ONTARIO
SUPERIOR COURT OF JUSTICE
COURT FILE NO.: CV-11-421980-00
DATE: 20120329
B E T W E E N:
ANGELO ORSI and ANGELA ORSI
Plaintiffs
- and -
FRANK SCARMATO, SHAHRAM LAGHAI and MARCEL’S GRADAL RENTAL LTD.
Defendants
Oscar Strawczynski, for the Plaintiffs / Defendants to Counterclaim
Douglas LaFramboise, for the Defendant / Defendant to Crossclaim / Plaintiff by Crossclaim Frank Scarmato
David M. Farmani, for the Defendant / Plaintiff by Crossclaim / Plaintiff by Counterclaim / Defendant to Crossclaim Shahram Laghai
AND BETWEEN:
SHAHRAM LAGHAI
Plaintiff by Crossclaim
- and -
FRANK SCARMATO
Defendant to Crossclaim
AND BETWEEN:
SHAHRAM LAGHAI
Plaintiff by Counterclaim
- and -
ANGELO ORSI and ANGELA ORSI
Defendants to Counterclaim
AND BETWEEN:
FRANK SCARMATO
Plaintiff by Crossclaim
- and -
SHAHRAM LAGHAI
Defendant to Crossclaim
HEARD: March 14, 2012
SPENCE J.
REASONS FOR DECISION
[1] Frank Scarmato (“Scarmato”), a defendant to the crossclaim made by Shahram Laghai (“Laghai”) as plaintiff, moves to set aside or stay the ex parte order of this Court dated January 30, 2012 granting summary judgment to Laghai and ordering specific performance of the Agreement of Purchase and Sale referred to below.
Background: The Litigation History
[2] The proceedings in this matter were initiated by the Orsis as Plaintiffs in their Statement of Claim, dated March 10, 2011, against Scarmato, Laghai and another as Defendants, based on a mortgage from Scarmato to the Orsis on property owned by Scarmato in the Kleinberg area. Pursuant to that mortgage, the Plaintiffs sought to exercise their power of sale. Each of Scarmato and Laghai counterclaimed. Each of them also cross-claimed against the other.
[3] In his Amended Statement of Defence, Counterclaim and Crossclaim dated September 8, 2011, Laghai claimed against Scarmato for a declaration that the Agreement of Purchase and Sale which is in issue in these proceedings is a valid and binding contract between Laghai as purchaser and Scarmato as vendor, to be enforced by specific performance.
[4] The crossclaim of Laghai against Scarmato is the basis for the present motion.
[5] By Notice of Motion dated November 21, 2011, Laghai moved for summary judgment on his crossclaim , including an order for the declaration and specific performance requested in his Amended Statement of Defence, Counterclaim and Crossclaim. The motion came on for hearing on December 16, 2011. The full court record was not available. I ordered an adjournment on terms to February 9, 2012. As noted in my endorsement on the record, a request for the adjournment was made by Mr. Strawczynski as agent for Mr. LaFramboise, who was said to be counsel to Scarmato. My endorsement noted, “Mr. Scarmato may well be engaging in delay.” I ordered that the adjournment order was to be peremptory to Mr. Scarmato.
[6] I also ordered as follows in paragraph 2 of the order of December 16, 2011:
- this court orders that the Defendant/Defendant to Crossclaim serve and file: a) Notice of Appointment of Lawyer within 5 days; b) Defence to the Crossclaim by January 5, 2012; c) Responding materials to the Motion of the Defendant/Defendant to Crossclaim by January 10, 2012, failing which the Defendant/Plaintiff by Crossclaim may move ex parte for judgment. Any material for the Plaintiff shall be filed by the date for the material of the Defendant to Crossclaim.
(Subsequently, an issue was raised on behalf of Scarmato as to whether there was proper notice to him. This issue is dealt with below.)
[7] The matter was returned before me by Laghai ex parte for hearing on January 30, 2012 pursuant to paragraph 2 of the December 16, 2011 Order on the basis that the terms of the Order had not been complied with.
[8] On January 30, 2012, I made the Order of the Court of that date which provides in part at paragraphs 1, 2 and 3 as follows:
This Court declares that the agreement of purchase and sale (the “Agreement”) between the Plaintiff by Crossclaim as buyer and the Defendant Frank Scarmato as seller, dated Sept. 21, 2010 concerning the land and premises municipally known as 12111 Pine Valley Drive, Vaughan, Ontario (the “property”) with legal description of PT W34 LT 35 CON 6 Vaughan as in VA 69125; S/T VA 41000, City of Vaghan [ sic ], is a valid and binding contract between eh parties to be enforced as set out herein.
This Court orders that the Agreement shall be completed by no later than 6:00 p.m. on February 16, 2012 or such later date not later than February 29, 2012 as the Plaintiff by Crossclaim may select in writing on notice to the Defendant given at least 7 days in advance and subject to any further Order of the court on motion by the Plaintiff by Crossclaim for an extension of the closing date.
This Court orders that the completion of the Agreement shall be carried out in accordance with the terms of the Agreement.
[9] The January 30, 2012 Order also provided as follows in paragraphs 6 and 7:
The above Orders are subject to any further order of the Court in this matter.
Any motion for other or further relief in this matter may be scheduled before me if that is convenient for the court schedule.
[10] On January 31, 2012 I made an endorsement to the record relating to the above Order. The endorsement stated, in part, as follows:
By the order of December 16/11, the Defendant Scarmato was required to deliver any responding materials by Jan. 10/12. None was delivered.
The test for summary judgment is whether there is a genuine issue requiring a trial. On the basis of the material before the Court, the Defendant has failed to satisfy his obligation to complete the transaction provided for in the Agreement of Purchase and Sale.
Accordingly, the Plaintiff by Crossclaim is entitled to an order for specific performance.
[11] Scarmato moved on February 6, 2012 for a stay of the execution of the summary judgment granted by the January 30 order.
[12] On February 9, 2012, Hainey J. ordered a stay of the January 30 order until March 14, 2012. The matter was returned before me on March 14, 2012.
Whether Scarmato Received Proper Notice of the December 16, 2011 Motion
[13] The Court maintains an internal court record for a proceeding which includes the names of the lawyers registered on the record of the Court as counsel to the parties. Service on a party made by service on counsel of record to that party is proper service.
[14] Ms. Suzanne Quinn is referred to frequently by Laghai as the lawyer for Scarmato. Her name does not appear on the Court record as counsel to Scarmato. It shows that on April 27, 2011, Mr. David Michael Pomer went on the record as counsel for Scarmato.
[15] No change in the record as to counsel for Scarmato occurs until December 21, 2011. On that date, the record shows the name of Mr. LaFramboise as counsel to Scarmato. The Court record does not show any subsequent change in the name of counsel to Scarmato.
[16] The Motion Record of Laghai for the hearing on December 16, 2011 was addressed to “Quinnlaw” with the accompanying name, “Suzanne Quinn”, as solicitor for Scarmato. The Motion Record was served on Ms. Quinn on November 23, 2011. Ms. Quinn did not appear on December 16, 2011.
[17] As noted above, Mr. Strawczynski, on behalf of Mr. LaFramboise, sought an adjournment on December 16, 2011. On March 14, 2012, Mr. LaFramboise advised the Court that he learned of the hearing on December 16, 2011 only through advice he received from Mr. Strawczynski. Mr. LaFramboise also advised that he had not been able to attend that day because he was required to be in another court that day. He provided documentation to confirm that that was so.
[18] Counsel for Laghai provided what purports to be a copy of a letter from Ms. Quinn dated May 25, 2011 stating that she had been retained by Scarmato with regard to a “Section 71 notice registered by Laghai” against the property in issue. The letter does not refer to the present proceedings. Counsel for Scarmato provided what purports to be a letter from Ms. Quinn dated March 2, 2012 in which she states that she had done some work for Mr. Scarmato in respect of “an aborted real estate sale of his property”, but was never formally retained by him and she was never retained with regard to the present proceedings.
[19] Based on the foregoing, there is no reason to conclude that the solicitor of record for Scarmato has been anyone other than David Michael Pomer and Mr. LaFramboise of Mr. Pomer’s firm, who is currently solicitor of record, and Ms. Quinn has not been on the record for Scarmato. Since the Pomer firm was not on proper notice for the December 16 hearing, the absence of Mr. LaFramboise on that day would not have supported the suggestion of possible delay on the part of Scarmato. In the absence of that suggestion, the more likely result on that day would have been an adjournment without the order in paragraph 2 of the December 16, 2011 Order, in order to allow proper notice to be given to Scarmato and without the presumption in favour of summary judgment that is reflected in paragraph 2.
[20] The above conclusion is a relevant consideration to be taken into account in determining on the present motion, what order would be just for purposes of Rule 37.14 of the Rules of Civil Procedure , R.R.O. 1990, Reg. 194. The Rule is considered below.
The Test to Set Aside
[21] The January 30 Order was made on a motion without notice. Laghai obtained the order without notice on the basis of paragraph 2 of the December 16 Order. Laghai submitted that Scarmato had not complied with the requirement in that paragraph to file a Notice of Appointment of Lawyer within 5 days, a Defence to the Crossclaim by January 5, 2012 and responding materials by January 10, 2012. It does not appear from the internal court record for the proceeding that a Statement of Defence or responding materials were filed within the periods specified.
[22] Rule 37.14(1) and (2) provide as follows:
37.14 (1) A party or other person who,
(a) is affected by an order obtained on motion without notice;
(b) fails to appear on a motion through accident, mistake or insufficient notice; or
(c) is affected by an order of a registrar,
may move to set aside or vary the order, by a notice of motion that is served forthwith after the order comes to the person’s attention and names the first available hearing date that is at least three days after service of the notice of motion. R.R.O. 1990, Reg. 194, r. 37.14 (1) ; O. Reg. 132/04, s. 9.
(2) On a motion under subrule (1), the court may set aside or vary the order on such terms as are just. R.R.O. 1990, Reg. 194, r. 37.14 (2) .
[23] At the hearing on March 14, 2012, counsel for Scarmato contended that he and/or his firm were counsel of record to Scarmato and that he had served on counsel for Laghai, on January 5, 2012, the Statement of Defence and Crossclaim of Scarmato, as attested by an Affidavit of Service to that effect. Counsel said he filed no responding materials because he intended to rely on the materials filed by Laghai. Accordingly, the service of the Statement of Defence and Crossclaim on counsel for Laghai effectively satisfied the requirement in paragraph 2 of the December 16 Order.
[24] Scarmato states in his affidavit, sworn February 5, 2012, that he and Mr. LaFramboise received advice of the January 30 Order from counsel to Laghai only on February 4, 2012. Scarmato filed his motion for a stay of execution of that Order on February 6, 2012. By doing so, he satisfied the requirement of Rule 37.14 to proceed forthwith after learning of the order sought to be set aside or varied. Accordingly, the task of the Court under Rule 37.14 is to determine what order, in the circumstances of this case, would be just.
[25] The material filed by Laghai disclosed that Scarmato had served his Statement of Defence. There was no way for Laghai to know that Scarmato did not intend to file any responding material. So, it was not improper for Laghai to seek the summary judgment order provided for in the December 16 Order. However, since Scarmato did not wish to file responding material, the December 16 Order did not require him to do so. Consequently, the required basis for the motion for summary judgment did not exist. If the Court had been advised that Scarmato did not intend to file any responding material, the Court would not have been able to grant the ex parte January 30 Order. This conclusion obviously bears on the question of what order it would be just for the Court now to make.
Other Considerations Relevant to a Just Disposition
[26] The conclusions reached above may be summarized as follows:
(1) there was no proper basis for the order made in paragraph 2 of the December 16 Order; and
(2) there was no proper basis for the ex parte January 30 Order for summary judgment.
[27] The second of these conclusions provides sufficient reason by itself to determine that it is just to set aside the January 30 Order.
[28] The first of the reasons provides further support for that determination.
[29] It is unnecessary to pursue the matter further, but it is in order to mention the following concerns. Because of the way this matter has proceeded, there has been no hearing of the issues on the crossclaim on their merits. Each party has filed a pleading. Each party has filed an affidavit, but these affidavits have been filed for the respective motions to which they relate. There is no assurance that they address all the matters that have been put in issue under the pleadings. There has been no cross-examination on the affidavits. The gist of the defence of Scarmato, as I understand it from the materials and the submissions, is that Laghai, while acting as his real estate agent for the sale of his property, persuaded him to enter into an agreement with Laghai to sell that property to him at a price that is improvidently low, based on an appraisal made soon after the agreement was signed and also based on current estimates of the value of the property. Laghhai’s position is that this claim is without merit and in any event, it is not a defence to the claim for specific performance. These issues are substantive ones and at this stage it would be unjust to preclude a proper hearing to determine them, whether by summary judgment or otherwise.
Conclusion
[30] For the reasons given above, the January 30 Order cannot stand and must be set aside. But that must be done only on such terms as are just.
[31] An order to set aside the January 30 Order for the above reasons will leave the December 16 Order in effect except for paragraph 2 of the Order , which has no further effect. On this basis it would be open to Laghai to return his motion for summary judgment except that the date fixed for its return is now passed. So a new timetable for the return of the motion is required.
[32] The order to set aside the January 30 Order requires terms relating to the Affidavit of Scarmato filed February 5, 2012 on the motion to stay and the Affidavit of Scarmato, sworn February 22, as to the valuation which Mr. LaFontaine referred to in the present hearing. In order to ensure that there is no uncertainty about the status of these affidavits in respect of further proceedings in this matter, the order to set aside is made on the terms set out below.
[33] For the reasons set out above, the January 30 Order is set aside on the following terms:
(1) If Laghai wishes to return his original motion for summary judgment, he shall give notice to Scarmato and Orsi as to the date for its return within the next 14 days.
(2) If Scarmato wishes to rely on either or both of his Affidavits sworn February 5, 2012 and February 22, 2012 on that motion or in any other further proceedings in this matter, he shall serve proper notice to that effect, together with a copy of such Affidavit or Affidavits. This term is without prejudice to any issue Laghai may wish to raise as to the admissibility of such affidavit or affidavits in any respect.
Costs
[34] Counsel may make written submission to me as to costs if that becomes necessary. A copy of such submissions by e-mail to my assistant would be appreciated.
Spence J.
Released: March 29, 2012
COURT FILE NO.: CV-11-421980-00
DATE: 20120329
ONTARIO SUPERIOR COURT OF JUSTICE
B E T W E E N:
ANGELO ORSI and ANGELA ORSI Plaintiffs
- and -
FRANK SCARMATO, SHAHRAM LAGHAI and MARCEL’S GRADAL RENTAL LTD. Defendants
AND BETWEEN: SHAHRAM LAGHAI Plaintiff by Crossclaim - and - FRANK SCARMATO Defendant to Crossclaim
AND BETWEEN: SHAHRAM LAGHAI Plaintiff by Counterclaim - and - ANGELO ORSI and ANGELA ORSI Defendants to Counterclaim
AND BETWEEN: FRANK SCARMATO Plaintiff by Crossclaim - and - SHAHRAM LAGHAI Defendant to Crossclaim
REASONS FOR DECISION
Spence J.
Released: March 29, 2012