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Sandra Ania, Tim Sullivan and their dog Hana walk alongside an empty lot where a condo they bought was supposed to be located on March 3, 2019.Christopher Katsarov/The Globe and Mail

A Toronto condominium developer has appealed a ruling that ordered it to return a pre-sale purchase deposit after being found to have terminated a contract in bad faith.

Justice Katherine Swinton found that Hi-Rise Group failed to act in good faith when it declared Sanda Ania and her husband, Timothy Sullivan, had not met the financing requirements in a agreement to purchase a $444,900 condo.

The ruling was handed down on Feb. 15, 2019, more than a year after Hi-Rise began demanding more financial information while threatening to keep the couple’s $55,624 deposit.

The appeal was filed on March 15, on behalf of Hi-Rise by Monica Peters of Garfinkle Biderman LLP, who represented the company in the first trial. It argues Justice Swinton committed a number of errors in assessing evidence of bad faith and applying the law and claims, “The learned judge’s judgment gives rise to a reasonable apprehension of bias against the appellant.”

The appeal puts in doubt the return of the homebuyers’ deposit and a second trial for damages that the justice had ordered in his initial ruling.

At one point in the case, Hi-Rise chief executive Warren Green was asked under oath why he wouldn’t co-operate with Ms. Ania and Mr. Sullivan and he replied, “I don’t have to.” Mr. Green also said 96 of 116 pre-sale purchasers in his company’s Spice Danforth project had later been disqualified for similar financing clause issues. He also admitted that the condo project was no longer going forward and that he was now planning a rental apartment development on the land instead.

Days after the initial ruling, on Feb. 22, Spice Danforth Inc. (the company registered as the owner on Hi-Rise Group’s 35 Danforth Road project) sold the land to Danforth Residences Inc. for $18-million.

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Danforth Residences Inc. is a new corporation registered Jan. 25. Its sole director is Bryan McWatt, with an address listed at 65 Queen St. W. unit 210 – the same address for Bryton Capital Corp. where Mr. McWatt is the chief executive. Bryton Capital and Mr. McWatt are partnered with Hi-Rise group on a $300-million condominium project in Hamilton, and Bryton Capital is the manager of the project’s main financial backer, the conversion fund of The Labourers’ Pension Fund of Central and Eastern Canada, which takes commercial properties and finances conversion into residential properties.

“[The vendor] had no right to terminate other than for an agreed upon term,” said Audrey Loeb, partner at Shilby Righten, LLP. Converting a condo into a rental building was not in the pre-sale contract, so, according to Ms. Loeb, Hi-Rise should have worked with those contracted pre-sale buyers. “They would have had to negotiate with the buyers; they would have had to pay something extra.”

A complaint against Hi-Rise is also being probed by Tarion, Ontario’s new-home regulator.

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