Court File and Parties

Court File No.: CV-24-00732187
Date: 2025-01-09
Court: Superior Court of Justice - Ontario

Applicant: Parkland Corporation
Respondents: 16408117 Canada Inc., Mian Abubaqr, Caledon Fuels Inc., Numberdar Holdings Inc., Narinder Khasria, Loroy LLP, Imran Akram, Ahmed Inam, Masud Raja, Peak Prime Realty Inc., and Tahir Mehmood a.k.a. Tahir Mehmood Raja

Before: Paul B. Schabas

Counsel:

• Brendan Jones and Arthur Zask, for the Applicant
• Jonathan Rosenstein, for 16408117 Canada Inc. and Mian Abubaqr
• Evan Moore and Patrick Abbott, for Caledon Fuels
• Howard Gerson, for Numberdar Holdings Inc. and Narinder Khasria
• Michael Lauricella, for Loroy LLP, Imran Akram and Ahmed Inam

Heard: 2025-01-03

Reasons on Motion

Overview

[1] This is the second proceeding arising from the Respondent Caledon Fuels Inc.’s (“Caledon”) efforts to get out of a Lease agreement with the Applicant Parkland Corporation (“Parkland”) requiring Caledon to operate an Ultramar gas station at premises owned by Caledon at 16544 Hurontario Street in Caledon, Ontario (the “premises” or the “property”).

[2] This decision deals with a motion for interlocutory relief brought by Parkland requiring Caledon and the purchaser of the premises, 16408117 Canada Inc., to comply with the negative covenants in the Lease – namely, that the gas station not operate as anything other than an Ultramar station with fuel supplied by Parkland pending further order of the Court. Parkland also seeks leave to obtain and register a certificate of pending litigation (“CPL”) against the premises. Although the motion also sought production orders, I did not hear argument on that issue and make no determination of it, which can be pursued subsequently, if necessary, by Parkland.

[3] For the reasons that follow, the motion for leave to file a CPL and for an injunction is granted.

Background

[4] Parkland is an independent supplier and marketer of fuel and petroleum products. Parkland supplies fuel to gas stations, including to those operating under the Ultramar banner, which is a Parkland brand. Until very recently, Caledon was the registered owner of the premises and operated an Ultramar gas station there.

[5] The evidence on this motion is that the investors in Caledon are, or were, the Respondents Masud Raja (“Masud”) and his brother Tahir Mehmood Raja (“Tahir”), and Noreen Asghar ("Asghar"). Asghar is a director and shareholder of Caledon. Asghar is married to Mirza Chaudhary (“Chaudhary”), who described himself on this motion as an advisor and agent of Caledon. Asghar testified that she relies on her husband to deal with all matters relating to Caledon's business. Chaudhary is also a real estate broker. The evidence on this motion supports the conclusion that Chaudhary is the controlling mind of Caledon. He is the central figure in this matter.

[6] According to Chaudhary, he has a “gentlemen’s agreement” to share profits from Caledon with Masud. Masud is also a real estate agent with the Respondent Peak Prime Realty Inc.

[7] Ijaz Ahmad ("Ijaz") was an officer and manager for Caledon. He had access to financial information and had signing authority for its bank account. Tahir signed various agreements on Caledon’s behalf. Ijaz apparently leases part of his house in Milton to Tahir.

[8] The Lease between Parkland and Caledon was initially entered into by predecessor corporations in 2015. The Lease requires that Caledon only operate the gas station as an Ultramar station, with signage provided by Parkland. The Lease includes Parkland’s renewal rights and its Right of First Refusal (“ROFR”) to purchase the premises. Caledon has no unilateral right to terminate the Lease.

[9] In January 2024 Caledon attempted to sell the property to a third party. Ijaz signed those documents on behalf of Caledon. At the same time, Chaudhary, on behalf of Caledon, unilaterally terminated the lease with Parkland and advised Parkland that Caledon was de-branding the gas station. Parkland promptly issued an Application in the Superior Court seeking injunctive relief. An interim injunction was granted on consent and the Application was heard on April 10, 2024.

[10] On April 22, 2024, Papageorgiou J. released Reasons granting the relief sought by Parkland: Parkland Corporation v. Caledon Fuels Inc., 2024 ONSC 2361. She found that Parkland had properly renewed the Lease in 2023, extending the term to July 31, 2028, and declared the Lease to be in full force and effect. She enjoined Caledon from using, storing, selling, or advertising motor fuels not supplied by Parkland at the premises, as required by the Lease. Caledon has not paid the $30,000 in costs ordered by that Judgment.

[11] Caledon had in the meantime begun taking other steps to avoid the Lease, and took further steps to do so after the release of Papageorgiou J.’s decision on April 22, 2024.

[12] In the course of preparing its application materials in early 2024, Parkland discovered that in September 2023 Caledon’s lawyers, Imran Akram and Ahmed Inam of Loroy LLP (who are also Respondents on this Application), had filed an application with the Land Titles Office to delete Parkland’s Notice of Lease which Parkland had placed on title in 2015 (“Notice of Lease #1”). Despite this deletion, Caledon had continued to abide by the Lease, at least until its attempt to unilaterally terminate it in January 2024. In this proceeding, Parkland alleges that Caledon acted fraudulently in deleting the Lease from title.

[13] Upon discovering the deletion of the Lease, Parkland registered a Caution on title and filed a notice of its ROFR. When the Caution was removed by the Land Titles Office, on March 18, 2024 Parkland again registered notice of its leasehold interest with a new Notice of Lease (“Notice of Lease #2”). However, unlike Notice of Lease #1, this second notice stood behind a mortgage placed on the property in 2022 by BMO to secure a loan to Caledon. Loroy LLP had also acted on that mortgage registration in 2022.

[14] Following the release of Papageorgiou J.’s decision, but before the formal judgment was entered, Caledon arranged to assign the BMO mortgage to the Respondent Numberdar Holdings Inc. (“Numberdar”) by an agreement dated May 15, 2024. Major Singh Dhillon (“Dhillon”) is the principal of Numberdar. The Respondent Narinder Khasria, on behalf of Numberdar, negotiated the assignment with Chaudhary which was registered on title on August 17, 2022. Although Loroy LLP was initially retained to act for Caledon on the assignment, that firm was replaced by Jack Frymer, a long-time lawyer for Chaudhary and Caledon.

[15] Numberdar loaned $5 million to Caledon and took mortgages on five properties, including the assignment of the BMO mortgage on the Caledon property. Dhillon’s evidence on this motion is that Numberdar conducted no due diligence with respect to the Caledon property or its financial position prior to agreeing to the assignment. Dhillon said he wasn’t concerned because he had “more than enough security” from the five properties.

[16] Although Caledon had stayed current with its payments to BMO for the previous two years, and despite Numberdar requiring lower payments than BMO, within a month of the assignment of the mortgage to Numberdar Caledon defaulted. Caledon’s dishonoured cheques had been signed by Ijaz. There is no correspondence between Numberdar and Caledon regarding the dishonoured cheques. Parkland alleges that Caledon’s default was intentional and expected by Numberdar, which allowed Numberdar to issue a Notice of Sale, which it promptly did on August 21, 2024.

[17] Upon receiving the Notice of Sale, Parkland asserted its leasehold interest to Numberdar and stated that any sale would be subject to the Lease, and to Parkland’s ROFR.

[18] The property was not listed for sale publicly and, unusually for a power of sale, no appraisals were obtained by Numberdar. Instead, Numberdar discussed the power of sale with Chaudhary and hired Masud (Chaudhary’s business partner and an owner of Caledon) as its exclusive real estate agent to handle the sale. Parkland’s real estate manager communicated Parkland’s ROFR and other rights to Masud who relayed that information to Chaudhary, both of whom would have been aware of them in any event.

[19] Despite being on notice of Parkland’s Lease and its ROFR, without any notice to Parkland, on October 18, 2024 Numberdar accepted an offer to purchase the property by the Respondent 16408117 Canada Inc. (“164”), and the property was sold to 164 under power of sale on November 12, 2024. In accordance with s. 99 of the Land Titles Act, RSO 1990 c L.5 (“LTA”), where a property is sold under power of sale any registered instrument below the charge that is being enforced ceases to affect the land. This meant that Notice of Lease #2 was, effectively, cancelled.

[20] The purchaser, 164, is closely linked to Chaudhury and Caledon. Chaudhary described himself on this motion as an advisor to 164 and its principals, the Respondents Mian Abubaqr (“Abubaqr”) and Ijaz Ahmad. Abubaqr has a long relationship with Chaudhary and Ijaz; they have dealt with one another on other gas station investments. Abubaqr said he was simply a silent investor and that Chaudhary had brought this opportunity to him and that Chaudhary arranged the financing. Abubaqr said he relied on Chaudhary regarding the acquisition of the property and business. Ijaz, who was Caledon’s business manager and signed the dishonoured cheques, is 164’s sole director. Chaudhary negotiated, or dealt, with Numberdar on behalf of 164.

[21] Masud - Chaudhury’s business partner - also acted as real estate agent for 164 (in addition to representing Numberdar) and kept Chaudhury informed of the progress of the transaction. Masud’s brother, Tahir, accepted service of the Notice of Application in this proceeding as the “owner” of 164, even though Abubaqr testified that he was the owner. The corporate office of 164 is Tahir’s residence in Milton which, as I have noted, includes space leased to Ijaz.

[22] When the sale was registered, Numberdar also registered two new mortgages on the property worth approximately $5.6 million. This is inconsistent with Dhillon’s evidence that Numberdar proceeded quickly with the sale in order to get its money out. Chaudhary negotiated this as well. Caledon received a surplus payment from the sale of approximately $1.6 million, of which approximately $600,000 was used to finance 164's purchase via a vendor take-back mortgage.

[23] On the same day that the sale was registered, Abubaqr, on Chaudhary’s direction, emailed Parkland that it did not intend to continue operating the premises as an Ultramar gas station. Abubaqr and Ijaz both gave evidence that the objective of acquiring the property under power of sale was to circumvent the Lease and not have to deal with Parkland. Chaudhary’s lawyer, Imran Akram, wrote at the time that Chaudhary wanted the sale closed as quickly as possible “due to the possible involvement of Parkland in the power of sale proceedings.”

[24] Despite Parkland’s immediate objection asserting that the premises remained subject to the Lease, on November 18, 2024 Parkland learned that the Ultramar signage had been removed.

[25] As arranged by Chaudhary, 164 entered into a fuel supply agreement with a competitor of Parkland, Canco, and posted Canco signs at the gas station. However, upon Canco being informed of the Parkland Lease, Canco said it would remove the signs. 164’s Factum states that it is operating the station as a “Canco” gas station under a fuel supply agreement with Canco.

[26] On November 28, 2024, Parkland issued this Application, and on December 6, 2024 it commenced this motion for an interlocutory injunction enjoining the respondents from operating the gas station as anything other than an Ultramar station with fuel supplied by Parkland, and for an order granting leave to obtain and register a CPL on the property. An expedited schedule for the exchange of evidence and cross-examinations was set, and the motion was heard by me on Friday January 3, 2025.

[27] At the outset of the hearing on January 3, 2025, I was advised that Numberdar’s mortgage had been discharged, and that BMO is once again the lender as mortgagor. Parkland was informed of this on January 2, 2025, the day before the hearing.

Issues

[28] The issues to be determined on this motion are:

(a) whether leave should be granted to issue a CPL with respect to the premises; and

(b) whether an interlocutory order enjoining Caledon and 164 from breaching the negative covenants under the Lease (relating to signage and supply of motor fuel) should be granted.

The Tests for a CPL and for an Interlocutory Injunction

[29] The test to be met for the Court to issue a CPL is well-established and not in dispute. The moving party must demonstrate that there is a triable issue with respect to the moving party’s claim to an interest in land: Pacione v. Pacione, 2019 ONSC 813 at para. 20. A “triable issue” is a relatively low test – it does not require the moving party to show that it will likely succeed, but simply that the party has “a reasonable claim to the interest in the land claimed”: G.P.I. Greenfield Pioneer Inc. v. Moore, para. 20.

[30] The Court must also consider all relevant factors between the parties, including whether damages would be a satisfactory remedy and the intent of the parties in acquiring the land or interest. The Court must balance the interests of the parties in exercising its discretion equitably: Perruzza v. Spatone, 2010 ONSC 841 at para. 20; Natale v. Testa, 2018 ONSC 2823 at paras. 49 and 50.

Pursuant to s. 101 of the Courts of Justice Act, R.S.O. 1990, c. C.43, the Court may grant an interlocutory injunction where it appears to the Court to be “just or convenient to do so.” A party seeking an interlocutory injunction must address the three-part test stated by the Supreme Court of Canada in RJR-MacDonald Inc. v. Canada (Attorney General) at p. 334:

(1) is there a serious issue to be tried?
(2) will the applicant suffer irreparable harm if the injunction is not granted? and
(3) which party will suffer the greater harm if the injunction is granted or refused – a balance of inconvenience test?

The three questions must be assessed as a whole. Strength on one branch may compensate for weakness on another branch.

[31] Although a CPL can only be issued where there is a claim for an interest in land, otherwise the tests for issuing a CPL and for ordering an interlocutory injunction are quite similar. Just as meeting the test for a “triable issue” does not require a party to show that it is likely to succeed, the “serious issue to be tried” standard is a low one, requiring only that the application not be vexatious or frivolous: RJR at pp. 337-338.

[32] Both tests require consideration of whether damages will provide an effective remedy or, put another way, whether the moving party will suffer irreparable harm if the CPL or injunction is not granted. And both tests require the Court to consider the equities of the situation, including the impact of making such orders on the parties – in effect, the balance of inconvenience test.

[33] Accordingly, it is appropriate to address the two claims for relief together.

Claim to an Interest in Land

[34] A leasehold interest constitutes an interest in land: Clark v. Carter, 2012 ONSC 3905 at para. 11; Peppe's, The Pizza Factory Ltd. v. Stacey et al.. Here, Parkland is asserting its right to control the use of the property contained in the Lease. One of Parkland’s main objectives in holding the Lease is to ensure that the property not be used as a gas station other than under the Ultramar banner. In seeking injunctive relief to enforce the negative covenants in the Lease, Parkland is asserting a claim for an interest in land and therefore meets that portion of the test for a CPL.

Triable Issue and Serious Issue to be Tried

[35] Parkland asserts that Caledon fraudulently deleted Notice of Lease #1 from title and, through its directing mind, Chaudhary, Caledon has improperly benefitted from that fraud by taking the steps set out above. These include assigning the mortgage to Numberdar, deliberately defaulting on it, and then arranging a power of sale and financing 164’s purchase to eliminate Parkland’s Notice of Lease #2. As Notice of Lease #2, unlike Notice of Lease #1, was registered after the BMO mortgage, the effect of the sale by way of power of sale was to delete the leasehold interest: LTA, s. 99(3). Arguably, then, as asserted by Parkland in its Notice of Application, the Respondents, “individually or together” entered into a series of “sham transactions” in furtherance of a fraud and conspiracy to destroy Parkland’s leasehold interest in the land.

[36] In its Notice of Application, therefore, Parkland seeks, among other things, a declaration that its Lease relating to the premises remains in full force and effect, and an order that the Director of Land Titles re-register the Lease on title in the same priority as it was in prior to the unlawful deletion by Caledon.

[37] Parkland submits that regardless of Notice of Lease #2 being subordinate to the mortgage, all parties had actual knowledge of the Lease, and that it pre-dated the mortgage, such that the power of sale does not eliminate the Lease. As stated in 1420111 Ontario Ltd. v. Paramount Pictures (Canada) Inc., para. 18:

What then of the position of the applicants, who acquired the property under power of sale? A purchaser under power of sale who acquires property with a prior lease takes that property subject to that lease. If the lease was registered, all future purchasers would be deemed to have notice of it. Here, although the lease was not registered, the purchaser had actual notice of the lease, and it thus took the property subject to it… Simply put, a power of sale does not affect a prior lease where the purchaser under the power of sale has actual knowledge of the lease's existence. [Emphasis added]

[38] Similarly, in Sadie Moranis Real Estate Ltd. v. 1338941 Ontario Ltd., para. 39, the Court confirmed that where a bank had notice of a lease, even though the lease was not registered on title, the bank’s rights were subordinate to the rights of the tenant, or lessee.

[39] These decisions follow long-standing principles summarized in Falconbridge on Mortgages, the 4th edition of which is quoted in Paramount Pictures at para. 9, and states:

If the owner of land free from encumbrance grants a lease of the land, and afterwards mortgages it, the mortgage affects merely the reversion retained by the mortgagor. The right of the lessee to possession in such case is paramount, and the rights of the mortgagee to possession and to have recourse to the land for recovery of the mortgage money are subject to the right of the lessee. A legal mortgagee becomes, however, the owner of the reversion subject to the mortgagor's right to redeem, and when the mortgagee becomes entitled to possession as against the mortgagor he may compel the tenant to pay rent to him instead of the mortgagor.

[40] The 5th edition of Falconbridge is to similar effect, in s. 15:1 entitled “Tenant’s Rights Paramount.” It states:

Where the owner of land subject to a lease grants a legal mortgage, the mortgage merely affects the reversion retained by the mortgagor in the land. The mortgage is subject to the lease since the mortgagee cannot acquire any greater rights than the mortgagor had in the land. The right of the tenant to possession in such case is paramount, and accordingly the rights of the mortgagee to possession and to have recourse to the land for recovery of the money secured by the mortgage are subject to the rights of the tenant.

[41] The Respondents dispute the existence of a triable issue or serious issue to be tried.

[42] 164 relies on the land titles system set out in the LTA which, in accordance with s. 78, allows the purchaser to rely on the land register for the correct state of title. This includes the principle that instruments registered on title “rank according to the order in which they are entered in the register and not according to the order in which they were created, and, despite any express, implied or constructive notice, are entitled to priority according to the time of registration.” As summarized by Epstein J. (as she then was) in Durrani v. Augier, para. 42 and quoted more recently in Stanbarr Services Limited v. Metropolis Properties Inc., 2018 ONCA 244 at para. 13:

The philosophy of a land titles system embodies three principles, namely, the mirror principle, where the register is a perfect mirror of the state of title; the curtain principle, which holds that a purchaser need not investigate the history of past dealings with the land, or search behind the title as depicted on the register; and the insurance principle, where the state guarantees the accuracy of the register and compensates any person who suffers loss as the result of an inaccuracy. These principles form the doctrine of indefeasibility of title and [are] the essence of the land titles system[.]

[43] However, there are exceptions.

[44] The Court of Appeal recognized in Stanbarr that “actual notice of a non-registered instrument” can “defeat the interest of a registered owner or encumbrancer even in the absence of fraud”: Stanbarr at para. 14, citing Waimiha Sawmilling Co. v. Waione Timber Co. and United Trust Co. v. Dominion Stores Ltd.. Stanbarr discusses the jurisprudence addressing the application of the theory of deferred indefeasibility which arose in Household Realty Corp. v. Liu and Lawrence v. Maple Trust Company, 2007 ONCA 74, and the impact of amendments to the LTA in 2006 following the Household Realty decision. The Court noted in Stanbarr at para. 23 that while it could be “credibly argued” that notice of a non-fraudulent defect in title may no longer defeat registered interests, it did not need to resolve the issue in that case (para. 23) as there had not been notice of the defect.

[45] More recently, in Froom v. Lafontaine, 2023 ONCA 519 at para. 66, the Court of Appeal again addressed the theory of deferred indefeasibility, but in the context of fraud. I do not read that decision as holding that a purchaser with notice of a non-fraudulent defect in title may nevertheless obtain title without regard to the defect. Rather, as stated in Froom at para. 73:

…while the deferred indefeasibility of title regime typically guarantees that a transfer in favour of a subsequent purchaser or encumbrancer is valid once registered, there may be an exception for a subsequent purchaser or encumbrancer with actual notice of a defect. In MacIsaac v. Salo, 2013 ONCA 98, this court endorsed the principle, at para. 39, “that equity continues to have application to claims governed by the Land Titles Act and that the Act has not abrogated equitable principles of actual notice”. [Emphasis added]

[46] There is in this case, however, the issue that arises from Parkland’s registration of Notice of Lease #2: whether, as argued by the Respondents, the registration effectively overrides actual notice from the Applicant that the Lease stands ahead of the mortgage.

[47] In DeGasperis Muzzo Corp. v. 951865 Ontario Inc., 2000 CarswellOnt 3029, a mortgagor had actual notice of a prior unregistered interest, also a lease, but the lease was later registered, after the mortgage. Ground J. held that the benefit of actual notice was lost due to the subsequent registration. This decision was upheld by the Court of Appeal in a brief oral endorsement: DeGasperis Muzzo Corp. v. 951865 Ontario Inc..

[48] However, DeGasperis is not referred to in any of the subsequent Court of Appeal decisions I have cited above addressing the continuing impact of actual notice, and does not appear to have been followed anywhere, perhaps due to the unusual facts that arose in that case. Ground J.’s decision was also subject to criticism at the time of its release: see, e.g., the Annotation by Jeffrey Lem, later the Director of Land Titles for Ontario, found at 2000 CarswellOnt 3029.

[49] In any event, DeGasperis is distinguishable from the facts in this case. It did not deal with an allegation of fraud. Rather, the circumstances arose from a complex transaction in which it was agreed that the mortgage would be registered ahead of the lease which meant, as the Court of Appeal’s brief endorsement stated, that the leaseholder “agreed… to subordinate its leasehold interest to the interests of” the mortgagor. That is not this case. Here, Parkland registered its lease ahead of the BMO mortgage and it was improperly – now asserted to have been fraudulently – deleted by Caledon. All parties were on notice of the deletion and of the re-assertion of Parkland’s rights, including that Parkland had gone to Court to protect its leasehold interest, and succeeded in that court application. The purchaser of the premises who seeks to avoid the lease, 164, is closely connected to Caledon.

[50] Similarly, I do not find the recent decision in CIBC v. 1340182 Ontario Limited et al., 2024 ONSC 3658, relied on by Caledon, supports the Respondents’ position. The facts here are quite different involving parties that had notice of the improper, if not fraudulent, deletion.

[51] Fraud has been an exception to the mirror principle for many years. In this case, 164 acknowledges in its factum that the circumstances contain “badges of fraud” but argues that there are “innocent explanations to dispel all of Parkland’s insinuations.” That would, however, involve a deep dive into the merits and credibility assessments that cannot be made on this interlocutory motion. Stating that there are “innocent explanations” does not diminish the existence of a triable issue or serious issue to be tried.

[52] 164 also refers to s. 57(1) of the LTA which permits a person “wrongfully deprived of land or of some estate or interest therein” to recover damages but does not, it argues, permit the removal from title of a fraudulent instrument – which can only be done in limited circumstances not present here. However, s. 57 deals only with remedies against the fraudster and is found in a portion of the Act that addresses compensation from the Land Titles Assurance Fund.

[53] Parkland’s application is not about invalidating a fraudulent instrument, or claiming compensation from the Fund but, rather, among other things, is for an order to have its Notice of Lease re-registered in priority to other encumbrances. This Court has authority to make such an order under s. 159 of the LTA. While that section begins with the qualification that it is “[s]ubject to any estates or rights acquired by registration”, the Court of Appeal has stated that the “purchaser only obtains the benefit” of that registration “if he or she is a bona fide purchaser for value without notice”: MacIsaac v. Salo, 2013 ONCA 98 at para. 54. Hence notice is an issue.

[54] The Respondents argued that the issue of fraud is res judicata as it could have been raised in the prior Application heard in 2024. Similarly, the Respondents say that Parkland ought to have sought an order to re-register the Lease in priority to the BMO mortgage in the earlier Application. I disagree. That proceeding dealt with the attempt to terminate the Lease; it was only in the course of the proceeding that Parkland became aware of the deletion of the Notice of Lease #1 which was simply one piece of evidence that Papageorgiou J. relied on in finding that Caledon had repudiated the Lease (para. 99). Parkland did not need to assert fraud in order to succeed in reinstating the Lease, nor can it be faulted for failing to anticipate that Caledon and others would conspire to defeat the Lease through a power of sale in the face of Justice Papageorgiou’s declaration and the actual notice to Caledon and others of the existence of the Lease. Most of these events occurred after the Application was disposed of, and cannot be res judicata.

[55] It is not necessary for me to resolve the substantive legal issues raised in this Application on this motion; my role is simply to decide if the issues raised by Parkland are “triable” or raise a serious issue to be tried. There is evidence that all the respondents had actual notice of the Lease, and would have been aware of the improper deletion of Notice of Lease #1. The transactions all appear to have been facilitated by Chaudhary, who is the directing mind of Caledon. This raises the question whether 164 can be called an innocent purchaser. Badges of fraud are present, and while 164 and Caledon assert innocent explanations, that determination is for another day. For today, the evidence supports my conclusion that Parkland has raised triable issues and serious issues to be tried.

Irreparable Harm and Whether Damages an Effective Remedy?

[56] In the prior Application, Papageorgiou J. found that Parkland would suffer irreparable harm that could not be compensated in damages if the Lease was not enforced: paras. 94-110. Her reasons are compelling and amply supported by case law cited by her. This includes her finding that “where a tenant alleges a wrongful interference with its property interest, an injunction to restrain the wrong is the usual remedy”, citing 1465152 Ontario Limited v. Amexon Development Inc., 2015 ONCA 86, para. 23.

[57] Papageorgiou J. also cited the decision of Myers J. in Parkland Corporation v. SRAA Inc., 2021 ONSC 2874, dealing with some of the same people involved in this case, who found at para. 92 that “the potential loss of control of the site brings a specie of loss that is not readily susceptible to quantification in damages.” Indeed, Myers J. went on at para. 93 to find that the effect on Parkland’s brand was “virtually incalculable.” As Papageorgiou J. noted at paras. 104 and 105, consistent with the evidence before me:

Parkland’s business model depends upon the enforceability of its long-term supply agreements with members of its dealer network.

The Lease and Sublease are integral to the maintenance of Parkland’s network of gas stations, through which Parkland seeks to create and expand market share. Such goals are dependent on parties honoring long-term contractual relationships, such as the Lease and Sublease. Without gas stations under long-term contracts and the right to long-term control of the supply of motor fuels to its gas station network, Parkland would be operating under an entirely different business model.

[58] Even more recently, Centa J. followed these decisions in yet another case involving Parkland. He noted that the “deliberate breach of a negative covenant gives rise to a presumption of irreparable harm” and saw no reason to depart from the earlier decisions “that concluded that Parkland would suffer irreparable harm from dealers de-branding the gas stations and publicly selling motor fuel supplied by an entity other than Parkland”: Parkland Corporation v. 2615669 Ontario Inc., 2024 ONSC 3724 at paras. 35-39.

[59] I conclude, therefore, that this is not a case that is readily amenable to compensation in damages, which favours the issuance of a CPL and an injunction.

Balancing Interests

[60] Under either test I must balance the competing interests of the parties and act equitably. More tangibly, the third branch of the RJR test requires consideration of which party will suffer greater harm if the injunction is granted or refused pending a decision on the merits (RJR, p. 342).

[61] If an injunction is granted, 164 will need to remove any signs or marketing of gas that is not under the Ultramar banner. It will only be able to purchase or sell fuel obtained from Parkland. This means that 164 will either have to shut down the gas station or abide by the Lease and operate as an Ultramar station.

[62] While it might be argued that issuing an injunction will upset the status quo, this status quo has existed for less than two months. Further, 164 took its steps to debrand in the face of notice from Parkland and with knowledge of Parkland’s recent successful efforts to enforce the Lease. 164 could have gone to court to resolve this issue, or awaited the return of this motion which has proceeded quickly. Instead, it acted unilaterally in the face of clear objections from Parkland. To preserve the current status quo, therefore, would be unjust to Parkland and reward 164 for its unilateral action.

[63] To the extent that upsetting the current status quo may impact Canco - the record before me is not entirely clear on its continued involvement – this is of limited importance and I have no evidence on that issue. While an injunction will put 164 in breach of its contract with Canco, it is not clear what damages or liability 164 will face, if any. Further, in Parkland Corporation v. SRAA Inc., which also involved a competitor moving in to supply a gas station, Myers J. observed at para. 104 that “[m]any injunction cases recognize that in balancing convenience or inconvenience, there is much less harm to a new entrant being delayed than to an incumbent being evicted.”

[64] 164’s principals assert that if they are forced to operate under the Ultramar brand they will lose money and “quickly become insolvent.” However, the evidence before me of this is weak and generalized and can be given little weight. Caledon made the same argument before Papageorgiou J. who observed that Caledon’s financial statements produced in that proceeding, but not on this motion, were unaudited and largely related to the period when many businesses were having financial difficulties because of the Covid-19 pandemic. Caledon appears to have obtained a substantial benefit from the transactions impugned in this case. 164, and Caledon, can be compensated in damages if the injunction ought not to have been issued.

[65] Numberdar has been paid out. The other Respondents are not affected or can, eventually, be compensated in damages if necessary.

[66] In conclusion, balancing the equities and considering the potential harm and inconvenience to each party, this branch of the tests also supports the issuance of a CPL and an injunction.

Conclusion

[67] I grant leave to Parkland to obtain and register a CPL against the premises.

[68] I also enjoin Caledon and 164 from selling non-Parkland motor fuels, and from displaying signage that has not been authorized by Parkland, at the premises, pursuant to the negative covenants in the Lease pending the final determination of the application.

[69] This order is effective immediately. If the parties cannot agree on the wording of a formal Order by 5 p.m. on January 13, 2025, they shall send me their proposed draft orders and I shall sign the one I decide appropriately reflects these Reasons.

[70] If the parties cannot agree on costs within 14 days of the release of these Reasons, they may provide written submissions to me, not exceeding three pages, double-spaced, not including attachments, by January 31, 2025.

Paul B. Schabas
Date: January 9, 2025