SUPERIOR COURT OF JUSTICE – ONTARIO

COMMERCIAL LIST

Court File No. 10-CL-8871-00CL

RE: Nina Di Felice and Italo Di Felice, Applicants

AND:

1095195 Ontario Limited and Carmela Battista, Respondents

Court File No. 11-9193-00CL

AND RE: Nina Di Felice and Italo Di Felice, Applicants

AND:

721362 Ontario Limited and Aldo Di Felice, in his capacity as nominee of 721362 Ontario Limited, Carolina Di Felice, Aldo Di Felice and David Di Felice, Respondents

BEFORE: D. M. Brown J.

COUNSEL: S. Schwartz, for the Applicants

R. Cohen, for the Respondent, Carmela Battista

A. Di Felice, for himself, and Carolina Di Felice and David Di Felice

HEARD: October 31 and November 1, 2012

REASONS FOR DECISION

I. Nature of the proceedings

[1] Many years ago three branches of the Battista family invested in three groups of property in Toronto. They invested wisely; the properties have appreciated significantly in value. Unfortunately, as the senior members of each family branch have reached their late 60s and early 70s, dissension has arisen. These two proceedings have resulted.

[2] In Application No. 10-CL-8871, Nina Di Felice (neé Battista), and her husband, Italo Di Felice, applied for relief in respect of one group of properties – a commercial property located at 5025 Yonge Street, Toronto, together with a vacant residential lot around the corner at 10 Elmwood Avenue, Toronto (collectively, the “Yonge/Elmwood Properties”). Relying on the oppression and winding-up provisions contained in the Ontario Business Corporations Act, R.S.O. 1990, c. B.16 and on the Partition Act, R.S.O. 1990, c. P.4, the applicants sought the sale of the Yonge/Elmwood Properties and the distribution of the sale proceeds amongst the owners.

[3] In the other Application, No. 11-9193-00CL, Nina and Italo, relying again on the OBCA and Partition Act, sought the sale and distribution of the proceeds of two other properties: first, a commercial property located at 5925-5931 Yonge Street, Toronto, together with a residential property around the corner at 42 Cummer Avenue, Toronto (collectively, the “Yonge/Cummer Properties”), and a commercial property at 79 Sheppard Avenue West, Toronto (the “Sheppard Property”).

[4] The ultimate relief sought by Nina and Italo is opposed by the other Battista family branches, but in differing degrees and respects. I will outline the positions of the other parts of the family later in these Reasons.

[5] By order made June 14, 2012, I directed trials of both applications using a hybrid record in which the affidavits and transcripts of out-of-court cross-examinations were marked as exhibits, and focused viva voce evidence was adduced at the trial. The trial took place over two days. I compliment counsel and Mr. Aldo Di Felice for their efficient use of the trial time.

II. The various branches of the Battista family

[6] Liberato and Franceschina Battista begot four children, the families of three of which are involved in this litigation. Carolina Battista married Giuseppe Di Felice. He died a few years back. Carolina and Giuseppe have two children, the respondents Aldo and David Di Felice.

[7] Ruggiero (“Roger”) Battista married the respondent, Carmela (neé Paolone).

[8] Finally, the applicant, Nina Battista, married the applicant, Italo Di Felice.

[9] Italo and Giuseppe were brothers.

[10] Although Italo, Giuseppe and Roger had varying levels of formal education, the evidence was clear that all three were astute businessmen and knew how to invest in real estate. Giuseppe’s son, Aldo, is a lawyer and successful businessman. Consequently, this litigation involves parties who are adept at real estate investments. By any measure they have done quite well for themselves in the real estate market.

III. The three groups of properties

[11] No dispute existed about the ownership of the three groups of properties.

A. The Yonge/Elmwood Properties

[12] The Yonge/Elmwood Properties were acquired by Nina, Italo and Carmela in 1994. The Elmwood Property is right around the corner from the Yonge St. one, separated by a public laneway.

[13] The Yonge Street property is a commercial building, and it is owned by the respondent 1095195 Ontario Limited. Carmela holds 50% of the issued and outstanding shares of 109, while Nina and Italo each own 25% of the shares. Although no written trust agreement exists, Carmela, Nina and Italo agreed that 109 holds the property for them as bare trustee; they have paid taxes for the property on that basis for years.

[14] At the time the application was commenced, the first floor units of the Yonge Street property were leased to a Dairy Queen franchise and to Optic Creation Limited. The units on the second floor were leased to a shiatsu clinic and a dentist. These were long-time tenants.

[15] Carmela and Nina own the Elmwood Property as tenants-in-common.

[16] Roger, Carmela’s husband, agreed that he looked at the investment in these properties as an investment with family members as partners.[^1]

B. The Yonge/Cummer Properties

[17] The 5925-5931 Yonge St. and 42 Cummer Avenue properties are located virtually beside each other, separated by only a small lot. The Yonge Street property consists of three storefronts on Yonge Street, and one smaller storefront on Cummer Avenue, with second-floor office space at the north-east corner of the property. A roof-top sign also generates revenue. The property is mortgage-free. The Cummer Avenue property is a 63’ by 120.5’ lot on which is situated a residential house.

[18] Acquired in 1987 by equal contributions from the families of Nina, Roger and Carolina, title to the Yonge Street property is held by 721362 Ontario Limited. Each of the three families holds an equal number of the 90 common shares; in happier times the six spouses were each directors. No shareholders’ agreement exists. At present, the shares are held by members of the Carolina/Nina/Roger generation, together with their children, with the shares divided equally amongst all three families.

[19] Title to the Cummer property was taken in the name of Aldo Di Felice, the son of Giuseppe and Carolina, as nominee in trust for 721. No written trust agreement exists.

[20] Roger agreed that he looked at the investment in these properties as an investment with family members as partners.[^2]

C. The Sheppard Property

[21] In 1977 Giuseppe and Italo purchased the Sheppard Property as tenants-in-common. In 1995 Giuseppe transferred his half interest to himself and his wife, Carolina, collectively as to a half, undivided interest, each as joint tenants. After Giuseppe died in 2009, Carolina transferred ownership of her one-half interest to her sons, Aldo and David.

[22] The Sheppard Property is a commercial one with a tenant on the first floor and three on the second. A roof sign generates revenue.

IV. The evidence: a general comment

[23] As is so often the case on these family-context commercial applications, all family members have filed affidavits, describing in meticulous detail the various twists and turns of the deteriorating family relationship. I have read and considered all of the evidence filed and adduced at the trial. I will review below the evidence I consider relevant to the issues raised by these applications – i.e. the commercial relationships amongst the family members, the legal rights associated with those commercial relationships and what, if any, legal relief should be granted in respect of those commercial relationships.

[24] Further, to give some context to the review of the evidence which follows, let me outline, at this point, the major difference between the parties. Roger and Carmela contended that a “Fundamental Understanding” has existed all along amongst the parties about the use and sale of the properties. Roger deposed, in his February, 2012 affidavit, that in their discussions and arrangements for each real estate investment the branches of the Battista family agreed to a Fundamental Understanding which contained three parts: (i) they would continuously rent the properties to maximize rental income; (ii) they would not sell the properties on the open market unless each family agreed because they intended to maintain the properties for their children and grandchildren; and, (iii) if one of the families wished to withdraw from the investment, the family could not offer its interest to a third party “without first giving the remaining investing family an opportunity to purchase the withdrawing family’s interest for fair market value”. In his affidavit Roger described the third component as the “ROFO”, or right of first offer.

[25] Aldo and David supported Roger and Carmela’s assertion about the existence of a Fundamental Understanding. Italo and Nina denied that any Fundamental Understanding had ever existed.

V. The Yonge/Elmwood Properties

[26] There is no dispute that for many, many years a close relationship existed between the families of Nina and Roger. Their mother took ill early in 2006 and died later that year. During that period of time something passed between Nina and Roger. Irrespective of who said what to whom, that event, and events surrounding their mother’s funeral and will, caused a major rift between those two branches of the family. Roger conceded as much in his evidence.[^3] Communications since have been strained, to put matters mildly, and both sides of the family have rarely spoken with each other over the past six years. Instead, they tended to resort to written communications to convey information. Many of those communications were placed before me in evidence.

A. Yonge/Elmwood management

[27] Italo took the lead in the day-to-day management of the properties. He said he consulted Roger about all major decisions. According to Italo, he and Roger talked almost daily about the properties. Roger described their contact as less frequent, but he testified that Italo kept him informed about what was happening and he trusted Italo.

[28] In 2001 Roger proposed the demolition of the Elmwood house in order to convert the property to commercial use. Although not partial to that plan, Italo and Nina ultimately agreed. The house was demolished, and Roger took the lead in dealing with consultants to re-zone the Elmwood property. The property was rented out for parking. According to Italo, Roger represented that re-development of the Elmwood property would commence in 2006, but the family fissure has meant that Elmwood remains an empty lot and is no longer used for parking.

[29] With the breakdown between Nina and Roger in 2006, communications concerning the property became strained. It is not practicable to recite all of the points of dispute about the Yonge/Elmwood Property which arose since 2006, but the evidence disclosed the following main points of contention.

B. The management of the properties

[30] The 2006 family dispute resulted, in part, in Carmella writing Italo on December 13, 2007 that (i) he was not authorized to issue cheques or withdraw funds from any bank account without her signature, (ii) she wanted her 50% portion of all term deposits, (iii) she wanted certified copies of all lease agreements, contracts and other documents concerning the property and, (iv) on a go-forward basis all communications were to be done through her husband, Roger, however, “my husband does not have authority to bind my interest”. Prior to then either Roger or Italo had signed cheques, without the signature of the other.[^4]

[31] Italo replied that all records were available for inspection at his office, and while Carmela was welcome to review all invoices, “we need to agree on a plan so that the company does not suffer”. Italo mentioned the possibility of hiring a property manager.

[32] On May 8, 2008 Roger wrote Italo informing him that Carmela had lost confidence in Italo’s management of the properties and wanted a property manager hired. In May, 2008, Roger informed Italo that Carmela would not sign cheques for the property until she received “her money held in the joint venture” and she would be unavailable to sign cheques for a period of a month. Over that summer further delays were encountered in Carmela signing cheques; as well, she began to pay some bills directly and she cashed some company GICs without Italo’s consent. Italo called for the appointment of a property manager. Times Property Management ultimately was retained to manage the property in January, 2009.

C. The Dairy Queen lease

[33] In late 2007 Italo informed Carmela that the Dairy Queen lease would expire on January 31, 2008, and that given that lessee’s good history, he recommended agreeing to Dairy Queen’s request for a five-year renewal. Roger responded on January 5, 2008, denying his prior involvement in any major decisions concerning the property, demanding that all cheques be forwarded to his wife for signature, and thanking Italo for his opinion on the Dairy Queen lease:

Given the lack of information concerning the property and the leases provided in the past, my wife is not in a position to make an informed decision on this matter. Upon receipt and review of all the documentation requested outlined above, she will provide her comments.

[34] Italo began to provide Carmela with cheques for her co-signature. On January 18, 2008 he provided her with Dairy Queen’s lease proposal. Carmela’s response? Her letter of January 23, 2008 directly to Dairy Queen stated she had insufficient time to consider their proposal and “you are hereby asked to vacate the premises at the end of your lease agreement” – i.e. January 31, 2008. Italo proposed offering Dairy Queen a month-to-month tenancy. Carmela initially refused, again writing Dairy Queen telling them to vacate. Ultimately, Carmela appeared to agree to a month-to-month tenancy, but by the end of 2008 her lawyer was taking the position that she had not. In any event, Dairy Queen has continued as a month-to-month tenant.[^5]

[35] On January 24, 2008, Carmela wrote to the other tenants advising that Italo had no authority to bind her interest in the property.

D. The tax treatment of corporate income

[36] Roger deposed that 109 was incorporated to hold title to the Yonge Street property. He stated, however, that it always had been agreed that 109 would act as bare trustee of the property for the three shareholders – Nina, Italo and Carmela – for tax and accounting purposes. The use of 109 as a bare trustee was recited in a 1994 retainer letter sent by an accounting firm to Italo, which Italo had accepted on behalf of 109.

[37] In July, 2008 Italo began to object to the accountant, Flax Spitzen LLP, preparing statements for the property describing it as a “5025 Yonge Street Co-Tenancy”. Italo took the position that the statements should show 109 as the owner of the 5025 Yonge St. property. The accountant responded that he had used that accounting and tax structure for the past 15 years and had filed tax returns on that basis. Carmela took the position that the Yonge Street property was owned jointly by Italo (25%), Nina (25%) and herself (50%), and expressed concern that 109 had never paid corporate income tax on income generated by the property.

[38] 109 defaulted on filing its tax return for its fiscal 2009 year.

[39] Each side then retained lawyers. Roger deposed that Italo’s position about the ownership for tax and accounting purposes “created confusion, mistrust and frustration for me and Carmela”, and he pointed to that dispute as a reason why he and Carmela “were unable to make fully-informed or concrete decisions with respect to leasing, property payments, income taxes and other issues which depended upon a common understanding in terms of the structure of ownership for the Yonge Street Property.”

[40] Italo agreed to the preparation of a trust agreement to reflect the “current reality” expressed in the previously-prepared financial statements. However, by April, 2009 Roger and Carmela had dismissed their lawyer, and that month Roger wrote to applicants’ counsel stating that unless they provided an indemnity for any tax liability related to the ownership issue, “we ask you forward the July 29, 2007 (sic) letter to CCRA requesting an investigation and ruling on the matter”.

[41] As this dispute continued to fester, in June, 2009, Roger informed Dolores, the daughter of Italo and Nina who is a lawyer at a major Toronto law firm, that they were now questioning the work she previously had done on the corporate records for 109 and 721, and he hoped “we will not be forced to escalate this matter”. Dolores denied having done work for the two companies.

[42] Suffice it to say that Roger and Carmela did not accept any of the explanations provided by Dolores for on December 31, 2009, Carmela commenced an action against Dolores and her firm seeking damages for negligence and breach of fiduciary duty in the amount of $750,000. The allegations related to the dispute surrounding the form of ownership of the Yonge/Elmwood Properties. In his February, 2012 affidavit Roger deposed that he expected the litigation would be resolved “if Italo and Nina comply with the Fundamental Understanding and do not have the Yonge Street Property sold on the open market to a third party”.

[43] In 2009 Carmela started an action against the former corporate accountant, David Fulford.

[44] In October, 2009, applicants’ counsel repeated to the new counsel for Roger and Carmela his clients’ willingness to negotiate and execute a trust agreement, shareholders agreement and co-owners agreement for the Yonge/Elmwood Properties.

[45] This issue was discussed at a January, 2011 mediation. According to a February 8, 2011 letter from Italo to Roger, he confirmed that 109 owned the Yonge Street property as a bare trustee. Certainly at trial Italo acknowledged that 109 held the Yonge Street property as bare trustee for the three individuals – Carmela, Nina and himself.

E. The 2009 Bowood offer to purchase the Yonge/Elmwood Properties

[46] In November, 2009, Bowood Properties (2006) Inc. offered to purchase the Yonge/Elmwood Properties for approximately $8.5 million. Italo deposed that the offer was unsolicited. Italo wrote to Roger on November 23, 2009 recommending that they negotiate with Bowood:

While our intentions in purchasing these properties were to keep them as long-term investments and not to sell them, we believe that the offers represent a good return on our investment and we are prepared to sell if we are able to negotiate acceptable terms with the purchaser.

When asked on cross-examination about his phrase that the properties were long-term investments, Italo testified he meant that if they did not get the right price, they would not sell, but if they got the right price, they would sell – they would sell when the price was right.

[47] A meeting on November 21, 2009 between Roger and his son, Dario, on the one side, and Dolores and her brother, Terry, on the other, did not result in any resolution of the family dispute or a willingness by Roger to deal with the Bowood offer. Following the meeting Roger sent Dolores the following email:

It is clear, after today’s meeting, is not possible, at the present time, to repair the relationship between families.

It is very disturbing to learn that you and your family were aware of what was happening to my mother and my family and no one moved a single finger to help.

I hope things will get better in the future.[^6]

[48] On December 4, 2009, Roger emailed Dolores that “the problems created by your side” eventually would “be resolved by: 1) The Lawyers 2) The Courts”. However, he indicated a willingness to meet again and to discuss the Bowood offer. Dolores indicated a willingness to meet, but suggested that only her brothers attend because she was not available. Roger did not agree. That prompted Italo to write Roger on December 9 indicating that he and Nina were prepared to meet with Carmela and Roger to discuss the offer. Roger faxed back: “It is too late now”. In the result, the Bowood offer was not dealt with.

[49] On January 22, 2010 applicants’ counsel contacted the lawyer for Roger and Carmela advising that soon none of the tenants would have executed leases and “some tenants are not prepared to continue their tenancy without an executed lease”. Counsel proposed a sale of the Yonge/Elmwood Properties:

There are two options. First, it should be determined if the party who was interested in acquiring the Property in December is still willing to do so and on what terms. If that party is prepared to acquire the Property, the offer should be negotiated and the parties can then determine if the price and the terms upon which the Property may be sold are agreeable. Second, an independent broker may be retained who will then list the Property for sale. Once offers are received, a decision on whether to accept or negotiate the offer can be made with the advice and guidance of the brokers.

Please provide us with your clients’ position on or before Friday, January 29, 2010. If we do not hear from you on or before that date, our clients will pursue all appropriate remedies.

No reply was made on behalf of Roger and Carmela to that letter.

[50] In a May 25, 2010 fax to Italo, Roger addressed the issue of a potential sale of the property to a third party:

Unfortunately we cannot consider any offer to sell to a third party, or retain an independent broker until: the ownership issue is resolved, the taxes properly paid, and we are in receipt of an affidavit of all documents in the Di Felice’s possession.”

[51] In June, 2011 Bowood presented a further unsolicited offer to purchase the Yonge Street property in which it had increased its offer price from $4.5 million to $5.0 million.

F. Leases and purchase offers: 2010 and after

[52] In late April, 2010, Dairy Queen contacted the property manager to discuss doing some renovations to the property at its expense. Roger responded that Dairy Queen could do the work if Italo and Nina agreed and, as well, Carmela was prepared to sign new leases for all the tenants. Roger repeated Carmela’s willingness in a June 4 fax to Italo. At the close of that fax Roger wrote:

We remain willing to meet with you, with your sons and or with your representative at any time to discuss a solution to all the existing problems and we are prepared to work with you to accommodate your wishes to sell. (emphasis added)

Roger re-iterated, in a May 25, 2010 fax to Italo, that “Carmela is willing to sign leases for all the tenants, including Dairy Queen, as soon as you have both approved and signed the same”.

[53] By June 16, 2010, Roger’s position had changed. His email to the property manager stated he was unable to approve or to make decisions for the two Yonge Street properties:

I will be able and willing to approve and make decisions only after I have received affidavits of all existing documents, belonging to the above mentioned entities, from Italo and from all the professionals appointed by the entities.

I should note that on August 12, 2009, applicants’ counsel had informed counsel for Roger and Carmela that Italo consented to the corporate accountant releasing the contents of his file to them, and on October 1, 2009 had sent a letter containing corporate financial documentation for the years 2002 to 2005.

[54] In July, 2010 the property manager resigned, although the evidence suggested that the resignation later was withdrawn. Proposals in August, 2010 for a family mediation went nowhere at the time; a formal mediation took place in January, 2011.

[55] The applicants commenced their application regarding the Yonge/Elmwood Properties at the end of August, 2010. On September 9, 2010, counsel for Roger and Carmela wrote to applicants’ counsel stating:

I anticipate that my client will likely be interested in purchasing your clients’ share in either one or both of the properties at fair market value. Alternatively, the properties should be listed for sale and the parties may wish to retain a right of first refusal over any offers that are received…

I believe that an appropriate schedule should be implemented to address the disposition of both properties. (emphasis added)

[56] On September 29, 2010 counsel for Roger and Carmela wrote again, proposing a mechanism by which either side could buy-out the other at appraised values, “failing a resolution of the above steps, the properties shall be listed for sale on the open market, subject to a right of first refusal of the parties”. When asked on cross-examination at trial why this offer made no reference to a ROFO, Roger testified that at the time he felt it was the easiest way out to put it on the market to establish a price.

[57] The documentary evidence disclosed that by January, 2011 a property manager was back in place. On January 4, 2011, Michael Pascu, a lawyer, sent Italo copies of proposed leases for four tenants at the Yonge Street property. He advised that Roger had approved the leases and asked for direction whether the leases should be sent to the tenants for execution. On January 16, 2011 Gino, another name by which Roger is known, wrote Italo to inform him that some of the tenants were willing to sign the leases – “If I do not hear from you on or before January 21^st 2011 I assume that you have approved them and copies will be sent to the tenants”. On January 26 Roger confirmed to the property manager that Carmela had approved the leases prepared by Mr. Pascu, and made a similar confirmation to Italo on February 12, 2011. It was unclear whether the tenants had approved the terms of the leases.[^7]

[58] There the paper trial goes dead until October 17, 2011, when Roger took the position, through his counsel’s letter, that Nina and Italo had failed to execute the remaining leases for the property, and they demanded that Nina and Italo “take corrective measures to ensure that the tenants at the Yonge and Elmwood property have written leases forthwith”. Italo testified that because of his lack of trust in Roger he wanted to separate their relationship, so he concluded it would be better for the marketing of the property if there were not long-term leases in place.[^8]

[59] Roger also filed a string of emails from February, 2012 sent to Zubin, at the property manager, asking whether Italo had approved the leases back in early 2011, and then complaining that Zubin was not responding to his emails.

[60] One tenant, Jasengdang Acupuncture Holistic Centre, gave notice that it was moving out of the premises at the end of September, 2011 because of the lack of a lease. From the email evidence filed, it appears that an offer of lower rent enticed Jasengdang to stay.

[61] Another, Northtown Dental, ended its lease on December 31, 2011 because of the lack of a long-term lease. By February, 2012 the parties had agreed to list the vacant premises for lease.

[62] In February, 2012, Glenwood Property Management Inc. made an unsolicited offer for the properties in the amount of $10 million. Italo forwarded the Glenwood offer to Roger who not wish to deal with it, maintaining his position that Carmela enjoyed a right of first offer. Carmela offered to buy-out Nina and Italo for the amount offered by Glenwood. Italo and Nina were not interested. Carmela then proposed the parties agree to a shot-gun buy/sell mechanism under which Nina and Italo would make the initial offer. Nina and Italo did not agree to such a mechanism.

[63] The evidence indicated that by 2012 the two families were communicating and making decisions concerning the property through the property manager. They were not talking directly to each because of the impasse in their relationship.[^9]

G. Offers to buy-out Nina and Italo

[64] On October 27, 2010, Italo and Nina offered either to (i) purchase Carmela’s interest in Yonge/Elmwood for $9 million and to sell her the Yonge/Cummer Properties at their appraised values, or (ii) sell Carmela Yonge/Elmwood for $9 million and purchase the other property at its appraised value. Aldo did not consent to the sale of the Yonge/Cummer Properties. On November 19, 2010, Carmela offered to buy the Yonge/Elmwood Properties for $9 million. Interestingly, as part of her offer Carmela agreed not to transfer the properties to a third-party during the two-year period following the purchase. Nina and Italo did not accept the offer.

VI. The Yonge/Cummer Properties

[65] Italo had taken care of much of the day-to-day management of the Yonger/Cummer Properties, but in February, 2009 he told Roger and Giuseppe that he wished to stop, and he proposed they hire a property manager. The owners ultimately agreed to hire Times Property Management (“TPM”).

[66] Giuseppe died in August, 2009; Aldo became the representative for the property for that part of the family. Aldo deposed that following his father’s death he tried to bring some transparency and formality to decision-making, as well as to corporate and financial record-keeping for 721. However, “the reactions from Roger and Italo have been to stall, avoid and block my efforts and, ironically, to impugn my efforts to assert rights as a non-controlling shareholder in 721 Ltd. and a non-managing partner in 79 Sheppard as oppressive of Italo and Roger’s controlling position and managerial control”. Aldo described the “feud” between Roger and Italo as having a “caustic effect” on the affairs of 721.

[67] According to Italo, TPM encountered difficulty managing the property because it could not obtain instructions from Roger and Aldo about leasing vacant space, and both refused to sign cheques on occasion. Evidently TPM twice tendered its resignation, but was persuaded to remain as property manager.

[68] Roger and Carmela resigned as directors of 721 on June 19, 2010.

[69] In July, 2010 Aldo informed the property manager that he would not be able to continue to provide consents on decisions for the property. As he put it his July 25, 2010 email to the property manager:

So as you can gather, after having given it an honest try for close to a year, there is little reason for me to continue propping up what has become a one legged table, especially after being ignored in my unsuccessful efforts to set the corporate records straight and get those responsible for tax filings to actually do their duty.

[70] On September 28, 2010, Carolina resigned as a director, and Aldo requisitioned a shareholders’ meeting to elect him as the sole director of 721. Italo did not agree to Aldo becoming the sole director.

[71] On November 6, 2010, Aldo’s counsel wrote to those for the other two family branches to advise that the Aldo branch of the family would not consent to buy-outs proposed as part of some family settlement offers:

Furthermore, our clients have serious concerns about the conduct of your clients, both as longtime directors of 721362 Ontario Limited and as managers of the Yonge/Cummer Properties. In particular, in the past fourteen months, since our client was first approached to consent to the appointment of Times Property Management, your clients’ behaviour has very seriously compromised the corporation and our client’s legitimate reasonable expectation from their ownership interests therein. The conduct of your clients has very unfairly prejudiced, and very unfairly disregarded our clients’ interests as shareholders of 721362 Ontario Limited.

Aldo’s counsel advised that he had been retained to commence oppression proceedings under the OBCA; none were commenced.

[72] After the start of the Yonge/Elmwood application, Roger took the position, through his counsel’s October 17, 2011 letter, that since Nina and Italo were the only two remaining directors of 721, they were under an obligation to lease the vacant units and by failing to do so they had breached their statutory and fiduciary duties. Roger and Carmela called on Nina and Italo to immediately list the available premises for lease. Italo deposed:

Roger and Carmela (and Carolina) resigned as directors of 721362 Ontario Ltd. and left the responsibility to Nina and I. He continually questions our actions and yet complains when we are reluctant to take any steps for fear of criticism by him.[^10]

Frankly, given the previous conduct by Roger and Carmela, I regard the position they asserted in their counsel’s October 17, 2011 letter as mere tactical posturing for this lawsuit, and I consider reasonable Italo’s concern that if he acted on his own to lease some of the vacant units, the members of the other families would find fault in his conduct.

[73] As of early 2012, the two largest tenants of the Yonge/Cummer Property, the Bank of Montreal and North York Books and Gift Store, had vacated the premises. Their space had not been re-let. One vacant space also existed on the second floor. The house located at Cummer Avenue has been vacant since December, 2010.

[74] The financial statements for 721 had not been completed for the three years prior to 2012, nor had tax returns been filed for that period. An agreement amongst the parties in early 2012 resulted in the retainer of an independent accounting firm to undertake that work.

[75] 721 has never held a shareholders’ meeting; the corporate records are not current.

[76] Roger and Aldo also jointly own property at 4704 Yonge Street. Although the property is not the subject of these proceedings, Aldo deposed that Roger was refusing to co-operate in the management of that property. On June 18, 2012, Roger emailed Aldo, in part, as follows:

It’s difficult for me to understand that you, on the one hand do not want do business with the Batista family at 4704, (in addition your brother told me last week you do not trust the Battista family), on the other hand you want to invest with the Battista family millions and millions of dollars at Yonge/Cummer.

Sorry Aldo it does not make sense, you have to be more steady with you positions and you should tell your brother the truth.

VII. The Sheppard Property

[77] For 25 years Italo and Giuseppe had been partners in a hair styling salon. Together they had purchased property at 4922 Yonge Street out of which to operate their business. In 1990 personal disputes arose. They ended their business relationship in 1992. The following year Italo sold his interest in 4922 Yonge Street to Giuseppe.

[78] They had bought the Sheppard Property in 1977. In the spring of 2009 Italo told Giuseppe he wanted to step down from taking care of the property. According to Italo, they agreed to hire a property manager, but before doing so Giuseppe died. His sons, Aldo and David, did not agree to a property manager. Italo continued to manage the property.

[79] According to Italo, when he contacted Aldo in September, 2009 about a proposed lease for vacant second floor space, Aldo refused to authorize the lease. Evidently Carolina later signed the lease. Aldo described this as an effort by Italo to keep him in the dark even though Aldo was his father’s estate trustee.

[80] Aldo engaged in an exchange of emails with Dolores from September, 2009 until January, 2010. Aldo described Italo as attempting “to incite confusion and anxiety for what appear to be manipulative purposes”. Aldo deposed that Dolores was unresponsive to his various email requests, and in one email Aldo threatened his cousin with a complaint to the Law Society of Upper Canada. I think a fair reading of those emails is that Aldo had no confidence or trust in Italo or his abilities to administer the property in a fair and impartial manner.

[81] On November 2, 2009, Aldo sent the accountant, David Fulford, an email. In the portion dealing with the Sheppard Property Aldo wrote:

At this stage, I think this needs to be put behind us and we all move on our separate ways, so a winding up of the corporation and the partnership would be the only logical way to bring this stalemate and acrimony to an end…

When simple disclosure is like pulling teeth, there is a loss of confidence and status quo is not working. Appointing an “independent manager” who tells me he is entirely dependent on Italo for copies of all bills and statements and information, is not independence nor a solution.

On behalf of my family, we want out. I suspect the Battista does too. Now is the time to determine whether there is any prospect of concluding a process to do so cooperatively rather than by compulsion. (emphasis added)

That last paragraph obviously referred to both the Yonge/Cummer and Sheppard Properties.

[82] In an August 23, 2010 email to Dolores, Aldo repeated the need “to resolve a separation of interests on Sheppard and Cummer” – “possibilities include a sale to a 3^rd party, or exchange of interests in Sheppard and Cummer”. Aldo continued: “Hopefully, a separation can be agreed so that we can avoid having one imposed. My family is and has been 100% onside on this approach, i.e., separation, since the day Italo Terry (sic) visited my brother and mother at her house many months ago.” (That meeting occurred in November, 2009.) When asked at trial why this email did not refer to a Fundamental Understanding, Aldo testified that he thought his proposals were consistent with that concept.

[83] On November 25, 2009, Italo wrote Aldo that while his family did not want to be sellers of the Sheppard and Cummer Properties, “we will consider buying your interest” and Italo invited options from David. The following July Italo wrote Aldo stating that he awaited their proposals on how to deal with their desire to separate from the Yonge/Cummer Properties.

[84] On cross-examination Italo acknowledged that David Di Felice had never done anything improper in respect of the Sheppard Property and always signed cheques for the property when asked.[^11] Indeed, the overall thrust of Italo’s evidence was that the nitty-gritty of the management of the Sheppard Property was proceeding on a normal basis. Italo, however, wanted to step down from managing the property, and he did not regard David as qualified to manage it. Instead, he wanted to see the appointment of a property manager.[^12] Italo took the position that it had not been possible to communicate with Aldo and therefore the families could no longer be partners in the property.[^13]

VIII. Expectations regarding the use and sale of the Yonge Street Properties

[85] As mentioned, Nina, Roger and Carolina’s families disagreed about the expectations they held when they bought the properties at issue in these proceedings.

[86] Roger deposed, in his February, 2012 affidavit, that in their discussions and arrangements for each real estate investment the branches of the Battista family agreed to a “Fundamental Understanding”, and earlier in these reasons I set out Roger’s affidavit evidence about the content of that concept. At trial Roger offered more details about the Fundamental Understanding, including that for a person to sell his/her share in a property required the approval of all involved, as well that such a person would have to offer their interest 50/50 to the other two owners, if three family members owned the property. Also, if one family member wanted to acquire a greater interest in a property, he/she would have to offer to buy the interests of all other family members. The price would be for fair market value, determined by appraisal.

[87] On cross-examination Roger agreed that the Fundamental Understanding was not reduced to writing. In his affidavit he did point to a letter written in September, 1994 to the lawyer who had handled the acquisition of the Yonge/Elmwood Properties. In the letter Roger complained about the poor level of service allegedly provided by the lawyer. In that context he wrote that the deal represented more than money, “it represents a lifetime of savings and our children’s and grandchildren’s future. To us, every dollar counts.” He asked the lawyer to become more familiar with the file and reminded him “that this transaction is very, very important to us”.

[88] On cross-examination Roger repeated several times that they did not buy the properties with the intention of selling them; their intent was to keep the properties for the next generation. Italo testified that Roger never expressed such an intention to him.[^14]

[89] Italo deposed that the first he had heard of a Fundamental Understanding was when he had read Roger’s February, 2012 affidavit. Italo stated that no such understanding existed. According to Italo, the family members had agreed the properties would be long-term investments and would be held until sold for development or for a favourable price to someone, not necessarily to a developer. Italo expected that the major decisions concerning the properties would be made on a consensus basis. Italo stated that there had been no discussion about a right of first offer, or ROFO, as asserted by Roger.

[90] Aldo deposed that when he was in his 20s he had become aware “of the dealings, understandings and expectations among family members with respect to these investments”, and that understanding was broader than the Fundamental Understanding asserted by Roger. According to Aldo:

The mutual understanding could be summed up by the phrase “family comes first”. There was and is the shared expectation when dealing within our family that all be treated fairly and make best efforts to work together. It is a principle that members act co-operatively in the best interests of the entire family, that personal interests should not compromise the family interests and that family should stick together. Respect is the foundation of this principle. This principle governed how family members must conduct themselves, whether dealing with real estate investments or otherwise in either social dealings or business dealings.

This mutual familial understanding was enforceable. However, no one has ever previously attempted to address business context breaches of the familial understanding through the courts. Instead, in the past, to enforce compliance with the mutual understanding, a family member would appeal to the family Matriarch Franceschina Battista who was universally viewed by family members as an impartial and virtually infallible mediator.

Aldo deposed that he had “always understood the agreement and expectation to be that family real estate investments: (A) would be held indefinitely, (B) would be cooperatively managed to maximize operating income, (C) would be eventually sold only to an end redevelopment offer”, and he stated that when a family member wished to exit an investment prior to its sale, others would enjoy a right of first offer.

[91] Aldo did not identify, in his affidavit, the source or occasions upon which he secured this understanding. At trial Aldo simply referred to conversations which he had heard at times, including a kitchen table discussion when the families were bidding on the Yonger/Cummer Properties. He did acknowledge that he could not recall any specific articulation of a ROFO concept when the Sheppard Property was bought.

[92] Aldo also relied on the past practice of the family in respect of four other properties which remained within the family when some family member wanted out of the investment – one ended up with his father following his dispute with Italo, and the other three were split amongst some family members as a result of a negotiated settlement of Francheschina’s estate. Aldo did acknowledge that another property had been sold to a third party, but explained that the sale was consistent with the family’s Fundamental Understanding because it was made to an end developer and no family member wanted it.

[93] At trial Aldo testified that the principles he had heard family members talk about really amounted to a fairness principle, and what he understood about people’s understandings did not include a horizon on selling the properties. On cross-examination Aldo agreed that there was not a restriction which limited the sale of family properties to end developers, but he testified there was an “expectation” that a sale would only occur when development had heated up so that a premium would be paid to knock down the buildings rather than pay for them on the basis of the income they were generating.

[94] Aldo acknowledged that Roger’s assertion of the existence of some right of refusal or offer had never been described by family members as a ROFO or right of first refusal – it was generally the same idea; the guy who did not want to sell could buy out the one who wanted to sell or put it on the market; it was the fairness principle. Aldo did not recall the family discussions reaching the level of detail of calling the concept a right of first refusal or ROFO or any other term.

[95] Italo deposed that in 1977 when he and Giuseppe bought the Sheppard Property, Aldo was only 15 years old and was not privy to the brothers’ discussions about purchasing the property, nor was Aldo privy to the 1987 discussions to buy the Yonge/Cummer Properties.

[96] I would observe that Aldo deposed that in 2009 Roger had agreed to sell him the half-interest Carmela enjoyed in the Yonge/Elmwood properties. According to Aldo, when Bowood later made its offer to purchase, Roger stated he would not be honouring his agreement to sell. Roger denied Aldo’s assertions.

IX. The parties’ positions regarding the properties

A. Yonge/Elmwood Properties

[97] The applicants wish to expose the Yonge/Elmwood Properties to the market in order to obtain the highest price for them. They also filed an August 11, 2010 letter from Cushman & Wakefield Ltd. which recommended that 5025 Yonge Street and 10 Elmwood be sold together in order to maximize value.

[98] In his affidavit Roger stated that Carmela did not wish to sell the properties on the open market because in recent years the parties had been able to manage the properties through a property manager and, alternatively, in the event of a sale, the properties should be listed separately. Roger deposed at some length in his February, 2012 affidavit that he and Carmela were willing to work with Nina and Italo to ensure the proper management of the property. He deposed:

Carmela and I do not agree that the present situation, especially in respect to the Yonge Street Property, is “intolerable” or that the relationship is “irreparable”, as explained above. We simply want Italo and Nina to comply with the Fundamental Understanding and not have the Yonge Street Property sold on the open market to a third party…

[99] In his February, 2012 affidavit Roger set out Carmela’s position as follows: (i) Carmela wished to buy-out the interests of Nina and Italo in the Yonge Street property for fair market value; (ii) if the Court concluded that the Yonge Street and Elmwood Properties should be subject to a common order, Carmela would purchase both properties; or (iii) Carmela was prepared to sell her interest in the Elmwood property and the Yonge/Cummer Property for fair market value.

[100] Roger regarded the property as “very, very unique to me”, having bought it “with the intent to keep it for generations to come”.[^15] On cross-examination Roger acknowledged that he owned several other income-producing properties on Yonge Street.[^16]

B. Yonge/Cummer Properties

[101] Roger deposed in his February, 2012 affidavit that he did not oppose the sale of this property on the open market to a third party.

[102] Aldo did oppose the sale, contending that it would be unfair to require his family to liquidate their interest in the property “as a result of Roger’s and Italo’s families’ inability to resolve their differences”. On his part, Aldo wanted the opportunity for his branch of the family to buy-out the interests of the other two. Aldo described the Yonge/Cummer Properties as “unique” and “virtually irreplaceable” because they are situated on the announced site for a subway station, but Aldo did not adduce any independent evidence to support his assertion.

C. The Sheppard Property

[103] Italo wished to list the Sheppard Property for sale in the open market.

[104] Aldo deposed that it would be unfair to require his family to liquidate its share in the Sheppard Property because of a dispute between Roger and Italo. He wanted the ability to buy-out Italo’s interest at fair market value. Aldo described the Sheppard Property as “unique” and “virtually irreplaceable” because of its location in a very active redevelopment zone. Aldo did not adduce any independent evidence to support his assertion.

D. Summary of positions

[105] The positions taken by the parties at the hearing were described in some detail in their factums or written argument and are summarized below:

Yonge/Elmwood

Yonge/Cummer

Sheppard

Italo/Nina

List for sale together with a common broker

Bid deadline

All parties may bid

List for sale together with a common broker

Bid deadline

All parties may bid

List for sale with a common broker

Bid deadline

All parties may bid

Roger/Carmela

Obtain appraisal

Right of first offer

If both parties want to make offers, use a shot-gun or court auction with right of first refusal

Do not oppose the terms of sale proposed by Italo/Nina

N/A

Carolina &

Aldo/David

N/A

Obtain appraisals

First right of Carolina/Aldo/David to buy-out other interests at appraised values

If they do not elect to buy, then sell under court-supervised auction with Carolina/Aldo/David enjoying right of first refusal

Obtain appraisals

First right of Carolina/Aldo/David to buy-out other interests at appraised values

If they do not elect to buy, then sell under court-supervised auction with Carolina/Aldo/David enjoying right of first refusal

X. The governing legal principles: oppression, winding-up and partition and sale

[106] The applicants applied for relief under the OBCA oppression and winding-up provisions, as well as under the Partition Act. Let me summarize briefly the guiding principles in respect of each.

A. Oppression

[107] Recently, in Western Larch Limited v. Di Poce Management Limited,[^17] I attempted to summarize the principles concerning the oppression remedy:

[252] The oppression remedy contained in section 248 of the OBCA is an equitable remedy which seeks to ensure fairness and which gives courts a broad, equitable jurisdiction to enforce not just what is legal, but what is fair. In considering oppression claims courts must look at business realities, not merely narrow legalities. At the same time the remedy is very fact-specific – what is just and equitable is judged by the reasonable expectations of the stakeholders in the context and in regard to the relationships at play.

[253] In BCE Inc. v. 1976 Debentureholders the Supreme Court identified the two inquiries which a court must make in considering an oppression claim: (i) Does the evidence support the reasonable expectation asserted by the claimant? and (ii) Does the evidence establish that the reasonable expectation was violated by conduct falling within the terms "oppression", "unfair prejudice" or "unfair disregard" of a relevant interest? The reasonable expectations of specified stakeholders is the cornerstone of the oppression remedy. Fair treatment - the central theme running through the oppression jurisprudence - is most fundamentally what stakeholders are entitled to "reasonably expect".

[254] The concept of reasonable expectations is objective and contextual. The actual expectation of a particular stakeholder is not conclusive - the question is whether the expectation is reasonable having regard to the facts of the specific case, the relationships at issue, and the entire context, including the fact that there may be conflicting claims and expectations.

[255] The onus lies on the claimant to identify the expectations that he or she claims have been violated by the conduct at issue and establish that the expectations were reasonably held. Factors which a court may consider in determining whether a reasonable expectation exists include: general commercial practice; the nature of the corporation; the relationship between the parties; past practice; steps the claimant could have taken to protect itself; representations and agreements; and the fair resolution of conflicting interests between corporate stakeholders.

[256] As the Supreme Court pointed out in BCE, not every unmet expectation gives rise to an oppression claim. Something more is required: “The section requires that the conduct complained of amount to "oppression", "unfair prejudice" or "unfair disregard" of relevant interests…[I]t is worth stating that as in any action in equity, wrongful conduct, causation and compensable injury must be established in a claim for oppression.”

B. Partition and sale

[108] Sections 2 and 3(1) of the Partition Act, R.S.O. 1990, c. P.4, provide:

2. All joint tenants, tenants in common, and coparceners, all doweresses, and parties entitled to dower, tenants by the curtesy, mortgagees or other creditors having liens on, and all parties interested in, to or out of, any land in Ontario, may be compelled to make or suffer partition or sale of the land, or any part thereof, whether the estate is legal and equitable or equitable only.

3. (1) Any person interested in land in Ontario, or the guardian of a minor entitled to the immediate possession of an estate therein, may bring an action or make an application for the partition of such land or for the sale thereof under the directions of the court if such sale is considered by the court to be more advantageous to the parties interested.

[109] Recently, in Garfella Apartments Inc. v. Chouduri, the Divisional Court nicely summarized the principles governing the partition and sale of land:

All tenants in common (along with many other categories of co-owners) are subject to having their property partitioned or sold at the behest of another person with an interest in the land.

The presumption is in favour of partition, rather than sale. However, a sale will be ordered if the court considers it to be "more advantageous to the parties." A sale has also been found to be appropriate when the land is not suitable for partition.

There is a prima facie statutory right for tenants in common to compel either a partition or sale.

The court retains a discretion to refuse any relief, i.e. neither partition nor sale. However, the onus is on the responding party to demonstrate circumstances warranting the refusal of such relief. This is only appropriate in circumstances of malice, oppression, or vexatious intent. The Court of Appeal in Greenbanktree stipulated that "oppression" in this context includes "hardship ... of such a nature as to amount to oppression."[^18]

[110] As put by the Court of Appeal in Greenbanktree Power Corp. v. Coinmatic Canada Inc.:

Co-tenants should only be deprived of this statutory right in the limited circumstances described above, with this caveat. In our view, "oppression" properly includes hardship, and a judge can refuse partition and sale because hardship to the co-tenant resisting the application would be of such a nature as to amount to oppression.[^19]

[111] In exercising its discretion under section 2 of the Partition Act a court should take into account the effect of any agreement between the parties about the land in question.[^20]

C. Winding-up

[112] In Falus v. Martap Developments 87 Limited,[^21] I attempted to summarize the basic jurisprudence concerning the OBCA winding-up provisions:

[40] Pursuant to section 207(1)(b)(iv) of the OBCA a court may order the winding-up of a corporation where “it is just and equitable for some reason, other than the bankruptcy or insolvency of the corporation, that it should be wound up”. If a court concludes that the winding-up of a corporation would be just and equitable, it “may make such order under this section or section 248 as it thinks fit”. Although the "just and equitable" ground does not require a finding of "oppression", the remedial powers of the court under OBCA s. 207(2) enable it to grant the wide range of discretionary remedies available to it in an oppression remedy case, even though facts justifying a determination on the ground of oppression do not exist.

[41] The words “just and equitable” are regarded as words “of the widest significance”, to be given a broad interpretation. They act as a kind of bridge between the statutory grounds for winding-up and “the principles of equity developed in relation to partnerships.” Lord Wilberforce, in Ebrahimi v. Westbourne Galleries Ltd., articulated the core meaning of the concept of "just and equitable" in the context of the winding up of a corporation. In the Ebrahimi case he noted that the words “just and equitable” recognized “the fact that a limited company is more than a mere judicial entity, with a personality in law of its own: that there is room in company law for recognition of the fact that behind it, or amongst it, there are individuals, with rights, expectations and obligations inter se which are not necessarily submerged in the company structure…” Therefore the policy objective underlying the “just and equitable” ground for winding-up a company seeks to prevent one party from disregarding the obligation it assumed by entering a company and to:

enable the court to subject the exercise of legal rights to equitable considerations; considerations, that is, of a personal character arising between one individual and another, which may make it unjust, or inequitable, to insist on legal rights, or to exercise them in a particular way.

In terms of the application of the “just and equitable” concept to particular circumstances, Lord Wilberforce stated:

The superimposition of equitable considerations requires something more, which typically may include one, or probably more, of the following elements: (i) an association formed or continued on the basis of a personal relationship, involving mutual confidence - this element will often be found where a pre-existing partnership has been converted into a limited company; (ii) an agreement or understanding, that all, or some (for there may be 'sleeping' members), of the shareholders shall participate in the conduct of the business; (iii) restriction on the transfer of the members' interest in the company - so that if confidence is lost, or one member is removed from management, he cannot take out his stake and go elsewhere.

[43] Often the “just and equitable” principle has been used to wind up a company in circumstances where a dominating or more powerful shareholder attempts to exclude another or to force another out of the relationship. But the concept goes further, applying where the relationship between the parties has reached a deadlock or where the relationship has broken down because of incompatibility or quarrelling: “continued quarrelling, and such a state of animosity as precludes all reasonable hope of reconciliation and friendly co-operation is sufficient to justify the order.” Consequently, the case law indicates that where in essence a corporation resembles a partnership, if the relationship of trust and confidence between the partners in corporate guise has broken down and the continuation of the business between them operating as equal partners is not possible, judicial intervention under OBCA s. 207 is appropriate.

[44] But the breakdown in mutual confidence must be such that the partner-shareholders cannot work together in the way originally contemplated. The need to establish a link between the breakdown in mutual confidence and the financial fate of the corporate enterprise was identified by the Court of Appeal in Wittlin v. Bergman:

The usual situation for a finding that liquidation or dissolution is appropriate is where a corporation is deadlocked with each of two shareholders or groups of shareholders holding fifty percent of the shares. In such a situation, if the shareholders cannot work together, the company is likely doomed to failure within a foreseeable time. To avoid the inevitable deterioration in value of the company, liquidation or dissolution could be the appropriate solution.

XI. Analysis

[113] In view of Roger’s assertion, supported by Aldo, that a Fundamental Understanding existed amongst the owners of the properties, I shall first consider that issue. Thereafter, I will examine the claims asserted by the parties in respect of each property.

A. Does a Fundamental Understanding exist?

[114] I find that a Fundamental Understanding, of the kind asserted by Roger, did not exist amongst the parties in respect of their acquisition, use and disposition of the properties at issue in these proceedings.

[115] There is no doubt that when the parties purchased each of the three groups of property they did so as long-term investments, not as short-term buys and flips. In fact, the families have held the properties over a long-term: (i) Sheppard was bought in 1977, some 36 years ago; (ii) Yonge/Cummer were acquired in 1987, about 26 years ago; and, (iii) Yonge/Elmwood were bought in 1994, some 19 years ago. All have been dealt with as long-term investments.

[116] So, too, until the family dispute which arose in 2006, all properties were continuously rented to generate rental income.

[117] But, for several reasons, the evidence does not support a finding that the parties had agreed to afford other family members a right of first offer, or a right of first refusal, in the event that one family wished to withdraw its investment in any particular piece of property.

[118] First, Roger acknowledged that the Fundamental Understanding he was advancing had not been reduced to writing. The September, 1994 letter of a complaint to a lawyer to which he pointed in support of such an understanding, while stressing the importance of the transaction to the families and their desire for better legal service, cannot be stretched into some form of legally-binding agreement amongst the families or expression of mutually-binding expectations.

[119] Second, notwithstanding the large volume of written correspondence which passed between the parties from 2007 until 2012, the first reference Roger made to the existence of a Fundamental Understanding was only in his February, 2012 affidavit. The absence of any such reference during such a long period of time weighs heavily against Roger’s assertion about the existence of a Fundamental Understanding.

[120] Third, positions taken by Roger and his counsel prior to the swearing of his February, 2012 affidavit directly contradicted Roger’s assertion of such an understanding. When in late 2009 and early 2010 Italo pressed Roger to agree to negotiate the Bowood offer, Roger ultimately responded, on May 25, 2010, that he could not consider any offer to sell to a third party, not because of the existence of some Fundamental Understanding, but because Italo was questioning the tax structure of 109 and had not yet provided an affidavit of documents. In a June 4, 2010 to Italo, Roger stated that he and Carmela were prepared to work “with you to accommodate your wishes to sell”; again, no mention of a Fundamental Understanding. Several months later, in a September 9, 2010 letter, counsel for Roger and Carmela expressed his clients’ interest in buying-out Nina and Italo, “alternatively, the properties should be listed for sale and the parties may wish to retain a right of first refusal over any offers that are received”. The absence of any mention of a Fundamental Understanding in such a formal proposal by Roger and Carmela severely undermines Roger’s contention about its existence.

[121] Aldo’s support of the existence of a Fundamental Understanding suffers from a similar defect – in his November 2, 2009 email to the accountant Aldo wrote that “we all move on our separate ways, so a winding up of the corporation and the partnership would be the only logical way to bring this stalemate and acrimony to an end…” Again, no mention of a Fundamental Understanding.

[122] Fourth, at trial Roger elaborated on the details about how the Fundamental Understanding would work in the event one family wanted to exit an investment. These details, set out above, were not contained in his February, 2012 affidavit, and I was left with the distinct impression that Roger was fleshing out the content of the Fundamental Understanding in order to make it apply more readily to the family breakdown which had started in 2006. In fact, what the evidence showed was that when the families bought the properties, they did not turn their minds specifically to what would happen in the event a dispute arose amongst them or in the event one family wanted to exit an investment. Aldo acknowledged, for example, that he could not recall any specific articulation of a right of first offer concept when the Sheppard Property was bought. Of course, he was only 15 years old at the time.

[123] Fifth, as part of her November 19, 2010 offer to buy the Yonge/Elmwood Properties, Carmela agreed not to transfer the properties to a third-party for a two-year period following the purchase. From that it would follow that Carmela would consider herself free thereafter to sell the Yonge/Elmwood Properties to whomever she wanted, not a position consistent with Roger’s description of the Fundamental Understanding involving the holding of properties for many generations.

[124] Sixth, I give little effect to Aldo’s evidence supporting Roger’s assertion of some Fundamental Understanding. Aldo’s evidence on this point was vague and lacking in specific about when, where and with whom any such understanding had been formed. Aldo conceded, in fact, that family members had never talked in terms of a right of first offer or a right of first refusal, but only in terms of fair dealing.

[125] Finally, in light of the absence of cogent evidence about any discussions amongst family members at the time of acquiring properties about what they would do in the event of a breakdown of their relationship or desire to exit an investment, let alone any agreement on the point, I find the evidence about their past practices in dealing with other properties unhelpful. That evidence, when taken as a whole, revealed that the past dealings by family members with other properties, including a sale of one property to a third party,[^22] took place in circumstances when family members were able to communicate with each other and manage their affairs on a consensual basis. Their past dealings with jointly-owned properties did not occur when parties were disputing what to do with a property or were unable to communicate with each other, the circumstances in which they now find themselves. As Italo put it on cross-examination:

In time we were able to come to an agreement which was economical, feasible for everybody, nobody will get financially hurt, you know, we were able to agree.[^23]

Accordingly, I find their past practices with respect to the disposition of jointly-owned properties provided little guidance in ascertaining what expectations they reasonably held regarding the disposition of jointly-owned properties in times of disagreement about the use or disposition of those properties.

[126] By way of summary, I make the following findings of fact:

(i) the parties never agreed to a Fundamental Understanding as described by Roger;

(ii) the parties never agreed that in the event one of the families wished to withdraw from an investment that the other family owners would enjoy a right of first offer or right of first refusal;

(iii) the parties did not form a reasonable expectation that in the event one of the families wished to withdraw from an investment that the other family owners would enjoy a right of first offer or right of first refusal; and,

(iv) the parties did not agree upon what would happen in the event their business relationships deteriorated to the point that one or more of them wished to withdraw from an investment.

Let me now turn to each property.

B. The Yonge/Elmwood Properties

[127] Nina and Carmela own the Elmwood Property as tenants-in-common. 109 is the registered owner of 5025 Yonge Street, but the parties agree that the corporation holds title as a bare trustee for Carmela (50%), Italo (25%) and Nina (25%). Given that agreement (and an ownership structure vigorously asserted by Roger), one might argue that it is more realistic to approach the ownership interests for the Yonge Street property as akin to a tenancy in common, rather than a corporate shareholding. But, in my view, whether one approaches the issue from the point of view of the Partition Act or the winding-up provisions of the OBCA, the result is the same – both properties should be listed for sale on the open market under court supervision.

[128] First, as to Elmwood, it is a tenancy in common and Nina, as a co-tenant, is entitled to a partition or sale of the property unless Carmela shows that some good reason exists to refuse partition. On the evidence filed, Carmela has not shown that Nina or Italo have engaged in some malicious, vexatious or oppressive conduct which would justify a court refusing to grant partition or sale. The simple fact is that some non-business family events in 2006 caused a rift between the two families and that rift resulted in their inability to manage and deal with the Yonge/Elmwood properties in a business-like fashion. The evidence I set out in detail above regarding the events of 2008, 2009, 2010 and 2011 demonstrated the adverse impact the lack of trust between the families – or the feud, as Aldo aptly put it – worked on the operation of those properties. Although the existence of a dispute between co-owners is not a prerequisite to relief under the [Partition Act],[^24] a dispute and breakdown in their relationship existed between the co-owners of the Elmwood Property.

[129] No party called for the partition of any of the properties at issue in these proceedings; the evidence revealed that partition would not be commercially practicable for any of them. A sale of the properties would be more advantageous to the parties involved.

[130] Nor is the desire of Roger and Carmela to buy-out Italo and Nina a bar to granting a remedy under the [Partition Act].[^25]

[131] Second, as to 5025 Yonge Street, if that property were approached as a de facto tenancy in common, then no good reason exists to refuse a sale. Notwithstanding the evidence that 109 held title as bare trustee for the three individual shareholders, the jurisprudence is unclear whether that would entitle Italo and Nina to seek partition or sale of the property. [^26] I am not prepared to proceed on that basis. Yet, when 109’s ownership of 5025 Yonge Street is viewed from a corporate perspective, then the evidence supports a finding that 109 was operated as a partnership in the guise of a corporation – Roger so admitted. There is no doubt that a severe breakdown in the relationship amongst the shareholders has occurred, prompted by the events of 2006.

[132] I place no weight on Roger’s current assertions that he and Carmela now trust Italo and Nina and could work together with them. I regard such evidence simply as an attempt to position themselves in this litigation. Aldo did not regard that relationship as salvageable; he described the relationship between Roger/Carmela and Nina/Italo as “irreparably damaged”. Aldo deposed that “Roger and Italo have demonstrated, over the course of the past two years, an inability to stop their fractured personal relationship from interfering with and seriously jeopardizing the interests of 721 Ltd. Their conduct has demonstrated they cannot be trusted to act in the best interests of the company or its shareholders, and should not continue to be involved.”

[133] The real litmus test is the conduct of the parties which occurred before this litigation started, and that conduct demonstrated a profound lack of trust between these two families concerning the ownership and operation of the Yonge/Elmwood Properties. Indeed, by 2010 Roger was acknowledging that the parties had to separate.

[134] That breakdown in trust adversely affected, and continues to adversely affect, the operations of the Yonge/Elmwood Properties. Problems persist in leasing some of the Yonge Street units, and Elmwood lies vacant, recently only generating some temporary revenue because of construction work taking place on the adjacent lot. The owners are not able to deal with third party offers to purchase the property because Roger and Carmela stand firm in their belief about the existence of a Fundamental Understanding, which I have found does not exist. Finally, Carmela sued Italo and Nina’s daughter, and Roger, in his affidavit, rather crudely tied the settlement of that litigation to the recognition of his Fundamental Understanding.

[135] I see no hardship to Carmela by ordering a sale of either property. Although Roger maintained that the properties were unique to Carmela and himself (as did Aldo in respect of the other two properties), they are not unique in the eyes of the law. All the properties at issue in these proceedings are income-generating commercial properties, evidently well-situated for potential development. No “peculiar and special value” attached to any of them.[^27]

[136] Also, while Roger objected to a sale of the Yonge/Elmwood Properties because they would expose Carmela to capital gains tax and transaction fees, I would observe that Roger was the one who insisted that 109 held title merely as a bare trustee for the three individuals. In any event, taxes are taxes, and become payable at some point; there was no suggestion in the evidence that the proceeds on sale would be inadequate to pay any capital gains taxes. As to transaction fees, certainly reasonable business people attempt to minimize the costs associated with any investment. But, in the present circumstances, the relationship between the owners has broken down, and that causes its own costs. Moreover, the parties have had two shots at mediation – one before C. Campbell J. and another before Mr. Terence O’Sullivan – so they have enjoyed ample opportunity to resolve their dispute without court intervention. As the Divisional Court put the matter in the Garfella Apartments case, mere inconvenience and adverse financial consequences will not be sufficient to discharge the onus of showing oppression.[^28]

[137] Although I find that a breakdown in trust has taken place between Roger/Carmela and Italo/Nina with respect to the operation of the Yonge/Elmwood Properties, since these are public reasons I hasten to emphasize that the lack of trust between the parties does not involve allegations of financial wrong-doing. Italo made it clear on his cross-examination that he financially trusted Roger and Carmela.[^29]

[138] However, I find that the breakdown in trust between the two owner families means that the operations of the Yonge property – which is the income-producing property - will continue to deteriorate, even with the presence of a property manager, and to avoid the inevitable deterioration in the value of 109, liquidation would appear to be the most appropriate remedy under section 207 of the OBCA.

[139] Carmela, however, submitted that the separation of interests in the Yonge/Elmwood Properties should proceed by first securing appraisals of the properties, then affording each family the opportunity to buy-out the other at the appraised value for their interest and, in the event both parties wanted to buy out the other, resort should be had to a shot-gun buy/sell mechanism or, alternatively, a court-supervised sale with each enjoying a right of first refusal.

[140] Let me deal first with Carmela’s submission about an appraisal/shot-gun process. I recognize that a variant of that process was fashioned by Ground J. in the Tzembelicos case, but two features about that case are significant. First, Ground J. concluded that he could not make findings of fact on the contested application evidence placed before him, so he invoked the inherent equitable jurisdiction of the court to craft a remedy.[^30] I have conducted a hybrid trial; I do not labour under the same constraints. Second, and more importantly, Ground J. found that significant tax benefits would result if the partnership were allowed to continue in existence, so he allowed one group to buy-out the other’s interest.[^31] No such evidence of a tax advantage was placed before me. Similarly, in Liao v. Griffioen the court declined to wind-up an on-going business and, instead, ordered one shareholder to buy out the other because both shareholders agreed that the corporations should not be liquidated.[^32] Again, different facts than those before me.

[141] Carmela submitted that when considering whether to grant a buy-out remedy under section 207 of the OBCA a court may consider the conduct of the shareholders, including who caused the breakdown, as well as who possesses the ability to continue the business.[^33] Trying to attribute fault in this case is a futile exercise; fault lies with both families. The 2006 breakdown between Roger/Carmela and Italo/Nina was not related to their joint business; it was a family issue. After 2006 the emotions of the family dispute clouded the business judgments of both Roger and Italo. Roger (and Carmela) began to insist on changes to the way the property previously had been managed and started making life quite uncertain for their tenants. That harmed the business. On his part, Italo began to question the tax and accounting treatment of the revenues for 5025 Yonge Street, notwithstanding an established pattern of treating 109 as a bare trustee. That, in turn, made Roger and Carmela “very upset” – “we were going crazy”.[^34] They pushed back hard, including suing their niece and then tying the settlement of that lawsuit to the recognition of their professed Fundamental Understanding. Following the commencement of the Yonge/Elmwood Properties application, Roger and Carmela mellowed in their stance, trying to convey an aura of co-operation. By that time Italo and Nina wanted out, and they would leave it to the court to decide. The conduct of both sides of this family has been less than edifying, and certainly their conduct has been such that neither side qualifies for some form of equitable relief which would allow them to preserve their ownership interest in the properties. The granting of buy-out rights under sections 207 of the OBCA is highly fact-dependent, and I do not see the facts in this case to support crafting such a remedy.

[142] On the facts of this case, I conclude that the most just and equitable remedy under the Partition Act, in the case of the Elmwood Property, and under sections 207 of the OBCA in the case of 5025 Yonge Street, is to order a court-supervised sale of the Yonge/Elmwood Properties.

[143] Finally, notwithstanding that conclusion, and notwithstanding my finding that no Fundamental Understanding existed between the parties, in directing a court-supervised sale of those properties, is Carmela entitled to a right of first refusal in the bidding process? In my view she is not. The Court of Appeal has observed that as a general principle a right of first refusal is not given to one co-tenant when a court orders a sale under the [Partition Act].[^35] By their nature rights of first refusal can dampen a bidding process:

[A] right of first refusal, such as was granted to the respondent, is a substantive right. It is a right which has some clear, albeit difficult to quantify, economic value. It is a right which falls outside the boundaries of what is ancillary to, or what is reasonably necessary to implement the order for sale of the matrimonial home.

A right of first refusal will most often work to discourage other interested buyers. If a spouse is granted a right of first refusal, the effect of it is to remove that spouse from the competitive market for the matrimonial home. The existence of a right of first refusal distorts the market, because it provides a benefit to one party, which eliminates the need for that party to compete with any other interested purchaser…[^36]

In the absence of a co-tenancy agreement for commercial property, neither co-owner could have a reasonable expectation that it would be given the first right to purchase the other party’s interest.[^37] However, either co-tenant may bid at the sale in an effort to protect its investment.

[144] For these reasons, I order the sale of the Yonge/Elmwood Properties, through a court-supervised bidding process, with each of Roger/Carmela and Italo/Nina entitled to submit a bid in that process.

[145] Italo submitted that I should order both properties to be sold as a package, and pointed to the 2010 Cushman & Wakefield letter as advocating a joint sale as the best way to maximize value. That is thin evidence upon which to place such a significant restriction on the sale of the two pieces of property. To maximize the prices fetched in the bidding process, I am inclined to the view that bidders should be permitted to bid on either or both pieces of property, leaving it to the market to determine the overall highest price.

[146] I will give further directions about the process later in these Reasons.

C. The Yonge/Cummer Properties

[147] The families of Roger/Carmela and Italo/Nina agreed that the Yonge/Cummer Properties should be listed for sale under a court-supervised process. Carolina’s family opposed such a process and wished the opportunity to buy-out the interests of the other two families. In my view a court-supervised sale process pursuant to OBCA s. 207 would be the appropriate remedy in the present case.

[148] First, the evidence disclosed that 721, which is the beneficial owner of both properties, is, in essence, a partnership of the three families in the guise of a corporation.

[149] Second, the trust and confidence required for the proper governance and operation of such a closely-held family corporation have broken down. I have already dealt with the lack of trust between Roger/Carmela and Nina/Italo. A similar lack of trust and confidence characterized the relationship between the families of Nina/Italo and Carolina. On November 2, 2009, Aldo wrote that his family wanted out of the Yonge/Cummer and Sheppard investments. Aldo later wrote on July 25, 2010, “there is little reason for me to continue propping up what has become a one legged table.” On October 28, 2010, Carolina resigned as a director, without seeking to appoint another family member to replace her and, a week later, Aldo’s counsel wrote, on November 6, 2010, about “serious concerns” regarding the conduct of Italo and Roger, whose “behavior has very seriously compromised the corporation”, so much so that counsel threatened proceedings under the oppression provisions of the OBCA. Further, as I set out above, Aldo’s exchange of emails with Dolores from September, 2009 until January, 2010 revealed that he had no confidence or trust in Italo or his abilities to administer the property in a fair and impartial manner.

[150] The November 6, 2010 letter from Aldo’s counsel was also critical of Roger and his family. Aldo’s evidence regarding the investment of his family with Roger’s in 4704 Yonge Street revealed a lack of trust and confidence between the two families in the management of jointly-owned properties. In his evidence Roger took exception to many statements Aldo made in his affidavit about Roger. It was clear from the evidence of Roger and Aldo that they each lack confidence or trust in the other.

[151] Third, the lack of trust amongst the three family groups has harmed and is continuing to harm the operations of the Yonge/Cummer Properties, notwithstanding the presence of a property manager to deal with existing tenants. Large portions of the Yonge Street property remain vacant, and the Cummer premises have been empty since 2010. In June, 2010, Aldo informed the property manager that he could no longer provide consents for decisions about the property. None of the families have resorted in any meaningful way to standard corporate devices, such as shareholder meetings, in an effort to remedy the situation. By resigning their directorships, the Battista and Carolina Di Felice families effectively have retired from the management of the company, leaving the court to sort out the mess.

[152] Based on the evidence filed, I find that the corporate affairs of 721 are deadlocked, with no reasonable prospect of remedying the situation given the depth of the animosity and lack of confidence which exists amongst the three family groups of shareholders, and the inability of the three families to work together is causing a deterioration in the operating value of the company. Under those circumstances, a winding-up of 721, with a court-supervised sale of its main asset, the Yonge/Cummer Properties, is the just and equitable remedy.

[153] On the facts of this case I see no basis for granting the relief requested by Aldo that his family enjoy a right to buy-out the other two families at an appraised value or a right of first refusal in any bidding process. There is no evidence that an open market sale would financially prejudice the Carolina Di Felice family. Further, the conduct of that family does not entitle it to an equitable remedy of buy-out. Aldo’s correspondence generated its own degree of acrimony with the other owner members of the family, and simply walking away from the governance of 721 by resigning as a director and withdrawing consents for needed decisions were not constructive moves in the circumstances. While I appreciate that Aldo tried to requisition a shareholders’ meeting following his mother’s resignation, his proposal to become sole director of 721 was not a realistic or constructive one.

[154] For these reasons, pursuant to section 207 of the OBCA, I order the sale of the Yonge/Cummer Properties, through a court-supervised bidding process, with each of the families of Roger/Carmela, Italo/Nina and Carolina entitled to submit a bid in that process.

D. The Sheppard Property

[155] Finally, the Sheppard Property is held as a tenancy-in-common. Italo enjoys a prima facie right to seek a partition or sale of the property. Although the level of rancor present at the Yonge/Elmwood and Yonge/Cummer Properties has not characterized the operations of the Sheppard Property, a dispute need not exist for a co-tenant to invoke his rights under the Partition Act. The nature of the property is such that partition is not commercially feasible. Aldo has not demonstrated, on behalf of himself and David, any conduct on the part of Italo which would constitute malice, oppression, or vexatious intent within the meaning of the case law. A sale of the property would not cause hardship to Aldo and David.

[156] I see no basis to depart from the general rule that no right of first refusal should be given to one of the co-owners on the sale of the Sheppard Property under the Partition Act. However, any co-owner will be entitled to bid in the sale process.

[157] I therefore order a court-supervised sale of the Sheppard Property pursuant to the Partition Act.

XII. Summary and Costs

[158] By way of summary, for the Reasons set out above, I order the court-supervised sale of the Yonge/Elmwood, Yonge/Cummer and Sheppard Properties, on the following terms:

(i) One independent, national, real estate brokerage firm shall market and sell all the properties;

(ii) If the parties cannot agree on such a firm by January 25, 2013, they shall move before me during the week of February 11, 2013, for the selection and appointment of such a firm, and their motion materials shall include a sales and marketing proposal for the properties from their proposed candidates;

(iii) The properties will be listed for sale on the Multiple Listing Service at the same time at listing prices established in accordance with the recommendation of the listing broker;

(iv) At this point of time I make no direction as to whether the 5025 Yonge St./10 Elmwood properties, and the 5925 Yonge St./42 Cummer properties should be listed for sale together. If the parties can agree on an independent broker, that broker should make a recommendation on the issue to the court. If the parties cannot agree on a broker, then their candidate brokers should make recommendations to the court. As mentioned earlier in these Reasons, at this point I would be inclined to allow bidders to submit offers on either, or both, of the properties in each set, but I am open to recommendations from the approved broker;

(v) The approved listing broker shall provide reasonable guidelines and listing periods for the marketing and sale of the properties, including the allowance of reasonable due diligence periods by interested bidders. At the same time, the bidding process must proceed with reasonable dispatch and should be concluded within the first half of this year;

(vi) All parties shall have the opportunity to bid on the purchase of the properties and to receive all relevant information concerning the properties to conduct their own due diligence;

(vii) No party shall enjoy a right of first refusal or right of first offer in connection with the sale of any of the properties;

(viii) All offers to purchase must be sealed and received by a deadline date determined by the listing broker. No offers to purchase received after the bid deadline may be considered;

(ix) All offers to purchase must be for cash only;

(x) All offers to purchase shall be opened at the same time. All parties shall be entitled to attend the opening of the offers;

(xi) The highest offer for each property shall be accepted, subject to the right of such offer to be improved through negotiation based on any recommendation of the listing broker;

(xii) Pending further order of this Court or the agreement of the parties, the net sale proceeds shall be paid into court or as the parties direct for the distribution to them; and,

(xiii) The approved broker, or any party, may seek further directions from this Court regarding the marketing and sales process, including the terms of the offers for sale, the acceptance of any offers or any other ancillary matters.

[159] A court-supervised sales process, such as that outlined above, involves transaction costs. Given the significant value of the three groups of properties in issue, incurring such costs is reasonable in the circumstances in order to ensure the maximum return to the owners of the properties. Of course, the more the parties are able to agree on the process and the less they resort to this Court for directions, the greater will be the net return to them.

[160] I would encourage the parties to try to settle the costs of these applications. If they cannot, Italo and Nina Di Felice may serve and file with my office written cost submissions, together with a Bill of Costs, by January 18, 2013. The other parties may serve and file with my office responding written cost submissions by February 1, 2013. Italo and Nina may serve and file brief reply submissions by February 8, 2013.

[161] Responding cost submissions should include a Bill of Costs setting out the costs which that party would have claimed on a full, substantial, and partial indemnity basis. If a party opposing a cost request fails to file its own Bill of Costs, I shall take that failure into account as one factor when considering the objections made by the party to the costs sought by any other party. As Winkler J., as he then was, observed in Risorto v. State Farm Mutual Automobile Insurance Co., an attack on the quantum of costs where the court did not have before it the bill of costs of the unsuccessful party “is no more than an attack in the air”.[^38]

D. M. Brown J.

Date: January 4, 2013

[^1]: Transcript of the cross-examination of Roger Battista, April 11, 2012 (“Roger’s Cross), QQ. 85-6.

[^2]: Roger’s Cross, QQ. 85-6.

[^3]: Roger’s Cross, QQ. 115-6.

[^4]: Roger’s Cross, QQ. 145-6; 183-4.

[^5]: Transcript of the cross-examination of Italo Di Felice, April 10, 2012 (“Italo’s First Cross”), Q. 378.

[^6]: In his February, 2012 affidavit Roger objected to the admissibility of this email contending it constituted a “without prejudice” communication. Although the email’s re: line stated “without prejudice”, the contents of the email were not in furtherance of a settlement, so I see no basis for a claim of privilege.

[^7]: Italo’s First Cross, Q. 410.

[^8]: Italo’s First Cross, Q. 417 and 420.

[^9]: Roger’s Cross, Q. 299.

[^10]: See also Italo’s evidence in the transcript of his cross-examination conducted on September 11, 2012 (“Italo’s Second Cross”), QQ. 218-220.

[^11]: Italo’s Second Cross, QQ. 74-81.

[^12]: Italo’s Second Cross, QQ. 88-96.

[^13]: Italo’s Second Cross, QQ. 136-137.

[^14]: Italo’s First Cross, QQ. 175-6.

[^15]: Roger’s Cross, Q. 328.

[^16]: Roger’s Cross, QQ. 329-331.

[^17]: 2012 ONSC 7014.

[^18]: (2010), 2010 ONSC 3413, 102 O.R. (3d) 624 (Div. Ct.), paras. 10 to 13.

[^19]: (2004), 2004 48652 (ON CA), 75 O.R. (3d) 478 (C.A.), para. 2.

[^20]: Latcham v. Latcham, 2002 44960 (ON CA), [2002] O.J. No. 2126 (C.A.), para. 4.

[^21]: 2012 ONSC 2301.

[^22]: Italo’s Second Cross, QQ. 179-180.

[^23]: Italo’s Second Cross, Q. 204.

[^24]: First Capital (Canholdings) Corporation v. North American Property Group, 2010 ONSC 3196.

[^25]: Garfella, para. 37.

[^26]: In Tzembelicos v. Tzembelicos, 2002 11546 (ONSC), affirmed 2003 12803 (ON CA), Ground J. found that a corporation held title to land in trust for individual partners, and those individual partners would have standing to apply for partition and sale of the land. However, on appeal, the Court of Appeal noted that such a partnership interest “is not a possessory one and, therefore, does not give a corresponding prima facie right to partition or sale (OCA, para. 2).

[^27]: Southcott Estates Inc. v. Toronto Catholic District School Board, 2012 SCC 51, paras. 40 and 41.

[^28]: Garfella, para. 33.

[^29]: Italo’s First Cross, QQ. 355 and 361.

[^30]: Tzembelicos, paras. 4 and 5.

[^31]: Tzembelicos, paras. 6 and 7.

[^32]: Liao v. Griffioen, 2001 28393 (ON SC).

[^33]: See the cases summarized in Cocov v. Gorgiev, 2011 ONSC 2778, para. 9.

[^34]: Roger’s Cross, Q. 214.

[^35]: DiBattista (in trust) v. Menecola (1990), 1990 6888 (ON CA), 75 O.R. (2d) 443 (C.A.), p. 449g.

[^36]: Martin v. Martin (1992), 1992 7402 (ON CA), 8 O.R. (3d) 41 (C.A.), p. 48.

[^37]: First Capital, para. 45.

[^38]: (2003), 2003 43566 (ON SC), 64 O.R. (3d) 135 (S.C.J.), para. 10, quoted with approval by the Divisional Court in United States of America v. Yemec, 2007 65619 (ON SCDC), [2007] O.J. No. 2066 (Div. Ct.), para. 54.