.

155I lack the jurisdiction to grant injunctive relief under s.101 of the CJA. If that is what is being sought, then the Plaintiff is in the wrong Court.

156I do not understand how requesting that I do indirectly, what I lack the jurisdiction to do directly, is helpful to the Plaintiff in the balancing of the equities under the Dhunna and Perruzza tests.

157I asked counsel for the Plaintiff how it is that under the Malletta and Duffin tests a Mortgagor could not restrain a Mortgagee from enforcing a mortgage, in the absence of fraud, where there has been no redemption or the mortgage amount is not paid into Court, but a purchaser from that same Mortgagor could.

158I also asked would it have made a difference if the Mortgagee was not Luxury Castle but still Tribecca or another conventional lender like Bank of Montreal.

159His answer was that the conduct of Sarrafian and Luxury Castle, his voluntary assumption of the risk of the assignment of the First Mortgage and the Second Mortgage, the alleged attempts to shift the risks of collection from Leksikova to Zhao and the alleged interference with the closing of the APS by Luxury Castle/Sarrafian justified the granting of the Order restraining Luxury Castle in this case.

160That answer trends very closely to the tests for the granting of injunctive relief and the remedy of Equitable Subordination, which although available in Canada, is very rarely granted. In either case I lack the jurisdiction to grant such relief.

161It appears to be uncontroverted that:

-the First Mortgage and Second Mortgage were validly registered on the Burncrest Property by the Shahs and Tribecca, respectively;

• the Second Mortgage was in default prior to its Assignment to Luxury Castle;

-Tribecca had issued the Tribecca Notice of Sale;

-Neither Leksikova nor Sarrafian redeemed the Second Mortgage;

-Tribecca sued and obtained the Tribecca Judgement and an Order for Possession of the Burncrest Property;

-Tribecca registered the Tribecca Writ with respect to the Burncrest Property and was seeking a Writ of Possession.

-the First Mortgage and the Second Mortgage were legally assigned to Luxury Castle;

-after assignment Luxury Castle ceased paying the First Mortgage which is also now in default;

162Had Tribecca continued with its enforcement, rather than being purchased by Luxury Castle, absent any equitable conduct argument, I do not see what argument the Plaintiff or Leksikova would have had to stay enforcement through the granting of a CPL.

163To be repetitive, many of the issues relating to the arguments raised by the Plaintiff about the conduct of Sarrafian and Luxury Castle and the proper calculation of the amounts owing under the First Mortgage and the Second Mortgage will be determined at the hearing of the Leksikova Application. That hearing will determine whether the purchase price under the APS is sufficient to pay out the amounts owing under the First Mortgage and the Second Mortgage.

164On the evidence before me, for the purposes of this motion, I cannot ascribe specific malevolent intent by Sarrafian and Luxury Castle to interfere with the transaction relating to the APS. It is equally plausible that Sarrafian purchased the First Mortgage and the Second Mortgage to prevent the loss of the Montfort Home, as the Monahan J. Endorsement foreshadows.

165With respect to the issue of the discussions between Zhao and Luxury Castle regarding a possible purchase by Zhao from Luxury Castle on Power of Sale at the purchase price of $1,450,000, I have read and re-read paragraph 67 of the Sarrafian Affidavit, Exhibit R - the email from Mr. Zeitz and the testimony of Sarrafian on this issue at the Sarrafian Cross Examination.

166I cannot reconcile the alleged offer to purchase at $1,450,000 with following wording in paragraph 67 of the Sarrafian Affidavit and determine whether Sarrafian was offering to take less than the amounts he claims are owing under the Second Mortgage:

“Note that this purchase price being offered ($1,450,000) was what I believed the Property’s current fair market value to be at the time of the offer. This price would not satisfy the outstanding balance of the Tribecca Mortgage.”

167Whatever that means the offer was not accepted by Zhao. There is no evidence before me of what the market value of the Burncrest Property is. I do have any evidence before me that the purchase price in the APS is improvident or that the amount above is the correct price.

168Given the uncertainty of the terms of this “offer”, I cannot find that Zhao would have mitigated his loss and crystallized his damages at $85,000 as suggested by counsel for Luxury Castle.

169I also do not ascribe some malicious intent to Sarrafian making the offer. He appears to have trying to solve his problem of collecting the amounts owing under the First Mortgage and the Second Mortgage that he purchased. Zhao chose not to solve Sarrafian’s problem and decided to maintain his claim to specific performance in the Action and on this Motion.

170In that regard I question whether the conduct of the Plaintiff, through Leksikova, applying for permit and plan approval on a property he did not own yet, and allegedly incurring costs in doing so, was any less “voluntary”.

171I do not find, on the evidence before me, that the arguments made by the Plaintiff, regarding the legal ability of this Court to grant an order to restrain the enforcement of the First Mortgage and the Second Mortgage by Luxury Castle due to the conduct of Sarrafian, favour the Plaintiff.

Prejudice to the Plaintiff

172The Plaintiff in his Factum states that Zhao wishes to maintain the status quo. The position of Zhao is:

“75. There is more risk of serious harm if the CPL is not granted. Without a CPL, [Leksikova or Luxury Castle are] free to dispose of the Property as [they wish], and [Zhao] would lose the very right he seeks in the action.”

76. In fact, the Burncrest Property is currently listed by Luxury Castle for sale.”

173On the date of the review of these materials on August 10 by Master Frank (as he then was), there was no imminent closing by an alternative purchaser of the property.

174As of the date of the hearing, September 17, 2021 there was no evidence before the Court of an alternative purchaser either having an interest in the Burncrest Property or having signed a competing APS with Luxury Castle, and no imminent closing date was scheduled.

175No party advised the Court at the hearing on September 17, 2021 that the Luxury Castle listing for the Burncrest Property at Exhibit U to the Zhao Affidavit would expire on September 22, 2021, 5 days after the Urgent Hearing. As these reasons are prepared, I have no evidence before me as to whether there currently exists a valid listing for the Burncrest Property.

176However, on August 17th, 2021 the Plaintiff did register the Caution-APS at Exhibit D to the Supplementary Affidavit on title of the Burncrest Property after paying land transfer tax in the total amount of $47,615.30.

177The registration of the Caution-APS states that “The Land Registrar is authorized to delete this caution 60 days from the date of closing, which is 2021/10/18.” , or three days before the determination of the Leksikova Application.

178Like a CPL, the Caution APS is notice to the world that the Plaintiff has claimed an interest in the Burncrest Property, until the 18th of October 2021. Like a CPL, the Caution APS will effectively be a bar to the transfer of the Burncrest Property until it expires.

179As a result, on the date of the hearing, on the date of the writing of this decision, there is effectively a bar on the transfer of the Burncrest Property.

180When questioned by me as to what additional relief the granting of the CPL would provide, Counsel for the Plaintiff advised that the expiry issue was the problem with this remedy and that a CPL would not have this issue.

181Accordingly, the Plaintiff at the time of the hearing and at the time of the issuance of these reasons had an effective bar to the transfer of the Burncrest Property in the form of the Caution APS. No evidence was presented to me regarding whether the Caution APS can or cannot be renewed or re-registered.

182At the time of the hearing, but perhaps not at the time of these reasons due to the expiry date of September 22, 2021 on the Luxury Castle listing, the Burncrest Property may or may not be listed for sale, but there was at the time of the hearing no signed APS with a competing purchaser or evidence of interest by buyers entered into evidence.

Balancing of Prejudices:

183In balancing:

a) the prejudice to Luxury Castle of the granting of the CPL and effectively preventing enforcement and recovery of amounts secured under the First Mortgage and the Second Mortgage (albeit in the context of the hearing of the Leksikova Application in 21 days from the date of this decision to determine the amounts owing under those very mortgages);

against:

b) the potential prejudice to Zhao:

• if there still is a listing agreement by Luxury Castle; and

• if a purchaser is found; and

• if that purchaser signs an APS with Luxury Castle recklessly signing purchase agreements before the hearing of the Leksikova Application; and

• if that purchaser searches title and finds the Caution APS; and

• if that purchaser continues to pursue a sale prior to the hearing of the of the Leksikova Application in 21 days

I find that Luxury Castle will be more greatly prejudiced by the granting of leave to file the CPL than Zhao will be potentially prejudiced by my not granting such leave.

IV) Summary

184In summary I have considered the equities in detail above, as required by the Perruzza test and have determined and balanced the following factors under the tests in Perruzza and Dhunna to determine whether to grant leave to allow the Plaintiff file the CPL:

(i) Zhao is an individual who has a triable issue for a reasonable claim to an interest in the Burncrest Property;

(ii) Zhao has not discharged his onus of proving that the Burncrest Property is unique;

(iii) Zhao’s intent in purchasing the Burncrest Property is not determined given my evidentiary findings concerning Zhao’s lack of disclosure that he is a builder;

(iv) Zhao does not seek damages against the Defendant Leksikova but Zhao intends to amend his Statement of Claim to seek damages against Luxury Castle and Sarrafian;

(v) Zhao’s damages are easily calculable;

(vi) On the evidence before the Court, damages are a satisfactory remedy for Zhao;

(vii) No other willing purchaser has been identified at the time of the hearing; and

(viii) I have found that Luxury Castle will be more greatly prejudiced by the granting of leave to file the CPL than Zhao will be potentially prejudiced by my not granting such leave.

185I have exercised my discretion in equity and have examined the relevant matters between the parties entered into evidence on the Original CPL Motion.

186Having done so, on the evidence before me on this motion, and for the reasons set out in great detail above, I find that the review of the equities in this case DO NOT support my granting leave that a CPL be issued.

187The Plaintiff’s Original CPL Motion is therefore dismissed.

Costs

188If the parties cannot agree on the disposition of the costs of the motion, they may make written submissions, not exceeding three pages each, the Plaintiff within 20 days and the Respondents to the Motion within 40 days.

Associate Justice Ilchenko

Superior Court of Justice

October 1, 2021