SUPERIOR COURT OF JUSTICE - ONTARIO

COURT FILE NO.: 10-CV-396479

DATE: 20120214

RE: The Toronto-Dominion Bank, Plaintiff

AND:

Perpetual Income Producing Enterprise Inc. and Armando Orefice, Defendants

BEFORE: Carole J. Brown J.

COUNSEL: S. Sood , for the Plaintiff

Armando Orefice , for the Defendants

HEARD: January 23, 2012

ENDORSEMENT

[ 1 ] The plaintiff, the Toronto-Dominion Bank [“TD”], moves for orders (i) for leave to bring this motion, as the matter has been set down for trial; (ii) an order striking the defence and counterclaim of the defendants and (iii) for judgment against the defendants on the grounds that the defendants have failed to comply with Court orders, refused to be cross-examined on an affidavit in support of the summary judgment motion and failed to attend a court-ordered mediation. In the alternative, the plaintiff seeks an order (i) requiring the defendants, Perpetual Income Producing Enterprise Inc. [“PIPE”] and Armando Orefice [“Orefice”], to comply with the Order of Master Brott dated November 22, 2011 ordering the defendants, PIPE and Orefice, to appoint new counsel or comply with Rules 15.04(6) and 15.04(8), respectively; (ii) dispensing with mediation and requiring the parties to forthwith attend at Trial Scheduling Court to set a date for trial; (iii) staying the costs awarded pursuant to the Order of Stewart J. dated December 29, 2011 and (iv) awarding costs of today’s motion to the plaintiff, to be set off against the costs order of December 29, 2011.

[ 2 ] The plaintiff’s action is for judgment as against the defendants, PIPE and Orefice, an officer, director and majority shareholder of the corporate defendants, in respect of their liability on guarantees executed by them to secure the loans advanced to Vicor.

[ 3 ] The plaintiff brought a motion for summary judgment against the defendants on May 7, 2010. The defendants served their responding materials, including a sworn affidavit from Orefice, on May 21, 2010. Orefice was subsequently examined on cross-examination on the affidavit filed, but, on his counsel’s advice, refused to answer questions. Cross-examination was adjourned by the plaintiff to seek directions from the Court and was ultimately resolved by counsel for the parties agreeing to broaden the scope of the cross-examination. A scheduling hearing was held and a new timeline propounded, with further cross-examination to be held October 19, 2010 and the motion for summary judgment scheduled for November 15, 2010.

[ 4 ] At the cross-examination, ordered pursuant to the new timeline, Orefice attended without counsel and refused to answer any questions. The plaintiff brought a motion to strike the affidavit, which was not granted. However, Orefice was ordered to submit to cross-examination and to pay costs.

[ 5 ] The summary judgment motion was ultimately heard on February 7, 2011. On July 27, 2011, partial summary judgment was ordered as against PIPE, on its unlimited guarantee, with the quantum of judgment to be determined at trial, along with Orefice’s liability on his guarantee. On December 29, 2011, costs were ordered against TD in the amount of $10,000.00 payable within 60 days. On August 16, 2011, the plaintiff wrote to the defendants’ counsel to schedule a mediation. As no response was received, the plaintiff requested the Mediation Coordinator of the Superior Court to assign a mediator. E. Bruce Soloman was assigned, and the mediation was scheduled for November 22, 2011, with Statements of Issues to be provided to the mediator by both parties by November 15, 2011. On November 9, 2011, defendants’ counsel advised plaintiff’s counsel and the mediator that he was unable to contact or receive instructions from his clients and would be seeking an order for removal as solicitor of record. He requested that the mediation be vacated. The mediator, Mr. Soloman, advised him that vacating the mediation would require a court order. None was forthcoming. The mediator now seeks, through plaintiff’s counsel at this motion, payment of the defendants’ portion of the cancellation fee in the amount of $339.00. I have no evidence before me of whether a fee was also charged to the plaintiff, or whether that was the total cancellation fee. Nor do I have evidence of a mediation agreement or contract.

[ 6 ] The defendants’ counsel of record was granted an Order removing them from the record on November 22, 2011. Master Brott ordered that:

Mancini Associates LLP be removed as lawyers of record for the defendants; PIPE appoint a new lawyer of record or serve an order granting it leave to be represented by a person other than a lawyer within thirty days of being served with the November 22 Order; and Orefice appoint a new lawyer of record or serve a notice of intention to act in person within thirty days of being served with the November 22 Order.

[ 7 ] Service of the said Order was effected on the defendants by mail on December 6, 2011, according to the Affidavit of Service sworn by C. Cohen of Mancini Associates, following the Order for Removal. Accordingly, deemed service of the Order by mail is five days thereafter.

[ 8 ] To date, PIPE has failed to appoint a new lawyer of record or obtain an order granting leave to be represented by a person other than a lawyer within 30 days of service of the said Order, as required pursuant to R.15.04(6) and the Order of Master Brott. Orefice has also failed to appoint new counsel or serve a Notice of Intention to Act in Person, pursuant to R. 15.04(8) and the Order of Master Brott.

[ 9 ] Orefice, who appeared on his own behalf at this motion, argued that he had not received the Order for Removal requiring him to comply with R. 15.04(6) and (8). He had no other explanation for the delays or failures to comply with court orders.

[ 10 ] The Rules and Order of Master Brott imposed a positive duty on the defendants which was not fulfilled. I have considered the caselaw cited by Mr. Sood for the plaintiff regarding striking of the defence and counterclaim. In the circumstances of this case, I decline to strike the defence and counterclaim, but do grant the plaintiff’s request for the alternative order sought.

[ 11 ] I order as follows:

1. That the plaintiff be granted leave to bring this motion;

2. That the defendants, PIPE and Orefice, must comply, within 30 days of the release of this endorsement, with the Order of Master Brott dated November 22, 2011 as follows:

a. That PIPE appoint a new lawyer of record or obtain an order granting it leave to be represented by a person other than a lawyer within 30 days of the release of this order;

b. That Orefice appoint a new lawyer of record or serve a Notice of Intention to Act in Person within 30 days of the release of this endorsement;

c. That the mediation in this action be dispensed with;

d. That the parties forthwith attend at Trial Scheduling Court in order for a trial date to be set.

[ 12 ] The plaintiff seeks costs on a substantial indemnity basis in the total amount of $11,768.00. He has provided a Bill of Costs on a substantial indemnity basis only. I am prepared to order costs on a partial indemnity basis in the total amount of $8,500.00, to be set off against the $10,000.00 costs ordered to be paid by the plaintiff to the defendants. This results in a total amount owing by the plaintiff to the defendants of $1,500.00.

[ 13 ] The order for payment by the plaintiff to the defendants in the amount of $10,000.00, with the set off of $8,500.00 that I have ordered today, is stayed pending the outcome of the trial.

[ 14 ] I make no order for payment of the outstanding fees of the mediator. Rule 24.1 does not provide for a cancellation fee for mediators in the absence of an express contractual arrangement for such fee, and there is no evidence before me of a mediation agreement having been executed among the mediator and the parties.

Carole J. Brown J.

Date: February 14, 2012