Court File and Parties

Court File No.: CV-18-00604210-0000 Motion Heard: 2023-10-11

Superior Court of Justice - Ontario

Re: Xiang Bin Ma (in trust for a corporation to be formed) et al., plaintiffs And: 1835942 Ontario Inc. et al., defendants

Before: Associate Justice R. Frank

Counsel: James Wortzman and Catherine Allen, for the plaintiffs Kris Borg-Olivier, for the defendants 1835942 Ontario Inc. and Mohammed Eslami Zadeh, aka Mohammed Eslamezadeh aka as Mohammed Eslami Maurice Neirinck, for the defendant Andy Bakhtiari

Heard: October 11, 2023

Reasons for Decision

[1] The plaintiffs commenced this action on August 29, 2018, seeking, among other things, specific performance of an agreement of purchase and sale (described below) for the purchase of the property municipally known as 10481 Yonge Street, Richmond Hill (the “Property”).

[2] On August 30, 2018, the plaintiffs brought an ex parte motion and obtained an order granting leave to obtain and register a certificate of pending litigation (the “CPL”) against title to the Property. The CPL was issued and registered on title to the Property on the same day.

[3] The defendants bring this motion to discharge the CPL.[^1] The defendants’ position it that the plaintiffs failed to make full and fair disclosure on the ex parte motion which, by itself, is a sufficient basis to discharge the CPL. They also take the position that there is no triable issue with respect to the plaintiffs’ claim to an interest in the Property, and that a balancing of the relevant equitable factors favours the defendants and necessitates the discharge of the CPL.

[4] The plaintiffs dispute the defendants’ grounds for discharging the CPL. As a preliminary argument, the plaintiffs submit that this discharge motion should be dismissed for delay because the defendants waited more than three years to bring it.

[5] For the reasons that follow, the defendants’ motion is dismissed.

A. Background and Litigation History

[6] The defendant 1835942 Ontario Inc. (“183”) is a corporation that has owned the Property since November 2010. The defendants Andy Bakhtiari and Mohammed Eslamizadeh are 183’s officers and directors.

[7] The plaintiff Malin Direct Corp. (“Malin”) is an Ontario corporation. The plaintiff Xiang Bin Ma is an officer and director of Malin.

[8] On September 8, 2017, Mr. Ma, on behalf of a company yet to be incorporated (ultimately Malin), made an offer to purchase the Property.

[9] On October 3, 2017, 183 accepted Mr. Ma’s offer and the parties executed a binding Agreement of Purchase and Sale (the “APS”). The APS included the following terms:

(a) a purchase price in the amount of $54.8 million; (b) a closing date on May 8, 2018; (c) 183 agreed to provide various documents regarding the Property to the buyer within five banking days of the seller accepting the offer, including Phase I and Phase II environmental reports; and (d) the buyer agreed to pay three deposits into trust pending completion of the transaction: (i) an initial deposit of $1,000,000; (ii) a second deposit of $1,500,000, to be paid when the Environmental Condition (defined below) was removed or fulfilled; and (iii) a third deposit of $2,500,000, to be paid on or before January 28, 2018.

[10] The offer included a condition (the “Environmental Condition”) providing that:

“This offer is conditional for a period of (45) Forty Five Days from the date of acceptance of this offer, upon the Buyer being satisfied at his own expense and in his sole and unfettered discretion with the following:

1. All matters of zoning, viability, soil test, develop-ability…

Failing which this Offer becomes null and void and the deposit money shall be returned to the Buyer in full without interest or deduction. This condition is included for the benefit of the Buyer and may be waived at his sole option by notice in writing to the Seller or his agent.”

[11] On October 4, 2017, the buyer paid the first deposit of $1,000,000.

[12] 183 provided Mr. Ma with certain documents in two tranches, on October 3, 2017 and on October 12, 2017.

[13] The APS was amended on October 11, 2017, and the parties had discussions about potential further amendments. On November 17, 2017, the parties amended the APS by, among other things:

(a) deleting and/or waiving the Environmental Condition; (b) lowering the purchase price by $2.8 million; and (c) extending the closing date from May 8, 2018 to August 31, 2018.

[14] On or about November 17, 2017, the buyer paid the second deposit of $1,500,000.

[15] On or about March 14, 2018, the parties’ representatives and counsel met and discussed, among other things, the plaintiffs’ request for additional environmental information about the Property from 183, such as completed Phase I and II Environmental Reports. The plaintiffs followed up with subsequent requests for such documents.

[16] Between March 2018 and mid-July 2018, the plaintiffs’ representatives continued to request environmental information and reports, such as completed Phase I and Phase II environmental reports.

[17] On July 19, 2018, the defendants provided to the plaintiffs a Phase I Environmental Assessment Update dated December 15, 2016.

[18] On August 21, 2018, the plaintiffs’ litigation counsel sent a letter to 183’s counsel demanding an extension of the closing date. Among other things, the letter alleged that 183 had failed to provide any Phase II Environmental Assessments or to notify the purchasers of a plan of expropriation that was registered on title to the Property on April 11, 2018. The letter made specific reference to a Watters Environmental Group Inc. (“Watters”) 2016 Phase II Environmental Assessment Report (the “Watters Phase II Report”) which the plaintiffs asserted had not been provided by 183.

[19] On August 24, 2018, 183 provided to the plaintiffs a copy of the 2010 Phase II Environmental Assessment Report on the Property prepared by Church & Trought Inc. (the “2010 Church & Trought Phase II Report”).

[20] 183 refused to provide any further extensions to the closing date. The plaintiffs then commenced this action on August 29, 2018 and brought an ex parte motion on August 30, 2018 at which time they obtained leave to obtain the CPL which they registered on title to the Property.

[21] The evidence in the record with respect to the litigation history following the issuance of the CPL begins in September 2020 with a request by plaintiffs’ counsel for the defendants’ affidavit of documents. In October 2020, the parties scheduled examinations for discovery to take place in January 2021, and the defendants served their unsworn affidavit of documents in November 2020. However, the examinations for discovery were postponed due to a health issue encountered by plaintiffs’ counsel.

[22] In mid-June 2021, while counsel were having discussions about new dates for the examinations for discovery, the defendants advised that they intended to bring a motion to have the CPL discharged. The defendants did not schedule the motion at that time, and the examinations for discovery were scheduled to take place on September 13 and 14, 2021.

[23] In August 2021, defendants’ counsel advised plaintiffs’ counsel that they had contacted the court for dates for a motion to set aside the CPL. The plaintiffs inquired as to when the defendants would serve their motion material and took the position that discoveries and cross‑examinations should take place at the same time.

[24] By September 2021, the defendants had not delivered any motion material or booked a motion date. Counsel for the plaintiffs wrote to counsel for the defendants and advised that the plaintiffs were not prepared to proceed with examinations for discovery prior to the cross‑examinations on the intended discharge motion and that the discoveries would need to be rescheduled to a date after the defendants’ motion record was served. In response, counsel for the defendants advised as follows:

If our clients elect to proceed with a motion to discharge the CPL, it will be based primarily on your clients’ failure to move the action forward in the years since the CPL was obtained. It is therefore not a motion that would have made sense to pursue in 2018. If we do bring the motion, I think it is unlikely that we would include an affidavit from either of Mr. Eslami or Mr. Bakhtiari, and if we do, it would be very limited.

There is therefore no reason to reschedule the discoveries, and we intend to go forward with them as scheduled.

[25] Plaintiffs’ counsel responded as follows: “We will proceed with examinations for discovery in reliance on your advice that the only ground your clients will rely upon if they bring a motion to discharge the CPLs is the alleged delay.” Counsel for the defendants replied, advising that: “A motion brought by our clients for discharge of the CPL would be based at first instance on your clients’ failure to move the action forward in a timely fashion. There may be other substantive grounds that would be raised in support of the motion.”

[26] The September 2021 examinations were then adjourned again, and counsel for the plaintiffs asked the defendants to serve their motion materials in respect of the motion to discharge. By mid‑September no motion material had been delivered and counsel for the plaintiffs wrote asking whether the defendants still intended to bring the discharge motion. On October 7, 2021, counsel for the defendants confirmed that the defendants were not proceeding with a motion to set aside the CPL at that time. The examinations for discovery were ultimately rescheduled to take place on January 12, 13, and 14, 2022.

[27] In late February of 2022, shortly after the examinations for discovery were completed, counsel for the defendants advised that he had been instructed to bring a motion to discharge the CPL, not on the basis of delay, but instead based on evidence that the defendants assert came out during the discoveries.

[28] As noted, the grounds asserted in the defendants’ discharge motion are that: (1) the plaintiffs failed to make full and fair disclosure on the ex parte motion; (2) there is no triable issue in respect of the plaintiffs’ claim to an interest in the Property; and (3) the CPL should be discharged based on the relevant equitable factors that favour the defendants.

B. Issues

[29] The issues on this motion are as follows:

(a) Should this motion be dismissed as a result of the defendants’ delay in bringing it? (b) Should the CPL be discharged because the plaintiffs failed to make full and fair disclosure when it obtained leave to issue a CPL on an ex parte basis? (c) Should the CPL be discharged: (1) because there is no triable issue with respect to the plaintiffs’ claim to an interest in the Property; or (2) based on the applicable equitable factors?

C. Law and Analysis

Issue #1: Should the motion be dismissed as a result of the defendants’ delay?

[30] Relying on Rule 37.14(1) of the Rules of Civil Procedure, the plaintiffs submit that this motion should be dismissed because of the defendants’ lengthy delay of more than three years before bringing it.

(i) Applicable legal principles regarding delay

[31] Rule 37.14(1) provides:

37.14 (1) A party or other person who,

(a) is affected by an order obtained on motion without notice;

may move to set aside or vary the order, by a notice of motion that is served forthwith after the order comes to the person’s attention and names the first available hearing date that is at least three days after service of the notice of motion.

[32] The application of Rule 37.14(1)(a) to a motion to discharge a CPL was recently considered in Hawkins v. Girimonte, 2023 ONSC 4415 in which Associate Justice McGraw held as follows:

I reject the Defendant’s submission that Rule 37.14(1), and therefore, the requirement to move “forthwith”, does not apply to the discharge of a CPL. The Defendant argues that Rule 42.02, not Rule 37.14(1), applies to the discharge of a CPL. However, in 413554 Ontario Ltd. v. Pine Valley Developments Corp. [2011] ONSC 6193, D.M. Brown J. (as he then was) held that the requirement to move “forthwith” applies to a motion to set aside a CPL.[^2]

[33] In Ontario (Attorney General) v. 15 Johnswood Crescent, 2009 ONSC 50751, Strathy J. (as he then was) summarized the applicable principles under Rule 37.14(1) as follows:

[41] The requirement that a party must move “forthwith” reflects the importance of finality of court orders - a policy that goes to the integrity of the justice system. Confidence in the system is eroded if court orders are challenged long after they have been made.

[42] The “forthwith” requirement also reflects two common sense presumptions. The first buttresses the “accident or mistake” requirement. It is presumed that a party whose rights have been adversely affected by a mistake will raise an immediate protest. Thus, moving forthwith provides evidentiary support for the party’s assertion of mistake.

[43] The second common sense presumption is that a party who sits on his or her rights in the face of a court order has accepted the legitimacy of the order. A failure to move “forthwith” to set aside the order suggests that the party is prepared to let it stand.

[44] The word “forthwith” means:

• “immediately;” • “as soon as possible in the circumstances, the nature of the act to be done being taken into account;” • “as promptly as is reasonably possible or practicable under the circumstances;” or • “without any unreasonable delay, considering the objects of the rule and the circumstances of the case.”

See: Beattie v. Ladouceur (1995), 23 O.R. (3d) 225 (Gen. Div.) at 228-229; R. v. Parrot (1979), 27 O.R. (2d) 333 at 339-40 (C.A.).

[45] These definitions suggest that a court considering the “forthwith” requirement must consider the purpose of the rule itself, the purpose of the requirement for prompt action, the length of the delay, the reasons and circumstances of the delay, and all the surrounding circumstances of the case.[^3]

[34] Johnswood was recently cited with approval by the Supreme Court of Canada in respect of the principle that “once the moving party has become aware the order exists, they are then expected to take prompt action to challenge the order or otherwise acquiesce to its existence”.[^4]

[35] In assessing the delay, the court will consider the length of the delay and the reasons for it, the presence or absence of prejudice, the underlying merits of the moving party’s case, and any other relevant circumstances.[^5] Whether a party has moved “forthwith” must be considered in the context of all of the circumstances.[^6]

(ii) Analysis regarding delay

[36] The defendants submit that although they did not bring this motion immediately after learning of the ex parte order, their failure to move promptly was not acquiescence to the order. In explaining their delay, the defendants assert as follows:

(a) It is reasonable that the defendants did not move sooner because of the cost involved in bringing a discharge motion. (b) It only became reasonable for the defendants to bring this motion when they began to face the increasing prejudicial impact from the CPL through the passage of time. More specifically, the CPL has had a negative impact on the defendants’ ability to deal with the financing of the Property, including the refinancing of a mortgage in favour of the Laurentian Bank (the “Laurentian Bank Mortgage”) in the amount of $8 million. Specifically, the defendants submit that because of the CPL a holding company controlled by Mr. Bakhtiari was required to pay out the Laurentian Bank Mortgage, resulting in Mr. Bakhtiari having additional capital tied up in the Property. The defendants submit that they have moved reasonably promptly following this change in circumstance. The defendants also claim that the presence of the CPL is interfering with an interesting potential development opportunity on the Property. (c) It remains in the court’s discretion as to whether the delay is fatal to the discharge motion. The assessment of the delay is not a mechanical calculation, but rather a contextual balancing of finality and timely justice, on the one hand, and the importance of the matter being heard on its merits, on the other.[^7] Further, the delay must be assessed in light of the underlying merits of the claim, which the defendants submit favours them.

[37] In terms of the anticipated cost of a discharge motion, the defendants have not pointed me to any authority for finding that cost is a reasonable explanation for the delay in bringing such a motion. In any event, I do not accept this explanation in the context of an action regarding the sale of a property valued at $52 million, particularly where there is no evidence that the defendants were in a better financial position to bring the motion when they did so rather than bringing it promptly after learning of the ex parte order.

[38] I also do not accept the defendants’ argument that the delay is reasonable because the grounds for this motion only arose through the passage of time. First, even assuming that the refinancing of the Laurentian Bank Mortgage was impacted by the CPL, the defendants have not explained why they did not seek the plaintiffs’ cooperation regarding the need to refinance that mortgage. It is not uncommon for a plaintiff to agree to a temporary lifting of a CPL to allow a defendant property‑owner to register refinancing when pre‑existing security interests become due. In any event, the refinancing issue has now been dealt with and there is no evidence of any further upcoming financing issues with respect to the Property or the need for the defendants to lift the CPL to deal with any additional financing issues. In the result, I place little weight on the defendants’ assertion that there has been a change in their financial circumstances that would justify their delay in bringing this motion to set aside the ex parte order. As well, I find that the defendants’ assertion of a potential “partnership with the federal government” with respect to an interesting potential development opportunity on the Property is unsupported by any documentation or other evidence. Given the absence of any evidence providing details of the potential development, I place no weight on this bald assertion.

[39] I am also unable to find that other relevant considerations outweigh the defendants’ delay. In this regard, I am mindful of the nature of the order that the defendants seek to discharge.[^8] Here, the CPL is interlocutory only; it is not a final determination of the parties’ rights to the Property. Further, although the defendants complain that the CPL constrained them in a rising real estate market, the evidence from Mr. Bakhtiari is that “Although I would not have any particular interest in selling the Property, I would not be opposed to considering a truly attractive offer from a credible buyer”.[^9] On the other hand, the plaintiffs would be prejudiced if the CPL were lifted and the Property sold. With respect to the merits of the claim, in my view the merits are not so clear as to afford a counterbalance to the defendants’ extremely long delay.

[40] Finally, I note the defendants’ changing positions with respect to whether and when they would bring this discharge motion, as well as the defendants’ representations about the basis for the motion. In this regard, I accept that a change in a party’s position over time is not per se objectionable. There may be cases where the relevant circumstances evolve during the progress of the litigation that cause a party to alter its view about the need for an interlocutory motion such as this discharge motion. However, in this case, the defendants have not provided a cogent explanation for their shifting positions regarding the timing and basis for this motion.

Conclusion regarding delay

[41] Considering the factors outlined in Johnswood and the relevant context and circumstances, I find that the there is no reasonable explanation for the defendants’ extensive delay to bring this motion to set aside the CPL. Simply put, the defendants’ delay of more than three years to bring this motion does not by any definition constitute moving forthwith as required under Rule 37.14(1) of the Rules of Civil Procedure.[^10] I would dismiss the defendants’ motion for this reason alone.

Issue #2: Did the plaintiffs fail to make full and fair disclosure?

[42] The defendants assert that the plaintiffs obtained the CPL on their ex parte motion on the basis of incorrect and incomplete information. They submit that the plaintiffs’ failure to make full and fair disclosure on the ex parte motion is a sufficient basis to order the discharge of the CPL.

(i) Applicable legal principles regarding full and fair disclosure

[43] Pursuant to Rule 39.01(6) of the Rules of Civil Procedure, a party moving without notice has a duty to make full and fair disclosure to the court of all material facts. It is well settled law that the failure to make full and fair disclosure is, in and of itself, sufficient to discharge a CPL.[^11] This is embodied in Rule 39.01(6), which provides as follows:

(6) Where a motion or application is made without notice, the moving party or applicant shall make full and fair disclosure of all material facts, and failure to do so is in itself sufficient ground for setting aside any order obtained on the motion or application.

[44] Pursuant to Rule 39.01(6) of the Rules of Civil Procedure, a plaintiff must make full and fair disclosure of the relevant facts, including facts which may explain the defendants’ position if known to the plaintiff. Material facts constitute all facts which the judge hearing the motion would need to be aware of in coming to a decision, non‑disclosure of which may affect the outcome of the motion.[^12]

(ii) Analysis – was there full and fair disclosure?

(a) Alleged non-disclosure / misleading disclosure regarding the Watters Phase II Report

[45] The defendants submit that the environmental consultant Watters never prepared the purported Watters Phase II Report (as the plaintiffs now acknowledge), nor any formal report concerning the Property. The defendants also submit that they had no relationship with Watters, and that Watters had been retained to conduct certain investigations on the Property by a neighbouring property owner who had been considering purchasing a portion of the Property. The defendants submit that: (1) the plaintiffs obtained the CPL on the basis of incorrect and misleading information that the defendants had breached their obligation to provide the plaintiffs with a copy of the purported Watters Phase II Report; and (2) the plaintiffs’ evidence regarding the purported Watters Phase II Report was critical to the court’s decision to grant the CPL on an ex parte basis. The defendants argue that because the plaintiffs chose to move on an ex parte basis they must bear the risk of having been wrong about the purported Watters Phase II Report.

[46] First, I do not agree that the evidence with respect to a purported Watters Phase II Report was the principal factor on which the CPL order was made. The plaintiffs’ evidence in support of the ex parte motion raised concerns about the alleged breach of the APS based on the defendants’ failure to produce numerous reports, only one of which was the purported Watters Phase II Report. More specifically, while the plaintiffs’ affidavit evidence referenced the purported Watters Phase II Report, there is also reference to the late delivery of at least two other reports, as well as another missing report. Having reviewed the endorsement of Associate Justice McGraw and having considered the overall evidence that was before the court on the ex parte CPL Motion, I find that the erroneous reference to the purported Watters Phase II Report was not critical to the court’s decision to grant the CPL. There was ample other evidence before the court to support the granting of a CPL.

[47] I also find that the incorrect information regarding the purported Watters Phase II Report was not put before the court on a bad faith or reckless basis. Rather, the plaintiffs’ understanding of and erroneous reference to the purported Watters Phase II Report was supported by information that was reasonably relied on by the plaintiffs, including: (1) a publicly‑filed lien that had been registered on title to the Property; and (2) affidavit evidence from the plaintiffs’ real estate lawyer about a discussion he had with a representative of Watters indicating that Watters had prepared a Phase II Report with respect to the Property. Further and importantly, in a letter to the defendants’ real estate lawyer dated August 21, 2018, the plaintiffs’ litigation counsel made express reference to the purported Watters Phase II Report and asserted that the defendant 183 had failed to provide a copy of it to the plaintiffs. This was more than one week before the plaintiffs brought the ex parte motion. Rather than responding to this assertion by the plaintiffs’ litigation counsel and advising the plaintiffs that they were mistaken about the Watters Phase II Report, the defendants were silent on this point. The defendants had the opportunity to correct the plaintiffs’ misunderstanding but did not so. Considering all of the evidence and circumstances, I find that the plaintiffs’ error was not intentional or reckless, and that the plaintiffs were not acting in bad faith in referring to the purported Watters Phase II Report in the evidence they put before the court on the ex parte motion.

[48] In summary, I find that the reference to the purported Watters Phase II Report was not the principal basis for the CPL Order and that the plaintiffs’ error was not misleading or reckless such that there was a failure to make full and fair disclosure.

(b) Alleged non-disclosure in the notice of motion

[49] The defendants submit that the plaintiffs’ notice of motion was not sufficiently comprehensive, and that there was material non-disclosure because certain key facts were only detailed in the supporting affidavit evidence rather than directly in the notice of motion. For example, the defendants argue that the notice of motion does not provide sufficient detail about the waiver of the Environmental Condition or provide a comprehensive list of the specific documents the plaintiffs allege were not disclosed. The defendants also submit that the plaintiffs failed to indicate in their notice of motion that, prior to waiving the Environmental Condition, the plaintiffs’ consultants had concluded that there were no environmental concerns with respect to the Property.

[50] I do not accept the defendants’ assertion, which is unsupported by any authority, that all material facts must be meticulously detailed in the notice of motion. In my view, it was sufficient for the material information to be included in the affidavit evidence filed in support of the ex parte motion. The prohibition against “burying” evidence applies in circumstances where material information is found in an exhibit to an affidavit combined with a failure by the moving party to bring that material information to the attention of the court. In this case, I do not find that the material information was withheld or buried in exhibits that were not brought to the court’s attention. Rather the supporting affidavit evidence was comprehensive and made reference to the material facts sufficient to make full and fair disclosure, including with respect to the waiver of the Environmental Condition and the specific documents that the plaintiffs allege were not disclosed. The same is the case with respect to disclosure that the plaintiffs’ consultants had concluded that there were no environmental concerns with respect to the Property. In this regard, the plaintiffs’ supporting affidavit material indicates that “Our consultants and Agents advised us that based upon the information disclosed, at the time of the waiver, there was no environmental contamination at the Property.” This was sufficient full and fair disclosure of this fact.

(c) Alleged non-disclosure that the 2010 Church & Trought Phase II Report is referenced in other reports

[51] The plaintiffs allege that the 2010 Church & Trought Phase II Report was only provided to them in August 2018, well after the waiver of the Environmental Condition. The plaintiffs allege that this was in breach of the APS and formed part of the defendants’ alleged misrepresentations.

[52] The defendants assert that the plaintiffs’ evidence on the ex parte motion with respect to the late disclosure of the 2010 Church & Trought Phase II Report was misleading. They submit that the plaintiffs did not properly disclose to the court that, prior to the waiver of the Environmental Condition, the defendants had provided the plaintiffs with numerous other reports that reference the 2010 Church & Trought Phase II Report.

[53] In my view, this was not material non-disclosure that should result in the reversal of the CPL order. The plaintiffs’ claim is based, in part, on the defendants’ failure to provide the 2010 Church & Trought Phase II Report on a timely basis regardless of the references to it in the other reports. The references in other reports to the 2010 Church & Trought Phase II Report may ultimately become relevant to the determination of the plaintiffs’ overall claims on their merits. However, having reviewed and considered the affidavit evidence filed in support of the ex parte motion, I am of the view that the CPL Order would have been made even if there had been more explicit evidence that the 2010 Church & Trought Phase II Report had been referred to in other reports provided to the plaintiffs before the waiver of the Environmental Condition.

(d) Alleged non-disclosure with respect to reports that post-date the 2010 Church & Trought Phase II Report

[54] The defendants assert that the plaintiffs failed to disclose that the environmental reports that post-date the 2010 Church & Trought Phase II Report indicate that there are no environmental concerns with respect to the Property. Although that is the defendants’ interpretation of certain post-2010 reports, the proper interpretation of the various environmental reports regarding the Property will have to be determined based on a more complete record that includes expert evidence on this issue. In the circumstances, I do not accept that this was a material fact the non-disclosure of which should result in the reversal of the CPL order.

(e) Alleged non-disclosure regarding a plan of expropriation

[55] The materials in support of the plaintiffs’ ex parte motion referred to a failure by the defendants to disclose information about a plan of expropriation that had been registered on title to the Property. The defendants argue that the plaintiffs failed to disclose to the court that the plan of expropriation did not affect their desire to purchase the Property, and that this was non‑disclosure of a material fact. I do not agree. It was only after the ex parte motion that the plaintiffs were able to determine that the plan of expropriation related to a small portion of the Property. Although the plaintiffs ultimately determined that the expropriation issue did not impact their interest in acquiring the Property, they had not yet made that determination at the time of the ex parte motion. In my view, there was no material non-disclosure with respect to the plan of expropriation.

Conclusion regarding full and fair disclosure

[56] For the reasons outlined above, I find that the affidavit evidence filed in support of the ex parte CPL motion contained the necessary material facts and that the plaintiffs provided the necessary full and fair disclosure required for a motion made without notice.

Issue #3: Should the CPL be discharged because there is no triable issue with respect to the plaintiffs’ claim to an interest in the Property, or based on equitable factors?

[57] The well-established test on a motion to discharge a CPL is summarized as follows:

(a) 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. (b) 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”. (c) 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. (d) 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.[^13]

[58] In determining whether there is a triable issue, the evidentiary bar is low. Further, the court is not to assess credibility or decide disputed issues of fact and credibility.[^14]

[59] The defendants’ position is that the CPL should be discharged: (1) because there is no triable issue with respect to a breach of the APS because the plaintiffs waived the Environmental Condition; (2) because there is no triable issue with respect to the plaintiffs’ claim for specific performance of the APS; and (3) based on equitable factors. I deal with each of these in turn.

(i) Is there a triable issue with respect to a breach of APS?

[60] The defendants’ assert that there is no triable issue with respect to the plaintiffs’ claim to an interest in the Property based on a breach of the APS relating to the environmental status of the Property. More specifically, the defendants argue that because the plaintiffs waived the Environmental Condition, there is no basis for the plaintiffs’ claim that the defendants failed to provide environmental reports on a timely basis, or otherwise, in breach of the APS. They also assert that the discussions and correspondence between the parties and their counsel regarding additional environmental reports and documents did not constitute an amendment to the APS that would make relevant any environmental reports or information about the environmental status of the Property.

[61] The defendants argue that the current circumstances are analogous to those in Dynacorp Canada Inc v Curic, 2010 ONSC 2603,[^15] a case in which the plaintiff had obtained a CPL that was later discharged. In Dynacorp, one of the issues on the discharge motion was whether the applicable agreement of purchase and sale remained in force as a result of an extension to a condition date provided for under the agreement. The plaintiff in that case argued that the condition date had been extended because the defendants had failed to deliver documents for inspection by the plaintiff as required under the applicable agreement of purchase and sale. Master Muir discharged the CPL on the basis that there was no triable issue with respect to the plaintiff’s claim to an interest in the land. In reaching that conclusion, Master Muir found, among other things, that it was clear from the plaintiff’s own evidence that the plaintiff had been provided with all documents requested from the defendants during the due diligence period, and that the defendants’ conduct during the due diligence/inspection period was in compliance with the provisions of the applicable agreement.

[62] In my view, Dynacorp is distinguishable. As noted, in this case, there is evidence that certain documents had not been provided in advance of the waiver of the Environmental Condition. Further, the plaintiff in Dynacorp did not allege misrepresentation relating to the documents in issue whereas in this case the plaintiffs make numerous allegations of misrepresentation.

[63] As noted, the bar for establishing a triable issue is low. The plaintiffs’ position, as framed in the statement of claim and in the plaintiffs’ affidavit evidence, is that the defendants breached the APS by failing to provide certain environmental reports they were obliged to disclose and by making misrepresentations about the environmental status of the Property both prior to and following the waiver of the Environmental Condition. The plaintiffs allege that they relied on those representations to their detriment in waiving the Environmental Condition.

[64] In my view, the factual circumstances surrounding the waiver of the Environmental Condition, including what was done and said by each of the parties, are complicated. The waiver issue needs to be assessed on its merits based on a complete record and in circumstances where the trier of fact can assess credibility and decide disputed issues of fact and credibility. Other disputed issues include: what clauses the plaintiffs asked to be included in the APS; the effect of the entire agreement clause on the representations made before and after the parties entered into the APS, and before and after it was amended; what documents, if any, remained deliverable after the waiver of the Environmental Condition; and the plaintiffs’ conduct and reliance on advice or information in entering into the APS and its amendments, and whether the reliance was reasonable. These issues raise a triable issue with respect to the plaintiffs’ claim to an interest in the land based on alleged breaches of the APS and claims of misrepresentation with respect to the environmental status of the Property.

[65] The defendants also argue that 183 was not in breach of the APS by failing to provide a copy of the 2010 Church & Trought Phase II Report to the plaintiffs prior to the waiver of the Environmental Condition because 183 did not have a copy of it at that time. I do not accept this argument. The defendants’ evidence with respect to whether and when they obtained the 2010 Church & Trought Phase II Report, or whether it was in their power or control to obtain it, has changed materially since the motion was first brought. In any event, for purposes of this motion, I find that if the defendants did not already have a copy of that report in October 2017, they had the ability at all material times to obtain a copy of it from their agents. A more complete assessment of the evidence regarding this question and the import of it on the plaintiffs’ claims, including with respect to the waiver of the Environmental Condition, is required. Again, this contributes to the triable issue with respect to the breach of contract and misrepresentation claims that underly the plaintiffs’ claim to an interest in the Property.

[66] The defendants also argue that they used their best efforts to comply with their production obligations and produced numerous environmental reports that they submit were comprehensive. In my view, 183’s disclosure obligation under the APS was not limited to a “best efforts” basis nor to a certain number of reports that 183 considered sufficient and comprehensive.

[67] The defendants also assert that the plaintiffs cannot credibly argue that they would have acted differently if the environmental reports that the plaintiffs allege were delivered late had been produced in October 2017 instead of in 2018. This argument is premised on the assertion that a proper reading of all the available reports, including those that were provided after the waiver of the Environmental Condition, demonstrates that there are no environmental issues with respect to the Property. I do not accept this argument. The plaintiffs’ evidence is that the plaintiffs’ environmental consultant identified various concerns about the Property based on a review of the environmental reports provided by the defendants, including a report provided after the waiver of the Environmental Condition. The import of the late disclosure is one of the disputed issues that will have to be decided following the exchange of expert reports and based on: expert evidence; evidence from the parties’ representatives; and evidence from certain non-party witnesses. The non-party witnesses may include representatives of Watters and the owner of a neighbouring property, Mr. Bob Zamani. It appears that Mr. Zamani will have evidence about information he had been provided about the environmental status of the Property and what aspects of that information he shared with the defendants in 2016. While that evidence is contested by the defendants, it supports the conclusion that, for the purposes of this motion, there is a triable issue with respect to the breach of the APS and the misrepresentation claims that underly the plaintiffs’ claim to an interest in the Property.

Conclusion regarding triable issue with respect to a breach of APS

[68] For the reasons outlined above, I find that the defendants have not met their onus of demonstrating that there is no triable issue with respect to the plaintiffs’ claim to an interest in land based on the alleged breaches of the APS and misrepresentations about the environmental status of the Property. The alleged breaches of the APS, and the alleged misrepresentations regarding the disclosure relating to the environmental status of the Property, combined with the evidence relating to the allegations, as pleaded, are sufficient to meet the requisite low threshold. An assessment of the issues will require a review of the contemporaneous email correspondence and evidence from a number of witnesses regarding various meetings and discussions. For the purposes of this discharge motion, there is sufficient evidence to raise a triable issue with respect to whether the timing and scope of the reports provided by the defendants to the plaintiffs was in compliance with the APS, and whether there were actionable misrepresentations with respect to the environmental status of the Property.

(ii) Is there a triable issue with respect to the claim for the remedy of specific performance?

[69] The defendants assert that even if the plaintiffs have established a triable issue with respect to a breach of the APS, they are not able to demonstrate that there is a triable issue with respect to their claim for specific performance. In this regard, the defendants argue that the plaintiffs will not be able to demonstrate that the Property is unique and that damages would not be an adequate remedy.

The applicable test

[70] In Interrent International Properties v. 1167750 Ontario Inc., 2013 ONSC 4746,[^16] Master Macleod (as he then was) outlined the following principles applicable to an assessment of a claim for specific performance in the context of a motion to grant or discharge a CPL:

o The first question is whether or not the claim for specific performance has merit. On an ex parte motion the threshold is low. The court must simply be satisfied that the claim is plausible and there is sufficient evidence to show that there is a serious issue. o On a contested motion, the court will review all of the evidence put forward by both parties and determine on the totality of the evidence before it whether or not there is a triable issue. o In making this determination the court need not accept the pleadings or the affidavit evidence uncritically but will examine all of the evidence after cross examination to determine whether or not the claim has a reasonable prospect of success. o Reasonable prospect of success means not only a reasonable prospect of proving breach of contract but also succeeding in obtaining the equitable remedy of specific performance. Thus the court must be satisfied that damages would not be an appropriate remedy. o Even if the plaintiff has a potential case for specific performance the court may still refuse the CPL if it would be unjust to order it. The court must consider the equities of granting this form of interim relief. This is not a mechanical application of a test but an exercise of discretion to achieve a just result. o Factors the court may consider include the strength of the case, the uniqueness of the land, the adequacy of damages as a remedy, whether the CPL appears to be for an improper purpose, and the balance of convenience.[^17]

[71] In Southcott v. Toronto Catholic School Board, 2012 SCC 51,[^18] the Supreme Court reiterated the principle that it had articulated in Semelhago v. Paramadevan, [1996] 2 S.C.R. 415 that it is no longer the case that every piece of real estate is considered to be unique and that it “cannot be assumed that damages for breach of contract for the purchase and sale of real estate will be an inadequate remedy in all cases”.[^19] The Supreme Court explained that “[s]pecific performance will be available only where money cannot compensate fully for the loss because of some ‘peculiar and special value’ of the land to the plaintiff”.[^20]

[72] In Interrent, Master Macleod (as he then was) stated as follows:

Specific performance is only available as an equitable remedy when the ordinary legal measure of damages will be insufficient and this depends on the court finding that the land is so unique that its loss cannot be adequately calculated in damages alone. If damages are an adequate remedy then specific performance will not be granted even if that is the only remedy that has been claimed.[^21]

[73] In Matthew Brady Self Storage Corp. v. InStorage Limited Partnership, 2014 ONCA 858,[^22] the Court of Appeal held as follows:

[W]here the claim relates to an investment property and any “unique” characteristics can be reflected in the sale price or profits from the investment and, therefore, give rise to quantifiable damages, courts have taken the position – following the approach taken in Semelhago – that there is no clear rule one way or the other as to whether specific performance is available. Its availability will turn on the uniqueness of the property and whether there is a fair, real and substantial justification for the claim.

[74] In John E. Dodge Holdings Ltd. v 805062 Ontario Ltd.,[^23] Lax J. outlined the following principles with respect to the remedy of specific performance:

• The fundamental question is whether the land rather than its monetary equivalent better serves justice between the parties. This will depend on whether money is an adequate substitute for the plaintiff's loss and this in turn will depend on whether the subject matter of the contract is generic or unique. • There is both a subjective and objective aspect to uniqueness. In terms of the subjective aspect, the court should examine this from the point of view of the plaintiff at the time of contracting. The court will determine objectively whether the plaintiff has demonstrated that the property has characteristics that make an award of damages inadequate for that particular plaintiff. Obviously, investment properties are candidates for damages and not specific performance. • It is important to keep in mind that uniqueness does not mean singularity. It means that the property has a quality (or qualities) that makes it especially suitable for the proposed use that cannot be reasonably duplicated elsewhere. To put this another way, the plaintiff must show that the property has distinctive features that make an award of damages inadequate. The plaintiff need not show that the property is incomparable.

Analysis

[75] Relying on Southcott, Interrent and Dynacorp, the defendants submit that there is no reasonable prospect that the plaintiffs will succeed in obtaining the equitable remedy of specific performance. I do not agree.

[76] In Southcott, the court had to determine whether a plaintiff‑purchaser was excused from its obligation to mitigate its damages in circumstances where it was seeking specific performance of an agreement of purchase and sale following the vendor’s breach of that agreement. At trial, one of the issues determined by the trial judge was the question of the availability of specific performance, which required an assessment of the uniqueness of the property in issue. The trial judge in Southcott found that the plaintiff’s proposed development in that case “was not complex, but rather a relatively straightforward plan for the development of 48 semi-detached residential units”.[^24] On the facts of that case, the Supreme Court noted that the unique qualities of the proposed development related solely to its profitability such that damages were an adequate remedy, and that the trial judge had concluded that “the calculation of profits was not conjectural or speculative as the proposed development was not complex, and the only disagreement between the parties regarding the quantum of damages related to the timing and rate of sale of completed units”.[^25]

[77] In Interrent, Master Macleod (as he then was) found that even though the plaintiff did not seek damages as an alternative remedy in its statement of claim, the claim for specific performance in that case was weak for two principal reasons: (1) there was a lack of evidence to support the plaintiff’s position that the agreement of purchase and sale was amended or the time extended; and (2) damages were an adequate remedy. With respect to the adequacy of damages, the evidence indicated that the property in issue in the Interrent action consisted of four apartment buildings that had been converted into a condominium. None of the condominium units had been sold, and the defendant rented them out as residential tenancies. In those circumstances, the quantification of damages was a relatively straightforward exercise making damages an adequate remedy. Master Macleod (as he then was) made the following finding:

The evidence does not support a finding that there is any intrinsic value for the plaintiff in this property other than the opportunity to generate revenue and profit. Nor do I accept that damages are difficult or impossible to calculate. The lost revenue stream may be determined from the financial records of the defendant while future potential gains through increases in the value of the units are no more speculative than other damage claims. It should be readily ascertainable whether the proposed purchase price was below or above current market rates.[^26]

[78] With respect to the assessment of the uniqueness of the Property in this case, I pause to note that neither the plaintiffs nor the defendants filed any independent evidence about whether there are other similar properties available for purchase. While both the plaintiffs and the defendants filed evidence from their respective representatives about that issue, a party cannot be an expert in its own case. For that reason, the parties’ own evidence of the real estate market must be considered as self-serving, unobjective and unreliable as actual market evidence. Nevertheless, I find that the plaintiffs’ evidence demonstrates a subjective and objective uniqueness of the Property from the point of view of the plaintiffs at the time of contracting.

[79] While the commercial investment property in issue in this case is not per se unique, there are several aspects to the Property that support the conclusion that “the property has characteristics that make an award of damages inadequate for that particular plaintiff”. For example, unlike the situations in Southcott and Interrent, the potential development of the Property in this case is complex. Unlike Interrent, there is no pre‑existing development with a revenue stream, nor is there a straightforward development plan as there was in Southcott. There are varying opportunities and uncertainties with respect to the precise scope and type of development of the Property, including potential zoning and use issues that would make it more difficult to calculate damages and that may make the property unique relative to others. In addition to its size, the Property is located along the Yonge Street corridor and near Richmond Hill’s historic downtown, and it is in close proximity to public transit. As noted in Dodge, uniqueness does not mean singularity. Rather, it means that the property in issue has qualities that make it especially suitable for the proposed use that cannot be reasonably duplicated elsewhere.[^27] Based on the evidence, I find that for purposes of this motion the land in issue rather than its monetary equivalent may better serve justice between the parties. In this regard, I note that I am not required to make a final determination of the question of the availability of specific performance. This is a motion seeking the discharge of a CPL, and the threshold here is lower than it would be at trial.

[80] In the result, having considered the evidence, I find that for purposes of this motion the defendants have not met their onus of showing that the plaintiffs’ claim for specific performance is sufficiently weak for me to conclude that there is no triable issue with respect to the plaintiffs’ claim to an interest in the Property.

(iii) Should the CPL be discharged based on equitable factors?

[81] Even if the plaintiffs have demonstrated that there is a triable issue with respect to their claim to an interest in the Property, I still have discretion to discharge the CPL if it would be unjust for it to remain in place. As noted, I must consider the equities and exercise my discretion to achieve a just result. In my view, a review of the equitable factors leads to the conclusion that the CPL should not be discharged.

(a) Is the plaintiff a shell corporation?

[82] The defendants argue that the plaintiff corporation appears to be a shell corporation devoid of assets. On this point, there is no direct evidence with respect to whether the plaintiff corporation is a shell corporation. However, even if that were the case, I note that the plaintiffs have paid a deposit of $5 million which is being held with the court pending the result of this action. That is sufficient to alleviate any concern that may otherwise arise from a corporate plaintiff that is a shell corporation.

(b) Uniqueness of the Property

[83] For the reasons outlined above, I find that the uniqueness of the Property favours the plaintiffs.

(c) Alternative claim for damages

[84] I do not place any weight on the fact that the plaintiffs do not seek damages as an alternative remedy as a basis for finding that the CPL should remain in place. In this regard, I note that if I were to determine that it is appropriate to discharge the CPL because damages would be an appropriate remedy, I could include in my order that the plaintiffs are at liberty to amend the statement of claim to seek damages either in substitution for or as an alternative to the claim for specific performance.[^28] This is a neutral factor.

(d) Whether damages are calculable and are adequate as an alternate remedy

[85] For the reasons outlined above, I find that damages would not be an adequate remedy. This factor favours the plaintiffs.

(e) The presence or absence of a willing purchaser

[86] The defendants’ evidence is that 183 had never listed the Property for sale, nor did it have any intention to do so. As noted above, the evidence from the Mr. Bakhtiari is that while he would not have any particular interest in selling the Property, he would not be opposed to considering a truly attractive offer from a credible buyer. This is not sufficient evidence of an intention to sell the Property that is being impeded by the CPL. In any event, there is no evidence of another willing purchaser. This is a neutral factor.

(f) Prejudice to the parties

[87] The defendants argue that they are “undoubtedly harmed” by the presence of the CPL, which is an encumbrance on title. In support of this assertion, the defendants submit that 183’s principals have a great deal of equity in the Property, which they are unable to access as a result of the CPL. They also submit that 183 has been prevented from exploring opportunities in the real estate market, and that 183 was unable to pursue an interesting opportunity to partner with the federal government to build mixed-use affordable housing on the Property.

[88] In my view, the prejudice to the plaintiffs if the CPL is removed would be greater than the harm to the defendants if the CPL remains in place. As noted, I find that there is no convincing evidence on this motion that 183 has an intention to sell the Property that is being impeded by the CPL. Further, as noted, the defendants’ complaint about equity in the property is mitigated by the plaintiffs’ $5 million deposit that is similarly tied up as a result of this action. As well, for the reasons outlined above, I find that there is insufficient evidence to demonstrate any prejudice resulting from any anticipated refinancing requirements for the Property or the asserted opportunity to partner with the federal government to build housing on the Property.

[89] Further, given my finding that damages are not a satisfactory replacement for specific performance, I find that the harm to the plaintiffs if the CPL is removed would be greater than the harm to the defendants if the CPL remains in place.

(g) Other considerations

[90] If I am incorrect in my finding (outlined above) that the defendants’ delay in bringing this motion to discharge the CPL is a sufficient basis, on its own, for dismissing the motion, then I find that the defendants’ delay is nevertheless a relevant equitable factor that favours the plaintiffs.

Conclusion regarding equitable factors

[91] In summary, I find that the equitable factors in this case weigh in favour of the plaintiffs. As a result, I decline to exercise my discretion to discharge the CPL on an equitable basis.

D. Disposition and Costs

[92] For the reasons outlined above, the defendants’ motion for an order discharging the CPL is dismissed.

[93] With respect to costs, the plaintiffs have a pending motion seeking an order pursuant to Rule 32.01 of the Rules of Civil Procedure permitting the plaintiffs’ consultant to attend at the Property for the purpose of completing a Phase II environmental site assessment (the “Inspection Motion”). The parties have agreed that they will make their cost submissions with respect to this motion to discharge the CPL following the completion of argument in the Inspection Motion.

DATE: November 20, 2023 R. Frank Associate J.

[^1]: The action was discontinued against the defendants Max Realty Solutions Inc. and Shahim Mirkhan on June 20, 2022. References in these Reasons to “the defendants” refer only to the defendants 1835942 Ontario Inc., Mohammed Eslami Zadeh also known as Mohammed Eslamezadeh also known as Mohammed Eslami, and Andy Bakhtiari. [^2]: See Hawkins v. Girimonte, 2023 ONSC 4415 at para 24, citing 413554 Ontario Ltd. v. Pine Valley Developments Corp. [2011] ONSC 6193. [^3]: Ontario (Attorney General) v. 15 Johnswood Crescent, 2009 ONSC 50751 at paras 40‑45 (citations omitted). See also Hawkins at para 22. [^4]: Canadian Broadcasting Corp. v. Manitoba, 2021 SCC 33 at para 48; see also Hawkins at para 23. [^5]: Johnswood at paras 34-35. [^6]: Hawkins at para 25. [^7]: Canadian Broadcasting Corp. v. Manitoba at para 49. [^8]: Johnswood at para 53. [^9]: Mr. Bakhtiari was the only representative of 183 to have delivered sworn evidence on this motion. [^10]: Pine Valley at paras 14-16. [^11]: Access Self-Storage Inc. v. 1321645 Ontario Ltd. et al, 2017 ONSC 6037 at para 17. [^12]: Hunter Square Developments Inc. v. 351658 Ontario Ltd., 2002 ONSC 49491 at paras 52-53, citing Pazner v. Ontario (1990), 74 O.R. (2nd) 130. [^13]: Perruzza v. Spatone, [2010] ONSC 841 at para 20. [^14]: Karkoulis v Karkoulis, 2023 ONSC 499 at para 19. [^15]: Dynacorp Canada Inc v Curic, 2010 ONSC 2603. [^16]: Interrent International Properties v. 1167750 Ontario Inc., 2013 ONSC 4746. [^17]: Interrent at para 15. [^18]: Southcott v. Toronto Catholic School Board, 2012 SCC 51. [^19]: Southcott at para 38 citing Semelhago v. Paramadevan, [1996] 2 S.C.R. 415 at para 21. [^20]: Southcott at para 38. [^21]: Interrent at para 31. [^22]: Matthew Brady Self Storage Corp. v. InStorage Limited Partnership, 2014 ONCA 858 at para 35 (citations omitted). [^23]: John E. Dodge Holdings Ltd. v 805062 Ontario Ltd. at paras 55, 59 and 60. [^24]: Southcott at para 58. [^25]: Southcott at para 40. [^26]: Interrent at para 34. [^27]: Dodge at para 60. [^28]: See Interrent at para 36.