Court approves class action against Trump tower builder
Lawsuit could involve 150 condo owners looking to recoup $30 million in losses
An Ontario court has certified a classaction lawsuit by the buyers in a Toronto hotel that once bore the name of U.S. President Donald Trump.
The buyers want to sue Talon International, the company that built the property, to recoup the deposits they paid on five-star hotel condominium suites.
The Trump Tower included 261 hotel condominiums and another 118 residential units.
The class action, which involves only the hotel unit owners, almost certainly ensures that the legal battles surround- ing the original luxury property will continue for at least another three years.
Now part of the Marriott chain, the hotel was last year stripped of Trump’s name, which Talon was licensed to use. It is now known as the Adelaide Hotel. The class action could involve as many as 150 hotel condo buyers looking to recoup deposits worth an estimated $30 million, lawyer Mitchell Wine said.
He represents Ashleka Persaud, a Toronto-area woman who bought one of those suites in 2007.
Persaud and her husband, under the company name Ten Eight Vacations, paid a $227,500 deposit on a $910,000 unit in the property at Bay and Adelaide Sts.
The hotel was originally supposed to open in March 2009. But it took until January 2012 for the official opening, and Persaud gained occupancy of her unit the following month, according to court documents. About a month later, Trump would be photographed shaking hands on the property with the late former Toronto mayor Rob Ford. Persaud, however, never closed on the sale as scheduled by the end of that year.
Court heard that the estimates provided to the buyers in the hotel overstated the revenue potential of the suites, and understated or failed to disclose the expenses. The occupancy rates on the hotel suites, which were supposed to rent for $550 to $600 a night, were so poor buyers like Persaud were losing between $4,000 and $5,000 per month.
According to the application decision by Justice Paul Perell, the class action will determine whether Talon made fraudulent or negligent representations to the buyers in its revenue and cost estimates for the hotel units.
Only 50 of the hotel condo sales closed, according to court documents. It is believed some units were never sold.
Under Ontario class action provisions, it is up to the buyers to opt out of the suit once contacted by the applicant’s lawyers. But given the length of the Trump Hotel saga, it could take some time to locate all the potential applicants, according to Wine.
He also successfully represented warehouse supervisor Sarbjit Singh and homemaker Se Na Lee at an Ontario appeal court where they claimed to have lost hundreds of thousands of dollars in the Trump Tower.
The appeal court ruled the buyers should be released from their commitments in the hotel and compensated for their losses. The Supreme Court in March dismissed Talon’s application to appeal that decision.
“What I’ve said is the position of Persaud and everyone else who is in the class is exactly the same as Mr. Singh,” Wine said on Friday.
It is not known whether Talon will appeal the class action certification ruling.