CITATION: Stravino v. Buttinelli, 2015 ONSC 1768

COURT FILE NO.: 07-FA-14939FIS

DATE: 20150318

SUPERIOR COURT OF JUSTICE – ONTARIO

RE: Luigi Stravino, Applicant

AND:

Annamaria Buttinelli, Respondent

BEFORE: C. Horkins J.

COUNSEL: Peter Smith, for the Applicant

Simon Schneiderman, appearing as Agent for the Respondent

HEARD at Toronto: February 5, 2015

ENDORSEMENT

introduction

[1] The applicant Luigi Stravino was born in Italy in 1952. He met his wife Annamaria in Toronto and they married in July 1975. Their son Adriano and daughter Marlyn were born in 1976 and 1982 respectively.

[2] The parties eventually separated, but do not agree on the date of separation. A divorce order was issued on May 28, 2000. The applicant states that he did not know about the divorce or the respondent’s application for a divorce until May 3, 2006.

[3] On July 31, 2007, the applicant commenced this application against his former wife Annamaria Buttinelli. He claims spousal support and equalization from the respondent.

[4] Mr. Stravino brings a motion pursuant to Rule 11(3) of the Family Law Rules to add three respondents to his application: Giovanna Buttinelli (Annamaria’s mother/Mr. Stravino’s former mother-in-law) and the two adult children of the marriage, Adriano Stravino and Marlyn Stravino. He seeks an order amending his application as set out in the proposed amended application (Schedule “A” to the notice of motion).

[5] Mr. Stravino also seeks an order directing that Civil Action CV-14-518834 (“the civil action”) commenced in the Superior Court of Justice on December 24, 2014, be heard in the Family Court in Toronto together with this application.

[6] At the outset of the motion, Mr. Stravino withdrew some of the requested amendments to his application. In para. 50 of the proposed application where the “Other” relief is listed paras. 10, 11, 12, 13, and 15 are withdrawn. Mr. Stravino also withdraws the following requested amendments in the body of the pleading: the underlined words in para. 5 on page 6, and in the Important Facts section, paras. 22 and 24.

[7] In general the proposed respondents dispute this motion because they say that the proposed claims against them are barred by the expiration of a limitation period and the applicant has not provided sufficient evidence to show that the issue of discoverability is engaged.

[8] There is one proposed amendment that is not objected to. The applicant seeks to add his children as respondents to seek spousal support from them. There is no limitation period for this claim (Limitations Act, 2002, S.O. 2002, c. 24, Sched. B, s. 16(1)(c)). This amendment is granted.

The Application

[9] I start with an overview of the claims advanced and the material facts set out in the original application.

[10] The applicant was born in Italy in 1952. He married the respondent in July 1975. They have two children (now adults), Adriano and Marlyn.

[11] In 1991, the family returned to Italy to live. They acquired a business in Italy and the applicant gave up his Canadian citizenship to qualify for state employment in Italy.

[12] On July 15, 1991, the applicant was seriously injured when he was hit by a motor vehicle while walking in Rome. There is no dispute that he suffered numerous injuries including a closed head injury. He returned to Toronto for better medical care and in late 1992 went back to Italy where his family continued to reside.

[13] On January 19, 1995, the applicant’s claim arising from the accident was settled. The respondent told the applicant that it was settled for approximately $440,000 (“settlement funds”). The respondent transferred the settlement funds to her account in Toronto.

[14] In 1996, the respondent sold her hair salon business in Italy. She and the children returned to Toronto to live and left the applicant in the care of his sister in Italy. The respondent repeatedly told the applicant that because he had renounced his Canadian citizenship, his Canadian passport could not be renewed and he could not move back to Toronto with his family.

[15] From 1996 through 2004, the respondent travelled to Italy to visit the applicant. She assured the applicant that his application for a passport was going well, but he was being pursued for an unpaid debt arising from the medical treatment he received in Toronto in 1992. The respondent told the applicant that he would be able to join his family in Toronto soon.

[16] The applicant pleads that the respondent asked him to sign various documents. He does not know how many documents he signed and says that he does not know “what these documents were about”. In summary, he alleges that the respondent deceived him by asking him to sign documents such as various powers of attorney under false pretenses. She used the documents for her benefit and to his detriment.

[17] The applicant states that the respondent had him sign a power of attorney so that the debt from the medical treatment would not fall on the respondent and the children. The respondent also asked him to sign a power of attorney concerning the matrimonial home in Toronto at 22 Appleton and the hair salon business in Toronto. The respondent told him that this was necessary because the family needed a larger home when he returned to Toronto.

[18] In 2001, the respondent obtained a power of attorney for the applicant’s Canada Pension Plan Disability Benefit.

[19] In April 2005, the respondent gave the applicant a bank draft in the amount of $105,000 Euros. She told the applicant that this was all that was left from his settlement funds and he had to use the money to take care of himself while living in Italy and waiting to return to Canada. After delivering this money to the applicant, the respondent visited her husband in Italy sporadically.

[20] In 2006, the applicant returned to Canada for his son’s wedding. When he arrived, the respondent told him that they were “now separated” and he could only stay in the Toronto home for one month. At the airport on his way back to Italy after the wedding, his daughter gave him an envelope. He opened it when he arrived in Italy and was astonished to find out that the court had issued a divorce judgment in May 2000. Although the actual date that he learned about the divorce is not in the application, the applicant argues that it was May 3, 2006

[21] He has no knowledge of receiving a petition for divorce and if he signed any documents concerning the divorce, he states that they were misrepresented to him.

[22] There was no financial statement filed with the application for divorce and property was not equalized.

[23] After learning about the divorce, the applicant discovered that the Appleton home had been sold in 1997 for $173,000. He also learned that the respondent had filed income tax returns on his behalf that described him as married in the years 1996 through 2004.

[24] The applicant alleges that the respondent collected his CPP disability payments from March 1996 until 2001.

[25] The applicant believes that the respondent may have siphoned off family assets and that others may be holding this property in trust for the respondent.

[26] The applicant did not know that he had two years from the date of divorce to bring a claim for equalization of family property. He relies on s. 2(8) of the Family Law Act, R.S.O. 1990, c. F.3 to seek an extension of the two year limitation period applicable to an equalization claim.

[27] The applicant states that he is impoverished and cannot work because of his injuries.

[28] The respondent has a successful hair salon business that she set up when she returned to Canada. The applicant alleges that the respondent acquired this business and various real estate using family property and his settlement funds. Further she “orchestrated events to ensure that all their property and assets would remain with her”.

[29] The applicant alleges that the respondent used family property and his settlement funds to acquire two homes (326 Pellatt Avenue and 85 Wendell Avenue) and a hair salon business on St. Clair Avenue.

[30] Since the respondent returned about half of the settlement funds to the respondent in April 2005, the alleged misuse of the settlement funds covers what was not returned to the applicant.

[31] The applicant seeks a variety of relief from the respondent:

• Full disclosure and a tracing order to show what the respondent did with family property from 1996 to date

• Spousal support

• An unequal division of family property

• Return of his settlement funds from the accident

• An interest in all property that the respondent owns

• Damages for fraud and “loss of investment opportunity” on all funds that the respondent misappropriated from him.

The Proposed Amendments

[32] The applicant’s motion seeks to add three respondents and amend his application. The proposed respondents are the applicant’s two adult children and his former mother-in-law.

[33] In the existing claim the applicant seeks spousal support from the respondent. He states that because of his injuries arising from the 1991 accident he has “obscured vision, loss of balance, speech impediments, memory problems and limited use of hands and legs.” He has not been able to work since this accident. The applicant states that he is impoverished.

[34] The applicant seeks to add a claim for spousal support from his children. This proposed amendment is not contested as there is no limitation period applicable to support.

[35] The remaining new claims are grounded in the applicant’s allegation that his settlement funds and/or share of the family property (including sale proceeds from Appleton) were used to purchase three houses in Toronto: 326 and 319 Pellatt Avenue and 85 Wendell Avenue.

[36] The applicant alleges that the conduct of the respondent and the proposed respondents has “caused him damage”.

22 Appleton Avenue

[37] The Appleton property was the matrimonial home. When the family moved to Italy, a power of attorney was given to Giovanna and her husband. They lived in the matrimonial home while the family resided in Italy.

[38] In or around 1993 Appleton was “transferred” using the power of attorney. This was contrary to the applicant’s intentions and instructions. The pleading does not say who the property was transferred to.

[39] Sometime after May 2000, the applicant discovered that Appleton had been sold in 1997 for $173,000.

326 Pellatt Avenue and 319 Pellatt

[40] Shortly after the respondent transferred the applicant’s settlement funds to her account in June 1996, Giovanna bought 326 Pellatt for $217,000 and paid cash. Giovanna and her husband had no assets of their own. They were retired and were living in the Appleton property while the applicant and his family were living in Italy. The respondent requested the bank in Italy to transfer the settlement funds to her bank account in Toronto. She gave the Italian bank written instructions to make this transfer.

[41] The applicant believes that his settlement funds were used to buy 326 Pellatt.

[42] In 2009, Marlyn purchased 319 Pellatt. She used money from the sale of Appleton and his settlement funds to purchase this property.

[43] The applicant seeks a declaration that Giovanna holds 326 Pellatt in trust for him. He also seeks an order that Giovanna transfer title to this property to him.

[44] The applicant seeks a declaration that Marlyn holds 319 Pellatt in trust for him. He does not seek an order that Marlyn transfer title to him.

85 Wendell Avenue

[45] In May 2004, the respondent purchased 85 Wendell Avenue for $305,000 and paid cash. It is alleged in the original application that the respondent used family property and the applicant’s settlement funds to buy 85 Wendell.

[46] Two months after the respondent purchased 85 Wendell, she placed a mortgage on this property for $228,750. On January 28, 2011, the respondent transferred this property to herself and Adriano for no consideration. The next day a second mortgage was registered against the property for $185,548. A third mortgage for $48,000 was registered against the property.

[47] On February 10, 2011, the respondent transferred her interest in 85 Wendell to Adriano. The proposed pleading states “Adriano says he used the proceeds of the Appleton property for the down payment on 85 Wendall which he claims to have paid in 2004.”

[48] The applicant seeks a declaration that the January 28, 2011 transfer of the Wendell property to the respondent and Adriano is a fraudulent conveyance pursuant to the Fraudulent Conveyance Act, R.S.O. 1990, c. F.29 and void as against the applicant.

legal framework

[49] Pursuant to r.11(3) the court “shall give permission to a party to amend an application, answer or reply, unless the amendment would disadvantage another party in a way for which costs or an adjournment could not compensate.”

[50] The proposed respondents argue that the applicable limitation period has expired and as a result this is a “disadvantage” that cannot be compensated through costs or any other manner.

[51] Both sides rely on the following case law that has developed under rule 5.04(2) of the Rules of Civil Procedure, R.R.O. 1990, Reg. 194. This rule states:

5.04(2) At any stage of a proceeding the court may by order add, delete or substitute a party or correct the name of a party incorrectly named, on such terms as are just, unless prejudice would result that could not be compensated for by costs or an adjournment.1

[52] In Pepper v. Zellers Pepper v. Zellers Inc. (2006), 2006 42355 (ON CA), 83 O.R. (3d) 648 (C.A.), the court described the low threshold on the motion as follows at para 14:

…a rule 5.04(2) motion to add parties and, in this case, to add parties after the apparent expiration of a limitation period, is discretionary. While the threshold on such a motion is low, the motion judge is entitled to consider the evidentiary record to determine whether there is a live issue of fact or credibility about the commencement date of the limitation period.

analysis

[53] The nature of the proposed amendments cannot be considered as one. The proposed claim relating to the Wendell property is different from the two Pellatt properties.

[54] The applicant seeks a declaration that the Pellatt properties are held in trust for him. In argument he characterized this as a constructive trust claim. The applicant also seeks damages for unjust enrichment.

[55] A constructive trust claim is not made against the Wendell property. Instead, the applicant seeks to have the January 28, 2011 conveyance to the respondent and Adriano declared a fraudulent conveyance. Currently, Adriano is the sole owner of Wendell. I note that the applicant is not seeking to set aside the February 10, 2011 transfer. Arguably, this transfer falls if the January 28 transfer is set aside.

[56] If the January 28, 2011 conveyance is set aside, sole ownership of the property would revert back to the respondent. The respondent owned this property on the applicant’s date of separation. The applicant states that once the conveyance is set aside, he is entitled to have the value of the property equalized.

Analysis - The Wendell Property

[57] The applicant argues that his claim under the Fraudulent Conveyance Act is subject to the 10 year limitation period set out in the Real Property Limitations Act, R.S.O. 1990, c.L.15 (“RPLA”). The respondent argues that a two year limitation period applies.

[58] There is no limitation period in the Fraudulent Conveyance Act. The applicable limitation period is the two year limitation period in the Limitations Act, R.S.O.1990 c. L.15 unless the10 year limitation period under s. 4 of the RPLA applies.

[59] Section 4 of the RPLA states:

4. No person shall make an entry or distress, or bring an action to recover any land or rent, but within ten years next after the time at which the right to make such entry or distress, or to bring such action, first accrued to some person through whom the person making or bringing it claims, or if the right did not accrue to any person through whom that person claims, then within ten years next after the time at which the right to make such entry or distress, or to bring such action, first accrued to the person making or bringing it.

[Emphasis added.]

[60] The applicant relies on McConnell v Huxtable, 2014 ONCA 86. This was a family law application in which Ms. McConnell brought a claim for unjust enrichment seeking a constructive trust in property that Mr. Huxtable owned. She alleged that she made significant contributions to the property during their common law relationship. Her claim was statute barred unless the 10 year limitation period in the RPLA applied. The motion judge found that the RPLA applied and this was upheld on appeal.

[61] In this case, s. 4 of the RPLA applies if the applicant’s claim relating to Wendell is “an action for recovery of land”. In McConnell v Huxtable, the meaning of this phrase was considered in the context of a constructive trust. The Court of Appeal summarized the findings of the motion judge at para. 23:

The motion judge held that the plain meaning of recover any land includes seeking an equitable interest in land through imposition of a constructive trust. As he said at para. 59, "a case in which someone asks the court to award them ownership of part or all of a piece of land held by somebody else is an action to recover land." … The conclusion of his analysis is found in paras. 74-80. For present purposes it is sufficient to set out para. 77:

A party seeking an ownership interest by way of constructive trust must plead and then prove facts establishing entitlement to it. The fact that a claimant must prove enrichment of the other party and a corresponding deprivation of the claimant, with no juristic reason for the enrichment in order to establish a constructive trust, and must also show that damages alone are insufficient and only a proprietary remedy is adequate, does not alter the fact that the claimant has asked the court from the beginning to award an interest in land. To me, all this means is that the claimant has to plead and prove those key elements, usually called "material facts" in litigation, to justify the order sought. It should not matter how many material facts there are or whether the entitlement to land requires a two step analysis, so long as the application makes a claim of entitlement to ownership of land.

[Emphasis added.]

[62] Frequently, as in this case, when a constructive trust is alleged, the applicant seeks an alternative claim of damages for unjust enrichment. McConnell v Huxtable confirms at para.40 that this alternative relief shelters under s. 4 because it is an “alternative or fallback position to the first claim advanced by the applicant, which is for an ownership interest.”

[63] The proposed claim dealing with the Wendell property is not “an action to recover any land”. The applicant is not seeking an entitlement to an ownership in land as was the case in McConnell v Huxtable. The applicant’s purpose in seeking to have the January 28, 2011 conveyance set aside is focused solely on his aim to have the value of this property available for equalization. If the conveyance was fraudulent, then ownership of the Wendell property reverts back solely to the respondent.

[64] The fact that land is incidentally involved in the proposed fraudulent conveyance claim does not mean that the action is governed by the RPLA (see Zabanah v. Capital Direct Lending Corp., 2014 ONCA 872, aff’d. 2014 ONSC 2219 and Metropolitan Toronto Condominium Corp. No. 1067 v. L. Chung Development Co., 2012 ONCA 845; Toronto Standard Condominium Corp. No. 1487 v. Market Lofts Inc., 2015 ONSC 1067).

[65] As stated in Rawluk v. Rawluk, 1990 152 (SCC), [1990] 1 S.C.R. 70 at para. 44 there is a distinction between relying on a constructive trust versus equalization:

44 The distinction between a share in ownership and a share in property value through an equalizing transfer of money is more than an exercise in judicial formalism. This distinction not only follows the two-step structure of the Family Law Act, 1986 but reflects conceptual and practical differences between ownership and equalization. Ownership encompasses far more than a mere share in the value of property. It includes additional legal rights, elements of control and increased legal responsibilities. In addition, it may well provide psychological benefits derived from pride of ownership. Where the property at issue is one to which only one spouse has contributed, it is appropriate that the other spouse receive only an equalizing transfer of money. But where both spouses have contributed to the acquisition or maintenance of the property, the spouse who does not hold legal title should be able to claim an interest in that property by way of a constructive trust and realize the benefits that ownership may provide. The imposition of a constructive trust recognizes that the titled spouse is holding property that has been acquired, at least in part, through the money or effort of another. The non-titled spouse's constructive trust interest in this property is distinct from the right to an equalizing share of property value that is derived not from an independent property right but from the status as a married person.

[Emphasis added.]

[66] In summary, the proposed claim under the Fraudulent Conveyance Act relating to 85 Wendell Avenue is not an action to recover land. As a result, the 10 year limitation period under s. 4 of the RPLA does not apply.

[67] A two year limitation period applies and it has expired. This is clear from the applicant’s affidavit sworn on April 26, 2012. In this affidavit the applicant states that he was not aware that Adriano had purchased the Wendell property until 2006 when the applicant came to Toronto to attend his son’s wedding. At para. 39 of this affidavit, he explains that in January 2012 he learned that the respondent had transferred her interest in the Wendell property to Adriano. At this point, he became the sole owner of the property. The affidavit states as follows:

I believe that the Respondent transferred all of her interest in 85 Wendell Avenue as a way to rid herself of any assets that she may have available to her. The transfer of the Respondent’s interest in 85 Wendell Avenue to Adriano Stravino was not discovered by me until January, 2012 at which time I realized that Adriano needed to be added as a party to the litigation and necessitated the registration of the Certificate of Pending Litigation or I could lose any recourse I may have with respect to 85 Wendell.

[Emphasis added.]

[68] More than two years have passed since the applicant discovered that he had a claim with respect to the Wendell property. There is no issue concerning discoverability.

[69] The proposed amendment that seeks a declaration that the conveyance of the Wendell property was fraudulent under the Fraudulent Conveyance Claim is denied. It is clearly statute barred. Specifically this covers the “Other” relief in paras. 50(8) and (12) of the proposed application.

Analysis – 326 and 319 Pellatt

[70] The applicant argues that the 10 year limitation period under the RPLA applies. His claim as it relates to the Pellatt properties is framed as a constructive trust claim. As a result, I am satisfied that McConnell v. Huxtable applies. The proposed amendment is a claim “to recover any land”.

[71] When does the 10 year limitation period start to run? The applicant argues that it runs from May 3, 2006, the day he says that he discovered he was divorced. Before this date, he believed that he was married and relied on the respondent to take care of his money.

[72] There is some evidence to support the applicant’s reliance on the May 3, 2006 date. For example, although the court issued a divorce in May 2000, the respondent continued to describe herself as married in her income tax returns until she filed her 2005 income tax return in 2006. In 2001, the year after the Divorce order was issued, the respondent had the applicant sign a legal document. This document described the respondent as the applicant’s wife and designated the respondent as the applicant’s survivor who was entitled to his pension benefits.

[73] If the 10 year limitation period starts to run on May 3, 2006 then the claims against the proposed respondents are not out of time.

[74] The respondent disputes the applicant’s evidence and says that he knew divorce proceedings were initiated when he was served with the Petition for Divorce in 1998. Similarly, Adriano and Marlyn state that their father knew that he was separated in 1996 and was aware of the Divorce order before May 2006.

[75] The applicant concedes that the limitation period may start to run as of January 8, 2005. On this date, he sent the respondent a letter demanding that she return to him half of the settlement funds. The respondent returned the money requested. In this letter he also asks the respondent if she can do something so that his pension money is sent directly to him.

[76] After relying on the respondent for so many years to manage his money and take care of him, this letter demanding half of his settlement money seems odd and raises questions about what the applicant knew at the time concerning the use of family property and his settlement money. It might become apparent that this is when the applicant discovered that he had a claim.

[77] Recognizing this risk, the applicant’s counsel commenced the civil action on behalf of the applicant against Giovanna Buttinelli, Adriano Stravino and Marlyn Stravino. The claim was issued on December 24, 2014. The applicant seeks an order directing that this civil action be transferred to Family Court and heard together with this application.

[78] Clearly, there is a live dispute between the parties as to when the limitation period should start to run. As the court stated in Skrobacky (Litigation guardian of) v. Frymer, 2014 ONSC 4544 (Div. Ct.), “[a] review of the jurisprudence addressing rule 26.01 suggests that on a motion to amend pleadings, where there is an issue of fact or credibility relating to discoverability, the customary practice is to grant leave to amend with leave to the defendant to include a limitation period defence”. This applies to this motion to add parties.

[79] In summary, the applicant has satisfied the court that there is a live issue of fact and credibility concerning discoverability and the commencement date of the limitation period as it relates to 326 and 319 Pellatt Avenue. Extensive evidence was filed on the motion that addresses the issue of discoverability. The issue is complicated and is best decided with the benefit of viva voce evidence at trial.

[80] I agree that the civil action should be transferred to this Family Court and heard together with this application. This civil action encompasses claims dealing with the Wendell property that I have not allowed to be added to the application. Transfer of this civil action is not an opportunity to introduce what has not been allowed on this motion. This will require the applicant to amend this civil action since I have decided that the proposed claims regarding the Wendell are statute barred.

The Cross-motion

[81] The respondents brought a cross motion seeking to strike out the applicant’s affidavit or certain paragraphs. The basis for this motion is their position that much of the affidavit is speculation and should be struck.

[82] Since I did not rely on those parts of the applicant’s affidavit that are speculative in nature, it is not necessary for me to deal with the issue.

[83] The cross motion is dismissed.

conclusion

[84] The motion pursuant to Family Law Rule 11(3) to add parties and amend his application is granted as follows.

(1) The applicant may add Giovanna Buttinelli, Adriano Stravino and Marlyn Stravino as respondents to this application.

(2) Adriano Stravino shall be added solely for the purpose of seeking spousal support.

(3) The proposed claim against Adriano Stravino relating to the Wendell property is statute barred.

(4) The amended relief requested in paras. 50(6), (7), (9) and (14) is allowed.

(5) The amendments requested in paras 5, 6, 10, 11, 14, 15, 21, 23, 25 and 30 is allowed.

[85] If the parties cannot agree on costs, they shall exchange brief written submissions and file them with the court by April 16, 2015.

C. Horkins J.

Date: March 18, 2015