Executive Summary: Key Legal and Evidentiary Issues

• Enforceability of the share purchase agreement for 240 Duncan Mill Road, including obligations to provide clear title and discharge the Bitton CPL.

• Breach of contract by Alain Checroune through failure to close the transaction and actions to frustrate the plaintiffs’ rights after receiving a $1.2 million deposit.

• Plaintiffs’ entitlement to damages in lieu of specific performance due to the bankruptcy and sale of the property, making specific performance meaningless.

• Application of oppression remedies under the Business Corporations Act for conduct depriving plaintiffs of leasehold improvements and rental income.

• Calculation and award of damages for lost gain, return of deposit, leasehold improvements, and lost rents, with certain claims (lost commission and damage deposit) denied for lack of evidence.

• Award of prejudgment interest from October 1, 2015, and partial indemnity costs of $230,312.52 to the plaintiffs.

Background and facts of the case

The plaintiffs, Jamshid Hussaini, Neelofar Ahmadi, and Homelife Dreams Realty Inc., brought a motion for default judgment against Alain Checroune arising from a failed share purchase agreement. The agreement, entered into in 2012, involved the plaintiffs purchasing shares in 1482241 Ontario Ltd., which owned the office building at 240 Duncan Mill Road in Toronto. Checroune was the sole shareholder of the corporate defendant at the time. The agreement required Checroune to provide clear title to Duncan Mill by discharging a certificate of pending litigation (the Bitton CPL), with a closing date of October 1, 2015. The plaintiffs paid $1,200,000 for 20% of the shares, and were to pay $4,800,000 for the remaining 80% upon clear title, with the total purchase price set at $15,000,000. The plaintiffs also leased the sixth floor and sublet space as part of their business plan.

The transaction did not close. Checroune took steps to sell the property to other buyers and interfered with the plaintiffs’ and their subtenants’ use of the space. He told one of the plaintiffs he would encumber the property and defeat their interest using power of sale proceedings. The plaintiffs brought a claim for specific performance, but after the property was sold by the bankruptcy trustee on March 29, 2018, for $19,000,000, and the proceeds were distributed to creditors, the plaintiffs received nothing and did not obtain the shares as contracted.

Procedural history and findings

On July 19, 2024, the plaintiffs moved before Associate Justice La Horey to strike and dismiss Checroune’s pleadings due to his failure to comply with prior court orders. Checroune did not attend the motion and had not actively participated in the litigation since 2019, except for one attendance in 2023. Associate Justice La Horey struck Checroune’s pleadings and noted him in default. The court found that Checroune, in his individual capacity, breached his obligation to fulfill the share purchase agreement after clearing the title. Instead, he harassed the plaintiffs, used economic incentives to lure subtenants away, and frustrated the sale after obtaining the $1.2 million deposit. The court determined the plaintiffs were not required to tender in these circumstances.

Discussion of policy terms and clauses at issue

The share purchase agreement required Checroune to provide clear title and did not permit the use of the plaintiffs’ deposit for amounts allegedly owed by any other entity. The court found that Homelife Dreams Realty Inc. was not a party to the share purchase agreement and that Checroune was not entitled to apply the deposit to other debts.

Damages and remedies awarded

The court awarded the plaintiffs $4,000,000 for the lost gain they could have obtained had the transaction proceeded. The plaintiffs were also entitled to the return of their $1,200,000 deposit. As an oppression remedy under the Business Corporations Act, the court accepted the plaintiffs’ evidence of $130,000 lost value in leasehold improvements and $800,000 in lost rents from subtenants, and ordered additional compensation for Checroune’s oppressive acts in the amount of $930,000. The court declined to award damages for lost commission and a damage deposit due to lack of evidence. Prejudgment interest was ordered on damages related to the breach of agreement and compensation for oppressive acts, both running from October 1, 2015. The plaintiffs were awarded costs on a partial indemnity basis in the amount of $230,312.52.

Outcome

The plaintiffs were granted default judgment, with damages of $4,000,000 for lost gain, $1,200,000 for return of deposit, $930,000 for oppression remedy (including leasehold improvements and lost rents), and costs of $230,312.52, with prejudgment interest from October 1, 2015.