SUPERIOR COURT OF JUSTICE - ONTARIO

COURT FILE NO.: 39929

DATE: 30-05-2013

RE: 790668 Ontario Inc., Frezza Management Inc., Elio Frezza, Gina D’Andrea-Vozza, Donna D’Andrea-Hogan, Onorio Frezza, Tara Frezza, Julia Frezza and Michael Frezza, Plaintiffs

AND:

D’Andrea Management Inc., Daney D’Andrea, D’Andrea Developments Inc., Rick D’Andrea, 1317539 Ontario Inc., 1476335 Ontario Inc., 1052534 Ontario Limited, Aldo Rotondi, Jose Nunes, 1536962 Ontario Ltd., and St. Willibrord Community Credit Union Limited now operating as Libro Financial Group, Defendants

AND:

790668 Ontario Inc., Peter Frezza, Onorio Frezza, Brenda Frezza Management Inc., Elio Frezza, Gina D’Andrea-Vozza, Donna Hogan, Tara Frezza, Julia Frezza, Michael Frezza, Siskind Cromarty Ivey & Dowler LLP, Fausto Boniferro and Wayne Taylor, Third Parties

BEFORE: Heeney R.S.J.

COUNSEL:
Thomas Corbett, Counsel for the Defendants D’Andrea Management Inc. and Rick D’Andrea (moving parties on motion)

Mavis Butkus, Counsel for the Third Parties Siskind Cromarty Ivey & Dowler LLP and Fausto Boniferro (responding parties on motion)

HEARD: April 2 and May 21, 2013 at London

ENDORSEMENT

[1] This is a motion for leave to appeal the interlocutory order of Rady J. dated March 5, 2013. It is brought by the Defendants D’Andrea Management Inc. and Rick D’Andrea (collectively “DMI”) relative to their third party claim against the law firm Siskind Cromarty Ivey & Dowler LLP and one of their lawyers, Fausto Boniferro (collectively, “the responding parties”).

[2] On September 7, 2007, the motions judge was appointed under rule 37.15 by then Regional Senior Justice Leitch to hear all motions in these complicated proceedings. The order that is sought to be appealed was made in the context of a motion for summary judgment that has been brought by the responding parties, which seeks to dismiss DMI’s third party claims against them. That summary judgment motion has been adjourned to await the results of this leave motion, and is expected to be heard in July of this year.

[3] The order of the motions judge that is under scrutiny in this motion for leave to appeal dismissed a motion that had been brought by DMI, which sought four items of relief:

1. Leave for DMI to file the affidavits contained in a supplementary motion record dated June 20, 2012;

2. An order that the motions judge not hear the pending summary judgment motion;

3. An order that Fausto Boniferro attend to resume his cross-examination, including on the supplementary motion record; and,

4. An order compelling the re-attendance of Onorio Frezza, Peter Frezza and Gina D’Andrea-Vozza to answer refused questions.

[4] The third item has essentially been resolved, as has most of item four. As reflected in para. 7 of her reasons, the motions judge proceeded on the basis that she did not need to order Mr. Boniferro to re-attend because he was prepared to do so voluntarily. Ms. Butkus, during her submissions on this leave motion, confirmed their willingness to produce Mr. Boniferro for further cross-examination, within the scope outlined by the motions judge in her earlier endorsement of March 1, 2012. It is conceded by Ms. Butkus that items 1, 2 and 3 on the Refusals Chart are the proper subject matter of questioning, and this concession applies not only to Mr. Boniferro but also to the other three witnesses, Onorio Frezza, Peter Frezza and Gina D’Andrea-Vozza, who were content to rely on the submissions of Ms. Butkus on this issue. While the supplementary motion record itself cannot be used as the basis for questioning, the many attachments and transcripts which are already part of the record can be so utilized.

[5] Rule 62.02(4) states that leave to appeal an interlocutory order shall not be granted unless:

(a) There is a conflicting decision by another judge or court in Ontario or elsewhere on the matter involved in the proposed appeal and it is, in the opinion of the judge hearing the motion, desirable that leave to appeal be granted; or

(b) There appears to the judge hearing the motion good reason to doubt the correctness of the order in question and the proposed appeal involves matters of such importance that, in his or her opinion, leave to appeal should be granted.

[6] Having considered the very able arguments of counsel, I am of the view that this threshold has not been met. Leave to appeal is, therefore, denied. Rule 62.02(7) states that where leave is granted, the judge shall give brief reasons in writing. By implication, therefore, reasons are not required where leave is denied. That is the case, for example, where leave to appeal is denied by the Supreme Court of Canada. Nevertheless, in the interests of transparency I will provide brief reasons for the decision I have arrived at.

[7] The factual background of this case is exceedingly complex, and almost defies a concise description. I will attempt to set out enough of the facts to enable these reasons to be understood.

[8] The facts date back to the early 1990s, and involve multiple lawsuits among family members that were ultimately consolidated in the current action. The D’Andrea and Frezza families were shareholders in DMI, which purchased a property in Sarnia from Owens Corning in 1992. Litigation was brought against Owens Corning alleging environmental contamination, and a settlement was reached whereby their vendor-take-back mortgage was greatly reduced. That settlement, however, required outside funding to replace the mortgage, and a dispute broke out among the shareholders relating to the need for personal guarantees on that funding.

[9] Ultimately, Daney D’Andrea and a majority of the DMI shareholders decided to list the property for sale. A sale of the property was opposed by the Frezzas, who commenced an oppression action in June 2001. Mr. Boniferro, a lawyer with Siskinds, represented the Frezzas at that time.

[10] A dispute arose over the provision of confidential information about the property, which was sought by the Frezzas, but refused by the DMI majority. One Wayne Taylor was allegedly engaged by the Frezzas to falsely pose as a purchaser, and thereby gain access to the confidential information. Later, in August 2001, DMI’s listing agent obtained an offer from Joe Nunes to purchase the property for $1.7 million. A shareholders meeting was called for August 29, 2001, to discuss the offer. Mr. Boniferro was in attendance at that meeting, as counsel for Onorio, Peter and Elio Frezza, and for Donna D’Andrea-Hogan and Gina D’Andrea-Vozza.

[11] Mr. Boniferro pointed out that the meeting was improperly constituted to formally conduct the business of the corporation, due to deficiencies in the manner, content and timing of notice of the meeting. Nevertheless, everyone was content to discuss matters on an informal basis.

[12] During the course of the meeting, another “purchaser” arrived, namely Dennis Shaw. He wanted to present an offer through Mr. Boniferro to purchase the property for $2.5 million, in trust for a company to be incorporated, and without personal liability.

[13] DMI alleges that Dennis Shaw was yet another fake purchaser, and he became involved solely for the purpose of delaying consideration of the legitimate offer from Joe Nunes. No transaction ever materialized with Dennis Shaw. Mr. Nunes refused to extend the open date on his offer and it expired. He later purchased the property under Power of Sale at a much reduced price, and that differential represents part of the damages sought in the proliferation of proceedings that were commenced afterward.

[14] The claims by DMI against Mr. Boniferro include damages for breach of authority, breach of fiduciary duty and negligence. He is also arguably included in an allegation of conspiracy, along with the other Frezza parties, although no claim for damages is made against him arising from conspiracy.

[15] Mr. Boniferro and Siskinds brought a motion for summary judgment, seeking to establish that Mr. Boniferro did not owe a duty of care to DMI and the other named respondents (none of whom were clients of Boniferro), and that the balance of the allegations are without merit and do not require a trial. Mr. Boniferro was cross-examined on his affidavit filed in support of that motion on January 31, 2012.

[16] Five months later, on June 20, 2012, DMI served a supplementary motion record. It is with respect to this supplementary motion record that leave to file was later sought from the motions judge. Her denial of that leave is one of the orders sought to be appealed. I will deal with that ground of appeal now.

[17] As the motions judge correctly observed, rule 39.02 prohibits a party who has cross-examined an adverse party from subsequently delivering an affidavit for use at the motion, without leave of the court or the consent of the parties. The rule directs the court to grant leave, on such terms as are just, “where it is satisfied that the party ought to be permitted to respond to any matter raised on the cross-examination…”

[18] The motions judge expressly followed what is conceded to be the leading case on point, First Capital Realty Inc. v. Centrecorp Management Services Ltd., [2009] O.J. No 4492 (Div. Ct.). At para. 22 of her reasons, the motions judge set out the criteria to be considered, including:

1. the relevance of the evidence; 2) whether it responds to a matter raised on cross-examination; 3) if there is non-compensable prejudice if leave were granted; and 4) if there is an adequate and reasonable explanation why the evidence was not included earlier.

[19] The motions judge correctly instructed herself that “a flexible contextual approach”, having regard to the objectives in Rule 1.04, is to be taken in assessing the relevant criteria. She then proceeded to do precisely that, as she considered each factor in its context. She cited Skrobacky v. Frymer, [2011] O.J. No 2466 (S.C.J.), where Corrick J. held that the rule was designed to prevent, in part, an endless exchange of affidavits and cross-examinations and, as a result, “leave should be granted sparingly”. She relied on similar comments from Brock Home Improvement Products Inc. v. Corcoran, [2002] O.J. No. 931 (S.C.J.), 2002 49425 (ON SC), which indicated that the court should “scrutinize carefully the reasons for the omission and the evidence offered in support of that explanation.”

[20] It is not necessary for present purposes to review the motions judge’s analysis of each factor. I am not rehearing the original motion, nor am I sitting in appeal of the order that was made. My task is only to determine if the threshold for leave to appeal has been met. In that regard, I simply observe that the motions judge carefully and thoughtfully considered each factor, in arriving at the conclusion that leave to file the supplementary motion material should not be granted. Although she found no non-compensable prejudice, her consideration of the other factors, and in particular the lack of any adequate explanation for the delay in filing the material, caused her to exercise her discretion by denying leave.

[21] Leave to appeal this ruling cannot be granted under rule 62.02(4)(a) because there is no conflicting decision by another court. The motions judge clearly followed established precedent in conducting her analysis. I do not accept the submission of Mr. Corbett, for the moving parties, that there is an inherent conflict between First Capital and Skrobacky. The avoidance of affidavit wars and yet another round of cross-examinations is clearly one of the objectives behind rule 39.02(2), and there is nothing in First Capital to indicate that this is no longer the law. Indeed, similar comments are found in Brock Home Improvement, which was cited with approval in First Capital, and which indicated that “it is only in exceptional cases that resort should be had to rule 39.02(2)”. Attaining the “just, most expeditious and least expensive determination” of motions, as mandated by Rule 1.04, requires that the court “scrutinize carefully” the explanations offered by counsel who seek to protract the affidavit war.

[22] In order to demonstrate that a “conflicting decision” exists, the moving parties must show “a difference in the principle chosen as a guide to the exercise of judicial discretion and not merely in outcome as a result of the exercise of discretion”: St. Lewis v. Rancourt, [2012] O.J. No. 5698 (S.C.J.) at para. 35. They have failed to do so.

[23] Nor can leave be granted under rule 62.02(4)(b). One of the two things that must be demonstrated in order to obtain leave under that subrule is that the proposed appeal involves matters of such importance that leave to appeal should be granted. That refers to matters of sufficient importance that they extend beyond the interests of the litigants and relate to matters of public importance relative to the development of the law and the administration of the law: Judson v. Mitchele, [2011] O.J. NO. 4614 (S.C.J.).

[24] Clearly, the issue under consideration involves matters that are of importance only to the parties themselves, and involve no matters of public importance whatsoever.

[25] The second proposed ground of appeal involves the motions judge’s refusal to make an order that she not hear the motion for summary judgment.

[26] The motions judge correctly observed that rule 37.15(2) provides that a judge appointed to hear all motions under that rule “shall not preside at the trial of the actions, or the hearing of the applications except with the written consent of all parties.” However, she noted that this rule did not similarly prelude the hearing of motions for summary judgment. She stated that one reason for enacting the rule that a single judge could hear all motions in a case was to enable scarce judicial resources to be deployed in an efficient way. Given the pressures of London’s current workload, she found that policy to be all the more imperative. She dismissed that part of the motion.

[27] Once again, leave to appeal this order cannot be granted under rule 62.02(4)(a) because there is no conflicting decision by another court. Indeed, there are no decisions at all that have considered this issue, so far as counsel are aware. The only applicable law is that found in the Rules themselves. The motions judge correctly applied rule 37.15, by ruling that she would hear the motion for summary judgment, as her appointment mandated her to do. She correctly observed that the prohibition against conducting the trial did not apply in the circumstances.

[28] Mr. Corbett concedes that there is no caselaw with which the motions judge’s decision conflicts, but instead he seeks to create new caselaw on this point. He argues that an analogy can be drawn between a trial and a motion for summary judgment. If a judge appointed to hear all motions under this rule is prohibited from hearing the former, then he suggests that such a judge should, in some circumstances, be prohibited from hearing the latter.

[29] If this submission were acceded to, it would amount to a judicially-imposed amendment to the Rules. The regulators were clearly alive to the issue as to whether a judge appointed under rule 37.15 should be precluded from hearing certain proceedings, and determined that such a judge should not preside over the trial or the hearing of the application. Mr. Corbett seeks, in effect, to add the words “or the hearing of a motion for summary judgment” to rule 37.15(2), something that the drafters of the Rules chose not to do.

[30] It may well be that there are circumstances where a judge appointed under this rule should not hear a motion for summary judgment. That might be the case where, for example, the judge, in hearing one motion, clearly disclosed his or her opinion on an issue that would be central to the motion for judgment. But such situations do not require a judicial amendment to the Rules. They are already provided for by the established caselaw dealing with bias and the reasonable apprehension of bias.

[31] Both in his argument before the motions judge and before this court, Mr. Corbett clearly stated that he was not alleging bias or the reasonable apprehension of bias. It follows, therefore, that the motions judge is in a position to bring an unbiased and open judicial mind to the resolution of the summary judgment motion, and there is no basis upon which she should recuse herself.

[32] I do not propose to speculate as to the reasons why the drafters of the Rules chose to preclude a rule 37.15 judge from hearing the trial. I do, however, observe that there is a great deal of difference between a trial and a motion for summary judgment. The summary judgment motion judge is not conducting a trial, but is instead tasked with determining whether a trial is necessary or not. Who is better positioned to make that call than the judge who has heard all motions in the proceeding and knows the case inside out?

[33] The motions judge’s concern for economy of judicial resources is well placed. I can attest to the expenditure of an inordinate amount of time to gain enough familiarity with the facts to enable me to hear and dispose of this leave motion. The motion took 1 ½ days to argue, whereas a typical leave motion might take one or two hours at most. This is a complex case, and it is precisely the kind of case that rule 37.15 was designed to deal with. To assign the motion for judgment to another judge would involve an extraordinary duplication of effort, and an unwarranted consumption of judicial resources that are already stretched to the breaking point. I agree entirely with the motions judge’s decision to deny the relief requested.

[34] Leave cannot be granted under rule 62.02(4)(b) because I am not of the view that there is good reason to doubt the correctness of the order. Whether a rule 37.15 judge should or should not hear a motion for judgment is not, in my view, a question that is open to serious debate. Indeed, given the frequency with which motions for summary judgment come before our courts, one would have thought that there would be some existing caselaw on this point, if this issue was one that was seriously open to question.

[35] Simply put, the motions judge applied the applicable rule precisely as it is written. This does not give rise to an apparent error that merits review and comment by an appellate court.

[36] The final ground of appeal relates to the request for an order compelling the re-attendance of Onorio Frezza, Peter Frezza and Gina D’Andrea-Vozza to answer refused questions. As noted in para. [4] above, this has been partially resolved. The aspect of this issue that was dealt with in the reasons of the motions judge (in paras. 37 to 46) related to the issue of privilege.

[37] Once again, the motions judge considered leading authorities on waiver of privilege and concluded that privilege had been maintained. I have been directed to no conflicting decision of another court that would satisfy that particular requirement in rule 62.02(4)(a). There is no good reason to doubt the correctness of the ruling of the motions judge, nor has any matter of importance beyond the interests of the litigants been identified, as required by rule 62.02(4)(b).

[38] Mr. Corbett submits that the motions judge erred in failing to address whether privilege might be waived if solicitor/client communications were made with a view to perpetrating unlawful conduct, as argued in paras. 77 and 78 of his factum that was before the motions judge.

[39] Such an alleged error cannot be made to fit within the confines of the threshold for leave to appeal under subrule (a). It could only meet the threshold for leave to appeal under subrule (b) if there is good reason to doubt the decision (or lack of a decision) of the motions judge in that regard. However, once again it cannot be stated that it involves a matter of importance beyond the interests of the litigants themselves, as required by that subrule. This, on its own, is fatal to the request for leave to appeal.

[40] Furthermore, it is not necessarily the case that this issue was overlooked by the motions judge. In para. 12 of her endorsement of March 1, 2012, the motions judge made a specific ruling that questions relating to Mr. Boniferro’s knowledge about Mr. Taylor and his bona fides could be asked, notwithstanding any claim for privilege, and that ruling continues to apply. As to the more general question as to whether privilege can be waived if communications were made with a view to perpetrating unlawful conduct, the motions judge carefully reviewed the pleadings in her March 1, 2012 endorsement and was not persuaded that conspiracy was properly pleaded against Mr. Boniferro. She noted that para. 32 of the Third Party Claim alleges that the third party shareholders “and others” embarked on a malicious conspiracy. However, she cited authority for the proposition that the pleadings in a conspiracy case should describe who the several parties are and their relationship with each other, and should state precisely what the purpose or objects of the conspiracy were and the overt acts alleged to have been done by each of them in furtherance of the conspiracy. The Third Party Claim contains no such detail as against Mr. Boniferro. She concluded by noting in para. 11 of her endorsement that: “[n]o amendment of the pleading has been sought to clarify.”

[41] As far as I am aware, no amendment to the pleadings has since been sought to clarify any alleged claim of conspiracy against Mr. Boniferro. One may infer, therefore, that this is not a case where the motions judge failed to deal with this argument, but rather one where it was not necessary to deal with it, given the current state of the pleadings.

[42] For all of these reasons, the motion for leave to appeal is dismissed.

[43] If the parties cannot agree on costs, I will accept written submissions from Ms. Butkus within 15 days, with Mr. Corbett’s response within 10 days thereafter, and any reply within 5 days thereafter.

“Heeney R.S.J.”

Regional Senior Justice T. A. Heeney

Date: May 30, 2013