Court File and Parties

Court File No.: CV-24-00062474-0000 Date: 2025-08-29 Superior Court of Justice - Ontario

Re: The Crystal Beach Property Inc. and Crystal Beach 1 Inc., Plaintiffs

And: 2632273 Ontario Ltd. and 2632272 Ontario Ltd., Defendants

And Re: 2632273 Ontario Ltd. and 2632272 Ontario Ltd., Plaintiffs by Counterclaim

And: The Crystal Beach Property Inc. and Crystal Beach 1 Inc., 2854756 Ontario Inc., Defendants by Counterclaim

Before: The Honourable Justice M. J. Donohue

Counsel:

• B. Vakili, S. Savic, Counsel, for the Plaintiffs [Main action]
• M. Van Vliet, Counsel, for the Defendants [Main action]

Heard: August 22, 2025

Decision on Motion

Introduction

[1] On July 25, 2025, I granted an ex parte motion brought by the plaintiff ("the buyer") for a certificate of pending litigation ("CPL") against two properties owned by the numbered company defendants ("the sellers").

[2] The materials presented by the buyer set out that the sellers had breached a binding agreement of May 1, 2024.

[3] The sellers move to discharge the CPL on two bases:

a) that the buyer moved without notice to obtain the CPL and failed to make full and frank disclosure as required under rule 39.01(6) of the Rules of Civil Procedure, R.R.O. 1990, Reg. 194 and/or;

b) that the court should exercise its discretion under s. 103(6) of the Courts of Justice Act, R.S.O. 1990, c. C.43 to discharge the CPL on the basis that the buyer had no reasonable claim to an interest in land and that damages was an alternative remedy; and further, that an analysis of the equities on the Dhunna factors (572383 Ontario Inc. v. Dhunna, [1987] O.J. No. 1073 (Ont. Master) at paras. 10-18) provide grounds to remove the CPL.

Full and Fair Disclosure

[4] The decision of Myers, J. in Moses v. Metro Hardware and Maintenance Inc., 2020 ONSC 6684 sets out the reasoning and importance of such disclosure on ex parte motions at paragraphs 20 to 31.

[5] That court highlighted paragraphs 27 and 30 of United States v. Friedland, [1996] O.J. No. 4399 (Ont. Gen. Div.) by Sharpe, J. who noted:

The moving party must state its own case fairly and must inform the Court of any points of fact or law known to it which favour the other side.

All matters which are relevant to the 'weighing operation' that the court has to make in deciding whether or not to grant the order must be disclosed. [Emphasis added.]

[6] Myers, J. further noted that best practice on ex parte motions is to have a section in an affidavit or factum titled, for example, "Facts that may be relied upon by the defendants."

Analysis of Disclosure

[7] The motion materials in July 2024 were presented to the court on the basis of a May 1, 2024 "binding term sheet".

[8] The materials omitted further discussions that followed on May 1.

[9] The buyer admitted there were further details being worked on. He considered them to be minor, however, this was not disclosed in materials to the court.

[10] The term sheet specifically stated that the vendor take back mortgage would be registered against both properties.

[11] There is evidence that the buyer, after May 1, was negotiating the separation of the mortgage between the two properties.

[12] Most significantly, the two unsigned agreements of purchase and sale ("APS"), which the buyer drafted, were not in the materials.

[13] The sellers point to new provisions in those APS which were not in the May 1 term sheet. As well, a conditional closing clause was added which was not in the May 1 term sheet.

[14] The submission of the buyer was that these further discussions to complete the APS were not material.

[15] Moving without notice, however, burdens that party with the obligation to provide full disclosure.

[16] Discussions about what should ultimately go into an agreement of purchase and sale as well as the draft agreements, should have been before the court when moving without notice to the opposing party.

[17] Also, the sellers' email of May 22, 2024 should have been specifically brought to the court's attention in the motion affidavit or factum. There the sellers described the end of the relationship as withdrawing their "without prejudice proposal/discussions".

[18] In my view, these points would have been relevant to the "weighing operation" for the court's decision when the buyer moved without notice.

[19] I find in this case, the buyer's omitted disclosure requires the remedy of discharging the CPL.

[20] If I have erred, I further assess whether the plaintiff has an interest in land and whether the Dhunna factors favour continuing or discharging the CPL.

Is There a Reasonable Claim to an Interest in Land?

[21] The buyer's position is that they had a binding contract to purchase this property which was breached by the sellers.

[22] The sellers did not argue this was not a triable issue. In fact, they recognized that the merits of the claim were to be to the trial judge.

[23] For the purposes of this CPL motion, I am satisfied that there is a triable issue as to whether the plaintiff had an "interest in land".

[24] The buyer's submissions on the bad faith negotiations of the sellers is also a triable issue.

[25] Accordingly, I proceed to consider whether the CPL should be discharged nevertheless.

The Dhunna Factors

[26] The parties agree that the court is to consider the eight factors set out by Master Donkin in 572383 Ontario Inc. v. Dhunna at paragraph 10 regarding the appropriateness of the CPL:

i) whether the plaintiff is, or is not a shell corporation;

ii) whether the land is, or is not unique, bearing in mind that in a sense any parcel of land has some special value to the owner;

iii) the intent of the parties in acquiring the land;

iv) whether there is an alternative claim for damages;

v) the ease or difficulty of calculating damages;

vi) whether damages would be a satisfactory remedy;

vii) the presence, or absence, of another willing purchaser;

viii) the harm done to the defendant if the certificate is allowed to remain, or to the plaintiff if the certificate is removed, with or without the requirement of alternative security.

Analysis of the Dhunna Factors

[27] My review of the factors is as follows:

i) It is admitted that the plaintiff corporation is a shell corporation created simply to purchase this land and that it is inactive.

ii) The evidence on whether the land is unique to the plaintiff is weak. The buyer makes a bald statement that it is unique and there are "no comparable properties." The seller provided evidence of comparable properties to which the buyer did not respond. The buyer testified that he "likes" the property and planned to build a hotel or motel and he "liked the region". This does not speak to uniqueness of the properties.

iii) The buyer's intention for the land was as an investment and to build a hotel or a motel. There are no details. The sellers point to two emails by the buyer where despite these intentions they discussed entering mutual releases and returns of their deposits. I find these potential "walk aways" relevant to the lack of uniqueness as well as the buyer's intentions.

iv) & (vi) Not surprisingly the statement of claim provided in the alternative a claim for damages. What is significant is that the buyer deposed that damages would be an adequate remedy.

v) No evidence was provided to support that damages would be difficult to assess.

vi) This is discussed above.

vii) The buyer recognizes the evidence that there had been a willing purchaser in the spring of 2024. The seller deposed in 2025 when this motion was brought that there was a sale pending the outcome of this motion and it may fall through.

viii) The sellers submit that carrying costs of the property continue while the CPL prevents the sale of the property.

[28] The evidence does not support the uniqueness of the property. Damages provide an adequate remedy. On review of all the factors, it is appropriate to discharge the CPL.

Conclusion

[29] Accordingly, in light of the failure to make full and fair disclosure on an ex parte motion and an equitable analysis of the Dhunna factors, the CPL must be discharged.

[30] I so order.

Costs

[31] If the parties are unable to resolve costs, the sellers may serve and file written submissions by September 12, 2025.

[32] The buyer may file responding submissions by September 26, 2025.

[33] If necessary, the sellers may serve and file a reply submission by October 3, 2025.

[34] Such submissions are not to exceed one page but are to attach bills of costs and any applicable offers.

[35] Submissions are to be emailed to St.Catharines.SCJJA@ontario.ca to my attention.

[36] Failing receipt of such submissions by October 6, 2025, costs will be considered resolved.

M. J. Donohue, J.

Date: August 29, 2025