In a recent case, 2384125 Ontario Inc. v. The Diamond at Don Mills Developments Inc., twenty-five commercial condominium unit owners collectively sued the condominium developer for a total of $7,000,000, claiming that they were induced by misrepresentations by the developer and were overcharged occupancy fees and purchase price adjustments on closing.

The plaintiffs claimed that the developer was a “single purpose development company”, being a corporation incorporated solely for the development of this one condominium. All of the units in the condominium had been sold except for one. The developer also held vendor take-back mortgages on two of the sold units.

The plaintiff unit owners applied to the court for an order preventing the developer from transferring or mortgaging the one remaining unit that it owned and from transferring the two vendor take-back mortgages. “The plaintiffs claimed that such relief is justified because the unsold unit and the mortgages are believed to be the only assets available to satisfy any judgment obtained by the plaintiffs”.

The unit owners’ application was unsuccessful, as the plaintiffs did not provide any strong evidence that the developer was disposing of its assets other than in the ordinary course of its business. The plaintiffs also failed to show that they would suffer irreparable harm if the order was not granted. In coming to this conclusion the court quoted from a Supreme Court of Canada decision, RJR-Macdonald Inc. v. Canada, which stated that “the fact that one party may be impecunious does not automatically determine the application in favour of the other party who will not ultimately be able to collect damages.”