COURT FILE NO.: CV-19-00000153-0000
DATE: 2023 11 17
ONTARIO
SUPERIOR COURT OF JUSTICE
B E T W E E N:
KB Group Inc., Plaintiff/Defendants by Counterclaim
Plaintiff
- and -
Dr. Satinder Kaur Saroya Medicine Professional Corporation and Satinder Kaur Saroya, Defendants/Plaintiffs by Counterclaim
Defendants
Counsel:
Sukhjinder Bhangu, for the Plaintiff/Defendant by Counterclaim – sb@bhangulawofice.com
Ryan Smith, for the Defendants/Plaintiffs by Counterclaim – rsmith@loonix.com
HEARD: November 14, 2023, in person
ENDORSEMENT
[1] Satinder Kaur Saroya, through her professional corporation, Dr. Satinder Kaur Saroya Medicine Professional Corporation (collectively, "Saroya Parties") bring a contested motion for a Certificate of Pending Litigation (“CPL”) in relation to units 17, 18, 19 and 20 of 4645 Palladium Way, Brampton, Ontario ("Property"). The Cross-Defendant takes no position on the motion.
[2] The Saroya Parties entered into four agreements of purchase and sale ("APSs") for the Property, and the vendor, KB Group Inc. ("KB Group"), brought an Application to terminate them. The Application was heard by Justice Fowler-Byrne on February 18, 2020. In a written judgement released May 19, 2020, she canvassed the factual and legal issues, determined some matters based on the written record before her, and converted those issues that required at trial into an action: K.B. Group Inc. v. Dr. Saroya et al., 2020 ONSC 3132.
[3] Most significantly, Fowler-Byrne J. found that there the APSs were not terminated by KB Group, were not terminated pursuant to the contract itself, were not terminated by reason of frustration, and could not be terminated unilaterally by KB Group (para. 66). In short, the contracts were prima facie enforceable.
[4] Justice Fowler Byrne found that the following issues required a trial:
a. whether the APSs were terminated by reason of repudiation, rescission, or promissory estoppel;
b. whether the APSs or alleged “Collateral Agreement” were illegal;
c. whether the Cross-Defendant acted as an agent for the Saroya Parties; and
d. the remedies available to all parties.
[5] In setting these matters down for a trial, Justice Fowler Byrne stated as follows at paras. 63-65:
With respect to the remaining issues, the determination of any one of the remaining issues leaves open the very real possibility of inconsistent findings at a trial. All the other issues require findings of fact with respect to the parties’ conduct, intentions and motivations. If this court made such a finding with respect to the issue of repudiation, there is a possibility that, after hearing the entirety of the evidence after a trial, the trial judge would make contrary findings of fact in support of their conclusion with respect to promissory estoppel or illegality. This must be avoided.
Also, the court is concerned about the lack of evidence on the part of Saroya. It is clear that Saroya was an important party in these Agreements, but neither party sought to elicit his evidence on any of the issues. The KB Group alleges that Saroya acted as an agent for the Respondents, but it took no steps to examine him. The Respondents allege the Collateral Agreement was illegal, and therefore unenforceable, but never sought to elicit the evidence of the party who is allegedly one of the masterminds behind it.
What is also disconcerting to the court is that there are apparently related actions outstanding involving the key parties to this application. It was admitted that there is an ongoing action wherein BPF, or at least some of its principals, are suing the KB Group for unpaid commission for arranging this mortgage. It also appears that there has been a breakdown in relations between the various principals of BPF and that there may be outstanding litigation in this regard. No evidence was presented by either party regarding these other conflicts. The court is left with the distinct impression that it has been purposively been left in the dark and that the outcome of this application will be but another weapon in the ongoing battles between various actors in other actions. The parties should consider an order that the matters be consolidated or tried one after the other.
[6] Pursuant to the Reasons, the Satinder Parties served a counterclaim, seeking, among other relief, specific performance of the APSs.
[7] The Saroya parties now ask for a CPL to be registered against the Property because KB Group is marketing the Property for sale on its website, and a CPL is necessary to put would-be purchasers on notice of the Satinder Parties' interest in the Property and maintain the status quo pending resolution of the remaining issues in the action.
[8] Where a motion for leave to issue a CPL is brought on notice, the test is the same as on a motion to discharge a CPL: Canadian Western Trust Company v 1324789 Ontario Inc, 2019 ONSC 4789 at para 12. Section 103(6) of the Courts of Justice Act sets out the circumstances in which the court may discharge a CPL.
[9] I must follow a two-step test to determine whether to grant the CPL. First, is there sufficient evidence to establish a reasonable claim to an interest in the land based on facts upon which the plaintiff could succeed at trial? If so, what are the equities between the parties as to the appropriateness of granting the order? Lo Faso v. Ferracuti, [2012] O.J. No. 1460 (ONSC).
[10] Here, the Saroya parties have met the preliminary and low threshold of establishing that they have a reasonable claim in land. Justice Fowler-Byrne specifically found that the APSs were not terminated by KB Group, were not terminated pursuant to the contract itself, were not terminated by reason of frustration, and could not be terminated unilaterally by KB Group (para. 66). In short, Fowler-Byrne J. found that the contracts were valid on their face, subject only to KB Group’s claims of repudiation, rescission, promissory estoppel, or illegality. The Saroya parties clearly have a reasonable interest in land as of this date.
[11] Once the threshold has been met, I must go on to consider the equities between the parties, by considering “all relevant matters between the parties”: Rise Elephant Property Investment Corporation v Lut, 2018 ONSC 5247, para 2. This includes whether the plaintiff is a shell corporation, whether the land is unique, the intent of the parties in acquiring the land, whether there is an alternate claim for damages, the ease or difficulty in calculating damages; whether damages would be a satisfactory remedy; the presence or absence of a willing purchaser; and the harm to each party if the CPL is granted.
[12] On the record before me, I am satisfied that the equities favour granting the CPL. The Saroya parties are more akin to an individual than a shell corporation or even a private investor. Dr. Saroya’s is a medical doctor that operates her general practice through a professional corporation, and who has testified under oath and been subject to cross-examination. She says she wants to move her medical practice to the Property, and then use the equity in the Property to one-day retire. The Property is unique because it was marketed as a professional condominium and because it was only available for sale to medical professionals pursuant to the APSs that Dr. Saroya signed. The Property was also an investment because owning office space would make Dr. Saroya’s medical practice more valuable when it came time to retire. KB Group’s suggestions that Dr. Saroya “would never move her medical practice” to the Property because of the distance from her current home and the location of her current clientele were not grounded in the evidence and were based on pure speculative. I also reject the argument that the space is not sufficiently unique—the APS certainly reflects a unique, professional space for doctors and paramedical practitioners.
[13] On the other hand, intent of the parties is a key matter in dispute and will require a trial. Justice Fowler-Byrne found that the issue of the appropriate remedy (whether specific performance or damages) was a matter that could only be resolved after a contested hearing. Refusing to grant a CPL simply because damages may be awarded would go against the underlying policy rationale behind the courts granting CPLs: to put would-be purchasers on notice of a potential claim in land. At this point, the claim in land and the claim for specific performance as a remedy for breach of contract are both live issues. The CPL must issue.
[14] The Saroya parties seek costs in the amount of $28,614. They argue that the costs are reasonable because of KB Group’s actions. The point to the fact that this motion was deemed urgent by Justice Miller and set down for a hearing on July 24, 2023. KB Group served their responding materials on July 23 and then sought an adjournment. Based on the Plaintiff’s late-breaking request for cross-examinations, Justice Wilkinson adjourned the motion to October 23 and timetabled the filing of materials. Again, the Saroya parties complied with the court order, while the Plaintiffs did not file a factum and then requested a further adjournment to do so. This matter finally arrived before me, some four months after it was deemed urgent by Justice Miller. Despite the repeated adjournments granted by this Court, KB Group never served a factum. The cross-examination transcripts (ordered and paid for by Dr. Saroya) added little by way of relevant evidence. KB Group has clearly engaged in delay tactics in an effort to sell the Property before a CPL could be registered on it. That all being said, I find the costs to be disproportionate to the overall complexity of the matter. I would award $20,000 in costs, all inclusive.
[15] I am not seized of this matter.
Mandhane, J.
Released: November 17, 2023
COURT FILE NO.: CV-19-00000153-0000
DATE: 2023 10 17
ONTARIO
SUPERIOR COURT OF JUSTICE
B E T W E E N:
KB Group Inc., Plaintiff/Defendants by Counterclaim
Plaintiff
- and -
Dr. Satinder Kaur Saroya Medicine Professional Corporation and Satinder Kaur Saroya, Defendants/Plaintiffs by Counterclaim
Defendants
ENDORSEMENT
Mandhane J.
Released: November 17, 2023