Court File and Parties

COURT FILE NO.: CV-16-24499 DATE: 20231011

ONTARIO SUPERIOR COURT OF JUSTICE

BETWEEN:

ESSEX CONDOMINIUM CORPORATION NO. 125 Plaintiff – and – HERITAGE PARK VILLAS INC., 2043571 ONTARIO INC., 1287678 ONTARIO INC. AND DANTE CAPALDI Defendants

COUNSEL: Joseph DeLuca, for the Plaintiff Erin Reynolds for Heritage Park Villas Inc., 2043571 Ontario Inc. and Dante Capaldi Steven Pickard for 1287678 Ontario Inc.

HEARD: April 11 and June 14, 2023

REASONS FOR JUDGMENT

DUBÉ J.:

A. NATURE OF THE MOTION

[1] This is a motion brought by the defendants, Heritage Park Villas Inc. (“HPVI”), 2043571 Ontario Inc. (“204”), 1287678 Ontario Inc. (“128”) and Dante Capaldi (“Capaldi”). The defendants seek summary judgment pursuant to r. 20.01(3) of the Rules of Civil Procedure, R.R.O., Reg. 194 (the “Rules”) dismissing the plaintiff’s (“ECC 125” or “the corporation” or “the condominium corporation”) action as against the defendants on the basis that there is no genuine issue requiring a trial on any of the claims advanced by the plaintiff.

[2] The plaintiff commenced the action seeking three different claims as against one or more of the defendants, which are as follows:

a. The first is a claim for damages as a result of a breach of contract arising from the failure by the defendants to pay and collect any or all condominium Common Fees from HPVI owned units.

b. The second is a claim for damages as a result of a breach of contract and negligence against Capaldi, 204 and 128 due to a failure to collect, misuse or properly allocate the reserve fund contributions that were collected from all unit-owners causing EEC 125 to have a significantly underfunded Reserve Fund.

c. Finally, the third is a claim to recover against the defendant, Capaldi, personally after he promised, and then refused, to pay legal fees incurred by the plaintiff while defending against an unrelated lawsuit, the Wouters’ Application.

[3] The defendants seek to dismiss the plaintiff’s claim in its entirety as it discloses no reasonable cause of action based on the following: (1) the claim for unpaid Common Fees is statute-barred pursuant to the Limitations Act, 2002, S.O. 2002, c. 24, Sched. B. (“Limitation Act”), (2) the plaintiff suffered no damages during that period when the Reserve Fund was underfunded, and (3) the promise allegedly made by Capaldi to pay legal fees did not constitute a binding oral contract.

B. THE BACKGROUND FACTS

[4] My review of the background evidence is limited to those facts that are admissible, significant to the central issues, or that provide context necessary to appreciate and determine the relevant issues.

[5] I could find no direct evidence in the materials that there was underlying contract between the plaintiff and the defendants, but since the plaintiff pleads a breach of contract in relation to two claims and the position of both parties appears to be based on the premise that one existed, I will therefore assume a contractual relationship for the purpose of this motion.

[6] On December 3, 2008, ECC 125 was registered as an Ontario Condominium Corporation pursuant to the Condominium Act, S.O. 1998, c. 19 and is located at 2650 Sandwich West Parkway, LaSalle, Ontario. HPVI built the residential condominium in 2008 and acted as developer on the project.

[7] ECC 125 consists of a four-storey, apartment-style building, comprising 46 condominium units.

Common Fees

[8] For several years following construction, HPVI remained the owner of the majority of ECC 125’s 46 units and, as with the other unit-owners, was responsible for paying Common Fees on these units. In May 2014, the time of the turnover meeting, HPVI owned 17 units.

[9] The first Board of Directors for ECC 125 was elected on May 26, 2014. Mr. Matthew Berthiaume (“Berthiaume”) was elected as the President; Ms. Gabriella Petruzzi (“Petruzzi”) as Treasurer; and Capaldi as Secretary.

[10] After the election, both Berthiaume and Petruzzi were added as signing authorities with TD Bank, giving them the authority to access ECC 125 bank records.

[11] In addition to being a board member, Capaldi carried on in his role as Officer and Director of HPVI.

[12] Capaldi was also the Officer and Director of 128 and 204. From 2009 through to 2013, 128 served as the property management corporation for ECC 125 until it was subsequently replaced by 204 (collectively referred to as the “Property Management Companies”). From 2008 until turnover in 2014, Capaldi, as the directing mind of HPVI and the Property Management Companies, controlled the affairs of ECC 125.

[13] The Property Management Companies were responsible for the daily operations of the condominium, including maintaining the financial and physical condition of the property. Capaldi carried out those duties.

[14] From a financial perspective, the duties and responsibilities of the Property Management Companies included but were not limited to a) the timely collection of Common Fees from the tenants, and b) maintaining ECC 125’s Reserve Fund.

[15] In addition, from a physical standpoint, the Property Management Companies were responsible for managing the operations of ECC 125, such as, overseeing the repairs and maintenance of the condominium, janitorial work, landscaping and snow removal.

[16] In or around July 2015, Berthiaume resigned from the Board of Directors. Alan Wells (“Wells”) was elected in his place. Beginning in August 2015, Petruzzi acted as President of ECC 125, Wells acted as Treasurer, and Capaldi continued in his role as Secretary.

[17] In or about August 2016, Capaldi ceased being a member of the Board. Afterwards, on August 1, 2016, Condo Plus was hired to replace 204 as ECC 125’s new property management company.

[18] On September 14, 2016, after attempting unsuccessfully to obtain TD Bank statements from Capaldi, Wells finally received same from the owner/operator of Condo Plus, who had received the statements from ECC 125’s lawyer, Andrea Thielk (Thielk).

[19] After comparing the bank statements for the periods December 2008 to December 2015 with the annual audited financial statements that had been provided by the accountant for ECC 125, Michael Greenaway (“Greenaway”), Wells discovered troubling irregularities. More specifically, after a thorough review of the bank statements and audited financial statements, Wells discovered that HPVI owned units owed Common Fees in the amount that he estimated at the time to be $247,856.85.

[20] It was later learned that the Property Management Companies controlled by Capaldi failed to collect, and HPVI failed to pay, monthly Common Fees on HPVI owned condominium units between 2008 and December 2014.

[21] It is alleged that the Property Management Companies also failed to collect all Common Fees that were owed by non-HPVI owned units until September 2016.

[22] Capaldi ultimately acknowledged that because of the depressed economic conditions that existed shortly after ECC 125 was constructed, he was unable to sell many of the HPVI owned units both at this building and at another one of his condominium projects called Portofino. As a result, due to the large number of HPVI owned units that remained unsold, he was unable to pay HPVI’s fair share of the Common Fees during the relevant period.

[23] After Wells discovered the discrepancies between the bank statements and the audited financial statements, he informed the Board of Directors and counsel was retained in October 2016 to deal with the matter.

[24] On December 30, 2016, a Notice of Action was issued followed by a Statement of Claim.

[25] The plaintiff later retained Capital Assist (Valuation) Inc. and an Economic Loss Report, authored by Federica Nazzani, was completed on December 13, 2022.

Reserve Fund

[26] On or just before a Special Board Meeting on August 6, 2015, the corporation’s annual audited financial statements, authored by Greenaway, provided considerable details, for the first time, that ECC 125’s Reserve Fund failed to comply with several provisions of the Condominium Act, including that it was underfunded.

[27] As set out in ss. 93(1) and 93(2) of the Condominium Act, ECC 125 was required to maintain a Reserve Fund, for the purpose of paying for major repairs and replacements to the condominium’s common elements and assets.

[28] Since all Common Fees from HPVI and non HPVI units were either not paid or allegedly misappropriated, insufficient funds were allocated to the Reserve Fund during this period.

[29] In 2015, unit-owners voted to increase Common Fees over a three-year period to attempt to address the Reserve Fund deficit. Because of this, some owners of units in 2016, 2017 and 2018 paid proportionately more than they should have and therefore suffered a loss, while owners who purchased units prior to 2016 may have paid less and therefore benefitted from the lower Common Fees.

[30] Estimates in relation to EEC 125’s losses as a result of the underfunded Reserve Funds are detailed in the 2015 Reserve Fund Study and the Economic Loss Report.

Wouters Application

[31] In April 2015, unit owner Nicole Wouters (“Wouters”) commenced an Application against ECC 125, seeking repairs and damages as a result of water damage to her condominium (“Wouters’ Application”). At all material times, Andrea Thielk (“Thielk”) was acting as corporate counsel on behalf of ECC 125 under a general retainer agreement.

[32] Thielk initially responded to Wouters’ claims on ECC 125’s behalf and charged ECC 125 legal fees for doing so. Wouters’ Application was eventually referred to ECC 125’s insurance company, who appointed defence counsel and the matter was ultimately resolved.

[33] During two Board Meetings, including one on August 6, 2015, Capaldi agreed that he would “take care of this,” which the unit-owners believed meant that he would pay for both the repairs and Thielk’s legal fees. Capaldi denied that he agreed to pay for legal expenses and asserts that he only offered to cover the costs associated with repairing the water damage to Wouters’ unit, if directed to do so by court order or a settlement agreement.

[34] On or about May 8, 2017, Thielk filed and served an Order for Assessment against ECC 125 for unpaid legal expenses in the amount of $19,594.09 inclusive of HST and disbursements.

C. ISSUES AND ANALYSIS

[35] I have carefully reviewed counsels’ positions and I am confident, based on the documentary evidence before me, of the following:

1. I am able to make the necessary findings of facts and apply the relevant legal principles to those facts in order to reach a fair and just determination based on the merits. In that regard, I am satisfied that there is no genuine issue requiring a trial with respect to the below claims, for the following reasons: a. That the plaintiff has failed to commence its action for damages arising from the defendant’s failure to pay Condominium Fees between 2008 and December 2014 within the two-year limitation period prescribed by the Limitations Act, and therefore the claim is statute-barred. b. That the promise made by Capaldi to pay ECC 125’s legal fees while defending against Wouters’ lawsuit did not constitute a binding oral agreement. and therefore, the motion for summary judgment on both is granted.

2. That there is a genuine issue requiring a trial with respect to the following claim: a. For damages arising from Capaldi and the Property Management Companies’ failure to properly fund ECC 125’s condominium Reserve Fund. and therefore, the motion for summary judgment is dismissed.

Did ECC 125 discover the claim related to the unpaid Common Fees within the statutory limitation period (i.e., before December 30, 2014)?

1) Theory of the Moving Party Defendants

[36] The Notice of Action with respect to this matter was filed on December 30, 2016. Section 5(2) of the Limitations Act sets out a rebuttable presumption that ECC 125 discovered the claim related to the unpaid Common Fees on the day the act on which the claim took place. In the circumstances of this case, the defendants submit that ECC 125, or more specifically Petruzzi, as Treasurer of ECC 125, ought to have, with the exercise of reasonable diligence, discovered the material facts underlying the cause of the action by at least the end of October 2014. By this time, after coming to believe that Capaldi was involved in financial wrongdoing, Petruzzi should have taken steps to obtain and compare the TD Bank statements against the audited financial statements, which would have resulted in the discovery of the unpaid Common Fees by HPVI owned units. However, she failed to do so. As a result, ECC 125 is unable, from the evidence, to rebut the presumption in s. 5(2) and therefore the claim is statute-barred pursuant to s. 4 of the Limitations Act. Accordingly, there is no genuine issue for trial.

2) Theory of the Responding Party Plaintiff

[37] The plaintiff concedes that ECC 125 is presumed to have discovered a claim on the day the act on which the claim is based took place but argues the presumption’s relatively low threshold has been rebutted. According to the plaintiff, ECC 125’s reliance on Capaldi’s intentional misrepresentation of the cause of action, concealment of material facts, inaccurate audited financial statements and/or other fraudulent behaviour sufficed to suspend the limitation period until the claim was ultimately discovered, or, with reasonable diligence, ought to have been discovered. In other words, Capaldi’s intentional misdeeds over the years prevented Wells and others from being able to reasonably discover that the Property Management Companies had failed to collect Common Fees from HPVI owned units. It was only when Wells sought the advice of counsel shortly before commencing legal proceedings on December 30, 2016, or perhaps even as late as December 13, 2022, when the Economic Loss Report was completed, was the claim finally discovered. Overall, a trial is required to properly assess the credibility of the various actors on the issue of whether the plaintiff has successfully rebutted the presumption and therefore whether the claim is statute-barred pursuant to s. 4 of the Limitations Act.

3) Analysis

Summary Judgment

[38] Rule 20.04(2) of the Rules of Civil Procedure, R.R.O. 1990, Reg. 194 states:

(2) The court shall grant summary judgment if,

(a) the court is satisfied that there is no genuine issue requiring a trial with respect to a claim or defence; or

(b) the parties agree to have all or part of the claim determined by a summary judgment and the court is satisfied that it is appropriate to grant summary judgment.

[39] In Hryniak v. Mauldin, 2014 SCC 7, [2014] 1 S.C.R. 87, the Supreme Court of Canada provided guidance on circumstances in which summary judgment is appropriate. At paras. 49-50, Karakatsanis J., writing for the Court, stated:

There will be no genuine issue requiring a trial when the judge is able to reach a fair and just determination on the merits on a motion for summary judgment. This will be the case when the process (1) allows the judge to make the necessary findings of fact, (2) allows the judge to apply the law to the facts, and (3) is a proportionate, more expeditious and less expensive means to achieve a just result.

These principles are interconnected, and all speak to whether summary judgment will provide a fair and just adjudication. When a summary judgment motion allows the judge to find the necessary facts and resolve the dispute, proceeding to trial would generally not be proportionate, timely or cost effective. Similarly, a process that does not give a judge confidence in her conclusions can never be the proportionate way to resolve a dispute. It bears reiterating that the standard for fairness is not whether the procedure is as exhaustive as a trial, but whether it gives the judge confidence that she can find the necessary facts and apply the relevant legal principles so as to resolve the dispute.

[40] A party on a summary judgment must put its “best foot forward.” A court is entitled to assume that the record contains all the evidence that a party would present at trial. See Sweda Farms v. Egg Farmers of Ontario, 2014 ONSC 1200 at para. 26, aff’d 2014 ONCA 878, leave to appeal refused, [2015] S.C.C.A. No. 97.

Limitations Act

[41] The following sections of the Limitations Act are applicable:

SECTION 4 Basic limitation period

4. Unless this Act provides otherwise, a proceeding shall not be commenced in respect of a claim after the second anniversary of the day on which the claim was discovered.

SECTION 5 Discovery

5. (1) A claim is discovered on the earlier of,

(a) the day on which the person with the claim first knew,

(i) that the injury, loss or damage had occurred,

(ii) that the injury, loss or damage was caused by or contributed to by an act or omission,

(iii) that the act or omission was that of the person against whom the claim is made, and

(iv) that, having regard to the nature of the injury, loss or damage, a proceeding would be an appropriate means to seek to remedy it; and

(b) the day on which a reasonable person with the abilities and in the circumstances of the person with the claim first ought to have known of the matters referred to in clause (a).

Presumption

(2) A person with a claim shall be presumed to have known of the matters referred to in clause (1) (a) on the day the act or omission on which the claim is based took place, unless the contrary is proved.

[42] Perell J., in Mundell v. White, 2022 ONSC 5994, succinctly summarized the applicable law on discoverability, as follows at para. 76:

Pursuant to s. 5(2) of the Limitations Act, 2002, unless the contrary is proven, it is presumed that a claimant will know of the matters of his or her claim on the day that the act or omission took place. When a limitation period defence is raised, the onus is on the plaintiff to provide evidence to show that its claim is not statute-barred and that he or she behaved as a reasonable person in the same or similar circumstances using reasonable diligence in discovering the facts relating to the limitation issue.

[43] Importantly, discoverability under s. 5 of the Limitations Act does not require knowledge of the full extent of the damages pleaded: see Tender Choice Foods Inc. v. Versacold Logistics Canada Inc., 2013 ONSC 80 at para. 1, aff’d 2013 ONCA 474 (“Tender Choice Foods”). Instead, “to discover a claim, the plaintiff must only have sufficient facts upon which to support an allegation that there is a cause of action … There must be knowledge of some potential act or omission on the part of the party that caused or contributed to the plaintiff’s damages”: see Nikolova v. JR Property Services Corp., 2019 ONSC 3566 at para. 12.

[44] In certain circumstances, the plaintiff may require advice from an expert before a claim becomes discoverable or become apprised of the facts necessary to discover a claim: see Lawless v. Anderson, 2011 ONCA 102 at para. 24 (“Lawless”); Boniferro Mill Works ULC v. Ontario (2009), 2009 ONCA 75, 97 O.R. (3d) 745 at para. 54.

[45] In Shukster v. Young et al., 2012 ONSC 4807, Leach J. provided the following summary of the law with respect to the burden of proof on summary judgment motions when a limitation defence is raised, at para. 19:

• Subsection 5(1)(a) contains a subjective test that focuses on the Plaintiff's actual knowledge of the types of facts enumerated under that provision. Evidence that the Plaintiff had actual knowledge of such matters will trigger operation of the limitation period. However, a lack of such evidence and/or a denial of such actual knowledge will not suffice to prevent a finding that operation of the limitation period was triggered, if other provisions of section 5 indicate that such a finding is appropriate.

• In particular, subsection 5(1)(b) contains a second test that is objective, and requires the Plaintiff's knowledge to be assessed in relation to a standard asking when a reasonable person, with the Plaintiff's abilities and in the Plaintiff's circumstances, ought to have had knowledge of the matters enumerated in subsection 5(1)(b). This in turn usually leads to a consideration of the steps such a person would have taken to acquire such knowledge. In effect, the question becomes one of determining when the Plaintiff, in the particular circumstances of the case, ought to have learned of such matters. One must ask why the Plaintiff and his/ her solicitor were unaware of such matters until some later point. The applicable standard is that of a “reasonably prudent person in pursuing the facts.”

• Moreover, subsection 5(2) goes further, and establishes a rebuttable presumption that the Plaintiff did know of such matters on the day the underlying act or omission took place. The burden is on the Plaintiff to rebut that presumption. In other words, once a Defendant has pleaded a limitations defence, the evidentiary burden is on the Plaintiff to prove that the claim was issued within the limitation period.

• Pursuant to Rule 20, a party moving for summary judgment retains the overall burden of showing that there is no genuine issue requiring trial. However, where a Defendant moves for summary judgment in relation to a statutory limitation period, the evidentiary burden as to the discoverability issue and under Rule 20 effectively shifts to the responding party under section 5(2). In particular, the Plaintiff must adduce evidence sufficient to demonstrate that there is a genuine issue, requiring trial, concerning operation of the limitation period pursuant to subsections 5(1) and 5(2). In particular, a Plaintiff seeking to defeat operation of the limitation period on such a motion has the onus to rebut the presumption in s.5(2), or at least demonstrate that there is a genuine issue requiring trial as to whether that presumption is rebutted.

• Such determinations are fact driven, and must be decided based on the particular circumstances of each case.

[Emphasis added]

[46] In Lawless, the Court of Appeal emphasised at para. 22 that the plaintiff is deemed to know a cause of action when the material facts were discovered or ought to have been discovered by the plaintiff by the exercise of reasonable diligence. Further on this point, s. 5(2) puts the onus on the plaintiff to satisfy the Court that it would be highly unlikely, if not impossible, to have obtained the necessary information with due diligence: see Roni Excavating Ltd. v. Paccar Inc., 2013 ONSC 5192 at para. 23.

[47] In this regard, a claim is discovered when a plaintiff has actual or constructive knowledge of material facts upon which a plausible inference of liability against the defendant can be drawn. Constructive knowledge is demonstrated when the evidence shows that the plaintiff ought to have discovered the material facts by exercising due diligence: see Greenspan v. Goldman, 2022 ONSC 5578 at para. 53, citing Grant Thornton LLP v. New Brunswick, 2021 SCC 31, 461 D.LR. (4th) 613, at paras. 42-44.

[48] In other words, the plaintiff’s obligation is to investigate, within the prescribed time, whether a plausible inference of liability against the defendant can be drawn: see Sloan v. Sauve Heating Ltd., 2010 ONSC 3817 at para. 20, aff’d on this point, 2011 ONCA 91.

[49] Finally, the threshold to displace the presumption in s. 5(2) is relatively low: Presley v. Van Dusen, 2019 ONCA 66, 144 O.R. (3d) 305, at para. 24.

[50] Turning to the facts of this case, I disagree with the plaintiff’s description of Berthiaume and especially Pertruzzi as unsophisticated board members who were essentially “puppets” under the manipulative control of Capaldi.

[51] While the evidence clearly demonstrates that Berthiaume did not sufficiently understand his role on the Board of Directors for ECC 125, let alone the position of President, Petruzzi on the other hand, had significant prior experience both as a Board member and a Treasurer/President and knew these positions well.

[52] Petruzzi had received training in bookkeeping while previously employed by two companies, a food distributor and carpet firm. She also took bookkeeping at school.

[53] Petruzzi had been on the Woman’s Auxiliary Board at the Caboto Club in Windsor, as well as taking turns as President of the Board of Directors of the Bocci Club. In addition, she was on the Board of Directors for her union when she was employed by the Children’s Aid Society. She testified that while a Board member at this time, she was involved with making sure that “the financial part was taken care of at the union.”

[54] Because of her background, Petruzzi testified that she knew how to “navigate around” audited financial statements. In fact, this was one of the reasons why she thought she would be a good Treasurer. On this point, Pertruzzi had this to say during cross-examination:

…I could read the papers and to read things and I understood them because I knew Matt [Berthiaume], my partner at the time, he had no idea what was going on but at least we could talk, and I could tell him and he was fine with it, but, and then even with Alan [Wells], he had his problems sometimes understanding the balance sheets and stuff like that so, it kind of came in handy because I may not have reported them or done them but I read them enough times that I knew exactly what was going on because of my work, it helped me a lot.

[55] As noted, there is a rebuttable presumption that the cause of action was discoverable when the loss or damage occurred, which would have been prior to December 30, 2014. In this case, the real question is not whether Petruzzi had actual knowledge of the claim, but whether she, in the circumstances, ought to have discovered the material facts underlying the cause of action by the exercise of reasonable diligence during the presumptive period.

[56] When acting as Treasurer, Petruzzi described several incidents involving Capaldi that were highly suspicious. She testified that the problems with Capaldi occurred on or before October 23, 2014, which would have been by the fourth or fifth Board meeting. These events included the following:

a. In her capacity as Treasurer of ECC 125, Petruzzi repeatedly asked Capaldi questions, but he either did not provide answers or he would say: “I’ll take care of it, don’t worry.”

b. It appeared that Capaldi did not understand Petruzzi’s role and responsibilities as the corporation’s Treasurer.

c. Despite requesting income statements from Capaldi each month after the turnover meeting to enable Petruzzi to know “what was on the financial statements,” at no time were they produced to her. Instead, Capaldi would say that he was “doing them.”

d. Again, despite repeated requests, Capaldi never provided invoices or even copies of invoices for cheques that Petruzzi had signed so that she could confirm that the amounts being paid were correct. These included many invoices that were issued personally to Capaldi.

e. Whenever Petruzzi asked Capaldi for any specific information, he did not provide it.

f. When Petruzzi attempted to contact EEC 125’s accountant, Greenaway, she was left with the impression that, as she had previously experienced with Capaldi, he “had a story that I didn’t quite understand.” Afterwards, she believed that she had “gotten the runaround,” and so she never bothered to call Greenaway back.

g. On one occasion, Petruzzi had contacted TD Bank to ask for financial statements. However, even after being told “yes, we can provide that,” TD Bank never produced the statements. From this, Petruzzi believed that Capaldi was involved somehow in TD Bank failing to provide her with these records.

[57] The plaintiff argues that Capaldi’s ongoing fraudulent behaviour and repeated failure to provide Petruzzi with important financial records about ECC 125 which, as Treasurer, she was entitled to, prevented the claim from being reasonably discovered and therefore delayed the running of the limitation period. I disagree. There is no evidence that Capaldi’s behaviour in any way undermined Petruzzi’s ability to discover the claim during the presumptive period. In fact, I find the opposite to be true - that the claim was discoverable despite Capaldi’s misconduct.

[58] By late October 2014, Petruzzi had good reason to believe, and did believe, that because of Capaldi’s suspicious behaviour, there “was something wrong” and “there is really something going on” with him. Pertuzzi had been a Treasurer “many times” on other Boards and knew, in this capacity, that she was supposed to “take care of the books” and oversee Capaldi’s management of ECC 125. She testified that she was responsible for “double check[ing]” what he had done to “make sure it’s done right.”

[59] In this regard, Petruzzi knew that as ECC 125 Treasurer, she required the TD Bank statements, but Capaldi had repeatedly refused, for unknown reasons, to provide these documents to her. She testified that as Treasurer, she had the authority to access the bank statements at TD Bank. Nevertheless, aside from one unsuccessful attempt, she failed to do so. On that one occasion when she did attempt to access the TD Bank statements, Petruzzi explained during cross-examination:

Well, the bank didn’t – didn’t give us information, I – I did talk to the bank one time and he said “Yes, we can do that”, never got them because Dante would find out and he would totally get rid of it.

[60] The plaintiff provides no evidence that Capaldi in any way prevented TD Bank, including “he”, from providing Petruzzi with the sought-after banking records. In fact, by TD Bank saying “[y]es, we can do that,” they appeared to be more than willing to accommodate her request. When asked why as Treasurer, and later as President, of ECC 125 she did not get the bank statements by going directly to TD Bank, Petruzzi provided an entirely unsatisfactory explanation – she said that it was because she was “dumb.” See Pepper v. Zellers Inc. (c.o.b. Zellars Pharmacy) (2006), 83 O.R. (3d) 648 (C.A.) at para. 20.

[61] I find that when Petruzzi observed Capaldi’s obvious, repeated and highly suspicious behaviour and thereafter believed that something wrong was happening at EEC 125, she had an obligation to investigate the matter further. Instead, she failed to act and “double check” what Capaldi was doing by at the very least attempting again to obtain the TD Bank statements. If Petruzzi had exercised due diligence by taking steps that she ought to have taken, she would have inevitably discovered, as Wells later did, the financial irregularities underlying the cause of action, namely, the uncollected Common Fees from HPVI owned units. Even though Wells had much less experience and knowledge about bookkeeping than Petruzzi, he was nonetheless able to discover significant financial irregularities by merely comparing the audited financial statements against ECC 125’s TD Bank statements.

[62] Petruzzi testified, Capaldi “took care of everything” and “they just sat there and said yes like puppets,” but that does not take away from the fact that she had direct knowledge of material facts upon which a plausible inference of liability against him could have been drawn. A reasonably prudent person with Petruzzi’s abilities and knowledge as a bookkeeper would have taken steps to obtain the critically important and accessible financial information from TD Bank to attempt to confirm her belief that Capaldi was involved in wrongdoing at ECC 125. To put it yet another way, had Petruzzi taken the steps necessary to obtain the bank statements from TD Bank, I am satisfied that the plaintiff would not have been able to demonstrate that it would be highly unlikely, if not impossible, with due diligence, to have discovered knowledge of the material facts underlying the claim.

[63] Wells similarly alleges that the discovery of the cause of action was delayed because Capaldi somehow convinced TD Bank not to release bank statements directly to him. In his case, Wells deposed that on one occasion in the summer of 2015, he attended TD Bank to obtain ECC 125’s bank statements, but “was directed by Catherine Soda (“Soda”), Accounts Manager Small Business, to get them from Capaldi.” According to his testimony, Wells concluded from all the circumstances including the incident with Soda and Capaldi’s general reluctance to release financial records to him in a timely manner, that “nothing went through without [Capaldi’s] okay” – which apparently also included TD Bank statements. However, I find no evidentiary basis to conclude, as Wells did, that Capaldi was conspiring with anyone at TD Bank to prevent the dissemination of banking records to him or anyone else.

[64] Despite Capaldi’s repeated failure to provide records when requested to do so within a reasonable period of time, Wells testified that he made no further attempts to gain access to the TD Bank records and, therefore, “had no idea whether I could have went [sic] to the bank and got that stuff.” Wells’ evidence clearly demonstrates that he also failed to act with due diligence by taking alternative steps which were available to him as Treasurer by simply bypassing Capaldi to access, or at least attempt again to access, these critically important financial records.

[65] With all that said, I am nonetheless of the view that the incident involving Wells had little to no relevance with respect to the one attempt by Petruzzi to obtain the TD Bank records. Not only did the attempt to obtain the records by Wells from Soda occur many months and perhaps close to a year after Petruzzi’s made her attempt, but Petruzzi’s attempt also involved her dealing with a totally different person at TD Bank – a male known only as “he”, rather than Soda.

[66] The plaintiff also argues that the audited financial statements were so replete with inaccurate and misleading information that the documents played no useful role in the claim ultimately being discovered. I disagree. Wells testified that after reviewing the bank statements, he “immediately saw” that the Common Fees supposedly collected by the Capaldi run Property Management Companies from unit-owners, as outlined in the audited financial statements, appeared to be inconsistent with the total amount of funds in ECC 125’s bank statements. In his affidavit, he states, “the financial issues were so obvious and so serious, that I knew I had to act quickly” and he approached the board about his findings.

[67] After tracing the corporation’s actual monies with the amounts in the annual audited financial statements, Wells determined that the accounts payable, the accrued liabilities, and the revenue in the audited financial statements were higher than the total in the bank statements. According to his calculations, Wells eventually determined that HPVI units owed outstanding Common Fees in the amount of $247,856.85. Further, as Wells stated in his affidavit “[u]ntil I was able to “audit the auditor” using the bank statements, we would never have thought of hiring a lawyer to look at the other issues.” Considering that evidence, I disagree with the assertion by the respondent in its factum that only after counsel was retained and provided expert analysis and opinion evidence, was the claim discovered. On the contrary, the evidence clearly demonstrates that the material facts underlying the claim was discovered when Wells compared the bank statements with the audited financial statements, which was before counsel was retained.

[68] The plaintiff also submits that ECC 125’s claims were not fully realized, and therefore not discovered, until December 13, 2022, when Federica Nazzani completed the Economic Loss Report. I again disagree. The December 30, 2016, Notice of Action clearly pleads that damages were suffered by ECC 125 after 204 failed to collect Common Fees from HPVI owned units. Discovery under s. 5 of the Limitations Act does not depend on awareness of the totality of the defendant’s wrongdoing or knowing that the claim is likely to succeed or even when the later discovery of additional facts changes a borderline claim into a viable one: see Tender Choice Foods, at para. 59. All that is required is that the plaintiff knew enough facts to base a cause of action against the defendants: see Tender Choice Foods, at para. 58. In the case at hand, well before the Economic Loss Report, ECC 125 knew, or more accurately, ought to have known had Petruzzi obtained the TD Bank statements, of the existence of sufficient facts to base a claim against the defendants.

[69] I am entitled to assume that I have all the evidence that would otherwise be before the trial judge. With that in mind, I am satisfied that the plaintiff has failed to discharge its burden of demonstrating that its claim could not reasonably have been discovered when the cause of action arose. Based on the circumstances known to the plaintiff, specifically Petruzzi, I conclude that she failed to exercise due diligence and take reasonable steps that were available to her during the presumptive period to obtain knowledge of material facts in respect to the claim for unpaid Common Fees. Since the claim ought to have been discovered by the plaintiff before December 30, 2014, it is therefore statute-barred pursuant to s. 5(1)(b) of the Limitations Act.

[70] Accordingly, I conclude that there is no genuine issue requiring a trial. Therefore, ECC 125’s claim against the defendants in relation to unpaid Common Fees, or at least those monies that were not earmarked for reserve fund contributions, as I will discuss further below, is dismissed.

Did the Underfunded Reserve Fund suffer any damages and does EEC 125 have standing to advance a claim on behalf of unit-owners?

1) Theory of the Moving Party Defendants

[71] The defendants argue that even though the Reserve Fund was underfunded for many years, ECC 125 did not experience any significant expenses that it could not address due to a lack of funds, and therefore no losses to a common element occurred. Since unit-owners remedied the underfunded Reserve Fund so that it is now in good-standing, only the unit-owners can bring an action for damages. Therefore, ECC 125 has no standing to advance this claim.

2) Theory of the Respondent Plaintiff

[72] The plaintiff argues that for years, Capaldi and the Property Management Companies either failed to collect or misappropriated funds received from HPVI and non-HPVI owned units that ought to have been earmarked to a properly constituted corporate Reserve Fund. Under the Condominium Act, the Reserve Fund is a creature of ECC 125, and held in common as an asset of the condominium corporation. Since ECC 125 is responsible to maintain the Reserve Fund for costs of major repairs to the common elements and assets through the fund, damages to the Reserve Fund are not to be borne by individual owners. In this regard, s. 23(1)(a) of the Condominium Act empowers ECC 125 to sue in respect of corporate assets or individual units. Therefore, ECC 125 has properly advanced a claim against the defendants on behalf of the individual unit-owners.

3) Analysis

[73] Section 23(1) of the Condominium Act, provides authority for ECC 125 to advance actions, stating:

Subject to subsection (2), in addition to any other remedies that a corporation may have, a corporation may, on its own behalf and on behalf of an owner,

(a) Commence, maintain or settle an action for damages and costs in respect of any damage to common elements, the assets of the corporation or individual units; and

(b) Commence, maintain or settle an action with respect to a contract involving the common elements of a unit, even though the corporation was not a party to the contract in respect of which the action is brought.

[74] In 1420041 Ontario Inc. v. 1 King West Inc., 2012 ONCA 249, 110 O.R. (3d) 241, leave to appeal refused, [2012] S.C.C.A. No. 272 (“1 King”), the Ontario Court of Appeal reviewed the powers provided to condominium corporations under Section 23(1) in determining whether an individual unit owner was able to sue for relief related to common elements. After reviewing the section, Blair J.A. explained at para. 21:

What s. 23 is designed to do, in my opinion, is to empower a condominium corporation to bring an action where there is a “common” condominium issue to be addressed – where, as Rosenberg J.A. put it in Wellington [at p. 19 O.R.], ‘the real injury is to the owners as a group rather than to any individual.’

[75] An important underlying tenet of s. 23(1) is its objective of protecting the interests of the unit-owners as a whole, not the interest of individual unit-owners: 1 King, para. 19. As such, section 23(1) provides the condominium corporation exclusive standing to commence an action in relation to common elements: 1 King, paras. 28, 29. In this regard, Blair J.A. in 1 King explained at para. 39:

…the jurisdiction has correctly characterized the condominium corporation’s power under s. 23 as one that triggered by a problem common to the condominium as a whole and to the owners as a group, rather than by a problem that is primarily related to a particular unit.

[76] In addition to the above, Blair J.A. also notes that “whatever the action, it must be an action with broader implications for the condominium community as a whole”: at para. 40.

[77] As a preliminary point, and although I do not believe that much turns on this, I would like to address the issue of whether subsection 23(1) of the Condominium Act prohibits a condominium corporation from suing if damages are caused to a smaller sub-group or subset of unit-owners rather than “to the owners as a whole” or all unit-owners. On this issue, I am of the view that ECC 125 can properly being an action against Capaldi and the Property Management Companies in circumstances where damages incurred as a result of underfunding the Reserve Fund were ultimately suffered by an identified sub-group of unit-owners, and not all the owners of units in the condominium building: see Toronto Standard Condominium Corporation No. 2130 v. York Bremner Developments Limited, 2016 ONSC 539 at para. 183.

[78] The Condominium Act is a consumer protection legislation directed at protecting condominium owners: see York Region Standard Condominium Corporation No. 1206 v. 520 Steeles Developments Inc., 2020 ONCA 63, 444 D.L.R. (4th) 415, at para. 30 (“Steeles”). It gives the corporation broad powers to sue on its own behalf and on the behalf of the unit-owners with respect to common elements: 1 King, at paras. 15, 18. The condominium corporation’s generous scope to sue also minimizes the risk of a multiplicity of proceedings and provides a pathway whereby the corporation and unit-owners can effectively pursue claims relating to the common element through one vehicle. Blair J.A. summarized this point further in 1 King, at para. 34:

It makes sense for a condominium corporation to be empowered to bring an action where there is a common condominium issue to be addressed, rather than leaving it to individual unit-owners, alone or collectively, to pursue their remedies as owners of an undivided interest in the common elements – with the potentially unwieldy consequences of such an option.

[79] As indicated, the defendants’ position is that the underfunded Reserve Fund is not a loss to ECC 125, since no expenses were incurred which were not fully covered by the Fund. As a result, there is no common injury affecting the unit-owners as a whole. Instead, the losses were incurred by a sub-set of unit-owners who have paid proportionately more in Common Fees than they should have due to a special levy raised to remedy the Reserve Fund deficit. Therefore, it is these individual owners, and not ECC 125 on behalf of all unit-owners, who should be pursuing the claim. I disagree.

[80] It is beyond doubt that the Reserve Fund is a common element of the corporation – and I will continue to use the term Reserve Fund despite no stand-alone account that existed at the relevant times to hold the Reserve Fund contributions. In any event, as noted by the plaintiff in its factum, under the Condominium Act, the Reserve Fund is a creature of ECC 125 and held in common as an asset of the corporation. ECC 125 is exclusively responsible to maintain the Reserve Fund for the life of the corporation and for costs of major repairs to the common elements and assets through the Fund. Unit-owners contribute to the Reserve Fund through their Common Fees and cannot opt out of the Fund. Collection of Common Fees is the responsibility of the Property Management Companies as an agent of ECC 125. If an individual unit owner does not pay into the Fund, they are indebted to ECC 125. The Reserve Fund is operated by the condominium corporation, for the benefit of all owners in perpetuity. In this regard, the Fund is ECC 125’s responsibility and that recovery of damages to the Reserve Fund ought not to be borne by individual owners, but by the corporation.

[81] I appreciate that ECC 125 experienced no specific losses as a result of the Reserve Fund failing to cover significant expenses or repairs to the corporation’s common elements or assets because it lacked funds during the relevant period. However, by underfunding the Reserve Fund, Capaldi and the Property Management Companies’ alleged conduct directly contributed to losses sustained by the corporation, losses that were ultimately borne by an identifiable sub-group of unit-owners. The Property Management Companies’ alleged misuse of Common Fees, or deliberate failure to collect all Common Fees owed by HPVI Owned units between 2008 and December 2014 and non-HPVI unit until December 2016 and divert a portion of same to the common Reserve Fund, resulted in the Fund being severely underfunded. Not only did this contravene ECC 125’s statutory obligations under the Condominium Act, but it put ECC 125 at serious risk of being unable to cover its expenses if the building ever required major repairs. Given these risks, it is obvious to me that the depleted Reserve Fund had broader adverse implications for the condominium community as a whole.

[82] The defendants argues that there was no real loss because ECC 125 had the good fortune of adequately covering all expenses during the time when the Reserve Fund was underfunded. This is really beside the point. The fact is, Capaldi, and the Property Management Companies he controlled, allegedly caused the Reserve Fund to be seriously and unlawfully underfunded which, once discovered, needed to be remedied immediately in the form of a cash infusion.

[83] Once the Reserve Fund deficit was discovered, ECC 125 was forced make up the shortfall by implementing a special levy on the existing unit-owners. To do this, unit-owners agreed to raise funds over a three-year period, which resulted in Common Fees being significantly higher during this period than if HPVI had paid its fair share of Common Fees in the first place or if Capaldi and the Property Management Companies had collected all the Fees that were owed by other unit-owners. By diverting funds for his own purposes, Capaldi allegedly benefitted at the expense of those affected unit-owners who were burdened with the task of bringing the Reserve Fund into compliance with the Condominium Act.

[84] This is not a unique problem or unit-specific wrong in relation to an individual unit owner. Rather, it constitutes damages caused to a common element which were necessarily passed down from ECC 125 to a sub-group of unit-owners, such that the losses as between the two were one and the same and not severable: Toronto Standard Condominium Corporation No. 2130 v. 1 King West Inc et al. at para. 14. Furthermore, this case may be distinguished from Metropolitan Toronto Condominium Corp. 858 v. Tornat Construction Inc., [1994] O.J. No. 476 (Gen. Div.) (“MTCC”). In that case, the plaintiff alleged that deception on the part of the defendant caused the purchase price of a condo unit to increase. In this regard, Matlow J. held the harm was a notional one and not real one as the only damage was to the “purchasers’ respective economic worth”: at para. 6. Here, the damages are not merely notional as it was in MTCC, but instead, the plaintiff alleges specific and ascertained economic losses as outlined in the 2018 Reserve Fund Study and the Economic Loss Report, which were ultimately absorbed by a group of unit-owners.

[85] Drawing again on the underlying purpose of the Condominium Act as consumer protection legislation, the Ontario Court of Appeal had this to say in Steeles, at para. 30:

…the Act as a whole is consumer protection legislation directed at protecting condominium owners and that s. 23 was enacted to facilitate actions against third parties by condominium owners as a collective to vindicate their rights.

[86] In conclusion, I find that EEC 125 has standing to advance a claim to recover damages caused by Capaldi and the Property Management Companies underfunding the common Reserve Fund.

[87] Since this issue requires a trial, the plaintiff’s motion for summary judgment in respect to this claim is dismissed.

[88] As a final note, and although not pleaded by the defendants, I also considered whether the claim regarding the Reserve Fund deficit was statute-barred, which was the subject matter of a telephone conference that I had with counsel on September 13, 2023. Ultimately, however, I decided that it was not. Unlike the case involving the failure to collect Common Fees from HPVI units, I find that the claim with respect to the underfunded Reserve Fund was not discoverable even if steps had been taken by Petruzzi to obtain the TD Bank statements in late October, 2014.

[89] It was only after Greenaway produced the 2014 annual audited financial statements that he amended on July 9, 2015, which was at or just before the Special Board Meeting on August 6, 2015, did unit-owners and Board members, other than perhaps Capaldi, first become aware that ECC 125 had failed to comply with several provisions of the Condominium Act. As it relates to the Reserve Fund, non-compliance included the following:

a. That ECC 125 has not contributed to the Reserve Fund 10% of annual budget amount of common expenses.

b. That ECC 125 does not have a Reserve Fund account to deposit monies received from owners and allocated to the Reserve Fund.

[90] Although Greenaway noted issues with respect to the Reserve Fund in past audited financial statements, for instance, that a Reserve Fund Study had not been conducted within one year, it was not until the July 9, 2015, amendments, were Board Members and the unit members provided with a more fulsome and meaningful picture of the extent to which the Reserve Fund had failed to comply with the Condominium Act.

[91] Greenaway explained that he had simply “overlooked” it, apparently for years, and that it was merely an “omission” on his part. In any event, Petruzzi deposed that at the time of this discovery, she did not even “know how a Reserve Fund worked,” “did not know how much money had to be in the fund” or that ECC 125 was “at risk” because of an underfunded Reserve Fund. Given the evidence, I am satisfied that, unlike the case involving the unpaid Common Fees by HPVI units, Petruzzi did not have the means or the wherewithal to reasonably discover the claim or facts underlying the Reserve Fund deficit, even if she had access to the bank statements, especially given the nature of the pre-2015 audited financial statements, which were materially incomplete. I conclude therefore that, based on the evidence, the plaintiff would have successfully rebutted the presumption in s. 5(2) of the Limitations Act.

Did Capaldi’s promise to cover the costs associated with the Wouters’ Application constitute a binding oral contract with regards to legal fees?

1) Theory of the Moving Party Defendants

[92] Capaldi argues that he made no representations that he would personally pay for legal fees incurred by ECC 125 in defending Wouters’ Application. According to Capaldi, the only oral agreement he made with the unit-owners was to pay for the water damage repairs to Wouters’ unit. In the alternative, even if Capaldi did agree to pay the legal expenses incurred by the Wouters’ Application, the verbal statements by Capaldi merely constituted a gratuitous, unenforceable promise, thereby leaving no genuine issue for trial.

2) Theory of the Respondent Plaintiff

[93] The plaintiff submits that Capaldi made representations that he would take care of everything associated with Wouters’ Application, which the unit-owners believed not only included repairing her unit but also Thielk’s legal fees. Since direct testimony and the assessment of credibility on cross-examinations is important with respect to determining the circumstances surrounding the making of the promise, especially in relation to the intention of the parties regarding the terms of the contract, a trial is required. A trial is also necessary to properly assess whether consideration for the voluntary promise came in the form of the unit-owners’ reliance on Capaldi’s promise and Capaldi’s assumption of responsibility for the defence in return for ECC 125 agreeing that it would not sue Capaldi.

3) Analysis

[94] Legally binding contracts may be oral or written. The elements of a contract remain the same: see G.H.L. Fridman, The Law of Contract in Canada, 5th ed. (Toronto: Thomson Canada Limited, 2006) at p. 27. There must be offer, acceptance and consideration. The parties must also demonstrate objective intention to form legal relations see Fridman, at p. 27. Since the landmark Supreme Court of Canada decision in Bhasin v. Hrynew, 2014 SCC 71, [2014] 3 S.C.R. 494, at paras. 33 and 63-66, it may be added that parties also have a general duty to contract in good faith.

[95] The parties must agree on the essential terms of the contract, in other words, a ‘meeting of the minds (also referred to as consensus ad idem). The test for a meeting of the minds is objective. Pepall J. (as she then was), explained the test in UBS Securities Canada Inc. v. Sands Brothers Canada Ltd. at para. 40, aff’d 2009 ONCA 328, 95 O.R. (3d) 93, at paras. 86-88 (“UBS Securities”):

For parties to be bound by contract, there must be a meeting of the minds, commonly referred to as consensus ad idem. The test as to whether there has been a meeting of the minds is an objective one and has been described as follows:

… [T]he parties will be found to have reached a meeting of the minds, in other words be ad idem, where it is clear to the objective reasonable bystander, in light of all the material facts, that the parties intended to contract and the essential terms of that contract can be determined within a reasonable degree of certainty ...

[footnotes omitted]

[96] Evidence of the parties’ subjective intention does not determine whether they came to an agreement or, if so, the terms of that agreement: see Eli Lilly & Co. v. Novopharm Ltd., [1998] 2 S.C.R. 129 at para. 54; S & J Gareri Trucking Ltd. v. Onyx Corp., 2014 ONSC 4765 at para. 52, aff’d 2016 ONCA 505. The test only considers what a reasonable person would think the parties intended in all the circumstances.

[97] If the parties have come to the requisite meeting of the minds with respect to all essential terms of the agreement, the agreement is complete and enforceable, even if the parties intended to draft some further formal written document or record of the agreement. That said, an agreement may require that formalization to be valid if the essential elements of the agreement have not been settled or agreed upon, if terms are missing or have not been finalized, if there is ambiguity about what the parties have agreed to, or if the contract is too general or uncertain: see Bawitko Investments Ltd. v. Kernels Popcorn Ltd. (1991), 79 D.L.R. (4th) 97 (Ont. C.A.) at 110-112; Picavet v. Clute, 2012 ONSC 2221 at para. 12. Pepall J. observed the following about the need for certainty in UBS Securities Canada Inc., at para. 42:

Intention alone is insufficient to create an enforceable agreement. The essential terms must also be sufficiently clear to suggest that the parties came to an agreement.

... I am satisfied ... that the parties intended to make a contract. However, this does not end the matter. Notwithstanding that the parties may have thought they were bound, if the essential terms of the alleged contract lack certainty, either because they are vague or because they are obviously incomplete, the result will not be a binding contract: 9 Hals., 4th ed. para. 262; Treitel, The Law of Contract, 5th ed. (1979), at p. 40; Corbin on Contracts at p. 394.: Canada Square Corp. v. Versafood Services Ltd. .

[footnotes omitted]

[98] On or about April 29, 2015, Wouters brought at civil claim against ECC 125 for damage to her condominium unit caused by water leakage.

[99] At the time, Thielk was corporate counsel for ECC 125, acting on a general retainer and provided legal services to ECC 125 both before and after the commencement of Wouters’ claim. With respect to service rendered in defending the lawsuit, Thielk submitted an account to ECC 125 for $19,875.00 in legal fees, inclusive of HST.

[100] Neither Capaldi nor HPVI were named as defendants in the lawsuit.

[101] Wells deposed that the water damage was, in his opinion, almost certainly due to faulty construction by HPVI and that the damage was reported prior to turnover, when Capaldi was still in charge of the building’s maintenance and in control of the board. He further stated in his affidavit that it became clear to him that Capaldi did nothing to fix the problem, so Wouters was forced to sue the corporation. Finally, Wells stated that he believed Capaldi stalled on the repairs so it would become the new board’s responsibility. At no time does Wells provide the source of his opinions or what he claims to be the circumstances leading up to the filing of Wouter’s lawsuit. Therefore, I find this evidence to be conclusory and of little value to my analysis.

[102] Wells stated that during a Board meeting, Capaldi promised he would take care of everything in respect to the Wouters’ Application and that he later “re-stated his promise” at the August 6, 2015, Special Board meeting, which is transcribed. From this, I assume that Capaldi had on one or more previous occasions made the same or a similar promise as he did on August 6, 2015.

[103] I have reviewed the affidavits from the 12-unit-owners, including one from Wells, that were attached to Wells’ larger affidavit, dated January 18, 2018. The Affidavits are two paragraphs in length and have substantially the same wording. Each unit member deposed that they heard Capaldi state either on one, two or three occasions, “that it was ‘absolutely’ his ‘responsibility’ to take care of repairs to unit 207, as well all the costs associated with it was his to bear as the builder.” They further deposed that Thielk was present when he accepted responsibility.

[104] The defendants object to my relying on the affidavits of the 12-unit-owners in the manner that I received them, that being, as attachments to Well’s affidavit, citing rr. 4.06(2), 39.01(4) and 20.02 of the Rules of Civil Procedure.

[105] I will however assume, without deciding, that for the purpose of this ruling these affidavits are properly before me. The evidence, including the affidavit from Wells dated January 18, 2018, and the affidavits from the 12-unit-owners, are essentially consistent and generally supports the position that Capaldi promised to take care of repairs to unit 207 and all the costs associated with it.

[106] Although not mentioned in the affidavits of the 12-unit-owners, Wells stated in his affidavit from January 18, 2018, apparently on behalf of the other unit-owners, that he “believed that when Capaldi said he was taking ‘care of this’ he meant that he was covering all expenses,” including all “related expenses” which apparently also included legal expenses incurred by ECC 125 in defending against Wouters’ lawsuit.

[107] Pertuzzi stated in her affidavit that by Capaldi saying he would take care of anything and everything to do with Wouters’ water damage claim, she took it to mean both repairs and legal fees.

[108] Berthiaume sets out in his affidavit that he met Capaldi while he was at Thielk’s office to discuss Wouters lawsuit. At that time, Capaldi told him that he did not have to get involved in Wouter’s claim and that he would take care of everything. Berthiaume believed this also included legal fees.

[109] In addition to the affidavits, I have reviewed the transcript of the Special Board Meeting of August 6, 2015.

[110] During that meeting, and after other matters were discussed, the transcripts capture Capaldi advising the Board and those unit-owners in attendance that, as they discussed at the last meeting, Theilk’s significant account for legal services needed to be paid. He then explained that since ECC 125’s bank account had insufficient funds to pay Thielk’s account, ECC 125 ought to consider raising a $200 special levy.

[111] At one point, the following exchange takes place:

Wells: “Mr. Capaldi stood here and told all of us that he is going to take care of this personally. It was his corporation and had absolutely nothing to do with us.

Capaldi: “Right”

Wells: “Right?

Capaldi: “Absolutely”

Wells: “And he still says that today”

Capaldi “Absolutely”

Wells: Last meeting, the amount was $10,000. Now it’s $12, and we are asked to pay 250 and now it is 200. That’s my notes. Okay? So I don’t know what you have in you –

Capaldi: “Alan. Alan, I don’t know why you – with all due respect –

Thielk: Yeah. Yeah.

Wells: Yes

Capaldi: -- Andrea, I don’t know why you’re getting tied up in the detail. I don’t know why. If it’s $200 or 250, whatever it is, she needs to get paid. So if –

Capaldi: “Okay. We have an obligation. We have a duty. Let’s pay her. And it wasn’t my fault, with all due respect. Okay?

Wells: “I’m not --”

Capaldi: “And that’s --”

Wells: “—saying that it’s your fault. That’s up to the court.”

Capaldi: “And I still –”

Unidentified Speaker: “—to decide”

Capaldi: “And I – that’s right. But I still stand today – though – that remediation in that unit, I have a duty to do that. I’ve disclosed it to the insurer and to our solicitor. I will go in and do the repairs once I’m instructed to do that.”

Wells: “Who’s going to – who’s going to instruct you to do that?”

Capaldi: “Well, the outcome of the – settlement. If there’s a settlement or if it goes to – goes to court.”

[112] Capaldi’s promise to pay for everything in relation to the Wouters’ Application was never reduced to writing and he never acknowledged, nor did the unit-owners ever attempt to confirm, that his undertaking also included Thielk’s legal services. At best, the promise was unclear and ambiguous. There is also no evidence to suggest that Capaldi later reneged on a previous promise to pay ECC 125’s legal expenses. In fact, the transcript of the August 6, 2015, Special Board meeting suggests that at this and perhaps the previous Board meeting, Capaldi intimated to the unit-owners that Thielk’s legal expenses ought to be paid by them, through a special levy, with the hope that it may be later covered by insurance and that he instead would take care of the repairs to Wouters’ unit, if instructed to do so by the court or a settlement. In other words, what he said and did in the presence of other unit-owners at one or both Board meetings were at odds with the belief later held by those unit-owners that when Capaldi said he would take care of everything, that meant also paying for ECC 125’s legal expenses.

[113] This is important because it underscores objectively, that on at least one and perhaps two occasions, Capaldi and the unit-owners had a different understanding of an essential term of the oral contract, and therefore never had a “meeting of the minds” on whether the promise also included paying for Thielk’s legal services. Overall, I am satisfied that a reasonable person, after considering all the evidence, would think that Capaldi intended only to cover repair costs associated with Wouter’s unit, and not Thielk’s legal fees.

[114] Even if I am wrong about this, I agree with the defendants that in the absence of consideration, Capaldi’s promise to pay Thielk’s legal fees constitutes a gratuitous and unenforceable contract. While certainly discussed at the Special Meeting, there is no evidence that ECC 125 agreed at any time not to sue Capaldi for the damages alleged in Wouters’ Application or that Capaldi agreed to indemnify ECC 125 from the claim. As a result, any oral statements made by Capaldi to the unit-owners to pay for everything, including Thielk’s legal fees, was entirely unsupported by consideration and therefore not contractually binding: see John D. McCamus, The Law of Contracts, 3rd ed. (Toronto: Irwin Law Inc., 2020) at pp. 236-37; Shamrock Fencing v. Walker, 2016 BCPC 244 at para. 14.

[115] In conclusion, based on what I assume to be a full evidentiary record, I find that there is no genuine issue requiring a trial with respect to whether oral statements made by Capaldi to the ECC 125 unit-owners to pay Thielk’s legal fees constitutes a binding contract. Accordingly, ECC 125’s claim against Capaldi is dismissed.

D. JUDGMENT

[116] I am satisfied, based on the evidence before me, that there are no issues requiring a trial with respect to the following claims advanced by the plaintiff against the defendants:

a. unpaid condominium Common Fees, and

b. Capaldi personally promising to pay for the plaintiff’s legal fees in defending Wouters’ Application.

[117] Accordingly, I find this is a proper case for summary judgment and I dismiss the plaintiff’s above two claims.

[118] With respect to the claim against Capaldi and the Property Management Companies in relation to underfunding the Reserve Fund, this will proceed to trial.

[119] Accordingly, the motion for summary judgment with respect to this claim is dismissed.

E. COSTS

[120] While I find that the defendants were the more successful party, I urge counsel to attempt to resolve the issue of costs.

[121] If the parties are unable to do so, they may file brief written submissions with the court, of no more than five (5) double-spaced pages (exclusive of any costs outline, bill of costs, dockets, offers to settle, or authorities), in accordance with the formatting standards of r. 4.01 and the following schedule:

a. The defendants shall deliver their submissions within thirty (30) days following the release of these reasons.

b. The plaintiff shall deliver its submissions within twenty (20) days following service of the defendants’ submissions.

c. The defendants shall deliver their reply submissions, if any, which shall be limited to no more than three (3) double-spaced pages, within five (5) days following service of the submissions.

[122] If any party(s) fails to deliver their submissions in accordance with this schedule, they shall be deemed to have waived their rights with respect to the issue of costs, and the court may proceed to make its determination in the absence of their input or give such directions as the court considers necessary or advisable.

Brian D. Dubé Justice

Released: October 11, 2023