Court of Appeal for Ontario

Date: 20210917 Docket: C69126

Before: Strathy C.J.O., Pepall and Pardu JJ.A.

Between:

South Beach Street Development Ltd., Amaryco Inc. and Fabrizio Lucchese Defendants (Appellants)

And

US Income Partners LLC Plaintiff (Respondent)

Counsel: Matthew R. Harris, for the appellants Amaryco Inc. and Fabrizio Lucchese Yeganeh Pejman, for the respondent

Heard: September 13, 2021 by video conference

On appeal from the judgment of Justice Sean F. Dunphy of the Superior Court of Justice, dated February 5, 2021.

Reasons for Decision

[1] The appellants Amaryco Inc. and Fabrizio Lucchese were indebted to the respondent as a result of an investment in Florida.

[2] Following default in payment, the parties entered into a Settlement Agreement. The appellants had U.S. counsel for the purposes of negotiating the Settlement Agreement.

[3] The Settlement Agreement provided:

• for a monthly repayment schedule;
• for a consent to an Ontario judgment that would be released from escrow in the event that there was a default in the repayment schedule. It constituted an absolute estoppel and bar to any defence or counterclaim with respect to the consent judgment; and
• an attached form of judgment for US$2,750,000 plus stipulated interest and legal costs.

[4] Failure to make any of the required payments entitled the respondent to register a warranty deed on some of the appellants’ vacant land in Florida, and to reduce the balance due on the appellants’ outstanding settlement debt by US$1,500,000.

[5] Each of the parties represented that they had made such investigation as deemed necessary or desirable.

[6] The appellants defaulted on a payment required by the Settlement Agreement. The respondent successfully moved for judgment relying on the consent to judgment. It provided a credit to the appellants on account of the warranty deed on the vacant land in Florida.

[7] The appellants appeal from that judgment.

[8] Although the appellants raised three arguments in their factum, before us they only pressed one. They argued that the consent was ineffective because the statement of claim had not been issued beforehand, and in granting judgment the motion judge improperly relied on Rule 1.04 of the Rules of Civil Procedure, R.R.O. 1990, Reg. 194.

[9] The appellants did not contest the defaults under the Settlement Agreement. The Settlement Agreement clearly identified the substance of the claim contained in the statement of claim that was ultimately issued. By providing the consent to judgment, the appellants plainly intended to create a legal obligation based on the contents of that claim. They had the benefit of advice from their U.S. attorney and could not point to any matters that required the expertise of an Ontario lawyer. Indeed, they represented that they had made all necessary investigations.

[10] The full record was before the motion judge and reliance on r. 1.04 did not result in any prejudice to the appellants. The motion judge was legitimately satisfied that he had all he needed to do justice between the parties, and that reconstituting the proceedings under a different rule would reflect the triumph of form over substance.

[11] For these reasons, the appeal is dismissed. As agreed by the parties, the appellants are to pay the respondent its costs fixed in the amount of $7,500 inclusive of disbursements and tax.

“G.R. Strathy C.J.O.”

“S.E. Pepall J.A.”

“G. Pardu J.A.”