In a developing controversy, a Toronto CEO along with his 12 affiliated companies face the prospect of a class-action lawsuit. The lawsuit alleges that these entities exploited their HVAC rental customers by holding their homeowner titles “hostage”. This was done in return for hefty sums of money, asserts a legal representative of the consumers.
The lawsuit, brought forth by Toronto residents Goren Donev and Alga Bonnick, contends that Crown Crest Capital Management Corp, along with at least 11 other companies managed by CEO Lawrence Krimker, violated Ontario’s Consumer Protection Act. None of these companies informed their rental customers that security interests, worth thousands of dollars, had been imposed against their home titles. Furthermore, it is alleged that the companies’ sales representatives sold these contracts door-to-door, a practice outlawed in Ontario since 2018.
These security interests, functioning similarly to liens, serve as financial collateral for lenders. In this context, they were used to guarantee the value of the companies’ heating, ventilation, and air conditioning (HVAC) units. While such interests are a common practice in the home equipment rental industry, usually, such interests match approximately the cost of the equipment. However, in Donev and Bonnick’s case, the collective sums fixed against their homes exceeded the amount of $20,000.
According to Mohsen Seddigh from the Toronto law firm Sotos Class Action, exploitative practices are prevalent in the home equipment industry. He mentions that lenders can profit beneficially from imposing costly security interests on titles, as homeowners are commonly left with no option but to settle these inflated sums, often without being aware of the interests and only discovering them when they attempt to sell their property or obtain a new mortgage.
Crown Crest responded to these allegations in a written statement issued in June, claiming awareness of the accusations leveled against “various corporations and a senior executive”. They dispute all charges and anticipate dismissal, while maintaining their commitment to transparency and compliance with consumer protection laws.
Krimker, who has had at least three charges levied against him under the Consumer Protection Act for failing to exercise reasonable care as a corporation’s director, was unresponsive to numerous requests for comment.
A statement of defense on behalf of Krimker denies all allegations against him, asserting that Krimker as a corporate officer is a discrete entity from his companies and that he does not participate in “day-to-day operations”. Nevertheless, the consumers’ claim alleges that Krimker was the mastermind behind the operation, enabling him to create multiple companies to avoid liability, thereby making him jointly liable.
The class action is currently in the preliminary stage of awaiting a certification hearing, during which the initial appearances of both parties will take place.
Should the claim be certified and subsequently successful in its trial phase, existing interests would be removed from consumers’ titles and class members would collectively be awarded $5 million in damages.
The lawsuit alleges that Krimker manipulated more than a dozen companies in transactions with homeowners. Predatory sales tactics applied by these companies reportedly included clauses allowing the provider to register a security interest against the homeowner’s property, and transfer the agreement to any person at any time without the homeowner’s consent or notice. The overall effect was that homeowners were barred from dealing with their properties without paying for the security interest.
Seddigh explains that customers often became aware of these interests only during the process of selling or refinancing their homes. The weighty burden of these interests held their homes “hostage” for a significant amount of money. In such instances, homeowners usually felt pressured to pay these sums of money.
An attorney argues that this issue extends beyond the allegations against Krimker and his business. The most vulnerable members of society are often the most severely impacted, including senior citizens and individuals with a limited understanding of English.
The allegations against Krimker and the 13 associated corporations have not yet been proven in court. The legal team at Sotos Class Action anticipates the action’s certification hearing to take place early next year.