374427 Ontario Ltd v. Sommerset Communities Inc.
[2015] O.J. No. 4234
2015 ONSC 5006
Newmarket Court File No.: CV-14-121232-00
Ontario Superior Court of Justice
P.A. Douglas J.
Heard: August 4, 2015.
Judgment: August 7, 2015.
Civil litigation — Civil procedure — Injunctions — Circumstances when granted — Considerations affecting grant — Balance of convenience — Irreparable injury — Serious issue to be tried or strong prima facie case — Motion by the plaintiff 374427 Ontario for an interlocutory injunction preventing the defendants from entering onto the subject property allowed — The plaintiff, the original owner of the property, alleged that there had been a suspicious non-arm's length sale of the property — There was a serious issue to be tried regarding whether the plaintiff had an ownership interest in the property — The defendants' efforts to prepare for demolition were arguably demonstrative of irreparable harm — The balance of convenience favoured the plaintiff.
Real property law — Proceedings — Practice and procedure — Injunctions — Motion by the plaintiff 374427 Ontario for an interlocutory injunction preventing the defendants from entering onto the subject property allowed — The plaintiff, the original owner of the property, alleged that there had been a suspicious non-arm's length sale of the property — There was a serious issue to be tried regarding whether the plaintiff had an ownership interest in the property — The defendants' efforts to prepare for demolition were arguably demonstrative of irreparable harm — The balance of convenience favoured the plaintiff.
Statutes, Regulations and Rules Cited:
Rules of Civil Procedure
Counsel:
Paul Dollak, for the Plaintiff (Moving Party).
Arina Joanisse, for the Defendants Sommerset Communities Inc., Giulio Bianchi and Elgin House Properties Limited, Responding Parties.
Ruling on Motion:
Overview:
1 The Plaintiff moves for an interlocutory injunction preventing the Defendants (excluding Eisen and hereinafter referred to collectively as "the Defendants"), from entering onto the subject property (were particularly described in the pleadings hereinafter "the property"), an order directing restoration of the property and police assistance as necessary to enforce such orders.
Parties and Background:
2 The Plaintiff is the original owner of the property and in this action it seeks, inter alia, restoration as the registered owner after an "improvident and suspicious non-arm's length sale" of the property.
3 The Defendant Eisen registered a first mortgage against the property in 2012 in the amount of $6.5 million dollars. The Defendant Sommerset held a second mortgage on the property registered in January 2014 in the amount of $400,000 (there is a dispute as to how much was actually advanced). The Defendant Bianchi is the controlling mind of both Sommerset and Elgin.
4 The Plaintiff's plan for the property involved development of a seniors' home; however, Power of Sale proceedings were initiated by Sommerset, as a consequence of which the property was sold for $12.5 million dollars to Elgin.
5 There is an appraisal setting the value of the property at $37 million dollars upon which the Plaintiff relies. The Defendants rely upon three competing appraisals setting the value in the range of $9.8 million dollars to $12.5 million dollars.
6 I note that the Defendants served a 21 page affidavit of Mr. Bianchi with multiple exhibits on the day before the motion was argued before me. I do not criticize the Defendants for the timing of delivery of this affidavit material; however, it is simply a fact that the motion proceeded before me without the Plaintiff having had the benefit of an opportunity to prepare a reply affidavit answering the Defendants' evidence. Given the alleged urgency of the matter, no adjournment was sought by the Plaintiff in this regard.
7 In February 2015 the Plaintiff moved ex-parte (as permitted by the Rules of Civil Procedure) for a Certificate of Pending Litigation. This motion was granted. The parties are scheduled to argue a motion in October of 2015 in which the Defendants seek to set aside the Certificate of Pending Litigation on the basis of material non-disclosure and the alleged fact that the Plaintiff has no "interest in land". In this regard it is argued by the Defendants that the following actions by the Plaintiff are inconsistent with it having an interest in the property:
8 While there may be merit to these arguments, assessment of such merit is better left for trial or possibly a motion for summary judgment.
9 The Plaintiff says the Defendants are proceeding with demolition regarding several buildings on the property. The Defendants acknowledge preparatory work is being done, consistent with its approved site plan and governing municipal by-laws and its ownership of the property.
Analysis:
10 The three-fold test for injunctive relief is set out by the Supreme Court of Canada in RJR MacDonald v. Canada [1994] 1 S.C.R. 311.
11 In my view, essential to all three prongs of the tests outlined above is the question in this case of whether the Plaintiff has an interest in the property.
12 Regarding the first prong of the test, whether there is a serious issue to be tried, the threshold is low (see Mackovic v. Dudo Developments Ltd. [2007] O.J. No. 3134). If the motion is neither vexatious nor frivolous, this prong of the test should be considered satisfied (see RJR MacDonald v. Canada).
13 The serious issue to be tried relevant to the injunctive relief sought is whether the Plaintiff has an ownership interest in the property. The test at this stage is not one of likelihood of success, but rather whether there is a serious issue to be tried and that the motion seeking the injunctive relief is neither vexatious nor frivolous.
14 I also consider that as the court has already ordered a Certificate of Pending Litigation, there has been a determination, subject to the results of the motion to vacate the Certificate of Pending Litigation, that the Plaintiff has a reasonable claim for an interest in the property. Such a finding is foundational to the issuance of a Certificate of Pending Litigation. I do not consider it appropriate, or necessary to disturb that finding for the purpose of this motion.
15 I have no difficulty, given the low threshold, in concluding that there is a serious issue to be tried in that there is no evidence before me on the basis of which I might conclude that the relief sought is "vexatious or frivolous".
16 Regarding the second prong of the test (irreparable harm), assuming that the Plaintiff has a reasonable claim for an interest in the property, it follows that the Defendants' efforts to prepare for demolition of several buildings, erecting hoarding, removing vegetation, etc. is arguably demonstrative of irreparable harm, given the Plaintiff's stated intentions for the property. This situation is distinguished from that in Woods Property Development Inc. v. Mintz 2002 CarswellOnt. 1216 in that in this case the property appears at this early stage in the proceedings much more than just an investment vehicle as in the Woods case.
17 The third prong of the test is about balance of convenience. In this case, both parties allege their interests will be adversely affected by the granting of the injunction or its denial. Given the Defendants' intention to proceed in due course with demolition and other preparatory work for a project different in character from that contemplated by the Plaintiff, I conclude that in the shorter term over which I intend to grant relief the balance of convenience favours the Plaintiff.
18 I decline to make an order at this time requiring the Defendants to restore the property to its state as of the beginning of July 2015 as the order that I make will be intended to carry through to October only pending more fulsome exchange of evidence and possible cross-examinations upon the affidavits exchanged.
19 For the foregoing reasons, order to go as follows:
P.A. DOUGLAS J.