COURT FILE NO.: 11-24661
DATE: 2013-10-23
ONTARIO
SUPERIOR COURT OF JUSTICE
BETWEEN:
Linda Rosati, also known as Linda Deni
and Joseph Rosati
Plaintiffs
– and –
Pasquale Cornelio and
Mortgage Intelligence Inc.
Defendants
Philip U. Okpala, for the Plaintiffs
Sonya Katrycz, for the Defendants
HEARD: October 4, 2013
THE HONOURABLE MR. JUSTICE P.B. HAMBLY
reasons for judgment
Introduction
[1] The defendant has brought a motion for summary judgment on the grounds that the statement of claim does not raise a cause of action or in the alternative for delay in prosecution. The plaintiffs defend the motion on the current statement of claim and bring a motion to file a fresh as amended statement of claim and to add a party.
The Facts
[2] Joseph Rosati (Joseph) was married to Laura Regimenti (Laura). They separated and divorced. Justice Steinberg made an order dated January 23, 2007 in the divorce action which incorporated Minutes of Settlement. Joseph is now married to Linda Rosati, a.k.a. Linda Deni (Linda). Joseph was a house builder and is now a real estate broker. Linda is a mortgage broker. Joseph and Linda have long lived and worked in the City of Hamilton. Laura has brought an application in the divorce action to set aside Justice Steinberg’s order on the grounds of non-disclosure by Joseph of financial information.
[3] Joseph and Linda live at 12 Pickard Crescent (Pickard), in the City of Hamilton. The property is registered in Linda’s name only. It is mortgage free and has a value of about $500,000. They wish to build a house at 1272 Fidlers Green (Fidlers Green), in the City of Hamilton. This property is also registered in Linda’s name. It consists of a parcel of land of about 5.5 acres. It was purchased on October 5, 2007 for $395,000. There is a first mortgage registered against it in the amount of $400,000. In Laura’s application, on motion by Laura, Justice Reilly, to provide security for Laura’s claim, made a “non-dissipation” order dated August 6, 2009, that neither Joseph nor Linda shall “dispose of or encumber” Pickard.
[4] Joseph and Linda wish to place a mortgage on Pickard to raise money to construct a house on Fidlers Green. Linda was added as a party in Laura’s application. Joseph and Linda brought a motion before Justice Pazaratz to vacate Justice Reilly’s order or to transfer it to Fidlers Green. This would permit Joseph and Linda to encumber Pickard to raise money to build the house on Fidlers Green. Laura’s claim would be secured by the equity in Fidlers Green that would exist after the home was built. Justice Pazaratz denied the motion on June 2, 2010 without prejudice to the applicants bringing a fresh motion which addressed the “concerns and deficiencies” which he raised in his endorsement.
[5] Linda swore an affidavit on June 9, 2010 in support of a fresh motion. In that affidavit she listed the assets owned by her and Joseph and provided estimates of the equity in these properties. She deposed that there was not sufficient equity in these properties which they could use to borrow money to build on Fidlers Green. She attached a letter of opinion dated June 3, 2010 from Canada Trust that the value of Picard was $685,000. She attached a list of expenses totaling $1,124,200.00 provided to her by Joseph to build the home at Fidlers Green. She deposed that she and Joseph had savings and capacity to earn income from which they could raise $545,437. With the equity in Picard of $685,000 this totaled $1,230,437 which was approximately the estimated cost of their building the house on 1273 Fidlers Green. She attached an appraisal from Pocrnic Realty Advisors dated June 5, 2010 that the value of Fidlers Green, after the home was built on it, would be $1,800, 000. This would give Laura ample security for her claim against Joseph. She advanced the proposition that “the only viable alternative that we have in order to build our home at 1272 Fidlers Green is to build with the equity of 12 Pickard Crescent (para. 21 of affidavit). She stated that “There are no alternative arrangements available to us.” (para. 36 of affadivit) Joseph filed an affidavit, also sworn June 9, 2010, in which he adopted the contents of Linda’s affidavit.
[6] Laura is living with Pasquale Cornelio (Cornelio). He is a mortgage broker and was the principal of a company called Mortgage Intelligence Inc which is a mortgage lender. Cornelio sent an e-mail on July 6, 2010 to Yitz Levinson. He is an employee of Hillmount Capital Inc. (Hillmount). He requested a letter of interest from Hillmount in which it indicated the terms on which it would lend money to Joseph and Linda to build the house at Fidlers Green by way of a second mortgage on the property. This would make it unnecessary for them to place a mortgage on Pickard. In his e-mail he provided information from the affidavits dated June 9, 2010 filed by Linda and Joseph in the divorce action about their finances. He stated that he had been asked by Laura’s lawyer “to arrange construction financing or at best the likeliness of acquire financing.” He stated “I basically need a letter of interest based on the information given to us and can safely say we wouldn’t get the deal.”
[7] Cornelio provided to Hillmount the following information:
The appraisal on 1272 Fidlers Green showing an “end value” of $1,800,000.
The construction costs of the house on Fidlers Green of $1,125,000.
First mortgage on Fidlers Green of $396,000.
He stated the requirements of the loan to be the following:
$345,000 available immediately and $200,000 available during the construction period of up to 18 months.
Construction loan minimum $580,000 to a maximum $950,000.
$770,000 would give more than enough to complete. Giving us 65% LTV (loan to value).
[8] Hillmount responded with a “Letter of interest regarding 2nd mortgage construction financing - 1272 Fidlers Green” dated July 7, 2010. It was addressed to Linda and Joseph. Hillmount sent it to Cornelio. It was a preliminary quote. It was unsigned. There was a paragraph at the end entitled “Acceptance of Letter of Intent by Borrower” followed by places for Linda and Joseph to sign as borrowers. It indicated that it would provide a loan to Joseph and Linda of up to $770,000 at 12.5 %. It listed 24 conditions.
[9] Laura filed an affidavit sworn July 14, 2010 in response to the affidavits of Joseph and Linda in which she attached the letter of interest from Hillmount dated July 7, 2010. The purpose of the letter was to demonstrate that Joseph and Linda did not need an order lifting the non-dissipation order of Justice Reilly from Pickard because they had sufficient financial resources apart from Pickard to raise money to build a house on Fidlers Green. They could obtain a loan of $770,000 secured by a second mortgage on Fidlers Green. According to the letter of opinion dated June 3, 2010 from Canada Trust, Pickard was valued at $685,000 which was less than the loan that they could raise with Hillmount.
[10] Justice Pazaratz dismissed the motion on October 12, 2012. He was not satisfied that Joseph could provide the same security to Laura for her claim against him by lifting the non-dissipation order on Pickard and placing it on Fidlers Green before a house had been built on it. He did not mention the letter of interest from Hillmount in his endorsement.
[11] The letter of interest from Hillmount dated July 7, 2010 did not come to the attention of Linda until the day of the hearing of the motion on October 12, 2010. In her examination for discovery in this action on October 2, 2012 she said that she phoned Hillmount and spoke to Yitz Levinson the following day on October 13, 2010. She asked him about the letter of interest. He told her that he was provided with a package by Cornelio. He understood that she was related to Cornelio. He thought that Cornelio was helping her and Joseph to arrange financing. He thought that Cornelio, Joseph, Laura and she were all family members. She said to him that she and Joseph were in litigation with Laura. She explained that it made no sense that she and Joseph would approach the partner of Joseph’s former wife Laura, namely, Cornelio to arrange financing for them. She told Yitz Levinson that she intended to proceed with whatever was necessary to remedy the situation. Cornelio was not a party to the proceedings between Joseph and Laura. Linda was a party in that proceeding. She was concerned that Cornelio would go to a third party, namely Hillmount, to arrange financing for her and Joseph. Cornelio provided her personal information to Hillmount without her consent. This was done not for the benefit of her and Joseph but for the benefit of him and Laura.
[12] On January 5, 2011 Joseph and Linda (the plaintiffs) caused their lawyer to issue a Statement of Claim against Cornelio (the defendant) and Mortgage Intelligence Inc. in which they claimed general damages of $500,000 and punitive damages of $500,000 for a total of $1,000,000 and an injunction against Cornelio and Mortgage Intelligence Inc. from “disbursing the private and confidential information of the plaintiffs”. They made the following allegation:
- Without authorization, or authority of any kind, the Defendant, Cornelio, utilized the personal and private information of the Plaintiffs and purported to make application to private lenders including, Hillmount Capital Inc (“Hillmount”) with respect to a construction loan for a home to be built by the Plaintiffs.
Pasquale filed a Statement of Defence dated November 28, 2011.
[13] The defendant noted pleadings closed on December 8, 2011. Examination for discovery of the parties took place on October 2, 2012. Linda gave undertakings to provide a copy of the complaint form which she filed with the Privacy Commissioner of Canada and to advise of the sections of the Mortgage Brokers Act on which she relied. An order dated September 4, 2012 made on the consent of the parties dismissed the action against Mortgage Intelligence Inc. In August 2013, the lawyer who issued the statement of claim on behalf of Joseph and Linda and who represented them on the discoveries, voluntary withdrew as their solicitor and they retained their current lawyer to represent them. Linda’s undertakings have not been fulfilled.
[14] On February 28, 2011 Linda also filed a complaint with the Office of the Privacy Commissioner of Canada (Privacy Commissioner). She alleged that Hillmount had collected the personal information of her and Joseph without their consent. Further without her knowledge and consent it used this personal information to create a letter of interest for mortgage financing to them which it disclosed to Pasquale. He in turn provided it to Laura. She used it in her application against Joseph to set aside Justice Steinberg’s order dated January 23, 2007. She did this by attaching it to her affidavit in defence of the motion of Joseph and Linda to set aside Justice Reilly’s non-dissipation order dated August 6, 2009 against Pickard.
[15] The Privacy Commissioner upheld the complaints. He found that the conduct of Hillmount violated the principle of non-disclosure of an individual’s personal information without the individual’s knowledge and consent expressed in clause 4.3 of Schedule 1 of the Personal Information Protection and Electronic Documents Act (PIPEDA). It reads as follows:
4.3 Principle 3 - Consent The knowledge and consent of the individual are required for the collection, use, or disclosure of personal information, except where inappropriate.
Exceptions in PIPEDA did not apply.
[16] The report of the Privacy Commissioner held that Hillmount had violated the right to privacy of Joseph and Linda in two ways. It had received their personal information without their consent. It had also provided to Cornelio a preliminary report of Hillmount’s willingness to provide them with a construction loan secured by a second mortgage on Fidlers Green without their consent. Cornelio obtained their personal information from their affidavits dated July 9, 2010 filed in court records in support of their motion to remove the non-dissipation order. These were available to the public.
[17] The privacy commissioner stated in his report the following:
Some of the personal information at issue in these complaints appeared in an affidavit sworn by the complainant and filed at an office of Ontario Superior Court of Justice Family Court Branch, a publicly available source.
However, not all of the information was a matter of public record, as Hillmount has contended. Specifically, the preliminary quote for financing that Hillmount was offering had not existed before and would not be found in any public record. Hillmount used the personal information of the complainant and her husband to create a new document containing a quote for their ability to finance a property, which it then disclosed to the mortgage agent.
With respect to any personal information found in the court record, the purpose for which such personal information appeared in the court record was to provide evidence in ongoing litigation between the complainant and her husband and his ex-wife. At the time it received the information, the purpose for which Hillmount collected, used and disclosed the personal information was to propose to the complainant and her husband a financial arrangement for a home construction loan. This purpose was clearly stated to Hillmount in the e-mail it received from the mortgage agent (“to arrange construction financing”). Hillmount maintained that, until it was contacted by the complainant, it was not aware that the letter of interest would be used in court or used in any manner other than for discussion purposes with the complainant and her husband.
Since these two purposes are not directly related, the exception provided by paragraphs 7(1)(d), 7(2)(c.1), and 7(3)(h.1) cannot be used to justify the collection, use and disclosure of the personal information of the complainant and her husband without their consent in the circumstances.
Hillmount also disputed our rejection of applying paragraph 7(1)(d) to justify its collection of the complainant’s personal information without meaningful consent. Hillmount maintined that the information at issue could have been obtained through a title search. Once again (and as paragraph 1(d) of the Regulations explains), we must draw attention to the difference between the purpose for which the information existed on public records, on the one hand, and that for which it was ultimately collected and used by Hillmount, on the other.
Lastly, we reviewed Hillmount’s Personal Information Policy. We noted that, although it does mention the need to obtain client consent before their personal information can be disclosed by Hillmount to third parties, there is no mention of the need for individual consent in cases where personal information is collected or used by Hllmount, as required by principle 4.3 of the Act. The respondent would therefore not appear to be in compliance with Principle 4.1.4, which requires that it implement policies and practices giving effect to the Act’s principles.
In our preliminary report of investigation of February 22, 2012, we recommended that Hillmount commit to the following:
(i) provide evidence that Hillmount has established a procedure to obtain consent for the collection, use and disclosure of personal information consistent with its obligations under Schedule 1 of the Act; and
(ii) inform this Office of Hillmount’s efforts to give effect to the procedure. This includes training staff in the procedure and developing information to explain the procedure.
- Discussions between Hillmount and this Office over the next few months resulted in a satisfactory response to our recommendations, that if followed should avoid this type of issue from recurring.
It concluded in para. 49 that the matters which Linda’s complaints against Hillmount “are well founded and resolved”.
Discussion
Defendant’s Motion for Dismissal for Delay
[18] In Woodheath Developments Ltd. v. Goldman, 2001 28019 (ON SC), [2001] O.J. No. 4018; affirmed (2003) 2003 46735 (ON SCDC), 66 O.R. (3d) 731 (Divisional Court), the plaintiff set the action down for trial 12 years after the cause of action arose, 10 years after the action was commenced and 5 years after the limitation period expired. Master Dash allowed the defendant’s motion dismissing the action. Justice Then dismissed the plaintiff’s appeal. He stated the following;
4 Specifically, I accept as correct the principles applicable to motions to dismiss for delay derived by the learned master from the case law and accurately summarized in the headnote at 56 O.R. (3d) p. 658 as follows:
The principle to be applied on a motion to dismiss for delay is that the action should not be dismissed unless: (1) the default is intentional and contumelious; or (2) the plaintiff or his or her lawyers are responsible for the inexcusable delay that gives rise to a substantial risk that a fair trial might not now be possible. It is presumed that memories fade over time, and an inordinate delay after the cause of action arose or after the passage of limitation period gives rise to a presumption of prejudice. Where there is a presumption of prejudice, the defendant need not lead actual evidence of prejudice and the action will be dismissed for delay unless the plaintiff rebuts the presumption. The presumption of prejudice may be rebutted by evidence that all documentary evidence has been preserved and the issues in the lawsuit do not depend on the recollection of witnesses or that all necessary witnesses are available with detailed recollection of the events. If the presumption is rebutted, then the action may still be dismissed if the defendant leads convincing evidence of actual prejudice.
[19] The cause of action in this case likely arose either on or about July 14, 2010 when Laura attached the letter of interest to her affidavit of that date or on October 12, 2010 when Linda first became aware of it during the argument before Justice Pazaratz. The two year limitation period provided by the Limitations Act 2002 would expire on or about July 14, 2012 or October 12, 2012. Examinations for discovery took place on October 2, 2012. There is only one undertaking of Linda unfulfilled, namely the production of the complaint form to the Privacy Commissioner, which is meaningful as a result of the dismissal of the action against the corporate defendant. This can be easily fulfilled. A new lawyer has only been on the case since August 2013. The case can go ahead largely on admitted facts based on documents that are available. The defendant has led no evidence of actual prejudice. The delay is neither “intentional and contumelious” or “inexcusable” and “inordinate”. This branch of the defendant’s motion is dismissed.
The Defendant’s Summary Judgment Motion
Failure To Plead Cause of Action
[20] The cause of action that the plaintiffs wish to pursue on the facts pleaded is the tort of Breach of Privacy. They have not pleaded it. The defendant submits that the Statement of Claim cannot be amended now to include an allegation of Breach of Privacy. The claim is statute barred as a result of the expiration of the two year limitation period provided by the Limitations Act, 2002 s.4. They rely on the decision of the Court of Appeal in the judgment of Justice Feldman in Joseph v. Paramount Canada’s Wonderland 2008 ONCA 469, 90 O.R. (3d) 401. In that case, as a result of inadvertence in a solicitor’s office, a statement of claim was not issued until after the expiration of the two year limitation period. Justice Feldman held that the doctrine of special circumstances which permitted the extension of a limitation period no longer applied. The action was statute barred.
[21] However in this case the plaintiffs allege that the tort of breach of privacy applies to the facts as pled in a statement of claim that was issued within the two year limitation period. In similar circumstances, Justice Healey in Muskoka Fuels v. Hassan, [2009] O.J. No. 5877 allowed the claim to proceed. She stated the following:
14 The law is well settled that pleading alternative bases of relief on the same facts does not constitute raising a new cause of action; it is tantamount to drawing a different legal conclusion from the facts already pled ( citations omitted).
In my view the case could proceed on the existing statement of claim without amendment if the facts as pleaded could support the tort of breach of privacy.
Can The Facts Pleaded Support A Cause Of Action For Invasion Of Privacy?
[22] In Somwar v. McDonald’s Restaurants (2006), 2006 202 (ON SC), 79 O.R. (3d) 172 the plaintiff was employed as a restaurant manager. His employer conducted a credit cheque on him without his consent. He sued the employer on the grounds that it had violated his right to privacy. In his judgment dismissing a motion brought by the defendant to dismiss the action on the grounds that the statement of claim did not disclose a cause of action, Justice Stinson referred to the principle that a plaintiff’s case should not be dismissed unless it was “plain and obvious” that it could not succeed. (para. 4 relying on Hunt v. Carey Canada Inc., 1990 90 (SCC), [1990] 2 S.C.R. 959 at 980). The real question on the motion of the defendant is whether it is “plain and obvious” that the facts alleged could not support the tort of breach of privacy. (see also Lakeshore Oakville Holdings Inc. v. Misek (2010), ONSC 6007 where Justice Perell dismissed an action on this test; affirmed by the Court of Appeal in Combined Air Mechanical Services Inc. v. Flesh 2011 ONCA 764, the seminal case interpreting the recent amendments to Rule 20 for the granting of summary judgment and Jones v. Tsige, 2012 ONCA 32, [2012] O.J. 148 at paras. 30-32 approving Somwar )
[23] In Jones and Tsige, Sandra Jones and Winnie Tsige were bank employees. Tsige was living in a common law relationship with Jones’ former husband. Tisge was involved in a financial dispute with him. Jones had a bank account at the same bank where Tsige worked. Tsige used her access as a bank employee to customers’ bank accounts to look at transactions in Jones’ bank account. She stated that she wanted to know if Jones’ former husband was paying child support to Jones. Jones did not accept that explanation. Jones sued Tsige for invasion of privacy. Jones and Tsige each brought motions for summary judgment. The motions judge granted Tsige’s motion and dismissed the action. The Court of Appeal in the judgment of Justice Sharpe allowed an appeal by Jones. He held that there was a tort of invasion of privacy in Ontario. Tsige’s actions constituted an “intrusion upon seclusion” which was a branch of the tort of invasion of privacy. He allowed the appeal and granted Jones summary judgment against Tsige. He assessed damages at $10,000. He stated the following:
70 I would essentially adopt as the elements of the action for intrusion upon seclusion the Restatement (Second) of Torts (2010) formulation which, for the sake of convenience, I repeat here:
One who intentionally intrudes, physically or otherwise, upon the seclusion of another or his private affairs or concerns, is subject to liability to the other for invasion of his privacy, if the invasion would be highly offensive to a reasonable person.
71 The key features of this cause of action are, first, that the defendant's conduct must be intentional, within which I would include reckless; second that the defendant must have invaded, without lawful justification, the plaintiff's private affairs or concerns; and third, that a reasonable person would regard the invasion as highly offensive causing distress, humiliation or anguish. However, proof of harm to a recognized economic interest is not an element of the cause of action. I return below to the question of damages, but state here that I believe it important to emphasize that given the intangible nature of the interest protected, damages for intrusion upon seclusion will ordinarily be measured by a modest conventional sum.
[24] Cornelio cites Rule 20 of the Family Law Rules as justification for his actions. The rule reads as follows:
(24) When a party obtains evidence under this rule, rule 13 (financial statements) or rule 19 (document disclosure), the party and the party's lawyer may use the evidence and any information obtained from it only for the purposes of the case in which the evidence was obtained, subject to the exceptions in subrule (25).
USE OF INFORMATION PERMITTED
(25) Evidence and any information obtained from it may be used for other purposes,
(a) if the person who gave the evidence consents;
(b) if the evidence is filed with the court, given at a hearing or referred to at a hearing;
(c) to impeach the testimony of a witness in another case; or
(d) in a later case between the same parties or their successors, if the case in which the evidence was obtained was withdrawn or dismissed.
[25] Linda and Joseph took the position in their affidavits sworn June 9, 2010 that they could only raise money to construct a house on Fidlers Green by using the equity in Pickard. Cornelio’s argument is that by doing this they were opening themselves up to be challenged on their position. He was justified in using the financial information about them which they provided to get an opinion from Hillmount challenging this proposition.
[26] One of the difficulties in this argument is that Cornelio is not a party to the application brought by Laura to set aside Justice Steinberg’s order of January 22, 2007. He is also not a party to the motion brought by Linda to set aside the non-dissipation order dated August 2, 2009 made by Justice Reilly. Rule 20 (25) must be read with Rule 20 (24). The “use(d) for other purposes… if the evidence is filed with the court” must mean by a party in the lawsuit.
[27] Cornelio took the position that he was acting on the request of Laura’s lawyer. It could be argued that he was, therefore, acting as agent for Laura and what Laura could do he could do also. Even if that were the case it seems that Yitz Levinson was under the impression that Cornelio’s interests were equivalent to those of Linda and Joseph. Clearly they were not.
[28] The Privacy Commissioner found that under PIPEDA Hillmount was required to determine that the information that it received from Cornelio about the private personal finances of Linda and Joseph was being provided with their consent. It was also required to determine before releasing its preliminary report to Cornelio that this was being done with the consent of Linda and Joseph. Corneilo released private personal financial information about Linda and Joseph to Hillmount without their consent. In my view it is not clear from Rule 20 (24) and (25) that a party or a person acting on the instructions of a party can release private personal financial about another party derived from the court files in a family law action to a third party for the purpose of getting an opinion under the guise that he is acting in the other party’s interest without the other party’s consent.
[29] If consent is required, Joseph and Linda may have a cause of action for the tort of invasion of privacy against Cornelio. It is not plain and obvious that their action will fail. The motion brought by Cornelio for summary judgment dismissing their action is dismissed.
Plaintiffs’ Motion To File A Fresh As Amended Statement Of Claim and To Add Laura
[30] The plaintiffs have not served Laura with their motion. As I suggested above I would be inclined to grant a motion that the Plaintiffs be permitted to amend their statement of claim to allege a cause of action of breach of the tort of invasion of privacy. The fresh as amended statement of claim which the plaintiffs seek to file contains much more and seeks to add Laura as a party. The fresh allegations in the statement of claim are integrally linked to Laura. In my view it should not be argued in part before she is served with the motion. She may want to argue that the limitation period has passed regarding a claim against her for breach of privacy and hence she should not be added for this reason. There will be an order that the plaintiffs’ motion is adjourned sine die to be renewed on five days notice after Laura is served.
Result
[31] Defendant’s motion is dismissed. The Plaintiffs’ motion is adjourned sine die on five days notice. I have a bill of costs of the defendant. I do not have one for the plaintiffs. In any event I want to give both parties an opportunity to make written submissions on costs.
[32] The plaintiffs may make written submissions on costs within 10 days of receipt of these reasons and the defendant may make written submissions on costs within 10 days of receipt of the Plaintiffs submissions.
Justice P.B. Hambly
Released: October 23, 2013
COURT FILE NO.: 11-24661
DATE: 2013-10-23
ONTARIO
SUPERIOR COURT OF JUSTICE
BETWEEN:
Linda Rosati, also known as Linda Deni
and Joseph Rosati
and
Pasquale Cornelio and Mortgage Intelligence Inc
REASONS FOR JUDGMENT
Justice P. B. Hambly
Released: October 23, 2013