A developer who stood to benefit from the Ford government鈥檚 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鈥檚 back and struck a deal with the new buyer, a real estate investment trust called Choice Properties.
It鈥檚 not clear from Fenwick鈥檚 lawsuit exactly how the new arrangement was formed.
What is known is that Rice鈥檚 company is currently building a 1.2-million-square-foot Loblaw鈥檚 distribution centre on the site 鈥 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 鈥渨ould have realized鈥 if not for their 鈥渙ppressive conduct.鈥
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 鈥 two numbered companies helmed by Gary Stern and Elijah Antflick, respectively 鈥 both declined to comment.
Fenwick鈥檚 lawyer, Ken Rosenberg, said his client had 鈥渘o comment.鈥
A spokesperson for Choice Properties said the company 鈥渋s not involved in this private matter between the litigants.鈥
Central character in Greenbelt scandal
Rice, a prominent developer in the GTA, became a central character in the province鈥檚 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鈥檚 integrity commissioner last year, Rice denied receiving any inside information.
鈥淭he 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,鈥 Rice is quoted as saying in the . 鈥淭hat鈥檚 our business.鈥
The Auditor General鈥檚 report on the province鈥檚 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鈥檚 participation.)
The allegations made against Rice by Fenwick don鈥檛 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.
鈥淭his project has truly been a collaborative effort involving the public and private sectors,鈥 Rice is quoted as saying in an East Gwillimbury news release. 鈥淲e鈥檙e excited about this state-of-the-art facility in East Gwillimbury and York Region.鈥
Lawsuit alleges 鈥榙ishonest conduct鈥
Fenwick鈥檚 lawsuit doesn鈥檛 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 鈥渘egligent misrepresentation鈥 and 鈥渂reach of contract.鈥
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 鈥渟pike鈥 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鈥檚 lawsuit.
After the sale of his share was finalized, Fenwick realized he was the only one not involved with the new buyer, he alleges.
鈥淭he 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,鈥 the lawsuit states.
Fenwick said he only learned of his former partners鈥 鈥渄ishonest conduct鈥 in early 2023.
鈥淎s 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.鈥
