Court File and Parties

COURT FILE NO.: CV-23-00692782-0000 DATE: 20230123

ONTARIO SUPERIOR COURT OF JUSTICE

BETWEEN:

SABRINA HOMES INC. Plaintiff – and – 2786966 ONTARIO INC., TARUNDEEP SINGH, DIPESH GUPTA, PAWAN KUMAR and RANBIR CHAUHAN Defendants

Counsel: Lorne S. Silver and Sophie Teversham, for the Plaintiff/Moving Party Jayson Thomas and Claire Copland, for the Defendants/Responding Parties

HEARD: January 20, 2023

Papageorgiou J.

Endorsement

[1] The plaintiff Sabrina Homes Inc. (the “Buyer”) brings a motion for a) leave to register Certificates of Pending Litigation (a “CPL”) against titles to certain properties (the “Property”) owned by 2786966 Ontario Inc., Tarundeep Singh, Dipesh Gupta, Pawan Kumar and Ranbir Chauhan (the “Seller”) more fully described in their Notice of Motion; and b) an interlocutory injunction restraining the Seller from transferring, encumbering or otherwise dealing with the Property pending trial of the action. [1]

[2] For the reasons that follow, the motion is dismissed.

Background

[3] On December 30, 2021, the Buyer agreed to purchase, and the Seller agreed to sell the Property with the closing to occur on December 2, 2022. The sale agreement authorized the Buyer to place a mortgage on the Property in the amount of $2 and the Buyer did so. (The Property comprised 8 separate lots and the sale agreement was contingent on all lots closing together; the $2 mortgage was to operate as a continuing charge to ensure that no lots were sold to another purchaser.)

[4] Sometime prior to the date set for closing the Buyer met with the Seller and advised that market conditions had changed. It could no longer obtain financing to complete the purchase unless there was a reduction in the purchase price as well as an extension of the time to close to June 2023.

[5] The Buyer and one representative of the Seller met and signed a handwritten note which reflected the Buyer’s position that they had a firm agreement to reduce the purchase price by $1,500,000 with an extension of closing until June 2023.

[6] Afterwards, the parties exchanged further communications; apparently there were some discussions about whether an additional deposit would be required. The Buyer’s lawyer wrote to the Seller’s lawyer and stated that “The Buyer has advised that the additional deposit discussed was in the range of $100,000 to $200,000.” However, the Seller indicated that it required an additional deposit in the amount of $800,000.

[7] The Buyer took the position that the handwritten note was a binding amending agreement. The Seller took the position that it was not, as there was no agreement as to the quantum of any additional deposit which was a material term. (Query what the consideration was for this amendment without any agreement as to an additional deposit.)

[8] The Seller tendered on the date set for closing, December 2, 2022, and the Buyer refused to close.

[9] The Seller then issued a Notice of Action in Welland on December 6, 2022, and brought an urgent motion returnable December 7, 2022 to discharge the $2 mortgage which the Buyer had placed on the Property. The Buyer’s mortgage with a third party (the “Third Party Mortgage”) was up for renewal on December 2, 2022, and the Third Party Mortgagee said it would not extend the Third Party Mortgage if the Buyer’s $2 mortgage was not removed.

[10] The Buyer’s lawyer wrote to the Seller’s lawyer requesting an adjournment and timetable for exchange of materials and made a with prejudice offer to postpone the $2 mortgage to the Third Party Mortgage.

[11] The motion proceeded on December 7, 2022, without the Buyer present. Justice Ramsay granted the Seller’s urgent motion and discharged the $2 mortgage upon payment into court by the Seller of the $200,000 deposit paid by the Buyer.

[12] The Buyer took the position that it had received no notice or insufficient notice of the motion and brought a motion to set aside Justice Ramsay’s December 7 Order. On December 16, 2022, the Buyer obtained an interim stay, and was given an opportunity to file materials and cross examine the Seller on the materials filed.

[13] The Buyer’s motion to set aside Justice Ramsay’s Order took place before Justice Ramsay on December 23, 2022. At that time, the Buyer also sought an Order that the issues which had been before Justice Ramsay proceed instead to a trial of an issue. The Buyer makes much of this. He suggests that the only issue before Justice Ramsay was whether there should be a trial of an issue; as such he cannot be faulted for any failure to put more evidence before Justice Ramsay as to the underlying merits. What he ignores is that the merits of the Order which Justice Ramsay made, and whether it should be set aside at all, was the precondition to his obtaining an Order that the matters proceed to a trial of an issue. Therefore, if the Buyer did not file all the relevant evidence he had on the merits, as he now submits, or conduct all necessary cross-examinations, then he did so at his own peril. [2]

[14] On December 23, 2022, Justice Ramsay dismissed the Buyer’s motion and found as follows:

It is plain and obvious, then, that the handwritten note did not constitute an agreement to amend the agreement of purchase and sale. The key term, the additional deposit, was not agreed. That much is shown even in the correspondence from the defendants' lawyer, from which I take that a deposit was discussed but not agreed on. At best, a range of $100,000 to $200,000 was "discussed." There is no need to direct the trial of an issue, as counsel for the defendants suggest. The evidence is sufficient for me to say for my purposes that the defendants defaulted on the agreement of purchase and sale, which triggers their obligation under the contract to discharge the mortgages. [Emphasis added]

[15] Justice Ramsay then concluded that the Buyer’s default on the agreement of purchase triggered the Buyer’s obligation under the contract to discharge the $2 mortgage. He held, on the basis of the evidence before him, that if he set aside his Order the Seller would be prejudiced, because they would not be able to keep up with the mortgage payments to the Third Party Mortgagee and would be foreclosed, losing their lands, while the Buyer litigated on an issue which he considered very weak.

[16] From December 23, 2022 until January 17, 2023 the Buyer did not take any steps to appeal Justice Ramsay’s Order.

[17] However, on January 11, 2023 the Buyer commenced this fresh proceeding in Toronto. Two days later it notified the Seller that it now sought to bring a motion for a CPL against the Property based upon its alleged interest in the land pursuant to the agreement of purchase and sale which had been before Justice Ramsay.

[18] At that point the Seller advised the Buyer that it had entered into an agreement of sale with a new purchaser which was to close on January 23, 2023. The Buyer then brought this urgent motion for a CPL which proceeded before me on an urgent basis.

Does this motion constitute an abuse of process?

[19] The Seller argued that the entire motion should be dismissed as an abuse of process. For the following reasons, I agree.

[20] The doctrine of abuse of process applies to prevent the re-litigation of previously decided facts. It applies not only where issues were actually determined but where issues could have been determined: Winter v Sherman Estate, 2018 ONCA 703 at para 8.

[21] In my view, whole evidentiary underpinning of this motion is the same as that of the Welland Action and the motion before Justice Ramsay; this motion is an attempt to do an end run around Justice Ramsay’s Order and determinations which he made in the Welland proceeding. The $2 mortgage registered on title to the Property was a form of security held by the Buyer. Justice Ramsay determined that for the purposes of the motion, the Buyer had a weak claim and that this security should be vacated because of prejudice which would be suffered by the Seller. A CPL is essentially another form of security which the Buyer now seeks to have registered on the Property. The Buyer could have brought a cross-motion for a CPL before Justice Ramsay as part of its motion to set aside his Order but did not.

[22] The Buyer’s primary argument before me was that Justice Ramsay made a final order in respect of an interlocutory motion before him, that he made errors of law and errors of mixed fact and law, and that the Seller did not have a fair opportunity to be heard.

[23] This Court is not an appeal court. If the Buyer was dissatisfied with Justice Ramsay’s Order, his remedy was not to bring different proceedings raising substantially the same issues, in a different court, in a different jurisdiction, thereby seeking to relitigate the same issues. His remedy was to either appeal Justice Ramsay’s Order or seek leave to appeal if that was required, and apply for an urgent stay of Justice Ramsay’s Order. The Buyer had almost a month to do so. The Buyer has now taken one of these steps by issuing a Notice of Appeal on January 18, 2023 to the Court of Appeal, but it is effectively too late to obtain a stay. And that appeal may be in the wrong court.

[24] The Buyer argues that he cannot be faulted for bringing a new proceeding in Toronto because he did not think the Welland proceeding was ongoing. In that regard, he submits that as of early January he had not yet been served with the Notice of Action or the Statement of Claim which he says were not filed in accordance with the timelines set out in Rules which require this to be done within 30 days from December 6, 2022, when the Notice of Action was issued.

[25] In response, the Seller’s lawyer, as an officer of the Court produced an email from the courthouse in Welland confirming that even though the Statement of Claim is dated January 12, 2023, it was in fact filed in Welland, on January 5, 2023; this means it was done within the timelines set out in the Rules. Therefore, the Welland action is an ongoing proceeding and not a nullity as alleged by the Buyer. Even if the Buyer was confused in this regard or concluded that the Seller had not properly filed its Statement of Claim within the required 30 days, it seems to me that the appropriate approach in all the circumstances would be to inquire of the Seller’s lawyer on this issue, and seek confirmation as to whether this had been done, rather than bring an entirely new proceeding in Toronto, a jurisdiction which appears to have no connection with the disputed issues on the materials before me.

Should a CPL be granted?

[26] If I am wrong that this motion should be dismissed as an abuse of process, I would nevertheless not grant the CPL for the following reasons.

[27] The test for a CPL is set out in Perruza v Spatone, 2010 ONSC 841 at para 20 as follows:

(i ) 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).

Triable Issue

[28] With respect to the threshold issue, given the low bar and the sworn evidence before me, for the purposes of this motion, I am satisfied that there is a triable issue as to whether the Buyer has an interest in the Property. This should not be taken to be my disagreement with Justice Ramsay’s decision. Before me is a different record than the record which was before Justice Ramsay. [3]

[29] However, in my view the Buyer does not satisfy the remainder of the test.

Uniqueness

[30] First, the Property is not unique. The Affidavit of Hunain Siddiqui filed by the Buyer states that it is unique because there are either “little” or “no” other development properties of this size in the vicinity of the Property or in Welland with the same or similar attributes and opportunities. He does not actually say whether there are, in fact, no other such properties available for purchase. He does not even say that he looked.

[31] Mr. Siddiqui goes on to describe the specific attributes of the Property, claiming each is unique. These include i) the fact that there are 8 contiguous lots, ii) that there are numerous other developments underway on Niagara Street making it one of the core streets and residential hubs, iii) that a section of the Property is environmentally protected making overall development more attractive for future residential and commercial developers, iv) that there are sanitary, stormwater and water services located along the Property line which do not exist in other areas in Welland, v) that the zoning is attractive, vi) that the Property has quick and easy access to major highways, vii) that they have a view of the Welland Canal and that the Property is five minutes from Niagara College and big box stores.

[32] The focus of his description of these purportedly unique attributes is that they make the Property commercially appealing. But “uniqueness” for the purposes of a CPL requires the moving party to “show that the property has distinctive features that make an award of damages inadequate.”: John E. Dodge Holdings Ltd. v 805062 Ontario Ltd at para 60.

[33] The Buyer has not provided any evidence as to his unique ability to benefit from developing property in Welland as opposed to elsewhere. It does not suggest that it is purchasing it for any ongoing business use of its own. It has not explained why it seeks to purchase property in Welland, say that there is something special about Welland in terms of ties which it may have or special relationships it has with contractors or others that makes Welland particularly important. There is not even any evidence that the Buyer has ever developed any property in Welland.

[34] In my view, THMR Development Inc. v. 1440254 Ontario Ltd, 2017 ONSC 5411 is distinguishable. The Court in that case found that the property was unique in part because it was unique for the purchaser’s specific circumstances in that it was close to other properties owned by the purchaser; because of that proximity, its existing staff could manage both this property and its nearby property. There is no such evidence before me.

[35] The evidence demonstrates that the Buyer wishes to purchase the Property to construct and sell a commercial development.

[36] In my view the evidence does not establish the requisite uniqueness.

Alternative Claim for damages

[37] There is an alternative claim for damages advanced by the Buyer. It has already quantified amounts that it has spent towards the development of the Property which is $465,000 inclusive of its deposit. If the action proceeds, it will have an opportunity to establish the profits it would have earned from this development. Courts have held that even if damages may be difficult to calculate, “in the normal course, damages are presumed to be an adequate remedy for the loss of investment properties.” Triple Eight Asset Management Inc., v. Greco, 2019 ONSC 2855 at para 38. The Buyer has not adequately explained why this would not be the case here.

[38] In my view, the Buyer has not established that damages would be an inadequate remedy.

Harm to the Seller compared to harm to the Buyer/Equitable considerations

[39] The harm to the Seller will be significant if the CPL is granted. The Seller entered into a new sale agreement with a new purchaser on December 28, 2022 after Justice Ramsay rendered his decision. If the Seller does not complete the sale, it will be exposed to damages for breach of contract. It may also lose the Property to the Third Party Mortgagee as the Property is currently under power of sale with the Seller’s equity of redemption expiring on January 26, 2023.

[40] In contrast, the Buyer will be able to continue with its appeal to the Court of Appeal if the Justice Ramsay’s Order is found to have been a final Order. If successful, it will be able to bring a counterclaim in the Welland action for breach of contract on the basis that the October 6, 2022 note is an enforceable agreement. If Justice Ramsay’s Order is found to be an interlocutory Order, then the Buyer will also be able to counterclaim against the Seller and seek damages in that action.

[41] I do not accept the Buyer’s argument that the power of sale represents no or an insufficient risk to the Seller because it would take time for the Third Party Mortgagee to appraise and advertise the Property during which time the Seller could exercise its right of redemption. As pointed out by the Seller’s counsel, section 22 of the Mortgages Act, R.S.O. 1990, C. M 40 provides that the right of redemption is foreclosed by the entry into of a sale agreement with a new buyer; the mortgagee can enter into a new sale agreement any time after January 26, 2023.

[42] I am also not persuaded that the Buyer’s suspicions concerning the Seller‘s ability to find a new purchaser who made a clean offer shortly after Justice Ramsay’s Order tilt the balance in its favour; suspicions are just that.

[43] I am also not persuaded by the Buyer’s suspicions regarding the bona fides of the Third Party Mortgagee’s stated requirement for the removal of all mortgages on the Property. The Buyer provided this evidence prior to the motion to set aside Justice Ramsay’s Order in December. The Seller could have sought to obtain evidence from the Third Party Mortgagee on this issue if it was indeed not bona fide or based upon some collusion between the Buyer and the Third Party Mortgagee.

[44] I add that the Buyer has not offered to post security or a bond that would protect the Seller in the event that the new purchaser sues it for damages.

[45] In all the circumstances, considering all relevant matters between the parties, I am exercising my discretion to dismiss the Seller’s motion.

Events which occurred after the motion was argued

[46] I note that after the motion was argued I asked the parties to return at 3:00 pm to argue costs.

[47] When they returned, the Seller advised me that it had learned that the Buyer had registered cautions on the Property at 10:41 am, after this motion commenced. The Seller argued that these cautions will effectively prevent the closing of the sale on January 23, 2023 because a title insurer will not agree to insure title if there are cautions registered, and that this amounts to impermissible self-help and possibly contempt.

[48] The Buyer did not deny having done this.

[49] I advised the parties of my decision to dismiss the Buyer’s motion as well as my Order that the Buyer take immediate steps discharge any cautions registered on the Property and in any event by no later than 5:00 pm on January 20th. I indicated that my reasons would follow on January 23, 2023.

[50] At 4:45 on January 20, 2023, the Buyer complied with this Order.

Costs

[51] The Buyer sought $13,601.73 in partial indemnity costs and $19,601.73 in substantial indemnity costs. The Seller sought $6,403.32 in partial indemnity costs and $9,604.98 in substantial costs.

[52] The Seller is the successful party and presumptively entitled to costs.

[53] The Seller requests substantial indemnity costs on the basis that this proceeding constitutes an abuse of process, was ill conceived and an attempt to forum shop and relitigate matters. See 43614 Canada Inc. v Dalcor Inc., Unimac-United, 2015 ONSC 2486, at paras 21-24 regarding the court’s discretion to award substantial indemnity costs in respect of proceedings which constitute an abuse of process.

[54] The Buyer argues that there should be an order of no costs because this proceeding originates from the conduct of previous counsel for the Seller, a miscarriage of justice when Justice Ramsay made his first Order on December 7, 2022, and a denial of natural justice when he made his second on December 23, 2022. As well, the Seller says it had no actual knowledge of the Notice of Action and Statement of Claim in the Welland proceeding until January 20, 2023. If costs are awarded, he says they should be awarded on a partial indemnity basis and he takes no issue with the quantum claimed.

[55] With respect, there has not yet been any finding that there has been any denial of natural justice or miscarriage of justice. This is not an appeal court and this matter may ultimately proceed before the Court of Appeal pursuant to the Seller’s Notice of Appeal in due course, or if the Buyer is correct, it may proceed before the Divisional Court.

[56] With respect to the Buyer’s knowledge of the Notice of Action and Statement of Claim, the Buyer should have contacted the Seller to make inquiries. It makes no sense to bring separate proceedings here in Toronto on the basis that the Welland action is a nullity based upon a perceived delay of a matter of days in filing the Statement of Claim, or to believe that those proceedings would remain a nullity when the $200,000 was still in court with both sides having a claim to it. Even when a Statement of Claim has not been filed within the 30 days required by the rules, the Court may grant leave to extend the time.

[57] In all the circumstances, in my view, this motion was a collateral attack on Justice Ramsay’s Order and thus constituted an abuse of process. I am awarding substantial indemnity costs in the amount of $9,604.98 as requested by the Seller payable within 14 days.

Papageorgiou J. Released: January 23, 2023

ONTARIO SUPERIOR COURT OF JUSTICE

BETWEEN: SABRINA HOMES INC. Plaintiff – and – 2786966 ONTARIO INC., TARUNDEEP SINGH, DIPESH GUPTA, PAWAN KUMAR and RANBIR CHAUAN Defendants

REASONS FOR JUDGMENT Papageorgiou J. Released: January 23, 2023

[1] Although the Seller comprised more than one entity and the sale involved more than one lot and mortgage thereon, I am referencing all of these parties in the singular as well as the lots and any mortgages in the singular, for ease of reference.

[2] In that regard, the Buyer complained that none of the individual Seller’s had filed any affidavits in respect of the October 6, 2022 meeting.

[3] I do note however that the Buyer’s lawyer’s letter indicating that an additional deposit of $100,000 to $200,000 was discussed does suggest that not all material terms were agreed upon. Also, query what the consideration was for the extension if no further deposit was required as alleged by the Seller.