Law Times

Page 4 September 19, 2016 • Law timeS www.lawtimesnews.com NEWS Property sold for $1 million to cover $8,500 debt BY MICHAEL MCKIERNAN For Law Times D on't mess with Law- PRO when it comes to honouring your debts. That was a lesson one Toronto couple learned the hard way after the lawyers' professional indemnity insurer forced through the sale of their $1-million property to cover the $8,500 they owed. In January, Manouchehr and Fariba Baradaran lost their build- ing at 19 Church Ave., a com- mercial building housing a vet's office, in the Yonge St. and Finch Ave. area of Toronto after racking up two costs awards worth $7,750 and $750 during an unsuccess- ful attempt to sue their former lawyers in a separate property deal. LawPRO had called in the enforcement office at the On- tario Superior Court of Justice to begin sale proceedings after the Baradarans failed to pay up. Although the remaining funds will go to the couple, the Barada- rans were unimpressed with the $1,050,000 price achieved at auc- tion for a property they believed should have fetched as much as $5 million. They then applied to have the sale reversed, claiming that the proper process was not followed and that they had not been given notice of the sale. However, in an Aug. 25 de- cision, Ontario Superior Court Justice Thomas Lederer sided with LawPRO, dismissing the Baradarans' application. "One has to wonder how those involved could have al- lowed circumstances to develop such that a property of this value was sold to satisfy cost awards for so small an amount," Leder- er wrote in his judgment. Andrew Fortis, the head of the real estate and corporate- commercial practice groups at Hummingbird Lawyers LLP, says it's not unusual to see en- forcement proceedings of this sort launched. Far less common, he says, is one that goes all the way to completion. "Usually, when people get the letter from the sheriff that says their house is going to be sold, that's the point when they realize this is the real deal, and say, 'I'm not losing my house over this,'" Fortis says. "That's when they turn to a lawyer to see what they can do to call off the sale, set up a payment plan or refinance. You very rarely see a sale go through for such a low amount." According to Fortis, one of his own clients once set a court- ordered sale in motion over an outstanding $250 Small Claims Court damages award. "This client had deep pockets and a lot of principle," Fortis ex- plains. The debtor persistently refused to pay until it became clear that his ownership of his own home, which was worth around $700,000, was actually under threat. "When he got that knock on the door from the sheriff 's office, he wrote us a cheque," Fortis says. "For creditors, this is an avenue that the law permits for satisfy- ing judgments when you can't collect through other means. For debtors, if you have assets, they're not going to be taken away from you overnight without notice." The Baradarans' case dates back to 2012, when the pair sued two lawyers retained to help with the purchase of a property in Aurora, Ont. LawPRO de- fended the claim, and succeeded in getting it struck as statute- barred in July 2013. The judge in that case labelled the action vexatious, and awarded $7,750 in costs to LawPRO, according to Lederer's decision. An appeal followed, before its dismissal for delay led to a further $750 in costs in favour of LawPRO. The insurer filed writs of sei- zure and sale on a number of properties owned by the couple, and following several fruitless demands for payment, finally commenced enforcement pro- ceedings in July 2015. The auc- tion and final sale occurred in January 2016. The Baradarans argued the sale was improvident, claiming in affidavits filed with the court that the actual market value of the sold property was $4 million to $5 million. However, Lederer dismissed their figures as "bald statements" without an "analysis of any sort to support" them. LawPRO's request for enforc- ment, on the other hand, in- cluded a letter of opinion from a real estate broker that pegged the property's value at between $1.2 million and $1.3 million. "The property sold for $1,050,000. Given a value between $1.2 and $1.3 million, this is not unreasonable and certainly not improvident," Lederer concluded. The judge also dismissed the Baradarans' claims about a lack of proper notice, finding that the husband had acknowledged receipt of notices about the sale in July and November 2015. Un- der cross-examination, he also said he was dealing with medi- cal issues as the sale approached, and was under the impression that the auction would not go ahead while negotiations were underway about a settlement with LawPRO. "It seems to me that they ei- ther thought this was not go- ing to happen or they had their heads buried in the sand," For- tis says. "I would argue that six months should be sufficient time to refinance or to list your house for sale yourself. Then you know you're getting a fair market value. If you have assets, it's going to be difficult to evade creditors, given that this remedy is out there." Despite Manoucher Barada- ran's claims about a lack of funds to pay the original cost awards to LawPRO, Lederer noted that he owned several properties, includ- ing equity amounting to more than $2 million. Soon after the auction, he also purchased an- other Toronto home for just more than $2 million, the judge added. In an interview with Law Times, Manouchehr Baradaran says he has appealed Lederer's decision, and claims the whole episode has put a psychologi- cal strain on his entire family. In addition, he says the price he paid for his new Toronto home, in a similar location to the one he lost, adds weight to his claim that the auction price fell way short of its actual value. "They sold it for $1,050,000, yet when I buy a house in the same area, with money I got from pri- vate lenders, it costs $2,075,000. How can the commercial place, which has much more land, go for so much less?" he says. Justin Anisman, a lawyer with Toronto firm Mason Ca- plan Dizgun Roti LLP who acted for LawPRO in the matter, said he was unable to comment while the case is before the courts. Toronto lawyer Patrick Au- lis says the moral of the story is: "Don't bring frivolous lawsuits, because they will result in a cost award being made against you. "And if you do get hit with one, take it seriously, because parties can and will enforce them. Dragging your feet could result in you losing your home," Aulis adds. LT Andrew Fortis says a recent case where a couple's property was sold to cover legal bills is unusual, due to the 'low amount' owed. Gala Dinner and Awards Presentation ,SRSYVMRK'EREHE´W0IEHMRK0E[]IVW9RHIV¯JVSQPE[½VQWERHMR¯LSYWI¯XLMW IZIRX[MPPTE]XVMFYXIXSXLIVMWMRKWXEVWSJXLIPIKEPGSQQYRMX] Keynote Speaker Marc André Blanchard 'EREHMER%QFEWWEHSVXSXLI9RMXIH2EXMSRW(MWXMRKYMWLIH6MWMRK7XEVW%PYQRYW Emcee Jean Cumming)HMXSVMR'LMIJLexpert The Fairmont Royal York Hotel, Toronto 8LYVWHE]2SZIQFIV TQ'SGOXEMP6IGITXMSR TQ+EPE(MRRIVERH%[EVHW4VIWIRXEXMSR Dress: &YWMRIWWEXXMVI 8STYVGLEWIXMGOIXWSVXSWTSRWSVXLIIZIRXGSRXEGX CarswellMedia.Sales@thomsonreuters.com Presented by Lexpert, the prestigious Rising Stars Awards Gala honours winners from across 'EREHEERH[IPGSQIWPE[½VQERHMRLSYWIPIEHIVWERHHMWXMRKYMWLIHKYIWXWXSGIPIFVEXIERH network with others who are at the top of the legal profession. PI\TIVXGEVMWMRKWXEVW 7MKREXYVI7TSRWSV &VSR^I7TSRWSV ,SWXIHMR4EVXRIVWLMT[MXL Untitled-3 1 2016-09-13 2:44 PM Check out lawtimesnews.com for insight from our regular online columnists Monica Goyal discusses the latest gadgets and trends in legal technology in Bits & Bytes From trade deals to foreign investment, Patrick Gervais keeps you up to date on business issues in Trade Matters Darcy Merkur brings a plaintiff-side perspective on insurance matters in Personal Injury Law

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