COURT OF APPEAL FOR ONTARIO
CITATION: Buccilli v. Pillitteri, 2014 ONCA 337
DATE: 20140429
DOCKET: M43697 (C56408)
Rouleau J.A. (In Chambers)
BETWEEN
Patricia Buccilli and Drapery Interiors Etc. Inc.
Plaintiffs (Respondents)
and
Pasquale Pillitteri also known as Pat Pilliteri, Christina Pilliteri, Patron Contracting Limited also known as CDC Contracting, Birchland Homes Inc. and Vendrain Inc.
Defendants (Appellants)
Anna Husa, for the appellants
M.R. Kestenberg, for the respondents and moving parties on cross-motion to enforce a settlement
Terrence O’Sullivan, for the proposed intervenors, Retano (Ron) Ventura and 1796248 Ontario Inc.
Heard: April 25, 2014
On motion for leave to intervene as parties on the appeal from the judgment of Justice Frank J.C. Newbould of the Superior Court of Justice, dated November 23, 2012, with reasons reported at 2012 ONSC 6624, and cross-motion to enforce a settlement.
Rouleau J.A.:
[1] These reasons deal with both the motion for leave to intervene and the cross-motion to enforce a settlement. The motion for leave to intervene is brought by Renato Ventura (“Ron”), brother and brother-in-law of, respectively, Christina Pillitteri (“Christina”) and Pat Pillitteri (“Pat”), the individual appellants on the underlying appeal. Ron moves for leave to intervene, seeking party status in the appeal for himself personally and for 1796248 Ontario Inc. (“179”), a company he owns and controls. That motion is opposed by Patricia Buccilli (“Patricia”) and her company Drapery Interiors Etc. Inc. (“Drapery Interiors”), respondents on the appeal, who bring a cross-motion pursuant to rule 49.09 of the Rules of Civil Procedure, R.R.O. 1990, Reg. 194, to enforce an alleged settlement of the proposed motion for leave to intervene.
[2] For the following reasons, the motion for leave to intervene is granted and the cross-motion dismissed.
BACKGROUND IN BRIEF
[3] The underlying dispute concerns a family business. Patricia was married to Lorenzo Ventura (“Enzo”), Ron’s brother. Enzo, Ron, and Pat owned and operated Patron Contracting Limited, also known as CDC Contracting (“CDC”), and Birchland Homes Inc. (“Birchland”). Each was a one-third shareholder in CDC and Birchland.
[4] In September 1998, Enzo died in a construction accident. Patricia inherited her late husband’s estate and thus became a one-third shareholder in CDC and Birchland.
[5] In June 2001, Patricia entered into a transfer agreement with Christina, transferring to her, in trust, Enzo’s one-third interest in CDC and Birchland, as well as his interest and ownership rights in various real estate holdings. Subsequently, that one-third interest in CDC and Birchland, formerly held by Enzo, was transferred half and half to Ron and Pat, respectively. Ron’s shares in CDC are now held by 179; he continues to hold his shares in Birchland personally.
[6] In 2008 Patricia brought an action against Christina, Pat, CDC, and Birchland, seeking to have the transfer agreement set aside. Neither Ron nor 179 were parties to the action.
[7] In accordance with a bifurcation order dated October 26, 2009, a trial on liability was to proceed first, followed if necessary by a trial on damages. Following the trial on liability, the trial judge released his reasons on November 23, 2012, finding in favour of the respondents (Patricia and Drapery Interiors). In the judgment that issued pursuant to these reasons, the trial judge orders, in part, that the transfer agreement of June 2001 is set aside, that Patricia “is entitled to a one-third (1/3) interest in CDC Contracting and Birchland Homes Inc. and of all money, benefits and opportunities withdrawn or diverted by Christina Pillitteri or Pat Pillitteri, either directly or indirectly,” from CDC and Birchland, and that an accounting is to be taken to determine Patricia’s entitlement. The appellants filed a Notice of Appeal on December 20, 2012.
[8] By orders dated April 9 and 17, 2013, the trial judge appointed Ernst & Young (“E & Y”) as court expert to help perform the accounting of Patricia’s entitlement pursuant to the judgment, with E & Y’s invoices to be submitted to CDC. When the invoices submitted by E & Y ran considerably over the agreed-upon budget, the appellants filed a motion for a stay pending the outcome of the appeal. Ron supported the appellants on that motion and made submissions to that effect.
[9] In September 2013 Ron told the respondents that he intended to intervene in the appeal. He would, however, wait to see the terms of the formal judgment before deciding. That judgment was not settled until January 2014.
[10] On November 29, 2013, Gillese J.A. granted the motion for a stay pending disposition of the appeal. At para. 27, she stated the following with respect to Ron: “Although Ron is not a party to the proceedings, the liability trial decision has had a direct impact on his rights and interests.”
[11] In February 2014, Ron prepared materials for the purpose of filing a motion to intervene. The motion was not filed at that time, but counsel for Ron had some discussions with counsel for Patricia about the possibility that it would be filed. On March 20, 2014, counsel for Ron sent a letter to counsel for Patricia explaining Ron’s concerns that the trial judge’s liability judgment could be interpreted as affecting Ron’s ownership of shares in CDC and Birchland. Counsel for Ron made the following proposal to counsel for Patricia:
Will your client agree that, to the extent Justice Newbould’s judgment is interpreted as transferring Mr. Ventura’s shares, it should be scaled back so that it does not have that effect? If so, then there would no longer be a need for Mr. Ventura to intervene, and he is willing to withdraw his intervention motion provided that you undertake to advise the panel of the basis for doing so.
[12] The following day, March 21, 2014, counsel for Patricia responded, in part:
I wish to confirm that our client has agreed to the terms of your letter, in particular the second last paragraph of your letter such that our client agrees that to the extent that Justice Newbould’s judgment is interpreted as transferring Mr. Ventura’s shares it will be scaled back on consent so that it does not have that effect.
[13] Shortly after this exchange, counsel for the appellants advised that although the appellants’ position on appeal is that it was improper for the judgment to affect Ron and 179, there would be no agreement as to what “scaling back” might mean and the appellants would oppose any order on appeal that varied the judgment only with respect to its effect on Ron and 179.
[14] On April 2, 2014, counsel for Ron wrote to counsel for Patricia stating that, on further reflection, he was “not persuaded that we can protect the interests of our client without being present at the Court of Appeal.” On April 7, 2014, counsel for Ron served notice of the present motion for leave to intervene. Specifically, the motion seeks to have Ron and his company, 179, added as parties to the appeal. Patricia filed a cross-motion pursuant to rule 49.09, seeking to enforce the purported agreement not to intervene, on the ground that it was an accepted offer to settle the motion, within the meaning of Rule 49.
ISSUES
[15] The issue before the court is whether, in light of the criteria set out in rule 13.01, Ron and 179 ought to be granted leave to intervene as added parties in the appeal. In reaching my decision I need to consider whether the respondents accepted an offer to settle from, or otherwise reached an enforceable agreement with, Ron such that Ron and 179 should be precluded from moving to intervene pursuant to rule 13.01.
ANALYSIS
[16] Rule 13.01 provides:
13.01 (1) A person who is not a party to a proceeding may move to intervene as an added party if the person claims,
(a) an interest in the subject matter of the proceeding;
(b) that the person may be adversely affected by a judgment in the proceeding; or
(c) that there exists between the person and one or more of the parties to the proceeding a question of law or fact in common with one or more of the questions in issue in the proceeding.
(2) On the motion, the court shall consider whether the intervention will unduly delay or prejudice the determination of the rights of the parties to the proceeding and the court may add the person as a party to the proceeding and may make such order as is just.
[17] As noted above, Gillese J.A. was of the view that Ron’s rights and interests were directly affected by the trial judge’s liability judgment. I agree that it is at least arguable that, by setting aside the transfer agreement between Patricia and the Pillitteris, and by ordering an accounting, the judgment may affect Ron’s interests and, specifically, may void the transfer to Ron of one half of Enzo’s former interests in CDC and Birchland. The issue of the liability judgment affecting a non-party has in fact been raised by the appellants in the current appeal.
[18] As to the issue of prejudice or delay, this motion has been brought late in the proceedings and risks causing delay. Patricia notes, in addition, that Ron was aware of the trial and must have been aware of the broad substance of the pleadings well before then.
[19] Ron, for his part, notes that he formally notified the parties in September 2013 that he was considering seeking leave to intervene. Ron and 179 have agreed to accept the record as is and ask only to file a factum. Both the appellants and Ron and 179 have agreed not to seek an adjournment of the scheduled hearing of the appeal.
[20] The respondents advance three principal reasons why the motion for leave to intervene should be dismissed. First, on their cross-motion the respondents argue that the exchange of letters between counsel, discussed above, shows that there was a valid settlement of the proposed motion to intervene and that settlement should be enforced pursuant to rule 49.09. Second, the respondents submit that Ron’s rights and interests are not “automatically” affected by the judgment, and that Ron would in any case be able to protect his rights and interests at the damages phase of the trial. Finally, the respondents submit that given the delay in filing the motion for leave to intervene, the court should exercise its discretion to dismiss the motion.
I will deal with each of these grounds in turn.
Whether there exists a valid Rule 49 settlement
[21] The respondents bring their cross-motion pursuant to rule 49.09, which reads, in relevant part:
49.09 Where a party to an accepted offer to settle fails to comply with the terms of the offer, the other party may,
(a) make a motion to a judge for judgment in the terms of the accepted offer, and the judge may grant judgment accordingly;
[22] The respondents argue that rule 49.09 applies to the offer purportedly contained in and accepted through the exchange of letters noted above, because Ron is a “party to [that] accepted offer” even if he was not at the time a party to any relevant proceeding or motion before the court.
[23] Rule 49.02 provides as follows:
49.02 (1) A party to a proceeding may serve on any other party an offer to settle any one or more of the claims in the proceeding on the terms specified in the offer to settle (Form 94A).
(2) Subrule (1) and rules 49.03 to 49.14 also apply to motions, with necessary modifications.
[24] In Scanlon v. Standish (2002), 2002 CanLII 20549 (ON CA), 57 O.R. (3d) 767 (C.A.), this court found, at para. 8, that “these words contemplate the existence of pending litigation” and that “[a]bsent an application or action, the Rules of Civil Procedure, by their own definition, have no application to disputes between citizens”. In Scanlon the litigation was only contemplated at the time of the alleged settlement. This led to the court’s conclusion, at para. 22: “A pre-litigation offer … is not a Rule 49 offer.” This holding was later confirmed in McBride Metal Fabricating Corp. v. H & W Sales Co. (2002), 2000 CanLII 16845 (ON CA), 50 O.R. (3d) 97 (C.A.).
[25] Until Ron is given intervenor status, he is not a party to the litigation. Further, when counsel exchanged the letters noted above there was no pending motion. In my view, therefore, the exchange of letters cannot constitute a Rule 49 offer and acceptance. Assuming it forms a binding agreement, however, it can be taken into account in deciding whether to exercise my discretion on the motion for leave to intervene.
[26] Even supposing that counsel’s exchange of letters constitutes a valid Rule 49 offer to settle and acceptance, I would not exercise my discretion to enforce it. In purporting to accept Ron’s offer, counsel for the respondents wrote, in part, that “our client agrees that to the extent that Justice Newbould’s judgment is interpreted as transferring Mr. Ventura’s shares it will be scaled back on consent so that it does not have that effect” (emphasis added).
[27] Ron’s counsel maintains that, to be effective, the settlement agreement must be agreed to by the appellants because varying the trial judge’s liability judgment “on consent” requires the consent of all parties to the litigation. It is clear that the appellants are not consenting and will not consent to any “scaling back”. Although the respondents argue that consent is not required, it is not clear to me that the respondents can, alone, ensure that the result they and Ron agreed upon can be obtained without the consent of the appellants or the agreement of the court. Finally, there seems to be confusion as to what “scaling back” a judgment means. Ron argues that his interests can be affected both directly through an order requiring the transfer of some of the shares and indirectly because of the impact of the judgment on the value and assets of CDC and Birchland. In my view, the settlement is not clear on this point.
[28] In these circumstances, even if I were to accept that the agreement could come within Rule 49, I would conclude that it is not enforceable and would therefore not enforce it.
Whether Ron’s interests are “automatically” affected by judgment
[29] The respondents submit that Ron’s rights and interests are not “automatically” affected by the trial judge’s liability judgment. The respondents advance at least two reasons in support of this submission. First, because the trial on damages has yet to take place, Ron will have the opportunity to defend his interests. The respondents do not oppose Ron and 179 appearing as parties at that stage of the trial. Second, the respondents have agreed to advise this court at the hearing of the appeal and the trial judge at any future trial on damages that, insofar as the judgment on liability can be interpreted as affecting Ron and 179’s interests in CDC and Birchland, the respondents support the “scaling back” of the judgment on liability to obviate any impact on Ron and 179’s interests.
[30] Ron and 179, supported on this point by the appellants, respond that the liability judgment is at least open to an interpretation on which it affects Ron’s rights and interests, and the respondents cannot unilaterally “scale back” the trial judge’s liability judgment in the sense of varying the judgment. In other words, the respondents are not in a position to deliver on a promise that Ron’s rights and interests will not be affected by the liability judgment and will not be affected by the outcome of the appeal.
[31] I cannot prejudge the outcome of the appeal or that of the damages portion of the trial. Justice Gillese has already ruled that the outcome of the appeal may have an impact on Ron’s interest in CDC and Birchland. All that rule 13.01(1) requires is that a person “may be adversely affected” or that “there exists between the [proposed intervenor] and one or more of the parties to the proceeding a question of law or fact in common with one or more of the questions in issue in the proceeding.” In the appeal the appellants have clearly raised the issue of the impact of the judgment on Ron. It may well be that through the mechanisms they propose, the respondents will succeed in convincing this court and the judge hearing the damages trial that Ron’s interests are not and should not be affected. However, the appellants have not agreed to support that position and the issue is squarely before the court on the appeal. It is not for me to speculate on the outcome of the appeal and, in the circumstances, it seems to me that the respondents cannot ensure any specific outcome at the appeal or in the damages trial. As a result, I conclude that Ron has met the requirements of rule 13.01(1).
Whether unnecessary delay in bringing the motion warrants dismissal
[32] Finally, the respondents argue that Ron and 179 have waited too long to bring this motion for leave to intervene, and that the court should accordingly exercise its discretion not to grant leave.
[33] I am troubled by the lateness of this motion. The respondents ought not to have had to argue the motion one week before the scheduled hearing of the appeal, and be left with only a few days to consider Ron’s factum and be in a position to respond in court. The underlying action was brought in 2008 and counsel for the respondents understandably expresses frustration at the possibility of an adjournment.
[34] The position to be taken by Ron on the appeal will not, however, take the respondents totally by surprise. It overlaps considerably with a position already advanced by the appellants. The appeal therefore may well proceed as scheduled. Additionally, little prejudice would accrue to the respondents if they decide to request a short adjournment of the appeal. Ron and the appellants have indicated that they will not seek an adjournment but would consent to an adjournment request by the respondents if, after reviewing Ron’s factum, the respondents need additional time to prepare for the appeal. In the circumstances, while the delay in bringing the motion is unfortunate, I do not conclude that it warrants dismissal of the motion.
CONCLUSION
[35] The motion for leave to intervene is granted. The cross-motion is dismissed. Ron and 179 are added as parties on the appeal. They are to file a factum of not more than 15 pages by Monday, April 28, 2014, and are not to add to the record.
[36] Counsel for the respondents will notify the court by Tuesday, April 29, 2014, if after receipt of Ron’s factum they desire an adjournment. Although Ron was successful on the motions, I am not prepared to award him costs. He delayed in bringing the motion and, although I have concluded that there is no binding Rule 49 settlement, the respondents did not act unreasonably in maintaining that they had resolved matters with Ron. The appellants do not seek costs. There will, therefore, be no order as to costs.