Court File and Parties

COURT FILE NOs.: CV-21-00661900 and CV-21-00661171

DATE: 20230519

SUPERIOR COURT OF JUSTICE - ONTARIO

RE: ROGER LI, BAO DIEM VUONG, HONGSHENG JI, JENNY CHAN, JIAJUN CHEN, JIAN QUN WANG, LIN LIN CAI, MANFANG LIU, MIN JIAN LIN, RAYMOND H. CHAN, SEN VUONG, XIAO YUAN ZHANG, YANG QU, YONG PENG and ZEYU ZHONG, Appellants

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IDEAL (JS) DEVELOPMENTS INC., IDEAL DEVELOPMENTS INC., SHAJIRAJ NADARAJALINGAM, 2011836 ONTARIO CORP. carrying on business as GRAND GRACE DEVELOPMENT, JEFFERSON PROPERTIES LIMITED PARTNERSHIP, AMERCAN CORPORATION, DRAGON HOLDING GLOBAL REAL ESTATE FUNDS SPC, FIERA FP REAL ESTATE FINANCING FUND L.P., DHI DEVELOPMENTS INC. and FANSEAY WANG, Respondents

AND RE: GOWHARTAJ ASMANI a.k.a. MARJAN ASMANI, HESHAM ABOU EL ESAAD A.K.A. SAM ESAAD, DALIA ABDEL RAHMEN, PAKINAM ABOU EL ESAAD, ALEXANDER BESKROVNYI, KATERYNA PONOMARENKO, NANCY BRETTONE-WESTGARTH, NICOLA BUONINCONTRO, ADINA BUONINCONTRO, NICOLA POLSONI, RAZIA FAIZI, ALIREZA KHOSROWSHAHI, IO HONG LAM a.k.a. STEVE LAM, BONNIE CHEN, FATEMEH SABERI, ABBASALI JALILI, LORNE MURTAGH, LORI MURTAGH, GREGORY SHUSTERMAN, IRINA SHUSTERMAN, SIMON E. SERRUYA, HUSSAIN HEMANI, JANICE ZHANG, NIRAV DESAI, MONICA DESAI, SIHAN LIU, OLUFEMI OMIWOLE, MOHAMMED RAZA BADAMI, MARYAM BANIASADI and DAVOOD BANIASADI, Appellants

– and –

IDEAL (JS) DEVELOPMENTS INC., IDEAL DEVELOPMENTS INC., SHAJIRAJ NADARAJALINGAM a.k.a. SHAJI NADA, JEFFERSON PROPERTIES LIMITED PARTNERSHIP, FANSEAY WANG, 2011836 ONTARIO CORP. c.o.b. as GRAND GRACE DEVELOPMENT, AMERCAN CORPORATION, DRAGON HOLDING GLOBAL REAL ESTATE FUNDS SPC, and DHI DEVELOPMENTS INC., Respondents

BEFORE: Justice E.M. Morgan

COUNSEL: Sara Erskine, for the Appellants (Court File No. CV-21-00661171) Eric Sherkin, for the Appellants (Court File No, CV-21-00661900) Haddon Murray, for the Defendants 2011836 Ontario Corp. c.o.b. as Grand Grace Development, Amercan Corporation, Dragon Holding Global Real Estate Funds SPC and Fanseay Wang (both actions)

HEARD: May 10, 2023

APPEAL OF CPL MOTION

Background to the Appeal

[1] The Appellants in these two actions are pre-construction purchasers of either freehold townhouses (Court File No. CV-21-00661171) (the “Townhouse Appellants”) or residential condominium units (Court File No. CV-21-00661900) (the “Condominium Appellants”). Both sets of Appellants signed Agreements of Purchase and Sale with the Respondent/Defendant, Ideal (JS) Developments Inc. (“Ideal”) (the “APS”).

[2] The Appellants have all learned that after entering into their agreements, but well before the completion of construction and the closing date, Ideal transferred the lands to a group comprised of the Respondents, 2011836 Ontario Corp. c.o.b. as Grand Grace Development, Amercan Corporation, Dragon Holding Global Real Estate Funds SPC and Fanseay Wang (collectively, “Grand Grace”). The Appellants have all also learned that Grand Grace will not honour their contracts of sale, and that the properties they thought they had bought have subsequently been re-sold to other purchasers.

[3] The two groups of purchasers together moved for a certificate of pending litigation (“CPL”) on the lands before Associate Justice D. Michael Brown. He declined to authorize a CPL and dismissed the motion: Asmani v. Ideal (JS) Developments Inc., 2022 ONSC 5407.

[4] Both groups of purchasers appeal that decision here. Grand Grace has responded; Ideal has played no part in the Appeal or in the motion below.

[5] All of the Appellants’ APSs contain a non-registration clause. This clause provides that the Appellants cannot register a CPL on the property.

[6] Grand Grace was a lender to Ideal and one of the financiers of the construction project. When Ideal defaulted on its obligations to its lenders, Grand Grace exercised its rights under the loan agreement with Ideal and the lands in issue were transferred from Ideal to Grand Grace.

[7] The APS’s were not registered on title to the lands. Consequently, Grand Grace took title without being encumbered by the APSs. It takes the position that it also assumed no contractual obligations to the Appellants upon taking title to the lands. Although Appellants make an argument that Grand Grace and Ideal “colluded” to deny the Appellants their rights, there is no evidence of that and no serious argument that Grand Grace was not entitled as lender to take title to the land from Ideal free of all unregistered encumbrances.

[8] After taking title to the lands, Grand Grace developed them, revised the designs of the condominium and townhouse units, and eventually entered into new agreements of purchase and sale with purchasers other than the Appellants. For their part, the Appellants brought motions for leave to register a CPL on title to the lands after the new agreements were entered into.

[9] In the motion below, the Associate Justice considered the entirety of the evidence before him. On the facts as he found them, he held that the Appellants had failed to establish three ingredients that he deemed fundamental to obtaining a CPL: (a) that the property at issue was unique, (b) that damages would be an inadequate remedy, and (c) that they would suffer significant prejudice should a CPL not be granted.

Arguments and analysis

[10] Contrary to Appellants’ counsel’s contention that this raises questions of law alone, these findings are paradigmatic examples of matters of mixed fact and law. Whatever legal issues are contained within them, they cannot be resolved without determination of facts unique to this case. Accordingly, the standard of review is that of palpable and overriding error. The Supreme Court of Canada explained this standard in Housen v. Nikolaisen, 2002 SCC 33, [2002] 2 SCR 235, at para 36:

Where the legal principle is not readily extricable, then the matter is one of ‘mixed law and fact’ and is subject to a more stringent standard. The general rule, as stated in Jaegli Enterprises, supra, is that, where the issue on appeal involves the trial judge’s interpretation of the evidence as a whole, it should not be overturned absent palpable and overriding error.

[11] Appellants’ counsel contends that the Associate Justice erred in finding that the units were not unique. I see no merit to that argument. The issue of uniqueness is one of fact that must be considered in light of the particular evidence before the Court: LCT Investment Group Ltd v Halla Canada Inc, 2017 ONSC 6964, at para 4. As Justice Lax explained in John E. Dodge Holdings Ltd. v. 805062 Ontario Ltd., 2001 CanLII 28012, at para 59, the Court must determine here whether the evidence shows “that the property has characteristics that make an award of damages inadequate for that particular plaintiff.”

[12] The record before the Associate Justice did not contain anything on which a finding of uniqueness could have been based. In their affidavits, the Appellants for the most part describe the good deal that they had obtained under the APSs. There is nothing in the record to show that the property has the kind of distinctive attributes that would make an award of damages insufficient: Sabrina Homes v 2786966 Ontario Inc, 2023 ONSC 558 at para 32. Likewise, there is no evidence in the record demonstrating a lack of comparable properties: Ma v. Ideal Developments Inc., 2022 ONSC 963, at para 48. Considerations of price and financial terms do not alone suffice to fulfill the uniqueness requirement.

[13] Along similar lines, the Associate Justice observed in his decision that the record contained no evidence with respect to the real estate market during the period in issue. The Appellants submit that this is wrong, and that the record did indeed contain market evidence that the Associate Justice ought to have taken into account. Specifically, they point to the affidavit of the Plaintiff, Roger Li, who is identified as a licensed real estate broker. He deposed that “in the current market townhomes in the area would be at least … $500,000 more”.

[14] With all due respect, that is not evidence that the Associate Justice should have relied on. Mr. Li is a Plaintiff. He cannot be an expert in his own case, and his evidence of market conditions is for that reason unobjective and unreliable as actual market evidence.

[15] In Ahmad v Ashask, 2022 ONSC 1348, at para 172, the real estate market evidence of a plaintiff/broker was rejected precisely on the grounds that “he has a stake in the outcome of the trial and is not in any sense an independent expert.” Objectivity and independence from the parties is among the most elementary principles in accepting this kind of evidence. In the present case, the Associate Justice may have overstated the fact that there is no evidence about prices in the real estate market; but he did so only to the extent that what he meant was that there is no evidence that is useful and not self-serving.

[16] The Appellants also argue that damages are an inadequate remedy because Grand Grace has a propensity to move assets around and be generally manipulative and treat the Appellants unfairly. They fear that this tendency might one day leave them with an insolvent company that cannot pay damages.

[17] I cannot blame the Appellants for not liking the way they have been treated by Grand Grace. But their remedy may yet come at trial. At present, there is no evidence of dissipation of assets by Grand Grace; and, even if there were such evidence, Respondents’ counsel correctly point out that the remedy for that would be a Mareva injunction, not a CPL. It is clear, however, that the Appellants’ point here is not really based on evidence in the record; rather, it is based on a prediction of conduct and events that may or may not lie down the road.

[18] This argument is, of course, speculative. It is the type of argument that one often hears from lay litigants, but less often from lawyers, and is not an argument that courts are inclined to accept. The problem is that it impugns conduct before it has happened, and none of us have the ability to peer into the future. In a prescient passage, Associate Justice Josefo commented on just this kind of thinking in Rajakumar v. Marydel Homes (Beaverton) Inc., 2022 ONSC 4121, at para 28:

There is in this case no reliable evidence that the usual remedy of money damages is incapable of calculation, or that such calculation would be difficult. All there is, is speculation that the defendant will possibly become a shell corporation by the time the litigation reaches its conclusion. That may or may not occur. Yet as with any litigant, including those who at one time felt suing Eaton’s was risk-free because Eaton’s would always be there, or that Nor-Tel Networks would always be able to pay a judgment, or that General Motors would never file for CCAA protection, those are the normal risks and vicissitudes which every plaintiff must confront. Absent reliable evidence, I am not prepared to order a CPL on speculation.

[19] I am equally unprepared to order a CPL based on speculation about an unpredictable future. The Appellants have made it clear that their real loss is a monetary one, and there is no evidentiary basis for thinking that a monetary remedy will be unavailable to them if they are successful in this action.

[20] The Appellants also submit that the Associate Justice erred in taking into account the prospect of loss to the new purchasers of the condominiums and townhouses. At the hearing, Appellants’ counsel indicated that the Appellants do not want to harm the new purchasers or interfere with their contracts, but they simply want to protect their own position.

[21] I do not attribute ill will to the Appellants, and I am sure that they wish the new purchasers all the best. But their position is a contradiction in terms. The very point of a CPL is to ensure that no one else can freely contract over the same property as the one that the party seeking the CPL claims. It is a court sanctioned way to throw a wrench in the works of anyone else’s contract: City Core Consortia Limited v 2549386 Ontario Inc, 2022 ONSC 2723, at para 61. Whatever else a CPL might or might not accomplish, it will certainly interfere with the new purchasers’ contracts. To say otherwise would be to mischaracterize the entire exercise.

[22] As Grand Grace’s counsel point out in their factum, the courts have stated that the existence of a willing purchaser for the property is one factor to take into account in considering whether a CPL is called for: 572383 Ontario Inc v Dhunna, [1987] O.J. No. 1073 at para 17. Since a CPL will prejudice the willing purchasers of the properties in issue, it is proper to take this context into account. And while this is not a uniquely determinative factor, the Associate Justice was right to give it some consideration under the circumstances.

[23] Finally, the Appellants argue that Grand Grace cannot rely on the non-registration clause in the APSs because it was never a party to the APSs, nor has it assumed or otherwise terminated them. However, the courts have already indicated that a non-registration clause is, if not conclusive of the analysis, one more factor to consider in assessing the position of a disappointed purchaser claiming that the vendor has breached: Dhumma, at paras 10-18.

[24] In Ma v. Ideal Developments Inc., 2022 ONSC 963, at para 61, Justice DeSa cast a non-registration clause in exactly this light: “[a]n agreement not to register a CPL is obviously an important factor to consider in the analysis. However, in my view, it is not dispositive of the issue.” This is the very same posture that the Associate Justice took toward the non-registration clause in the case at bar.

[25] The Associate Justice concluded his discussion of the non-registration clause with a finding that is in complete harmony with the existing case law: “I find that the non-registration clause is not an absolute bar to the relief sought by the moving parties on this motion, but that the moving parties’ agreement to the non-registration clause is nevertheless an important factor weighing against the granting of a CPL”: Asmani, supra, at para 38. There was no error, let alone a palpable and overriding one, in this analysis or this approach.

[26] The fact remains that the Associate Justice viewed the case in its entirety as being about monetary loss. He determined that damages are the real remedy that the Appellants seek, and that a damages claim of this nature cannot support a CPL. There was no discernible error in his reasoning on the way to this conclusion.

Disposition

[27] The Appeal is dismissed.

Costs

[28] All parties have submitted a Costs Outline or Bill of Costs, which is in accordance with the Practice Direction and is very much appreciated. This is too often overlooked by counsel and left for submissions at a later date.

[29] It would seem that the parties are not far apart on costs. Counsel for Grand Grace seek, for both motions together, the all-inclusive amount of $44,861.57 on a partial indemnity scale. Counsel for the Townhouse Appellants seek, on a partial indemnity basis, the all-inclusive amount of $21,494.48, while counsel for the Condominium Appellants seek, also on a partial indemnity basis, the all-inclusive amount of $20,789.18. In other words, the parties are within $2,500 of each other in their cost requests for this multi-issue and extensively researched Appeal.

[30] Costs are discretionary under section 131 of the Courts of Justice Act. Rule 57.01(1)(0.a) of the Rules of Civil Procedure mandates me in exercising that discretion to take into account the principle of compensation for the successful party, while Rule 57.01(1)(0.b) mandates me to take into account the reasonable expectations of the unsuccessful party. Given how close the two sides (three parties) are to each other’s requests, it seems to me that Grand Grace’s counsel’s partial indemnity costs represent an appropriate amount.

[31] Using round numbers for the sake of convenience, the Appellants shall pay Grand Grace costs of the Appeal in the total amount of $44,800, inclusive of all fees, disbursements, and HST. Liability for these costs shall be shared jointly and severally by the two sets of Appellants in the two actions.

Date: May 19, 2023 Morgan J.