Vaughan’s Icona towers purchasers mull legal action against Gupta Group

The real estate group stil wants to build towers taller than the previously cancelled Icona towers at Steeles Avenue and Yonge Street in Thornhill

Yorkregion.com
October 5, 2018
Dina Ibrahim

Hundreds of disgruntled purchasers of pre-constructed units in the now cancelled Icona towers in Vaughan are exploring potential legal action against the developer.

They gathered in Woodbridge the evening of Oct. 1 to listen as Toronto lawyer Ted Charney laid out their options. 

Charney is already representing another disillusioned group who bought condos at Cosmos towers, also in Vaughan, before that project was cancelled back in April.

With the Charney's help, that group is now filing a class action lawsuit against Cosmos-owner Liberty Developments.

The former Icona purchasers met behind closed doors at the Royal Canadian Legion for approximately an hour and half as Charney advised them on the best course of action to take following Gupta Group’s surprising cancellation of the project in mid-September.

Melisa Leone Jardim, one of the meeting's organizers and one of the four members of the For Justice Committee set up to help purchasers in the battle with the developer, was looking forward to moving into her new Icona apartment with her husband and their two sons in September 2021.

Jardim said after the meeting that Charney so far hasn’t “ironed” any course of action yet, but he said “this is not a class action lawsuit” and that “he referred to it as a joinder suit.”

In law, a joinder suit allows for multiple issues to be heard in one trial, meanwhile, a class action lawsuit is where one of the parties is a group of people, who are represented collectively by a member of that group.

But a day after, a website called Icona Condos Cancellation, became open to purchasers to register to "commence a proceeding in the Ontario Superior Court of Justice or if necessary through an arbitration," with each unit holder paying $565 to Charney's services.

In a phone interview, Charney said “the purpose of the meeting was not to agree on anything but to inform the purchasers about their options about pursuing a legal remedy for the cancellation of the project.”

One of the thorny issues is that the Gupta Group was trying to develop a piece of land in Vaughan that had a “restrictive covenant preventing any construction of condominiums.”

The “restrictive covenant” was in place since 2005, he added.

Despite the “restrictive covenant,” the Icona towers were first announced in January 2017, leading many to question why Gupta went ahead with the project despite the obvious legal limitation.

In a statement, the management of Icona Developments Inc., said they are “extremely saddened and disappointed” over the cancellation, reiterating what they have said previously that it happened "because of circumstances beyond our control that make the project unfinanceable.”

The firm emphasized that: “We have refunded purchaser deposits in full and without delay.”

Gupta Group eyes new project

Shortly after Gupta Group announced the cancellation of the Icon project, it submitted an official application to the City of Vaughan for a permit to erect three residential towers at Steeles Avenue and Yonge Street.

For that development, the company is proposing to erect a 65-storey building and two 52-storey buildings.

If built, the condo towers would be higher than its Icona condo towers, which, at 51 and 53 stories respectively, were billed at the time as the tallest in Vaughan.

The applications for the new project, so far, have been “circulated to external agencies and internal departments for review,” the City of Vaughan added, but it did not give any further information.

However, Ward 5 Councillor Alan Shefman, who represents Thornhill in Vaughan, said the intent to build the new towers hasn’t “been presented formally to the city.”

Furious Icona buyers

Jardim like other wishful-owners lambasted Gupta’s decision to cancel the Icona project, saying they're not merely investors but families with future plans.

The 34-year-old Vasyl Bublyk, currently living with his parents in Barrie, is also among those furious would-be Icona residents.

His plan to move into his new condo fizzled down into thin air after he received a letter on Sep. 14 from Icona Developments Inc., telling him that his purchase agreement is “terminated.”

“The idea was to sell the [family] house and buy two condos,” Bublyk said.

One condo was expected to be his wedding bliss nest and the other one is for his parents, he lamented.

Bublyk, who works in construction and sees himself as a seasoned manager in the industry, is baffled how it was easy for Gupta Group to legally to opt out.

“Every single point of that agreement is on the side of the vendor, there is not a line or an item to the advantage of the buyer,” he said. “For them, it is easy to press the button so they can re-sell it at a better value.”

Himanshu Nijhawan, also 34, was looking forward to offer his retiree parents the future Icona condo as a “gift” after depositing approximately $103,000.

Currently, “priced out of the market” due to real estate prices going up, Nijhawan says it is “unfair” for these vendors to use a “finance clause” to have an upper hand when deciding to terminate the deal.

“So basically they say that they didn’t receive satisfactory financings and that can mean anything such as an interest rate that they like,” he said. “But they should have these things set up before starting the project. They should know what the banks will offer them and what the conditions are.”

Calls on Ford to take action

On Sep. 19, Nijhawan sent an email to Premier Doug Ford, urging him to inject a clause by allowing people, “who bought into it always have the option to buying into the condo again at the same price for similar units instead of being stuck with nothing.”

In the email, Nijhawan called on Ford to: “Please help your voters.  We believe in you.  Please hold these developers accountable,” adding that “greed” is the “real reason” behind the cancellation of the project.

“The condos had appreciated more than $100,000 over the year and half they held our deposits.  Now they know they can resell it a few years later for a lot more money.  These guys have more than enough money to fund the project themselves.”

Nijhawan is hoping for a class action lawsuit against Icona similar to the legal case filed against Liberty Developments, who also cancelled their high-profile Cosmos condos Vaughan six months ago.

Filed Aug. 30 on behalf of 451 buyers of Liberty Development’s Cosmos condos, the case argues that the sales contracts went beyond what’s allowed by Ontario’s building regulator, Tarion, in pre-construction agreements.

'Burned twice'

Worst, Bublyk said he was “burned twice” as he made an earlier purchase with Liberty Developments.

“I have been in the construction business for 15 years. I have seen it all, but I haven’t seen people  canceling projects just because they are greedy,” he said. “Even sometimes if the profit margins are little, the developer should still deliver, maybe not the best quality but at the end of the day,  they are still getting the units, this is not the case.”

One of Bublyk’s condos cost $700 per square foot at the time of purchase, now it has almost doubled to about $1,300.

“They don’t care about people. Some people are planning retirement, some planning weddings, some expecting a baby,” he said.

Mayur, another would-be Cosmos condo owner in his mid-thirties, shared a similar sentiment when he said that “there should be some fierce law, where one cannot take advantage of what the laws and conventions are.”

There needs to be “some sort of protection..that’s really what it is,” he said. “Me as a consumer i couldn’t have a way out if i wanted it.”

Scheduling a hearing date

So far, there is no legal case being filed at Gupta Group.

“The buyers should get organized. It is really unfair over what they did,” Nijhawan said.

However, there is some progress being done at the Cosmos side.

Charney, the lawyer representing Cosmos owners, says “we will now seek to schedule a hearing date

Asked how municipal and provincial governments can amend the law to stop developers from doing this, Charney said: “By prohibiting vendors from including an  early termination condition based on satisfactory financing in the contract; or by requiring the vendor to exercise the condition within say 90 days of the project selling 65 per cent of units instead of years after purchasers have committed to purchase a unit; or by requiring vendors to prove to Tarion before terminating the project that the vendor has made  all commercially reasonable efforts  to secure financing.”

Tarion 'needs to get its act together'

Marilyn Iafrate, a Vaughan councillor running for re-election on Oct. 22, has been very outspoken about the issue.

“I am truly disgusted with the recent wave of condo projects pulling out,” Iafrate said. “ It shouldn't take two or more years to determine that your project isn't financially viable. And if you don't know, you shouldn't be pre-selling.”

Iafrate said "Tarion needs to get its act together“ and "bring in new rules to protect purchasers because right now I feel that they are only protecting the building industry.”

The councillor said the situation adds more fuel on fire when it comes to the “lack of affordability” of homes especially to “our young people who are starting out; the very people builders want to sell to but are now priced out of the marked.”

“Maybe the rule should be - build the project within a year of selling your minimum 60 per cent or pay back the deposits at current market value - rest assured if that happened, most projects would move forward and take a little less profit.”

As Bublyk receives his cheque of $63,999.60, his top demand is to make the new rules at an “equal footing to both parties.”

“The vendor has the right to change the size of your condo, has the right to change the shape of your condo and the height of your ceiling, pretty much anything they think it is right,” he said, describing the Ontario tender agreement as “total nonsense.”