COURT FILE NO.: 08-CL-7399

DATE: 20121123

ONTARIO

SUPERIOR COURT OF JUSTICE

B E T W E E N:

PATRICIA BUCCILLI and DRAPERY INTERIORS ETC. INC. Plaintiffs

• and -

PASQUALE PILLITTERI also known as PAT PILLITTERI, CHRISTINA PILLITTERI, PATRON CONTRACTING LIMITED also known as CDC CONTRACTING, BIRCHLAND HOMES INC. and VENDRAIN INC. Defendants

Counsel: Michael R. Kestenberg and Thomas M. Slahta, for the Plaintiffs Peter R. Greene, Kyle Peterson and Brigid Wilkinson, for the Defendants

HEARD: September 24, 25, 27 and 28, October 1, 2, 3, 4 and 9, 2012

Newbould J.

[1] The plaintiff Patricia Buccilli was married to Lorenzo (“Enzo”) Ventura who died tragically in a construction accident in September 1998. The defendant Christina Pillitteri was a sister of Enzo Ventura and thus is a sister-in-law of the plaintiff Patricia Buccilli. Christina is married to the defendant Pasquale (“Pat”) Pillitteri, who is thus a brother-in-law of Patricia Buccilli. A third Ventura sibling is Ron Ventura.

[2] Enzo Ventura, Pat Pillitteri and Ron Ventura operated the defendants CDC Contracting and Birchland Homes and were each one-third shareholders. The defendant Vendrain held and continues to hold several real estate investments. The defendant Christina Pillitteri claims to be the sole registered shareholder of Vendrain.

[3] Patricia Buccilli claims that her late husband’s one-third interest in the family businesses and his interest and ownership of various real estate holdings, to which she as his sole heir became owner, were unlawfully transferred to her sister in law and brother in law. The plaintiff Drapery Interiors is a business operated by her and it claimed an indemnity from Christina and Pat Pillitteri for past rent owing on premises rented by it. At the end of the trial this indemnity claim was dropped. Pursuant to a consent order, this case has been bifurcated, with liability issues to be tried and the extent of any damages or recoveries to be made to be determined later.

INDEX

Family history . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3 Credibility and reliability of witnesses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5 Non–payment of rent issue . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8 Purchase of matrimonial home . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9 Move from 83 Pine Valley Dr. and purchase of 2 Doncliffe Place condominium . . . . . . . . . 13 Draft August 2000 agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18 Sale of Palace Pier . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20 Estate of Enzo Ventura documentation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21 June 27, 2001 meeting and Transfer Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23 Other evidence regarding an agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29 Conclusion on June 27, 2001 discussions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31 Vendrain . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33 Legal claims to set aside Transfer Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42 Undue influence . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42 Unconscionability a) Inequality in bargaining position . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46 b) Improvident bargain . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 48 Misrepresentation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 53 Fiduciary duty . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 55 Section 38 of Estates Act . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 57 Are the claims those of CDC or the plaintiff? . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 57 Conclusion . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 58

Family History

[4] In 1972, Ron Ventura and his brother in law, Pat Pillitteri, started CDC. They were each in their early 20’s and each owned 50% of the shares of the company. A few years later, when Enzo Ventura had finished his schooling, he came into the business and the three each held one-third of the shares. At the time Enzo became a shareholder, the business was not yet profitable. It began in the concrete and drainage business, and later invested in real estate ventures as well. Eventually it became very profitable, and continues in business to this day.

[5] Enzo Ventura was the project director for CDC and planned, directed and coordinated activities of the projects to ensure they were done in accordance with the contracts and within time frames and funding parameters. Construction supervisors reported to him. Estimates of the number of people working for Enzo before he passed away were 75 to 100. Ron Ventura started as a machine operator and became the equipment director responsible for the equipment and machinery. Pat Pillitteri was the president responsible for estimation and contract administration, obtaining construction contracts and doing the banking for the business. Christina Pillitteri directed, coordinated and prepared the company’s financial records.

[6] The plaintiff Patricia Buccilli met Enzo when he was 30. They married on September 4, 1989. Enzo and his sister Christina were very close. Patricia and Christina met a few years before the marriage and by all accounts hit if off immediately. Patricia testified that Christina was a wonderful beautiful person and she loved her and loved being with her, and they became confidants. Patricia trusted Christina and had confidence in her, and thought the feeling was mutual. Christina testified that they were like sisters. Unfortunately their relationship ended in 2007 when differences arose between the Pillitteri and the DeCicco/Cioci families, with whom they had several real estate ventures, and between Patricia and the Pillitteris.

[7] At the time she married Enzo, Patricia had been a legal secretary for a number of years. She stopped working shortly after their marriage. She began doing interior decorating from her home, and worked for approximately one year on site for Birchland to assist purchasers of homes being built by Birchland in their interior decorating. Approximately a half year before Enzo died, Patricia began her drapery and interior decorating business, Drapery Interiors, in leased premises and this business has continued to this date. Early in the business she had one employee. She now has five.

[8] Christina Pillitteri has been the office manager of CDC from the outset of the business. In her words, she makes sure that things get done. She does the books and has been the person responsible for payables and receivables. She has one person helping her whom she describes as a bookkeeper/secretary.

[9] From the beginning after Enzo started at CDC, Christina kept all of Enzo’s personal records. In Christina’s words, Enzo wanted her to take care of his paperwork, both office and personal. After Enzo’s death, all of his records continued to be maintained by Christina the office.

[10] Enzo died tragically in a construction accident on September 9, 1998. Both Patricia and Christina were devastated. They consoled each other. Julie DeCicco, who has known them for over 30 years, expressed the view that Patricia and Christina were both devastated and have not to this day let go. Patricia’s evidence, which I accept, was that she became dependent on Christina, both physically and mentally. On June 27, 2001, a critical date for this case and nearly more than two and a half years after Enzo’s death, Mr. John Cirillo, a solicitor, testified that his view was that Patricia was of a state of mind to accept the direction and trust and confidence that she had in Christina and that Patricia was in a good and trusting relationship with Christina. I accept that evidence.

[11] On June 27, 2001 Patricia signed documents in which she transferred all of her interest in her husband’s estate to Christina Pillitteri in trust. Eventually the one-third interest of CDC and Birchland that had been Enzo’s was transferred by Christina Pillitteri to Pat Pillitteri and Ron Ventura so that each of them then owned 50% of CDC and Birchland.

[12] In 2007 a dispute between the Pillitteri and DeCicco families over several real estate joint ventures came to a head. Patricia Buccilli had thought that the Pillitteri family had been paying the rent for several years for the premises used by her for her drapery business that were in a property in which both the Pillitteri and DeCicco families had a joint venture interest. This turned out not to be the case. Tony DeCicco demanded payment of back rent for several years from Pat Pillitteri. When Patricia learned of this, she was upset and asked Christina and Pat Pillitteri to deal with the rent without the dispute between the Pillitteri and DeCicco families getting in between. This was refused. That eventually led to this lawsuit.

Credibility and Reliability of Witnesses

[13] In this case, the claim of Patricia Buccilli rests in part on oral conversations that she said she had with Christina and Pat Pillitteri. Their evidence differs in several respects and it is necessary therefore to assess the credibility and reliability of their testimony.

[14] In making credibility and reliability assessments, I find helpful the statement of O'Halloran J.A. in R. v. Pressley (1948), 1948 353 (BC CA), 94 C.C.C. 29 (B.C. C.A.):

The Judge is not given a divine insight into the hearts and minds of the witnesses appearing before him. Justice does not descend automatically upon the best actor in the witness-box. The most satisfactory judicial test of truth lies in its harmony or lack of harmony with the preponderance of probabilities disclosed by the facts and circumstances in the conditions of the particular case.

[15] I also find it helpful, particularly in this case, the statement of Farley J. in Bank of America Canada v. Mutual Trust Co. (1998), 18 R.P.R. (3d) 213 at para. 23:

Frequently in cases judges will be called upon to make findings concerning credibility of witnesses. This usually is a most difficult task absent the most blatant of lying which is tripped up by confession, by self-contradictory evidence, by directly opposite material developed at the relevant time period or by evidence of an extremely reliable nature from third parties. One is always cognizant that people's perceptions of the same event can sincerely differ, that memories fade with time, that witnesses may be innocently confused over minor (and even major) matters as well as the aspect of rationalization, a very human and understandable imperfection. A point that a witness may not be sure of initially becomes eventually a point that the witness is certain about because it fits the theory of his side. Rationalization will also affect some person's views so that a certainty that a fact was "A" evolves into a confirmation that that fact was "not A".

[16] Farley J. used the word "rationalization". I take his comments to refer to what is often said to be "reconstruction" of evidence. Reconstruction can be either inadvertent or advertent. In either case, when it occurs, it is something that the trier of fact must consider in weighing evidence.

[17] Having considered all of the evidence, I must say that I have considerable difficulty in accepting credible or reliable much of the evidence of Christina and Pat Pillitteri. It does not add up. I will deal with their evidence in detail on several points that require findings to be made, but mention here only one subject matter, being their evidence with respect to 83 Pine Valley Dr. which was purchased in the name of Pat Pillitteri in trust shortly before Patricia and Enzo were married and into which they moved on that day. It was later transferred to Enzo by a deed which stated in the land transfer affidavit that he had owned it from the start. Patricia’s evidence was that it was acquired by Enzo and held in trust by Pat Pillitteri for Enzo like other family investments. Pat and Christina’s evidence was that it was owned by Pat. Their explanation for the rationale of the purchase, who owned it, who paid the mortgage and the rationale for the transfer to Enzo was replete with contradictions and improbabilities from the beginning to end and I formed the view that their evidence was contrived and completely unreliable. There is no issue that the property was transferred by deed to Enzo and the only explanation for their testimony was that they wanted to paint a picture of Enzo having paid little or nothing for the property and thus that Patricia gave up nothing of substance when she later agreed that they could have the property.

[18] I also found Christina in particular to be evasive in answering certain questions, often pausing before giving an evasive answer. I found both Christina and Pat Pillitteri readily recalling points they viewed in their favour and slow or unable to recall points against their case. I found Pat Pillitteri quick to give answers that he thought helpful to his case.

[19] I found Patricia to be someone who painfully gave her evidence, quite unlike Christina or Pat. I have had some difficulty with aspects of her evidence, such as her testimony that she did not read many of the documents she signed and was not advised of the contents. Patricia is not an unintelligent woman, and with her background as a legal secretary and latterly as an interior decorator, one would expect that she would not cavalierly sign important documents without understanding them. However I recognize that she was in a continuing state of unhappiness because of her husband’s death, and was reliant on Christina in particular, and it is possible that she did not read all of the documents and that they were not all explained to her. While I have a great deal of difficulty with Pat Pillitteri’s testimony, one answer he gave on his examination for discovery that on cross-examination at trial he acknowledged to be true was that Mr. Cirillo did not explain the contents of the documents that he asked people to sign on the crucial day of June 27, 2001, but rather just told them what they were to sign.

[20] I do not think that Patricia was purposely giving untrue evidence. She, like many witnesses do, may have been reconstructing events in trying to recall what happened, and taken together with her aggrieved state, requires her evidence to be carefully considered. On the face of it, she signed documents that run counter to her claim, but whether that is determinative in this action requires a careful consideration of her evidence, particularly as it stacks up against the evidence of others such as Christina and Pat Pillitteri. I generally have less reluctance to accept the evidence of Patricia than I do with the evidence of Christina and Pat Pillitteri.

[21] John Cirillo was the lawyer involved in the transactions in issue. He had acted for Pat Pillitteri before the events in question and he continues to act for him or his companies, and he is an investor with Mr. Pillitteri in a multiple unit building. He was called as a witness by the plaintiff. He was careful to acknowledge that he had little detailed recollection of events and he did his best to provide accurate testimony. A great deal of what he testified to was based on what was or was not in his files and what his normal practice would be and his belief that he had no reason not to follow his normal practice. Some things he did remember. To be fair to Mr. Cirillo, I do not think he has much memory of what was said on June 27, 2001, a critical date in this case, or on the other occasions in which he was involved, and I put little reliance on his evidence of what the discussion were. That evidence was mainly reconstruction based on his usual practices.

[22] In 2006 and 2007, the DeCicco/Cioci and Pillitteri families had a falling out that led to bitter litigation between them. It was eventually settled. Both Julie DeCicco and her husband Tony were called as witnesses by the plaintiffs. In considering their evidence, which differed substantially from the evidence of the Pillitteris, one must be cautious of this history between the two families and of any effect it might have on their evidence. I must say that I found Julie DeCicco to be an impressive witness-straightforward and no nonsense. I found Tony DeCicco to be affected a little by the family feud but I did not view him as purposely trying to give untruthful testimony.

[23] Mr. Benny Romano was the real estate agent who acted for Patricia on her purchase of a condo at 2 Doncliffe Place. He was called by the defence. He purported to have a recollection of events that I find surprising, and I do not place great reliance on his testimony.

Non-payment of rent issue

[24] Drapery Interiors has claimed in the statement of claim a claim a declaration that Pat and Christina Pillitteri and CDC are bound to indemnify Drapery Interiors for arrears of rent prior to January 1, 2008 and thereafter arising from Drapery Interiors’ tenancy of premises in the Westplex Centre. The Westplex Centre was a joint venture in which each of CDC and the DeCicco and Cioci families held a one-third interest. At the conclusion of the trial, the claim by Drapery Interiors was dropped. However, the circumstances regarding this issue are of some significance in understanding what gave rise to this action.

[25] In May, 1998 Drapery Interiors became a tenant in the Westplex Centre. Drapery Interiors was a new venture for Patricia. In discussions at the time amongst Patricia, her husband Enzo, Pat Pillitteri and Tony DeCicco, it was agreed that Drapery Interiors would not pay rent while the business was starting and that if it succeeded a rent payment would be discussed. After Enzo died a few months later, Patricia testified that Christina and Pat Pillitteri told her that they would take care of the rent and not to worry about it. She said no time limit for the payment was discussed. At no time after that did Drapery Interiors pay any rent.

[26] On January 8, 2007, after problems arose between Tony DeCicco and Pat Pillitteri, Tony wrote to Pat Pillitteri and said approximately $485,000 was owed for rent back to 1998 which Pat had stated he would look after. He asked when payment would be made. Tony DeCicco testified that Christina and Pat Pillitteri had promised that they would pay the rent shortly after Enzo died. A follow up letter was sent on May 25, 2007 with a threat of legal proceedings.

[27] Patricia testified that Christina showed her this last letter and she asked Christina to pay it and bring it up to date. She said that Christina told her of the falling out with the DeCicco family involving other investments and that as Tony DeCicco owed CDC money that he was not paying, the Pillitteris would not pay the back rent. Patricia further testified that later that year she asked Pat Pillitteri if they could resolve the rent issues with Tony DeCicco and his words to her were if Tony DeCicco wants rent tell him to go to his tenant for it. Patricia replied that she was the tenant and Pat said to her that she was on her own. Patricia testified that at that point she realized that she was no longer considered a part of the family or considered to have any interest in the family business. Pat Pillitteri gave no evidence denying this.

[28] On January 2, 2008 Patricia signed an acknowledgment for herself and Drapery Interiors that they were in arrears of rent from May, 1998 and would agree to pay the arrears. At the same time, Patricia signed a five year lease with Westplex Centre.

[29] On February 7, 2008 the statement of claim was issued in this action.

Purchase of matrimonial home

[30] Patricia and Enzo were married on September 4, 1989. After they had decided to marry, they began to look for a place to live. They found a condominium in Palace Pier on Lakeshore Dr. in Toronto, which was to be their matrimonial home. It was purchased by Enzo for approximately $300,000 in May, 1989. However, they did not move into it. Patricia testified that in the summer shortly before they were married, Enzo purchased 83 Pine Valley Dr. in Woodbridge. The property backs onto the first hole at the National Golf club. Patricia understood from Enzo that it was he who acquired 83 Pine Valley Dr. and was the beneficial owner, and that Christina confirmed that to her. She recalled Enzo taking her to the property and introducing himself to the vendor as the new purchaser. Title was taken in the name of Pat Pillitteri in trust. Patricia testified that it was not uncommon for family assets to be put in the name of Pat Pillitteri in trust. He had arranged the financing. Christina testified that she thought the purchase price was $840,000, that there were two mortgages totalling $800,000 and that Enzo paid the mortgages from their own personal bank account. She did not know where the balance of $40,000 came from.

[31] The deed to 83 Pine Valley Dr. was not put to Patricia on her cross-examination. It was introduced in the evidence of Pat Pillitteri in chief. The deed recorded that the purchase price was $805,000, with $405,000 being paid in cash and mortgages of $400,000 being registered.

[32] Christina testified that Enzo did not purchase the property. It was her husband Pat Pillitteri, who she said paid approximately $800,000. She said that Pat put up a deposit of $40,000, another $200,000 on closing with the balance being covered by mortgages. No banking records of any kind were produced to substantiate any payments by Pat Pillitteri. On cross-examination, Christina acknowledged that once the CDC business became successful, Enzo, Pat Pillitteri and Ron Ventura each drew a salary of $150,000, which was their sole source of income. Christina acknowledged that until Enzo married, he lived with his parents and was saving his money. Christina said she did not know where Pat got the cash that she said he put into the property, and suggested it could have come from an inheritance from his father. His father was a gas station attendant. Christina said that before he bought the property, Pat never discussed it with her and that he never discussed with her where the money came from. This is somewhat strange if the house was to be acquired for them to live in, which is what Pat had said in his examination for discovery, and strange that he never discussed with her where the money came from as she was the person who looked after Pat’s personal files.

[33] Christina testified in chief that Pat Pillitteri made the mortgage payments that were automatically taken from their bank account. She at first suggested they were paid with cash and then said they were paid from Pat Pillitteri’s bank account. She said she did not remember the name of the bank. I viewed her evidence on this point to be quite evasive. No banking records of Pat or Christina Pillitteri of any kind were produced in this action.

[34] Christina also testified that after Enzo died, Pat Pillitteri continued to make the mortgage payments from their bank account. This evidence was clearly untrue. On cross-examination, Christina admitted that after Enzo’s death, she opened a joint account in her name and in the name of Patricia Buccilli. She continued to deposit a “pay cheque” for Enzo into that account, from which the mortgages, taxes and household expenses for 83 Pine Valley Dr. were paid. This continued until Patricia moved away from 83 Pine Valley Dr.

[35] Pat Pillitteri testified that 83 Pine Valley Dr. is his house and that he acquired it in 1989. He said that the deposit of $40,000 came from him personally, that he put another $200,000 into the purchase and that the balance was financed by a $365,000 vendor take back mortgage and a second mortgage loan. He said in chief that he obtained the $200,000 as a loan from his uncle Carmen. This was contradictory to his evidence on his examination for discovery when he testified that he acquired the $200,000 from investments and from an inheritance from his father. On cross-examination he at first testified that Enzo never repaid any of the cash that he said he had put in. However, on his examination for discovery, when asked if Enzo and Patricia ever repaid him the money he said he had put into the property, his answer was – “They were paying--I think they were, I--my wife looked after that.”

[36] As to the purpose of purchasing the house, Pat gave confusing answers. He at first said that he put the title in his name in trust on the advice of a tax lawyer as a way not to pay land transfer tax twice, as he intended to transfer the property to his children. He also said in chief that by 1998, some 9 years later, the house was a knock-down, which is a surprising statement given the area and the fact that it still exists today and one of his children is now living in the house. On his examination for discovery his evidence was that the house was acquired as “we were going to move into it”. That did not occur. Christina and Pat Pillitteri at the time lived on Waymar Crescent and that continued for a few years after Patricia and Enzo moved into 83 Pine Valley Dr. when the Pillitteris purchased and moved into a home at 159 Pine Valley Drive. 83 Pine Valley Dr. was never put in his children’s name. Why Pat Pillitteri would have acquired and paid for a house in which Enzo and Patricia moved into and paid for was not explained.

[37] Regarding the mortgages on the house, Pat Pillitteri testified that Enzo paid some of the mortgage and any shortfall was paid by him and his wife Christina. He said he could not recall the quantum they paid for any shortfalls, or how often this occurred. Why Enzo would have paid for the mortgage if he did not own the house was not explained.

[38] On February 18, 1997, 83 Pine Valley Dr. was transferred by Pat Pillitteri in trust to Enzo Ventura. The land transfer tax affidavit sworn by Enzo stated “The grantee has been the sole beneficial owner during the entire period the lands have been or will be registered in the name of the grantor.” The evidence of Christina and Pat Pillitteri as to why this occurred makes no sense and I do not accept any of it.

[39] Christina testified in chief that the property was transferred to Enzo because the bank required some security from Enzo. She said that CDC was obtaining financing and that Pat Pillitteri and Ron Ventura had given their homes as collateral and the bank wanted some security from Enzo. There are at least two things unconvincing about this evidence. First, if the bank wanted security, presumably Pat Pillitteri could have signed the mortgage. He had signed a mortgage in 1994 to the Laurentian Bank on the property. According to Christina and Pat, it was his home and registered in his name in trust. Second, no mortgage was ever given to the bank by Enzo. When this was put to Christina on cross-examination, her answer was-well, Enzo passed away. However, Enzo passed away some 19 months after the transfer of the property to him.

[40] Pat Pillitteri gave the same evidence in chief that it was the bank that wanted security from Enzo that caused the transfer to Enzo. That evidence suffers from the same problems as Christina’s evidence. On cross-examination he acknowledged his discovery in which he said that it was his recollection that transferring the property to Enzo was Christina’s idea. I suspect that that statement was closer to the truth.

[41] The deed to Enzo was prepared by a solicitor named Jay Teichman. Mr. Pillitteri acknowledged that it was either he or his wife who instructed Mr. Teichman to draw up the deed. Mr. Teichman had to be informed of facts to include the statement in the land transfer tax affidavit that Enzo had been “the sole beneficial owner” from the start, and those facts must have come from either Christina or Pat Pillitteri. When Christina was asked about the statement on cross-examination, she asserted that she did not know what “sole beneficial owner” means. Then when asked if she agreed that 83 Pine Valley Dr. had been purchased by Pat Pillitteri in trust for Enzo, she paused for some time and then stated that Enzo would not have understood what he was swearing to. I do not credit this evidence of Christina.

[42] There can be no doubt that at least from the time that 83 Pine Valley Dr. was transferred from Pat Pillitteri in trust to Enzo that Enzo was the owner of the property, and thus that Patricia Buccilli became the owner of it when Enzo passed away. Regarding the evidence of who paid the mortgage while Enzo was alive, I prefer the evidence of Patricia and I do not accept the evidence of Christina or Pat Pillitteri that they paid any part of it. They are the persons who had Enzo’s records and their own, and did not produce any documentation at all to support their assertions, as weak as they were, that they had paid any part of the mortgage. After Enzo passed away, and Patricia continued to live there, it is clear that payments were made by CDC for Enzo into a joint account of Patricia Buccilli and Christina Pillitteri from which withdrawals were made by Christina to pay the mortgage and taxes. I accept the evidence of Patricia that she was told by Enzo and Christina that the house was purchased by Pat Pillitteri in trust for Enzo. The land transfer tax affidavit on the transfer to Enzo is a contemporary document and sworn evidence of that fact, and I accept it.

Move from 83 Pine Valley Dr. and purchase of 2 Doncliffe Place condominium

[43] The evidence surrounding this issue is central to the issues in this action. The evidence of Patricia and that of Christina and Pat Pillitteri differ remarkably.

[44] Patricia Buccilli’s evidence was that in the summer of 2000 she decided that she wanted to move and that she started to look around for an apartment. She told Christina that she wanted to move and intended to sell 83 Pine Valley Dr. and purchase another place to live. She asked Christina for the file with the title documents and mortgage information. Christina did not tell her that it was not her house to sell but told her that she and Pat wanted to keep 83 Pine Valley Dr. Patricia said that Christina and Pat Pillitteri told her to look for a place to buy and they would buy it for her and then keep 83 Pine Valley Dr.

[45] Patricia testified that she knew that 83 Pine Valley Dr. was worth around $1 million, that she had been told by Christina that the mortgage was around $400,000 and so she looked for something in the price range of $600,000. She was told about 2 Doncliffe by a friend and after seeing it went to Christina and Pat Pillitteri and told them about it. She asked them to come and see it, which they did, and then put in an offer and purchased it. She testified that Pat Pillitteri decided the amount of the offer of $550,000 and gave the deposit cheque of $50,000. The offer was signed back at $610,000 which she accepted after discussing it with Christina and Pat Pillitteri. She testified that she discussed the price with them as Pat Pillitteri made all the investments for the family and she valued his opinion.

[46] The agreement of purchase and sale stated that John Cirillo was to be the purchaser’s lawyer, and contained his address, telephone and fax numbers. Patricia testified she went to Mr. Cirillo’s office with Christina to sign the documents needed for closing and that that was the first time she had met Mr. Cirillo. She said she was given Mr. Cirillo’s name by Christina. The transfer was registered on September 27, 2000.

[47] Christina testified that in August, 2000 Patricia came to their house and said that she wanted to move out of 83 Pine Valley Dr. and that she had seen a condominium and had made an offer and needed a deposit. She asked Christina if they could come up with the deposit and pay for the condo on closing. Christina testified that Patricia said that in return for that, she would give up all of Enzo’s assets, including his interest in CDC, so long as a guarantee she and Enzo had made to Laurentian Bank for a CDC loan was released. She said that she and Pat honoured Patricia’s request. She said they obtained the $50,000 deposit the next day and that she went to 2 Doncliffe after it was purchased. On cross-examination, she said that although Mr. Cirillo had previously acted for Pat Pillitteri or one of his companies, it was Patricia who had chosen Mr. Cirillo to act on the purchase.

[48] Pat Pillitteri’s evidence was much the same as Christina’s. He said that Patricia came to them and said she had purchased a condo and said she demanded $50,000 right then and there for the deposit or she would lose the condo. He said that Patricia said to them that she wanted them to buy the condo free and clear and that she would give up 83 Pine Valley Dr., the condo on Lakeshore Dr. and the shares in CDC and Birchland. She also said she wanted the guarantee given to Laurentian Bank to be released. He testified that he was shocked, but she was persistent and so he agreed. On cross-examination, Mr. Pillitteri said that Patricia had never made a demand of that kind before and while he said that he did not know if it was out of character for her, “I knew her as a better person than she was that night”. He denied having given any advice to Patricia about the purchase price and said he did not go to the property until Patricia told him that she had made the deal and that everything was done. Although he confirmed that he knew Mr. Cirillo who had done legal work for him, he said he did not recommend that Mr. Cirillo act on the transaction.

[49] I find it strange that Mr. Pillitteri did not care who acted. One thing he did was to obtain a mortgage from Patricia for the full amount of the purchase price, payable on demand and with interest at 10 %. He said he wanted this because he could not close the deal he says they had made with Patricia because they had not yet obtained the release from Laurentian Bank of the guarantees of Enzo and Patricia of the CDC line of credit. I fail to see that as a reason for the mortgage but in any event, it is clear that he wanted the mortgage and he instructed Mr. Cirillo to prepare it.

[50] Who decided to use Mr. Cirillo on the transaction is not all that important. However I think it quite likely that it was Pat Pillitteri. Patricia testified that she did not know Mr. Cirillo before the transaction, and was not cross-examined on that evidence. Benny Romano is a real estate agent who acted on the purchase of 2 Doncliffe. He was called by the defence. He is a cousin of Pat Pillitteri and Christina and Pat Pillitteri are his godparents. He had no file or notes. In my view, Mr. Romano has little or no memory of events. He testified that he got the name of John Cirillo from Patricia. That might have been the case, but does not mean that Patricia did not get it from the Pillitteris. He also testified recalling that Patricia told him that she knew Mr. Cirillo and that she used to go out to bars with him. That of course is hearsay but in any event, I doubt that evidence very much. Mr. Cirillo never testified to that and it was not put to Patricia. I accept Patricia’s evidence that she did not know Mr. Cirillo.

[51] Mr. Cirillo’s evidence was that it was made clear to Patricia that the mortgage to Pat Pillitteri was never intended to be enforced or that she would be paying any interest on it. Patricia’s evidence was that she learned of the mortgage when she went to Mr. Cirillo’s office to sign the documentation to close the purchase and she was told by Christina and Pat Pillitteri that they needed the mortgage to obtain financing for the property. Mr. Pillitteri did borrow the money to close the purchase and this evidence makes sense. Although Patricia was told at the time that a discharge had already been signed, and Pat Pillitteri also testified that he signed the discharge on the day the deal closed, in fact the discharge was not signed by him until five months later on February 1, 2010. Mr. Pillitteri could not explain why. Mr. Cirillo’s evidence that the discharge was signed on the day of closing and kept in his file cannot be correct.

[52] I have difficulty with the evidence of Christina and Pat Pillitteri regarding their discussions with Patricia about moving and the “request” or “demand” made by Patricia that they buy the condo in return for her giving up all her properties and interests in CDC and Birchland. Patricia and Christina were close and talked every day. It would be surprising indeed that she would without any notice or discussion with Christina go and buy a condo without deposit money and then demand that they provide her with the deposit right away. It would be normal, and far more reasonable to believe, that she talked to Christina about it in the way that she said she did.

[53] Patricia had no need to have the Pillitteris buy her condo. She could have sold 83 Pine Valley Dr. and used the proceeds to buy the condo. She testified that that was her intention until Christina and Pat Pillitteri told her that they wanted to keep 83 Pine Valley Dr. It was Christina and Pat Pillitteri who wanted to keep 83 Pine Valley Dr. in the family, and their son lives in it now. I accept Patricia’s evidence that Christina and Pat Pillitteri made the suggestion that they would retain 83 Pine Valley Dr. and buy the condominium for her. I also accept her evidence that she discussed the offer price with Christina and Pat Pillitteri and the price to sign back. It would make sense for the Pillitteris to want to be involved in this as they were the ones who were paying for it. It would also make sense for them to go and look at the place in order to have some idea of it before agreeing to pay the purchase price, and I accept Patricia’s evidence that she did go to look at the property with them before committing to purchase it.

[54] Benny Romano testified that he believed that Christina and Pat Pillitteri went to the property after the deal was finalized. He said he thinks he was there. In my view, Mr. Romano has little or no memory of events and I do accept it as reliable evidence that the Pillitteris went to the property only after it had been purchased. His evidence that he forgot to ask Patricia for the deposit before he presented the offer to the vendor’s agent and only realized this once he was presenting the offer defies credulity. It is fundamental to any offer to purchase that it be accompanied by a deposit.

[55] It would have been completely out of character for Patricia to have committed to purchasing the property without any money for a deposit and then make demands on the Pillitteris for the deposit. I do not accept Pat Pillitteri’s characterization of Patricia when she came to speak to them about buying a condo. It was contrived.

[56] The defence says that Patricia was a sophisticated person. If they are right on this, one may ask why she would offer, without being asked, to give up her interest in CDC and Birchland. She had neither received nor reviewed any financial statements of those companies or any joint venture in which CDC was involved, such as Westplex Centre. There was no discussion of these things when Patricia discussed purchasing a condo with the Pillitteris. They admitted this and admitted that they did not suggest that she get any independent business or legal advice. Nor did they say she might want to consider the value of the Lakeshore condominium they say she offered to give up, or the value of 83 Pine Valley Dr. This is remarkable because on cross-examination, Christina Pillitteri admitted, contrary to earlier evidence on her cross-examination, that Patricia giving up all of these things did not make sense to her.

[57] Mr. Cirillo testified that Pat Pillitteri told him that he and Christina had negotiated an agreement with Patricia under which Patricia would receive 2 Doncliffe in consideration for her dealing with the other matters of the estate. He further testified that when dealing with Patricia regarding the purchase of 2 Doncliffe, she was most content to receive this property free and clear “in full satisfaction of an entitlement that together the family had discussed”, none of those discussions he was a party to. I have some doubts about the reliability of this evidence of Mr. Cirillo because it was only several months later that he was instructed to do the estate work for Enzo’s estate. However, even if his evidence is accurate, the fact that he thought Patricia was content to receive 2 Doncliffe in satisfaction of an entitlement that the family had discussed does not indicate what that discussion was. If Patricia is right, the discussion involved only 83 Pine Valley Dr. and 2 Doncliffe and the statement of Mr. Cirillo would not contradict Patricia’s evidence. If Christina and Pat Pillitteri are right, the discussion involved more.

[58] In summary, I accept Patricia’s evidence that the discussion with Christina and Pat Pillitteri went no further than a discussion started by Christina and Pat Pillitteri that they wanted to keep 83 Pine Valley Dr. in the family and that in return for that they would purchase a condo for Patricia. I find that there was no discussion at that time about Patricia giving up her interest in her Lakeshore Drive condo at Palace Pier or in CDC and Birchland. Nor was there any agreement made at that time that she would do so.

Draft August 2000 agreement

[59] In September 2000, Mr. Cirillo drafted an Agreement and Acknowledgment between Patricia Buccilli and Christina Pillitteri in trust. It was never given to Patricia. It stated:

WHEREAS Patricia Buccilli may be the sole beneficiary for the estate of her late husband Lorenzo Ventura; AND WHEREAS Lorenzo Ventura may be the registered owner of the following properties (hereinafter referred to as the “Properties”):

1. 83 Pine Valley Crescent, Woodbridge;
2. 2045 Lakeshore Blvd. West, Apt. 2802, Toronto. AND WHEREAS Lorenzo Ventura may be the registered owner of one third of the issued and outstanding shares in C.D.C. Contracting, a division of Patron Contracting Limited (hereinafter referred to as the “Company”); AND WHEREAS Patricia Buccilli is purchasing a property municipally described as 2 Doncliffe Place, Ste. 101 B, Toronto (hereinafter referred to as the “Doncliffe Property”); AND WHEREAS Pat Pillitteri in trust has contributed any and all of the monies required to purchase the Doncliffe Property; NOW THEREFORE this Agreement witnesseth as follows:
3. Patricia Buccilli hereby agrees to transfer her legal and beneficial ownership in the Properties and shares in the Company, as well as any and all other subsidiary companies and associated companies of the Company, to which she may be the legal beneficiary to the estate of her late husband Lorenzo Ventura, to Christina Pillitteri, in trust.
4. Patricia Buccilli agrees to execute any and all documents which are necessary to complete the transfers as contemplated in paragraph 1 as and when prepared.
5. Patricia Buccilli has agreed to complete this transaction in consideration for the fact that she will acquire title to the Doncliffe Property without payment from her own resources.
6. The parties agree to complete the transactions herein in the most commercially reasonable manner which contemplates the least overall tax burden to the parties herein. DATED this day of September, 2000.

[60] Patricia never saw this draft agreement or knew of its existence and she never discussed it with Christina or Pat Pillitteri. The draft was faxed by Mr. Cirillo to the Pillitteri residence. Christina testified that she does not know who instructed Mr. Cirillo to draft the agreement. She gave conflicting evidence about it. She testified that it was not signed because the release of the Laurentian Bank on the guarantee of Enzo and Patricia was not in place, yet could not explain why such a condition was not in the draft agreement if it was part of the deal. She also said when pressed that she never read it. Pat Pillitteri gave no evidence about this document.

[61] Mr. Cirillo testified that instructions for the document came from either Christina or Pat Pillitteri. He has no recollection or note of any response to it. He was never instructed to have it signed. He has no recollection of discussing it with Patricia.

[62] Regarding the supposed condition that the guarantee of Enzo and Patricia of the Laurentian Bank loan had to be released, Patricia acknowledged that she asked Christina for that release. Each of the three partners of CDC, being Enzo, Pat Pillitteri and Ron Venture and their wives had provided guarantees to Laurentian Bank for the CDC line of credit. CDC had a $1 million policy on Enzo’s life that was security for the CDC loan and the insurance money was paid by the insurer after Enzo died and paid to the Laurentian Bank. Patricia’s evidence, which I accept, is that for that reason she asked Christina for the return of the guarantee and Christina replied that it would be no problem. Why the Laurentian Bank took its time to send a letter releasing the guarantees was not explained. The evidence is clear that nothing other than the insurance money was paid to Laurentian Bank to obtain the release.

[63] What is remarkable is that if there was an agreement by Patricia with Christina and Pat Pillitteri as outlined in the draft agreement prepared by Mr. Cirillo, one would have expected Christina or Pat Pillitteri to have given it to Patricia and asked whether it correctly recorded their agreement. Christina at one point on cross-examination stated that she did not recall if she discussed the draft with Patricia. I accept Patricia’s evidence that it was not discussed with her. This draft was faxed by Mr. Cirillo to the Pillitteri residence on September 26, 2000, the day before Patricia, Christina and Pat Pillitteri attended at Mr. Cirillo’s office to sign the documents for the purchase of 2 Doncliffe. The fact that the draft agreement was not given to Patricia or discussed with her is telling. Patricia denies having made an agreement as contained in the draft agreement, and I accept that evidence.

Sale of Palace Pier

[64] In early 2001 Christina Pillitteri retained John Cirillo to act on two matters, being the sale of the Palace Pier condo that had been owned by Enzo since 1989 and the estate of Enzo. Mr. Cirillo opened two files with the estate of Enzo being the client for both. Patricia Buccilli did not retain Mr. Cirillo for either of these matters.

[65] On January 19, 2001 Benny Romano faxed to Mr. Cirillo an agreement of purchase and sale for the sale of the Palace Pier condo on Lakeshore Ave. in Toronto. Christina had arranged for the listing of the property. The agreement named John Cirillo in trust as the vendor. It was signed by Christina Pillitteri on behalf of the vendor. Mr. Cirillo had had nothing to do with the agreement. Christina of course had no legal authority to sign on behalf of the estate of Enzo. Mr. Cirillo did not receive any instructions for the sale from Patricia. His instructions came from Christina and Pat Pillitteri.

[66] On April 27, 2001, Patricia attended at Mr. Cirillo’s office to sign documentation regarding the closing of the sale of the Palace Pier condo. She had not arranged for the listing of the property. Christina had done that. She testified that she went with Christina and Pat Pillitteri. She testified that she had been told earlier by Christina that the property had been sold because it was not worthwhile to carry it. Included in the documents that Patricia signed was a direction as to whom the proceeds on closing were to be paid, and it disclosed that the net proceeds of $92,748.50 were to be paid to Pat Pillitteri in trust. She said she did not have a problem with that because Pat managed all of the personal family investments, including hers. She was not cross-examined on this evidence.

[67] Neither Christina nor Pat Pillitteri gave any evidence about the sale of the Palace Pier property, other than their evidence about the request that they said Patricia had made regarding the purchase of 2 Doncliffe in return for giving up assets, including the Palace Pier condo. They rely on this sale transaction with the net proceeds going to Pat Pillitteri as confirmatory of the agreement they say they had made the previous year with Patricia. In my view the fact that Patricia was comfortable with the net proceeds going to Pat Pillitteri in trust may on the surface look somewhat puzzling. But in the context of this family, it is less so. Patricia had never looked after family investments. Pat had done that. Patricia relied on Christina to look after the books and records. Patricia testified that after Enzo’s death she relied even more on Christina and that when she needed money Christina would provide it. On one occasion in May, 2005 Patricia told Christina that she needed money for her drapery business and Christina deposited $60,000 into the drapery business bank account. Christina did not suggest that the $60,000 was a gift. In fact she did not testify about it at all.

Estate of Enzo Ventura documentation

[68] It is clear that Christina was the person who took on the role of seeing that what had to be done for the estate work, which was done by Mr. Cirillo, and that it was Christina and not Patricia who had the records of Enzo’s assets.

[69] On February 28, 2001 Christina faxed to Mr. Cirillo 44 pages of information regarding the assets of Enzo. Mr. Cirillo testified that he received the fax bundle after discussing with Christina what documents he required. He said he did not speak to anyone else as it was Christina who provided him with all of the information. Patricia had no discussion with Christina about Christina sending estate information to Mr. Cirillo and did not see the fax bundle or the information contained in it. She did not provide any of the documentation to Christina. She did not provide any information to Mr. Cirillo for the purposes of handling the estate. This is not surprising as it was Christina who had kept all of Enzo’s personal and corporate records. As Christina testified, she was the best person to provide financial information to Mr. Cirillo to do the estate work.

[70] On March 8, 2001 Patricia attended at Mr. Cirillo’s office to sign estate documents. She said she was asked by Christina to do that and went with Christina and Pat. Mr. Cirillo could not say with certainty but had a vague recollection of Patricia coming in with Christina.

[71] Patricia signed an application for the administration of an estate without a will and an affidavit for an application to dispense with an administration bond. The application, which was used to determine the size of the fees to be paid to the court, stated that the last occupation of Enzo was “construction worker”, which was clearly not accurate, and indicated that his personal property had a value of $299,000 and his real estate net of encumbrances had a value of $244,000. The affidavit stated that Patricia “had intimate knowledge of my husband’s affairs prior to his death”, which clearly was not correct, as it was Christina who had that knowledge

[72] Patricia testified that the information in the documents did not come from her and assumes it would have come from Christina and Pat, and that she did not read the documents before signing them. She testified that she was asked to sign the documents by Christina whom she trusted. She said on cross-examination that she did not understand the documents then nor does she now. Mr. Cirillo testified that he had no specific recollection of going through the documents with Patricia although his normal practice would have been to do so. I have some considerable doubt that he went through the documents in any detail with Patricia. She would have realized that the statements that Enzo was a construction worker and that she had intimate knowledge of his affairs were incorrect.

[73] I view the lead taken by Christina in seeing that Enzo’s estate was dealt and Patricia’s unquestioning acceptance of that as confirmatory of Patricia’s reliance on Christina and of the trust placed by Patricia in Christina.

June 27, 2001 meeting and Transfer Agreement

[74] On June 27, 2001 Patricia and Christina and Pat Pillitteri met at the office of John Cirillo and a number of documents were signed, including an agreement which Patricia claims in this action should be set aside entitled Direction/Acknowledgement/Release (“Transfer Agreement”) as well as the transfer of shares of CDC and Birchland to Christina Pillitteri in trust. The Transfer Agreement was as follows:

DIRECTION / ACKNOWLEDGMENT /RELEASE TO: JOHN CIRILLO Barrister and Solicitor RE: THE ESTATE OF LORENZO VENTURA Deceased: September 9, 1998 In consideration of receiving free and clear title to real property municipally known as 2 Doncliffe Place, Suite 10 l B in the City of Toronto, in the Province of Ontario, PATRICIA BUCCILLI, also known as PATRICIA VENTURA, hereby releases, remises, quit claim and forever discharges any claims, demands, interests, rights and benefits she has or she may have in the future in the Estate of Lorenzo Ventura, also known as Enzo Ventura, and in particular agrees to the transfer of the following properties to Christina Pillitteri in Trust or to whomever she may further in writing redirect:

1. 2045 Lakeshore Boulevard, Unit 2802, Toronto, Ontario
2. 83 Pine Valley Crescent, Vaughan, Ontario
3. 50 Common Shares and 100 Class “C” Shares in the capital of Patron Contracting Limited
4. 33 1/3 Common Shares in the capital of Birchland Homes Inc. It is understood that any and all costs and tax implications which may result from the transfer of the “Estate Properties” including the shares in the above two Corporations, is at the expense of Christina Pillitteri and Pat Pillitteri. We, the undersigned, hereby authorize, direct and instruct you to act on behalf of all of us in connection with the above-noted matter on the following understanding: that no information received in connection with this transaction from one party can be treated as confidential so far as any of the others are concerned, that we have waived the benefits of independent legal representation and independent legal advice, and that if any conflict develops which cannot be resolved, you may have to withdraw from the transaction and we shall each have to consult different lawyers, and this shall be your good and sufficient authority for so doing. Dated at Toronto, this 25 day of June, 2001.

[75] This document was signed on June 27, 2001 by each of Patricia, Pat and Christina Pillitteri. The circumstances in which it was signed are central to this action. The defence relies on this document as confirmatory of the agreement said to have been made the summer before and as a complete answer to the claim of Patricia.

[76] Patricia testified in chief that she was told by Christina to go to Mr. Cirillo’s office for the purposes of transferring title to 83 Pine Valley. She thinks she went there on her own. Christina and Pat Pillitteri were there. She said Christina first asked her if she could speak with her alone, and Patricia agreed. They went into Mr. Cirillo’s boardroom and were the only two people there. They talked a little about Enzo and Christina said how hard this was for her to do, to transfer his house. Then Christina showed Patricia the Transfer Agreement and asked Patricia if she would sign it because she really needed this document to carry out the daily operation of CDC and for banking purposes. Christina told her that she would be assigning her shares in CDC and Birchland to Christina in trust and that she would look after her interest and her brother-in-law Ron Ventura’s interest. Christina told her that she was the only one that could be trusted with these shares and that is what Enzo would want her to do, to put them in her name. Patricia said that Christina was very emotional and distraught and she promised to always look after Patricia, saying that they needed to look after each other. Patricia testified that she but not Christina signed the Transfer Agreement at that time. She said she skimmed it and did not entirely understand it. She said that she depended on what Christina was telling her and that what she understood from Christina was that the shares were going to be assigned to Christina in trust who was to hold them for her.

[77] Patricia further testified that after that conversation Mr. Cirillo and Pat Pillitteri came in and they began signing a lot of documents. There was no discussion about the Transfer Agreement. While the Transfer Agreement stated that the three signatories authorized Mr. Cirillo to act for all three of them and that they had waived the benefit of independent legal advice, Patricia said that there was no discussion about that. The documents signed by Patricia, apart from the Transfer Agreement, were a number of corporate documents transferring the shares of CDC and Birchland to Christina Pillitteri in trust and the transfer of 83 Pine Valley Drive. Patricia testified that she did not review these documents with Mr. Cirillo who just explained that they were transferring the Pine Valley property and the shares of the companies and that she did not go through any of the documents. She said she did not know that the shares were to be transferred to Pat Pillitteri and Ron Ventura, as they later were.

[78] The transfer of 83 Pine Valley Drive signed by Patricia that day contained a land transfer tax affidavit of Christina Pillitteri that stated that the total consideration was $430,000, being the assumption of a mortgage in favour of Laurentian Bank in that amount. It stated that there was no cash or property transferred in exchange. Patricia said there was no discussion about that with her. It also stated that “Transferor transferring property to sister-in-law and transferee assuming balance of existing mortgage”. If there had been a deal as contended by the Pillitteris, the consideration would have been much more than the mortgage on the property.

[79] On cross-examination, Patricia testified that by skimming the Transfer Agreement, she meant that she read it but did not digest its content. She said she thought, and Christina told her, that this document was strictly between the two of them, and that it was being used strictly for banking purposes, and for the daily operation of CDC, and that she was holding these shares in trust for her interest. She said that she trusted Christina.

[80] Mr. Cirillo testified that the Transfer Agreement was drafted on instructions from Pat Pillitteri. He has no notes of the instruction or recollection how he was instructed, i.e. in person or by telephone. It was drafted on June 25, 2001, the typed date on the document. He did not send a copy to Patricia before she came into the office on June 27, 2001. He said that he recalled both Patricia and Christina being emotional and it being difficult for them because of the loss of Enzo. He described the situation as a family in mourning co-operating with each other. He was asked if he had a recollection of Christina and Pat Buccilli meeting separately from him and Pat Pillitteri. His answer was that he did not have a distinct recollection but had a vague recollection that they spent some time with themselves discussing these matters. He also said that he did not have a distinct recollection of them actually signing the Transfer Agreement.

[81] Mr. Cirillo also testified that he reviewed the documents with the parties and he recalled suggesting if Patricia was not content to seek independent counsel and that she did not need or want or expect independent counsel. He testified that there was no doubt in his mind that Patricia was content, understood the nature and content of the document, and was in a very good and trusting relationship with her sister-in-law. That he said he could distinctly recall. He said that Patricia relied more on Christina than on him. He did not recall advising Patricia to seek independent business advice for the reason that she did not put much reliance on his advice to her.

[82] In May, 2009, sometime after this action was commenced, the shares of CDC and Birchland were transferred from Christina Pillitteri in trust to Pat Pillitteri and Ron Ventura. Mr. Cirillo could not recall if he prepared the documents for this transfer. No such documents were contained in his file and he said that he absolutely would expect to have copies in his file if he prepared them. The obvious inference is that the transfers to Pat Pillitteri and Ron Ventura were not something in which Mr. Cirillo was involved.

[83] On cross-examination, Mr. Cirillo testified that it was his normal practice to review documents with clients that were signed in his presence and he had no reason to believe that he did not follow that usual practice in the transactions in question. When asked if he had a recollection as to whether he was present when the Transfer Agreement was signed by Patricia, Christina and Pat Pillitteri, his response was that he only had a vague recollection of the three of them attending at his office. He said he had no recollection of giving the Transfer Agreement to Patricia.

[84] Mr. Cirillo also testified on cross-examination that he recalled Pat and Christina Pillitteri telling him of the settlement they had made with Patricia, which he described as a global agreement. They told him that Patricia had agreed to it. By global agreement, he meant an agreement that Patricia would obtain 2 Doncliffe fully paid for and in return would give up 83 Pine Valley Dr. and the shares of CDC and Birchland. She would also get a release of the Laurentian Bank guarantee. He testified that his understanding of the agreement was from discussions with Christina and Pat Pillitteri and that they told him it was with the consent of Patricia. He said that none of the discussions regarding this agreement took place in his office. When asked if the release of the Laurentian Bank guarantee was discussed with Patricia in his presence, he said that the parties mostly had their discussions amongst themselves.

[85] Mr. Cirillo also said that he could recall that when Patricia came to his office to sign, she gave him no reason whatsoever to doubt her full consent to this transaction. That of course begs what Patricia thought the transaction was, something which Mr. Cirillo did not discuss with her unless he discussed the Transfer Agreement with her, which he cannot recall doing.

[86] Christina Pillitteri’s evidence in chief was that she and her husband drove to Mr. Cirillo’s office. They went there to sign the deal that Patricia had proposed to them when she came to them about buying 2 Doncliffe. Patricia was already there. Mr. Cirillo laid out all of the papers to be signed and explained them all. He mentioned independent legal advice and Patricia said she did not need it as she had been a legal secretary for many years. She said that she wanted to be sure that the properties were transferred to her in trust because Patricia had wanted her to take on the properties personally but she said that was not fair because of her brother Ron. So she asked that they be put in her name in trust. She said that the only other thing she remembered was that Pat said to Patricia to make sure she took care of the rent, being the rent on the premises Drapery Interiors occupied in the Westplex Centre.

[87] Surprisingly, Christina was not asked in chief about the evidence of Patricia concerning the private meeting Patricia had said the two of them had about the Transfer Agreement at Mr. Cirillo’s office. On cross-examination, when it was put to her that Mr. Cirillo had testified that he had a vague recollection of her and Patricia meeting alone, her response was that she did not remember having a meeting as Mr. Cirillo said. When it was put to her that Patricia had testified that they had met alone and that Christina had made representations to her that nothing would change and that she would be taken care of and that Patricia could rely on her, Christina’s response was that “we didn’t have that conversation—that day”. I viewed Christina’s evidence as evasive and did not regard it as a strong denial of Patricia’s evidence.

[88] Christina also testified on cross-examination that at the time of the meeting, it was her intention that she would transfer the shares of CDC and Birchland to Pat Pillitteri and Ron Ventura. When asked why in that case the shares were transferred to her rather than being transferred directly to Pat and Ron, she said that Patricia wanted her to have them and that with all the chaos she could not think and so she said give them to me in trust. I give little credit to this answer. The draft transfer in August 2000 that she had received and the Transfer Agreement that had been prepared two days before the meeting on June 25, 2001 on the instructions of Pat Pillitteri both provided that the transfers were to be to Christina Pillitteri in trust. It was no last minute thing in the chaos of the moment for Christina Pillitteri to decide to have the shares held by her in trust.

[89] Although Christina had said that Mr. Cirillo explained all of the documents that day, she acknowledged on cross-examination her answer on her earlier examination for discovery that she did not remember in detail if Mr. Cirillo explained the documents or just asked her to sign at the spots that needed to be signed.

[90] Pat Pillitteri in chief gave essentially the same evidence of the meeting as his wife Christina, including evidence that Mr. Cirillo explained all of the documentation. He said that Mr. Cirillo asked if they wanted legal advice, which he and his wife declined and that Patricia said she did not need it as she had been a legal secretary for 15 years. He said they signed the papers and they were all happy and went home. He was not asked about any separate meeting between Patricia and Christina. On cross-examination, Pat acknowledged as truthful answers on his prior examination for discovery in which he had said that Mr. Cirillo had not explained the contents of the documents but had just said “you have to sign this.”

[91] The statement of Mr. Pillitteri that they were all happy and went home is quite inconsistent with the evidence of Mr. Cirillo that Patricia and Christina were saddened and that it was difficult for them that day. That is one thing that Mr. Cirillo would remember and I accept it. I do not accept Mr. Pillitteri’s evidence on this.

[92] As to whether the Transfer Agreement was explained to Patricia before she signed it, we thus have the evidence of Patricia that it was not, the evidence of Mr. Cirillo that he does not recall but his usual practice would have been to do so, and the evidence of Christina and Pat Pillitteri in chief that it was but on cross-examination that Christina could not recall and Pat said it was not. This is a meeting that occurred 11 years ago, and real memories of such a thing are well nigh impossible for most people. I think it unlikely that nothing was said about the documents that Mr. Cirillo put before them to sign, but how much it is not really possible to say. Regarding the Transfer Agreement, if it was signed in his presence, it is likely something was said about it by Mr. Cirillo. He does not recall seeing it signed, which would not be surprising even if he did see it signed. If he did explain something about it, that does not mean that Patricia was not relying on what she says Christina said to her in their private meeting. As Mr. Cirillo testified, Patricia did not rely much on what he said.

Other evidence regarding an agreement

[93] There is evidence that was adduced regarding a purported agreement between Patricia and the Pillitteris. The way that the evidence went in and the use that can be made of it was very unsatisfactory. The evidence involved correspondence at the time the back rent issue arose in 2007.

[94] In her evidence in chief, Patricia was shown a draft statement in her name that had been listed in her affidavit of documents. She had retained Mr. Les Wittlin, a solicitor for whom she had worked for eight years before she was married, to deal with the rent issue. Mr. Wittlin wrote to Tony DeCicco on May 25, 2007 about this and said that Patricia had given him a statement apparently prepared by Tony DeCicco. On cross-examination, the statement was put to Patricia who testified that she did not recall ever seeing it, as did Tony DeCicco who did not recall seeing it and denied drafting it. The statement, marked Exhibit A, included the following:

The premises have been occupied by my business Drapery Interiors since the death of my husband, Enzo Ventura. When my husband died, I signed over his interest and various assets to Chris Pillitteri and Pat Pillitteri. In return, they agreed to be responsible for any costs associated with the occupancy of 8201 Weston Road, Unit 3 (save and except for utilities). There was no limit on the time during which that obligation would be outstanding.

[95] Mr. Wittlin was called as a witness by the defence. He did not have his file with him because of time constraints. He said he thought he had seen the statement before. It was left that he would go to his office and review his file to see if it contained the statement. The information that he later provided to counsel, which counsel agreed be part of the record, was that the statement marked exhibit A was on his correspondence brad next to his letter of May 25, 2007 sent to Tony DeCicco. It was then marked an exhibit. There is no direct evidence, however, as to who prepared the statement and no evidence of Patricia Buccilli adopting it as true. The statement, even if it were admissible that “When my husband died, I signed over his interest and various assets to Chris Pillitteri and Pat Pillitteri” is cryptic as to what “his interest” is or what the “various assets” were.

[96] There was also then marked as an exhibit a letter from Mr. Wittlin to Tony DeCicco dated May 9, 2007. It was put in under an agreement of counsel that the letter was authentic, i.e. that it was sent by Mr. Wittlin, but that it was not being put in for the truth of its contents. As Mr. Greene said, the letter is the letter but it is agreed that it is not evidence of the truth of its contents. The letter included the following:

Pat Buccilli’s evidence is that when she settled the affairs of her deceased husband and signed over all of her husband’s interests in the assets to Chris and Pat Pillitteri, it was to be their responsibility to handle any costs associated with the occupancy of the premises by Drapery Interiors save and except for utilities. There was no limitation on the duration of that obligation.

[97] While this letter had been a production in the litigation, it was never put to Patricia Buccilli on cross-examination. Nor was Mr. Wittlin asked about it. The statement in the letter is of course hearsay, and while if it was made by Patricia to Mr. Wittlin it would have lost any privilege associated with it by being referred to in the letter, that would not detract from its hearsay nature. It really should have been put to Patricia on cross-examination, but it was not.

[98] Patricia was not called to give reply evidence to deal with this document after the defence had closed its case, but this is perhaps understandable as the letter had not gone in to prove the truth of its contents. That is, perhaps there was nothing to deny. However, had she given reply evidence on the point, her evidence could have been taken into account in accepting or rejecting her evidence given in chief as to what the agreement with the Pillitteris was and was not.

[99] I think the fair inference to be drawn is that the draft statement marked Exhibit A was likely drafted by Mr. DeCicco based on the letter to him from Mr. Wittlin of May 9, 2007. He was trying to get the Pillitteris to pay the back rent owing on the premises used by Drapery Interiors and would want a signed statement from Patricia backing him up. I see that draft statement as not adding anything to Mr. Wittlin’s letter.

[100] The statement in Mr. Wittlin’s letter of May 9, 2007 is puzzling. It states that Patricia signed over all of her husband’s interests in the “assets”, whatever those assets were, to Christina and Pat Pillitteri. The Transfer Agreement did provide that Patricia thereby transferred the shares of Patron (CDC) and Birchland to Christina in trust, not to Christina and Pat, but the reference to Pat in the letter of Mr. Wittlin, even if it did come from Patricia, might have been a failure to recall the language of the Transfer Agreement of some six years earlier. It might have been a mistake on Mr. Wittlin’s part. Without the truth of the statement being in evidence, and it not having been put to Patricia, it would be wrong to speculate too much about this. The statement that Patricia signed over her husband’s assets is not inconsistent with the Transfer Agreement, as that is what it was. The issue is on what terms were the assets referred to in the Transfer Agreement were signed over. I would not view it as contradictory to the essence of what Patricia testified to regarding her discussion with Christina at the time the Transfer Agreement was signed by her.

Conclusion on June 27, 2001 discussions

[101] The meeting was over 11 years ago, and memories of anyone cannot be perfect. It also must be kept in mind that Patricia and Christina were distraught that day and somewhat emotional. That can have an effect on memories.

[102] I think it can be said that Patricia in some fashion understood that by the Transfer Agreement she was transferring the listed assets to Christina in trust. This came either from her skimming/reading the document or in her discussion that day with Christina. Not all is clear however as the document purported to include a transfer of the Lakeshore condo that had been sold two months earlier.

[103] Taking into account all of the evidence on the record before me I accept Patricia’s evidence that she first saw the Transfer Agreement when she and Christina had a separate discussion in Mr. Cirillo’s office and that she was told by Christina that she would hold the shares of the companies in trust for Patricia and that she would look after Patricia. There was no clear denial of that conversation by Christina and I found her evidence as to what happened that day to be evasive and not credible. Also I think it telling that while on that day the transfers of the shares to Christina in trust were signed, Mr. Cirillo did not have in his file any transfers from Christina to Ron Ventura and Pat Pillitteri that took place long afterwards. I infer that Mr. Cirillo was not retained to prepare documents or be involved in the later transfer from Christina. That fact is somewhat confirmatory of Patricia’s evidence that she was told by Christina that she would hold the shares in trust for Patricia. I also accept Patricia’s evidence that Christina told her that she was the one that could be trusted with the shares and that transferring the shares to Christina was something that Enzo would have wanted done. There is logic to that as Christina was the person who kept all of the books and records for Enzo and looked after his affairs both before and after he died, and Patricia was well aware of that.

[104] For the reasons previously given, I do not accept Christina’s evidence that she decided to hold the shares in trust because of the chaos of the moment. I accept Patricia’s evidence that Christina told her that the Transfer Agreement was needed for CDC banking business.

[105] I recognize that the Transfer Agreement contained release and quit claim language, somewhat inconsistent with a transfer to Christina in trust for Patricia. However, even if Patricia read and understood that language, which is unclear, that would not detract from the representations made that day by Christina that she would hold the company shares in trust for Patricia.

Vendrain

[106] One of the issues in this action relates to land developments that were or are on the books of Vendrain. Patricia claims that these land developments were properly owned by CDC. This issue makes a difference if Patricia is entitled to relief from the transfer of the shares of Enzo transferred on June 27, 2001.

[107] Patricia testified that prior to her marriage to Enzo, CDC had become unionized. However there were some employees who did not join a union and they were paid by Vendrain. The name Vendrain was taken from Ventura. She understood that Enzo was a one-third partner in Vendrain and that its only business was to deal with non-unionized workers. She saw Enzo bringing home Vendrain cheques and signing them. She had no information from anyone that Vendrain had invested in properties. Pat Pillitteri testified that the purpose in starting Vendrain was to use it to pay non-unionized personnel, but that after the union allowed non-unionized people to be on the CDC payroll, they stopped using Vendrain for that purpose.

[108] Julie DeCicco was a Cioci before marrying Tony DeCicco. She had known Enzo since 1975 when he and CDC had done drain and culvert work for her father Silvio Cioci who was a home builder. She did the administrative work for the DeCicco and Cioci family businesses. A number of investments were joint ventures or co-tenancies amongst the DeCicco and Cioci families and what she described as the CDC boys, meaning Enzo and Ron Ventura and Pat Pillitteri. Each joint venture was owned by a corporation in which Tony DeCicco was the shareholder, and the corporation as bare trustee held the land for each of the joint venture participants. These joint ventures were never formalized by a joint venture agreement, but were accounted for as joint ventures. Julie DeCicco administered the books and records for these investments, including doing the banking business. She gave detailed evidence of the investments made by CDC and the DeCicco and Cioci families (the “Plex Group”), and I accept her evidence. It was straightforward, largely supported by documentation and reliable.

[109] Weston Properties was a joint venture which had a 90% interest in forty acres of development land. The financial statements for the year ended 1986 indicated that CDC, Willowcourt Builders Inc. (Cioci family) and Wolfbridge Investments Inc (DeCicco family) each had a one-third interest in 45% of the venture. Cylo Developments was a co-tenancy. The financial statements for the year ended December 31, 1986 indicated that each of CDC, Willowcourt and Wolfbridge had an equal interest. Weston Road - 400 Industrial Park-Association was a development which the financial statements for the year ended December 31, 1986 indicated that each of CDC, Willowcourt and Wolfbridge had an interest. In 1998 this association distributed lots to the participants in accordance with their interest. Two of the lots distributed to the Plex Group were sold in 1998 for $3.2 million. $423,000 went into the Westplex Centre bank account and the balance was distributed equally to CDC, Willowcourt and Wolfbridge.

[110] The Westplex Centre is a 3 acre parcel on Weston Road. It is a joint venture in which CDC and the DeCicco and Cioci families each held a one-third interest. A plaza was built on the property in 1988 and it became an income producing property. It is in this centre that Drapery Interiors leases space.

[111] In 1996 Tony DeCicco and Pat Pillitteri “went shopping” in Julie DeCicco’s words, and found 6 properties that were acquired by the Plex Group and held as joint-ventures. Enzo Ventura was brought in on the negotiations for one of the purchases on Rutherford Rd. in Vaughan as he had a relationship with the vendor that was thought helpful to the negotiations. Julie DeCicco testified that each of the group became equal partners regardless of which family put up the money for each purchase. Whoever had available funds provided them for the each purchase. That was clearly the case as is clear from the various documents, and is not really contested. The issue is whether one-third rightly belongs to CDC or Vendrain.

[112] Julie DeCicco prepared a schedule in 1996 listing the purchases and who provided the funding. CDC provide $402,833 directly and another $487,483 through Westplex. Pat Pillitteri was listed as providing $520,000 of a little over $2 million for the purchase of an industrial building on Islington Ave. and allocated in the books to CDC’s share. He testified that it was a personal investment and that the money came out of Westplex and was treated as a loan. He produced no documentation whatsoever to establish any loan to him from Westplex, the joint venture in which CDC and each of the DeCicco and Cioci families held a one-third interest, and it is inconceivable that had it been a loan from Westplex, Julie DeCicco would not have known it at the time as she was looking after the books and records of Westplex and the DeCicco and Cioci families were two-thirds owners. Nor did he produce any records of any kind to establish where the money came from.

[113] On closing argument, Mr. Greene contended that the money was borrowed by Vendrain, and reliance was placed on the balance sheet of Vendrain as at January 31, 1999 that indicates loans payable of $1.2 million and as at January 31, 2000 of $1.6 million. However, who those loans were from and when they were incurred is not disclosed. Vendrain has produced no documentation whatsoever to establish that it borrowed from Westplex Centre or from anyone else.

[114] I conclude that Julie DeCicco rightly allocated the $520,000 to CDC in 1996, which made the total amounts put up by CDC in the six properties at $1,410,000. In her words, all of the investments were funded by either the DeCicco or Cioci families or by the CDC boys, which in her words meant Enzo and Ron Ventura and Pat Pillitteri.

[115] In June, 1998 the Plex Group acquired a two-thirds interest in another property, a 92 acre development parcel acquired in the name of Humberplex Developments Inc. Each held a 22.22% interest. The purchase was funded from part of the proceeds of the sale of one of the properties that had been acquired by the Plex Group in 1996. In January, 1999 property put in the name of Sevenplex Developments was acquired. Julie DeCicco testified that she asked Pat Pillitteri to come up with the closing funds on behalf of his group, which he did. In July, 2001 property put in the name of Kirwen Developments was acquired, funded by a sale of part of the Sevenplex property and some money from various family members. In the same month property recorded in the name of Utradecanada.com was acquired. Julie DeCicco was not able to say who funded the purchase, as she did not have the records to establish that.

[116] Julie DeCicco testified that she first heard of Vendrain in late 1997 or early 1998 when at a meeting with Tony DeCicco, Christina and Pat Pillitteri, Christina asked that Vendrain be inserted as the joint-venture partner in the Westplex Centre in replacement for CDC. Christina gave as the reason that CDC had banking issues. Julie testified that they agreed with the change so long as they got an indemnity against any tax repercussions, but as no indemnity was provided, CDC remained as the joint-venture partner in Westplex. Tony DeCicco said that at that meeting both Christina and Pat Pillitteri asked for the change. He said that the reason they gave for wanting the change was that the Westplex Centre was considered by the bank to be a liability rather than an asset and it affected CDC’s ability to borrow. Tony testified that it did not make sense to him because the Westplex Centre was a cash producing asset and banks like to tie up all the assets they can, but they agreed to do it if an indemnity was provided from CDC. Tony testified that Christina Pillitteri said during the discussions that the participants in Vendrain would be the same as in CDC. He offered advice that he had received from his accountant that instead of having just one company, they have a company for each participant, in order to take advantage of the small business tax rate.

[117] Neither Julie nor Tony DeCicco was cross-examined on this evidence. Christina Pillitteri gave no evidence in chief about it. On cross-examination, she denied asking that Vendrain be changed for CDC in Westplex. Pat Pillitteri gave no evidence in chief on the issue. On his cross-examination, he gave conflicting evidence. He at first said that the evidence that his wife Christina had asked that the interest in the Westplex Centre be changed from CDC to Vendrain was a lie. He later said that the investment in the Westplex Centre should never have been in CDC’s name and that they had tried to take it out for years, but were not able to achieve it. On his examination for discovery, he had said that he did not remember how CDC acquired an interest in the Westplex Centre.

[118] I accept the evidence of both Julie and Tony DeCicco that the request was made to transfer the interest in the Westplex Centre for the reasons given to them by the Pillitteris. I also accept Tony DeCicco’s evidence that Christina told him that the participants in Vendrain would be the same as in CDC, i.e. Enzo Venture, Ron Ventura and Pat Pillitteri. It would be expected that the Pillitteris would say that in asking for the change, because the DeCiccos knew who was involved in CDC and the explanation for the request being a bank issue would not suggest any different make-up in the participants in the investment. I reject the evidence of both Christina and Pat Pillitteri on this issue. They were not credible.

[119] Julie DeCicco testified that in 1997, both her mother Mrs. Cioci and the DeCicco family wanted to set up an estate freeze and they needed financial statements for the 1996 purchases to be finalized. The financial statements had not yet been prepared. During the discussions that followed with the Pillitteris, Vendrain was discussed as being the participant for these purchases. Christina Pillitteri told Julie that Vendrain was now their real estate arm and was the company that was going to be used from now on. She said these discussions formalized around December, 2008. By this time Enzo had died.

[120] The financial statements for the year 1996 for the six purchases in 1996 were prepared in April, 1999 and they recorded Vendrain as the joint venture participant rather than CDC. The same was the case for the 1998 purchase and three other purchases that took place thereafter. Vendrain was recorded as a one-third equity partner along with the DeCicco and Cioci family interests that each held one-third as well.

[121] By December, 2006 the DeCicco and Cioci families and the Pillitteri family decided they should part company because of difficulties that had arisen. On December 17, 2006 Julie and Tony DeCicco and Christina and Pat Pillitteri met at the DeCicco house to come to an amicable settlement. They agreed on how the properties in which they had their investments should be split amongst the three groups, being the DeCicco and Cioci families and Vendrain. Julie on behalf of the Cioci family, Tony on behalf of the DeCicco family and Pat Pillitteri on behalf of Vendrain signed a paper indicating the property split for the settlement.

[122] Three days later, on December 20, 2006, Julie DeCicco received a fax from Christina Pillitteri, in which Christina complained of a dispute between Tony and Pat and then said that as a result, she as sole owner of Vendrain, being a one-third owner of the Plex Group and Humberplex properties, would not agree to anything Pat/Tony/Julie discussed at the meeting. That is, she purported as the sole owner of Vendrain to renege on the deal reached at the meeting and agreed to by her husband Pat.

[123] Julie testified, and I accept her evidence, that it was complete news to her that Christina was the sole owner of Vendrain. She said the world changed that day and litigation followed.

[124] Patricia Buccilli claims that the joint venture interest in the six properties acquired in 1996, the Humberplex property acquired in 1998 and three further properties acquired after that, all eventually put in the name of Vendrain, rightfully should have been in the name of CDC, and a declaration is sought that Vendrain holds or held its interest in those properties in trust for CDC. In my view of the evidence, and I so hold, there was no economic reason for Vendrain or any other company in which Enzo was not a one-third shareholder to be inserted as the owner of the interest in the properties seven properties acquired in 1996 and 1998. Vendrain has not established that it paid anything for these properties. I cannot make any finding regarding the three other properties acquired in 1999 or 2001 as there are no records regarding the funding. The conclusions about these other three properties will have to await the trial of the issues that were bifurcated. My reasons for coming to this conclusion follow.

[125] Julie DeCicco testified that there is no record of any money for the investments coming from Vendrain and she received no cheques from Vendrain. She was quite clear about this, and I accept her evidence. That aspect of her evidence was not really challenged on cross-examination.

[126] Although this issue was alive from the outset of the pleadings, the defendants at no time prior to or during the trial have produced any documentation whatsoever indicating that Vendrain put any money into the properties. No banking records of Vendrain or of Christina or Pat Pillitteri have been produced. No cancelled cheques or other records establishing that Vendrain paid anything have been produced. It is known that Vendrain had financial statements, as they were produced for the years 2000 and beyond. There must have been some financial records from which the statements were produced. The inference I draw from the failure of Vendrain to produce any evidence of any investments in the lands in issue is that the records would not have been helpful to the defendants’ case.

[127] Lot 2 North, the first of the six properties acquired in 1996, was funded by each of Wolfbridge (DeCicco family), Mrs. Cioci and her children and CDC putting up $300,000. Pat Pillitteri agreed that the $300,000 probably came from Westplex, meaning that it came from CDC, the one-third owner of the Westplex Centre joint venture. Yet, after Enzo died, it was Vendrain rather than CDC that was recorded in the financial statements of the bare trustee holding company as the owner of the one-third interest. There was no legitimate reason for that to have occurred.

[128] The interest of the Plex Group in the Humberplex property acquired in June 1998 was financed entirely from the proceeds of the sale of the Huntington Farms No. 2 and 2A properties, acquired by the Plex Group in August, 1996. That acquisition had been funded by Willowcourt (Cioci family). Yet again, after Enzo’s death, it was Vendrain rather than CDC that was recorded in the financial statements as the owner of the one-third interest. There was no legitimate reason for that to have occurred.

[129] Enzo was instrumental in the negotiations leading to the acquisition of the sixth property in December, 1996, as he had a good relationship with the vendor. One would question why he would have done this gratuitously if he had no interest in the matter. There was no evidence from Pat Pillitteri that Enzo did this gratuitously or thought that he would have no interest in the property.

[130] Ron Ventura is now owner of 50% of the shares of CDC. Christina Pillitteri testified on cross-examination that Ron has no interest in Vendrain. Pat Pillitteri testified on cross-examination that Ron knows he has no interest in Vendrain. This evidence as to what Ron knows is of course hearsay. Ron, a person tied to the defendant CDC as a 50% shareholder, was not called by the defendants to corroborate Christina or Pat’s evidence or to otherwise shed light on the issue of Vendrain ending up being the recorded holder of the lands in question, lands worth in the millions of dollars. He quite obviously would have evidence that would have been helpful on this issue, and an adverse inference can be drawn in these circumstances by the failure of the defence to call him that his evidence would not have been helpful to the defence, and I draw that inference. This is particularly the case given the lack of production by the defendants of any documentation to support the issue of Vendrain owning an interest in these properties rather than CDC.

[131] In 2008 CDC sued Humberplex Developments for unpaid invoices of $2.478 million for water main and roadwork works done on the Humberplex property. It was settled and minutes of settlement were signed by the solicitors, including Mr. Greene’s firm who acted for CDC. The minutes of settlement have statements that are contrary to the case being made in this action by CDC. The minutes refer throughout to the “Pillitteri group”, and although Mr. Pillitteri denied in his evidence that there was any such group, it is clear that what was referred to as the Pillitteri group was CDC or its shareholders. For example, the minutes recorded:

“CDC, in essence, is owned by the Pillitteri Group”. The shareholders were originally Enzo Ventura, Ron Ventura and Pat Pillitteri, and at the time of the minutes of settlement were Ron Venture and Pat Pillitteri. “The Pillitteri Group and the DeCicco Group were also joint venturers in adjoining properties referred to as Westplex Centre Inc…” CDC was the joint venture in the Westplex Centre. “The Pillitteri Group and the DeCicco Group are also joint venturers in six real property investments...”, and “The Joint Venture interests are split approximately one-third for the Pillitteri group and two-thirds for the DeCicco/Cioci group.” This was a reference to the lands acquired by the Plex Group, in which Vendrain after the investments were made was accounted for as the one-third equity holder. “The DeCicco/Cioci group is to receive all of the Pillitteri group’s minority shares and interests in …four Joint Venture corporations…” These were four of the properties acquired by the Plex Group, in which Vendrain was ultimately accounted for as the one-third equity holder.

[132] The minutes of settlement do not assert that Vendrain was a joint venturer in the properties. Under the settlement, the Pillitteri Group was to receive the DeCicco/Cioci interests in two properties and a $500,000 payment. In fact, although it was CDC who sued for the outstanding receivable, the $500,000 went to Vendrain and CDC received nothing. While Mr. Pillitteri asserted on cross-examination that the outstanding receivable was at some point paid to CDC by Vendrain, he could not say when that was and had no documents to establish that. He acknowledged having received a copy of the agreed statement of facts, and it is safe to infer that he did not tell Mr. Greene or anyone that it was incorrect.

[133] Christina Pillitteri asserted in her evidence in chief that she had always been the sole shareholder of Vendrain and had never transferred the shares. However, in cross-examination, Vendrain’s shareholder register was put to her in which is recorded a transfer of the shares of Vendrain from her to a numbered company on January 15, 2009, about one year after this action was started. She blurted out that this was done for tax reasons and that she was the owner of the shares of the numbered company. However, no documentation was produced to indicate who the owners of the numbered company are. I am not prepared to conclude on her evidence that Christina is the sole shareholder of the numbered company.

[134] There is some evidence of the families all getting together to celebrate purchases and sales of property, including Tony and Julie DeCicco, Christina and Pat Pillitteri, Ron Ventura and Patricia and Enzo Ventura. Christina and Pat Pillitteri deny this. I prefer the evidence of Patricia, Tony and Julie DeCicco on this. The implication of the evidence, of course, is that they all thought they were involved in the acquisition and sale of the properties, including the Plex Group of properties. There was also evidence of coins being buried in the ground at the start of every project, one for each of the family members, for good luck. That is the evidence of Patricia, Julie and Tony DeCicco. Pat says it only happened once when a Toonie was thrown into a trench to see if there was quicksand at the Westplex Centre. That would be a remarkable way to test ground before putting in footings. Again, I prefer the evidence of the others on this. Why Ron Ventura was not called to support the defendants’ case on this was not explained. The inference is that his evidence would not have been helpful to the defendants’ case. I would not put too much reliance on this evidence of family celebrations or coin burying, but it is confirmatory of Enzo, Patricia and Julie and Tony DeCicco thinking that Enzo was part of the deals.

[135] I also think it not insignificant that the company was named Vendrain, the Ven of which comes from the Ventura family name. There was no explanation as to why a company wholly owned by Christina Pillitteri would be named that way.

[136] In my view, while the specific relief to be ordered regarding the claim under s. 248 of the OBCA is under the bifurcation order to be dealt with at the second phase of the case, it is clear that in considering what Patricia gave up in the Transfer Agreement that was signed on June 27, 2001, there should be included the value of at least the seven properties acquired in 1996 and 1998 and listed in tab 15 of exhibit 2.

Legal claims to set aside Transfer Agreement

[137] Four grounds are relied on to set aside the Transfer Agreement of June 27, 2001, being breach of fiduciary duty, undue influence, misrepresentation and unconscionability.

[138] These equitable concepts are not completely independent. In his text, The Law of Contracts, 6^th ed., Professor Waddams includes under the head Inequality of Bargaining Power the concepts of protection of weaker parties, undue influence and fiduciary relationships. In Hodgkinson v. Sims, 1994 70 (SCC), [1994] 3 S.C.R. 377 LaForest J. stated at para. 27 that the concepts of unequal bargaining power and undue influence are also often linked to discussions of the fiduciary principle and that all three equitable doctrines are designed to protect vulnerable parties in transactions with others. However, whereas undue influence focuses on the sufficiency of consent and unconscionability looks at the reasonableness of a given transaction, the fiduciary principle monitors the abuse of a loyalty reposed.

Undue influence

[139] The doctrine of undue influence is well known. Where there is no special relationship such as trustee and beneficiary or solicitor and client, it is open to the weaker party to prove the stronger was able to take unfair advantage, either by actual pressure or by a general relationship of trust between the parties of which the stronger took advantage. See Waddams at paras. 519 to 522. It is this latter concept that is relied on by the plaintiff. Once a confidential relationship has been established the burden shifts to the wrongdoer to prove that the complainant entered into the impugned transaction freely. See Waxman v. Waxman (2002) 2002 49644 (ON SC), 25 B.L.R. (3d) 1 per Sanderson J. at paras. 1430.

[140] In Waxman v. Waxman, Sanderson J. referred to Lord Wilkinson in Barclays Bank plc v. O’Brien [1993] 4 All. E.R. 417 who stated that in the case of presumed rather than actual undue influence, once a confidential relationship has been proved such that it is fair that the wrongdoer abused that relationship, there is no need to produce evidence that actual undue influence was exerted and the burden shifts to the wrongdoer to prove that the complainant entered into the transaction freely, for example by showing that the complainant had independent legal advice. These principles were adopted in Bank of Montreal v. Duguid (2000), 2000 5710 (ON CA), 47 O.R. (3d) 737 (C.A.). In that case, while Feldman J. A. dissented, her following statement accorded with the majority’s views:

[44] In the case of actual undue influence, the claimant must prove affirmatively that the wrongdoer exerted undue influence to induce the transaction. In the case of presumed undue influence, the claimant must show only that there existed a relationship of trust and confidence such that it is fair to presume that the wrongdoer abused that relationship to procure the transaction. The onus then shifts to the wrongdoer to prove that the complainant in fact entered into the transaction freely. One way to rebut the presumption is to demonstrate that the complainant received independent legal advice.

[141] In Goodman Estate v. Geffen 1991 69 (SCC), [1991] 2 S.C.R. 353, Wilson J. stated:

42. What then must a plaintiff establish in order to trigger a presumption of undue influence? In my view, the inquiry should begin with an examination of the relationship between the parties. The first question to be addressed in all cases is whether the potential for domination inheres in the nature of the relationship itself…
43. Having established the requisite type of relationship to support the presumption, the next phase of the inquiry involves an examination of the nature of the transaction. When dealing with commercial transactions, I believe that the plaintiff should be obliged to show, in addition to the required relationship between the parties, that the contract worked unfairness either in the sense that he or she was unduly disadvantaged by it or that the defendant was unduly benefited by it. From the court's point of view this added requirement is justified when dealing with commercial transactions because, as already mentioned, a court of equity, even while tempering the harshness of the common law, must accord some degree of deference to the principle of freedom of contract and the inviolability of bargains…
44. Once the plaintiff has established that the circumstances are such as to trigger the application of the presumption, i.e., that apart from the details of the particular impugned transaction the nature of the relationship between the plaintiff and defendant was such that the potential for influence existed, the onus moves to the defendant to rebut it. …the plaintiff must be shown to have entered into the transaction as a result of his own "full, free and informed thought". Substantively, this may entail a showing that no actual influence was deployed in the particular transaction, that the plaintiff had independent advice, and so on. Additionally, I agree with those authors who suggest that the magnitude of the disadvantage or benefit is cogent evidence going to the issue of whether influence was exercised.

[142] Has Patricia Buccilli established a relationship with Christina and Pat Pillitteri that gives rise to a presumption of undue influence? In my view she has, and I so find. Even while Enzo was alive, it was Christina who looked after Enzo’s books and records and Pat who made investment decisions for the family. That was Patricia’s evidence and I accept it. After Enzo’s death, Patricia was emotionally distraught for some time and it was Christina who continued to look after Patricia’s and Enzo’s affairs. Christina opened an account in her and Patricia’s name into which money from CDC was deposited and from which Christina made mortgage and tax payments. It was Christina who took all of the steps to have Mr. Cirillo prepare the necessary estate documents, including providing all of the information required by Mr. Cirillo. Patricia had no knowledge of the financial affairs of CDC and Christina and Pat Pillitteri knew that. Patricia’s evidence, which I accept, was that she was greatly reliant on Christina for support and she trusted Christina.

[143] Mr. Cirillo’s evidence, which I accept, was that at the time of the Transfer Agreement, Patricia was of a state of mind to accept the direction and trust and confidence that she had in Christina and that Patricia was in a good and trusting relationship with Christina. I realize that Christina also has had a difficult time over the loss of her brother Enzo, and that she testified on cross-examination that she and Patricia relied on each other, but this does not detract from the trust and reliance that Patricia placed on Christina after Enzo died.

[144] In my view of the evidence, there is no question but that the relationship between Patricia and Christina and Pat Pillitteri was such that the potential for influence existed and it is fair to presume that the Pillitteris abused that relationship.

[145] Have Christina and Pat Pillitteri met the onus of establishing that Patricia entered into the Transfer Agreement freely. In my view, they have not, and I so find.

[146] The defendants contend that Patricia signed the Transfer Agreement with knowledge of its contents and is bound by it. They also say that it was in accordance with the proposal that Patricia had made to them in August, 2007, but I have rejected that evidence. Even if Patricia read and understood the contents of the Transfer Agreement before she signed it, and even if no representation was made to her by Christina Pillitteri that day, which I will deal with, it cannot be said in the language of Wilson J. in Geffen that Patricia signed it with her own “full, free and informed thought”. Her thought was far from informed.

[147] Patricia had no knowledge of the affairs of CDC and of its worth at the time of the Transfer Agreement. Christina knew that the financial statements of CDC showed retained earnings as at January 31, 2000 of $3.3 million and as at January 31, 2001 of $3.65 million. Patricia’s evidence, which I accept, is that at no time prior to that agreement did Christina give her any information of the share values of CDC or Birchland. Nor did Patricia have any knowledge of the steps taken by Christina and Pat Pillitteri to move the Plex Group land developments into Vendrain, or the value of those developments. Christina Pillitteri admitted on her cross-examination that it did not make sense to her that Patricia was giving up all of the things she did, namely 83 Pine Valley Dr., the Lakeshore condominium, and Enzo’s interest in CDC and Birchland in return for the condominium at 2 Doncliffe, yet neither Christina nor Pat Pillitteri advised her to get any independent advice on the values involved. When one considers the value of the Vendrain developments on top of what CDC had, the statement of Christina that what Patricia gave up did not make sense is compounded. Christina and Pat Pillitteri were well aware that Patricia was giving up far more than she realized in the Transfer Agreement and yet did nothing about it.

[148] Nor did Patricia have the benefit of any independent legal advice. I do not accept the evidence of both Christina and Pat Pillitteri that Patricia said she did not need independent legal advice. Mr. Cirillo testified that he suggested to Patricia that if she was not content she should seek independent legal advice, and that she replied that she did not need or want or expect independent counsel. I have serious doubts of the reliability of such evidence as Mr. Cirillo had little recollection of any discussions and his statement, perhaps even unwittingly, could be seen to be self serving. Even so, the fact is that Patricia did not have any independent advice.

[149] Mr. Cirillo was the lawyer for Christina and Pat Pillitteri, and had been instructed by them to draft the Transfer Agreement as well as the draft September 2000 agreement. He had not been retained by Patricia. Mr. Cirillo did not give Patricia any business advice or suggest any, and acknowledged that Patricia did not place much reliance on anything he said. I find it difficult in the circumstances that Mr. Cirillo did not insist that in light of what Patricia was giving up that she get independent legal and business advice. Mr. Cirillo had discussed the terms of the agreement only with the Pillitteris. He never discussed with Patricia her understanding of the agreement that the Pillitteris had told him had been agreed to with her or her understanding of the values of the assets being exchanged. The situation cried out for Patricia to have independent advice and for the Pillitteris and for Mr. Cirillo to tell her that. Neither did.

[150] I do not see the boiler plate clause in the Transfer Agreement that stated that all signatories instructed Mr. Cirillo to act on behalf of all of them and that they all waived the benefit of independent legal advice as changing the underlying circumstances and Patricia’s lack of knowledge of the financial state of CDC and Vendrain. As well, that boiler plate had been drafted two days before the meeting, at which time Mr. Cirillo could not have known what Patricia would do about independent legal advice. It is also no evidence that Patricia had in fact retained Mr. Cirillo, which Mr. Cirillo knew she had not.

[151] It is also clear that in the language of Wilson J. in Goodman Estate v. Geffen that the Transfer Agreement worked unfairness in the sense that Patricia was unduly disadvantaged by it and that the Pillitteris unduly benefited by it. I will deal with this when considering the unconscionability claim.

[152] In the circumstances, I find that Patricia has established sufficient grounds under the doctrine of undue influence to have the Transfer Agreement set aside.

Unconscionability

(a) Inequality in bargaining position

[153] Unconscionability is closely aligned to undue influence, as stated by LaForest J. in Hodgkinson v. Sims. In Norberg v. Wynrib [1992] 2 S.C.R. 296 LaForest J. stated the doctrine of unconscionability to be as follows:

30. An unconscionable transaction arises in contract law where there is an overwhelming imbalance in the power relationship between the parties. In Morrison v. Coast Finance Ltd. (1965), 1965 493 (BC CA), 55 D.L.R. (2d) 710 (B.C.C.A.), at p. 713, Davey J.A. outlined the factors to be considered in a claim of unconscionability: ... a plea that a bargain is unconscionable invokes relief against an unfair advantage gained by an unconscientious use of power by a stronger party against a weaker. On such a claim the material ingredients are proof of inequality in the position of the parties arising out of the ignorance, need or distress of the weaker, which left him in the power of the stronger, and proof of substantial unfairness of the bargain obtained by the stronger. On proof of those circumstances, it creates a presumption of fraud which the stronger must repel by proving that the bargain was fair, just and reasonable.
31. An inequality of bargaining power may arise in a number of ways. As Boyle and Percy, Contracts: Cases and Commentaries (4th ed. 1989), note, at pp. 637-38: [A person] may be intellectually weaker by reason of a disease of the mind, economically weaker or simply situationally weaker because of temporary circumstances. Alternatively, the "weakness" may arise out of a special relationship in which trust and confidence has been reposed in the other party. The comparative weakness or special relationship is, in every case, a fact to be proven. As the last sentence of this passage suggests, the circumstances of each case must be examined to determine if there is an overwhelming imbalance of power in the relationship between the parties.
32. It must be noted that in the law of contracts proof of an unconscionable transaction involves a two-step process: (1) proof of inequality in the positions of the parties, and (2) proof of an improvident bargain.

[154] Has Patricia established an inequality in the positions of the parties to satisfy this first step? In my view she has, and I so find. The same factors in the undue influence analysis that led to my conclusion that there was a presumption of undue influence and that Patricia could not be said to have entered into the Transfer Agreement with her own “full, free and informed thought” establish an overwhelming inequality of bargaining power in Christina and Pat Pillitteri over Patricia.

(b) Improvident bargain

[155] Has Patricia established the Transfer Agreement to be an improvident bargain sufficient to establish unconscionability? In my view she has and I so find, for the reasons that follow.

[156] The application for the administration of an estate without a will signed by Patricia stated that Enzo’s personal property had a value of $299,000 and his real estate net of encumbrances had a value of $244,000.

[157] Prior to that document being prepared by Mr. Cirillo’s clerk, Christina had sent a 44 page fax bundle of documents containing a great deal of information regarding Enzo’s assets. She had been asked by Mr. Cirillo to send him the information about Enzo’s assets. A note from Christina accompanying the fax bundle stated that “our accountant” would get back to her hopefully soon with Enzo’s share value of CDC and Birchland.

[158] Christina testified that she asked their accountant John Yee for the information as to the values of CDC and Birchland but was told by him that they could not put the information together because the year ends for the companies were different from the date of death of Enzo. She also testified that she remembered Patricia saying that she did not need the information and that it would take too long, and so she told Mr. Yee not to do anything about it. This was never put to Patricia on cross-examination and it should have been if it was to be taken seriously. However, I find it highly implausible evidence. Mr. Yee was not called by the defendants to corroborate Christina’s evidence. Christina acknowledged that she was the best person to provide the financial information to Mr. Cirillo to do the estate work, and it is clear that Patricia had no information regarding the values of the companies. There would be no reason for Patricia to say it did not matter or that it would take too long to get. Why she would be in a hurry was not explained and it was Christina who organized all of the information and who asked Patricia to come with her to Mr. Cirillo’s office to sign the estate papers. Also, Patricia’s evidence, which I accept, is that she did not really understand the estate documents that she signed, or look at them carefully, and it would be inconceivable that she gave any directions of any kind as to the values of the companies. I believe that Christina’s evidence was to support her denial that she gave the value of CDC that was used in the estate documents.

[159] Mr. Cirillo testified that he had no recollection of getting information from the accountant or how the share values were obtained by his office. The file notes of the estate clerk with whom Mr. Cirillo worked contain values for Enzo’s personal and real estate property. These values were used to complete the application signed by Patricia for a certificate of appointment of estate trustee without a will. The value of the shares of CDC in the file notes, and carried into the estate documents as part of the value of Enzo’s personal property, is $150,000. It is likely that Christina provided that information to Mr. Cirillo’s clerk, but it does not really matter. It is no cogent evidence of the value of CDC at the time of Enzo’s death or at the time of the Transfer Agreement in June 2001.

[160] CDC operated at the relevant times as a general contracting firm specializing in sewer and water main installations, earth moving, road construction and curb and sidewalk construction. CDC also held its interest as a one-third joint venture partner in the Westplex Centre and held title to a residential lot at 588 Chelsea Rd. It had net income for the year ended January 31, 2000 of $278,123 and for the year ended January 31, 2001 of $340,631, with retained earnings for those two years of $3.3 million and $3.65 million.

[161] The defendants produced an expert report by Ms. Nancy Rogers, a qualified chartered business valuator, to opine on the value of Enzo’s one-third interest in CDC as at the date of death and as at August 31, 2000 (the date of the draft agreement) and as of July 25, 2001 (the date of the Transfer Agreement signed two days later). She prepared “an independent estimate valuation report” rather than “a comprehensive valuation report” as those terms are used by the Canadian Institute of Chartered Business Valuators. The former is based on a limited review, analysis and corroboration of relevant information as opposed to a comprehensive review which is the most reliable valuation report.

[162] Ms. Rogers determined value for the most part by use of an adjusted book value (ABV) approach. This method is the measure of the value of the hard assets net of all outstanding liabilities. She determined the ABV for the core operations at June 25, 2001 at $3,377,000, the value of CDC’s interest in Westplex at $698,000 and the value of the residential lot at $200,000, for a total value as at that date of $4,271,000. A one-third interest would be approximately $1.424 million. However, Ms. Rogers applied a 25% minority discount for Enzo’s one-third interest to arrive at a value of $1,068,000.

[163] I have considerable difficulty with this analysis. Whereas an ABV valuation method was used for CDC’s core operations, that was not the case with its interest in the Westplex Centre. The reason was that no appraisal of the Westplex Centre was obtained. Ms. Rogers acknowledged that a comprehensive valuation report would normally involve an appraisal of land, and that had an appraisal been obtained, it definitely would have been more solid evidence of CDC’s interest in the Westplex Centre. She said that typically when doing a valuation and a large property is being valued, a real estate appraisal would be appropriate. In this case, the book value of the Westplex Centre carried on CDC’s books as at January 31, 2000 was $682,279 for deposits on land and $674,425 for income producing property. These are recorded at cost and do not reflect fair market value. Those costs were in all likelihood incurred for the most part in the first half of the 1990’s.

[164] Ms. Rogers stated in her report that as an appraisal of Westplex was not available, she at first estimated CDC’s investment value based on the value of the underlying cash flow. She applied a capitalization rate of 14% to estimated maintainable earnings and after various adjustments for assets and liabilities of Westplex arrived at an estimated market value of $3,360,000 as at June 25, 2001. The pro rata one-third interest of CDC was $1,119,000 but she applied a 35% minority discount to get an estimate of CDC’s one-third share at $727,000. Even assuming the capitalization rate of 14% to be reasonable (the higher the cap rate the lower the value), I see no basis for a 35% minority discount. The financial statements of CDC included its 33.3% interest in the assets and liabilities, revenues and expenses of the Westplex Centre without any minority discount. Moreover, when the 2007 settlement was made and the DeCicco/Cioci families bought out the remaining one-third interest in Westplex Centre not held by them, no minority discount was made to the one-third interest.

[165] Ms. Rogers then compared her capitalized value of $727,000 to the book value of Westplex as recorded on CDC’s balance sheet of $698,000 and concluded that the book value was a reasonable proxy for the value of its interest in Westplex. That is, she valued CDC’s interest in Westplex, a real estate joint venture that had net operating income at July 31, 2000 of $381,380 and at July 31, 2001 of $426,434, at $698,000 as of June 25, 2001 based on its book value as on the books of CDC. This was not an adjusted book value. This cannot be considered a proper valuation without a fair market value appraisal having been done. In 2007, when the DeCicco and Cioci families settled their differences with the Pillitteris and the Westplex Centre and adjacent parking lot were acquired by the DeCicco /Cioci interests, the value arrived at for that purpose for the Westplex Centre and the parking lot was $13,995,000, more than four times the value of $3.36 million estimated by Ms. Rogers for CDC as at June 25, 2001. The operations of the Westplex Centre had not changed in the meantime.

[166] After Ms. Rogers arrived at a value of Enzo or his estate’s interest in CDC of $1.424 million, she applied a minority discount of 25% to get a value of $1,068,000 as at June 25, 2001. She did so by saying that the valuation of a minority interest considers that minority shareholders typically do not enjoy the same rights and privileges as a majority shareholder. This assumes that Christina was acquiring the interest in CDC under the Transfer Agreement on behalf of both Pat Pillitteri and Ron Venture. However, as will be discussed under the misrepresentation claim, I hold that Christina represented that she was acquiring the CDC interest on behalf of Patricia. In any event, if an application had been brought by a shareholder to wind up CDC, and the order were made, it is most likely that the assets would be put on the market en bloc, with the proceeds split evenly amongst the three shareholders, or one would be entitled to buy out the others without any minority discount. Buying out without a minority discount is what occurred on the 2007 settlement. The properties were transferred without any minority discount being applied.

[167] When one considers what Patricia was giving up by the Transfer Agreement, and considering how in equity that should be valued, I would not ascribe any minority discount to Enzo’s one-third interest in CDC. Nor would I ascribe any minority discount to CDC’s one-third interest in the Westplex Centre.

[168] Ms. Rogers was not asked to consider the value of the Plex Group lands held in the name of Vendrain. She said she had never heard of Vendrain. There is no evidence as to what the value was of those properties was in June 2001. However in the settlement in 2007 between the DeCicco/Cioci families and the Pillitteris, after part of the Humberplex lands had earlier been sold in 2000 for $32.8 million, the remaining Plex Group lands plus the three properties acquired afterwards and put in the name of Vendrain (Sevenplex, Kirwen and Utradecanada.com) were valued at $37 million. The total of these two values is approximately $70 million. How much the settlement valuation of $37 million reflects rising values since June 2001 is not in the evidence. Nor is the value ascribed to the three properties in the settlement value of $37 million, which may or may not have properly been in the name of Vendrain and which will have to await the further trial of bifurcated issues. It is clear, however, that the interest of Enzo is the seven Plex Group of properties would have been well in excess of $10 million.

[169] Patricia gave up title to 83 Pine Valley Dr. It had been purchased in 1989 for $805,000. Pat Pillitteri asserted that its value in September, 1998 and June, 2001 was $400,000 to $600,000 and that it was a “knock-down”. It is still being lived in by his son, and his statement that it was a knock-down is unconvincing. If Pat said it was worth $600,000, I would be highly surprised if it were not worth a lot more. Christina Pillitteri asserted that it was worth $600,000 in 1995, and why it would not have increased in value since then was not explained. How much was paid down on the mortgage by Enzo and by Patricia up to June, 2001 is not clear, but if the mortgage loan outstanding was $400,000, it means that nothing was paid down since the mortgages of $405,000 were registered at the time of its purchase in September, 1998. That cannot be the case. In 1994 before the property was transferred to Enzo, Pat Pillitteri signed a mortgage for $487,500 to Laurentian Bank. That was far more than the mortgages on title at the time of the acquisition and must have been used to support business loans for the business. It cannot have been reflective of the purchase price mortgage, which had been paid down for 5 years. I assume there was at least $500,000 in equity at the time of the Transfer Agreement in June, 2001, but in light of the values of CDC and Vendrain, it does not make a whole lot of difference in the result.

[170] The equity in the Lakeshore condominium that Patricia gave up is known. It was $92,748. Together with 83 Pine Valley Dr., they were about the same as the $610,000 price paid by Pat Pillitteri for 2 Doncliffe that Patricia acquired. I do not view the Laurentian Bank guarantee release as anything provided by the Pillitteris. That release was provided by the bank as a result of the $1 million insurance policy on Enzo’s life paid to the bank.

[171] In the end, in round terms, Patricia gave up her interest in CDC and the lands accounted for in the name of Vendrain for essentially nothing. Even on Ms. Roger’s flawed analysis, that interest in CDC alone was worth $1,068,000. Without the minority discount for her interest in CDC, it was worth $1.424, and using her capitalized earnings approach for the Westplex Centre without a minority discount, the value of Patricia’s interest in CDC would have been in the $1.5 to $1.6 million range. That ignores the lack of an appraisal for the Westplex Centre that Ms. Rogers agreed would have been preferable and used if a full comprehensive value report had been commissioned by the Pillitteris. The value of CDC alone that Patricia gave up in my view constituted an improvident bargain. The value of the seven developments acquired in 1996 and 1998 and accounted for in the name of Vendrain compounds the situation enormously.

[172] While it is not possible on the evidence to be precise as to the value of assets given up by Patricia in the Transfer Agreement, it is clear, and I so find, that it was an overwhelming improvident bargain and that on that ground the Transfer Agreement should be set aside.

Misrepresentation

[173] Patricia also asks that the Transfer Agreement be set aside on the basis that it was induced by a misrepresentation. An agreement induced by a misrepresentation can be set aside if the representation was as to a material fact and reasonably relied on. This applies to a representation whether innocent, negligent or fraudulent. See Waddams at paras. 419-421.

[174] It is necessary for a plaintiff to establish that the misrepresentation was a material inducement upon which the plaintiff relied. It is not necessary for a plaintiff to establish that the misrepresentation was the sole inducement for acting and it matters not if the misrepresentation was only one of several factors contributing to the plaintiff’s decision. See Sidhu Estate v. Bains (1996), 1996 3332 (BC CA), 25 B.C.L.R. (3d) 41 at paras 35-36; Kripps v. Touche Ross & Co. (1997), 1997 2007 (BC CA), 89 B.C.A.C. 288 (C.A.) at paras. 102-103; NBD Bank, Canada v. Dofasco Inc. (1999), 1999 3826 (ON CA), 46 O.R. (3d) 514 (C.A.) at para 81.

[175] In Sidhu Estate, supra, Finch J.A. (as he then was) quoted with approval from Fleming, The Law of Torts, 7th ed. (Sydney: Law Book, 1987), which stated at 604

At the same time, a defendant cannot excuse himself by proving that his misrepresentation was not the sole inducing cause, because it might have been precisely what tipped the scales… and from Barton v. Armstrong, [1976] A.C. 104 (P.C.) in which Lord Cross, who wrote for the majority, in part stated at 118 If on the other hand Barton relied on the misrepresentation Armstrong could not have defeated his claim to relief by showing that there were other more weighty causes which contributed to his decision to execute the deed, for in this field the court does not allow an examination into the relative importance of contributory causes. [Emphasis Finch J.A.’s]

[176] In this case, I have found that before Patricia signed the Transfer Agreement, Christina told Patricia that she would hold the shares of CDC and Birchland in trust for Patricia. This was a representation of a present fact, i.e. she intended to hold the shares in trust for Patricia. However, Christina was quite clear in her evidence that from the time of the Transfer Agreement, she intended to transfer Patricia’s shares in CDC and Birchland to Ron Venture and Pat Pillitteri. This was a misrepresentation of fact.

[177] Reliance can be inferred from all of the circumstances and it is not necessary for Patricia to have testified that she relied on the representation of Christina. See NBD Bank, Canada v. Dofasco Inc. (1999), 1999 3826 (ON CA), 46 O.R. (3d) 514 (C.A.) at para 81. However, Patricia did testify that she relied on the representation of Christina, and I accept that. In any event, in my view it is an obvious inference from the evidence of Patricia that it was a material inducement to her signing the Transfer Agreement that Christina told her that she would hold the shares of CDC and Birchland in trust for her. Patricia testified that she did not think that she would have signed the Transfer Agreement had she known that Christina intended on transferring the shares to Ron Venture and Pat Pillitteri, and while that is not the issue, the issue being if she relied on what she was told rather than if she would have relied on the statement if told something else, I accept her evidence. It would have been completely different from what she had been told and what she relied on.

[178] In my view, and I so find, the representation of Christina that she would hold the shares of CDC and Birchland in trust for Patricia was a misrepresentation inducing Patricia to sign the Transfer Agreement and another ground for setting aside the Transfer Agreement.

Fiduciary duty

[179] Alberta v. Elder Advocates of Alberta Society, 2011 SCC 26, [2011] 2 S.C.R. 360 is the latest S.C.C. case dealing with the tests for recognition of a fiduciary duty. In Frame v. Smith, 1987 74 (SCC), [1987] 2 S.C.R. 99 Wilson J. stated her view of when a fiduciary duty has been recognized. Her words have been adopted by the Supreme Court and other courts for many years. She stated:

Relationships in which a fiduciary obligation has been imposed seem to possess three general characteristics: (1) The fiduciary has scope for the exercise of some discretion or power. (2) The fiduciary can unilaterally exercise that power or discretion so as to affect the beneficiary’s legal or practical interests. (3) The beneficiary is peculiarly vulnerable to or at the mercy of the fiduciary holding the discretion or power.

[180] In Elder, however, McLachlin C.J. stated that as useful as the three “hallmarks” referred to in Frame are in explaining the source fiduciary duties, they are not a complete code for identifying fiduciary duties. She laid down three tests to be applied.

[181] First, the evidence must show that the alleged fiduciary gave an undertaking of responsibility to act in the best interests of a beneficiary. What is required in all cases is an undertaking by the fiduciary, express or implied, to act in accordance with the duty of loyalty reposed on him or her. The existence and character of the undertaking is informed by the norms relating to the particular relationship. The party asserting the duty must be able to point to a forsaking by the alleged fiduciary of the interests of all others in favour of those of the beneficiary, in relation to the specific legal interest at stake. The undertaking may be found in the relationship between the parties, in an imposition of responsibility by statute, or under an express agreement to act as trustee of the beneficiary’s interests.

[182] Second, the duty must be owed to a defined person or class of persons who must be vulnerable to the fiduciary in the sense that the fiduciary has a discretionary power over them. Fiduciary duties do not exist at large. They are confined to specific relationships between particular parties. Historically recognized per se fiduciary relationships exist as a matter of course within the traditional categories of trustee-cestui que trust, executor-beneficiary, solicitor-client, agent-principal, director-corporation, and guardian-ward or parent-child. By contrast, ad hoc fiduciary relationships must be established on a case-by-case basis.

[183] Finally, to establish a fiduciary duty, the claimant must show that the alleged fiduciary’s power may affect the legal or substantial practical interests of the beneficiary. In the traditional categories of fiduciary relationship, the nature of the relationship itself defines the interest at stake. However, a party seeking to establish an ad hoc duty must be able to point to an identifiable legal or vital practical interest that is at stake. The most obvious example is an interest in property, although other interests recognized by law may also be protected.

[184] In this case, I think it is obvious that a fiduciary duty was owed by Christina to Patricia. There was a complete trust by Patricia in Christina and Christina was well aware of it and agreed that such a trust existed. Christina told Patricia that she would hold the shares of CDC and Birchland in trust for Patricia and that she would look after Patricia. Patricia was completely vulnerable to the shares being transferred by Christina once the shares had been transferred to Christina, as they eventually were. It was a breach of her fiduciary duty to Patricia for Christina to transfer the shares of CDC and Birchland to Ron Ventura and Pat Pillitteri. In my view, it was also a breach of her fiduciary duty to Patricia for Christina not to have cautioned Patricia to get independent advice as to the values of the assets being given up by Patricia, particularly as Christina acknowledged that it made no sense to her that Christina was giving up those assets for the condominium at 2 Doncliffe.

[185] The remedy for breach of fiduciary duty is discretionary. The only realistic remedy to make Patricia whole from the breach is that the Transfer Agreement should be set aside and an accounting of profits of the defendants from the lands and developments that were the subject of the Transfer Agreement should be taken and one-third should be paid to Patricia.

Section 38 of the Estates Act

[186] In their pleadings and opening at the trial, the defendants relied on section 38(3) of the Trustee Act which provides that an action under section 38 shall not be brought after the expiration of two years from the death of the deceased. This argument was not pursued in oral argument at the end of the case.

[187] In my view, there is nothing in this defence. Section 38(1) of the Trustee Act provides that an executor or administrator of a deceased person may maintain an action for injury to the person or his property in the same manner as the deceased would have been entitled to if still living. However, the actions of Patricia are not based on wrongs to her husband. They are based on wrongs to her that occurred after her husband’s death, and section 38 has no application. See Dundas v. Zurich (2012), 2012 ONCA 181, 109 O.R. (3d) 521 (C.A.).

Are the claims those of CDC or the plaintiff?

[188] The defendants assert that any claim is that of CDC and not Patricia and that she has no right to sue for a wrong done to CDC. Reliance is placed on the rule in Foss v. Harbottle.

[189] So far as setting aside the Transfer Agreement is concerned, I do not see this as a wrong to CDC. It is a wrong to Patricia and the rule in Foss v. Harbottle has no relevance.

[190] So far as the remedy of tracing the assets placed in Vendrain or elsewhere is concerned, Patricia has made an oppression claim under section 248 of the OBCA. It is accepted that section 248 is broad enough to support an action by an aggrieved shareholder which amounts to a derivative action. See Malata v. Jung (2008), 2008 ONCA 111, 89 O.R. (3d) 36 (C.A.).

Conclusion

[191] The Transfer Agreement is set aside. Further a declaration is to be made that Patricia is entitled to a one-third interest in all money, benefits and opportunities withdrawn or diverted by Christina or Pat Pillitteri either directly or directly from CDC and Birchland, including but not limited to the beneficial interest in the seven properties acquired in 1996 and 1998 by the Plex Group and listed in tab 15 of exhibit 2, and that all subsequent growth and profit derived therefrom are subject to a constructive trust in favour of Patricia. Whether the three further properties acquired in 1999 or 2001 are subject to this declaration must await the further trial required by the bifurcation order.

[192] Patricia is entitled to her costs of this action to date. If these cannot be agreed, brief written submissions may be made by her within 15 days, including a proper cost outline, and brief reply submissions may be made within a further 15 days.

Newbould J.

Released: November 23, 2012