ONTARIO

SUPERIOR COURT OF JUSTICE

GUELPH COURT FILE NO.: 3768/02
DATE: 20120323

B E T W E E N:

Anthony M. Speciale

In person

Plaintiff

• and -

Giovanni Giardino, Ada Giardino, Danilo Giardino aka Danny Giardino, Nicolino Giardino, a Bankrupt by his Trustee in Bankruptcy, Ernest Leyson-Hughes C.A. and Royal Bank of Canada

R. Sparano, for the defendants/creditors, Giovanni Giardino and Ada Giardino

Defendants

HEARD: March 12, 2012

REASONS FOR JUDGMENT

Daley J.

[ 1 ] The issue for determination on this motion is whether monies standing in court should be released or distributed to the moving defendants, as judgment creditors of the plaintiff.

[ 2 ] The plaintiff is a solicitor licensed to practice law in Ontario. Leave was granted to the plaintiff to allow him to appear on this motion and make submissions based on an affidavit record, which included the solicitor's own affidavit.

[ 3 ] This matter has a very long and tortured history.

[ 4 ] This motion is brought by the defendants Giovanni Giardino and Ada Giardino (“Giardinos”) for direction of the court regarding the status of monies presently standing in court in this action.

[ 5 ] The monies presently in court were paid by the plaintiff pursuant to the order of Goodman J. dated February 28, 2012, which required the plaintiff to deposit the sum of $65,795.91 into court.

[ 6 ] This amount represents the total of several costs orders made against the plaintiff as follows:

(1) Judgment of Herold J. of September 13, 2006, dismissing action Speciale v. Giardino et al., File No. 3768/02 where costs were awarded against the plaintiff payable to the defendants in the sum of $14,582;

(2) Judgment of Daley J. of February 24th, 2010, in respect of costs which was increased by the order of Witten J., dated April 14, 2010 and ordered that the plaintiff pay costs in favour of the moving defendants and others in the sum of $47,213.91; and

(3) Order of Gray J. of August 23, 2011 awarding the moving parties cost of $4,000 payable by the plaintiff.

[ 7 ] These costs all remain unpaid.

[ 8 ] There have also been several costs awards made against the plaintiff in bankruptcy proceedings between 2008 and 2011 which total $111,740.06. The plaintiff has failed to pay any of these costs awards.

[ 9 ] The monies presently standing in court only relate to costs awards made in favour of the moving defendants in non-bankruptcy proceedings involving the plaintiff and the moving defendants.

[ 10 ] The moving defendants seek to have the monies standing in court paid directly to their solicitors Solmon Rothbart Goodman LLP as per an authorization and direction executed by the moving defendants and other parties dated March 6, 2012, wherein the parties acknowledge that the solicitors have a solicitor's lien against all the costs ordered payable by the plaintiff in the above-referenced orders.

[ 11 ] The plaintiff opposes the moving parties' request that the monies be paid out of court to the solicitors.

[ 12 ] During the submissions from counsel on this motion, the plaintiff conceded that, subject to his claim of equitable set off, the moving parties and the solicitors claiming on their solicitor's lien are entitled to receive the monies standing in court.

[ 13 ] The plaintiff further conceded that this Court has jurisdiction to consider this motion and he acknowledged that the matters at stake on the motion were outside the scope of any bankruptcy proceeding.

[ 14 ] Notably, the trustee in bankruptcy of the defendant Nicolino Giardino, who has been discharged from bankruptcy, wrote to counsel for the moving parties on March 8, 2012 advising that neither the trustee nor any creditor of the bankrupt estate claimed any interest in the costs monies standing in court.

[ 15 ] The plaintiff opposed the distribution and payment of the monies to the moving parties' solicitors, based on his claim of equitable set off.

[ 16 ] The plaintiff seeks to set off two judgments obtained by him in 1999 as against his liability under the orders to pay costs to the moving parties.

[ 17 ] In the action #99-BN-3052, Speciale v. Danilo Giardino , 1001815 Ontario Limited and 1317664 Ontario Inc., the plaintiff obtained default judgment against the defendants in the sum of $34,943.80.

[ 18 ] In the action #99-BN-3607, the plaintiff obtained default judgment against 1001815 Ontario Limited in the sum of $79,093.50.

[ 19 ] The costs awards referred to above made in favour of the moving parties against the plaintiff were made in different actions and involve different parties.

[ 20 ] Although on the argument of this motion, the plaintiff had no case authorities with respect to his claim to equitable set off of the judgments he obtained as against the costs award, I later received a case brief of authorities and text material from the plaintiff. I have considered the authorities filed by the plaintiff.

[ 21 ] The claim of equitable set off as asserted by the plaintiff, is not one where the plaintiff, being entitled to costs payable by a party, seeks to set-off costs he owed the opposite party.

[ 22 ] The plaintiff has two judgments in his favour against parties other than the moving parties, in whose favour the costs awards in question were made.

[ 23 ] The plaintiff urged that the court should take an expansive view of the claim for equitable set off.

[ 24 ] As I understand it, it is the plaintiff's position that as the judgment debtor, 1001815 Ontario Limited was operated by the moving parties, the Giardinos, there is mutuality or at least a close connection between the plaintiff and the moving parties such that equitable set off is a remedy available to him.

[ 25 ] It is clear that a company operates as a distinct legal personality from its shareholders, directors and officers. A corporation will be treated as a separate legal entity for the purpose of set off and will not have mutuality on debts owed by it to third parties, with debts owed by third parties to its shareholders, directors or subsidiaries: Kelly R. Palmer, The Law of Set-Off in Canada (Aurora: Canada Law Book Inc., 1993 at 244-245.

[ 26 ] Quite apart from the required legal foundation for plaintiff's position, no evidence was offered by the plaintiff that would even support his contention that the moving parties the Giardinos operated 1001815 Ontario Limited and that on some basis the corporate veil should be pierced in considering his claim for equitable set off.

[ 27 ] Further, there can be no set off of costs, and no such order can be made, where they are in separate actions, even if between the same parties: York Condominium Corp No. 329 v. Dazol Development Ltd. (1979), 12 C.P.C. 182 ; Toronto-Dominion Bank v. Orzech , 2003 CarswellOnt 2242 .

[ 28 ] While the current law appears to be that mutuality is not strictly required in equitable set off, where there is no mutual debt between individual defendants and a corporation, even if in the same action, there is no legal basis to apply the equitable rule of set off: 677933 Ontario Ltd. v Dical Investments Ltd. , [1992] O.J. No. 1583 .

[ 29 ] Quite apart from these considerations, in order for the plaintiff to establish that he is entitled to advance a claim for equitable set off, he must establish that there is some equitable ground for being protected from the costs orders and that ground must go to the root of the plaintiff's claim: Holt v. Telford , 1987 18 (SCC) , [1987] 2 S.C.R. 193.

[ 30 ] The plaintiff must establish as well that to deny his claim for equitable set off would be manifestly unjust.

[ 31 ] The costs awards that the plaintiff is seeking to set off are neither in the same proceeding nor involving the same parties. He is seeking to set off judgments obtained in 1999 made in his favour against 1001815 Ontario Limited, (which is not a party entitled to any costs pursuant to the non-bankruptcy costs orders), in separate actions, against the non-bankruptcy costs orders obtained in 2006, 2010 and 2011.

[ 32 ] As the judgments obtained by the plaintiff in 1999 are in different actions, involving different parties, and as there is no mutuality of debt, there should be no set off granted to the plaintiff in these circumstances.

[ 33 ] Further, even if the plaintiff had established that the right to claim equitable set off was available to him, on this record, and considering the plaintiff's conduct, this is not a case where equitable set off should be granted.

[ 34 ] The plaintiff has a lengthy history of total disregard of court orders and he has been relentless in his efforts to avoid payment of the costs orders outstanding against him.

[ 35 ] He has established no equitable basis for set off and on all the evidence, quite apart from the other considerations discussed above, I cannot conclude that it would be manifestly unjust to deny the plaintiff's claim for equitable set off.

[ 36 ] In the result, the monies presently standing in court in the sum of $65,795.91 shall forthwith be paid out of court to the moving parties’ solicitors Solmon Rothbart Goodman LLP.

[ 37 ] As to the costs of this motion, counsel for the moving parties shall serve and file submissions in respect of costs within 15 days, with submissions on behalf of the plaintiff to be delivered within 15 days thereafter. The submissions shall be limited to two pages plus a costs outline.

Daley J.

Released: March 23, 2012

GUELPH COURT FILE NO.: 3768/02
DATE: 20120323

ONTARIO SUPERIOR COURT OF JUSTICE B E T W E E N: Anthony M. Speciale Plaintiff - and – Giovanni Giardino, Ada Giardino, Danilo Giardino aka Danny Giardino, Nicolino Giardino, a Bankrupt by his Trustee in Bankruptcy, Ernest Leyson-Hughes C.A. and Royal Bank of Canada Defendants REASONS FOR JUDGMENT Daley J.

Released: March 23, 2012