ONTARIO
SUPERIOR COURT OF JUSTICE
COURT FILE NO.: 07-33319
DATE: 2012-09-19
B E T W E E N:
DENNIS LEGER
Graydon Sheppard, Counsel for the Applicant / Plaintiff
Applicant / Plaintiff / Defendant by Counter-Claim
- and -
JOSEPH TITTARELLI
Michael Bordin, Counsel for the Respondent / Defendant
Respondent / Defendant / Plaintiff by Counter-Claim
HEARD: September 13, 2012, reserved for decision
REASONS FOR DECISION
CRANE J.
[ 1 ] The present proceeding was commenced by a Notice of Application issued on August 24, 2007, under the Trustee Act by Dennis Leger to obtain an order of this court vesting to this Applicant the real property municipally described as 535 Barton Street in the city of Stoney Creek, Ontario. The application by originating process was supported by an affidavit of the Applicant and opposed by an affidavit of the Respondent, Joseph Tittarelli.
[ 2 ] The parties, through their respective counsel, conducted cross-examinations on the affidavits and on the productions of documents.
[ 3 ] The Applicant moved for summary judgment. In the result, an order was made on consent of the parties dated July 5, 2012, for a trial of issues. It is upon this trial that judgment is now being given.
[ 4 ] The issues for determination, pursuant to the foresaid order, are stated and answered as follows.
ISSUE: (a) a determination as to the terms of the partnership of the parties upon its formation;
ANSWER: A partnership was formed by these parties in 1987 upon their agreement to purchase a real property on Rymal Road in Hamilton for the purpose of gain. The parties were friends and with mutual trust and confidence agreed without a written document to contribute equally to the purchase and maintenance of this service station property and to share equally in the results of disposition.
The sale of the Rymal Road property in 1988 occasioned an oral agreement to extend their partnership. The proceeds from the Rymal Road property sale were paid into a joint account of the parties under their intention, formed in or about 1988, to enter into an investment business to purchase, maintain and sell real estate properties. The partnership purchased four properties in the period of approximately 1988 to 1991. They are 520 and 535 Barton Street East, Stoney Creek; 1030 King Street, Hamilton and 40 Sunvale Avenue, Stoney Creek.
The partnership relationship continued under an oral agreement of equality as noted above.
ISSUE: (b) whether an agreement was made by the parties regarding the dissolution of the partnership and disposition of the assets and liabilities thereof and the terms of any such agreement;
ANSWER: The parties discussed, but did not execute, an agreement for dissolution of their partnership.
ISSUE: (c) whether the partnership was dissolved, and if so, when;
ANSWER: No.
ISSUE: (d) whether the defendant is entitled to enforce an accounting of the partnership assets and the reimbursement to him of any excess funds contributed by him to the partnership;
ANSWER: Yes.
ISSUE: (e) if the defendant is entitled to such an accounting and reimbursement, directions as to the issues to be determined;
ANSWER: Counsel have sought the right to reserve their respective submissions pending this court’s response to the earlier issues. I do reserve this issue for submissions, and, if so advised, further evidence.
ISSUE: (f) whether the plaintiff is entitled to the transfer of all of the right, title and interest in the lands and premises municipally known as 535 Barton Street, Stoney Creek, Ontario;
ANSWER: This issue is reserved by the Court to be determined together with Issue (e)
REASONS:
[ 5 ] I find that the characterization of the relationship governing this dispute lies in equity on the fiduciary obligations of good faith, trust and honest dealing that exists between partners; Rochwerg v. Truster , 2002 CarswellOnt 990 ; 2002 41715 (ON CA) , 58 O.R. (3d) 687 (O.C.A).
[ 6 ] I find that as a Court of equity, jurisdiction is exercised with discretion with regard to the application of a limitation. Further, I find that it is the equitable doctrine of Laches that is applicable, rather than the statutory Limitations Act . I reject the submission of the Applicant / Plaintiff that the claim of the Respondent is in contract or enforcement of a debt.
[ 7 ] I find further that the partnership continues. I follow the reasoning of the Supreme Court of British Columbia in Davis v. Ouellette , 1981 626 (BC SC) , 1981 CarswellBC 58, 27 B.C.L.R. 162.
[ 8 ] Accordingly, I find that the partnership continues for so long as the partnership property is in existence under the registration on behalf of that partnership.
[ 9 ] The property municipally described as 535 Barton Street was purchased in 1989 on behalf of the partnership and the legal title is registered as ‘Joseph Tittarelli in trust.’ Each party, when asked at trial as to the beneficial ownership of that property under that registration replied that it is their partnership that is the beneficiary of the trust.
[ 10 ] I find, upon the evidence, that the discussions between the parties in or about August 1999, were the basis of a working agreement that; (a), they would firstly complete the sale of their partnership property at 1030 King Street, (b), settle on the values of the two Barton Street properties, (c), settle the amount of an acknowledged inequity of working capital contributions and expense payments between the partners, and then (d), upon the completion of the equalization, transfers would be made by the partnership with 520 Barton Street to the Respondent and 535 Barton Street to the Applicant. I find that the parties agreed that Mr. Leger should be in possession of 535 Barton prior to the settlement of accounts in order that he could operate a lubrication business from that site to obtain money to pay his partnership equalization. I find as further evidence of a discussion towards an ultimate resolution and dissolution of the partnership (and not an agreement), the parties had not discussed in August 1999 the fourth partnership asset, namely 40 Sunvale Avenue, which was not sold until 2001.
[ 11 ] In my view, it is inequitable, creating an injustice, should the Applicant receive transfer of 535 Barton Street from the partnership without his firstly settling his fiduciary obligation within an accounting of their partnership. In this finding I refer to the rule in Cherry v. Boultbee (1839) 41 E.R. 171 cited with approval by this court in the matter of The Bankruptcy of Temple of the City of Toronto in the Province of Ontario , 2012 ONSC 376 () , 109 O.R. (3d) 374 at paragraph 26 .
[ 12 ] I find that Laches do not apply on the facts of this case. The parties have made reasonable efforts to settle their partnership accounts, notwithstanding their failure to strike an agreement.
[ 13 ] The Respondent has provided a great many proposals for settlement of the accounts and there was a genuine response with a settlement proposal from the Applicant. It is now apparent that the parties cannot resolve their mutual efforts at a determination of the quantum of the Applicant’s deficiency in contribution to the partnership without the binding assistance of the Court to which they have now submitted their dispute.
FURTHER PROCEEDINGS:
[ 14 ] I suggest that counsel arrange a telephone conference with me for a preliminary discussion of the process going forward in this proceeding. Arrangements may be made through the offices of the Trial Coordinator at Hamilton.
Crane J.
Released: September 19, 2012
COURT FILE NO.: 07-33319
DATE: 2012-09-19
ONTARIO SUPERIOR COURT OF JUSTICE B E T W E E N: DENNIS LEGE Applicant / Plaintiff / Defendant by Counter-Claim - and – JOSEPH TITTARELLI Respondent / Defendant / Plaintiff by Counter-Claim REASONS FOR DECISION Crane J. DSC // dm
Released: September 19, 2012