SUPERIOR COURT OF JUSTICE - ONTARIO

COURT FILE NO.: CV-12-462675
MOTION HEARD: August 15, 2013
ENDORSEMENT RELEASED: September 4, 2013

RE: BRUNO DIFILIPPO and CAVANA CORPORATION v. GIUSEPPE DIFILIPPO

BEFORE: Master R. Dash

COUNSEL:
Roberto Cucci, for the plaintiffs
Brian Radnoff, for the defendant

REASONS FOR DECISION

[1] In its essence this action is between the plaintiff Bruno DiFilippo (“Bruno”) and his father (the defendant, or “Giuseppe”) over ownership of land. The land has since been sold and the action is now one for damages. The defendant moves for security for costs against Bruno on the basis of two outstanding costs awards in his favor and on the basis that the action is frivolous and vexatious. Bruno resists the motion on the basis that he is impecunious and the action is not plainly devoid of merit. The defendant also moves for costs of the action against the co-plaintiff Cavana Corporation (“Cavana”), who was a joint venturer with Bruno to develop the land and who then discontinued its claim.

BACKGROUND

[2] On March 29, 1978 a 52 acre parcel in Milton was purchased for $100,000 and was registered in the name of the defendant and his wife (Bruno’s parents). The lands were to be held for future development. A down payment was made of $30,000 with the balance financed. Bruno asserts that he gave his father $15,000 toward the purchase price as a 15% investment in the 52 acres and that his parents held 15% of the property on a contractual or constructive trust for him. This is denied by the defendant. In 1983 the Ontario Municipal Board permitted severance of the 52 acres. On January 5, 1984 a one-acre parcel from the 52 acres was transferred into Bruno’s name. The defendant claims the transfer was made solely for Planning Act purposes in order to sever the one-acre parcel and it was never intended to give Bruno any beneficial ownership. Bruno claims the transfer of the one-acre parcel was a partial repayment of his 15% interest in the 52 acres and that it was intended he would be become both legal and beneficial owner of the one-acre parcel. The affidavit of residence and value of the consideration sworn by Bruno on November 23, 1983 says the consideration was $2.00 and was “from father and mother to son, for natural love and affection.” Title remained with Bruno until February 1989.

[3] On April 30, 1986 the defendant and his wife sold the severed 51 acres to a purchaser named Diep. In February 1989 Bruno claims that his father indicated he had a purchaser for the one-acre parcel, that he would handle the transaction and that the funds would be to Bruno’s credit. On February 28, 1989 the one-acre parcel (also referred to herein as the “property”) was transferred to purchasers named Piazza. The transfer to the Piazzas was signed by the defendant and his wife as joint tenants and by Bruno all as transferors. No explanation has been provided by the defendant as to why he and his wife, who were not on title, signed the transfer. The sale price of $147,000 was partially paid by a mortgage back to the defendant and his wife for $117,000. On September 3, 1991 a transfer was signed by the Piazzas back to the defendant and his wife (who has since deceased). The affidavit of residence and value of the consideration shows nil consideration and that “transfer given to extinguish mortgage indebtedness which indebtedness exceeds the fair market value of the land.”

[4] Bruno pleads that the transactions between 1989 and 1991 that resulted in title to his parents were instituted and structured by the defendant and Bruno trusted his father, but that he received no money from the sale or under the mortgage back. Bruno claims his father told him that he and his wife took title for administrative convenience and that the property still belonged to Bruno. Bruno claims he was content with this arrangement. The defendant claims the property was always beneficially owned by himself and his wife and that Bruno never had a beneficial ownership.

[5] Bruno claims that on March 28, 2012 he learned that the defendant proposed to sell the one-acre parcel. The defendant claims the plaintiff knew of the potential sale and the name of the purchaser by September 2011. In any event in mid February 2012, during a competency proceeding (to be discussed later) Mr. Radnoff, counsel for the defendant, told Bruno’s lawyer in that proceeding of a conditional offer to purchase the property. The defendant claims that in March, Bruno was taking steps to interfere with the planning process.

[6] In the interim, in or about May 2012 Bruno entered into a joint venture with Cavana Corporation (also a named plaintiff in the statement of claim) to develop the property, with Cavana providing the funding.

[7] On May 17, 2012, Mr. Cucci, the plaintiffs’ lawyer in this action, wrote to Mr. Radnoff and advised that Bruno had learned that the defendant was intending to sell the property and that Bruno intended to commence an action, enclosing a draft statement of claim. During an exchange of correspondence that followed, Mr. Radnoff made it clear he intended to oppose any motion for a certificate of pending litigation (“CPL”), requested that any such motion be on notice to him and that he would co-operate with any expedited scheduling of the motion. On June 12, Bruno registered a caution against the property. On July 27 Mr. Cucci sent Mr. Radnoff draft affidavits in support of a motion for a CPL, although no action had yet been started.

[8] On July 29 Mr. Radnoff advised that the pending sale was conditional and he gave his undertaking to advise Mr. Cucci when the condition was waived. On August 3 Mr. Cucci suggested they attend the following week in motions scheduling court to set a date for a CPL (before a judge). That did not happen.

[9] On August 31, 2012 the plaintiffs issued a statement of claim claiming a declaration that Bruno held a beneficial interest in the entire 52 acres, that he holds a beneficial interest in the one-acre parcel and that the parcel register be amended accordingly. Bruno claims an interest in various proceeds from the 51 acre and the one-acre parcels as well as an accounting, tracing and damages. Cavana as a named plaintiff is described as Bruno’s joint venture partner for the purpose of owning and developing the property. No other material facts are pled about Cavana, although the relief is claimed by the “plaintiffs”.

[10] Mr. Cucci told Mr. Radnoff he would appear ex-parte to obtain a CPL because Mr. Radnoff had failed to share with him details of the defendant’s dealings with the property and because of delays in obtaining a return date for a contested motion.

[11] On September 11, 2012 Mr. Cucci attended ex-parte before Master Abrams to obtain a CPL. In her endorsement Master Abrams indicated that it was preferable to have brought the motion on notice. However, because the plaintiffs indicated a concern about a pending sale she granted leave to the plaintiffs to issue a CPL. She endorsed that the motion was adjourned to October 4 on notice to the defendant with the defendant being permitted to move to set aside the CPL on that date. The defendant refers to this as a temporary CPL. That is incorrect. It was a CPL subject to the defendant’s right to move to set it aside.

[12] On September 28, Mr. Radnoff advised that the sale was now unconditional and was scheduled to close on October 26, 2012.

[13] On the “return” of the motion on October 4, Master Graham ordered that the CPL be discharged. He accepted for purposes of the motion that there was a triable issue with respect to Bruno’s claim to an interest in the land. In balancing the equities however, Master Graham found that the land was acquired as an investment property for commercial purposes and that the land was not unique, notwithstanding Bruno’s assertion that he had some particular attachment to the lands. He found that damages were easily ascertainable, that damages were pled in the alternative and that damages would be an adequate remedy. He found that there was a willing purchaser to close October 26 and the defendant had undertaken to pay a significant sum into court from the sale proceeds. He found the harm to the defendant by keeping the CPL exceeded the harm to the plaintiffs in discharging it. Master Graham then refused the plaintiffs’ request to stay his own order pending an appeal since there was no irreparable prejudice. He ordered that the plaintiffs (i.e. both Bruno and Cavana) pay costs of the motion to the defendant within 30 days fixed in the sum of $7,000.00.

[14] On October 12, the plaintiffs served a notice of appeal (without a fixed return date) and a motion for a stay of Master Graham’s order discharging the CPL. On October 24, 2012 Justice Wilton-Siegel dismissed the motion for a stay. He found there was no irreparable harm since the property was a commercial investment, was not unique and damages could compensate the plaintiffs if Bruno’s ownership was upheld at trial. He also held that the balance of convenience favored not granting a stay, given the potential loss of a purchaser and the ability to compensate Bruno for any loss. Justice Wilton-Siegel concluded: “insofar as the merits of [Bruno’s] claim to beneficial ownership of the property are relevant to the consideration of the balance of convenience, [Bruno’s] claim must be regarded as weak.” He was also of the view that in light of Mr. Radnoff’s undertaking to advise when the agreement became unconditional the motion for a CPL should not have been brought ex-parte.

[15] The sale by the defendant of the one-acre parcel was completed on October 26, 2012.

[16] On December 21, 2012 the defendant served a motion for security for costs and to strike Cavana’s claim under Rule 21 as disclosing no cause of action.

[17] On February 13, 2013, Justice Wilton-Siegel released his costs ruling respecting the stay motion. He commented that the plaintiffs had delayed in bringing the CPL motion for four months and then did so without notice to the defendant. He found there was no merit in the motion for a stay. He commented: “I have not taken the issue of an alleged failure to make full and frank disclosure to Master Abrams into consideration. It is not necessary given the…merits of the applicant’s position on this application.” He awarded costs against both plaintiffs of $6526.40 “payable forthwith”.

[18] On February 20, 2013 Mr. Cucci advised that (a) Cavana was discontinuing its action given that the plaintiffs’ interest in the land “has been terminated” and (b) the appeal of Master Graham’s order was to be discontinued as the sale of the lands “made it completely moot”. Mr. Cucci confirmed that the automatic stay of Master Graham’s costs award was therefore no longer in effect and those costs then became payable.

[19] At that point the costs of $7,000 ordered by Master Graham and the costs of $6526.40 ordered by Justice Wilton-Siegel, in the total amount of $13,526.40 were outstanding.

[20] On March 4, the plaintiffs delivered the sum of $3,260 in partial payment of the two costs awards, leaving an outstanding balance of $10,266.40.

[21] On March 7, 2013, the security for costs and the Rule 21 motions came before Justice Pollak. She ordered that the action by Cavana be discontinued with prejudice on the consent of both parties. She then ordered: “Any remaining issues are within the jurisdiction of a master and shall be dealt with by the master. Any issues regarding costs thrown away of this motion are to be dealt with by the master hearing the appropriate motions.” My understanding of that order is that I am to determine the motion for security for costs against Bruno, the costs of the Rule 21 motion and of the discontinuance by Cavana.

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