COURT FILE AND PARTIES

COURT FILE NO.: CV-12-0977-00

DATE: July 24, 2013

SUPERIOR COURT OF JUSTICE - ONTARIO

RE: Antonio Mazza, Plaintiff (Respondent)

AND:

Filomena Gucciardi, Defendant (Moving Party)

BEFORE: André J.

COUNSEL:
Thane A. Campbell, Michael G.J. Miculinic, for the Plaintiff

Edward J. Babin, Cynthia L. Spry, Tim Hudek, for the Defendant

HEARD: July 18, 2013

ENDORSEMENT

[1] The defendant moving party seeks to vacate Certificates of Pending Litigation registered against two properties on account of an ex parte order by Justice Lemon of this court on March 7, 2012.

[2] The defendant maintains that the non-disclosure of material facts and the misleading nature of some of the information contained in the ex parte motion, justifies the relief sought.

[3] The respondent insists that the motion should be dismissed because he disclosed all material facts in his ex parte application, and that he did not present any misleading information to Justice Lemon. He submits in the alternative that even if he did not fully disclose all material facts, in his ex parte motion, the court has a residual discretion to uphold the Certificates of Impending Litigation.

[4] This matter therefore raises the following issue:

i. Under what circumstances should a court vacate a Certificate of Pending Litigation obtained on an ex parte basis?

[5] For the reasons outlined below, the Motion is granted and the Certificates of Pending Litigation are vacated.

Overview

[6] The plaintiff/responding party, Mr. Antonia Mazza, purchased the two properties in question in 1979 and 1986. After a forty-one year marriage, Mr. Mazza’s wife died in 1996. Shortly after, Mr. Mazza met a lady friend. The defendant, Ms. Gucciardi, who is Mr. Mazza’s only daughter reportedly persuaded her father to transfer the properties into her name to ensure that the new lady in her father’s life did not acquire an interest in them.

[7] Following the transfer, Mr. Mazza continued to maintain both properties. He succeeded in having the re-zoning by-laws governing one of the properties changed, which significantly increased the value of that property.

[8] The defendant has testified in a related proceeding that she did not believe she owned the properties; she believed that she and her father were partners.

[9] In 2003, Ms. Gucciardi, had some marital problems of her own. As a result Ms. Gucciardi and her party obtained a consent Divorce Judgment on November 10, 2003. The judgment indicated that neither Ms.Gucciardi, her husband or Mr.Mazza (the plaintiff moving party), held any property in trust for the other.

[10] Mr. Mazza retained independent counsel in his daughter’s divorce proceedings. Through his counsel Mr. Mazza consented to the Divorce Judgment. He executed the Minutes of Settlement and initialed the handwritten changes to it.

[11] In his Reply to Ms. Gucciardi’s Notice of Action and Statement of Claim, Mr. Mazza denied that he had independent legal advice when he indicated that he had no interest in the subject properties.

[12] On November 15, 2012 Mr. Mazza brought a motion for interim relief for continued access to the subject properties pending a trial over the issue of ownership. The court ordered that Mr. Mazza’s access to the subject properties would continue.

[13] Mr. Mazza brought his ex parte application for Certificates of Pending Litigation against the subject properties in March 2012. The supporting affidavit made no mention of Mr. Mazza’s assertion in 2003 that he did not have a trust interest in the subject properties or that he had transferred the properties to Ms. Gucciardi.

[14] Paragraph 37 of Mr. Mazza’s affidavit dated March 7, 2012 stated the following:

I received a telephone call from my daughter asking me whether I had received her lawyer’s letter. I had stated that I did not. She went on to say that she is going to sell the Ninth Line and Lower Baseline Road properties and obtain a restraining order against me.

[15] Paragraph 39 of Mr. Mazza’s March 7, 2012 affidavit further states:

Upon receiving my daughter’s phone call of February 27, and reading this letter, I became very sadden (sic) that my only daughter wishes not to communicate with me. She has forced me to communicate through lawyers and to bring the motion to secure my properties against her erratic and spontaneous wishes to sell the property.

[16] The February 27, 2012 letter referred to by Mr. Mazza was sent by Ms. Gucciardi’s counsel, Michael Garvey to Ms. Kathleen Yeoman, Ms. Gucciardi’s attorney. It indicated in paragraph three that:

My client simply wishes to inform your client that she is in the process of reviewing all matters with respect to real and other property and assets and will be making arrangements shortly to settle all family financial matters. In this regard, my client currently intends to make some form of proposal to your client (through your office), which proposal will deal with all matters relevant to current and post financial considerations.

Analysis

[17] The moving party on an ex parte motion must make full and fair disclosure of all material facts and failure to do so constitutes sufficient ground for setting aside any order on the motion. Rules of Civil Procedure. O. Reg. 575/07, s. 39.01 (6).

[18] The rationale for the rule stems from the fact that the ex parte judge is literally at the mercy of the party seeking injunctive relief. The ordinary checks and balances of the adversary system are absent and the opposing party does not have an opportunity to challenge the legal and factual basis on which the moving party relies upon. United States v. Friedland [1996] O.J. No. 4399 (Ont. Ct. Gen. Div.) para. 26.

[19] Failure to make full and frank disclosure by either omitting material facts or misrepresenting material facts, entitles the opposing party to have the injunction set aside. Petersen v. Pertersen, 2010 Carswell Ont. 2715 paras. 17 and 21.

[20] Did the plaintiff/responding party provide full and fair disclosure of all material facts when it sought ex parte relief in March 2012? In my view he did not. The Minutes of Settlement he signed in 2003 disclaiming any trust interest in the properties in question was a material fact which should have been disclosed when he sought ex parte relief in 2012.

[21] The Plaintiff submits that this was not a material fact since the Divorce Judgment did not make any reference to rights between Mr. Mazza and Ms. Gucciardi; rather it related to Ms. Gucciardi and her estranged husband. To that extent, it was not a material fact that should have been disclosed by Mr. Mazza when he sought ex parte relief.

[22] I disagree. Mr. Mazza does not have the freedom to disclaim any trust interest in the subject property in a divorce proceeding then assert one in another proceeding, without a court order indicating that even after the 2003 divorce judgment; he still retained a trust interest in the subject property.

[23] Mr. Mazza maintains that Ms. Gucciardi called him on February 27, 2012 and declared that she was going to sell the subject property. Ms. Gucciardi denied this. Paragraph 39 of his affidavit in support of his ex parte motion clearly conveys the impression that the letter also conveyed Ms. Gucciardi’s intention to sell the property. The letter however, expresses an intention to settle all financial matters between the two rather than to unilaterally sell the subject properties. Whether advertently or inadvertently, paragraph 39 of Mr. Mazza’s affidavit misrepresented the contents of Ms. Gucciardi’s lawyer to his lawyer.

[24] Given the omission of a material fact and a misrepresentation of a material fact in Mr. Mazza’s affidavit in support of his Motion for ex parte relief, should the ex parte injunction be set aside, even if the omission and misrepresentation were inadvertent or an account of forgetfulness? After all, Mr. Mazza is 79 year’s old and his statement in the divorce judgment was obtained nine years before he sought ex parte relief.

[25] The Court of Appeal in Chitel v. Rothbart, 1982 1956 (ON CA), 1982 Carswell Ont. 508 (C.A.), para. 18, stated unequivocally that where there has been less than full and fair disclosure in a material way or a misleading of the court on material facts, the court will not exercise its discretion in favour of the party who sought the injunction. See also, JDM Developments Inc. v. J. Stollar Construction Ltd., 2004 Carswell Ont. 4502 (S.C.J.) para. 34.

[26] It is no excuse for Mr. Mazza to indicate that he was unaware of the 2003 divorce judgment or that he did not believe that the judgment was important. Furthermore, it is not a response to a suggestion of non-disclosure that had there been disclosure, the ex parte judge would still have granted the ex parte relief in question: Petersen, supra, para. 19.

[27] The plaintiff/responding party maintains that the failure to make full disclosure of relevant facts during an ex parte motion does not automatically result in a decision to set aside the injunction. He suggests that while this failure is a sufficient ground to set aside the order, rule 39.01(6), does not mandate such a result and that the court retains the discretion with respect to whether the order ought to be set aside, Coupey v. Hamilton Police Services Board, 2005 Carswell Ont. 2220 (S.C.J.) para. 22.

[28] The Coupey decision however, is not binding authority for the following reasons. Firstly, it is a decision of this court. Secondly, it makes no reference to the Court of Appeal’s decision in Chiteh v. Rothart, a decision which I consider to be binding authority.

[29] Furthermore, even if I am wrong about Coupey, supra, the test enunciated in that case would still support my decision that the Certificates of Pending Litigation should be vacated. The court stated in Coupey that the appropriate test is not whether the Certificate of Pending Litigation would or would not have been issued had the omitted disclosure been made out, but rather whether the omitted facts might have had an impact on the original granting of the other. [Emphasis added.]

[30] In my view the omitted fact and the misrepresentation would have had an impact on the original granting of the order. At the very minimum, the ex parte judge might have:

a. questioned the urgency for seeking the relief;

b. the legal basis on which Mr. Mazza was seeking the order.

[31] It may be suggested that the sympathetic aspects of Mr. Mazza’s involvement with the subject properties should persuade me not to exercise any discretion in not setting aside the Certificates of Pending Litigation. In this case however, I decline to do so given the fact that the omission of a material fact, that is compounded by Mr. Mazza’s erroneous statement that he had no independent legal advice, when he signed the Minutes of Settlement the misrepresentation about the contents of the letter sent by Ms. Gucciardi’s counsel to Mr. Mazza’s counsel.

[32] The plaintiff/responding party relies on the case of Baker v. Jakobek, 2008 Carswell 3311 for the proposition that in motions involving Certificates of Pending Litigation, the issue is simply whether there is a triable issue as to a party having an interest in the land, not whether the plaintiff will likely succeed. Given that the plaintiff/responding party has such an interest, the Certificate of Pending Litigation should not be discharged.

[33] However, there is binding authority for the proposition that even though there is a triable issue relating to the plaintiff’s claim to an interest in the subject property, the Certificate of Pending Litigation may be discharged. Hunters Square Developments Inc. v. 351658 Ontario Ltd. [2002] 0.0. No. 2800 (O.S.C.J.) affirmed 2002 9163 (ON CA), [2002] O.J. No. 4694 (Ont. C.A.).

[34] Counsel for Mr. Mazza further submits that the motion brought by Ms. Gucciardi should be dismissed because of the extraordinary delay in challenging the ex parte orders.

[35] Delay however, is not a ground on which I can effectively displace rule 39.01(6). Indeed in 830356 Ontario Inc. v. 156170 Canada Ltd., 1995 Carswell Ont. 4360, (Ont. Ct. Gen. Div.) a Certificate of Pending Litigation was set aside thirteen months after it was imposed.

[36] Based on the above, the order allowing the filing of the Certificates of Pending Litigation is set aside and the certificates vacated. However, I am mindful that these properties were purchased and maintained by the plaintiff/responding party. He transferred them to the respondent/moving party at her behest. She conceded that it was her belief that she was in partnership with her father. On April 23, 2013, I concluded that “there is a serious issue in this case regarding ownership” of the subject properties.

[37] As a result, I conclude that this is an appropriate case for the exercise of my discretion under section 103(6) of the Court of Justice Act, R.S.O. 1990, c. C.43 [as am. by S.O. 1991, c.46], to “impose such terms as to the giving of security or otherwise as the court considers just.”

[38] Accordingly, I order that a term of the discharge of the Certificates of Pending Litigation is that 50% of the gross profits from the sale of the subject properties be paid into court as security. Gross profits are defined as the proceeds of sale of the subject property less any payments in full to any mortgages of the property.

[39] If counsel cannot agree on costs of the hearing, they may deliver written costs submissions no later than August 21, with responding for written costs submissions due no later than September 5, 2013.

“ Justice I.W. André”

I.W. André

Date: July 24, 2013