Court File and Parties

Date: 2022-06-07 Superior Court of Justice – Ontario (Commercial List)

Re: Centurion Mortgage Capital Corporation, Plaintiff And: Brightstar Newcastle Corporation, Brightstar Seniors Living Corporation, The Estate of Alan Chapple, John Blackburn, James Buckler and Lawson Gay, Defendants

Before: Penny J.

Counsel: George Benchetrit for BDO Canada Limited in its capacity as Court-Appointed Receiver Richard Mazar for Brightstar Newcastle Corporation, Brightstar Senior Living Corporation, The Estate of Alan Chapple, John Blackburn, James Buckler, Lawson Gay and 2153491 Ontario Inc. Gerald Rasmussen on his own behalf

Heard: In writing

Endorsement

Overview

[1] This endorsement resolves, as between Mr. Rasmussen and Brightstar, who is liable to pay the standard condominium closing adjustment required to complete a court ordered closing of the purchase of Mr. Ramussen’s condominium unit.

[2] In my endorsement of February 25, 2022 (2022 ONSC 1059) I found that Mr. Rasmussen was a bona fide purchaser for value without notice of prior claims in connection with his prepayment of the balance of the purchase price for Unit 417 in the Brookhouse Gate condominium project located in Newcastle, Ontario. I ordered the Receiver to close Mr. Rasmussen’s purchase of Unit 417 subject only to payment of the standard closing adjustments.

[3] Due to lack of evidence about the precise amount, and a potential dispute about who was liable to pay the closing adjustments, I directed the parties to attempt to resolve by whom and in what amount the closing adjustments should be paid. The parties (that is, Mr. Rasmussen and Brightstar) were unable to resolve this issue. They have each provided, through counsel for the Receiver, a written submission setting out the basis of their position. They have each indicated that they are content to have me resolve this dispute on the basis of their written submissions without the need for any further attendances or process.

[4] This endorsement, which resolves the amount of the standard closing adjustments and who must pay them, should be read in conjunction with my February 25, 2022 endorsement.

The Arguments of the Parties

[5] There is no dispute about the amount of the closing adjustment. All parties agree the amount is $50,966. The bulk of this amount is for unpaid condominium expenses and realty taxes since November 2019, when the condominium was registered. As explained in my earlier endorsement, this was also when Mr. Rasmussen was unable to obtain clear title to his unit and therefore was unable to close.

[6] As the owner of Unit 417, Mr. Rasmussen is prima facie liable to pay the standard closing adjustments. However, Mr. Rasmussen maintains that he should be indemnified for these costs by Brightstar. He offers three grounds for this position.

[7] First, Mr. Rasmussen asserts that prepayment of the balance of his purchase price, as requested by Brightstar, required him to borrow money. Mr. Rasmussen’s cost of this borrowing was, he calculates, $28,850.90. Mr. Rasmussen maintains that James Buckler and John Blackburn, both principals of Brightstar, agreed to repay these costs.

[8] Second, Mr. Rasmussen asserts that under the loan and amending agreement (L&A Agreement) by which his prepayment of the final balance of the purchase price was documented and agreed, Brightstar was liable, under para. 4, to pay interest of 5% on the prepayment if the sale to Mr. Rasmussen of Unit 417 did not close within six months of the prepayment. Six months later, the purchase of Mr. Rasmussen’s unit had not closed; indeed, it has yet to close. Mr. Rasmussen assets Brightstar is liable to pay interest under the L&A Agreement and has calculated this interest to the end of March 2022 at $72,277.

[9] Finally, Mr. Rasmussen argues that, due to declining health and for other reasons, he decided to move but could not sell Unit 417 because of these legal proceedings. He says he incurred duplicative and unnecessary costs in the total amount of $25,000 from having to carry two residences. He maintains that Brightstar, by virtue of failing to provide him with clear title in November 2019, should be liable for these costs.

[10] As a result of these claims, Mr. Rasmussen argues that Brightstar should be held responsible for paying the closing adjustments of $50,966 for his unit.

[11] Brightstar disputes these claims and maintains that Mr. Rasmussen is liable to pay the closing adjustments to the Receiver in exchange for receiving clear title to Unit 417. Brightstar relies principally on para. 23(b) of the agreement of purchase and sale (APS) which precludes Mr. Rasmussen from making any set-off-type claims. Para. 23(b) provides that:

under no circumstances shall the Purchaser be entitled to any claim, refund, credit, reduction/abatement or set-off whatsoever against any portion of the Purchase Price, or against any portion of expenses, Occupancy Fees or other adjustments respect to; save and except if provided the Addendum the contrary.

[12] Brightstar maintains that all of Mr. Rasmussen’s assertions about countervailing amounts owed to him by Brightstar fall into the category of “claim, refund, credit, reduction/abatement or set-off” which are prohibited by the APS as any basis not to pay the closing adjustments.

[13] Brightstar also makes various additional arguments going to the merits of Mr. Rasmussen’s allegations. It is not necessary, however, to deal with those arguments given my view, set out below, of the applicability of para. 23(b) of the APS. Accordingly, I make no finding one way or another about the merits of Mr. Rasmussen’s claims to be owed money by Brightstar.

Analysis and Conclusion

[14] Mr. Rasmussen’s first and third arguments, based on his cost of borrowing and the cost of maintaining two residences, are clearly distinct from the APS and L&A Agreement. The alleged obligations attributed to Brightstar arise from completely different agreements and are, in any event, not conceded by Brightstar or its principals. There is no sense in which these claims, even if they had merit, could constitute a lawful basis upon which Mr. Rasmussen could refuse to pay to the Receiver the standard closing adjustments for his unit as required by the APS.

[15] Mr. Rasmussen’s claim for the payment of interest is different because it arises out of the L&A Agreement, which is itself an amendment to the APS. However, even accepting Mr. Rasmussen’s interest claim under para. 4 of the L&A Agreement as more in the nature of a set-off than a counterclaim, para. 23(b) of the APS still applies. The closing adjustment is part of the purchase price. Mr. Rasmussen is legally obliged to pay the full purchase price in exchange for clear title to his unit. The APS is crystal clear on this point – under no circumstances shall the purchaser be entitled to any set-off against any portion of purchase price or other adjustments. Para. 23(b) governs. Regardless of the merit of his claims to be owed money by Brightstar or its principals, Mr. Rasmussen must pay the standard closing adjustments in the amount of $50,966.

[16] This conclusion, based as it is on para. 23(b) of the APS, is expressly and entirely without prejudice to Mr. Rasmussen’s right to seek indemnity by way of separate claim against Brightstar and/or its principals for any loss he is alleged to have suffered.

[17] There is no order as to costs.

Penny J.

Date: June 7, 2022