Court File and Parties

COURT FILE NO.: CV-21-00666171 MOTION HEARD: 20220217 SUPERIOR COURT OF JUSTICE - ONTARIO

RE: Nattasha Sethi, Plaintiff AND: Calexico Holdings Inc., Defendant

BEFORE: Associate Justice L. La Horey

COUNSEL: Jason E. Bogle, Counsel for the Moving Party Plaintiff Adam Lifshitz, Counsel for the Responding Party Defendant

HEARD: February 17, 2022 by videoconference

Reasons for Decision

Overview

[1] The plaintiff brings this motion for a certificate of pending litigation (“CPL”) with respect to property known municipally as 62 Erintol Way, Markham, Ontario (the “Property”). The motion was brought forward on an urgent basis as the sale of the Property to a third party purchaser is scheduled to close on Tuesday, February 22, 2022.

[2] The plaintiff’s motion was previously returnable on October 5, 2021. The parties agreed to adjourn the motion. Associate Justice McAfee held a case conference in this matter on September 28, 2021 and set a timetable for the motion but left it to the parties to obtain a new date for the hearing. Cross-examinations were scheduled for March 11, 2022, but no date for the return of the motion had been booked by the plaintiff. Because of the pending sale, the plaintiff brought forward the motion on an urgent basis.

[3] The defendant also brought an urgent motion for an order directing the Land Titles Registrar to delete a caution filed by the plaintiff against the Property and for costs on a full indemnity basis against the plaintiff’s lawyer personally. On consent, I made an order directing that the caution registered as instrument number YR3363521 be deleted and adjourned the issue of costs.

[4] At the commencement of the hearing of the CPL motion, the defendant requested an adjournment because: 1) the plaintiff was advancing arguments on issues not pleaded, and 2) the defendant wishes to cross-examine the plaintiff on her affidavits sworn September 1, 2021 and November 25, 2021 and also wishes to cross-examine the plaintiff’s sister, Ms. Nikkita Sethi, on her affidavit sworn February 14, 2022.

[5] The plaintiff opposed the adjournment request and was prepared to proceed without cross-examinations. The plaintiff also agreed that if the adjournment was not granted, that I should not consider the affidavit of the plaintiff’s sister sworn February 14, 2022. The plaintiff agreed that I could consider all of the affidavits submitted by the defendant, including the more recently delivered affidavits (listed below).

[6] Pursuant to oral reasons delivered on February 17, 2022, I denied the adjournment request and ruled that the motion should proceed with the affidavit of the plaintiff’s sister being excluded.

[7] Given that the decision is required immediately, my endorsement will be brief. I will not recite all of the background facts or all of the evidence which I have considered.

[8] For clarity, I will list the affidavits which I have considered. Filed by the plaintiff are: (1) affidavit of Nattasha Sethi (plaintiff) sworn September 1, 2021, (2) supplementary affidavit of Nattasha Sethi sworn September 25, 2021, and (3) affidavit of Boris Bonilla (law clerk) sworn February 11, 2022. Filed on behalf of the defendant are: (1) affidavit of Corey Leibel (manager of the defendant) sworn October 27, 2021, (2) affidavit of Corey Leibel sworn December 3, 2021, (3) affidavit of Corey Leibel sworn February 10, 2022, (4) affidavit of Corey Leibel sworn February 15, 2022, and (5) affidavit of Corey Leibel sworn February 16, 2021. In addition, the parties provided the court with the parcel register for the Property as of February 16, 2022, which shows the caution registered by the plaintiff on January 6, 2021.

Facts and Procedural History

[9] It is not disputed that the plaintiff and defendant entered into an agreement of purchase and sale for the Property on August 15, 2020 (the “APS”) whereby the plaintiff is the purchaser and the defendant is the vendor.

[10] The Property is one of approximately 90 similar new homes in a subdivision in Markham, Ontario. The plaintiff paid four deposits totalling $75,000 to the defendant.

[11] Paragraph 6 of the plaintiff’s affidavit sworn September 1, 2021 states:

My sister purchased the lot next to the Property. Initially, I purchased the property as an investment. Later, through counsel, I requested to have the information with the Defendant updated to reflect that the Property would be my primary residence. The Defendant confirmed the change on July 2, 2021.

[12] The transaction was originally scheduled to close on February 1, 2021. Due to the COVID pandemic, the closing of the transaction was delayed to July 6, 2021.

[13] The APS included a term that time was of the essence.

[14] The parties put into evidence correspondence between the parties’ real estate lawyers with respect to the plaintiff’s request for an extension of the closing date of July 6, 2021.

[15] The transaction did not close.

[16] The plaintiff commenced this action on July 26, 2021, seeking specific performance of the APS, or in the alternative, damages. The claim was amended on September 1, 2021 to add a request for a CPL. In the claim, the plaintiff takes the position that the defendant was in breach of contract and acted in bad faith in not granting a reasonable extension of the closing date.

[17] On September 28, 2021, the parties attended before Associate Justice McAfee to set a timetable for the plaintiff’s CPL motion which was then returnable on October 5, 2021. The parties agreed to a timetable including cross-examinations to be conducted by November 29, 2021. The parties were to address the rescheduling of the motion separately.

[18] On October 29, 2021 the plaintiff caused a caution to be registered against the Property. The defendant says that the documents filed in support of the caution were not served on it.

[19] Cross-examinations were scheduled for November 26, 2021, but were cancelled as a result of the service of a supplementary affidavit from the plaintiff sworn and served the day prior to the scheduled cross-examinations. The timetable established by Associate Justice McAfee did not provide for the delivery of a further affidavit from the plaintiff.

[20] On January 6, 2022, the plaintiff caused a new caution, YR3363521, to be registered against the Property. This is the caution that I have directed the registrar of the Land Titles Office to remove pursuant to the consent order.

[21] On January 11, 2022, a law clerk at the plaintiff’s firm contacted defence counsel to arrange for the rescheduling of the cross-examinations. Defence counsel did not respond until January 26, 2022, as their office was closed due to COVID. The cross-examinations were scheduled for March 11, 2022. The cross-examinations could not be scheduled earlier because of the schedules of Mr. Leibel and defence counsel.

[22] On February 9, 2022, defence counsel wrote to plaintiff’s counsel stating that it appeared that the plaintiff had registered a caution on the Property and had failed to serve the defendant with the materials regarding the caution as required by section 129 of the Land Titles Act. In the letter, counsel took the position that the registration of the caution was unlawful and that the defendant will seek full indemnity costs against the plaintiff’s lawyer personally for failure to serve the required materials in accordance with the Land Titles Act.

[23] On February 10, 2022, the plaintiff’s lawyer learned that the defendant had entered into an agreement to sell the Property to a third party with a closing date of February 15, 2022.

[24] The plaintiff’s motion for a CPL and the defendant’s motion for the removal of the caution were then scheduled to be heard on an urgent basis on February 17, 2022. The closing of the sale to the third party was extended to February 22, 2022.

Law and Analysis

CPL Motions Generally

[25] Section 103 of the Courts of Justice Act permits the issuance of a CPL when “an interest in land is in question”.

[26] The test for obtaining an order granting leave to register a CPL is well-settled.

[27] The applicable principles on a motion for leave to issue a CPL on notice are summarized by Master Glustein (as he then was) in Perruzza v Saptone as follows:

(i) The applicable principles on a motion for leave to issue a CPL on notice are summarized by 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 CarswellOnt 219 (C.A.) at para. 20);

(iv) Factors the court can consider on a motion to discharge a CPL include (i) whether the plaintiff is a shell corporation, (ii) whether the land is unique, (iii) the intent of the parties in acquiring the land, (iv) whether there is an alternative claim for damages, (v) the ease or difficulty in calculating damages, (vi) whether damages would be a satisfactory remedy, (vii) the presence or absence of a willing purchaser, and (viii) the harm to each party if the CPL is or is not removed with or without security (572383 Ontario Inc. v. Dhunna, 1987 CarswellOnt 551 (S.C. - Mast.) at paras. 10-18); and

(v) The governing test is that the court must exercise its discretion in equity and look at all relevant matters between the parties in determining whether a CPL should be granted or vacated (931473 Ontario Ltd. v. Coldwell Banker Canada Inc., 1991 CarswellOnt 460 (Gen. Div.); Clock Investments Ltd. v. Hardwood Estates Ltd., 1977 CarswellOnt 1026 (Div. Ct.) at para. 9).

[28] Justice Peterson has more recently reviewed the case law and identified further factors relevant to whether leave to issue a CPL should be granted. These additional factors include whether the CPL appears to be sought for an improper purpose and whether the moving party has prosecuted the proceeding with reasonable diligence. (2254059 Ontario v Kim, 2017 ONSC 5003 at para 31).

Whether there is a triable issue

[29] The court may grant leave to register a CPL only where it is satisfied that there is a triable issue in respect of the moving party’s claim to an interest in the land. This is a threshold issue. (2254059 Ontario v Kim, 2017 ONSC 5003 at para 21).

[30] In her amended statement of claim and in her affidavit sworn September 1, 2021, the plaintiff takes the position that the defendant acted in breach of contract and in bad faith with respect to her request for an extension of the closing date.

[31] The defendant takes the position that on July 6, 2021 it offered to extend the closing to July 8, 2021 on certain terms, but that the plaintiff did not accept its offer within the time stipulated and instead made a counteroffer for an extension that was not acceptable to the defendant. The defendant says that it was ready, willing and able to close on the closing date of July 6, 2021 and completed a deemed tender, as a result of which the transaction was at an end. The defendant argues that as the defendant was acting in good faith, it is entitled to rely on the time is of the essence provision in the APS.

[32] In her affidavit sworn November 25, 2021, plaintiff alleges that the defendant failed to provide certain notices in accordance with the APS and that as a result the defendant is in breach of its obligations to provide occupancy in accordance with the APS and is obliged to pay her delayed occupancy compensation.

[33] The defendant says that this issue is not pleaded in the amended statement of claim and that in any event, the plaintiff received timely notices in accordance with the APS.

[34] The defendant takes the position that when the APS terminated, the plaintiff’s interest in land terminated.

[35] It is not necessary for me to make a finding on whether there is a triable issue given my conclusions on the equities. For the reasons set out below, even if I had found that the plaintiff has a triable issue with respect to an interest in land, I would not grant the CPL.

Consideration of the Equities

Whether the plaintiff is a shell corporation

[36] The plaintiff is not a shell corporation. She has provided an undertaking as to damages. This is a factor in favour of the CPL.

Whether the land is unique/ intentions of the plaintiff

[37] As noted above, the plaintiff says that she initially purchased the Property as an investment. She says in her affidavit sworn September 1, 2021: “Later, through counsel, I requested to have the information with the Defendant updated to reflect that the Property would be my primary residence.” This occurred in July 2021, just prior to the scheduled closing date.

[38] The plaintiff’s evidence with respect to her intentions regarding the Property is sparse.

[39] The plaintiff did not elaborate on why her intentions with respect to the Property changed. The plaintiff did not say whether she intended to move into the Property on closing and did not provide any evidence that she had made any arrangements to occupy the Property on closing. She did not provide any evidence as to where she was living on July 6, 2021 and where she has been living since that time.

[40] Nowhere in the plaintiff’s affidavit of September 1, 2021 does she say that her intention, as of the date of the affidavit, was to occupy the Property as her primary residence.

[41] The plaintiff says that her sister purchased the lot next to the Property. However, there is no evidence that the plaintiff’s sister occupies the home built on that lot.

[42] In his affidavit sworn October 27, 2021, Mr. Leibel deposes that the Property is not unique or substantively different from many of the houses in the subdivision or nearby. He states that the neighbouring property is not occupied by the plaintiff’s sister. The plaintiff does not deny these statements in her supplementary affidavit of November 25, 2021.

[43] The plaintiff’s supplementary affidavit of November 25, 2021 does not speak to her intentions with respect to the Property as of that date.

[44] There is some evidence that the Property is unique in that the neighbouring lot is owned by her sister. There is no evidence that the Property is otherwise unique. This is a factor in favour of the CPL, but because the evidence is thin on the point, I do not give it much weight.

[45] Generally, if the purchaser intends to live at the Property this is a factor that favours a CPL. The plaintiff’s evidence as to her intentions with the Property is vague, perhaps deliberately so. There are a number of unanswered questions. As a result, I cannot come to any conclusion on the plaintiff’s intention with respect to the Property.

Whether there is an alternative claim for damages

[46] The plaintiff has an alternative claim for damages. This factor militates against granting the CPL.

The ease or difficulty of calculating damages

[47] Damages in this case would be relatively easy to calculate.

Whether damages would be a satisfactory remedy

[48] The plaintiff says that damages are not a satisfactory remedy because of the Property’s uniqueness, but as noted above, there is a paucity of evidence from the plaintiff on this point.

[49] In her factum, the plaintiff says that an award of damages would not be sufficient to buy a house of similar size and location, given the “hot housing market”. However, there is no evidence tendered in support of this proposition.

[50] On balance, this factor slightly militates in favour of granting a CPL on the basis that her sister owns the neighbouring property and the Property is unique on this basis.

The presence or absence of another willing purchaser

[51] The defendant has entered into an agreement to sell the Property to a third party and thus says that this is a factor militating against the CPL. However, the defendant entered into this agreement in the face of the plaintiff’s request for a CPL and thus took a calculated risk. There is no evidence about the third party purchaser or the terms of the agreement of purchase and sale entered into by the defendant and the third party. There is no evidence as to whether this unknown third party would be affected by the granting of the CPL. I conclude that this is a neutral factor.

Balance of convenience

[52] If the CPL is not granted, it appears likely that the Property will be sold to a third party on February 22, 2022 and the plaintiff will lose the ability to acquire the Property. However, the plaintiff will be able to pursue her claim for damages. The plaintiff’s evidence is that she originally purchased the Property as an investment, but at some point prior to the scheduled closing in July 6, 2021 had changed her mind and intended to live at the Property. As set out above, there is a lacunae of evidence from the plaintiff as to her intentions with respect to the Property after the transaction failed to close.

[53] The plaintiff’s evidence is that her sister purchased neighbouring property, but there is no evidence that her sister occupies that property.

[54] If the CPL is granted, the defendant will likely be prevented from completing the sale of the Property to a third party. It is now approximately seven months since the transaction failed to close in July 2021. The issues in the action are not likely to be finally determined for at least another year, during which time the defendant will be responsible for the carrying costs of the Property.

[55] I find that the balance of convenience favours the defendant.

Whether the moving party has prosecuted the claim with reasonable diligence

[56] The plaintiff issued the statement of claim on July 26, 2021 relatively soon after the transaction failed to close, but did not serve her two affidavits in support of the CPL motion until November 25, 2021, more than four months after the scheduled closing date of July 6, 2021. The delivery of the plaintiff’s supplementary affidavit (not provided for in the timetable ordered by Associate Justice McAfee one day before cross-examinations caused the cross-examinations scheduled for November 26, 2021 to be delayed. The plaintiff did not take steps to arrange new dates for cross-examinations until January 11, 2022, six months after the transaction failed to close.

[57] The plaintiff did not arrange for a new motion date until February 10, 2022, when she brought the motion forward on an urgent basis.

[58] I find that the plaintiff has not prosecuted the claim with reasonable diligence in all of the circumstances. This is a factor militating against the CPL.

Conclusion on the Equities

[59] Having considered and balanced the equities, I conclude that, even if there were a triable issue as to the plaintiff’s entitlement to specific performance, it would not be just and equitable in all of the circumstances that leave be granted to issue a CPL.

[60] In the alternative, the plaintiff asked for an order for payment into court of the proceeds of the pending sale. However, there is no evidence that the defendant would not be able to pay an award of damages should the plaintiff ultimately be successful.

[61] The plaintiff claims that it is in the interests of justice for the court to grant an order for payment of money into court because the defendant entered into an agreement of purchase and sale with a third party while the motion was pending. However, the defendant was not prohibited from listing or selling the property. The plaintiff could have brought on her motion for hearing much sooner. If the motion had to be adjourned to permit the defendant the opportunity to respond and for cross-examinations to take place, the plaintiff could have sought an interim order prohibiting the defendant from listing or selling the Property pending the return of the motion or an order requiring the defendant to advise if and when it entered into an agreement to sell the Property.

[62] I do not find that it is in the interests of justice that the defendant be required to pay the proceeds of the pending sale into court.

Disposition

[63] The plaintiff’s motion is dismissed.

[64] If the parties cannot agree on costs of the motion, the parties may contact my Assistant Trial Co-ordinator to convene a case conference to determine the mode for determining costs and an appropriate timetable.

L. La Horey, A.J. Date: February 19, 2022