COURT FILE NO.: CV-12-462675

DATE: 2012-10-25

SUPERIOR COURT OF JUSTICE - ONTARIO

RE: Bruno DiFilippo and Cavana Corporation, Plaintiffs

• v. -

Giuseppe DiFilippo, Defendant

BEFORE: Mr. Justice H.J. Wilton-Siegel

COUNSEL:
Roberto R. Cucci, for the Plaintiffs
Cynthia B. Kuehl, for the Defendants

HEARD: October 24, 2012

ENDORSEMENT

[ 1 ] On this motion, the applicant Bruno DiFilippo (the “applicant”) seeks a stay of the order dated October 4, 2012 of Master Graham discharging a certificate of pending litigation. The motion is brought under Rule 63.02(1)(b) of the Rules of Civil Procedure. A notice of appeal has been served although no date has yet been assigned for the hearing of the appeal.

Factual Background

[ 2 ] The action concerns a one acre parcel of land (the “property”) having the municipal address of 1098 Thompson Road, Milton. It is subject to an agreement of purchase and sale with a third party that is an affiliate of Tim Hortons. The transaction is scheduled to close on or about October 26, 2012. It is agreed that the property is a development property.

[ 3 ] The applicant says he paid the respondent 15%, being $15,000, of the purchase price of a 52 acre parcel of land in 1978 by way of an investment rather than a loan. This is disputed by the respondent and contradicted by an affidavit of the applicant in another proceeding, which describes this transaction as a loan. The 52 acre parcel was registered in the name of the respondent and his wife. The applicant also relies on the fact that title to the property itself was registered in his name between January 5, 1984, when the property was created by a severance from the larger 51 acre property, and February 28, 1989, when the property was sold to a third party. The 1989 sale transaction involved a vendor take-back mortgage in favour of the respondent and his wife, which was realized upon on or about September 3, 1991. Since that date, the property has been registered in the name of the respondent and his wife (who is now deceased), without any objection on the part of the applicant until the spring of 2012 when the applicant learned of the proposed sale of the property to the third party.

Analysis and Conclusions

[ 4 ] The three-part test for the granting of a stay is well-established. I will address each part in turn.

The Merits of the Applicant’s Position

[ 5 ] I have doubts that the applicant has established a serious issue to be tried or a prima facie case in respect of the merits of his appeal of the order of the Master. However, it is unnecessary to address the merits of the applicant’s grounds of appeal in view of the determination of the remaining parts of the test set out below.

Irreparable Harm

[ 6 ] The applicant says he will be irreparably harmed if the property is sold. On this issue, the applicant relies almost entirely upon the materials that were before Master Graham although he has had several weeks to provide such additional evidence as he considered responsive to the concerns that were raised by Master Graham when he addressed the applicant’s first stay motion before him.

[ 7 ] Based on the record before the Court, there is no evidence that the property is unique in any way. In particular, there is no evidence that this property was acquired for any purpose other than a commercial investment. There is also no evidence that the applicant cannot be compensated in damages for any loss that may arise as a result of the sale if his claim to beneficial ownership is upheld at trial. In fact, the Statement of Claim includes such a claim for damages. There is also no issue that any damages are readily calculable, among other things, given the existence of an arm’s length purchaser. The applicant acknowledges that he is not asserting that there is a risk of non-payment, given the order that one-half of the sale proceeds are to be held in the trust account of the respondent’s counsel and given the equity in the respondent’s home.

[ 8 ] The applicant suggests, however, that he has a “deep personal connection to the land” that makes it unique to him. He says it has been his “life plan” for more than 30 years to develop this property as a personal project and business opportunity. He says the property is “almost like an inanimate member of my family” and refers to the “family associations going back 34 years which remain emotionally significant to him”. However, he has never lived on the property nor is there evidence of any other involvement other than as described above, apart from the receipt of the proceeds of a mortgage loan of $26,000 taken out against the property by his parents in 2008.

[ 9 ] In particular, there is no evidence of any development plans of the applicant, apart from a joint venture entered into in May 2012 with Cavana Corporation (“Cavana”). Moreover, there are no details of the joint venture arrangements between the applicant and the principal of Cavana. His counsel says that the applicant is contributing the property and Cavana the money to develop the property, as the applicant has no funds available for such purpose. The joint venture can proceed, of course, only if the applicant succeeds in his claim that he is the beneficial owner of the property. From the sparse details provided, however, two conclusions can be drawn. First, the joint venture will necessarily involve a material reduction in the applicant’s interest in the property. Second, Caravan, as the party with the money and the development experience is to be in control of any development on the property. In short, the proposed joint venture involves a sale by the applicant of a material interest in the property and development under the control of a third party. This is inconsistent with the applicant’s professed longstanding intention to develop the property personally in a manner that somehow makes it unique. Instead, the joint venture confirms the essentially commercial nature of the property.

[ 10 ] Ultimately, perhaps in recognition of the difficulties of the argument based on uniqueness, the applicant’s counsel also argues that the irreparable harm to the applicant is the sale of land that has belonged to him for thirty years and, therefore, the effective expropriation of his land, which he says is contrary to longstanding principles of our legal system.

[ 11 ] This argument is rejected for the reason that it begs the very question raised by the applicant’s action. There is no current finding that the applicant owns the property and there may never be. Until his ownership is established, I fail to see how he can assert loss of ownership per se as his irreparable harm.

[ 12 ] If the certificate of pending litigation is removed from the property, the applicant will not lose the right to contest ownership of the property. He will lose the right to possess the property if he is successful on the ownership issue. If the property were unique, he would have a good case for a certificate of pending litigation based on the unquantifiable nature of the right of possession. However, the property is not unique and, accordingly, the applicant can be compensated by an award of damages for the loss of the right of possession should he be successful in his claim of ownership. There is no basis for concluding that such loss could not easily be quantified.

[ 13 ] On the basis of the foregoing, I conclude that the applicant has failed to establish irreparable harm.

Balance of Convenience

[ 14 ] The applicant also says the balance of convenience favours his position. I do not agree. I consider that the balance of convenience favours a denial of a stay in the present circumstances.

[ 15 ] As mentioned, the applicant can be compensated for any loss he suffers as a result of the sale by an award of damages. He does not argue that security for the balance of any such award not put in trust at the time of closing of the proposed sale is an issue. Further, insofar as the merits of his claim to beneficial ownership of the property are relevant in the consideration of the balance of convenience, the applicant’s claim must be regarded as weak.

[ 16 ] On the other hand, the respondent has entered into an agreement of sale with a third party. There is a legitimate concern that the third party purchaser may terminate the transaction if the stay is granted pending a determination of the applicant’s appeal of the Master’s order. The applicant argues that this concern is fully addressed by the availability of a Cavana offer to purchase the property on the same terms and conditions as the third party if the proposed sale fails because of the existence of the certificate of pending litigation. I do not agree for two reasons.

[ 17 ] First, there can be no certainty that the transaction with Cavana would proceed in such circumstances or, if it did, that it would close. The offer is accompanied by a deposit of only $25,000. While Cavana’s banker says the principal of Cavana and his companies, collectively, have funds on deposit exceeding $1 million, we know nothing of the particular financial circumstances of Cavana.

[ 18 ] Second, the offer contemplates putting all of the sale proceeds in trust pending a determination of the applicant’s entitlement to beneficial ownership of the property, subject to the right of the respondent to withdraw $50,000 for personal use provided a first mortgage is placed on his residence, the costs of which are presumably for the respondent’s account. Moreover, the offer does not reimburse the respondent for his expenses in connection with the existing sale transaction but would impose further expenses upon him in respect of the Cavana transaction.

[ 19 ] I would add that, insofar as it is relevant, I also reject the argument that the imminent closing of the sale transaction with the third party works an injustice on the applicant that should be considered in respect of the balance of convenience. He had many years to assert his claim to ownership of the property after he ceased to be the registered owner and failed to take such action. The urgency of the matter before Master Graham was also, in large measure, the creation of the applicant by his own actions in delaying bringing on this motion. As early as May 2012, the applicant was fully aware that the respondent had entered into a conditional agreement for the sale of the property and that the respondent would oppose any motion for a certificate of pending litigation. The applicant’s explanation for proceeding ex parte before Master Abrams was his counsel’s experience that opposing parties could not be trusted to give notice of the satisfaction or waiver of conditions in a sale agreement and the scheduled closing date. Whether or not this concern was warranted in this case after the respondent’s counsel stated that he would advise when the agreement became unconditional, he had that concern as early as May 2012. Nothing occurred between May and September 2012 that materially increased that concern. In the circumstances, the applicant should have brought his motion for a certificate of pending litigation either on notice or with sufficient time to allow for the totally predictable re-hearing if he obtained a certificate of pending litigation on an ex parte basis.

Conclusion

[ 20 ] Accordingly, the motion is dismissed. If the parties are unable to agree on costs, they shall have thirty days to provide written submissions including cost outlines, such submissions not to exceed five pages in length.

Wilton-Siegel J.

Date: October 25, 2012