Court File and Parties

COURT FILE NO.: CV-21-00673361-0000

DATE: 20220628

SUPERIOR COURT OF JUSTICE - ONTARIO

RE: SANAZ SHIRKHODAEITARI, Plaintiff

AND:

FATEMEH FARZANEH FARKHONDEH, Defendant

BEFORE: VERMETTE J.

COUNSEL: Avrum Slodovnick, for the Plaintiff

Dimitrios Mylonopoulos, for the Defendant

HEARD: June 9, 2022

ENDORSEMENT

[1] The Plaintiff brings this motion for an Order granting leave to the Plaintiff to issue a certificate of pending litigation (“CPL”) and to register same against title to a residential property located on Hounslow Avenue in Toronto (“Property”).

[2] The Plaintiff’s motion is granted.

A. FACTUAL BACKGROUND

[3] The Plaintiff has resided at the Property since June 2019 pursuant to a residential lease. The Defendant is the registered owner of the Property. The lease contained an option to purchase the Property.

[4] Starting in around June 2021, the Plaintiff fell behind in the payment of rent under the lease. In the summer of 2021, the Defendant initiated Landlord and Tenant Board proceedings as against the Plaintiff seeking eviction on the ground of non-payment of rent.

[5] From August to October 2021, the Plaintiff made several offers to the Defendant to purchase the Property.

[6] On October 7, 2021, the Plaintiff (as purchaser) and the Defendant (as seller) entered into an agreement of purchase and sale relating to the Property for a purchase price of $3,680,000 and with a closing date of November 30, 2021 (“APS”).

[7] Schedule C of the APS states the following:

Whereas the purchaser has an intention to build a pool and finishing backyard and cutting the backyard trees (With Permit) the seller agrees to credit the purchaser the amount of $190,000 CAD (one Hundred Eighty Thousand) [sic], to be reflected on the statement of adjustment and deducted from the net sale proceeds advanced by the purchaser’s lawyer on closing day.

This adjustment is made on a good faith understanding of the parties and is NOT revokable in the event the purchaser decided not to go ahead with any changes.

[8] Between October 7 and November 24, 2021, the Plaintiff made four deposit payments totaling $225,000. Pursuant to the terms of the APS, the deposits were released to the Defendant. The APS provided that if the transaction did not close, the deposit monies could be applied to pay the rental arrears from June to November 2021.

[9] On November 29, 2021, i.e. the day before the scheduled closing date, a dispute arose as to whether Schedule C formed part of the APS and whether the Defendant had an obligation to provide the pool and landscaping credit in the amount of $190,000. I note that the front page of the APS refers to a Schedule C, and the Schedule C relied upon by the Plaintiff appears to have been initialed by the Defendant, like the other pages of the APS.

[10] On the closing date, the Plaintiff was ready, willing and able to close the deal, but the Defendant insisted on payment of the purchase price without the credit to the purchaser provided for in Schedule C of the APS. The Plaintiff proposed that the disputed $190,000 be placed into trust or paid into court to stand to the credit of the party entitled to those funds. The Defendant rejected the Plaintiff’s proposal and refused to extend the closing date.

[11] In light of the Defendant’s position, the Plaintiff decided to close the transaction under protest and to pay the disputed $190,000, with respect to which she reserved her rights and remedies. The closing funds were provided by the Plaintiff and received by the Defendant’s real estate lawyer between 5 and 6 p.m. on the closing date, i.e. November 30, 2021.

[12] On December 1, 2021, the Defendant took the position that the transaction had not closed because the Plaintiff was in default of the APS, and she refused to release the transfer unless the Plaintiff agreed to waive her claim to the overage of $190,000.

[13] Ultimately, the transaction did not close. On December 1, 2021, the Plaintiff arranged for a Caution to be registered on title to the Property, and paid approximately $157,000 in land transfer taxes. The Defendant returned the purchase monies, but not the deposits.

[14] On December 7, 2021, the Plaintiff commenced this action in which she claims specific performance of the APS.

[15] On January 26, 2022, the parties attended at Civil Practice Court for the purpose of scheduling the Plaintiff’s motion to obtain a CPL. Justice Myers scheduled the motion and also made the following order:

I grant leave for the plaintiff to issue a Certificate of Pending Litigation for the subject premises. Leave is without prejudice to the defendant’s rights. Despite this order, the plaintiff will bear the burden of establishing its entitlement to keep the certificate at the return of the motion scheduled above.

B. DISCUSSION

1. Applicable test

[16] A two-part test governs the issuance of a CPL. First, the Court must determine whether the plaintiff has a triable claim to an interest in land. Second, the Court must consider all relevant factors between the parties, including whether damages would be a satisfactory remedy, and balance the interests of the parties in the exercise of its discretion as to whether to grant leave for the issuance of a CPL. See Rahbar v. Parvizi, 2022 ONSC 1104 at para. 20 (“Rahbar”).

[17] Regarding the first part of the test, courts have held that in an action involving a failed real estate transaction, the evidence required to show a triable claim to an interest in land is not high. The assessment of whether there is a triable issue as to an interest in land does not require establishing that the plaintiff’s claim will succeed. See Rahbar at para. 21. With respect to a claim for specific performance, there must be a triable issue with respect to both breach of contract and the equitable remedy of specific performance: see Interrent v. 1167750 Ontario, 2013 ONSC 4746 at para. 15. 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: see Perruzza v. Spatone, 2010 ONSC 841 at para. 20(iii).

[18] Regarding the second part of the test, as the granting of a CPL is an equitable remedy, the court will look at all of the relative matters between the parties in considering whether to exercise its discretion to grant leave for the issuance of the CPL. The factors that will guide a court’s assessment of whether to exercise its discretion to grant leave for the issuance of the CPL include the following: (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 certificate of pending litigation is or is not granted. See Rahbar at paras. 22-23.

2. Whether the Plaintiff has a triable claim to an interest in land

[19] In my view, there is sufficient evidence in this case to establish a reasonable claim to an interest in the Property based upon the facts. The Plaintiff’s claim is based on the APS, each page of which was either signed or initialed by both parties, including the disputed Schedule C. On the closing date, the Plaintiff tendered the purchase price, including the disputed $190,000, subject to a reservation of rights to claim damages for the $190,000 “extra” payment. Whether or not Schedule C formed part of the APS is a triable issue.

[20] The Plaintiff asks for specific performance in her Statement of Claim. The Defendant submits that there is nothing sufficiently unique or distinct about the Property that would warrant the registration of a CPL, let alone specific performance of the APS. According to the Defendant, damages would be an adequate remedy as opposed to specific performance.

[21] The nature of a property is relevant when determining whether to order specific performance. In assessing the nature of a property, the court considers the property’s physical attributes, the purchaser’s subjective interests, and the circumstances of the underlying transaction. While the property needs to have a degree of “uniqueness”, singularity or incomparability are not required. The issue is whether the property has qualities that make it especially suitable for the purchaser and those qualities are not readily duplicated elsewhere. See Ahmad v. Ashask, 2022 ONSC 1348 at para. 165 (“Ahmad”).

[22] While the evidentiary record before me on the issue of uniqueness of the Property is not particularly strong and includes many conclusory statements, I find that, taking into account all the circumstances of this case, there is sufficient evidence at this stage of the proceeding to establish a triable issue with respect to the remedy of specific performance. In my view, the fact that the Property has been the Plaintiff’s home for three years is a very important factor. It is a quality that cannot be readily duplicated, and it makes the Property particularly suitable for the purpose for which it is intended, i.e. being the Plaintiff’s home.

[23] The evidence adduced by the Plaintiff includes the following:

a. The Plaintiff has lived in the Property for almost three years and has grown to appreciate the Property, the location and the neighborhood. She considers the Property her home.

b. The Property meets the Plaintiff’s emotional and aesthetic needs.

c. The neighborhood is suited to the Plaintiff’s tastes and needs. The Plaintiff and her spouse have settled in the area and have family and business ties linked to that area in particular.

d. The Plaintiff and her spouse planned their life at the Property. They bought all of their furniture specifically to match the style of the Property.

e. The Plaintiff made provision for buying the Property in the lease.

[24] In addition, I agree with the Plaintiff that the following “objective” circumstances are relevant when assessing the “uniqueness” of the Property:

a. The rent for the Property ($6,000 monthly) and the purchase price under the APS ($3,680,000) were substantial, showing that the Property did not fall under the classification of a “mass-produced consumer product”: see Semelhago v. Paramadevan, 1996 CanLII 209 (SCC), [1996] 2 S.C.R. 415 at paras. 20-22.

b. The Property is located in Toronto and is being purchased as a home, not as an investment property. It has been recognized in the case law that the criteria for granting specific performance may be more easily met within the housing market in the Greater Toronto Area given that it is a housing market in which land is in increasingly limited supply and home sales are often characterized by bidding wars among prospective purchasers: see 1954294 Ontario Ltd. v. Gracegreen Real Estate Development Ltd., 2017 ONSC 6369 at para. 151 and Ahmad at para. 162.

[25] I also note that the Defendant, as the party opposing the CPL, has an 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. However, the Defendant did not conduct cross-examinations and did not adduce any evidence to show that the Property was not unique or that there were other comparable substitute properties available at the time.

[26] Thus, on the record before me, there is a reasonable claim that the Property is unique. See Datta v. Eze, 2020 ONSC 4796 at paras. 42-46.

[27] Since the Property is the Plaintiff’s home and is unique to her, I find that damages would not be an adequate remedy: see Berthault v. Green Urban, 2021 ONSC 8039 at para. 42 and Erie Sand and Gravel Limited v. Tri-B Acres Inc., 2009 ONCA 709 at paras. 116-118.

[28] In light of the foregoing, I conclude that the first part of the test has been met. The Plaintiff has established a triable claim to an interest in land as there is a triable issue in this case with respect to both a breach of the APS and the equitable remedy of specific performance.

3. Consideration of the equities of the case

[29] The relevant factors to consider are set out in paragraph 18 above. I have already dealt with the issues of whether the Property is unique and the adequacy of damages as a remedy. Addressing some of the other factors, the Plaintiff is an individual who wishes to acquire the Property to use it as her home, while the Defendant has been leasing it. There is no alternative claim for damages in the Statement of Claim[^1] and there is no evidence that there is another willing purchaser.

[30] With respect to the issue of the harm to each party, the Defendant argues that the harm done to her by the CPL outweighs any alleged harm to the Plaintiff should the CPL not be granted. The Defendant states that the CPL inhibits her ability to deal with the Property and that the Plaintiff remains in default of her rental payments.

[31] In my view, the alleged harm described by the Defendant is outweighed by the harm that would be suffered by the Plaintiff should the CPL granted by Justice Myers be lifted. While the Defendant has been leasing the Property to others and treating it as an investment property for a number of years, the Property is the Plaintiff’s home. The Defendant has not shown that there are any willing purchasers for the Property or that she had or will have to forego any opportunities as a result of the CPL. Further, the deposits retained by the Defendant are sufficient to cover any rent owed by the Plaintiff. In contrast, if the CPL is not maintained, there is a risk that the Plaintiff could lose her home and the very right that she is seeking in this action. I also note that the Plaintiff has shown that she is willing to move the litigation forward in a timely fashion.

[32] Given that the issuance of a CPL is an equitable remedy, the conduct of the parties is a relevant consideration. I note that when the dispute arose about the APS’s Schedule C shortly before closing, the Plaintiff proposed various alternatives to allow the transaction to close and was prepared to pay the extra $190,000 while reserving her rights. However, all of the alternatives proposed by the Plaintiff were rejected by the Defendant. Further, I agree with the Plaintiff that the Defendant’s conduct before the Landlord and Tenant Board has been troubling, including proceeding with an application for eviction on October 15, 2021 after the Defendant’s lawyer had confirmed in writing to the Plaintiff’s lawyer that the application would be withdrawn.

[33] Looking at all of the relative matters between the parties and balancing their interests, I conclude that the equities of the case favour the Plaintiff and that leave for the issuance of a CPL should be granted to the Plaintiff.

C. CONCLUSION

[34] Accordingly, the Plaintiff’s motion is granted.

[35] There was a brief discussion about costs at the end of the hearing. On the issue of the appropriate scale of costs, my initial view is that this is a case for partial indemnity costs. As has been observed in many cases, costs on the elevated scale are exceptional and are reserved for those situations when a party has displayed reprehensible, scandalous or outrageous conduct: see Quickie Convenience Stores Corp. v. Parkland Fuel Corporation, 2021 ONCA 287 at para. 4. While, as stated above, the Defendant’s conduct before the Landlord and Tenant Board has been troubling, this relates to a different proceeding and was not addressed in detail by the Defendant in her evidence.

[36] Since there does not appear to be a dispute between the parties with respect to the issue of quantum, I encourage the parties to reach an agreement on costs.

[37] If, despite the foregoing, costs cannot be agreed upon and the parties wish to make submissions on costs, the Plaintiff shall deliver submissions of not more than three pages (double-spaced), excluding the costs outline, within 14 days of the date of this decision. The Defendant shall deliver her responding submissions (with the same page limit) within 14 days of her receipt of the Plaintiff’s submissions. The submissions of all parties shall also be sent to my assistant by e-mail and uploaded onto CaseLines.

Vermette J.

Date: June 28, 2022

[^1]: While there is no claim for damages for breach of the APS, there is an alternative claim with respect to the deposits.