Trumped, for Now

It’s small, in light of his other issues, but Donald Trump is once again embroiled in litigation, albeit outside of the United States, which may result in findings against him of at least negligent misrepresentation sufficient to produce personal liability: see Singh v Trump et al, 2016 ONCA 747 (CanLII), <http://canlii.ca/t/gv3z7>. 

The action had been dismissed, completely, on a summary judgment motion. The Ontario Court of Appeal, earlier this month, allowed significant portions of the appeal. As a result, subject to a successful appeal to the Supreme Court of Canada – I can’t see leave being granted – the action will proceed, for now, on claims which could produce personal liability for Mr. Trump for, at least, negligent misrepresentation and perhaps fraudulent misrepresentation (see the summary in para. 159, particular items (3) and (4)).

The action is still in the pre-trial manoeuvres stage. The claims against Mr. Trump, personally, may never reach trial. I’d not be surprised if there is another pre-trial motion to dismiss them.

The case arises out of the construction of a mixed condominium / hotel called the “Trump Tower” in Toronto. (In passing that’s probably at least one “t” too many for the average television talking-head in Canada and the U.S.)

[1] In the mid-2000s, Sarbjit Singh and Se Na Lee each bought a Hotel Unit in the Trump International Hotel, a five-star building to be built in Toronto’s financial district. Mr. Singh and Mrs. Lee were both middle-class residents of the Greater Toronto Area and had no intention of occupying the Hotel Units themselves. Instead, they bought the units as investments, expecting that they would profit by participating in the hotel’s “Reservation Program”.[2] Under the Reservation Program, owners of individual Hotel Units could place their units in a common pool of rooms to be rented out at luxury rates by the hotel’s operator. Their expectation was that high occupancy and rental rates at the one-of-a-kind Trump International Hotel would provide healthy returns, even after deducting monthly expenses such as property tax, mortgage payments and housekeeping.
[3] Neither Mr. Singh nor Mrs. Lee were sophisticated investors, in real estate or otherwise. Both had to borrow heavily from family to finance their purchases. Both believed that buying into the Trump project would be an excellent investment. And in time, both came to realize that they were wrong.
As it happened, Mr. Singh and Mrs Lee (and others) were very wrong.

The details of the Trump International project are summarized in these paragraphs.

[6] In the early 2000s, Talon International Development Inc. and its parent Talon launched plans to develop a luxury hotel and condominium in downtown Toronto. At that time, Alex Shnaider was a Director and the Chairman of Talon. Val Levitan was a Director and the Chief Executive Officer and President of Talon. Mr. Levitan had no previous experience in construction, hotel management, or operations.
[7] Talon joined forces on the project with Donald J. Trump Sr., the New York-based developer, reality television personality and now presidential candidate. It entered into a licence agreement with Trump Marks Toronto LP to use the Trump name and trademarks for the building, which would be called Trump International Hotel & Tower. Talon also entered into an agreement with Trump Toronto Hotel Management Corp. to operate the Trump International Hotel.
[8] The Trump International Hotel & Tower was intended to be, and was ultimately built as, a 70-storey mixed-use complex at the corner of Bay and Adelaide Streets in Toronto’s downtown core. The building would contain two condominiums, one composed of residential condominium units and the other composed of full-service luxury hotel guestroom condominium units. Talon proposed to market and sell both types of units to the general public.
[9] Persons who bought Hotel Units would have to participate in a maintenance and operation program to cover expenses related to the upkeep of the hotel. Crucially for purposes of these actions, they would also be given the option of participating in the hotel’s Reservation Program. Under the Reservation Program, the hotel would rent the purchasers’ units out through its own system when the purchasers themselves or their guests were not occupying them. After the hotel deducted the expenses related to the Reservation Program, it would remit the rental income to the Hotel Unit purchasers. The Hotel Unit purchasers would use the profits from the room rentals to offset the carrying costs of the condominiums and to generate income.

The profits never materialised for purchasers such as the plaintiffs. The opportunity afforded them turned out to be fools’ gold.

The developers/promoters advertising material included the following from Mr Trump:

[20] Following the OSC Ruling, Talon began marketing the Hotel Units. It set up a sales centre on the building site and put ads in newspapers, magazines and other media. Visitors to the sales centre and to the Trump Tower website could watch a PowerPoint presentation that opened with a smiling Mr. Trump proclaiming: “It’s going to be the most elegant building there is. There won’t be a building to even compete with it. We’re going to do something very special in Toronto.”

Sound familiar?

I was living in Toronto at that time. My office was within a block of the Trump Tower site. I remember it going up and I remember the advertising. I admit that I don’t recall if, in other advertising, Mr. Trump ever used “huge” or claimed that the project would “make Toronto great” again. For what it’s worth, I also don’t recall if Mr. Trump pronounced the second “t” in Toronto.

It is with a small measure of irony that I’m able to advise that one of Mr. Trump’s appellate counsel was also a member of the same law school hockey team as I was. He played one of the two wing positions. My recollection (I may be wrong but I do not think so) is that he usually played on the right wing (in hockey) .

Ultimately, the decision in this case may turn on Angela Swan’s “don’t be a scumbag” paradigm.

DC