253 Queen Street East: a $17.6 million sale and one claim at the bar date

The land at 253 Queen Street East in Brampton is a 1.57-hectare site on the south side of the street, east of Hansen Road, and when Rosen Goldberg Inc. took control of it in February 2024 it held a multi-unit commercial plaza, surface parking and seven tenants, per the First Report of the Receiver, June 14, 2024, para. 4. 253 Queen Street Inc. had bought it from Homedale-Eagle Corporation in May 2018 for $15,150,000, and on September 29, 2023 the City of Brampton passed a zoning by-law approving 1,001,043 buildable square feet in three towers of 33, 38 and 32 storeys, per the Reasons of MacNeil J., 2024 ONSC 6590, Nov. 26, 2024, paras. 9, 14. The plan counted 1,026 residential units, 8,154 square metres of office space and 1,860 square metres of retail, per the Fourth Report of the Receiver, Aug. 27, 2026, para. 6.

The money, Justice MacNeil wrote, came primarily from a first-ranking $10 million vendor take-back mortgage in Homedale-Eagle's favour and a second-ranking $2 million charge held by Sky Mortgage Corporation, and the rest from about $9 million that two limited partnerships, Mixed-Use Developments (Ontario) L.P. and Wasaga Developments and Infrastructure 2021 L.P., paid for non-voting special shares entitled to dividends from the net proceeds, if any, of the redevelopment and sale, per the Reasons of MacNeil J., Nov. 26, 2024, paras. 10–11.

The vendor take-back started as a five-year loan at 3%; by May 2023 its maturity had moved to May 2, 2024 and its rate to 8%, payable in quarterly instalments of $200,000. In late July 2023 the company's principal, Mahdi Tajbakhsh, asked to defer the August instalment to November 2, and Homedale-Eagle agreed. On November 7 its bank told it that stop payments had been placed on the post-dated cheques for both instalments. Demand for $10,447,829.55 followed on November 22, and Sky, whose mortgage was also in default, supported a receivership, per the Affidavit of Haim Klein, sworn Dec. 22, 2023, paras. 4, 9–11, 15–19. "On consent, Order to go in the form provided to me in draft," Justice Valente endorsed on February 8, 2024, appointing Rosen Goldberg receiver and manager, per the Endorsement of Valente J., Feb. 8, 2024.

On September 8, 2026, the file, by then on the Commercial List in Toronto, came before Justice Dunphy at a 9:30 scheduling appointment. "This should be the penultimate step in this proceeding," he wrote, per the Endorsement of Dunphy J., Sept. 8, 2026, para. 1.

Two equity groups and a remediation agreement

Shortly after the appointment, counsel for TriDelta, the general partner of the partnerships holding a majority of the debtor's equity, pointed the receiver to a September 18, 2023 trial decision of Justice Kimmel, 2023 ONSC 5099, in an action between TriDelta and the partnerships' former general partners, controlled by Tajbakhsh, per the First Report of the Receiver, June 14, 2024, para. 7. Justice Kimmel had granted TriDelta's claim and dismissed the counterclaim, per the First Report of the Receiver, June 14, 2024, App. B, para. 13. Tajbakhsh remained the debtor's sole officer and director and, as the receiver understood it, controlled its minority equity, per the Second Report of the Receiver, Oct. 4, 2024, para. 7.

The site also carried a 2009 settlement under which United Technologies Corporation and Lear Corporation, tenants in Homedale-Eagle's day, fund remediation and monitoring through an escrow agent, with 60% of remediation costs payable to the debtor, which assumed the agreement, release and indemnity included, when it bought the land, per the Reasons of MacNeil J., Nov. 26, 2024, paras. 31–32, 62.

Five weeks on the market

The receiver collected proposals from CBRE and Colliers International, reviewed two the debtor had obtained from JLL and Institutional Property Advisors, and recommended CBRE on an unpriced listing at a 1.25% commission, per the First Report of the Receiver, June 14, 2024, paras. 11–14. Justice Hilliard approved the process on June 27, 2024, and none of the parties served, the debtor and the TriDelta entities among them, opposed it, per the Reasons of MacNeil J., Nov. 26, 2024, paras. 17–18.

CBRE launched on July 3 with signage, trade advertising, weekly emails to more than 1,500 contacts, over 200 calls and nine face-to-face meetings; 22 parties asked for information or data-room access. Three offers arrived, each conditional on due diligence. On August 3 the two highest re-submitted, the eventual purchaser at a lower price with conditions removed, the other at a higher price that still fell short. The agreement signed on August 15 carried a price the receiver called "significantly higher than the Purchaser's initial re-submitted offer," and a $1.76 million deposit, per the Second Report of the Receiver, Oct. 4, 2024, paras. 13, 15–19. TriDelta, briefed on August 7, "expressed disappointment regarding the anticipated realization" and asked for the process to be extended; the receiver declined. Tajbakhsh received the offers and the agreement, and his counsel wrote to raise concerns, per the Second Report of the Receiver, Oct. 4, 2024, paras. 22–26.

Approved over the debtor's objections

Justice MacNeil heard the approval motion on November 13, 2024. Both mortgagees supported the sale. The debtor and the TriDelta general partners and partnerships opposed it on price, on the environmental indemnity, and on a claimed beneficial interest in the land, per the Reasons of MacNeil J., Nov. 26, 2024, paras. 3–4, 43.

The debtor called the result a "dramatically depressed sale price" and relied on four brokerage proposals that valued the property much higher. The judge found that evidence insufficient: one proposal's range captured the agreement's price, another's low end was "in the ballpark," and the other two were not comparable, one having apparently left out environmental contamination and the other being based on a completed condominium project. "This is not a situation where there was a substantially higher bid, or a new and higher bid, that was left on the table or ignored by the Receiver," he wrote, holding the price to be the "best evidence" of fair market value, per the Reasons of MacNeil J., Nov. 26, 2024, paras. 46, 52, 54, 56.

The debtor also said a buyer should have been made to assume its environmental release and indemnity, since the agreement indemnified only the receiver. The judge rejected that because the debtor had not raised it when the sale process was approved, the settlement did not require assumption on a sale, and under its commitment letter with Sky the debtor's environmental liability survived foreclosure, per the Reasons of MacNeil J., Nov. 26, 2024, paras. 59–65.

The trust claim rested on a 2017 declaration of trust between Mixed-Use LP and U Real Estate Group Inc. and, in the alternative, a purchase money resulting trust. "Based on the record before me, I am not prepared to find that Mixed-Use LP (or Wasaga LP) is a beneficial owner of the Property," Justice MacNeil wrote; the declaration showed only that U Real Estate Group held $250,000 in trust, per the Reasons of MacNeil J., Nov. 26, 2024, paras. 66, 69, 72, 76. Selling only the registered interest, or paying the proceeds to the partnerships, would be a collateral attack on the unappealed sale process order, and with no registered caution and no evidence of notice, the two lenders were entitled under s. 62 of the Land Titles Act to rely on the debtor's power to mortgage the land, per the Reasons of MacNeil J., Nov. 26, 2024, paras. 85–87, 93–94. He granted the vesting order and a temporary sealing order, and endorsed, at the opposing parties' request, that they reserved their rights over how the costs of the receiver and the mortgagees would be allocated among them, per the Reasons of MacNeil J., Nov. 26, 2024, paras. 112, 114–115. The purchaser is 1001008209 Ontario Inc., a single-purpose entity for which 10060289 Ontario Inc. signed, per the Approval and Vesting Order, Nov. 26, 2024, recitals.