Arnone v. Amelio, 2013 ONSC 6536

CITATION: Arnone v. Amelio, 2013 ONSC 6536

DIVISIONAL COURT FILE NO.: 183/13

DATE: 2013-11-27

SUPERIOR COURT OF JUSTICE – ONTARIO

DIVISIONAL COURT

RE: Delfino Arnone and Anita Arnone, Plaintiffs (Respondents)

AND:

Liana Amelio and Lucia Lanzino, Defendants (Appellants)

BEFORE: Mr. Justice H.J. Wilton-Siegel

COUNSEL: David Quayat, for the Plaintiffs (Respondents)

Antonio Conte, for the Appellant Liana Amelio

HEARD: October 21, 2013

ENDORSEMENT

[1] The appellant Liana Amelio (“Amelio”), in her personal capacity and as litigation guardian for her mother Luciana Lanzino (“Lanzino”), appeals an order dated March 20, 2013, of Deputy Judge Bocci of the Toronto Small Claims Court (the “Order”) granting judgment in favour of the plaintiffs against Amelio in the amount of $25,000.

Background

[2] In early 2005, the plaintiffs Anita Arnone (“Arnone”) and her husband Delfino Arnone (collectively, the “plaintiffs”), loaned $35,000 to enable Joseph Lanzino, Arnone's brother and Lanzino’s husband, to pay certain legal fees. Joseph Lanzino died on September 4, 2007 while the loan was still outstanding. Amelio contends the loan was to Joseph Lanzino personally and says his estate is insolvent.

[3] Shortly after his death, Arnone attended a family meeting at Amelio’s house during which she alleges the loan was discussed and Lanzino and Amelio stated that the loan would be repaid from the proceeds of the sale of the Lanzino home at 85 Comay Rd. once it was sold.

[4] On August 8, 2008, Lanzino signed a letter (the “Acknowledgement”) which read as follows:

I Lucia Lanzino would like to ensure that my sister-in-law Anita Lanzino-Arnone and Delfino Arnone get repaid the $35,000 dollars plus interest. This money is to be paid back to them once 85 Comay is sold. They are the first to get their money back in full. My daughter Liana Lanzino has been given my estate and she will be responsible to pay this money back to her aunt Anita Lanzino-Arnone and Uncle Delfino Arnone.

Sincerely,

Lucia Lanzino

[5] Amelio says that title to the house was solely in Lanzino’s name and that it was lost through a power of sale proceeding in 2007. There is, however, no documentation evidencing power of sale proceedings in 2007.

[6] This action was commenced on August 2, 2011. In order to proceed in the Small Claims Court, the plaintiffs limited their claim to $25,000 plus interest and costs. The parties were self-represented at the trial. The trial was adjourned after one day and Amelio was ordered to produce copies of the documentation pertaining to the sale of the property and the insolvency of the estate, including an accounting of the assets and liabilities. This accounting was also to include any liabilities and expenses of the Estate paid for by Amelio personally, and any distributions of the estate.

[7] The documentation produced evidenced a “judgment foreclosure” dated August 10, 2009 in favour of Christina Amelio (“Christina”), Amelio’s daughter, and a transfer from her to Michael Anobile (“Anobile”), a family friend and creditor of Joseph Lanzino, on the same day. The home was subsequently sold by Anobile in 2010.

[8] Subsequent to the sale, Amelio received a portion of the commission on the sale of the property, being approximately $24,000, from the real estate agent. In addition, she received $42,000 from Anobile. By the time she received these funds, Amelio had become the property guardian of Lanzino, which she remains today. Amelio says these funds were a gift to her which she used to reimburse herself for expenses arising on her father’s death that she paid out of her personal funds.

Standard of Review

[9] The standard of review on an appeal from an order of a deputy judge of the Small Claims Court is set out in Housen v. Nikolaisen, 2002 SCC 33, [2002] 2 S.C.R. 235, at paras. 8, 10, 19, 25, 27 and 28. On this standard, a decision will be interfered with only if the trial judge made an error of law or exercised his or her discretion on the wrong principles or misapprehended the evidence such that there is a palpable and overriding error. In this case, the principal issues involve determinations of fact, or determinations of mixed fact and law in which the factual element is predominant. Accordingly, I have proceeded on the basis that the standard of appeal is a palpable and overriding error, except for the limitation period defence issues for which the standard is correctness.

Grounds of Appeal

[10] Amelio raises three grounds of appeal.

[11] First, Amelio says that the action was statute-barred under the Limitations Act, 2002, S.O. 2002, c. 24, Sch. B, on alternative grounds. First, she says the action was statute-barred two years from the date of the loan in 2005. However, the evidence establishes a written acknowledgement by Lanzino after Joseph Lanzino’s death. Second, she says that the action became statute-barred two years after the house was sold by power of sale in 2007, i.e. by December 2009. This argument was made on the basis that a party is deemed to know of all documents on the public register of title to the property. This principle is not, however, applicable to limitation period defences in the circumstances of this action.

[12] The Acknowledgement was signed in August 2008, and was accepted by the trial judge as evidence of Lanzino’s commitment to repay the loan. The evidence also establishes that the plaintiffs did not discover the sale of the house, and therefore the breach of the Acknowledgment, until March 2010. The action was commenced in August 2011, within the two-year period following that date.

[13] This ground of appeal is therefore rejected.

[14] Second, Amelio says that the claim against her personally was void for lack of consideration or, if otherwise enforceable, is void pursuant to the Statute of Frauds, R.S.O. 1990, c. S19, ss. 4, 5. I accept that any claim against her personally on an oral promise to pay $35,000 may be unenforceable on this latter basis. The Acknowledgment is, however, sufficient to support a finding of Lanzino’s obligation to repay the debt.

[15] Moreover, the trial judge effectively imposed liability on the basis of constructive trust (although she did not use this term expressly). The evidence establishes that Anobile paid Amelio funds in an amount in excess of the amount owing to the plaintiffs after the closing of his sale of the former Lanzino home. The trial judge found that Anobile did not pay these monies to Amelio by way of a gift or a charitable act.

[16] The issue of the treatment of these monies was raised by the plaintiffs at trial based on emails received from Anobile referring to his payment of monies to Amelio. The monies paid by Anobile were derived from the sale of the property previously registered in the name of Lanzino. The unusual details of the alleged foreclosure, which involved registration of title in Christina’s name prior to the conveyance to Anobile, and her residence in the property with her husband for a period of time prior to its sale by Anobile, have not been explained. Amelio could have called Anobile as a witness to support her assertion that these monies were a gift to her but did not do so. Moreover, these arrangements contradict Amelio’s testimony that the house was lost in power of sale proceedings in 2007.

[17] In all these circumstances, the trial judge could reasonably conclude that Anobile paid these monies to Amelio in her capacity as property guardian for Lanzino as proceeds of sale of the house, to which she was entitled by virtue of an understanding between Anobile and either Lanzino or Amelio. In my opinion, this is the effect of the trial judge’s decision.

[18] Third, Amelio says the trial judge became an active participant in the trial and lost her impartiality. She says the judgment should be set aside on this basis.

[19] The applicable legal principles for assessing whether the intervention of a trial judge gives rise to a claim of bias were set out by the Court of Appeal in Chippewas of Mnjikaning First Nation v. Chiefs of Ontario, 2010 ONCA 47, 265 O.A.C. 247, at paras. 230-231. At para. 243 of that decision, the Court of Appeal expressed the view that a strong presumption exists that trial judges have conducted themselves fairly and impartially. Amelio has failed to rebut this presumption in this case.

[20] This issue must be addressed in the context of the realities of a small claims court action in which neither of the parties was represented. In circumstances in which the parties are represented, the issue to be addressed is whether the trial judge involved himself or herself to the point of usurpation of the function of counsel for the objecting party. In circumstances in which neither of the parties is represented by legal counsel, the issue becomes whether the trial judge involved himself or herself to the point of conducting the case on behalf of one of the parties.

[21] This is an issue that must be addressed by a consideration of the entirety of the proceedings, rather than by reference to any specific instances of questioning by the trial judge. After a review of the entire transcript of these proceedings, I am not persuaded that the trial judge conducted herself improperly for the following reasons.

[22] First, it is not correct to say that the trial judge conducted her own investigation. In this regard, given the absence of examinations-for-discovery prior to a trial in the Small Claims Court, courts have recognized that judicial involvement may be necessary to assist the parties, as well as the court, to identify the legal issues presented by the evidence as it emerges. In this case, the involvement of the trial judge in asking questions on the examination-in-chief of each of the parties was required as neither party was capable of introducing their evidence on their own. The questioning of the trial judge was directed solely toward eliciting the position and evidence of each of the parties. In particular, the trial judge did not unduly involve herself in the cross-examination of Amelio to the point where she can be said to have conducted an investigation or to have become biased.

[23] Second, the trial judge was entitled to require Amelio to produce documentation that was relevant to the action, and that had not previously been produced, in order to ensure that each party had complied with their respective production obligations towards each other. Moreover, such documentation was necessary to establish Amelio’s case on two important issues – the alleged power of sale in December 2007 and the insolvency of the estate of Joseph Lanzino. Significantly, there was no prejudice to her and, to the extent she had been able to establish her assertions regarding the power of sale, there would have been some potential benefit to her. Conversely, the prejudicial evidence regarding the sale of the house in 2010 and Amelio’s receipt of proceeds from Anobile was produced by the plaintiffs, who received it from Anobile prior to the commencement of the trial.

[24] Third, while I agree that a trial judge – even a small claims court judge – cannot consider a theory of a case that has not been raised by the parties without advising the parties of such intention, I am not persuaded that this occurred in this case. While the plaintiffs did not expressly use the language of constructive trust, they made it clear that they were asserting an entitlement to the monies that Amelio received from Anobile. This claim was based on the two emails that the plaintiffs received from Anobile that were introduced into evidence before the adjournment. This claim was clearly expressed, for example, by Carmine Arnone in his evidence at page 52 of the transcript.

[25] Further, on a review of the transcript, I think it is incorrect to assert that Amelio was never told by the trial judge that she had to account for all of the monies received from Anobile or risk an order requiring her to pay the monies to the plaintiff. There is no evidence of confusion on Amelio’s part. She asserted that the monies were either monies of an insolvent estate or had been a gift from Anobile. The trial judge made it clear to her that the adjournment was being granted so that, among other things, she could provide an accounting of the expenses for which she says she was reimbursed out of the monies received from Anobile. As set out above, the trial judge could reasonably find on the evidence before her that the monies were received by Amelio in her capacity as property guardian for Lanzino. As Amelio could not establish debts of Lanzino for which she was entitled to be reimbursed out of these monies, the finding of personal liability is supportable and does not constitute a palpable and overriding error.

[26] This third ground of appeal is therefore also rejected.

[27] Based on the foregoing, the appeal is dismissed. Costs in the amount of $1,000 on an all-inclusive basis are payable to the plaintiffs.

Wilton-Siegel J.

Date: November 27, 2013