COURT FILE NO.: CV-16-566465
DATE: 2023 01 26
SUPERIOR COURT OF JUSTICE - ONTARIO
RE: URBAN LIFE RESIDENTIAL, IN TRUST, Plaintiff
- and -
615858 ONTARIO LIMITED, Defendant
BEFORE: Associate Justice Todd Robinson
COUNSEL: A. Habas, counsel for the plaintiff
I. Ellyn and K. Manning, counsel for the defendant
HEARD: September 20, 2022 (by videoconference)
REASONS FOR DECISION
[1] This litigation involves a dispute over an aborted real estate transaction in 2016 for the purchase and sale of a property owned by the defendant. An agreement of purchase and sale was executed between the defendant as seller and “Urban Life Residential, in Trust” as buyer (the “APS”). The transaction did not close and the plaintiff commenced this action and moved for a certificate of pending litigation (CPL) against the property. Although initially opposed, the defendant ultimately consented to issuance of a CPL on terms that the parties “be expeditious” in bringing the action to trial.
[2] Documentary and oral discoveries were completed in 2018. Denis Vranich was examined on behalf of the plaintiff. During the course of that examination, Mr. Vranich was asked about the named buyer in the APS, in response to which he asserted that the proper party to the APS ought to have been “Urban Life Residential Inc., In Trust”. The identity of the purchaser under the APS and the proper plaintiff in this proceeding are the core disputed issues in both of the two motions before me.
[3] After discoveries, a separate proceeding was commenced by the defendant seeking damages and other relief from real estate agents and lawyers involved in the transaction, including relief contingent on whether the plaintiff’s claim is or is not successful. That proceeding has since been consolidated into this proceeding as a third party action, with some third parties defending the main action and further discoveries having ben completed.
[4] The plaintiff seeks leave to amend its statement of claim and reply and defence to counterclaim to correct the alleged misnomer in its name, taking the position that the plaintiff was always intended to have been Urban Life Residential Inc. (“Urban Inc.”). The plaintiff also seeks an order extending the deadline to file a trial record. The defendant opposes the amendment on the basis that there is no misnomer. The defendant argues that what the plaintiff is actually seeking to do is substitute a new entity as plaintiff in place of a clear non-entity well beyond the expiry of the limitation period.
[5] The defendant has itself brought a cross-motion seeking leave to amend its statement of defence and counterclaim, including leave to withdraw an admission about the corporate status of the plaintiff, if necessary, and for summary judgment dismissing this action on the basis that the plaintiff lacks any standing to enforce the APS. Alternatively, if the action proceeds, the defendant seeks an order for security for costs and discharging the consent CPL.
[6] I am granting the plaintiff’s motion to amend and extending the set down deadline. With respect to the defendant’s cross-motion, I am satisfied that the alleged “admission” in the defendant’s pleading is not a legal admission requiring leave to withdraw. I am granting leave to amend the statement of defence and counterclaim.
[7] In my view, summary judgment is not appropriate here. There are genuine issues requiring a trial that on whether the APS is void or voidable by reason of the named buyer being an invalid trust and whether Urban Inc. was, in fact, the party to the APS or whether it otherwise has any standing to enforce the APS. Those issues cannot fairly or justly be resolved on the record before me. I am not satisfied that security for costs is just given the amendment granted and the evidence of Urban Inc.’s assets. In the circumstances of this case, I am also not convinced that the consent CPL should be discharged. I am accordingly dismissing those aspects of the defendant’s motion.
Analysis
[8] I deal first with the relief sought on the plaintiff’s motion, since it was the first motion brought, and then the relief sought on the defendant’s cross-motion.
a. Should leave be granted to amend the plaintiff’s name and pleadings?
[9] Rule 26.01 of the Rules of Civil Procedure, RRO 1990, Reg 194 (the “Rules”) directs that, on motion at any stage of an action, the court shall grant leave to amend a pleading on such terms as are just, unless prejudice would result that could not be compensated for by costs or an adjournment. Granting leave for amendments sought under rule 26.01 is mandatory where there is no non-compensable prejudice.
[10] Subrule 5.04(2) of the Rules deals specifically with misnaming a party. It provides that, at any stage of a proceeding, the court may by order substitute a party or correct the name of a party incorrectly named on such terms as are just, unless prejudice would result that could not be compensated for by costs or an adjournment. Unlike rule 26.01, granting an amendment under subrule 5.04(2) is discretionary, even in the absence of non-compensable prejudice: Mazzuca v. Silvercreek Pharmacy Ltd. (2001), 56 OR (3d) 768 (CA), 2001 CanLII 8620 (ON CA) at para. 30.
[11] Determining whether an amendment is genuinely due to misnomer or is seeking to add a new party involves assessing whether a person having knowledge of the facts would be aware of the true identity of a misnamed party by reading the statement of claim. If so, then the amendment should be granted unless there is prejudice that cannot be compensated for in costs or by an adjournment: Spirito Estate v. Trillium Health Centre, 2007 CanLII 41901 (ON SC) at para. 3 (aff’d 2008 ONCA 762).
[12] When a plaintiff moves to correct its own naming, the focus is on whether the “new” plaintiff was an intended plaintiff when the action was commenced and whether the defendant reasonably ought to have been aware of which entity was pointing the litigating finger in its direction: Dealer’s Choice Preferred Collision Centre Inc. v. Kircher, 2021 ONSC 8261 (Div Ct) at para. 2.
[13] The plaintiff argues that this is a case of true misnomer, whereby a “clerical error” in the APS was carried through to the statement of claim, but that the defendant was in no way misled as to the true identity of the plaintiff. The defendant argues that there was no misnomer. Rather, Denis Vranich is argued to have made a specific decision to commence this action in the same name as the named buyer under the APS, and that it was never his intention for Urban Inc. to hold title to the property.
[14] I am satisfied that Urban Inc. was the intended plaintiff when this action was commenced. Denis Vranich, who is the sole director and officer of Urban Inc., swore the supporting affidavit on the plaintiff’s motion. In it, at paras. 7 and 9, Mr. Vranich explains the error as follows:
It was pointed out to me by opposing counsel on my original examination for discovery which took place on September 25, 2018, that the APS identified the Buyer as "Urban Life Residential, In Trust". That is in error. The Buyer should have been identified by its proper name as Urban Inc. This was a clerical error made on the part of myself and my agent who was acting for me at that time.
The same error that was made in the APS was also made in the statement of claim in this action. The title of proceeding should have referenced Urban Inc. and not “Urban Life Residential, In Trust”.
[15] During his examination for discovery, Mr. Vranich was examined on “Urban Life Residential” not being a legal entity. The examination was prior to any pleadings issue being raised. Mr. Vranich maintained that “Urban Life Residential” was a corporation. He specifically deposed that it was the operating name for 2008042 Ontario Inc., which is Urban Inc. Although Mr. Vranich was incorrect in his stated belief that it was a registered business name (since it was not formally registered until after these motions had been brought), in my view, that is immaterial for the purposes of the plaintiff’s motion. His evidence supports that the intention was for Urban Inc. to be the plaintiff.
[16] The statement of claim, as pleaded, is consistent with the plaintiff’s position that Urban Inc. was the intended plaintiff. Notably, para. 2 of the claim expressly pleads, “The plaintiff is a corporation incorporated pursuant to the laws of the Province of Ontario.”
[17] The defendant argues that, during cross-examination, Mr. Vranich admitted that “Urban Life Residential, in Trust”, is not Urban Inc. In my view, there was no such admission. The defendant relies on a response of “okay” as agreement to examining counsel’s proposition that Mr. Vranich had previously agreed that Urban Life Residential, in trust, was not Urban Inc. However, “okay” is far from a definitive agreement and there are other instances during Mr. Vranich’s cross-examination where he connects the named buyer and Urban Inc.
[18] The defendant also points to the response by plaintiff’s counsel to a request made by the defendant’s lawyers under subrule 15.02(1) of the Rules. That subrule permits a person served with a statement of claim to request that the lawyer named in the claim as the plaintiff’s lawyer deliver a notice declaring who authorized the commencement of the proceeding. A request was made in December 2021 (arguably much broader than contemplated by subrule 15.02(1)), in response to which plaintiff’s counsel confirmed that Urban Inc. is the plaintiff and that she had authority from Urban Inc. to commence and proceed with the action.
[19] The defendant argues that I should read the use of present tense (“have authority”) in the response as being carefully worded, submitting that I should infer that the instructions to commence the action were not from Urban Inc. I am unconvinced by this overly-semantic argument. The cross-examination of Denis Vranich on the response did not yield any evidence clearly supporting the defendant’s position that Mr. Vranich intentionally directed that “Urban Life Residential, In Trust” be the plaintiff instead of “Urban Life Residential Inc., In Trust”. Drawing an inference is discretionary. I do not agree that the requested inference is reasonably or sufficiently supported by the record before me. I decline to draw it.
[20] I am, in any event, satisfied that the defendant was reasonably aware of which entity was pointing the litigation finger in its direction. The defendant’s own statement of defence is consistent with the plaintiff’s position. Specifically, at para. 1 of the defence, the defendant admitted the allegation that the plaintiff is a corporation, then added a clarification at para. 4. That clarification states, “The admission regarding paragraph 2 is subject to the Plaintiff being one and the same as Urban Life Residential Inc., Ontario Corporation Number 2008042.”
[21] In my view, the statement at para. 4 of the defence is significant. It acknowledges that, when pleading, the defendant knew and was not confused about the identity of the intended plaintiff, despite “Inc.” not being included. That pleading was delivered six weeks after the parties underlying dispute arose.
[22] I am reinforced in my view that there was no confusion over who was understood to be the named plaintiff by the defendant’s affidavit sworn on January 31, 2017 in opposition to the prior motion for a CPL. The affidavit was sworn by Barbara Di Pasquale, the sole director, officer, and shareholder of the defendant. Ms. Di Pasquale’s affidavit, at paras. 28-32 in particular, support that the defendant viewed the named plaintiff to be Urban Inc., which Ms. Di Pasquale believed to be a shell corporation.
[23] The defendant argues that the record before me supports that it reasonably believed it was contracting with the named plaintiff, and not Urban Inc. However, whether the defendant understood who was suing it is a separate matter from whether Urban Inc. is, in fact, the proper party to the APS and whether it has standing to enforce it. The latter are disputed factual and legal issues going to the merits of the claim and defences. Even if the underlying evidence supports the defendant’s position on those issues, it does not change that the defendant, in its own pleading and subsequent sworn evidence, acknowledged its understanding that Urban Inc. was the intended plaintiff.
[24] I am mindful that the defendant argues that the acknowledgement in para. 4 of its statement of defence and counterclaim does not amount to a legal admission and, if it does, the defendant is seeking leave to withdraw that admission. However, whether or not it constitutes a legal admission does not alter my view.
[25] On the plaintiff’s motion, my focus is whether a person in the defendant’s position, having knowledge of the facts, would reasonably be aware of the true identity of the allegedly misnamed plaintiff. That requirement has been met. Regardless of the ultimate disposition on Urban Inc.’s standing as a proper plaintiff to advance the claim, the defendant twice acknowledged shortly after this action was commenced that it understood Urban Inc. was the corporation referenced in para. 2 of the statement of claim, which described the plaintiff as a corporation.
[26] The defendant further opposes the amendment on the basis that “Urban Life Residential Inc., In Trust” is no more of an entity than “Urban Life Residential, In Trust”. The defendant submits that neither of them are valid trusts and thereby are not legal entities capable of maintaining an action. I am not convinced that the addition of “in trust” has any bearing on disposition of the plaintiff’s motion.
[27] The plaintiff has put forward case law supporting that adding the words “in trust” to a named buyer in an agreement of purchase and sale does not change the buyer’s liability to the seller unless there is a valid trust and the buyer is acting as agent for another person. The Court of Appeal has agreed that “there is no ‘legal magic’ to the insertion of the words ‘In Trust’ in a commercial document”: Bertoia v. McKenzie Investments and Leasehold Ltd., 2010 ONCA 664 at para. 7. The case law tendered by the plaintiff supports that the words “in trust” do not themselves exculpate a party from personal liability: Marathon Realty Co. v. Ginsberg, [1981] OJ No 1140, 1981 CarswellOnt 510 at para. 22; Shuper v. Noble (1982), 38 OR (2d) 64, 1982 CanLII 1821. I am not convinced that keeping “in trust” in the plaintiff’s naming in the title of proceedings should be viewed any differently.
[28] In my view, this is a case of misnomer. The requested amendment to the plaintiff’s name in both the statement of claim and reply and defence to counterclaim should thereby be granted pursuant to subrule 5.04(2), unless there is prejudice that cannot be compensated by costs or an adjournment.
[29] The balance of requested amendments to the statement of claim seek to add declaratory relief dealing with Urban Inc. being the buyer or else amending or rectifying the APS to reflect Urban Inc. as the buyer, as well as adding statements to the claim about the “clerical error” of not including “Inc.” in the APS. The defendant argues that these disclose no reasonable cause of action. In my view, the plaintiff is not seeking to plead a new cause of action. The proposed additions, including the additional relief, are ancillary to the position that Urban Inc. was the buyer. The cause of action remains that the defendant anticipatorily beached or repudiated the APS.
[30] I need not deal with the defendant’s arguments that the amendments are unsupported by any evidence of the alleged “clerical error”. The plaintiff is not required to prove proposed amended allegations on a pleadings motion. These amendments fall under rule 26.01 of the Rules, meaning that granting leave for them is mandatory, unless there is prejudice that cannot be compensated by costs or an adjournment.
[31] No prejudice from the amendments has been established. Although the defendant has cited several cases supporting that expiry of a limitation period is a form of non-compensable prejudice, it is only relevant in cases of adding or substituting a new plaintiff. In a case of misnomer, courts have held that expiry of a limitation period cannot be set up as “prejudice” where the initial claim was made within the limitation period: Spirito, supra at para. 3. Since I have found this to be a case of misnomer and do not view the amendments as adding any new cause of action, expiry of the limitation period is not prejudice in this case.
[32] Delay is also not an issue here. In my view, the defendant’s acknowledgement that the plaintiff and Urban Inc. were understood to be the same (found in both the statement of defence and Ms. Di Pascquale’s affidavit sworn January 31, 2017) was reasonably relied upon by the plaintiff in not seeking to formally correct the title of proceedings sooner. Despite what was discussed during discoveries on the named buyer, in my view, there was no clear challenge to the named plaintiff until December 2021, crystallized by the rule 15.02(1) request. I do not find the delay in seeking an amendment after the named plaintiff was challenged to be inordinate. There is no evidence of any actual prejudice arising from it.
[33] Since I find no non-compensable prejudice in this case, I am granting the requested amendments.
Should the time to file a trial record be extended?
[34] Extending the time to file a trial record is unopposed by the defendant, subject to the order also including an extension in the time for the defendant to file a trial record in the third party proceeding. The third parties have taken no position on this motion. I am accordingly granting the extension, which I would have found is appropriate in any event.
Is acknowledging Urban Inc. in the defence a legal admission requiring withdrawal?
[35] Rule 51.05 of the Rules provides that an admission made in a pleading may be withdrawn on consent or with leave of the court. An admission in a pleading must be an unambiguous and deliberate concession to the other side and not simply the result of words chosen. A factual pleading made in error cannot fairly be characterized as a deliberate admission: Vale Canada Limited v. Solway Investment Group Limited, 2021 ONSC 7562 at para. 137.
[36] The defendant argues that its acknowledgement in para. 4 of its statement of defence regarding Urban Inc. is not a legal admission requiring withdrawal. I agree. The record does not support that the defendant was doing anything more than acknowledging its understanding of who was suing it. There was no material admission of fact that Urban Inc. was the purchaser in the APS or has standing to enforce it. The only admission of fact was conditional, namely that the plaintiff is a corporation, subject to the plaintiff being Urban Inc.
[37] Particularly given my finding above that there was a misnomer and Urban Inc. was intended and reasonably understood to be the plaintiff, the defendant’s conditional admission about the plaintiff’s corporate status is not an admission requiring withdrawal. The defendant thereby need not meet the legal test for withdrawal to amend it.
Should the defendant be granted leave to amend its statement of defence?
[38] Having found that the conditional admission is not a legal admission requiring withdrawal, I find no basis to refuse the amendments sought by the defendant to its statement of defence and counterclaim. Those amendments only set out the allegations supporting that Urban Inc. was not a party to the APS and has no standing to enforce it. I find no prejudice to the plaintiff from that defence position being pleaded. Since rule 26.01 mandates that I grant leave to amend unless there is non-compensable prejudice, I am granting that leave.
[39] Some of the defendant’s proposed amendments contemplate the plaintiff remaining “Urban Life Residential, In Trust” and that plaintiff being distinct from Urban Inc. Having granted the plaintiff’s requested amendments, some of the amendments requested by the defendant are now in conflict with the revised statement of claim. To the extent that further amendments to the statement of defence and counterclaim (or to the reply and defence to counterclaim) are required, each party’s right to respond to an amended pleading is addressed in rule 26.05 of the Rules. That rule will permit both parties to further amend those pleadings, if required.
[40] The plaintiff has asked that, if I grant the defendant leave to amend its statement of defence, I make my order without prejudice to the plaintiff seeking additional amendments to its statement of claim. I am not convinced that is necessary. As already noted, rule 26.05 permits the plaintiff to amend its reply and defence to counterclaim in response to being served with the amended statement of defence and counterclaim. I see no reason why further amendment to the statement of claim is required, unless a response by way of an amended reply and defence to counterclaim would result in an inconsistency with the allegations in the statement of claim. Subrule 25.06(5) does preclude the plaintiff from making an allegation that is inconsistent with its prior pleading, requiring instead that the first pleading be amended.
[41] If directions are required to give effect to my order granting both parties leave to amend their pleadings, then the parties may arrange a case conference with me to address any pleading conflict that they cannot resolve themselves.
Is this case appropriate for summary judgment?
[42] The defendant seeks summary judgment dismissing this action on the basis that there is no valid plaintiff. The primary argument is that there was no valid trust and, accordingly, no valid purchaser under the APS. Because that issue is factually tied to whether Urban Inc. was the actual purchaser, I have also considered the defendant’s position that Urban Inc. was not and was never intended to be the purchaser.
[43] This is not an appropriate case for summary judgment. Whether the lack of a valid trust is fatal to the claim and whether Urban Inc. was, in fact, the party to the APS or otherwise has standing to enforce the APS are genuine issues requiring a trial. In my view, they cannot be fairly or justly be resolved on the record before me.
[44] Subrule 20.02(2) of the Rules directs that summary judgment be granted if the court is satisfied that there is no genuine issue requiring a trial. There will be no genuine issue requiring a trial when the court is able to reach a fair and just determination on the merits. This will be the case when the process allows the court to make the necessary findings of fact, allows the court to apply the law to the facts, and is a proportionate, more expeditious, and less expensive means to achieve a just result: Hryniak v. Mauldin, 2014 SCC 7 at para. 49.
[45] There is a two-stage assessment for deciding if summary judgment should be granted, which has been set out by the Supreme Court of Canada in Hryniak at para. 66.
[46] The first stage requires the court to determine if there is a genuine issue requiring trial based only on the evidence in the record. That is done without using the fact-finding powers provided in subrules 20.04(2.1) and (2.2), which provide for evidence to be weighed, credibility to be assessed, inferences to be drawn, and further oral evidence. If the evidence required to fairly and justly adjudicate the dispute is available on the record and summary judgment is a timely, affordable and proportionate procedure, then summary judgment may be granted.
[47] The second stage is triggered if there appears to be a genuine issue requiring a trial. The court should then determine if the need for a trial can be avoided by using the discretionary powers under subrules 20.04(2.1) and (2.2). Those may be used if doing so is not against the interest of justice. Use of the powers will not be against the interest of justice if they will lead to a fair and just result and will serve the goals of timeliness, affordability and proportionality in light of the litigation as a whole.
[48] As an associate judge, I do not have access to the fact-finding powers in subrule 20.04(2.1) and cannot direct further oral evidence under subrule 20.04(2.2). Both subrules provide those powers exclusively to a judge. The Divisional Court has confirmed that the enhanced powers are not available to an associate judge in ordinary civil litigation: R&V Construction Management Inc. v. Baradaran, 2020 ONSC 3111 (Div Ct) at para. 23. Subrule 20.04(4) also provides that, if the only genuine issue requiring a trial is a question of law, an associate judge may not decide it. Only a judge is entitled to determine the question and grant judgment accordingly.
[49] The effect of the foregoing is that if I identify a genuine issue requiring a trial, then I cannot grant summary judgment. That is the case even if using the enhanced powers would fairly resolve the issue in a timely, affordable, and proportionate manner, since I am legislatively precluded from exercising them.
[50] I agree with the defendant’s argument that there is no genuine issue requiring a trial on whether a valid trust exists. There are four requirements for establishing a valid trust: (i) the relevant parties to the trust must have capacity; (ii) there must be certainty of intention to create a trust, certainty of subject-matter, and certainty of objects; (iii) the trust must be constituted, meaning the trustees must hold legal title to the trust property; and (iv) the required formalities must be met: Rubner v. Bistricer, 2019 ONCA 733 at para. 49. To be valid, trusts must have a beneficiary capable of enforcing the trust: Carroll v. Toronto-Dominion Bank, 2021 ONCA 38 at paras. 27-28.
[51] On the record before me, there is no genuine issue that the requirements for a valid trust have not been met. If nothing else, there is no evidence of any identified beneficiary and it is undisputed that no beneficiary was designated. However, that is not the issue that matters for this motion.
[52] What remains a genuine issue for trial, in my view, is whether a party is able to enter into an agreement as a purported trustee without any beneficiary and whether doing so renders a contract void or voidable. Defendant’s counsel conceded that it is a common real estate practice for a purchaser to enter into an agreement of purchase and sale in trust for a corporation to be named or incorporated. In this case, the plaintiff points out that article A.13 of the APS expressly contemplates the buyer having the right to assign the APS at any time prior to closing “to any person, persons or corporation, either existing or to be incorporated” (emphasis added).
[53] I was directed to no case law supporting that a party cannot validly form a contract by naming a buyer as trustee in the absence of a valid trust having already been established. As already discussed above, in Marathon Realty Co., the court held that the words “in trust” do not change the liability of the party named in a contract absent an actual trust. There is, accordingly, some authority for the plaintiff’s position that the lack of a valid trust is not a clear bar to its claim. Deciding that legal issue is a matter better addressed at trial on a complete evidentiary record.
[54] Since I have granted the misnomer amendment, if Urban Inc. is not a party to the APS and has no other standing to enforce the APS, then the claim will fail. There is evidence supporting the defendant’s position that Denis Vranich was not clearly acting as an officer, director, or agent of any corporation when negotiating and entering into the APS. Urban Inc. is not mentioned in any of the contemporaneous documents, Urban Inc. did not issue any cheques or payments on the transaction, and it is conceded that Urban Inc. was not specifically mentioned to the real estate lawyers involved in the transaction. On the whole, the record tends to support that Urban Inc. was not expressly mentioned at any point prior to litigation commencing.
[55] Nevertheless, that is not an end to the matter. I must be satisfied that there is no genuine issue requiring a trial that Urban Inc. is not the purchaser in the APS and that Urban Inc. lacks standing to enforce the APS. I am not. I find that there is a genuine issue for trial on who were the parties to the APS and, since Urban Inc. is not expressly identified as the buyer, whether Urban Inc. may enforce the APS or whether the APS is void or voidable.
[56] Case law has consistently held that both parties have a best foot forward evidentiary obligation on a summary judgment motion, but that obligation does not change the burden on the moving party to demonstrate that there are no genuine issues requiring a trial. It follows that the evidence tendered (or not tendered) by a moving party is significant in deciding a summary judgment motion.
[57] Denis Vranich has given unequivocal evidence that Urban Inc. was the intended buyer. The defendant submits that it was misled as to the identity of the buyer by all of the transaction documents and real estate lawyer correspondence referring to “Urban Life Residential, in Trust”. The defendant argues that these support a finding that it reasonably believed the APS was with “Urban Life Residential, in Trust” and not “Urban Life Residential Inc., in Trust”.
[58] The plaintiff correctly points out that there is no direct evidence from the defendant setting out its understanding at the time. Barbara Di Pasquale’s affidavit does discuss what the APS and other documents say about the buyer and that no corporation was mentioned. She does not state that she was misled about who the purchaser was. Ms. Di Pasquale’s affidavit is silent on what she understood about the buyer at the time of signing the APS. She did not give any evidence on with whom the defendant was contracting and who Ms. Di Pasquale understood would be fulfilling the obligations under the APS (and liable to the defendant in the event of breach). The affidavit also does not outline what, if any, discussions occurred about the purchaser’s identity and whether a corporation was involved.
[59] The defendant submits that, in a perfect world, the defendant would have confirmed precisely to whom the property would be sold before signing the APS and assured itself that the buyer had enough money and was not bankrupt. That, the defendant submits, did not happen in this case. Instead, no one questioned or analysed who the buyer was.
[60] My difficulty with that argument is that it is unsupported by any direct evidence. It is, at best, inferred from the record. In addition to not addressing her understanding of who the parties to the APS were, Barbara Di Pasquale gave no evidence on what due diligence or investigations about the buyer were done, if any. The defendant has the primary burden on this motion. There is insufficient evidence from the defendant to support a fair inference that the identity and legal capacity of the purchaser was never considered.
[61] The defendant submits that I should draw an adverse inference for the plaintiff’s failure to tender evidence on Denis Vranich intending that a corporation would be the contracting party and that the named purchaser was not just a non‐entity, such as evidence from the real estate agent or real estate lawyer. It is certainly open to me to draw an adverse inference from failing to call a material witness, but not all witnesses with relevant evidence to give are material witnesses.
[62] Neither the real estate agent nor real estate lawyer have been demonstrated to be material witnesses on the issue of the intended purchaser. Denis Vranich is certainly a material witness on that issue. He has given evidence on his intentions, albeit that the defendant submits I should not accept it. There is, however, nothing before me supporting that either Mr. Vranich’s real estate agent or lawyer have any evidence on who was intended to be the purchaser, let alone that they are in a better position than Mr. Vranich to provide evidence on the subject. Also, no argument was made for why the agent and the lawyer were not equally available to the defendant as witnesses on this motion, for which the defendant has the primary evidentiary burden.
[63] Denis Vranich has also given evidence that “Urban Life Residential” is a business name for Urban Inc. Although Mr. Vranich was incorrect at the time of his discovery about it being a registered business name, that may be ameliorated by s. 7(3) of the Business Names Act, RSO 1990, c B.17. That subsection provides that no contract is void or voidable by reason only that it was entered into by a person who was in contravention of the act or its regulations at the time the contract was made. If “Urban Life Residential” is an unregistered business name for Urban Inc., then the failure to register it is not necessarily fatal to enforceability of the APS.
[64] To counter that position, the defendant has put forward evidence of the use of “Urban Life Residential” as an “umbrella name” for marketing Denis Vranich’s businesses more broadly. The defendant argues that the name is not a business name for Urban Inc., pointing to cross-examination testimony from Mr. Vranich agreeing that references to jobs identified online as being done by “Urban Life Residential” were not done by Urban Inc. However, I am not convinced that Mr. Vranich giving that acknowledgement is enough to find there is no genuine issue on whether “Urban Life Residential” was a business name for Urban Inc.
[65] In my view, Urban Inc.’s standing as a party to the APS and its ability to enforce it are genuine issues requiring a trial. It appears to me that deciding Urban Inc.’s standing will require an assessment of the credibility of both Mr. Vranich and Ms. Di Pasquale on their understanding of the contract and of Mr. Vranich’s evidence that Urban Inc. was the intended plaintiff and that “Urban Life Residential” was a business name for that entity. There is also insufficient evidence in the record before me on the factual background to inform what a reasonable person in the position of Mr. Vranich and Ms. Di Pasquale would have understood. Even if I had access to the enhanced powers in subrule 20.04(2.1) of the Rules (which I do not), I would not find it in the interests of justice to make credibility findings or draw inferences on the record before me.
[66] Since the defendant has not met its burden, I am dismissing the relief seeking summary judgment.
Should security for costs be ordered?
[67] In seeking security for costs, the defendant relies on subrule 56.01(1)(d) of the Rules. That subrule provides that where it appears the plaintiff is a corporation or a nominal plaintiff, and there is good reason to believe that the plaintiff has insufficient assets in Ontario to pay the costs of the defendant, the court may make such order for security for costs as it is just.
[68] In this case, the defendant bears the initial evidentiary burden of satisfying me that it “appears” that there is “good reason to believe” that the plaintiff has insufficient assets in Ontario to pay the defendant’s costs. If that initial onus is satisfied, then the onus shifts to the plaintiff to demonstrate that an order for security for costs would be unjust.
[69] Determining the justness of a security for costs order requires a holistic approach, in which all the circumstances of the case are examined. My assessment is to be guided by the overriding interests of justice. Although various factors have been outlined by courts to be considered, such as merits of the claim, delay in bringing the motion, the impact of a defendant’s conduct on the available assets of the plaintiff, access to justice concerns, and the public importance of the litigation, those factors are not static. Each case must be considered and decided on its own facts: Yaiguaje v. Chevron Corporation, 2017 ONCA 827 at paras. 22-25.
[70] The defendant argues that there is no evidence before the court that a trust exists (whether “Urban Life Residential, in trust” or “Urban Life Residential Inc., in trust”) and no evidence that the trust has any assets in Ontario. It submits that the plaintiff, as a bare trust, is a nominal plaintiff with no beneficial ownership in any property.
[71] Since I have granted the plaintiff’s requested amendment, Urban Inc. is now the plaintiff. For reasons already discussed, I am not convinced that the addition of “in trust” changes that. In any event, Urban Inc. has acknowledged that it will be directly liable for costs of this action if the defendant succeeds. Regardless of any ultimate findings made at trial on the “in trust” issue, it is thereby open to the trial judge to rely on that acknowledgment and hold Urban Inc. (not “in trust”) directly liable for the defendant’s costs of the action. In my view, given Urban Inc.’s acknowledgment, it would be inconsistent and unfair for Urban Inc. to later take a contrary position at trial that it should not be liable for costs.
[72] The record supports that Urban Inc. has sufficient assets in Ontario to satisfy an adverse costs award. Denis Vranich’s evidence is that Urban Inc. continues to own a property in Ancaster, which was appraised in 2017 with a market value of $8.4 million and against which only $4 million in charges are registered. The evidence of Barbara Di Pasquale that the property was sold in 2018 is based solely on information from unverified online searches that, in my view, Mr. Vranich’s evidence fully rebuts.
[73] Although the defendant argues that the property valuation is not current, nothing before me supports that the property has or is likely to have substantially depreciated in value. Based on what is before me, there would also need to have been depreciation in excess of $4 million for there to be no equity in the property.
[74] The defendant further argues that Urban Inc. may sell or further encumber the Ancaster property. That is not relevant to the test. The Ancaster property is an exigible asset demonstrated to have more than sufficient equity to satisfy any adverse costs award that may be made. That is enough. It does not matter in deciding a security for costs motion that a plaintiff’s available assets may possibility change, unless there is convincing evidence that the plaintiff is or will be disposing of its available assets. While the Ancaster property may have been listed for sale in 2018, there is no evidence supporting any current or pending intention to sell or further encumber it now.
[75] I find that the defendant has not met its threshold onus of demonstrating good reason to believe the plaintiff lacks sufficient assets in Ontario to satisfy a costs award. In the circumstances of this case, security for costs is not warranted.
Should the CPL be discharged?
[76] My authority to discharge a CPL is found in s. 103 of the Courts of Justice Act, RSO 1990 c C.43 and rule 42.01 of the Rules. There is a well-established two-part analysis set out in the oft-cited decision of Perruzza v. Spatone, 2010 ONSC 841 at para. 20. First, the court must determine if there is a triable issue regarding the plaintiff’s claimed interest in the subject property. Second, if the court is satisfied that the threshold requirement has been met, then it must consider whether the equities favour the continued registration of the CPL. I may discharge a CPL on any ground that I consider just.
[77] Whether or not to discharge a CPL is a discretionary decision. My discretion is to be exercised having regard to relevant factors in the circumstances of this particular case. Those relevant considerations 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 from the CPL: Perruzza, supra at para. 20. These factors are non-exhaustive.
[78] I have found genuine issues requiring a trial on whether the APS is void or voidable by reason of the buyer under the APS being “in trust” with no valid trust . I have also found genuine issues for trial on whether Urban Inc. is the proper party to the APS and whether it is able to enforce the APS without a named beneficiary. In my view, it follows that there remains a triable claim to an interest in the subject property.
[79] The defendant argues that it was made an express term of the consent CPL order that “the parties will be expeditious in bringing the within action to trial”, and that the plaintiff’s failure to move the action forward “expeditiously” warrants discharge of the CPL.
[80] There is evidence supporting delayed answers to undertakings by the plaintiff, limited communications in 2019, delayed response to the defendant’s proposed discovery plan after the defendant’s separate action was converted to a third party action, and lack of movement by the plaintiff between March and November 2021. The defendant argues that these delays have prevented sale of the property and Ms. Di Pasquale’s ability to retire.
[81] Importantly, the “expeditious” term of the consent CPL places the obligation of moving expeditiously to trial on both parties, not just the plaintiff. In its responding factum, the plaintiff has constructed a timeline of the proceeding based on the evidence of Barbara Di Pasquale and Denis Vranich. It shows consistent and, in my view, sufficiently expeditious movement until the end of September 2018. At that point, the defendant commenced its separate claim. It was not consolidated into this proceeding as a third party claim with pleadings closed until December 2019. Documentary and oral discoveries in the third party action proceeded over the course of 2020. A mediation then occurred in March 2021.
[82] Insofar as the defendant complains about the delay in the plaintiff’s answers to undertakings, the record supports that the defendant itself did not deliver its own answers to undertakings until after the plaintiff. Neither party was expeditious in answering undertakings.
[83] I agree with the defendant that there is a delay in this action through 2019, but that delay overlaps with the separate proceeding commenced by the defendant, which ultimately became a third party proceeding in this action. That separate action was clearly related to this action and naturally impacted it, but the plaintiff had no control over that proceeding. Ms. Di Pascquale has not explained why a third party action was not commenced from the outset, the delay in closing pleadings, and the delay in having it consolidated into this action. The “delay” in 2019 and 2020 is the period in which that proceeding was brought up to trial readiness, after which all parties attended the mandatory mediation with reasonable promptness.
[84] There is unexplained delay between that mediation and the plaintiff’s attempted set down in November 2021. That, though, is the only truly unexplained period of delay. In my view, it is not inordinate in the overall litigation and is not itself sufficient to support discharge of the CPL in all the circumstances.
[85] For reasons already discussed, I do not accept that the plaintiff is a shell corporation or nominal plaintiff. Urban Inc. will be available to satisfy a costs award. The “shell corporation” factor thereby does not assist the defendant.
[86] The defendant also argues that the property is not unique, pointing to allegedly comparable properties in Toronto and Oakville that have sold since litigation commenced. However, as the Court of Appeal has observed, “The time when a determination is to be made as to whether a property is unique is the date when an action or act took place and the wrong party must decide whether to keep the agreement alive by seeking specific performance or accept the breach and sue for damages.”: John E. Dodge Holdings Ltd. v. 805062 Ontario Ltd. (2003), 63 OR (3d) 304, 2003 CanLII 52131 (ON CA) at para. 40.
[87] There is no evidence of any alternative, comparable properties at the time of the alleged breach. The record does not support that any of the Toronto or Oakville properties were available to be purchased in late 2016. Notably, in Barbara Di Pascquale’s original responding affidavit sworn January 31, 2017 in opposition to the plaintiff’s CPL motion, there is no evidence of available comparable properties other than an unsubstantiate allegation that “There are other properties with similar development potential in the area.”
[88] Granting a discharge is discretionary. I am not satisfied that the equities of this case favour a discharge of the consent CPL at this time.
Disposition
[89] For the above reasons, I am granting leave to the plaintiff to amend its pleadings in accordance with the drafts at Exhibits A and B of the affidavit of Angela Ward sworn July 12, 2022. I am also granting leave to the defendant to amend its statement of defence and counterclaim in accordance with the draft at Appendix A to its notice of cross-motion.
[90] I am further extending the deadline for both the plaintiff and the defendant to deliver trial records to March 31, 2022. Two months is in keeping with the “expeditious” term of the prior order and should be sufficient time for the parties to effect amendments to the pleadings and set both the main action and third party action down for trial.
[91] The balance of the defendant’s motion is dismissed.
[92] Draft orders were not submitted on either motion. Although typically parties are to follow the process outlined in rules 59.03 and 59.04 of the Rules for preparing, approving, settling (if necessary), and issuing an order through the registrar, in the particular circumstances of these motions, I will settle the orders arising from these motions myself. Draft orders for each motion, approved as to form and content, may be submitted for my review through my Assistant Trial Coordinator (ATC). If the parties cannot agree on a form of order, a case conference with me may be arranged to settle them.
Costs
[93] The parties have already exchanged costs outlines. I encouraged the parties to agree on costs. If they cannot, then written costs submissions shall be exchanged and filed. The plaintiff shall serve its costs submissions by February 8, 2023. The defendant shall serve its responding costs submissions by February 17, 2023. If the defendant is seeking its costs of either motion, then the plaintiff shall be entitled to serve reply costs submissions, if any, by February 24, 2023. Otherwise, there shall be no reply submissions.
[94] Costs submissions shall not exceed four (4) pages for initial submissions and two (2) pages for reply, excluding any offers to settle and case law, and shall be submitted by email directly to my ATC, with proof of service. Unless costs submissions are exchanged and filed in accordance with these directions, the parties shall be deemed to have agreed on costs.
ASSOCIATE JUSTICE TODD ROBINSON
DATE: January 26, 2023