Court File and Parties

Court File No.: CV-22-00676506-0000 Motion Heard: 2022-02-11 Superior Court of Justice - Ontario

Re: Yan Wang, by her proposed Litigation Guardian and substitute decision maker, Hui Xu, Applicant / Moving Party And: Allure at the Gates of Aurora Inc., Respondent / Responding Party

Before: Associate Justice R. Frank

Counsel: Yan Wang and Li He, Counsel for the Applicant/Moving Party

Motion in Writing: February 11, 2022

Endorsement

I. BACKGROUND

[1] This is an ex parte in-writing motion by the applicant seeking:

a. an order appointing Hui Xu (“Mr. Xu”) as the litigation guardian of the applicant, Yan Wang (“Ms. Wang”); and

b. an order granting leave to issue and register a certificate of pending litigation against title to the property known as Unit 10, Level 1, York Region Vacant Land Condominium Plan No. 1159 (the “Property”).

[2] For the reasons that follow:

a. I am satisfied that it is appropriate to grant the order appointing Mr. Xu as the litigation guardian of the applicant; and

b. I decline to exercise my discretion to grant leave to issue and register a certificate of pending litigation against the Property.

a. Appointment of a Litigation Guardian

[3] The applicant, Ms. Wang, is the wife of Mr. Xu. They have been married since April 12, 2000. On November 14, 2021, Ms. Wang was involved in a traffic accident in the City of Nantong, China and sustained serious bodily injuries, including serious head injuries. Ms. Wang is now incapable as defined under section 1 of the Substitute Decisions Act, 1992.

[4] Both Ms. Wang and Mr. Xu are ordinarily resident in Ontario. Mr. Xu has no interest in the proceeding adverse to that of Ms. Wang. Mr. Xu has been informed of his liability to pay personally any costs awarded against Ms. Wang.

b. Motion for a certificate of pending litigation

[5] In the supporting affidavit from Mr. Xu sworn February 9, 2022, he deposes that on November 12, 2016 the applicant and respondent (vendor) entered into an agreement of purchase and sale for the Property (the “APS”). The affidavit evidence also includes the following:

a. The applicant claims to have paid deposits under the terms of the APS in the aggregate amount of $525,000;

b. The Property is part of a condominium development in Aurora, Ontario;

c. At the same time as entering into the APS for the Property, the applicant also executed an agreement of purchase and sale for a different unit in the same preconstruction condominium. The purchase of that second unit closed on May 30, 2019. The applicant and Mr. Xu moved into the second unit in late 2019.

d. The applicant alleges that the vendor failed to provide the applicant with a closing date for completion of the APS as required by an addendum to the APS (the “Tarion Addendum”);

e. In September 2021, the vendor advised the applicant via a Zoom meeting that, among other things:

i. the APS had been terminated because certain critical dates stipulated by the Tarion Addendum had passed;

ii. if the applicant intended to complete the purchase of the Property, the purchase price would be different as a result of changing market conditions;

f. The applicant denies that the respondent had the right to unilaterally terminate the APS;

g. The applicant says that:

i. she inquired as to the price increase the vendor was seeking; and

ii. the vendor told the applicant that it would provide an amended APS to the applicant for her consideration but never provided one to her.

[6] In late January 2022, Mr. Xu discovered that the land upon which the Property sits (which is still an empty lot) had been sold, with a closing date listed as February 14, 2022.

[7] By notice of application issued February 7, 2022, the applicant commenced an application seeking the following relief:

a. an order granting leave to issue and register a certificate of pending litigation against title to the Property;

b. an order rescinding the APS;

c. an order for the restitution of any monies paid to the respondent pursuant to the APS;

d. in the alternative, damages in the amount of $525,000 for the breach of the APS;

e. prejudgment interest and costs.

II. LAW AND ANALYSIS

a. Appointment of a Litigation Guardian

[8] Pursuant to Rule 7.02(2), a person shall only act as a litigation guardian for an applicant who is under disability upon filing an affidavit containing the information required under that Rule.

[9] As Mr. Xu’s affidavit contains the information required by Rule 7.02(2), I am satisfied that it is appropriate for him to act as the litigation guardian of the applicant for this application.

b. The test for leave to issue a certificate of pending litigation – general principles

[10] The purpose of a certificate of pending litigation is to give non-parties notice of a proprietary claim, thereby permitting a party to protect its claim pending the determination of the alleged interest on its merits. It does not, in and of itself, create a right or interest in the land. (Ambassador Electric Inc. v. Fernwood Builders (London) Ltd., 2014 ONSC 3738, at para. 7).

[11] In Perruzza v. Spatone, 2010 ONSC 841, at para. 20, Master Glustein (as he then was), set out the following legal principles which are applicable on a motion for leave to issue a certificate of pending litigation:

a. The test on a motion for leave to issue a certificate of pending litigation made on notice to the defendants is the same as the test on a motion to discharge a certificate of pending litigation (Homebuilder Inc. v. Man-Sonic Industries Inc., 1987 CarswellOnt 499 (Ont. Master) (“Homebuilder”), at para. 1);

b. The threshold in respect of the “interest in land” issue in a motion respecting a certificate of pending litigation (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 (Ont. Gen. Div. [Commercial List], at para. 62);

c. The onus is on the party opposing the certificate of pending litigation to demonstrate that there is no triable issue with respect to whether the party seeking the certificate of pending litigation has “a reasonable claim to the interest in the land claimed” (G.P.I. Greenfield Pioneer Inc. v. Moore, 2002 CanLII 6832 (ON CA), 2002 CarswellOnt 219 (Ont. C.A.), at para. 20);

d. Factors the court can consider on a motion to discharge a certificate of pending litigation 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 certificate of pending litigation is or is not removed with or without security (572383 Ontario Inc. v. Dhunna, 1987 CarswellOnt 551 (Ont. Master), at paras. 10-18); and

e. 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 certificate of pending litigation should be granted or vacated (931473 Ontario Ltd. v. Coldwell Banker Canada Inc., 1977 CanLII 1414 (ON SC), 1991 CarswellOnt 460 (Ont. Gen. Div.), 1977 CarswellOnt 1026 (Ont. Div. Ct.), at para. 9).

[12] In sequence, the court first determines if there is a triable issue as a threshold question. 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 (THMR Development Inc. v. 1440254 Ontario Ltd., 2017 ONSC 5411, at para. 13, citing 2526716 Ontario Inc. v. 2014036 Ontario Ltd., 2017 ONSC 1762).

c. Is there a triable issue for a claim to an interest in the Property

[13] There is a dispute between the parties as to whether the APS for the Property was properly terminated by the respondent/vendor. As a result, for purposes of this ex parte motion, I find that there is a triable issue with respect to whether the applicant has an interest in the Property.

d. Should the Court exercise its discretion to grant leave to issue a CPL

[14] In assessing whether the court should exercise its discretion to grant leave to issue a certificate of pending litigation, I have considered and applied the Dhunna factors that are relevant in the current circumstances.

[15] Although the evidence filed by the applicant in support of this ex parte motion fails to address any of the Dhunna factors directly, I find as follows with respect to those factors:

a. The question of whether the plaintiff is a shell corporation is not applicable in this case. This is a neutral factor.

b. The evidence indicates that there were 22 condominium units to be built as part of the condominium development in which the Property is located, and that the Property is currently an empty lot. Importantly, there is no evidence in the applicant’s supporting affidavit evidence that the Property is unique in any manner. Therefore, I find that this factor favours the respondent.

c. There is no direct evidence with respect to the intent of the applicant in acquiring the land. However, the evidence is that the applicant purchased another unit in the same condominium and moved into the other unit in 2019. There is no evidence to rebut the implication that the purchase of the Property (i.e. a second unit in the same condominium in which the applicant owns a unit in which she lives) was for a reason other than investment purposes. I find that this factor favours the respondent.

d. In terms whether there is an alternative claim for damages and whether damages would be a satisfactory remedy, in the notice of application, the applicant seeks: (i) an order rescinding the APS and an order for the restitution of any monies paid to the respondent pursuant to the APS; or (ii) in the alternative, damages in the amount of $525,000 for the breach of the APS. Importantly, although the applicant is seeking a certificate of pending litigation in order to protect her claim to an interest in the Property, she is not seeking specific performance of the APS. If the applicant were of the view that damages would not be an adequate remedy (and if the applicant was truly seeking damages as alternative remedy), I would expect that the applicant would be seeking enforcement rather than recission of the APS. Yet she is doing the opposite. In the result, I find that, based on the relief sought by the applicant in the notice of application, damages would be a satisfactory remedy and that this factor and the alternative claim for damages favour the respondent.

e. There is no evidence that there would be any difficulty calculating damages. As a result, this factor favours the respondent, or is a neutral factor.

f. As noted above, the evidence is that there is another willing purchaser for the Property, and that the sale is set to close on February 14, 2022. As such, this factor favours the respondent.

g. With respect to the relative harm to each party absent a certificate of pending litigation, Mr. Xu’s affidavit asserts that, if the Property is sold on February 14, 2022, he is “concerned that [the applicant] will lose her rights, interest or entitlement to the Property and have little recourse for recovering any loss from the Vendor”. However, Mr. Xu does not provide any explanation or basis for this concern, and I therefore find this to be a bald assertion to which I ascribe no weight. On the other hand, there is evidence of an agreement of purchase and sale with another party that is scheduled to close on February 14, 2022, and a certificate of pending litigation will effectively prevent that from occurring. That could lead to a claim against the respondent, something that is acknowledged by Mr. Xu who, on behalf of the applicant, has undertaken to pay any damages and costs that may be awarded against the applicant if a certificate of pending litigation against the Property is granted but later discharged. Therefore, I find that this factor favours the respondent.

[16] In summary, I find that the factors of uniqueness (lack of uniqueness in this case), adequacy of damages, relative harm, and the existence of another willing purchaser all favour the respondent in terms of the equities. Based on all of the circumstances, having considered the applicable Dhunna factors, and having considered and balanced the equities, I find that it would not be just and equitable to grant leave to issue a certificate of pending litigation.

III. CONCLUSION

[17] For the reasons outlined above, I am satisfied that it is appropriate to grant an order appointing Mr. Xu as the litigation guardian of the applicant.

[18] With respect to the certificate of pending litigation, although I find that the applicant has demonstrated a triable issue with respect to a claim to an interest in the Property, the Dhunna factors overwhelmingly favour the respondent. As a result, it would not be just and equitable in the circumstances to grant leave to issue a certificate of pending litigation.

[19] I order as follows:

a. Hui Xu is appointed as the litigation guardian of the applicant, Yan Wang, in this application.

b. The motion for an order granting leave to issue and register a certificate of pending litigation against title to the Property is dismissed.

Date: February 11, 2022