SUPERIOR COURT OF JUSTICE - ONTARIO
COURT FILE NO.: 12-54143
DATE: 2013/03/28
RE: Antonino Leone and Teresa Leone, Plaintiffs/Defendants by counterclaim and Respondents
AND
Arcangela Leone Scaffidi, Angela Valente, and Carmelo Scaffidi, Defendants/Plaintiffs by counterclaim and Moving Parties
BEFORE: Justice L. Ratushny
COUNSEL:
Sara Riboldi for the Moving Parties
J.F. Lalonde for the Respondents
HEARD: February 21, 2013
ENDORSEMENT
[1] The respondents have commenced an action (the Action) claiming breach of contract against the moving party, Arcangela Leone Scaffidi (Arcangela) and claiming inducement of breach of contract against the other moving parties, Angela Valente (Angela) and Carmelo Scaffidi (Carmelo). Angela and Carmelo are the children of Arcangela.
[2] The moving parties now request:
An order staying or dismissing the Action pursuant to Rule 21 of the Rules of Civil Procedure on the basis that this Court lacks jurisdiction over the matter or, if this Court has jurisdiction, an order that this Court is not the proper forum for the adjudication of all the matters pertaining to the action; and
An order declaring that the applicable law to the dispute is Italian law and on that basis an Ontario judgment contrary to the principles of Italian law would not be recognizable or enforceable in Italy.
[3] I review the background facts in some detail as they serve to help characterize the nature of the legal dispute between the parties to the Action.
THE AGREEMENT OF DIVISION
[4] The contract alleged to have been breached is an Agreement of Division signed by all its parties by October 16, 2011 (the Agreement).
[5] The respondents, Antonino Leone (Tony) and Teresa Leone (Teresa) are married to each other.
[6] Tony and Arcangela are brother and sister and their other brother, Tindaro Leone (Tindaro), died in 1992 leaving three children (Tindaro’s Heirs).
[7] Tony, Arcangela and Tindaro are the children of the late Nicolo Leone (Nicolo) and the late Carmela Scaffidi Argentina Leone (Carmela).
[8] Tony, Arcangela and Tindaro’s Heirs are the heirs of the estate of Nicolo and Carmela. Nicolo died in 1999 in Italy as an Italian citizen domiciled and resident in Italy. Carmela died in 2010 in Italy, also as an Italian citizen domiciled and resident in Italy.
[9] The parties to the Agreement are Tony, Arcangela and Tindaro’s Heirs.
[10] Tindaro’s Heirs are not parties to the Action.
[11] The parties to the Action all reside in Ottawa, Ontario. Tindaro’s Heirs, who are not parties to the Action but are parties to the Agreement, reside in Italy.
[12] The Agreement is regarding the division of real property located in Italy consisting of 25 separate registered titles to farmland and condominium units (the Italy Properties). The Italy Properties were originally owned by Nicolo and upon his death in 1999, his interest in them was divided in accordance with Italian law among his surviving spouse Carmela, and Tony, Arcangela and Tindaro’s Heirs in equal shares as tenants in common.
[13] In order to best manage and maintain the Italy Properties after Nicolo’s death, all of these owners including Carmela agreed that upon Carmela’s death, a division would take place that would result in Tony, Arcangela and Tindaro’s Heirs becoming the sole registered owners of the Italy Properties that each had agreed to take.
[14] Negotiations between these parties as to a division of the Italy Properties were ongoing between 2000 and 2008. In 2008 a tentative agreement was reached in the form of a handwritten list (the List) setting out the different properties each of these owners agreed to take. The List was prepared by a professional engineer in Italy, Giuseppe Polito, who had provided services to the Leone family for many years and who was also the liaison between Filippo Porracciolo, notary, and legal counsel to the Leone family.
[15] Tony and Arcangela signed the List in Ottawa on March 25, 2008 and then on the advice of Mr. Porracciolo, Mr. Polito was instructed to proceed to prepare a proper agreement to set out legal descriptions of the Italy Properties. That agreement (the First Agreement) was signed in Italy by Tindaro’s Heirs on November 28, 2008 and was based on the List already signed by Tony and Arcangela.
[16] After the First Agreement was drafted and signed by Tindaro’s Heirs, they discovered some title and repair issues diminishing their share of the Italy Properties and requested a new agreement be negotiated to deal with those issues. A new agreement of division (the Second Agreement) was prepared in late 2009 and except for the adjustments requested by Tindaro’s Heirs, the Second Agreement was the same as the First Agreement.
[17] Carmela died in Italy in August 2010. A succession application was prepared in Italy and Mr. Porracciolo informed Tony and Teresa, who had flown to Italy on the day of Carmela’s death, that Carmela’s interest in the Italy Properties would be divided, in accordance with Italian law, equally among Carmela’s surviving heirs, being Tony, Arcangela and Tindaro’s Heirs. Mr. Porracciolo also advised them of the amount of estate taxes owing and his professional fees. This information was passed along to Arcangela.
[18] On March 28, 2011 Tony and Arcangela signed the Agreement in Ottawa. The Agreement was based on the Second Agreement and distributed Carmela’s share in the Italy Properties equally between Tony, Arcangela and Tindaro’s Heirs.
[19] On October 16, 2011 Tindaro’s Heirs signed the Agreement, in Italy.
[20] The Agreement, however, could not be registered on title in Italy due to some deficiencies according to Italian law and Tony, therefore, asked Arcangela to sign a power of attorney to assist with those registration requirements.
[21] In the month after Arcangela had signed the Agreement, she informed Tony and Teresa in April 2011 that she was no longer prepared to proceed with it.
[22] The parties agree that under Italian law, upon Carmela’s death and the filing of a succession application in Italy, the assets of Carmela’s estate passed to her heirs, namely Tony, Arcangela and Tindaro’s Heirs, in equal shares as tenants in common and no trustee of the estate need be appointed.
[23] The succession process under Italian law is now complete. The Italy Properties remain held by Tony, Arcangela and Tindaro’s Heirs in equal shares as tenants in common. The Agreement has not been able to be registered in Italy.
THE OTTAWA PROPERTY
[24] In 1985, Nicolo and Carmela purchased a property in Ottawa (the Ottawa Property) as joint tenants. Upon Nicolo’s death in 1999, Carmela became the surviving joint tenant of the Ottawa Property. In 2008 and while she was alive, Carmela transferred the Ottawa Property to Tony as a gift.
[25] The Ottawa Property was not part of the List, the First Agreement, the Second Agreement or the final Agreement and neither was it part of the succession application prepared in Italy for Carmela’s estate.
THE ACTION
[26] The respondents’ Statement of Claim in the Action, claiming specific performance and damages for breach of contract and inducing the breach, was issued on April 20, 2012.
[27] The respondents say they first learned of this Rule 21 motion on October 9, 2012, after the moving parties had served their Statement of Defence and Counterclaim, after the respondents had filed their Reply and Defence to Counterclaim and after pleadings were closed and Examinations for Discovery had been scheduled. The respondents also say they were only first advised in February 2013 that the Ottawa Property was a contentious issue.
[28] The moving parties raise issues of Arcangela’s mental capacity at the time she signed the Agreement in 2011 and they have counterclaimed against the respondents for a declaration that Italian law governs the matters in dispute in the Action and for a declaration that the value of the Ottawa Property be included as required by Italian law in the calculation of the share division to be made of the estate of Carmela.
[29] Arcangela has recently commenced court proceedings in Italy against Tony and Tindaro’s Heirs for a declaration that the Agreement is not valid and for an order for the distribution of Carmela’s estate according to the principles of Italian law.
THE POSITIONS OF THE PARTIES ON THIS MOTION
[30] The moving parties submit that the issue between the parties is a succession matter governed by the law of Italy as it applies to Carmela’s estate and the Italy Properties.
[31] The moving parties further submit that the Agreement infringes the rules of succession in Italy by not mentioning the Ottawa Property, as its value had to be accounted for in the calculation of the presumptive equal shares of Tony, Arcangela and Tindaro’s Heirs as tenants in common under Italian law.
[32] The moving parties also claim that the Action is flawed in that it does not include all parties to the Agreement, namely Tindaro’s Heirs in Italy, and that Italian law requires all parties to an agreement be joined in an action.
[33] Finally, the moving parties state that in their Statement of Defence they pleaded that this Court has no jurisdiction over the disputes between the parties.
[34] The respondents submit that this matter is not an estate matter as the succession process for Carmela’s estate was completed in Italy before the Agreement was signed by Tony and Arcangela in Ottawa on March 28, 2011 and by Tindaro’s Heirs in Italy on October 16, 2011.
[35] This means, the respondents argue, that after the succession process was completed in Italy and Tony, Arcangela and Tindaro’s Heirs were registered on all the titles to the Italy Properties as owning undivided equal shares as tenants in common pursuant to Italian law, each was able to relinquish those equal shares and agree to a different division. They say this is what the Agreement accomplished and this is why the Action is a breach of contract matter and not a succession matter. They dispute that Arcangela had any issues affecting her capacity to understand what she was signing when she signed the Agreement in 2011 and this is a further reason why the Action is a breach of contract matter.
[36] The respondents also argue that the moving parties have attorned to the jurisdiction of this Court in light of the timelines involved in the Action and the moving parties’ defence of it.
ANALYSIS
The applicable law
[37] Club Resorts Ltd. v. Van Breda, 2012 SCC 17, [2012] S.C.J. No. 17 (SCC) is the current authority on determining jurisdiction, involving a three-step analysis.
[38] Applying that three-step analysis to this case, the first step is whether an Ontario court has or can assume jurisdiction if there is a “real and substantial connection” with Ontario. If there is a real and substantial connection with Ontario so that an Ontario court can assume jurisdiction, the second step is whether the Ontario court should take jurisdiction if the party contesting jurisdiction points to connecting factors indicating a weak relationship between the Ontario court and the subject matter of the litigation. The third step comes into play only when jurisdiction is established so that the claim may proceed, subject to the court’s discretion as to whether the Ontario court should take jurisdiction according to considerations of forum non conveniens (Van Breda, at paras. 81-112).
[39] The issue of attornment to the jurisdiction is part of the first step in Van Breda, as an Ontario court has jurisdiction if the defendant consents to its jurisdiction: Momentus.ca Corp. v. Canadian American Assn. of Professional Baseball Ltd., 2010 ONCA 722, at para. 35.
The subject matter of the litigation
[40] The subject matter of the Action requires identifying so as to accurately assess connecting factors.
[41] The respondents have commenced the Action as a breach of contract arising out of Arcangela’s refusal to finalize the Agreement and preventing the Italy Properties from being divided pursuant to the Agreement. The respondents emphasize that Carmela’s estate matters have been completed in Italy and the Agreement only deals with the post-succession and future division of the Italy Properties between the parties to the Agreement. The respondents raise issues of waiver by Arcangela in Ontario regarding the succession application in Italy for Carmela’s estate.
[42] The moving parties have defended the Action by disputing the validity of the Agreement signed by Arcangela including on grounds related to her health issues and medications and that the respondents were in a fiduciary relationship to her, by disputing the validity of the transfer of the Ottawa Property from Carmela to Tony during Carmela’s lifetime, the omission of the Ottawa Property from the succession application prepared in Italy for Carmela’s estate, and claiming the Action should be governed by Italian law. The moving parties have not disputed that Carmela’s estate matters have been completed in Italy, however they seek, as I understand their positions, to re-open the succession application already filed in Italy on the basis that the Ottawa Property should have been included in it as part of Carmela’s estate assets, even though she had transferred it to Tony during her lifetime, and its value would have affected the calculation of the presumptive equal shares under Italian law and would have also affected the terms of the Agreement.
[43] In my view, the subject matter of the Action is primarily a matter of contract involving the transfer of the Ottawa Property and the enforceability of the Agreement. For the respondents, the main issue in the Action is the enforceability of the Agreement and whether the heirs to Carmela’s estate are able to enforce the Agreement so as to deal with their already inherited equal and undivided shares. For the moving parties, the main issue in the Action, as I understand their positions, is the Ottawa Property being transferred by Carmela during her lifetime to Tony and not to Arcangela and not being included in the succession application or in the Agreement. These issues are all matters of contract. While I do not understand that Italian succession law has very much applicability to these contract issues, if it does have applicability particularly with respect to whether the Ottawa Property should have been included in the succession application according to Italian law, the parties to the Action are able to adduce evidence on that law as it affects the enforceability of the Agreement.
Whether this court has or can assume jurisdiction
[44] On the issue of whether this Court has jurisdiction through attornment by the moving parties, I am not prepared to make this finding, given the clear indication by the moving parties in their Statement of Defence of their position that the Agreement is governed by Italian law.
[45] As stated in Momentous, at para. 45, a motion challenging the jurisdiction of an Ontario court may be brought under Rule 21, as in the present motion, and it may be brought after the delivery of a statement of defence and there is nothing in Rule 21 that suggests a defendant is precluded from contesting jurisdiction because its statement of defence responds to the merits of a plaintiff’s claim. The defendant is required only to bring its motion “quickly after the commencement of the suit”.
[46] The moving parties/defendants in the present case did respond to the merits of the respondents’/plaintiffs’ claim. It may be said that their Rule 21 motion was not brought quickly in that their Notice of Motion is dated November 2012, seven months after the Statement of Claim was issued. However, because it is clear in the Statement of Defence that the moving parties are contesting jurisdiction, it can also be said that the jurisdictional issue was raised as soon as possible, alerting the respondents to it. In these circumstances I would not conclude that the moving parties have attorned to the jurisdiction of this Court.
[47] I proceed, therefore, to determine whether this Court can assume jurisdiction.
[48] As a dispute primarily involving contract law, the connecting factors to Ontario are that the Agreement was signed by Tony and Arcangela in Ottawa; the transfer of the Ottawa Property took place in Ottawa; the parties to the Action all live in Ottawa; the alleged breach occurred in Ottawa; most of the witnesses live in Ottawa; the alleged inducement of the breach occurred in Ottawa; the alleged waiver by Arcangela regarding the Ottawa Property occurred in Ottawa.
[49] All of these are presumptive connecting factors that, prima facie, entitle this Court to assume jurisdiction over the dispute: Van Breda, at para. 90. All of them establish a real and substantial connection between Ontario and the subject matter of the litigation.
[50] I conclude, therefore, that this Court can assume jurisdiction in this matter.
Whether this court should take jurisdiction
[51] The moving parties point to connecting factors indicating a weak relationship between Ontario and the subject matter of the litigation, namely that the Agreement was drafted in Italy and only in the Italian language; the Agreement purports to distribute the Italy Properties; Tindaro’s Heirs signed the Agreement in Italy; the Agreement violates the succession laws of Italy.
[52] In my view, however, none of these factors serve to dislodge or even diminish the real and substantial connecting factors referred to above. The matter of the validity of the Agreement regardless of where it was drafted and its language involves persons in Ottawa and actions taken in Ottawa. That Tindaro’s Heirs signed the Agreement in Italy is of no consequence as they are not parties to the Action. That the Agreement deals with the Italy Properties is of little consequence as the Action claims specific performance of the Agreement so as to allow its registration on title in Italy, and in the alternative, the Action claims damages from the moving parties who are resident in Ottawa.
[53] With respect to the argument that the Agreement violates the succession laws of Italy, I have difficulty assigning very much weight to it at all, in the situation of the Ottawa Property having been transferred by Carmela to Tony during her lifetime and the Agreement being a post-succession contract between the heirs to Carmela’s estate who presently hold their equal shares of the estate assets as tenants in common according to Italian law.
[54] I conclude, therefore, that this Court should take jurisdiction. Before allowing the Action to proceed, however, the moving parties request that I exercise my discretion to stay the Action on the basis that Italy is a more convenient forum.
The doctrine of forum non conveniens
[55] This doctrine is based on a recognition that a common law court retains a residual power to decline to exercise its jurisdiction in appropriate, but limited, circumstances in order to assure fairness to the parties and the efficient resolution of the dispute. The court can stay proceedings brought before it on the basis of the doctrine: Van Breda, at para. 104.
[56] The party asking for a stay on the basis of forum non conveniens must show that the alternative forum is clearly more appropriate: Van Breda, at para. 108. It is not a matter of flipping a coin: Van Breda, at para. 109.
[57] The moving parties have focused much of their argument on this motion and in their Statement of Defence on the Agreement being unenforceable in Italy according to the succession law of Italy and the necessity according to Italian law of including the Ottawa Property in the succession application in respect of Carmela’s estate, even though at the time of her death Carmela no longer owned the Ottawa Property.
[58] I have already expressed doubt as to the merit of this claim by the moving parties. If, however, there are issues of the enforceability of the Agreement according to Italian law and those issues could serve to tip the balance towards Italy being the more convenient forum for the dispute, a court in Italy would still have to consider the validity of the transfer of the Ottawa Property and of the Agreement according to Ontario law. In other words, issues of both Italian and Ontario law could be raised regardless of the forum so that the possibility of there being issues raised regarding Italian law does not serve, in this context, to make Italy a forum that is clearly more appropriate.
[59] Based on all of the same factors establishing a real and substantial connection between the subject matter of the Action and Ontario as referred to above, I find that the moving parties have not demonstrated that Italy is clearly more appropriate as a forum for the Action. Additionally, and in further support of Ontario as the appropriate forum, the motion materials indicate that Arcangela is not well and was unable to go to Italy, that she and the other moving parties did not wish to travel to Italy and that all of the parties to the Action have assets in Ontario available for enforcement purposes.
[60] I decline, therefore, to stay the Action based on a consideration of the doctrine of forum non conveniens.
[61] I conclude, therefore, that this Court can assume and should take jurisdiction over the Action.
[62] The moving parties’ motion is, accordingly, dismissed.
[63] Costs are awarded to the respondents. If the parties are unable to agree on their quantum, written costs submissions of no more than three pages from each party, exclusive of attachments, can be forwarded to me before April 19, 2013.
Justice L. Ratushny
Date: March 28, 2013
COURT FILE NO.: 12-54143
DATE: 2013/03/28
ONTARIO
SUPERIOR COURT OF JUSTICE
RE: Antonino Leone and Teresa Leone, Plaintiffs / Defendants by counterclaim
AND
Arcangela Leone Scaffidi, Angela Valente, and Carmelo Scaffidi, Defendants / Plaintiffs by counterclaim and Moving Parties
BEFORE: Justice L. Ratushny
COUNSEL:
Sara Riboldi for the Moving Parties
J.F. Lalonde for the Respondents
ENDORSEMENT
Ratushny J.
Released: March 28, 2013