SUPERIOR COURT OF JUSTICE – ONTARIO
COMMERCIAL LIST
COURT FILE NO.: CV-11-9318-00CL
DATE: 20140103
RE: Bertina Alfano, Trustee of the Carmen Alfano Family Trust, Bertina Alfano, Italo Alfano, trustee of the Italo Alfano Family Trust, Italo Alfano, Ulti Alfano Trustee of the Ulti Alfano Family Trust and Ulti Alfano ,
Plaintiffs
AND:
Terry Piersanti also known as Terry Scatcherd, Christian Piersanti, Piersanti and Co. Barristers and Solicitors, Piersanti and Co. Professional Corporation, 1269906 Ontario Limited, 1281111 Ontario Limited, 1281038 Ontario Limited, 1314112 Ontario Limited, 1281633 Ontario Limited, 1281632 Ontario Limited,
1466556 Ontario Limited, 3957331 Canada Inc., 3964400 Canada Inc., 3968626 Canada Inc., 4002598 Canada Inc., 4011902 Canada Inc., 6051685 Canada Inc., 6060439 Canada Inc., 6260365 Canada Inc., 6292470 Canada Inc., 6306560 Canada Inc., 6324223 Canada Inc., 6792715 Canada Inc., Yonge Centre Properties Inc., 6335144 Canada Inc., TMJ Investments, Tara Piersanti also known as Tara Piersanti-Blake, Justin Piersanti and Morgan Piersanti,
Defendants
BEFORE: Newbould J.
COUNSEL:
V. Ross Morrison and R. Samantha Chapman, for the Piersantis/moving parties
Kevin D. Sherkin, for the plaintiffs/responding parties
HEARD: December 23, 2013
ENDORSEMENT
[1] The Piersantis move to quash the attempt of the plaintiffs to bring on for hearing a motion made to the trial judge, Justice Ellen Macdonald, in June 2009 towards the end of the trial. Part of the relief sought by the plaintiffs at that time was dismissed. Later, the trial judge released her reasons for judgment in the action in which she held for the plaintiffs in a number of respects. An appeal by the defendants to the Court of Appeal was partially successful. Leave to appeal to the Supreme Court of Canada was denied.
[2] In their motion to the trial judge, the plaintiffs asked for an order that a number of documents be produced, and an order that a number of the defendants pay $4.8 million into court pending the release of the trial reasons for judgment on the basis that those defendants had paid that amount to various parties out of the ordinary course of business and therefore contrary to a Mareva injunction granted by Malloy J. in 2002 several years before the trial. That injunction had enjoined the defendants from dissipating their assets or dealing with their assets other than in the ordinary course of business. The plaintiffs also asked for a declaratory order that those defendants had breached the Mareva injunction.
[3] In her reasons for decision released on June 22, 2009, the trial judge declined the request to order that the $4.8 million be paid into court, holding that the plaintiffs were protected by the Mareva injunction registered on title to three plaza properties. She did not make any decision on the request for a declaration that the defendants had breached the Mareva injunction and said she would make findings on this matter in her reasons for judgment. More particularly, she said:
[8]... With respect to the payment into court of the $4,800,000, I decline to grant such relief. I do so even in the face of the very broad discretion that I have under Rule 60.02…
[9] The attitude of the Defendants towards their obligation to make full and timely production of all relevant documents was appalling, if not defiant. Collectively or individually, they held back many documents from the very early stages of these proceedings. They picked or chose the documents that they would produce. For example, there has been almost no production of the documents listed in paras. 1, 2, 3, and 4 of the notice of motion. Mr. Diamond conceded that it is too late to order this production. Except for closing submissions, scheduled to begin tomorrow, this case is closed. The Defendants justified their actions with respect to the three plazas to which the Alfanos claim an interest on a very fluid concept of what is in the ordinary course of business. It will be for me to make findings on this matter and on the credibility of the parties and their witnesses when I am considering the totality of the evidence when writing my reasons for judgment. It must be kept in mind that I ordered the re-registration of the Mareva on title to the three plaza properties very recently. Bearing in mind that I have carefully listened to the Piersanti and Gold defendants, there are matters that I cannot decide until I hear and consider closing submissions. The plaintiffs are sufficiently protected with the existence of the Mareva injunction on title to the three plaza properties. The request for payment into court of the $4,800,000 or such lesser sum as I might arbitrarily fix is therefore dismissed. Costs of this motion are reserved to be dealt with at the time of the ultimate disposition of costs in this action.
[4] In her reasons for judgment dated September 3, 2010 the trial judge appeared to make a finding, or come close to making a finding, that the Mareva injunction had been breached, and she ordered that 1281632 Ontario Limited, a Piersanti company, pay $2.5 million into court. She stated:
103 The evidence is that they have conducted the operation of 1281632 Ontario Limited (the mall properties) without regard to the injunction. Ms. Piersanti was cross-examined extensively on payments made that appear to contravene the terms of the injunction. Ms. Piersanti justified these payments on the basis that it was necessary to do so because they were in the ordinary course of business. Her interpretation of what was in the ordinary course of business was a very fluid one. Mr. Diamond prepared a chart revealing a total of $2,465,436.46 in payments that he submitted were not in the ordinary course of business.
104 There was brief reply evidence on June 5, 2009, followed by the renewal of a motion by the Plaintiffs to compel the Gold Defendants to pay into court $2,465,436.43. The Plaintiffs alleged that these monies were used by Mr. and Ms. Piersanti in contravention of the injunction imposed by Molloy J. in September 2002. I declined to order the payment into court stating that I would deal with these issues in these reasons. The following is the chart prepared by Mr. Diamond setting out the details of payments made from the proceeds of mortgages on the Mall properties.
TOTAL $2,465,436.46
105 I have concluded that $2,500,000 shall be paid into court to the credit of the Plaintiffs within 30 days of the release of these reasons. This will not cause any hardship to the Piersanti Defendants and will be some security for the Plaintiffs who will most likely encounter great difficulty in enforcing any judgment granted by this court in respect of their damages for losses in Osler.
[5] In the Court of Appeal, this part of the judgment was set aside. It was held that the trial judge had made no finding of a breach of the Mareva injunction but that that issue had not finally been disposed of. O’Connor A.C.J.O stated:
[165] The appellants argue that the trial judge erred in ordering 128 (a Piersanti related company) to pay $2.5 million into court.
[166] The respondents sought the payment into court on the basis that Ms. Piersanti had caused 128 to pay out approximately $2.5 million in breach of the Mareva injunction granted on June 18, 2002.
[167] I would set aside this order.
[171] In para. 105, the trial judge did not link the award to the breach of the Mareva injunction. Notably, she did not make any finding of contempt, nor give any indication that the $2.5 million award was being ordered for punitive or denunciatory purposes. On the contrary, she appears to have considered the payment of $2.5 million as a down payment against her damage award.
[172] 128, the party ordered to pay the $2.5 million, was not a defendant in the claim for fraud related to the Osler bankruptcy that gave rise to the judgment against Mr. Piersanti. The trial judge did not make any findings that would render 128 liable to pay the damage award for the fraud claim.
[173] In the result, I would set aside this order. To be clear, I do not conclude that there was no basis for a finding that the Piersantis breached the Mareva injunction. Rather, I am not satisfied that the trial judge, in her reasons, made that finding. That being the case, the trial judge’s reasons and these reasons should not be read as finally disposing of that issue.
[6] Mr. Morrison for the Piersantis contends that by deciding in her reasons on the motion dated June 22, 2009 to refuse to order $4.8 million be paid into court, the trial judge effectively dismissed the application for a declaration that the Mareva injunction had been breached. I do not read her decision that way. I read her decision to have put off any decision on the request for declaratory relief until her reasons for judgment would be prepared and released. To repeat, in her reasons on the motion she stated:
The Defendants justified their actions with respect to the three plazas to which the Alfanos claim an interest on a very fluid concept of what is in the ordinary course of business. It will be for me to make findings on this matter and on the credibility of the parties and their witnesses when I am considering the totality of the evidence when writing my reasons for judgment.
[7] The trial judge confirmed in paragraph 104 of her reasons for judgment of September 3, 2010 that in her reasons on the motion, she had put off the issue so it could be dealt with in her reasons for judgment.
[8] While it appeared in her reasons for judgment in paragraph 103 that the trial judge found that there had been a breach of the Mareva injunction, the Court of Appeal though otherwise, as set out in paragraph 173 of its reasons. The plaintiffs point to the underlined passages of that paragraph to assert that it cannot be said that the trial judge found there to have been no breach of the Mareva injunction. Rather, the plaintiffs say, it is clear from that passage of the Court of Appeal’s reasons that the issue has been left open.
[9] I agree with the plaintiffs. The decision of the Court of Appeal, binding on the parties and on me, means that the issue of whether there was a breach of the Mareva injunction was not finally disposed of and it cannot be said that there was no basis for a conclusion that the Piersantis breached the injunction.
[10] However, it is necessary to consider what happened after the decision of the Court of Appeal.
[11] On January 3, 2013, counsel for the plaintiffs provided written submission to Macdonald J. asking her to dispose of their motion that there had been a breach of the Mareva injunction and asked that it be dealt with at an appointment on February 8, 2013 that had been scheduled to deal with other issues. It was contended that rule 59.06 (1) provided her with the necessary jurisdiction. That rule provides that an order that requires amendment in any particular on which the Court did not adjudicate may be amended on a motion in the proceeding. Reliance was placed on the decision of the Court of Appeal that said the issue was still open.
[12] Counsel for the Piersantis filed written submissions opposing the request, essentially arguing that Macdonald J. had decided the issue in her reasons on the motion of June 22, 2009 in declining to order payment into court and therefore there was no issue that had not been adjudicated upon. This submission appears to have disregarded paragraph 173 of the reasons of the Court of Appeal.
[13] Due to health issues, the trial judge adjourned the appointment on several occasions. The appointment eventually took place on April 26, 2013. Oral submissions were made on the request of the plaintiffs that day to decide whether there had been a breach of the Mareva injunction. Near the end of that appointment, counsel for the Mrs. Piersanti provided a draft order to the trial judge that there be an inquiry into damages sustained by the Gold Defendants (some of the defendants, including Mrs. Piersanti) as a result of the Mareva injunction. This was caused by the action being dismissed against the Gold Defendants in the Court of Appeal. Macdonald J. signed the order that day.
[14] On June 13, 2013, the parties received an e-mail from Theresa Finelli, the administrative assistant to Macdonald J. The e-mail was as follows:
After hearing submissions on April 26, 2013, I have concluded that I am not prepared to amend my judgment.
Madam Justice Ellen Macdonald
[15] On the same day, June 13, 2013, Mr. Sherkin for the plaintiffs sent an e-mail back to Theresa Finelli and stated:
[16] Your Honour
With great respect, our clients did not ask that you amend your judgment. Our clients asked for a disposition on their motion which pursuant to your Endorsement on the motion was to form part of the Trial Endorsement. The Court of Appeal left that issue open for determination by stating that neither your Trial Endorsement nor the Court of Appeal’s decision foreclosed that open motion and it was not disposed of.
We would graciously appreciate knowing the following:
Is your email to be codified in an Endorsement?
Will there be further reasons?
If not your Honour, is your email directing our clients to seek a disposition of that motion from another judge?
Thank you for your continued assistance and clarification in that regard.
[17] On the following day, June 14, 2013, Mr. Diamond on behalf of the plaintiffs emailed Mr. Morrison and other defence counsel and stated that depending on the response of Macdonald J. to Mr. Sherkin’s email of the previous day, in the event that the email from Macdonald J. is the “Endorsement”, he wished to place Mr. Morrison on the earliest possible notice that it was his clients’ intention to appeal the ruling.
[18] On June 17, 2013 Mr. Diamond sent a further email to Mr. Morrison and other defence counsel and asked them if they required the plaintiffs to serve a formal notice of appeal from the email of Macdonald J. He said he was not sure how to proceed without an actual endorsement and was hopeful that Macdonald J. would provide a further response. He asked for a response a.s.a.p. if they needed a formal notice of appeal. No substantive response was received to this email.
[19] A further attendance before Macdonald J. was scheduled to deal with outstanding costs of the proceedings. Unfortunately, that attendance was also cancelled, again due to her health issues.
[20] On August 27, 2013, Mr. Sherkin wrote to Macdonald J. and asked that an appointment be scheduled to deal with his email to her of June 13, 2013. No response was received. Unbeknownst to the parties, on August 30, 2013 Justice Macdonald retired from the bench for health reasons. On October 10, 2013, and not knowing of her retirement, Mr. Sherkin emailed Ms. Finelli and asked Justice Macdonald to deal with the issues raised in his email of June 13, 2013.
[21] Mr. Morrison takes the position that by her email of June 13, 2013, Macdonald J. disposed of the request by the plaintiffs to have her rule on whether there had been a breach of the Mareva injunction. He says the only route open to the plaintiffs was to appeal that decision to the Court of Appeal, which did not occur. Mr. Sherkin says that the email was not an endorsement.
[22] This is an unfortunate situation. Madam Justice Macdonald was not well in the spring of 2013 and eventually retired from the court at the end of August. What is most concerning is that no reasons whatsoever were given by her for the statement that she was not prepared to amend her judgment. Requests of her for clarification of the e-mail went unanswered. If the e-mail could be considered to be a final decision dismissing the motion, it would not be possible for an appellate court to make any meaningful review of it in accordance with the principles of R. v. Sheppard, 2002 SCC 26, [2002] 1 S.C.R. 869 and the matter would have to be sent back for a rehearing.
[23] I disagree with the plaintiffs that they did not request the judgment to be amended. They justified their renewal of the motion on the basis that the judgment could be amended to deal with something not dealt with by the judge. To this extend the e-mail dealt with their request.
[24] The e-mail was not an order. Nor was it an endorsement as required by rule 59.02(1). That rule requires it to be “made” by a judge on the motion record. No such endorsement was made by Macdonald J. I would not treat the endorsement as a valid endorsement. Thus there has been no final decision on the motion.
[25] It seems to me that even if it could be said that the e-mail passed procedural muster, no order has been taken out and Macdonald J. was not functus. As I am the judge directed to hear the remaining issues in the action, it follows that I am not functus. This is not a rule 59.06(1) situation in which an order taken out is sought to be amended because of some accidental slip or omission or requires amendment in any particular on which the court did not adjudicate. There has been no order.
[26] There is authority, mainly in cases involving attempts to re-open matters because of alleged new evidence, that a court has a wide discretion to re-open a matter where the integrity of the process is at risk or a principle of justice is at stake that requires the reconsideration of the matter, and while a court should re-open a motion or other matter sparingly and with the greatest of care, it may re-open it when it is just to do so in exceptional circumstances. See Strugarova v. Kissiov (2009), 2009 40552 (ON SC), 82 C.P.C. (6th) 298 at para. 7. See also Degroote v. Canadian Imperial Bank of Commerce, [1998] O.J. No. 1696 at para. 6, per Lax J.; aff’d 1999 4115 (ON CA), [1999] O.J. No. 2313 (C.A.).
[27] In these circumstances, even if the endorsement could be said to be a real or proper endorsement, which in my view it was not, the circumstances here, in which no reasons were provided by Macdonald J. who before her retirement failed to respond to requests for clarification of the e-mail, are exceptional and the integrity of the process is at stake. Moreover, any appeal would inevitably result in the matter being sent back to me for decision on the basis of R. v. Sheppard. I would exercise my discretion and re-hear the matter.
[28] In the circumstances, I am of the view that the matter of whether the Mareva injunction was breached is an open question and that I have jurisdiction to deal with the matter. Counsel may arrange a 9:30 a.m. appointment to discuss scheduling of the motion.
[29] The motion of the Piersantis is dismissed. The plaintiffs are entitled to their costs. If costs are not agreed, the plaintiffs may make brief written submissions no longer than three pages in length along with a proper cost outline within 10 days and the Piersantis may make brief written reply submissions no longer than three pages in length within a further 10 days.
Newbould J.
Date: January 3, 2014