Reasons for Decision

Court File No.: CV-24-00723170-0000
Date: 2025-03-14
Superior Court of Justice – Ontario

RE: Condoman Developments Inc., 1808176 Ontario Inc. and Howard Youhanan, Plaintiffs
– and –
Cannect International Mortgage Corporation, Cannect Mortgage Investment Corporation, Lookout Condoman Developments Inc., Theodopolis Development Corp., 2638169 Ontario Inc., 2638170 Ontario Inc. and Marcus Tzaferis, Defendants

Before: E.M. Morgan
Counsel:
Denna Jalili, for the Plaintiffs/Defendants by Counterclaim
Matthew Gottlieb, Philip Underwood, and Dantae Gagnier, for the Defendants/Plaintiffs by Counterclaim, Cannect International Mortgage Corporation, Cannect Mortgage Investment Corporation and Marcus Tzaferis
Heard: March 5, 2025

I. Background

[1] The Plaintiff, Howard Youhanan, and his companies, Condoman Developments Inc. and 1808176 Ontario Inc. (“Condoman”), are real estate developers and investors who owe over $46,000,000 to the Defendant, Marcus Tzaferis, and his companies, Cannect International Mortgage Corporation and Cannect Mortgage Investment Corporation (“Cannect”). The loan has been in default since early 2023.

[2] Tzaferis and/or Cannect have been enforcing their rights by selling under Power of Sale properties belonging to Youhanan and/or Condoman on which they have registered mortgages. In this motion, Youhanan and Condoman seek to enjoin that mortgage enforcement, arguing that the loans are not really loans and are not enforceable as such.

citation: "Condoman Developments Inc. v. Cannect International Mortgage Corporation, 2025 ONSC 1641" parties: "Condoman Developments Inc., 1808176 Ontario Inc. and Howard Youhanan v. Cannect International Mortgage Corporation, Cannect Mortgage Investment Corporation, Lookout Condoman Developments Inc., Theodopolis Development Corp., 2638169 Ontario Inc., 2638170 Ontario Inc. and Marcus Tzaferis" party_moving: "Condoman Developments Inc., 1808176 Ontario Inc. and Howard Youhanan" party_responding: "Cannect International Mortgage Corporation, Cannect Mortgage Investment Corporation, Lookout Condoman Developments Inc., Theodopolis Development Corp., 2638169 Ontario Inc., 2638170 Ontario Inc. and Marcus Tzaferis" court: "Superior Court of Justice" court_abbreviation: "ONSC" jurisdiction: "Ontario" case_type: "motion" date_judgement: "2025-03-14" date_heard: "2025-03-05" applicant:

• "Condoman Developments Inc."
• "1808176 Ontario Inc."
• "Howard Youhanan" applicant_counsel:
• "Denna Jalili" respondent:
• "Cannect International Mortgage Corporation"
• "Cannect Mortgage Investment Corporation"
• "Lookout Condoman Developments Inc."
• "Theodopolis Development Corp."
• "2638169 Ontario Inc."
• "2638170 Ontario Inc."
• "Marcus Tzaferis" respondent_counsel:
• "Matthew Gottlieb"
• "Philip Underwood"
• "Dantae Gagnier" judge: "E.M. Morgan" year: 2025 decision_number: 1641 file_number: "CV-24-00723170-0000" source: "https://www.canlii.org/en/on/onsc/doc/2025/2025onsc1641/2025onsc1641.html" cited_cases: legislation:
  • title: "Ontario Business Corporations Act, RSO 1990, c. B.16" url: "https://www.ontario.ca/laws/statute/90b16" case_law:
  • title: "RJR-MacDonald Inc. v. Canada (Attorney General), [1994] 1 SCR 311" url: "https://www.canlii.org/en/ca/scc/doc/1994/1994canlii117/1994canlii117.html"
  • title: "Circuit World Corp. v. Lesperance" url: "https://www.canlii.org/en/on/onca/doc/1997/1997canlii1385/1997canlii1385.html"
  • title: "National Bank of Canada v. Guibord, 2021 ONCA 864, para 6" url: "https://www.canlii.org/en/on/onca/doc/2021/2021onca864/2021onca864.html#par6"
  • title: "Arnold v. Bernstein, [1971] 1 OR 467" url: "https://www.canlii.org/en/on/onsc/doc/1970/1970canlii245/1970canlii245.html"
  • title: "Pembroke Developments Inc. v. Singh, 2024 ONSC 5428, para 12" url: "https://www.canlii.org/en/on/onsc/doc/2024/2024onsc5428/2024onsc5428.html#par12"
  • title: "HJ Sutton Industries Ltd. v. Assured-Packaging Inc., 2011 ONSC 3567, para 26" url: "https://www.canlii.org/en/on/onsc/doc/2011/2011onsc3567/2011onsc3567.html#par26"
  • title: "Berkshire Funding Initiatives Ltd. v. Trinity Capital Corp., para 2" url: "https://www.canlii.org/en/on/onsc/doc/2002/2002canlii19464/2002canlii19464.html#par2" summary: > The plaintiffs, Condoman Developments Inc., 1808176 Ontario Inc., and Howard Youhanan, sought an interlocutory injunction to restrain the defendants, including Cannect International Mortgage Corporation and Marcus Tzaferis, from enforcing mortgage remedies (power of sale) over several Toronto development properties. The plaintiffs argued the loans were not true loans but equity investments, and that the mortgages were unenforceable. The court found the evidence and documentation overwhelmingly established the transactions as enforceable loans, not equity investments, and that the plaintiffs were sophisticated parties who knowingly entered into the agreements. The court dismissed the motion for an injunction, finding no serious issue to be tried, no irreparable harm, and that the balance of convenience favoured the defendants. interesting_citations_summary: > The decision provides a clear application of the RJR-MacDonald test for interlocutory injunctions in the context of commercial mortgage enforcement, emphasizing the reluctance of courts to interfere with validly executed security absent compelling reasons. The court also discusses the legal irrelevance of financial necessity as duress in commercial lending and the effect of delay and hollow undertakings to damages in injunctive relief. keywords:
• Condoman Developments
• Cannect International Mortgage
• Interlocutory injunction
• Mortgage enforcement
• Power of sale
• Commercial real estate
• Equity vs. debt
• RJR-MacDonald test
• Ontario Business Corporations Act
• E.M. Morgan areas_of_law:
• Civil Procedure
• Real Estate Law
• Commercial Law

Reasons for Decision

Court File No.: CV-24-00723170-0000
Date: 2025-03-14
Superior Court of Justice – Ontario

RE: Condoman Developments Inc., 1808176 Ontario Inc. and Howard Youhanan, Plaintiffs
– and –
Cannect International Mortgage Corporation, Cannect Mortgage Investment Corporation, Lookout Condoman Developments Inc., Theodopolis Development Corp., 2638169 Ontario Inc., 2638170 Ontario Inc. and Marcus Tzaferis, Defendants

Before: E.M. Morgan
Counsel:
Denna Jalili, for the Plaintiffs/Defendants by Counterclaim
Matthew Gottlieb, Philip Underwood, and Dantae Gagnier, for the Defendants/Plaintiffs by Counterclaim, Cannect International Mortgage Corporation, Cannect Mortgage Investment Corporation and Marcus Tzaferis
Heard: March 5, 2025

I. Background

[1] The Plaintiff, Howard Youhanan, and his companies, Condoman Developments Inc. and 1808176 Ontario Inc. (“Condoman”), are real estate developers and investors who owe over $46,000,000 to the Defendant, Marcus Tzaferis, and his companies, Cannect International Mortgage Corporation and Cannect Mortgage Investment Corporation (“Cannect”). The loan has been in default since early 2023.

[2] Tzaferis and/or Cannect have been enforcing their rights by selling under Power of Sale properties belonging to Youhanan and/or Condoman on which they have registered mortgages. In this motion, Youhanan and Condoman seek to enjoin that mortgage enforcement, arguing that the loans are not really loans and are not enforceable as such.