Executive Summary: Key Legal and Evidentiary Issues

• Caledon Fuels Inc. attempted to circumvent the lease with Parkland through multiple coordinated transactions involving related parties.

• Parkland’s lease included negative covenants and a Right of First Refusal (ROFR) that were ignored in a non-arm’s length sale to 16408117 Canada Inc.

• The Court found “badges of fraud” in the respondents’ conduct, particularly in the deletion of Parkland’s notice of lease and orchestrated power of sale.

• Actual notice of the lease by the purchaser 164 defeated their claim to good title despite registration-based arguments under the Land Titles Act.

• Interlocutory relief and a Certificate of Pending Litigation were granted due to serious triable issues and risk of irreparable harm to Parkland’s business.

• Partial indemnity costs of $79,140.92 were ordered against five named respondents due to their coordinated efforts and disregard of prior court orders.

Background and lease relationship

Parkland Corporation is a supplier and marketer of petroleum products, operating Ultramar-branded gas stations. Caledon Fuels Inc. was the registered owner of the property at 16544 Hurontario Street, Caledon, Ontario, and operated an Ultramar station under a lease agreement with Parkland. The lease, originally executed in 2015 by predecessor companies, included signage, renewal rights, and Parkland’s Right of First Refusal (ROFR). Caledon had no unilateral right to terminate the lease. The lease was renewed by Parkland in 2023, extending its term to July 31, 2028.

Unilateral termination and initial litigation

In January 2024, Caledon attempted to terminate the lease and notified Parkland of its intent to debrand the station. Parkland filed an application and obtained an injunction from Justice Papageorgiou on April 22, 2024, confirming the lease was in effect and enjoining Caledon from using or selling non-Parkland fuel.

Actions to evade the lease

Parkland later discovered that in September 2023, Caledon’s lawyers at Loroy LLP had deleted Parkland’s registered notice of lease (“Notice of Lease #1”) from title without notifying Parkland. Parkland responded by filing a new notice of lease (“Notice of Lease #2”) in March 2024, which stood behind a 2022 BMO mortgage also handled by Loroy LLP.

Subsequently, Caledon arranged for the BMO mortgage to be assigned to Numberdar Holdings Inc. on May 15, 2024. Caledon defaulted on the mortgage shortly after its assignment, and on August 21, 2024, Numberdar issued a Notice of Sale. The property was sold under power of sale to 16408117 Canada Inc. on November 12, 2024, despite Parkland’s notice of its lease and ROFR rights. The sale was brokered by Masud Raja, a business partner of Chaudhary (the central figure in Caledon), and the principals of 164 had long-standing ties to Caledon. Parkland was not notified of the sale.

Post-sale actions and Parkland’s response

Immediately following the sale, 164 notified Parkland it would not operate under the Ultramar brand. Parkland objected and filed a new application on November 28, 2024, followed by a motion for interlocutory relief on December 6, 2024.

Court’s findings and relief granted

Justice Schabas found that Parkland’s leasehold interest constituted an interest in land and that Parkland raised serious triable issues, including claims of fraud and conspiracy. The Court found “badges of fraud” in the respondents’ actions and ruled that Parkland had a strong case for a Certificate of Pending Litigation and interlocutory injunction. The Court concluded Parkland would suffer irreparable harm without relief, as its lease model and brand integrity depend on long-term agreements with station operators. The injunction enjoined Caledon and 164 from breaching the lease's negative covenants.

Costs decision

In the subsequent decision released on February 5, 2025, Justice Schabas awarded Parkland partial indemnity costs of $79,140.92, payable by Caledon Fuels Inc., 16408117 Canada Inc., Mian Abubaqr, Numberdar Holdings Inc., and Narinder Khasria. The Court declined to order substantial indemnity costs, finding that although there were “badges of fraud,” the conduct did not rise to the level of “reprehensible, scandalous or outrageous” to justify an elevated award. The decision emphasized that the parties acted in concert to effect the sale and removal of Parkland from the property, and costs were not deferred to the hearing of the full application.