Court File and Parties

COURT OF APPEAL FOR ONTARIO

2023 ONCA 633

DATE: 20230925

DOCKET: M54360 & M54435 (COA-23-CV-0295)

Gillese, Trotter and Coroza JJ.A.

BETWEEN

Ronald Hitti and 285 Spadina SPV Inc. Applicants (Appellants/Responding Parties)

and

Maranello Sports Inc. o/a Ferrari of Ontario Respondent (Respondent/Moving Party)

Counsel: Ronald Hitti, acting in person David A. Brooker, for the moving party

Heard: September 18, 2023

Reasons for Decision

Overview

[1] Maranello Sports Inc. o/a Ferrari of Ontario (the “Respondent”) brings two motions to this court.

[2] In motion M54360 (the “First Motion”), the Respondent asks that the underlying appeal in this matter be dismissed or stayed (COA-23-CV-0295) and, in the alternative, that the consent order dated March 10, 2023 (the “Consent Order”) be set aside or varied.

[3] In motion M54435 (the “Second Motion”), the Respondent asks this court to set aside an order made by the Registrar, dated July 4, 2023, permitting the appellant Ronald Hitti to continue the interest of the co-appellant 285 Spadina SPV Inc. (“285”) in the appeal by 15080525 Canada Corp. (“150”) (the “Registrar’s Continuation Order”).

[4] For the reasons that follow, both motions are granted.

Background in Brief

[5] Mr. Hitti entered into an agreement of purchase and sale with the Respondent (the “Agreement”) for a new Ferrari (the “Vehicle”). Title to the Vehicle was to be taken in the name of the corporate appellant 285. Mr. Hitti stated that he was the beneficial owner of 285 and his mother was its sole director.

[6] The Respondent agreed that 285 could take title to the Vehicle provided Mr. Hitti could demonstrate that he controlled or otherwise owned 285. Mr. Hitti was unable to provide the necessary corporate records for 285 and unable to confirm he had the requisite funds to complete the purchase. Thus, the Respondent refused to transfer the Vehicle to 285 or to Mr. Hitti.

[7] Mr. Hitti and 285 (together the “Appellants”) brought an application seeking specific performance of the Agreement (the “Application”). By judgment dated January 3, 2023, the Application was dismissed (the “Judgment”). The Appellants brought an appeal from the Judgment. It is that appeal which underlies the First and Second Motions.

[8] On March 10, 2023, the parties entered into the Consent Order. Under its terms, the Respondent agreed not to sell or transfer the Vehicle until final determination of the appeal.

[9] When the Respondent entered into the Consent Agreement, it was not aware that, on February 13, 2023, the Superior Court of Justice had issued an order removing Mr. Hitti from all positions of authority with 285 (the “February 2023 Order”). Accordingly, Mr. Hitti had no authority to commence or continue the within appeal on behalf of 285. Counsel for the Appellants at the relevant times has since been removed from the record. Like the Respondent, then-counsel for Mr. Hitti and 285 was unaware of the February 2023 Order when the parties entered into the Consent Order.

[10] In the First Motion, the Respondent moves to have the appeal stayed or dismissed on the basis that Mr. Hitti has no authority to commence or continue the appeal on behalf of 285 and the relief being sought is moot. The Respondent asks, alternatively, that the Consent Order preventing it from selling or transferring the Vehicle be set aside or varied.

Analysis

[11] As noted, in the Second Motion the Respondent moves to set aside the Registrar’s Continuation Order. Because the result of the Second Motion has a direct impact on the First Motion, we deal with it first.

The Second Motion is Granted

[12] Mr. Hitti made an ex parte application to the Registrar asking that the interest of 285 in the appeal be continued by 150. His affidavit in support stated that on February 11, 2023, by purported resolutions, all of 285’s assets and interests were assigned to him in trust for the shareholders and, on June 2, 2023, he assigned the interest in the appeal to 150, a corporation he caused to be incorporated one day earlier.

[13] The assignment from 285 to Mr. Hitti was allegedly made two days before the February 13 Order revoking any authority that he might have had over 285 and appointing new officers and directors of 285. However, the alleged assignment of interest by 285 to Mr. Hitti is invalid. We are satisfied that the steps taken to transfer the interest in 285 to 150 were made after the February 2023 Order and designed to thwart it.

The First Motion is Granted

[14] For various reasons, it appears that Mr. Hitti never was an officer or director of 285. In any event, the February 2023 Order stripped him of any authority to act on behalf of 285. Accordingly, he had no authority to commence or continue the appeal on its behalf.

[15] The current management of 285 does not wish to continue with the appeal. Even if the appeal were successful, the management of 285 has indicated that 285 will not pay for the Vehicle nor take possession of it. The Agreement was for 285 to take title to the Vehicle. Accordingly, the appeal is moot, clearly without merit, and must be dismissed.

[16] The Consent Order is set aside pursuant to r. 59.06(2)(a) of the Rules of Civil Procedure, R.R.O. 1990, Reg. 194, because of fraud or facts the Respondent discovered after it was made. Mr. Hitti knew of the February 2023 Order when the Consent Order was being negotiated. He hid its existence from the Respondent and his own lawyer. Had the Respondent been aware of the February 2023 Order, it would not have entered into the Consent Order. Clearly, the Consent Order must be set aside.

Disposition

[17] For these reasons, both the First Motion and the Second Motion are granted. An order shall go striking the notice of appeal in this matter, dismissing the within appeal, setting aside the Consent Order, and setting aside the Registrar’s Continuation Order. Costs of the appeal and the First and Second Motions are ordered in favour of the Respondent fixed at $40,000, all inclusive.

“E.E. Gillese J.A.”

“Gary Trotter J.A.”

“S. Coroza J.A.”