The collapse of the GTA condo market is at the centre of a tense legal battle between the two owners of a Burlington development, who are both seeking control over the project.
The Morgan Investments Group Inc., an investment firm led by Nigel Morgan, and Adi Development Group, led by Tariq Adi, are deadlocked and unable to make decisions about Nautique Lakefront Residences, a 25-storey, 254-unit building, heard Justice William Black in a Toronto civil courtroom hearing, Wednesday.
One of the points of contention is the price point for the remaining 54 units that are still not sold despite the fact that much of the work has been completed since 2024 (exactly how much has been completed is another thing the two parties disagree on).
“The units are priced over market right now and are not selling,” Morgan’s lawyer Tanya Pagliaroli told the court.
“The corporation is in a severe cash flow crisis,” she added, with two loans in default.
Right now Adi is taking a “wait-and-see approach,” she argued, and “it is not for anyone to say things are going to turn around.”
Adi’s lawyer Avi Bourassa told the court “there are more unsold units than either party would like at this time,” but that’s no fault of his client.
“Condo sales are much slower than they were before COVID,” he said.
The dispute offers a peek behind the curtain to how developers are handling the downturn in new condo sales in the GTA and Hamilton, which are down 69 per cent year over year, according to an August report from market research firm Urbanation.
The Toronto-area average condo price dropped to $615,000 in July, the lowest in four years, per the Toronto Regional Real Estate Board.
On the website for Nautique, buyers are offered a chance to win $100,000 if they buy a condo within 30 days. A one-bedroom unit under 600 square feet is listed at $599,000 according to HouseSigma.
Morgan and Adi formed Adi Morgan Development Group (Lakeshore) Inc. in 2014 to own and operate the downtown Burlington project at 370 Martha St., according to court documents associated with the case.
Adi was the exclusive listing agent and project manager.
Both parties are accusing each other of oppression, a business law term that in general means people are acting unfairly, and they are both trying to get the other party out.
Bourassa argues Adi should be able to buy out Morgan for fair market value, which he says is roughly $17.7 million.
Morgan would like to see Adi replaced as the exclusive listing agent, and to add a third board member.
Any buyout should be done through a “shotgun” sale, a mechanism where one or more of the shareholders buys out the shares of another, Morgan’s lawyers argued.
Morgan’s camp also accuses Adi of financial mismanagement, leaving them in the dark on financial decisions, and taking money from the project to give to another one.
Another member of Adi’s legal team, Justin Nasseri, said there is “zero evidence” for these allegations. He added they have given Morgan’s team ample information, and they are “overwhelmed” by it.
Pagliaroli said the building has been completed since 2024. But Bourassa said “there are still things to be done on the project,” such as landscaping and other work.
“Adi has been the face of the project,” he said, arguing a shotgun would be unfair as the brand is tied to them and they have been involved in a hands-on way that Morgan’s group hasn’t.
“This was Adi’s baby,” he said, and they should get to keep it.
This is not the first time the project has been in the news.
In late 2022, after complaints from buyers that they were asked to pay more than they originally agreed for units, and told they would have their purchase agreements cancelled if they refused, Adi Morgan Development Group (Lakeshore) Inc. paid a $60,000 penalty and $2.6 million to purchasers as part of a settlement with the Home Construction Regulatory Authority (HCRA).
Adi also accuses Morgan of buying out the principal loan in the property without his knowledge to gain the upper hand on the project, according to the large volume of court documents in the case.
There was “nothing illegal about buying” the loan, Morgan said in an interview before the hearing, calling it “normal business.”
In an email before the hearing, Adi lawyer Nasseri called this an “unlawful and surreptitious buyout.”
Adi “has consistently responded to the condo market downturn. It has adopted a prudent pricing strategy, designed to balance responding to the condo market with not irreparably depleting value for the corporation by fire-selling properties, ” he added.
Speaking generally, Morgan told the Star he predicts the condo downturn will last three to five years.
“I think it’s going to get worse, because a lot of these buildings, you know, you can’t just turn it off. That’s a problem.”
Once a building is in the air you need to complete it, or else everything will rust, he added.
“I think it’s going to be a tough run, and a lot of people in Ontario underestimate how much money goes in the economy from the construction industry,” he said. “I don’t think many people understand how big this bubble is. It’s huge.”
At the conclusion of the Aug. 20 hearing, Justice Black said he appreciates the urgency, and “it seems to be common ground that this business is in crisis.”
He hopes to have a decision within a week to 10 days.
