A developer who stood to benefit from the Ford government’s ill-fated plan to remove his property from the Greenbelt is facing allegations that he duped a business partner into selling his share of an unrelated property that was set to explode in value.
Michael Rice, CEO of the Rice Group of companies, is being sued by a company owned by businessman Allan Fenwick, with whom Rice partnered to purchase a 40-hectare property in East Gwillimbury in 2007.
Fenwick alleges that Rice and two other investors convinced him to sell his share of the property, and led him to believe they were all selling their shares. Then, Fenwick alleges, Rice and the other investors went behind Fenwick’s back and struck a deal with the new buyer, a real estate investment trust called Choice Properties.
It’s not clear from Fenwick’s lawsuit exactly how the new arrangement was formed.
What is known is that Rice’s company is currently building a 1.2-million-square-foot Loblaw’s distribution centre on the site — touted as the . The property is currently owned by a corporation which lists Rice and three senior executives from Choice Properties as its directors.
Fenwick is asking the court to force Rice and the other investors to compensate him for the value he “would have realized” if not for their “oppressive conduct.”
None of the allegations has been proven and none of the defendants has filed a statement of defence.
Rice did not respond to a detailed list of questions for this story. The other defendants — two numbered companies helmed by Gary Stern and Elijah Antflick, respectively — both declined to comment.
Fenwick’s lawyer, Ken Rosenberg, said his client had “no comment.”
A spokesperson for Choice Properties said the company “is not involved in this private matter between the litigants.”
Central character in Greenbelt scandal
Rice, a prominent developer in the GTA, became a central character in the province’s Greenbelt scandal because of a 275-hectare swath of Greenbelt land in King Township he purchased for $80 million less than two months before the province announced it would be removed from the protected area, fuelling speculation Rice had been tipped off by someone in government.
In an interview with Ontario’s integrity commissioner last year, Rice denied receiving any inside information.
“The crystal ball that they mentioned in the paper that we must have had is our knowledge and what we do on an everyday basis on Greenbelt land, on Whitebelt land, on developed lands,” Rice is quoted as saying in the . “That’s our business.”
The Auditor General’s report on the province’s initial Greenbelt plans noted that Rice was one of two developers who approached a housing ministry staffer at an industry event in September 2022 and provided him with information about their Greenbelt properties. The event was the day before Rice finalized his purchase of the King Township property.
Rice refused to be interviewed by the auditor general and went to court to fight a summons that could have compelled him to be interviewed and produce documents. (Former Auditor General Bonnie Lysyk decided to release her report without Rice’s participation.)
The allegations made against Rice by Fenwick don’t concern the Greenbelt land, but a property about 10 kilometres away on Woodbine Avenue, near Green Lane and Highway 404.
Rice joined representatives from Loblaw, Choice Properties, East Gwillimbury and York Region at a groundbreaking event in August 2022.
“This project has truly been a collaborative effort involving the public and private sectors,” Rice is quoted as saying in an East Gwillimbury news release. “We’re excited about this state-of-the-art facility in East Gwillimbury and York Region.”
Lawsuit alleges ‘dishonest conduct’
Fenwick’s lawsuit doesn’t specify the amount he is seeking. It asks the court for an order under the Business Corporations Act that would force Rice and the other defendants to compensate his company, SFA Investments Ltd., for the money he says he lost by selling the East Gwillimbury property earlier than he would have if they had not misled him.
The lawsuit is also seeking damages for “negligent misrepresentation” and “breach of contract.”
Fenwick invested $3.5 million into buying the $7.4-million property in 2007, making him the largest shareholder. He alleges that after more than a decade of minimal activity, Rice suddenly called a meeting in June 2021. He says Rice urged him and the other investors to take advantage of a “spike” in demand for industrial property by selling the land, adding that it could take another decade for the municipality to build sewer and water services, and developing the property privately would yield a low return on their investment.
Fenwick said he explicitly asked the other investors and Rice if they were involved with the buyer. They said they were not, according to Fenwick’s lawsuit.
After the sale of his share was finalized, Fenwick realized he was the only one not involved with the new buyer, he alleges.
“The defendants intentionally kept the plaintiff in the dark during their negotiations to sell the property, so that they could take for themselves the enhanced value associated with its imminent development by a marquee tenant,” the lawsuit states.
Fenwick said he only learned of his former partners’ “dishonest conduct” in early 2023.
“As a result of this dishonesty by the defendants, the plaintiff sold its shares in the Property for proceeds that were far less than the value it would have obtained but for the misconduct.”
