COURT OF APPEAL FOR ONTARIO

DATE: 20001114

DOCKET: C31425

RE: 1224948 ONTARIO LTD. (Plaintiff/Appellant) – and – 448332 ONTARIO LIMITED, 942219 ONTARIO INC., 1162750 ONTARIO INC., and 1162721 ONTARIO LIMITED (Defendants/Respondents) – and – 942219 ONTARIO INC. and 448332 ONTARIO LIMITED (Plaintiffs by Counterclaim) – and – JOE ANGOTTI, FRANK SALVATI, 1224948 ONTARIO LTD. and 594480 ONTARIO LTD. (Defendants by Counterclaim)

BEFORE: CARTHY, AUSTIN and ROSENBERG JJ.A.

COUNSEL: Irving Marks and Jeffrey Dicker,

for the appellant 1224948 Ontario Ltd.

Ronald D. Manes, Micheal G. Simaan

and Angelo P. Fazari,

for the respondents 942219 Ontario Inc.

and 448332 Ontario Limited

HEARD: November 6, 2000

On appeal from the decisions of Justice Joseph W. Quinn dated December 18, 1998, February 18, 1999 and March 30, 1999

E N D O R S E M E N T

[1] The appellant’s principal attack on the trial judge’s reasons for judgment was in his finding that s. 70 of the Registry Act only applied if the plaintiff showed that he acted bona fide in the sense of in good faith and without constructive knowledge. We do not agree with that interpretation of the reasons. It is apparent that the trial judge found that the appellant and the registered owner had not entered into a genuine agreement of purchase and sale—that the conspirators had no intention that the appellant, through its principal Salvati, enter into an enforceable agreement with the registered owner. In short, the trial judge found that this was a sham transaction and not bona fide in the sense of a genuine agreement intended to transfer ownership of the property.

[2] There was an abundance of evidence to support this conclusion, including the following: the back-dating of the deed and the vendor take-back mortgage; Salvati’s failure to try and deal directly with the first mortgagee; his failure to inspect the property; his professed intention to redevelop the property in the face of long-term leases; his lack of knowledge of the terms or even amounts of the mortgages; the vague and conflicting versions respecting payment of the deposit; the lack of any notes in the solicitor’s file; and the inference from the appellant’s failure to call Mr. Marchetti.

[3] This is sufficient to dispose of the appeal. We should not be taken as agreeing with all of the trial judge’s reasons and, in particular, with his interpretation of ss. 22 and 23 of the Mortgages Act. The appeal is dismissed with costs including the costs payable in the cause fixed by Moldaver J.A. at $2,000. 1162750 Ontario Inc. did not file material or participate in the appeal and should have no costs.

[4] As to the cross-appeal, the respondents by cross-appeal concede that it was not necessary to prove special damages on the claim for slander of title. However, they argue that no damages of any kind were proved and that was the finding of the trial judge. In the circumstances, we would not interfere with the trial judge’s holding. There was also a cross-appeal against the refusal of the trial judge to award punitive damages. That was within his discretion and no error in principle has been identified to justify interference. The cross-appeal with respect to slander of title is dismissed with costs.

[5] The appellants by cross-appeal also seek leave to appeal the costs order. This is not a case where the plaintiff alleged fraud and failed to prove it. The plaintiff attempted to convince the court to give effect to a sham transaction, which might for that reason justify solicitor-and-client costs in favour of the defendants. The trial judge did not do so and appears by his reasons to be saying that neither side is without fault with respect to the accumulation of court time. On the defence side, half the trial time was taken up over the counterclaim but without the defendants attempting to prove damages. We would not encourage the use of issues won and lost for the award of costs but the ultimate decision on costs was really based on the time spent on the claim and counterclaim. The trial judge’s award of no costs was the equivalent of party-and-party costs on each of the claim and counterclaim, cancelling each other out because of equal time devoted to each. We can see no error in principle in refusing solicitor-and-client costs nor in his disposition of party-and-party costs.

[6] We grant leave to appeal costs but dismiss the appeal without costs.

[7] At the conclusion of argument, some reference was made to payments into court to the credit of the action. Hopefully counsel can agree on the appropriate order to be made with respect to that money. If not, the parties will have one week from the release of these reasons to make submissions in writing as to the appropriate order.

(signed) “J.J. Carthy J.A.”

(signed) “Austin J.A.

(signed) “M. Rosenberg J.A.”