



COURT OF APPEAL FOR ONTARIO

CITATION: Dhatt v. Beer, 2020 ONCA 799

DATE:  20201211

DOCKET: M51990 & M52026

(C68375 & C68539)

Brown J.A.
    (Motion Judge)

BETWEEN

Mandeep
    Dhatt and Kulwinder Dhatt

Plaintiffs

(Respondents/Moving
    Parties)

and

Derek
    Beer and Indira Beer

Defendants

(Appellants/Responding
    Parties)

and

Jay
    Brijpaul and Re/Max West Realty Inc., Brokerage

Third
    Parties

(Respondents/Responding
    Parties)

Arnie
    Herschorn, for the
for the moving parties,
Mandeep Dhatt and Kulwinder Dhatt

David P. Lees
    and Zachary Silverberg, for the responding parties, Derek Beer and Indira Beer

Serena L. Rosenberg,
    for the responding parties, Jay Brijpaul and Re/Max West Realty Inc., Brokerage

Ethan
    Rogers, for the moving intervenor, Rogers & Company Professional
    Corporation

Melvin
    Rotman, for the execution creditors, Mahadi Singh and Chait Singh

Heard: December 9, 2020 by video conference

REASONS
    FOR DECISION

OVERVIEW

[1]

There are two motions before me on these appeals
    from orders granting specific performance of an agreement of purchase and sale
    (the Agreement) for a residential property in Brampton (the Property).

[2]

The successful purchasers, the respondents Mandeep
    Dhatt and Kulwinder Dhatt (the Purchasers), move for orders expediting the
    appeals, requiring the appellant vendors
Derek Beer and
    Indira Beer (the Vendors) to post security for costs, and lifting the stay of
    the trial judges cost order. The Vendors oppose the motion.

[3]

A non-party, the former lawyers for the Vendors,
    Rogers & Company Professional Corporation (Rogers), move for leave to
    intervene as an added party on the Purchasers motion and request a delay of
    that motion until the disposition of a proceeding initiated by Rogers in the
    Superior Court of Justice (SCJ).

THE TRIAL AND APPEALS

[4]

A bit of background is required to put the
    motions into context.

[5]

These appeals are from two orders made by the
    trial judge, C. Brown J.

[6]

The trial was held in March 2020. After failing
    to obtain an adjournment, the
Vendors did not
    participate in the balance of the trial. By judgment dated May 1, 2020 (the
    Trial Judgment), the trial judge: (i)
granted the Purchasers
    specific performance of the 2016 Agreement for the Property; (ii) dismissed the
    Vendors third party claim against their real estate broker,
Jay Brijpaul and Re/Max West Realty Inc. (the Broker); and (iii) awarded
    costs to the Purchasers ($112,347.63) and Broker ($88,178.52): 2020 ONSC 2729.
    Paragraph 3 of the Trial Judgment ordered that of the Agreements purchase
    price of $835,000, (a) the [Purchasers] are entitled to withhold the sum of
    $112,347.63 in payment of their substantial indemnity costs of the action (b)
    the [Purchasers] pay to the [Broker] the sum of $88,178.52 for the [Brokers]
    substantial indemnity costs in the third party action.

[7]

The second order was made by the trial judge on
    July 30, 2020, establishing a process for the transfer of the Property to the
    Purchasers (the Transaction Order). As part of that order, the trial judge
    ordered the Vendors to deliver up to the Purchasers vacant possession of the
    Property and appointed Robert Aaron as the transaction lawyer for the Vendors
    to complete the sale of the Property to the Purchasers.

[8]

The Vendors moved before Zarnett J.A. for a stay
    of the Trial Judgment and Transaction Order. Upon the undertaking of the
    Purchasers not to deal with the Property pending the disposition of the
    appeals, Zarnett J.A. denied the stay: 2020 ONCA 545, 449 D.L.R. (4th) 263. In
    the course of his reasons, Zarnett J.A. stated that the cost components of the
    Trial Judgment were subject to the automatic stay provisions of the
Rules
    of Civil Procedure
.

[9]

All appeal materials have been filed; the
    appeals are ready to be heard.

THE EVENTS LEADING UP TO THESE MOTIONS

[10]

The Purchasers took possession of the Property
    on September 2, 2020. They do not intend to sell their previous home until the
    disposition of the appeals.

[11]

The sale of the Property has not closed.

[12]

Mr. Aaron prepared a September 16, 2020
    statement of estimated proceeds of sale from the Property based on the
    Agreements $835,000 purchase price. The statement is attached to these
    reasons. He calculated that the encumbrances in respect of the Property
    amount to approximately $1 million, leaving a shortfall of about $178,000. The
    encumbrances fall into six categories: (i) first and second mortgages; (ii) the
    cost orders in the Trial Judgment made in favour of the Purchasers and Broker;
    (iii) real estate commission, taxes, HVAC; (iv) an execution registered by
    Mahadi Singh; (v) an execution registered by Chait Singh; and (vi) executions
    registered by Rogers.

[13]

Mr. Aaron proposed that Mahadi Singh accept less
    than the face value of his claim and that Chait Singh and Rogers lift their
    executions voluntarily to enable the sale to close.

[14]

Chait Singh and Rogers are not prepared to do
    so. They take the position that all the unsecured creditors, including claims
    for costs by the Purchasers and Broker pursuant to the Trial Judgment, should
    be treated equally on a
pro rata
basis.

[15]

No agreement has been reached on that issue,
    which has led to the Purchasers motion seeking, in part, to lift the stay of
    the cost orders.

[16]

On its part, Rogers has moved in the SCJ seeking
    to vary the Trial Judgments grant of specific performance and award of costs
    to the Purchasers and Broker. The economic rationale for that motion can be
    found in a December 7, 2020 appraisal of the Property that Rogers has filed in
    its intervention record. The appraisal puts the current fair market value of
    the Property at $1,437,000. The appraisal has not been tested but it highlights
    the concern expressed by the execution creditors. They contend that if the
    Property were sold for fair market value, all creditors would be paid in full.
    However, the ordered sale at $835,000, when coupled with the cost order, will
    see the Purchaser and Broker fully reimbursed for their trial cost claims while
    requiring the execution creditors to take a haircut or receive nothing. This result,
    the execution creditors contend, is manifestly unfair, especially when they
    were not given notice of the cost order the trial judge intended to make.

[17]

A case conference for Rogers motion is
    scheduled to be held by a judge of the SCJ Toronto Region Civil List on
    December 17, 2020. It is anticipated that a date for the Rogers motion will be
    set at that time.

ANALYSIS

The Purchasers motion

[18]

The principle guiding my disposition of the
    motions is a simple one: this court will determine the appeals from the Trial
    Judgment and Transaction Order; the SCJ is the proper forum to deal with the
    priorities dispute amongst the Purchasers, Broker, and execution creditors.

[19]

Applying that principle, the Vendors have
    offered no persuasive reason to oppose setting an early date for the hearing of
    the appeals. Accordingly, I order that the appeals shall be heard on February
    10, 2021, for two hours.

[20]

Purchasers counsel advised that in light of
    that appeal date, his clients were not pursuing their further requests for security
    for costs or lifting the stay of the cost awards.

[21]

That disposes of the Purchasers motion.

Rogers motion

[22]

Rogers seeks leave to intervene as an added
    party on the Purchasers motion and an order delaying the hearing of that
    motion pending the outcome of Rogers SCJ motion. The materials filed by Rogers
    on its motion certainly helped me to understand the big picture in this
    dispute, and they helped me formulate the guiding principle that I set out in
    para. 18. However, consistent with that principle, I am not persuaded that
    Rogers should be granted leave to intervene in this court. The proper forum for
    its submissions on the priorities dispute is the SCJ.

[23]

Nor, as can be seen, am I persuaded that the
    Purchasers motion should be delayed. Quite the contrary. By setting an early
    hearing date for the appeals, I am attempting to fix a timeframe in which the
    parties should resolve their priorities dispute in the SCJ. The longer that
    priorities dispute is allowed to fester, the more disproportionate the legal
    costs will become to the amount truly in dispute.

[24]

Rational economic actors can easily resolve the
    priorities dispute. If the priorities dispute is resolved, it may well be that
    the appeals also resolve.

[25]

In any event, I am sending a copy of these reasons
    to Myers J., the co-Team Leader of the SCJ Toronto Region Civil List, with my
    respectful request that he make the appropriate arrangements for the most
    effective use of the parties time and resources in the matter now pending in
    that court.

[26]

Accordingly, while the Rogers materials have
    been helpful, I formally dismiss their motion to intervene and delay the
    Purchasers motion.

DISPOSITION

[27]

By way of summary, I grant the Purchasers
    motion for an early appeal hearing and set February 10, 2021 as the date for a
    two-hour hearing of the appeals. The Purchasers withdraw the balance of their
    motion. I dismiss the Rogers motion.

[28]

As to the costs of the Purchasers motion, each
    party seeks costs of $5,000 from the other. That is an unreasonable ask for a
    simple procedural motion in this court. I fix the costs of the Purchasers
    motion at $1,500, payable to either the Purchasers or Vendors in the cause of
    the appeals.

[29]

Rogers seeks costs of its motion in the amount
    of $5,000 against the Purchasers. Although I have dismissed the Rogers motion,
    its materials were quite helpful. Consequently, I award Rogers costs of its
    unsuccessful motion in the amount of $500, payable in equal
pro rata
shares by the Purchasers and Vendors within 30 days of the release of these reasons.

[30]

I thank counsel for their assistance in dealing
    with these motions in an efficient, cost-effective manner.

David Brown J.A.





