COURT OF APPEAL FOR ONTARIO

DATE: 20231109 DOCKET: C69685, C69686 & C69687

Roberts, Favreau and Copeland JJ.A.

BETWEEN

Voreon Inc. Applicant (Appellant)

and

Matas Management Services Inc., Higher Living Development Inc. and Robins Appleby LLP Respondents (Respondents)

AND BETWEEN

Voreon Inc. and Kayzan Inc. Applicants (Appellant)

and

Matas-Hueton Holdings Inc. and Garden Drive Townes Inc. Respondents (Respondents)

AND BETWEEN

Voreon Inc. Applicant (Appellant)

and

Jean-Pierre Matas also known as John Matas and Matas Management Services Inc. Respondents (Respondents)

Counsel: Brendan van Niejenhuis, Ryann Atkins, and Saba Ahmad, for the appellant Ronald Allan, for the respondents

Heard: April 12, 2023

On appeal from the judgment of Justice Markus Koehnen of the Superior Court of Justice, dated June 16, 2021, with reasons reported at 2021 ONSC 4281.

Copeland J.A.:

[1] The appellant appeals from the judgment of the application judge dismissing its three applications. All three applications involved disputes that arose out of the breakdown of the business relationship between the principals of the appellant and the primary respondent, Stamos Katotakis and John Matas, respectively.

[2] Two of the appeals involve related real estate developments and the interpretation of a shareholders agreement and a later contract, the Settlement Agreement (court files C69685, “Higher Living appeal”, and C69687, “Eminence Living appeal”). The Settlement Agreement addressed both the Higher Living and Eminence Living projects. The central issue in these two appeals is whether the Settlement Agreement superseded the shareholders agreement and, as a result, that promissory notes were discharged pursuant to the terms of the Settlement Agreement.

[3] The application judge found that the Settlement Agreement superseded the shareholders agreement and the promissory notes, and resolved the issues between the parties. He found that the applications were an attempt to avoid the settlement because, in his words, “as things developed, it became clear to the [appellant] that it would be better off financially without the settlement than with it.” The application judge held that this did not provide a basis for avoiding the Settlement Agreement.

[4] In the Higher Living and Eminence Living appeals, the appellant argues that the application judge conducted the proceedings in a procedurally unfair manner, erred in granting declaratory relief, and erred in his interpretation of the Settlement Agreement.

[5] The third appeal (court file C69686, “the MHH appeal”) involves the validity of a mortgage registered on a property in Oakville by the respondent Matas-Hueton Holdings Inc. (“MHH”), a claim for set off of $64,135 based on a promissory note, and whether the transfer of a parking unit and storage unit in a condominium in Halton should be set aside.

[6] The application judge found that the mortgage was valid and, in any event, had been settled. As with the other appeals, the application judge found that the appellant was seeking to avoid the settlement it had freely entered into. The application judge dismissed the application in relation to the mortgage. He also dismissed the portion of the application seeking to set aside the transfer of the parking unit and storage unit in the Halton condominium, although its dismissal was without prejudice to the right of the appellant or the condominium corporation to commence a claim naming the appropriate parties in relation to the transfers. The application judge did not consider the claim for set-off.

[7] I would dismiss the Higher Living and Eminence Living appeals. The appellant’s claims that the application judge conducted the proceedings in the Higher Living and Eminence Living applications in an unfair manner and that he erred in granting declaratory relief are without merit. Further, I see no error of law or palpable and overriding error of fact in the application judge’s interpretation of the Settlement Agreement. In particular, I see no error in his finding that the Settlement Agreement superseded the shareholders agreement and the promissory notes.

[8] In the MHH Appeal, I see no error in the finding by the application judge that the $220,983 mortgage on the Oakville property was valid. However, I would allow the appeal of the MHH application in part on the issues of set-off of the $64,135 note and the transfer of the storage unit and parking unit, and remit these issues for determination in the Superior Court.

[9] In these reasons, I address the Higher Living and Eminence Living appeals together, as, for the most part, they raise the same issues. I then address the MHH appeal.

I. The Higher Living and Eminence Living Appeals

(1) Factual background

[10] The principals of the appellant and the respondent, Mr. Katotakis and Mr. Matas, are experienced real estate developers and investors. They invested in a number of ventures together. In each case, they incorporated a project-specific corporation into which they each invested through corporations they owned or controlled. In each case, Mr. Katotakis invested through a corporation that he personally controlled, the appellant, Voreon Inc. (“Voreon”).

(i) The Higher Living application

[11] The Higher Living application (court file C69685 on appeal) involved a project called Higher Living. This was a planned development of 86-90 Dundas St. West in Mississauga. The project-specific corporation for this development was the respondent Higher Living Development Inc. (“Higher Living”).

[12] Voreon invested $1,981,958 directly into Higher Living. In addition, Voreon loaned $990,979 to the respondent Matas Management Services (“MatasCo”) and the same amount to another investor (ZamanCo, owned by a close associate of Mr. Katotakis) to fund their investments into Higher Living. Voreon and ZamanCo owned their shares through Kayzan Inc (“Kayzan”).

[13] In this application, Voreon sought the payment from MatasCo of the promissory notes made in connection with the loan, plus interest under the notes, and sought interest and other financial benefits under the shareholders agreement applying to Higher Living (Voreon did not sue ZamanCo for its promissory note, despite ZamanCo not having repaid Voreon either).

[14] By the time the application came before the application judge in December 2019, the Higher Living property had been sold and approximately $10 million of the sales proceeds were held in trust. The dispute was about how much of the sales proceeds Voreon was entitled to.

[15] Voreon contended it was entitled to all $10 million, on the basis of the terms of a shareholders agreement that governed the project and on the terms of the promissory notes signed by MatasCo in favour of Voreon.

[16] MatasCo contended that Voreon was only entitled to $7,471,009, based on the terms of a Settlement Agreement signed January 28, 2016, which it argued superseded the shareholders agreement and the promissory notes. The Settlement Agreement provided that Voreon would receive $6.5 million upon sale or further development of Higher Living, as well as additional funds for zoning expenses and interest on the zoning expenses. The $7.4 million is the total of these two amounts.

[17] At the first hearing before the application judge on December 23, 2019, there was little court time available. As a result, the parties agreed that Voreon would be paid the $7,471,009 of the proceeds of the sale, and then the parties would argue later about whether Voreon was owed more than that amount, and whether the $7.4 million was paid under the Settlement Agreement or under the shareholders agreement and the promissory notes. A further hearing was scheduled on March 10, 2020, to address these issues.

[18] During the March 2020 hearing, Voreon argued that the Settlement Agreement was unenforceable relating to these proceedings, but was enforceable in other proceedings involving the parties. In order to avoid conflicting results, the application judge reserved his decision until the other applications could be argued. That argument was scheduled for April 20, 2020. Unfortunately, because of the outbreak of the COVID-19 pandemic, that hearing date was cancelled. It was ultimately rescheduled for December 13-18, 2020.

(ii) The Eminence Living application

[19] The Eminence Living application was substantially similar to the Higher Living application, but concerned a project called Eminence Living, at 44 Agnes St. in Mississauga. Voreon’s direct investment into Eminence Living was $2,172,882. In addition, Voreon loaned $1,086,441 to the respondent MatasCo and to ZamanCo to fund their investments in Eminence Living. Voreon and ZamanCo owned their shares through Kayzan.

[20] In this application, Voreon sought payment from MatasCo of the promissory notes in connection with the loan, plus interest, and sought interest and other financial benefits under the shareholders agreement to Eminence Living. The Settlement Agreement again provided that Voreon would receive $6.5 million from the sale or further development of Eminence Living. As in the Higher Living application, Voreon did not sue ZamanCo for payment of its promissory note.

[21] The Eminence Living property was sold in February 2020 for approximately $12 million. [1]

(2) Decision of the application judge

[22] The application judge found that Voreon was limited to the payment of $7.4 million under the Settlement Agreement for the sale of the Higher Living property, as the Settlement Agreement superseded the shareholders agreement and discharged the promissory notes in exchange for the first $6.5 million from the sale of the property.

[23] Voreon argued that the promissory notes were payable pursuant to the shareholders agreement because the Settlement Agreement did not create any binding obligations or, in any event, had been repudiated by the respondents and was unenforceable. In particular, Voreon argued that: (i) there was no meeting of the minds on the settlement; (ii) the settlement was merely an agreement to agree; and (iii) Mr. Matas had breached or repudiated the Settlement Agreement so as to relieve Voreon from its obligations under it. The trial judge rejected each of these arguments.

[24] On appeal, the appellant’s arguments focus on the interpretation of the Settlement Agreement and no longer challenge whether it was binding. Accordingly, I do not summarize the entirety of the application judge’s findings, but focus on the portion of the reasons that addresses the interpretation of the Settlement Agreement, which is very much in dispute on appeal.

[25] The application judge found that the provisions of the Settlement Agreement in relation to both the Higher Living and Eminence Living projects – provisions which “substantially mirrored” each other – clearly addressed the promissory notes on which MatasCo was liable. The application judge found that, reading the relevant provisions together and in the context of the entire agreement, they provided that the promissory notes were to be discharged and Voreon was to surrender its interest in Higher Living and Eminence Living in exchange for Voreon receiving the first $6.5 million from the sale of each property. The application judge found that this was what had occurred – the Higher Living project was sold, as was the Eminence Living project, and, in exchange for Voreon receiving the first $6.5 million from each sale, the promissory notes were discharged. Voreon was also entitled to its zoning costs under the Settlement Agreement, which brought the total amount owing to $7,471,009 in relation to each project under the Settlement Agreement.

[26] In addition to challenging the application judge’s interpretation of the Settlement Agreement, the appellant argues that the application judge conducted the proceedings in a procedurally unfair manner. I address the alleged procedural deficiencies under my analysis of the issues on appeal.

(3) Arguments raised on appeal

[27] In the Higher Living and Eminence Living appeals, the grounds raised by Voreon fall into two broad categories. First, Voreon argues that the application judge conducted the proceedings in a procedurally unfair manner, including by granting declaratory relief. Second, Voreon argues that the application judge erred in law in his interpretation of the Settlement Agreement.

(4) Analysis

[28] I first address the procedural fairness arguments raised by Voreon, then the submission that the application judge committed errors of law and palpable and overriding errors of fact in his interpretation of the Settlement Agreement.

(i) Procedural fairness

[29] Voreon raises a number of claims of procedural unfairness caused by the manner in which the application judge proceeded. In particular, Voreon argues that the application judge:

• granted the respondent unpleaded relief, in particular declarations that the Settlement Agreement was binding and superseded the shareholders agreement;
• deprived Voreon of an opportunity to raise defences to the unpleaded relief granted; and
• refused to allow Voreon to amend its pleadings to better define the issues.

[30] I am satisfied that there was no procedural unfairness in the manner in which the application judge conducted the proceedings. Although the appellant raised numerous allegations of unfairness, they boil down to whether the appellant had notice of the respondents’ position and the opportunity to explain and tender evidence and advance arguments based on the Settlement Agreement. In my view, the appellant’s arguments of procedural unfairness do not have merit. I explain my conclusion in this regard as it relates to the pleadings and procedural history. I then address the specific complaint about the application judge granting declarations that the Settlement Agreement was binding and superseded the shareholders agreement.

(a) No evidence of procedural unfairness

[31] I begin by echoing comments made by the application judge in his reasons which make clear that he was concerned about the overly-complicated manner in which Voreon structured the proceedings. Rather than starting one proceeding in which all matters between Messrs. Katotakis and Matas could be resolved at once, Voreon commenced a variety of separate proceedings, referring to alleged conduct of Mr. Matas in one proceeding to justify relief in other proceedings.

[32] My review of the record and procedural history leads me to share these concerns. The application judge faced a difficult task in managing these proceedings, given the inefficient structure of the proceedings that Voreon chose to instigate. However, in my view, there was no unfairness in the manner in which the proceedings were conducted. I turn now to specific claims of procedural unfairness made by Voreon which, in my view, are unfounded.

[33] The appellant claims it requested that the applications be converted to a trial and that it was denied procedural fairness by these matters proceeding by way of application.

[34] I am not persuaded by this submission. The appellant did not direct the court to any place in the record (including the many case management directions) where it requested that the application judge convert the applications to a trial.

[35] The evidence to which the appellant directed this court falls far short of a request to the application judge to convert these matters to a trial. In July 2020, Voreon’s counsel (not counsel on appeal) proposed to the respondent’s counsel by email that they discuss “offer[ing]” to the application judge that the matter proceed by way of a “mini trial”. The respondent’s counsel declined, expressing the view that he did not think it would shorten the proceedings, and said that if the application judge felt the trial of an issue was necessary, he could so order.

[36] Following this email exchange, counsel for Voreon emailed the application judge on September 11, 2020. The email raised numerous procedural issues and requested a case conference. This email made reference to Voreon’s counsel’s proposal to the respondent’s counsel in July 2020 of a mini-trial, and that counsel for the respondent declined the proposal. However, Voreon’s counsel did not ask the application judge to convert the matters to a trial.

[37] Floating the idea of a mini-trial to opposing counsel is not the same as making a request to the application judge to order one. Voreon commenced these proceedings as applications, took no steps to change that, and went along with them being heard as applications. Having done so, Voreon cannot now complain that there should have been a trial: 1213763 Ontario Inc. v. Shopsy’s Hospitality Inc., 2008 ONCA 863, at para. 25; C. Valery Construction Limited v. Battilana, 2018 ONCA 849, at para. 2.

[38] Voreon argues that the manner in which the application judge proceeded denied it the right to assert defences to the enforceability of the Settlement Agreement based on the respondent’s non-performance of aspects of the Settlement Agreement. I am not persuaded that Voreon was denied the right to pursue these arguments. The application judge considered Voreon’s argument that the Settlement Agreement was unenforceable because of assertions made by Voreon that the respondent had not complied with the settlement.

[39] In particular, in the Higher Living application, the application judge considered Voreon’s arguments that the following acts by the respondent made the Settlement Agreement unenforceable: failing to remove a collateral mortgage from title to Higher Living; and failing to execute certain documents in relation to the settlement, including a general security agreement. Similarly, in the Eminence Living application, the application judge considered Voreon’s arguments regarding the respondent’s failure to remove the Vector mortgage on the Eminence Living property. The application judge rejected Voreon’s arguments on these points, but he did not fail to consider them. There was no procedural unfairness.

[40] Voreon argues that it requested that the Higher Living and Eminence Living applications be adjourned so that they could be heard together with another application which the parties referred to as the “Kayzan” application. The Kayzan application was issued on January 14, 2020. This was after the interim order made by the application judge on December 23, 2019 in the Higher Living application, but before the formal interim order was issued. At the time of the appeal hearing, the Kayzan application still had not been adjudicated.

[41] I reject this argument because the record does not support it. The application judge held a case conference on January 31, 2020. In the direction from that case conference, he transferred a number of related matters, including the Higher Living, Eminence Living, and Kayzan applications to the Commercial list under his case management. Hearing dates were set/confirmed for the Higher Living and Eminence Living matters in March and April 2020. The application judge directed the parties to work together to fix a timetable for the remaining matters, including the Kayzan application.

[42] On June 25, 2020, counsel for Voreon wrote to the application judge to advise him of the schedule agreed to by the parties for a number of the outstanding applications. The Kayzan application was not included in the schedule. Based on this schedule, on July 13, 2020, the application judge advised the parties that the hearing date was set for December 14-15, 2020 (including the hearing of the applications which form the basis for these appeals). The December 14-15, 2020 hearing date did not include the Kayzan application, consistent with the parties’ agreement.

[43] On December 3, 2020, shortly before the hearing in these matters, but with the Kayzan application still unscheduled, counsel for Voreon wrote to the application judge regarding scheduling a motion for leave to amend the Kayzan application to add a party. In that email she stated that the Kayzan application had “not yet been scheduled by me because some of the relief sought may become moot as a result of the December 14-15 hearings before you”. Two days later, on December 5, 2020, in an affidavit filed by an assistant at the law firm of counsel for Voreon and Kayzan in a motion to add parties to the Kayzan application, the assistant stated: “I am advised by [counsel for Voreon and Kayzan] that no further steps were taken to advance the within proceeding by Kayzan. No affidavits have been served and no return dates have been fixed.” Two days later, Voreon abandoned this motion deciding “it [was] best to move to add a party to the MHH proceeding instead of the as yet unscheduled [Kayzan] application.”

[44] The record does not support that Voreon wanted the Kayzan application heard with the Higher Living and Eminence Living applications or took any steps to achieve this result.

[45] The appellant now claims it was not permitted to amend its pleadings, which led to confusion about the issues to be adjudicated and that the application judge consequently failed to consider Voreon’s interpretation of the Settlement Agreement.

[46] I do not agree with this submission. As I have set out above, the motion to amend was in relation to the Kayzan application, a matter the appellant had decided not to advance. The only motion to amend in relation to the matters under appeal here was granted.

[47] Beyond this lack of evidentiary support for the appellant’s position, there is an absence of any consequence to the parties that would result in procedural unfairness. As I set out in detail below where I address the appellant’s argument about unpleaded declaratory relief, the issue before the court was manifestly clear – that the parties disagreed as to whether the shareholders agreement or the Settlement Agreement applied and, if the Settlement Agreement applied, the appellant argued for an interpretation that would preserve the promissory notes and other payments allegedly owing to the appellant from the respondents. The application framed the issue this way. The parties filed evidence in relation to it and made arguments. And the application judge determined the Settlement Agreement applied, but rejected the appellant’s interpretation of it.

[48] In particular, the appellant asserts that the consequence of the application judge’s alleged confusion about Voreon’s position was a failure to consider the appellant’s submissions that, under s. 7 of the Settlement Agreement, payment on the promissory notes was still owing. The application judge did consider this argument and rejected it. To the extent the appellant criticizes the application judge for not determining issues such as payment of alleged debts or the impact of a cash call under the shareholders agreement, these are issues in the Kayzan application, which the appellant decided not to advance. If and when that application does advance, the court hearing the application may determine that it is appropriate to consider the extent of overlap and decide whether the principle of res judicata, among other doctrines, applies to prevent relitigation. As Voreon’s counsel noted, some relief sought in the Kayzan application may now be moot. However, this will be up to the application judge in the Kayzan application to decide. It bears repeating, the course pursued by Voreon below may have been inefficient, but there was no unfairness in how the application judge conducted the proceedings.

(b) Declaratory relief was sought

[49] Voreon argued that the application judge erred in granting declaratory relief in these applications, in particular, in declaring that the Settlement Agreement is binding on the parties; that the Settlement Agreement supersedes the promissory notes referred to in the shareholders agreement and are discharged by operation of the Settlement Agreement; and in declaring that Voreon’s entitlement in each application was limited by ss. 1 and 2 (respectively) of the Settlement Agreement. Voreon argues that the respondent did not plead a request for declaratory relief, and that it was unfair for the application judge to grant it, because it left Voreon without notice or a fair opportunity to respond.

[50] I reject this argument.

[51] Although, as the application judge noted, the relief sought by Voreon in these two applications was payment of promissory notes, given the manner in which the applications were framed and the response, the validity and enforceability of the Settlement Agreement were clearly the central issues. Voreon took the position that the shareholders agreement governed (and that it required payment of the promissory notes), and that the shareholders agreement was not superseded by the Settlement Agreement. The respondent took the position that the Settlement Agreement superseded the shareholders agreement, and provided for a defined payment to Voreon for the sale of each of the Higher Living and Eminence Living projects, in full and final satisfaction of various debts, including the promissory notes. In light of these positions, the only way the application judge could decide the question of whether the respondent was obliged to pay the promissory notes was to decide whether the Settlement Agreement was valid and enforceable.

[52] The application judge recognized this in the overview section of his reasons:

The difference about the amount owing to Voreon arises because the parties rely on different agreements to justify the Voreon payout. Voreon relies on the terms of a shareholders agreement that governed the project and on the terms of the promissory notes Matas signed in favour of Voreon. Matas relies on the terms of a Settlement Agreement dated January 28, 2016 which he submits supersedes the shareholders agreement and the promissory notes.

[53] All parties knew that the validity and enforceability of the Settlement Agreement were in issue before the application judge. All parties made submissions on these issues. This is clear, in particular, from the many affidavits filed by both sides, and the factums filed before the application judge. There was no unfairness to Voreon.

[54] I address first the affidavits, and then the factums. [2]

[55] Reading the Notices of Application in the Higher Living and Eminence Living applications together with the affidavits makes clear that Voreon raised the issue of the validity and enforceability of the Settlement Agreement, and that the respondents joined issue and responded on that issue in their affidavits. This court has held that affidavits filed on an application form part of the pleadings of the application: 1100997 Ontario Limited v. North Elgin Centre Inc., 2016 ONCA 848, 409 D.L.R. (4th) 382, at para. 17; see also Angeloni v. Estate of Franceso Angeloni, 2021 ONSC 3084, at paras. 27-29.

[56] I will not go into great detail regarding the contents of the affidavit evidence filed before the application judge on both applications. My goal is not to summarize the detail of the evidence given by the parties in support of their respective positions that there was or was not a binding settlement. Rather, I simply intend to highlight that both sides provided extensive evidence on the issue of whether the Settlement Agreement was valid and binding. Below, I refer to the Higher Living affidavits; however, the Eminence Living affidavits were to similar effect. [3]

• In his first affidavit on the Higher Living application, dated, August 9, 2019, Mr. Katotakis took the position that the promissory notes were payable pursuant to the shareholders agreement. He said that he proposed a Settlement Agreement dated January 28, 2016, but that the respondent failed to implement the settlement and repudiated it.
• In an affidavit dated October 11, 2019, Mr. Matas took the position that the Settlement Agreement dated January 28, 2016 extinguished the promissory notes. In particular, he said that under the Settlement Agreement, Voreon was entitled to receive $6.5 million from the proceeds of sale of various properties owned by Higher Living, in full and final satisfaction of various debts, including the promissory notes.
• In response, in an affidavit dated October 29, 2019, Mr. Katotakis took the position that the Settlement Agreement also required that the promissory notes be paid, and explained his reasons for this position. He also repeated his earlier position that Mr. Matas had repudiated the settlement agreement and failed to perform its obligations under the settlement agreement.
• In response, in an affidavit dated November 11, 2019, Mr. Matas again took the position that the Settlement Agreement was valid and binding, and explained his evidence of why he had not repudiated the settlement.
• In response, in an affidavit dated February 19, 2020, Mr. Katotakis again explained his position and evidence in support that the Settlement Agreement had not been implemented, and also rejected Mr. Matas’ interpretation of the Settlement Agreement that the $6.5 million would be in full and final satisfaction of various debts, including the promissory notes.

[57] Similarly, the factums filed before the application support that the parties knew that the validity and enforceability of the Settlement Agreement was in issue, and fully addressed those issues before the application judge. The factums of both parties addressed whether the Settlement Agreement was a valid agreement, whether it was enforceable (including whether the respondent had complied with its terms), and the interpretation of the Settlement Agreement. In the alternative, Voreon argued that if the Settlement Agreement was valid and enforceable, its proper interpretation meant payment of various debts, including the promissory notes, were not satisfied by the payment of $6.5 million.

[58] Further, both parties sought declaratory relief in their submissions before the application judge. The relief requested by the appellants in each application included requests for declaratory relief in relation to amounts owed to it under either the shareholders agreement or the Settlement Agreement (depending on the findings of the application judge). Voreon framed its requests for declaratory relief as follows in one of its factums on each application: [4]

Higher Living application

a) An order declaring the HLI Proceeds be distributed in accordance with the Shareholders Agreement, as calculated and reconciled to balance held in trust, in Schedule 1 of the Vine Resp. Report;

b) Alternatively, an order declaring that the HLI Proceeds be distributed in accordance with the Settlement Agreement, as calculated and reconciled to balance held in trust, in Schedule 1, Scenario 1, of the Vine Resp. Report, as amended to increase the interest rate applied to the $981,051 of additional funds (in Schedule 4), to Prime + 4%, in accordance with s. 10.2(a) of the Shareholders Agreement; …

Eminence Living application

(a) An order declaring the ELI Proceeds be distributed to Voreon in accordance with the Shareholders Agreement, as calculated and reconciled to the balance held in trust, in Schedule 2, Scenario 2, p. 19 of the Vine Report, as follows:

• The $215 thousand note from ELI to Voreon shall be repaid, in the amount of $409,641 as at June 30, 2020;
• Voreon’s additional expenses shall be repaid, in the amount of $1,599,913, as at June 30, 2020;
• Interest on Kayzan’s initial investment in ELI shall be repaid, in the amount of $2,310,050, as at June 30, 2020;
• Kayzan’s initial contribution to ELI shall be repaid, in the amount $3,259,324;
• 50% of ELI’s profits as at June 30, 2020 shall be paid to Voreon, in the amount of $806,624.50;
• After payments of the above amounts, totaling $8,638,322.00 to Voreon, the balance of the ELI Proceeds, in the approximate amount of $252,769.50, shall be distributed to MatasCo and immediately paid to Voreon in partial satisfaction of the MatasCo Notes, and Voreon shall have Judgment against Matas and MatasCo, jointly and severally, for the balance owing under the Notes;

(b) Alternatively, an order declaring that the ELI Proceeds be distributed to Voreon in accordance with the Settlement Agreement, as calculated and reconciled to the balance held in trust, in Schedule 5, Scenario 1, p. 23 of the Vine Report, as follows:

• The $215 thousand note to Voreon shall be repaid, in the amount of $409,641 as at June 30, 2020;
• Voreon’s additional funds contributed, in the amount of $1,128,459, shall be repaid, plus interest in the amount of Prime + 4%, in accordance with s. 10.2(a) of the Shareholders Agreement;
• the $6.5 million payment required under the Settlement Agreement shall be paid to Voreon with interest, in the amount of $8,676,218 to June 30, 2020;
• After payments of the above amounts, the deficiency of $2,047,450.00 shall be recoverable by Voreon as against Matas and MatasCo on a joint and several liability basis…

[59] The respondent framed its request for declaratory relief as follows:

Higher Living application

(b) An order declaring that the parties are bound by the terms of the Settlement Agreement; …

Eminence Living application

(a) An order declaring i. that the Settlement Agreement is binding upon the parties; ii. that the Settlement Agreement supersedes the Promissory Notes; and/or iii. that the recourse of the Applicant is confined to the terms of the Settlement Agreement; …

[60] The impact of these requests for declaratory relief from both parties before the application judge is twofold. First, there was no unfairness to the application judge granting declaratory relief. All parties were on notice that it was being sought, and the issues were fully argued. Second, Voreon, having itself included requests for declaratory relief in its submissions before the application judge, including its relief requested in the alternative to enforce the Settlement Agreement, cannot now complain on appeal that the application judge granted declaratory relief.

[61] In my view this case is distinguishable from Baker’s Dozen Holding Corporation v. Doovsal Properties Inc. (1999), 127 O.A.C. 280. In Baker’s Dozen, a commercial tenant owed rental arrears due to non-payment of rent. It brought an application for relief from forfeiture of its lease, then sought an adjournment in order to cross-examine the landlord on its lease filed in response to the application. The adjournment was granted on condition that approximately $17,000 of rent arrears be paid by a specified date. Rather than pay the arrears, the tenant abandoned its application. On the return date of the (now-abandoned) application, the application judge ordered the tenant to pay approximately $8,000 in arrears to the landlord. On appeal, this court held that in the absence of a cross-appeal or an admission of liability for the rent arrears, the landlord was not entitled to judgment. The obligation to pay $17,000 of arrears as a condition of the adjournment was not a finding of liability for the arrears on the part of the tenant. It was simply a condition of the adjournment. When the tenant abandoned its application, there was no basis to grant judgment in favour of the landlord.

[62] By contrast, the record in these appeals is clear that the parties joined issue on the question of whether the Settlement Agreement constituted a valid and enforceable agreement, and both parties sought declaratory relief. Moreover, Voreon did not abandon its application; rather, it proceeded and even argued in the alternative for declaratory relief under the Settlement Agreement. That Voreon does not agree with the application judge’s interpretation of the Settlement Agreement is not a question of procedural fairness, but one of the correctness of his interpretation.

[63] In sum, I am not persuaded that there was any procedural unfairness in the manner in which the application judge proceeded.

[64] I turn now to the application judge’s interpretation of the Settlement Agreement.

(ii) The application judge’s interpretation of the Settlement Agreement

[65] Voreon argues that the application judge committed extricable errors of law in his interpretation of the Settlement Agreement. Voreon argues that the application judge misread s. 1 of the agreement (in relation to the Eminence Living project) and s. 2 of the agreement (in relation to the Higher Living project). Voreon argues that the application judge failed to consider the portions of ss. 1(B)(c) and 2(B)(b) that made the payment of the $6.5 million to Voreon from sale or redevelopment of the properties payable from the first “clear” $6.5 million from the “residual” received after various specified collateral loans or mortgages had been paid. Voreon further argues that the application judge misread the plain wording of s. 7 of the Settlement Agreement and failed to read the agreement as a whole.

[66] The respondents argue that the application judge made no error in his interpretation of the Settlement Agreement.

[67] I do not accept Voreon’s arguments. I see no error in the application judge’s interpretation of the Settlement Agreement.

[68] Voreon’s arguments raise issues of the interpretation of the Settlement Agreement. To succeed, the appellant must establish either a palpable and overriding error of fact or an extricable error of law: Sattva Capital Corp. v. Creston Moly Corp., 2014 SCC 53, [2014] 2 S.C.R. 633, at paras. 50-55.

[69] As the application judge noted, the relevant provisions of the Settlement Agreement for the Higher Living and the Eminence Living projects mirrored each other. I reproduce them below.

Higher Living

2(A) While:

(b) Voreon has loaned $990,979.36 to ZamanCo which, in turn contributed $990,979.36 to Kayzan; and

(c) Voreon has loaned $990,979.36 to MatasCo; and

(2)(B) ZamanCo and MatasCo therefore agree that:

(a) They shall cause the [Cameron Stevens collateral mortgage] and related expenses to be either paid off or to be removed from Higher, all at no costs to Voreon and Kayzan; and

(b) In any event, the first $6,500,000 from the sale or further development of Higher (that is the first clear $6,500,000 from the residual received after payment or removal of the collateral loan CFS Cross) shall be paid to Voreon, in order to repay the loans to MatasCo and ZamanCo made by Voreon together with associated interest, together with Voreon’s own capital recovery and share of the profit.

(2)(D) Voreon agrees that upon receipt of the above $6,500,000 from the sale or further development of Higher, it shall:

(a) Cancel the obligations of ZamanCo and MatasCo in respect of the loans in the above 2(A)(b) and 2(A)(c), so that no repayment or interest is due on those loans; and

(b) Offer its interest in Higher, representing 50% of the issued and outstanding shares of Higher to ZamanCo and MatasCo for $1.

Eminence Living

1(A) While:

(b) Voreon has loaned $1,086,441.21 to ZamanCo which, in turn contributed $1,086,441.21 to Kayzan; and

(c) Voreon has loaned 1,086,441.21 to MatasCo; and

1(B) ZamanCo and MatasCo therefore agree that:

(c) In any event, the first $6,500,000 from the sale or further development of Eminence (that is the first clear $6,500,000 from the residual received after interest payments and repayments to mortgages and/or collateral loans) shall be paid to Voreon, in order to repay the loans to MatasCo and ZamanCo made by Voreon together with the associated interest, together with Voreon's own capital recovery and share of the profit.

(1)(D) Voreon agrees that upon receipt of the above $6,500,000 from the sale or further development of Eminence, it shall:

(a) Cancel the obligations of ZamanCo and MatasCo in respect of the loans in the above 1A(b) and 1A(c), so that no repayment or interest is due on those loans; and

(b) Offer its interest in Eminence, representing 50% of the issued and outstanding shares of Eminence, to ZamanCo and MatasCo for $1.

[70] I focus on the application judge’s analysis of the terms of the Settlement Agreement regarding the Higher Living project because that is where he engaged in the substance of his interpretation. He then applied that interpretation to the Eminence Living terms, since the provisions were essentially parallel, and the same arguments were made regarding their interpretation.

[71] The application judge found that the portions of sections 2(A), (B) and (D) of the Settlement Agreement, quoted above, clearly addressed the promissory notes on which MatasCo was liable. He found that, read together, these sections provided that the promissory notes were to be discharged and Voreon was to surrender its interest in Higher Living in exchange for Voreon receiving the first $6.5 million from the sale. The application judge found that this was what had occurred – the Higher Living project was sold and Voreon received the first $6.5 million from the sale. Accordingly, he found that the promissory notes were discharged.

[72] The application judge also explained in his reasons why this reading of the Settlement Agreement accorded with commercial practice at the time the agreement was made. He found that, at the time that the Settlement Agreement was entered into, Voreon believed that the Higher Living property was worth approximately $8,000,000. Voreon had contributed a total of $3,963,917 to the project, made up of its own equity contribution and the loans to MatasCo and ZamanCo. The application judge found:

Presumably when the Settlement Agreement was signed in 2016, Voreon believed that receiving $6.5 million on a total investment of $3.963 million amounted to a satisfactory return. The only thing that changed in the interim was that the property was sold in 2019 for $11.4 million. It appears that, with the benefit of hindsight, Voreon has concluded that it would have done better without the Settlement Agreement than with it. While that may be the case, that does not give it the right to walk away from the settlement.

[73] The application judge reached a similar conclusion regarding the Eminence Living project:

Presumably when the Settlement Agreement was signed in 2016, Voreon believed that receiving a further $6.5 million on a total investment of $4,345,764.84 into Eminence amounted to a satisfactory return. The only thing that changed in the interim was that the property was sold in February 2020 for approximately $12 million. As with Higher Living, Voreon appears to come to the conclusion that its return will be better under the notes and the shareholders agreement than under the Settlement Agreement.

[74] In my view, the application judge’s interpretation of ss. 2(A), (B), and (D) of the Settlement Agreement in relation to Higher Living and ss. 1(A), (B), and (D) in relation to Eminence Living accords with the language used in the relevant provisions of the agreement, read in light of the contract as a whole, and the surrounding circumstances: Sattva, at paras. 57 and 60.

[75] I do not accept Voreon’s argument that the application judge failed to consider the portions of ss. 1(B)(c) and 2(B)(b) that made the payment of the $6.5 million to Voreon from sale or redevelopment of the properties payable from the first “clear” $6.5 million from the “residual” received after various specified collateral loans or mortgages had been paid. He specifically quoted those portions of the Settlement Agreement in the portions of the agreement that he extracted in his reasons.

[76] Further, those portions of ss. 1(B)(c) and 2(B)(b) of the Settlement Agreement have no impact on how much Voreon is entitled to be paid for MatasCo’s obligations under the promissory notes to be discharged – $6.5 million in relation to each project.

[77] The appellant argues that the application judge misread s. 7 of the Settlement Agreement and that this led him to fail to consider the contract as a whole. The appellant argues that s. 7 preserves the promissory notes and their maturity date and nothing in the Settlement Agreement excuses MatasCo from the terms of the promissory notes.

[78] I disagree.

[79] The relevant portions of s. 7 of the Settlement Agreement provide as follows:

(a) Voreon shall be granted a general security agreement over all of the personal property of MatasCo in the amount of $990,979.56, plus interest at 7% per annum from October 14, 2012 (the “Higher GSA”). MatasCo acknowledges that the Higher GSA shall secure debt owing by MatasCo to Voreon evidenced by a promissory note issued by MatasCo in favour of Voreon dated October 14, 2012. As collateral security to the Higher GSA, MatasCo shall pledge its shares in Higher to Voreon. In the event MatasCo sells its shares in Higher, or if Higher sells the Higher Project, the Sale Proceeds shall first be applied to repay the debt aforesaid.

(b) Voreon shall be granted a further general security agreement over all of the personal property of MatasCo in the amount of $1,086,441.21, plus interest at 7% per annum from October 30, 2012 (the “Eminence GSA”). MatasCo acknowledges that the Eminence GSA shall secure debt owing by MatasCo to Voreon evidenced by a promissory note issued by MatasCo in favour of Voreon dated October 30, 2012. As collateral security to the Eminence GSA, MatasCo shall pledge its shares in Eminence to Voreon (provided that Voreon acknowledges that such shares may already have been pledged to the existing third-party lender in respect of the Eminence Project and, accordingly, such pledge may only be in second position and without actual possession of the shares). In the event MatasCo sells its shares in Eminence, or if Eminence sells the Eminence Project, the Sale Proceeds shall first be applied to repay the debt as aforesaid.

The parties agree to negotiate the terms of the Definitive Agreements and ancillary documentation, acting reasonably and in good faith, following the execution and delivery of this Agreement.

[80] The application judge considered s. 7 of the agreement. [5] He rejected the appellant’s argument that s. 7 preserved the promissory notes and their maturity date. The application judge held that the purpose of the general security agreement referred to in s. 7 of the Settlement Agreement was to protect Voreon in the event that the properties at issue did not sell for a price sufficient to pay Voreon the $6.5 million agreed to in ss. 1(B)(c) and 1(D) with respect to sale or further development of the Eminence Living project, and 2(B)(b) and 2(D) with respect to further development or sale of the Higher Living project. It was not intended to create an obligation on MatasCo to pay to Voreon more than $6.5 million in respect of each project in the event of sale or redevelopment, or to keep the promissory notes alive beyond either property being sold or redeveloped for a price sufficient to pay Voreon the $6.5 million agreed to.

[81] In my view, this reading of s. 7 of the Settlement Agreement properly considers the meaning of s. 7 in the context of the agreement as a whole. In the context of ss. 1 and 2 of the agreement, the application judge’s reading of s. 7 as providing security pending Voreon receiving the $6.5 million from the sale or further development of each property makes sense. Further, the fact that the application judge expressly addressed the substance of s. 7 of the Settlement Agreement in his reasons makes clear that he did not fail to consider the Settlement Agreement as a whole when he interpreted the effect of ss. 1(A), (B), and (D) with respect to the Eminence Living project and ss. 2(A), (B), and (D) with respect to the Higher Living project. He simply disagreed with Voreon’s interpretation of s. 7 of the Settlement Agreement (and Voreon’s interpretation of the agreement in general).

[82] In oral submissions on appeal and before the application judge, Voreon maintained that it was entitled to enforce the promissory notes under the shareholders agreement, even after the Settlement Agreement was reached, when the maturity dates of the promissory notes were reached prior to the sale of either the Higher Living or Eminence Living properties (the maturity date on the promissory notes was September 30, 2018).

[83] The application judge rejected this argument, and I see no error in his conclusion. He found that the Settlement Agreement superseded the shareholders agreement. Further, the application judge specifically addressed Voreon’s arguments that the Settlement Agreement could not have been intended to govern its rights to enforce the promissory notes after the maturity date when the Settlement Agreement itself did not contain a date by which either property was required to be sold. In substance, he found that Voreon drafted the Settlement Agreement and insisted that it be signed in short order. Voreon could have included a date by which either property had to be sold, failing which the terms of the shareholders agreement would govern. But it did not do so.

[84] The application judge’s conclusion that the Settlement Agreement superseded the shareholders agreement is supported by the entire agreement provision of the Settlement Agreement that provided it superseded all prior agreements “in connection with the matters provided for herein”:

This agreement and any agreements, instruments and other documents herein contemplated to be entered into between, by or including the parties hereto constitute the entire agreement between the parties hereto in connection with the matters provided for herein and supersede all prior agreements, understandings, negotiations and discussions, whether oral or written, with respect thereto, and there are no other warranties or representations and no other agreements between the parties hereto in connection with the matters provided for herein, except as specifically set forth in this Agreement.

[85] The “matters provided for” in the Settlement Agreement included the loans to MatasCo and ZamanCo toward their investments in the Higher Living and Eminence Living projects, including cancellation of those obligations on sale or further development of the properties, as well as Voreon’s recovery of its investments in the projects, including the loans to MatasCo and ZamanCo. The Settlement Agreement was a complete agreement for Voreon to receive the bargained for amounts and then cease to have further involvement in the development projects. By the terms of the Settlement Agreement clause set out above, it superseded the shareholders agreement.

[86] In sum, I see no basis to intervene in the application judge’s interpretation of the Settlement Agreement.

II. The MHH Appeal

(1) Factual background

[87] The MHH appeal (court file C69686) raises distinct issues from the other two appeals. It involves three issues: (i) whether there was a valid mortgage in the amount of $220,983 registered against title to 114 Maurice Drive in Oakville in favour of MHH; (ii) a claim for set-off in relation to a $64,135 promissory note; and (iii) whether the transfer of a parking unit and storage unit in Halton Standard Condominium Corporation No. 627 should be set aside.

[88] Regarding the first issue, the mortgage, the Oakville property involved was another property that Mr. Katotakis and Mr. Matas developed together through their corporations. MHH originally registered a mortgage against the property in the amount of approximately $220,000. [6] Complications and disputes arose, and in this process, Voreon managed to unilaterally discharge the MHH mortgage from title. This exacerbated matters and led Mr. Matas to threaten litigation.

[89] In November 2017, Mr. Katotakis emailed Mr. Matas with a proposed settlement. On November 22, 2017, Mr. Katotakis emailed Mr. Matas and Mr. Katotakis’ solicitors confirming that they had resolved the disputes and instructing the lawyers to implement the settlement (the “Settlement Email” or the “settlement”). As part of the settlement, the parties signed an Acknowledgement of Debt document, which confirmed that Voreon recognized and accepted a mortgage in favour of MHH for $220,983. The settlement agreement provided for the registration on title to the property of a mortgage in favour of MHH with the principal balance of $220,983, bearing interest at 7% (per annum). It also required MatasCo to execute a promissory note in favour of Voreon in the amount of $64,135, bearing interest at 7% (per annum), which would become due on November 30, 2018.

[90] On the application, Voreon challenged the validity of the $220,983 mortgage on the basis of an argument that it had not seen satisfactory proof that funds were actually advanced in consideration of the mortgage. Voreon argued that it was entitled to challenge the mortgage because MHH represented in the Acknowledgement of Debt that the amount of the mortgage was $220,983, and Voreon was entitled to demand proof of this amount.

[91] Regarding the third issue raised on appeal, Voreon sought to set aside the transfer to 2534887 Ontario Inc. (“253”) of a parking unit and storage unit in the Halton condominium development. Voreon argued that the transfer violated a shareholders agreement to which the applicants and respondents were parties.

[92] The condominium corporation obtained leave to intervene on the basis that its Declaration provided that no transfer of a storage or parking unit is valid unless it is to an owner of a unit in the condominium, and 253 did not own a unit. 253 was not initially named in the application, but Voreon argued that this was not important because the shareholders were Mr. Matas’ wife and sister-in-law. Voreon argued that 253 and MHH were alter egos. In any event, one week before the hearing date, Voreon sought an amendment to the application to add 253 as a party. The application judge granted this amendment and ordered 253 to be added as a respondent.

(2) Decision of the application judge

[93] Regarding the validity of the mortgage on the Oakville property, the application judge rejected Voreon’s claim that the mortgage was invalid. He found that the Acknowledgement of Debt did not contain any representation. Rather, it contained acknowledgments by all parties that the statements in the recitals were true. In other words, by entering into the Acknowledgment of Debt, Voreon acknowledged that the amount of the MHH mortgage was $220,983. The application judge found: “If [Voreon] had doubts about the amount owing under the mortgage, the time to have raised and explored those doubts was before they acknowledged the amount owing, not years after the fact.” The application judge found that Voreon’s argument that it was entitled to proof that MHH advanced funds under the mortgage was “entirely untenable” because the settlement superseded any obligation of the mortgagee to prove its debt.

[94] The application judge did not address the claim for set-off.

[95] Regarding the request to set aside the transfer of the parking unit and storage unit, the application judge found that it was not appropriate to grant the relief sought by Voreon, as the relief should be sought in a proceeding that names the affected parties as respondents. He dismissed this portion of the application without prejudice to Voreon or the condominium corporation commencing a new claim in relation to the transfers (and including 253 as a party).

(3) Arguments raised on appeal

[96] Voreon raises three issues in this appeal. First, in relation to the Oakville property, it argues that the application judge erred in holding that there was a settlement pursuant to which Voreon was obliged to permit the $220,983 mortgage, while refusing to consider the alleged breaches of the settlement by MHH, including the failure of MatasCo to pay a $64,135 note due on November 30, 2018. Second, Voreon argues that the application judge erred by not considering its claim that MHH was an alter ego of MatasCo, thus depriving Voreon of the ability to advance a claim for set-off of the $64,135 note. Third, in relation to the attempt to set aside the transfer of the parking unit and the storage unit at the Halton condominium development, Voreon argues that the application judge erred in holding that he could not grant relief against 253 because it was not a party to the proceeding, when he had granted a motion to add 253 as a party approximately one week prior to the hearing. I will address the first two issues together before turning to the parking unit and storage unit issue.

(4) Analysis

(i) The validity of the mortgage and the claim for set-off

[97] At the outset, I note that the thrust of the argument before the application judge was about the validity of the mortgage and not the $64,135 note. I see no error in the application judge’s reasons or conclusion that the $220,983 mortgage on the Oakville property was valid. The application judge properly considered the language used in the relevant provisions of the Settlement Email, read in light of the settlement as a whole, and the surrounding circumstances: Sattva, at paras. 57 and 60.

[98] The application judge found that the settlement was implemented. The parties signed a document entitled “Acknowledgement of Debt re 2nd Mortgage.” The application judge found that this document “makes it clear that the applicants were recognizing and accepting a mortgage in favour of MHH in the amount of $220,983.”

[99] Indeed, Voreon no longer maintains the argument it made before the application judge, which he rejected, that it is entitled to proof that approximately $220,000 in funds were advanced in consideration for the mortgage. Instead, Voreon now argues that the application judge erred by refusing to consider alleged breaches of the settlement by MHH, including the assertion that MatasCo did not “pay a debt to Voreon in the amount of $64,135, plus interest” due on November 30, 2018. Voreon argues that MHH did not comply with its obligations under the settlement agreement because MatasCo failed “to pay” the $64,135, plus interest. Voreon argues that the application judge’s conclusion that the $220,983 mortgage was valid because the obligations recognized in the settlement email had been performed was in error because MatasCo had not performed the obligation “to pay” $64,135 plus interest to Voreon.

[100] I reject this argument. The obligation contained in the Settlement Email regarding the $64,135 was as follows:

MatasCo will execute a replacement promissory note in favour of Voreon for the amount of $64,135; the note will be due in one year (November 30, 2018) and bear interest at 7% per year. The note can be repaid at any time with accrued interest. [Emphasis added.]

[101] MatasCo’s obligation was to execute the replacement promissory note. Voreon has not suggested that MatasCo failed to execute the promissory note. Whether or not that note was later repaid is a separate issue. If the promissory note was not repaid, Voreon would have a claim to amounts due under the promissory note not repaid. But non-payment of the promissory note would not render the terms of the settlement invalid or incomplete.

[102] Voreon also argues that the application judge failed to consider its argument that the $64,135 note in favour of Voreon should be set-off against the MHH mortgage because it remained unpaid and MHH, as well as 253, were alter egos of MatasCo and Mr. Matas.

[103] While the respondents do not refute the allegation that the $64,135 note remains outstanding, they argue that the claim for set-off was not considered because it was not properly pleaded nor argued. In so arguing, the respondents rely heavily on the failure to disclose the claim in the MHH Notice of Application and Voreon’s failure to amend the Notice of Application to plead the issue when 253 was added as a party. This argument flows from the misconception that the Notice of Application is a pleading and must disclose all causes of action.

[104] As I noted above in the Higher Living and Eminence Living appeals, on an application, a court must look beyond the notices of application to consider supporting affidavit material to determine whether a cause of action has been raised: 1100997 Ontario Ltd., at para. 17. Here, in the MHH application, the claim for set-off and the theory of liability through corporate alter egos was clearly put in issue in Mr. Katotakis’ affidavit, joined by the reliance of MHH on the Settlement Email, which explicitly documents the $64,135 debt. Given the lack of clarity in these proceedings due to the multiple notices of application and accompanying affidavits, it is understandable how the issue of set-off in the MHH application was overlooked. However, it is a live issue that remains unadjudicated. Regrettably, this court was not provided with sufficient submissions or a record to exercise our powers pursuant to s. 134(1) of the Courts of Justice Act, R.S.O. 1990, c. 43. It must return for adjudication by the Superior Court, along with the claim against 253 to set aside the transfer of the storage unit and parking unit, which I turn to next.

(ii) The application to transfer the parking unit and the storage unit

[105] The application judge dismissed the portion of the application seeking to set aside the transfer of the parking unit and the storage unit at the Halton condominium development. The dismissal was without prejudice to the right of the appellant or the condominium corporation to bring a new claim naming the proper parties.

[106] The application judge dismissed the request to set aside the transfer on the basis that 253 (whose shareholders were Mr. Matas’ wife and sister-in-law) had not been named as a respondent in the application. In fact, the application judge had granted Voreon’s motion approximately one week prior to the hearing dates to add 253 as a respondent. Dismissing this aspect of the application on the basis that 253 was not a party was a palpable and overriding error.

[107] Although the portion of the order dismissing the claim to set aside the transfer of the parking unit and the storage unit is not a final order, where, as here, an appeal in the same proceeding lies and is taken to this court, the court has jurisdiction to hear and determine the appeal from an interlocutory order, pursuant to s. 6(2) of the Courts of Justice Act.

[108] Accordingly, I would allow the MHH appeal on the issue of the claim to set aside the transfers of the parking unit and the storage unit, and return that aspect of the application to the Superior Court for adjudication. As with the claim for set-off of the $64,135, this court is without a sufficient record or submissions to deal with the merits of the claim.

III. Disposition

[109] I would dismiss the Higher Living and Eminence Living appeals. I would allow the MHH appeal in part and remit the matter to the Superior Court to determine the issues of set-off of the $64,135 note and the transfer of the storage unit and parking unit. I leave it to the court to determine how best to deal with the matter once there, including whether the application judge should hear the matter. I would, however, encourage case management of this matter and any outstanding litigation between the parties, such as the Kayzan application, in order to determine how best to bring the litigation between these parties to an efficient conclusion.

[110] At the hearing, the parties agreed that costs of the appeals should be payable to the successful party in the amount of $27,500, inclusive of disbursements and applicable taxes; however, that agreement was based on one party prevailing in all three appeals. If the parties are unable to agree on costs of the appeals and costs below in the MHH appeal, they may provide written submissions of no more than two pages each, plus a costs outline, within seven days of release of these reasons.

Released: November 9, 2023 “L.B.R.” “J. Copeland J.A.” “I agree. Roberts J.A.” “I agree. L. Favreau J.A.”

Footnotes

[1] The sale of the Eminence Living property occurred after the application judge’s interim order to distribute a portion of the proceeds of the Higher Living property sale to Voreon. As a result, all of the proceeds of the Eminence Living property were held in trust. Counsel at the hearing of the appeal advised that the proceeds continued to be held in trust pending the appeal.

[2] There was dispute during oral submissions on the appeal as to the positions taken by each party below. As this matter proceeded by way of application, there is no transcript. In order to review the positions taken by the parties below, the court requested at the hearing that the parties prepare and file a brief of all of the factums filed before the application judge. This was subsequently filed.

[3] The affidavits referred to do not include all of the affidavits filed on the Higher Living application. There were other affidavits filed, but they did not address as directly the validity and enforceability of the Settlement Agreement.

[4] Both parties filed numerous factums on each application. These extracts are from the factums filed shortly before the hearing date. I note as well that I only reproduce the portions of the request for relief which asked for declaratory relief. Both parties also requested other relief.

[5] The application judge did not expressly refer to the section number of s. 7 of the Settlement Agreement, but he referred to the substance of s. 7 in his reasons at paras. 29-33, and 49.

[6] In the Reasons for Judgment, the application judge stated that the original mortgage was in the amount of $300,000. This amount was incorrect. However, the error had no impact on his analysis of the validity of the new mortgage registered on the property as part of the settlement agreement.