Remo Valente Real Estate (1990) Ltd. v. Portofino, 2015 ONSC 1221

Court File and Parties

COURT FILE NO.: 05-CV-5864CM

DATE: 20150226

SUPERIOR COURT OF JUSTICE - ONTARIO

RE: Remo Valente Real Estate (1990) Limited, Plaintiff

AND:

Portofino Riverside Tower Inc., Westview Park Gardens (2004) Inc. Portofino Corporation and Dante J. Capaldi, Defendants

BEFORE: Carey J.

COUNSEL: Gino Morga, Q.C., Counsel for the Plaintiff

David A. Taub, Counsel for the Bank of Montreal

Anthony J.G. Van Klink, Counsel for BDO Canada Limited, Court-appointed Receiver of Portofino Corporation

HEARD: February 23, 2015

ENDORSEMENT

[1] The moving party, BDO Canada Limited (“BDO”), Receiver of Portofino Corporation (“Receiver”) moves that the Letter of Credit, dated October 3, 2007, in favour of the accountant of the Superior Court of Justice, posted as security by Portofino Corporation in this action, be surrendered and cancelled. BDO further seeks an order that the plaintiff, Remo Valente Real Estate (1990) Limited (“Valente”) pay all costs associated with maintaining of the Letter of Credit from May 9, 2012 forward, accruing at a daily rate of $54.80, as well as an order discharging the mortgage registered in favour of the plaintiff.

[2] The only real area of contention relates to the cancellation of the Letter of Credit. BDO, as Receiver, argues that circumstances have changed since the May 2012 order of Quinn J. continuing the security. They say that the order is no longer necessary as the concerns over dissipation of the assets are no longer present with their involvement as Receivers. They also say that the continuation of the Letter of Credit has the effect of re-ordering priorities and giving Valente an unfair preference as a [secured] creditor. The plaintiff, Valente, argues that the Letter of Credit naturally flows from the decision of Brockenshire J. through to Quinn J. and that more prejudice would result from cancelling the Letter of Credit. Mr. Morga, on behalf of his client, has described the Receiver as a mere “stalking horse” for the Bank of Montreal (“BMO”) and says that the concerns reflected in the judgments of Brockenshire and Quinn JJ. remain. He argues that as Dr. Dante Capaldi continues to manage the Portofino development, it is “business as usual” and the continuance of the faulty business practices, as determined by Brockenshire J., continue to dissipate the asset. Circumstances have not changed since the appointment of the Receiver according to Mr. Morga. The plaintiff says there should be a preference in fairness to the plaintiff given that the claim for the breach of contract relates to commissions that were earned in 2005 before all of the other claims were registered, including suspicious construction lien claims filed by Dr. Capaldi in 2013.

[3] In this motion the onus is on the moving Receiver to persuade me that the circumstances here have changed pursuant to r. 59.06(2) of the Rules of Procedure, R.R.O. 1990, Reg. 194. Rule 59.06 reads as follows:

59.06 (1) An order that contains an error arising from an accidental slip or omission or requires amendment in any particular on which the court did not adjudicate may be amended on a motion in the proceeding.

Setting Aside or Varying

(2) A party who seeks to,

(a) have an order set aside or varied on the ground of fraud or of facts arising or discovered after it was made;

(b) suspend the operation of an order;

(c) carry an order into operation; or

(d) obtain other relief than that originally awarded,

may make a motion in the proceeding for the relief claimed.

[4] I am not persuaded that the facts put forward by the Receiver amount to circumstances that would allow me to vacate the Letter of Credit. I am advised that the trial can be scheduled quite soon after this Endorsement is released. I am troubled by the fact that Dr. Capaldi is still involved in the management of the project, the expenses that have built up under the Receiver’s watch and the liens registered in favour of the lawyers for Portofino since the Letter of Credit was received. In terms of fairness, I am not satisfied that the plaintiff’s claim will be best served by allowing the Receiver to deal with any judgment that the plaintiff may receive as part of the distribution as approved by the court.

[5] The plaintiff’s case appears to be a strong one. Justice Brockenshire’s lengthy and thorough decision made findings of fact and credibility against Dr. Capaldi. Those were not disturbed by the decision of the Divisional Court or the Court of Appeal.

[6] Accordingly, the motion is dismissed in respect to paragraph a) of the Notice of Motion, Tab 1 of the Motion Record, relating to the cancelling of the Letter of Credit dated October 3, 2007. An order will go pursuant to paragraph b) of the said motion requiring the plaintiff, Valente, to reimburse Portofino and pay to the Receiver the costs associated with maintaining the Letter of Credit from May 9, 2012 to today’s date and going forward at a daily rate of $54.80 for each day thereafter and c) an order discharging the mortgage registered in favour of the plaintiff, Valente, as set out in the Notice of Motion of BDO Canada Limited, the Receiver.

[7] If the parties cannot agree to costs of this motion I will receive written, brief submissions within 30 days of release of this endorsement.

Original signed “Carey J.”

Thomas J. Carey

Justice

Date: February 26, 2015