Aurora Mills: drywall walls and two deposits the receiver wants to keep

Albert Gelman Inc., receiver of the Aurora Mills Business Park in Aurora, Ontario, asks the court to declare that two purchasers of industrial condominium units had no right to rescind over demising walls of steel studs and drywall where their agreements described six-inch concrete block (and, in one case, over two service rooms), and that it may keep their deposits: $393,993 paid toward Unit 6, priced at $1,969,965, and $1,020,000 paid toward Units 22, 23 and 24, priced together at $5,100,000. The motion is returnable in person on March 11, 2027, per the Notice of Motion, Nov. 4, 2026, pp. 1–2, para. 1 and the Fourth Report, Nov. 4, 2026, paras. 16, 35.

When this receivership was last reported here, on September 14, the receiver was preparing to ask for a timetable. Justice J. Dietrich set one on September 29, giving the purchasers until November 30, 2026 to deliver responding material, per the Endorsement of Dietrich J., Sept. 29, 2026, para. 2. Since its appointment the receiver has completed 16 of the 20 sales agreed before the receivership, and these four units are the rest, per the Fourth Report, Nov. 4, 2026, para. 12. The Fourth Report is the receiver's side of the argument. No responding material from either purchaser is in the record; the purchasers' positions reach it through their lawyers' letters, which the receiver attached to its report.

Concrete block in the agreement, steel studs on the drawings

Schedule "A" to the Unit 6 agreement lists "6 Inch concrete block walls from floor to ceiling." Section 3(a) of its Schedule "X" lets the vendor substitute materials "provided that the quality of any substituted material(s) is comparable to or better than the material(s) originally indicated," and records the purchaser's consent to any such substitution, per the Unit 6 APS, May 2, 2022 (Fourth Report, App. "K"), Sch. "A"; Sch. "X", s. 3(a). The receiver says the Units 22–24 agreement and the disclosure statement describe the same walls, and relies on section 3(a) in both agreements. In the disclosure statement the declarant reserves the right to alter the units' design, style, size and configuration "in its sole and unfettered discretion," provided each purchaser's common interest and share of common expenses will not change materially, per the Disclosure Statement, Jan. 12, 2022 (Fourth Report, App. "M"), s. 4.4(A) and the Fourth Report, Nov. 4, 2026, paras. 17(a), 17(c), 38(a)–(b).

According to the report, the drawings submitted for the building permit, dated June 5, 2023, which the Town of Aurora reviewed before issuing the permit on March 4, 2024, specify demising walls of steel studs and fire-rated gypsum board rather than concrete block. Dellaterra Asset Management, the receiver's development and property manager, has confirmed the walls were built of six-inch steel studs with 5/8-inch gypsum board on each side and batt insulation, per the Fourth Report, Nov. 4, 2026, para. 14. The Town's final inspection of the base building on Blocks 5 and 6 was marked "Passed" on June 30, 2025, the inspector writing that "the undersigned is satisfied all work is in compliance with the OBC," per the Town of Aurora Final Inspection Report, June 30, 2025 (Fourth Report, App. "H") and the Fourth Report, Nov. 4, 2026, para. 13.

Torkin Manes LLP, the company's real estate counsel and later the receiver's, has also advised, the report says, that no notice of material change under s. 74 of the Condominium Act, 1998 was delivered to either purchaser, and that the company did not tell Torkin of any change it considered material, per the Fourth Report, Nov. 4, 2026, para. 18.

Unit 6: occupancy in June, an objection in December

2851156 Ontario Limited agreed to buy Unit 6 on May 2, 2022, for office and storage use under section 1.05 of its agreement. Its interim occupancy closing was completed on June 27, 2025. In an occupancy agreement signed June 19, the report says, the purchaser acknowledged that it had inspected the unit and that the unit had been completed in accordance with the agreement, and before the occupancy closing it raised permits, paving and the gas account, but not the walls, per the Fourth Report, Nov. 4, 2026, paras. 17(b), 19.

On December 1, a week before the scheduled final closing, the purchaser's counsel objected to the walls, and two days later called drywall "a lighter and less durable material than concrete block" and inferior to it on fire, moisture, sound, break-ins and structural support. The company's litigation counsel answered on December 6 that the substitute was of comparable quality and that section 3(e) of Schedule "X" limited the remedy for a material change to termination within ten days after a purchaser is notified or becomes aware of it. "The construction materials used in the walls were obvious at the time of the occupancy closing," the email said, per the Fourth Report, Nov. 4, 2026, paras. 21–23, App. "Q".

On December 12 the purchaser's counsel gave notice under s. 74(6) that the agreement was rescinded, treating Torkin's December 2 reply as the first "written notice of a material change from the Vendor." The purchaser had made known, the letter says, that it would use the unit "to store and clean its collection of recreational vehicles," and required concrete block for safety, including against theft and break-ins, and for moisture and humidity control. "The Purchaser certainly would not have purchased the subject property had it known of the Vendor's substitution of the materials for the demising walls," it says, per the Unit 6 purchaser's letter, Dec. 12, 2025 (Fourth Report, App. "R"), pp. 1–2. The receiver notes that the December 2 email answered the purchaser's own objection of December 1, per the Fourth Report, Nov. 4, 2026, para. 24.

Ten days after the letter, Torkin submitted the company's application at Newmarket under s. 74(8) of the Act, for declarations that the change was not material and the agreement not rescinded. The court declined to issue it on January 5, 2026, the report says because the regional practice direction required a case conference first, and the receiver was appointed on January 23 before one was held, per the Fourth Report, Nov. 4, 2026, para. 26. The purchaser did not close on February 4, its counsel maintaining that the agreement had been rescinded, per the Fourth Report, Nov. 4, 2026, paras. 28, 30.

Units 22 to 24: an electrical room and a sprinkler room

2710436 Ontario Ltd. agreed on January 24, 2022 to buy the three units for $5,100,000. Its counsel's letters put its deposits at $1,024,051.94; the receiver says Torkin's trust records and deposit receipts show $1,020,000, the 20% the agreement called for, per the Fourth Report, Nov. 4, 2026, paras. 35–36, App. "HH". Its interim occupancy closings were not completed. After a pre-delivery inspection on July 4, 2025, it raised objections that included, as the report describes them, the walls, which it alleged were inferior in quality, durability and sound insulation; a communications or electrical room in Unit 22, which it alleged was built directly against the frame of the drive-through door; and a mechanical room in Unit 24, which it alleged was substantially larger than originally contemplated and obstructed the majority of the unit's usable width, per the Fourth Report, Nov. 4, 2026, paras. 39–41.

The company's litigation counsel answered on July 18 with the agreement's change clauses, among them section 3(b), which says the location and size of mechanical installations may differ from the sales brochure and "may result in both changes in location and room size reductions," and put the Unit 22 room at "approximately 5%" of the unit's square footage, per the Torkin letter, July 18, 2025 (Fourth Report, App. "DD"), paras. 3, 8. The receiver's own estimate is approximately 10% of Unit 22's ground floor area. On August 18, 2025, the report says, the purchaser's counsel purported to rescind the agreement for all three units under s. 74, and the company neither answered in writing nor brought a s. 74(8) application, per the Fourth Report, Nov. 4, 2026, paras. 45–47.