CITATION: Scalamonga v. Di Toro, 2015 ONSC 4931
MOTION HEARD: 20150724
REASONS RELEASED: 20150805
SUPERIOR COURT OF JUSTICE – ONTARIO
BETWEEN:
Teresa Scalamogna and Liliana Siggillino,
Plaintiffs
and
Rosanna DiToro, Egidio DiToro, 1416134
Ontario Limited, 2377544 Ontario
Inc., Daniela DiToro, Robert DiToro and
Maurizio Occhiuto,
Defendants
BEFORE: MASTER D. E. SHORT
COUNSEL: Patrice Cote, for the Moving Plaintiff, Siggillino Fax: 905-886-4871
Mark Ellis, for the Plaintiff Scalamogna Fax: 416-863-1221
Matthew Karabus, for the DiToro Defendants Fax: 416-862-7661
RELEASED: August 5, 2015
Reasons for Decision
I. Overview
1This is a Family Feud case. Two sisters sue their third sister together with her children and corporations controlled by members of her portion of the family.
2The plaintiff Liliana recently retained new counsel. That counsel brought an ex parte motion before my colleague Master Dash on July 9, 2015 seeking a Certificate of Pending Litigation. At that hearing Master Dash directed that the matter ought to proceed on notice to the defendants. His endorsement set out a number of reasons for his endorsement.
3Firstly, the claim was made in the original Statement of Claim that was issued in November of 2013. That claim .apparently was not specifically pursued until the ex parte motion then brought an urgent basis before Master Dash.
4Secondly the action had to date been vigorously defended by both an unsuccessful motion to dismiss and then an unsuccessful motion seeking leave to appeal that decision. As well the defendants have been represented by counsel throughout.
5The third ground related to the fact that the mortgage that was now causing concern was registered on January 27, 2015 and the moving party of Lilliana had been aware of its existence for over three weeks since a title search was conducted by June 16, 2015.
6As a consequence Master Dash adjourned the matter to July 24, 2050 so that notice could be provided to the lawyer representing the defendant. I heard the return of the motion on that date.
II. The Case So Far
7In his reasons in Scalamogna v. DiToro found at2014 ONSC 5914; 246 A.C.W.S. (3d) 48; 5 E.T.R. (4th) 125; 2014 CarswellOnt 14915 Justice Firestone sets out the background to this action. It is of some relevance to note the motion was heard on July 22, 2014.
8In part the decision reads:
1 The moving party defendants (DiToro defendants) bring this motion for an order:
(a) With respect to the plaintiffs' claims against the DiToro defendants for the recovery of the land ( the "Property Claims"), an order under rule 21.01(1) (b) striking out the statement of claim, without leave to amend, on the basis that it fails to disclose a reasonable cause of action; and
(b) With respect to the plaintiffs' claims other than for the recovery of land (the "Non-Property Claims"), an order under rule 21.01(1)(a) dismissing the action on the basis that it is statute barred.
3 At the hearing of the motion I was advised that the parties have settled all issues except whether the plaintiffs' action based on the alleged fiduciary duty between the sisters who are parties to this action can stand, given the defendants' position that they have no interest in the subject property in dispute until the death of their mother, at which point they are entitled to the property under her will.
FACTUAL BACKGROUND
4 The plaintiffs Teresa Scalamogna ("Teresa") and Liliana Siggillino ("Liliana") are sisters of the defendant Rosanna DiToro ("Rosanna"). With the exception of the defendant Maurizio Occhiuto ("Occhiuto"), the remaining defendants are family members of Rosanna, or numbered companies (1416134 Ontario Limited and 2377544 Ontario Inc.) which are controlled by Rosanna and her husband, the defendant Egidio DiToro ("Egidio"). The defendant Daniela DiToro ("Daniela") is Rosanna and Egidio's daughter. Robert DiToro ("Robert") is Rosanna and Egidio's son. The subject property is currently in Daniela's name.[MY EMPHASIS]
5 Occhiuto is the solicitor who provided legal advice to the sisters regarding the sale of their interest in the subject property. Occhiuto takes no position on this motion.
9Based upon documents now filed before me it would seem that, while His Honour understood that the property was registered in the name of Daniela on the date the motion was heard. He might well not have been aware that the transfer by which she became the owner, from 1416134 Ontario Limited, appears to have been registered the day that the motion was argued. As well, that the same day, a mortgage in favour of the TD Bank for $543,750 was apparently placed by her.[sic]
10His Honour went on to observe:
6 The property at issue in this action is a family farm property located at 13940 Airport Road, Caledon, Ontario ("the property"). The property was originally purchased by the sisters' parents, Filomena Siggillino ("Filomena") and Gregorio Siggillino ("Gregorio"), in 1973. The property consists of 46.89 acres located just outside the Greenbelt.
7 Filomena and Gregorio intended the property to form the principal inheritance of their progeny. In 1997, Gregorio passed away. As a result, title to the property passed to Filomena, who be-came the sole owner of the property and continued to hold the property as the family investment property. It is alleged that Filomena maintained and maintains that the property was to be shared equally by her daughters, in fulfilment of both her and Gregorio's life-long wish.
8 The issue in dispute between the parties relates to circumstances leading up to the transfer of the property on or about July 16, 2008.
9 The plaintiffs argue that the three sisters are devisees of the property under Filomena's will. The will itself is not in evidence; however, that fact is accepted by the defendants for the purpose of this motion. The plaintiffs allege that in 2007 Filomena indicated that she wished the property to be passed down to her children collectively at that time and that the property was to be transferred to the siblings collectively as their inheritance. Accordingly, they would each receive a one-third in-terest in the property.
III The Quit Claim
11The circumstances surrounding the granting of a Quit claim form the nexus of this case. The basis for, and the propriety of, the granting of a Quitclaim as opposed to a conveyance in this case are unclear to me. As well I note in passing the potential difficulties in this case flowing from all three sisters receiving “independent” advice from the same solicitor. With respect to these issues Justice Firestone observes:
10 On July 16, 2008, all three sisters executed a Quitclaim deed transferring the property, on Filomena's behalf pursuant to a power of attorney, to 1416134 Ontario Limited for no consideration. The Quitclaim deed describes the power of attorney as number PR1224302, which was registered on March 9, 2007. All three sisters in their capacity as holders of a power of attorney were given independent legal advice by Occhiuto.
11 In or around the time of this transaction, the plaintiffs each accepted $250,000 from Rosanna, in exchange for their one-third interest in the property.
12A dispute then arose between the sisters over the $250,000 per person purchase price. The plaintiffs allege that it was not a fair reflection the property's true market value. They allege that Rosanna, who is a registered real estate broker, held herself out as an expert and as the personal representative of the plaintiffs.
13They state that Rosanna misrepresented the nature and value of the property to them, and convinced the plaintiffs to each sell their interest for far less than it was worth, so that both she and her husband could profit from the property.
14At the time of the transaction, and for approximately five months thereafter, the plaintiffs were ostensibly satisfied with the transaction. In 2013 the plaintiff Liliana became suspicious of Rosanna, after learning that Rosanna had not been honest with her regarding other business dealings.
15Liliana subsequently obtained a valuation of the property at its April 2013 value. While Rosanna paid the plaintiffs each $15,000 per acre, the plaintiffs allege that the value of the property as of April 2013 was estimated at $60,000-$70,000 per acre. [my underlining throughout]
12The material now filed before me, by way of an affidavit signed by the plaintiff Liliana Siggillino suggests that a “Market Valuation” was in fact obtained from Colliers International dated July 30, 2008 and addressed to her. That two page opinion noted that the “Property is not in the greenbelt or protected countryside areas” and specifically stated :
“Therefore, the property’s current market value is in a range between $50,000-$55,000 per acre or $2,340,000 to $2,574,000for the entire parcel.”
13I note that this written opinion is dated only 15 days after the disputed transaction. It was not provided in the material before Master Dash when the ex parte CPL was sought; rather it is annexed to a second affidavit sworn by Liliana in support of the Application for a CPL, now brought on notice.
14As part of the terms of the recent adjournment Master Dash ordered, (with my underlining added):
“ Until final disposition of this motion, the property … shall be preserved to preserve the status quo from the time of service of the motion record and this endorsement such that the property will not be transferred or further encumbered without further order of this court.”
15Rule 45.01 (1) provides:
The court may make an interim order for the custody or preservation of any property in question in a proceeding or relevant to an issue in a proceeding, and for that purpose may authorize entry on or into any property in the possession of a party or of a person not a party.
16Rule 37.02(2) gives Masters (as part of the “court”) the jurisdiction of a judge, except in specific enumerated situations, which are irrelevant in this case.
17Rule 45 also gives the court powers with respect to a specific fund:
45.02 Where the right of a party to a specific fund is in question, the court may order the fund to be paid into court or otherwise secured on such terms as are just.
18I am satisfied that by virtue of these rules a master has the jurisdiction to make an interim preservation order of real property while a CPL motion is pending.
IV. The New Agreement of Purchase and Sale
19The difficulty that now has arisen flows from the production by the defendants, following service of Master Dash’s Order, of an Agreement of Purchase and Sale (the “APS”) relating to the property apparently signed three days before the hearing before the master.
20The plaintiff’s application was originally based on the registration of the $2,000,000 new mortgage, but they now point to this new agreement as further justifying my issuing a CPL now.
21The document produced by the defendants before me was annexed to an affidavit sworn by Robert D Toro on July21, the affidavit indicates that the on July 3 2015 237 as seller and “Gurmeet S. Sidhu in Trust as buyer” which is to close August 17, 2015
22Mr Di Toro deposes that “I executed the APS for 237 on July 3, 2015 prior to obtaining knowledge of Siggillino’s motion.”
23The offer made and accepted is for $6.9 million dollars. This was clearly a substantial offer that contained an unusual provision whereby the $200,000 deposit payable on the acceptance of the APS “is non-refundable”.
24That transaction is scheduled to close on August 15, which seems somewhat quick for a transaction of this magnitude. I was advised on the hearing of the motion that the purchaser is not willing to extend the closing date.
25What I have sought to do in deciding this motion is to protect at least a reasonable portion of the interest that might be claimed by the two sisters based on the appraisal that was available to them.
26I therefore directed that a Certificate of the Pending Litigation be issued but that it may be vacated upon payment in the court of the sum of 1.5 million dollars, to be held pending the outcome of this litigation.
V. Leave to Appeal Findings
27In his February 2015 reasons, decining leave to appeal to the Divisional Court from the decision of Justice Firesone, Justice Lederer in reasons that can be found at 2015 ONSC 874, held in part:
2 The plaintiffs are two of three sisters. The defendant, Rosanna Di Toro, is the third. Their parents purchased and preserved a farm in the Town of Caledon. They wished it to be left to their daughters as their inheritance. The father of the three sisters is dead. His interest in the farm passed to his wife, who is alive. The property was transferred. Two of the defendants are numbered com-panies (1416134 Ontario Limited and 2377544 Ontario Limited, hereinafter respectively, "1416" and "2377"). The first, 1416, is identified as one of two parties (the other is the husband of Rosanna Di Toro), who use the property "as a company premises for the carrying-on of the contractor busi-ness" (Statement of Claim, para. 8). It appears that the farm was first transferred from the mother to 1416 and then transferred to 2377, a company owned by the defendants other than Maurizio Occhiuto. It is referred to as the "succession owner" (Statement of Claim, para. 1(d)).
3 The fundamental premise of the prospective appeal is that the plaintiffs can have no claim because they had no interest in the land. The land was owned by the mother and transferred to a company owned by Rosanna Di Toro and other of the defendants. The plaintiffs were mere devisees (beneficiaries) under the will of their mother. They had no legal interest in the property at the time the transfer was made. As a result, there cannot be a fiduciary duty owed by the defendants to the plaintiffs. There can be no such duty in respect of an unrecognized interest under a will of a person who is still alive. Moreover, there cannot have been an inter vivos gift of the land to the three sisters, a possibility raised by the trial judge, because it was not pleaded.
4 The problem with this approach (and the factum of the moving parties) is that it fails to tell the whole story. In 2007, the mother of the sisters indicated a wish that the property be passed down to the sisters, at that time, while she was still alive. This was the catalyst for the transfer. The Statement of Claim says (and the factum filed on behalf of the responding parties relies on the fact) that, at the time of the transfer, the two plaintiffs each received $250,000 from Rosanna Di Toro for their respective interests in the farm. It is only when these facts are brought to bear that the claims made by the plaintiffs for an interest in the property, damages, loss and mistreatment at the hand of the third sister come into focus.
5 There is a point where parties hide within a technical position and lose sight of the obvious. If the two sisters had no interest in the property, what did the defendant, Rosanna Di Toro buy when she paid each of them $250,000? Given the position of the defendants, they were paid for something they did not own. The better view is the one espoused by the motion judge. The transfer centred on the apparent desire of the mother that the property was to be passed to her daughters prior to her death. It is reasonable to project that, at some point in the course of the transfer, the property passed to the daughters. The motion judge raised the possibility of an inter vivos gift. The Statement of Claim refers to a constructive trust. One way or the other, it is not plain and obvious that the plaintiffs did not either hold an interest in the property or were improperly denied one. This being so, the actions of Rosanna Di Toro, as outlined in the Statement of Claim, if proven, may support a claim for breach of fiduciary duty. In playing the role she did, remembering that the plaintiffs relied on her experience as a real estate professional, it may be that she acquired the duties of loyalty and the plaintiffs the primacy of interest ascribed to a fiduciary relationship.
6 In making this motion, the moving parties rely on r. 66.02(4)(b) of the Rules of Civil Procedure. In the circumstances, I have no doubt as to the correctness of the decision of the motion judge. To the contrary, it would be surprising, if given the facts alleged, the law offered no remedy to the two plaintiffs. Whether the claims that the defendant sister misrepresented the value of the property to her two sisters or breached a fiduciary duty she owed to them is properly left to a judge to decide through whatever means are appropriate. It could be a summary judgment motion but is more likely a trial.
28That decision indicated that it was “Heard: by written submissions”. The decision on the leave application was released February 9, 2015.
29The title search placed before Master Dash reveals that the “succession owner”, 2377 , , on January 27,2015, less than two weeks before and clearly while the leave to appeal motion was pending, granted a substantial further encumbrance to 527540 Ontario Limited in the amount of $2,000,000.
VI. Disregard of Claims in Existing Action
30Thus the June 16, 2015 current abstract of title reflects mortgages still on title registered by various of the Defendants totalling $2,543,750.
31On the face of the Abstract those mortgages seem to flow, not from a conveyance, but rather a quit claim deed signed by all 3 sisters on July 16, 2008. The “transfer” document indicates that the transferor is the mother, Filomena Siggillino.
32The land transfer tax affidavit apparently signed by “ROBERT DITORO” would seem to suggest that he was acting as an officer of 1416134 Ontario Limited. The “Consideration” is stated to be zero with an explanation for nominal consideration stated simply as “Quit Claim deed” [sic].
33What adds to my difficulty with the title is that the title search records that prior to the quit claim deed being granted a charge was granted by Filomena to the same 1416134 Ontario Limited. The amount of the charge is not reflected on the title, abstract, but it does indicate the charge was placed on March 9th, 2007.
34A quit claim to a mortgagee would commonly be expected in a situation where the mortgage was irretrievably in default and to avoid the cost of an uncontested foreclosure.
35Why the mother would be placing a mortgage against the property more than a year prior to the Quit Claim seems unclear to me. The files of the lawyers involved in placing this mortgage electronically will perhaps explain the circumstances of this “loan”. To then grant a quitclaim deed to the mortgagee for no consideration again causes concern to me with respect to the manner in which these transactions appear to have been carried out.
36As well the abstract discloses a transfer on February 11, 2009 by 1416146 to 1783846 Ontario Inc. That entity is not a defendant in this action.
37What the title oddly does disclose is a discharge of the subject mortgage to 1416134 being but it is registered a year after the quit claim, on July 22, 2009, the same date 1783846 transferred the property to Daniela and she apparently borrowed the $543,750 against it from the TD Bank.
VII. Delay
38Counsel for the defendant asserts that the delay in bringing this application for a certificate of pending litigation ought to be fatal to the application. Having considered all the circumstances and the direction implicitly contained in the decision of Justice Lederer , I was satisfied that this was an appropriate circumstance to grant a certificate of pending litigation. There are too many unanswered questions that need to be addressed with a view to coming to the most appropriate and just result in this case.
39Nevertheless, it does appear that information was available at a very early stage, to the moving party, which does not appear to have been disclosed either in the earlier court applications or before Master Dash on the ex parte application.
40Such nondisclosure could be fatal to such an application. In this case, there may be difficulties arising from the change in counsel by Liliana.
41The concerns surrounding theissue of independent legal advice. As well issues have now arisen concerning the apparent understanding of counsel when he commenced the original 2013 action that having been served with the claim, a party would deal with the land at its peril.
42To the extent I have any discretion in this case I take comfort in believing that granting a CPL is in accord with the expectation of Justice Lederer that , “it would be surprising, if given the facts alleged, the law offered no remedy to the two plaintiffs.”
VIII. Original Pleading
43The Statement of Claim sets out in detail the remedies sought. Where any estoppel might lay is for another court. For present purposes I observe that the defendants unsuccessfully sought to have a finding made that the plaintiffs’’ claims were without merit. That original claim begins:
“I. The plaintiffs Liliana Siggillino ("Liliana") and Teresa Scalamogna ("Teresa"), claim against the Defendants, Rosanna DiToro, Egidio DiToro and 1416134 Ontario Limited, 2377544 Ontario Inc., Daniela Di Toro, Robert DiToro and Maurizio Occhiuto, :
(a) a Certificate of Pending Litigation upon the title to real property described municipally as 13940 Airport Road, Caledon East, Ontario ("the property");
(b) an order compelling the recovery of ]and pursuant to section 4 of the Real Property Limitations Act, R.S.O. 1990, c. L. 15;
(c) an interim and permanent injunction compelling the defendants to immediately cease and desist exploiting the property for their private benefit to the exclusion of the plaintiffs, until the final order of this Honourable Court;
(d) a declaration that the defendant Rosanna DiToro ("Rosanna") owed a fiduciary duty to the plaintiffs, as correspondingly by association the defendants Egidio DiToro ("Egidio"), Daniela DiToro ("Daniela"), Robert DiToro ("Robert"), 1416134 Ontario Limited ("141 "), and succession owner 2377544 Ontario Limited ("237") owed a transmitted fiduciary duty;
(e) a declaration that the defendants held and hold the property in trust as a resulting and constructive trust for the plaintiffs;
(f) a full accounting of benefit improperly and exclusively accruing to the defendants resulting from their usurping of the property to their benefit and to the detriment of the plaintiffs, including an order tracing the product of any such accrued benefit to the defendants;
(g) rescission of the improper and unlawful transfer of the property to the defendants (other than Maurizio Occhiuto ("Occhiuto")) by the plaintiffs, in order to rectify title to the property to properly reflect the ownership interests of the plaintiffs as respectively one-third owners with Rosanna; …
44The Second affidavit filed on return of motion (on notice to defendants) read in part:
Rosanna is a Registered Real Estate Agent and Real Estate Broker who practices in the Greater Toronto Area.
Egidio is a real estate developer and contractor individually and through 141. Egidio and 141 use the property as a company premises for the carrying-on of the contractor business. Both have provided services to the plaintiffs respectively as contractor.
2377544 Ontario Inc. (''237") is a duly incorporated and subsisting Ontario company wholly owned by the defendants other than Occhiuto. The property herein was transferred to 237 with knowledge of the actions of the defendants in order to avoid liability to the plaintiffs.
Daniela is the daughter of Rosanna and Egidio and was the owner of the property until July 17, 2013.
Robert is the son of Rosanna and Egidio.
The defendant Occhiuto is a duly-called Barrister & Solicitor of the Law Society of Upper Canada, with his office in the City of Vaughan. He was legal counsel to the plaintiffs and to the individual defendants with respect to the subject-matter of this action.
Interim Orders Being Sought
The plaintiffs seek leave to obtain and to register a Certificate of Pending Litigation on title to both the residential and the cottage properties described herein pursuant to Section 103 of the Courts of Justice Act, R.S.O. 1990, c. C 43, in order to preserve the properties pending the disposition of the matters set out herein.
The plaintiffs seek an interim and permanent injunction that the defendants cease and desist unilateral exploitation of the property pending trial, and a mandatory order that the lands be held and operated in trust for the beneficial owners until final disposition of the claim.
45No one cross examined on any of the affidavits filed. In my mind there are a myriad of triable issues that justify a stand still order with respect to the property and without the recent developments within the past month I would have been prepared to grant the CPL. However it seems to me that some balancing is required.
46I come to this conclusion in part because of what I regard as an important failure to disclose the valuation information available in 2008 to Liliana
On or about July 30, 2008, after I had executed the quit claim deed, I obtained an appraisal report from Colliers which indicated the value of the property to be somewhere between $50,000.00 and $55,000.00 per acre. Attached herein as Exhibit "C" is a true copy of the report.
Until I retained my former lawyer, Mark Ellis, l did not know that the term fiduciary duty applied to Rosanna, as a professional real estate agent, and that she had a duty to act truthfully and not to deceive me. So, when I obtained a valuation from Colliers in July 2008, valuating the land at $55,000.00 per acre, I was very upset but unaware that I could do anything about it.
Not only had I been betrayed by my own sister Rosanna whom I trusted, but I was
also betrayed by the defendant lawyer Maurizio Occhiuto who failed to provide the independent legal advice that I needed to understand this, and to properly inform my decision in order to avoid the situation I am in today.
IX. Understanding Status of Relief Claimed
47In now moving for a CPL the second affidavit reads in part:
Urgent Motion for CPL
Until I commenced this action, I was unaware that I could take any step to prevent Rosanna and the defendants from transferring ownership in and mortgaging the Property thereby depleting the equity. My former lawyer, Mark Ellis, advised me of this for the first time and included a claim for a Certificate of Pending Litigation ("CPL") in the Statement of Claim.
I expressed my concern to Mark Ellis from the beginning of this action that given the deceitful practices of Rosanna and the defendants it was critical that the Property be protected from further transfer and mortgaging. I wrote an email to Mark Ellis dated September 24, 2013, in preparation for issuing the Statement of Claim ... in which I provided the following instructions:
“Go ahead and do all that is necessary to get this claim ready to be served early next week especially the "lock down" of the property”.
I trusted that Mark Ellis would follow my instructions and proceed to obtain a CPL. However, he did not do so contrary to my instructions. Instead, Mark Ellis advised me that because we commenced this action seeking a CPL and asserting my interest in the Property, the defendants would have to refrain from any transaction in the Property that could affect my interest in the land. I trusted Mark Ellis' s advice.
To my great dismay, in March 2015, I discovered that the defendant 2377544 Ontario Inc. which is controlled by the personal defendants, gave a charge against the Property for $2,000,000.00 on January 27, 2015. ….
I was never given notice of this charge either prior to or after it was registered. I have never been provided with any particulars of where the $2,000,000.00 went. Given my claims in restitution, for the improper conversion of real property, for the tortious interference with my property rights and interests, the actions of the defendants are nothing short of an affront to the proper administration of justice. When Mark Ellis was made aware of this charge, he was shocked.”
48Mr Ellis attended on the motion before me but did not participate in the argument other than to indicate his client supported Lilianna’s motion
X. Proportionality
49In the current real estate market a transaction of the magnitude now disclosed ought not to be lost without good cause.
50Without limiting in any way the damages to which the plaintiffs may ultimately be found to be entitled, I determined to craft a proportional option for the defendants which will enable them to complete the agreement of purchase and sale into which they have entered
51. As a consequence at the hearing I advised the parties that I was granting plaintiff’s motion for a certificate of pending litigation and maintaining a preservation order until suchtime as a certificate had been registered, on the condition that the certificate would be vacated upon payment into court (or as the parties otherwise agree) of the sum of $1,500,000 ,on the closing of the specific transaction disclosed by the defendants in their materials filed before me.
52That sum was calculated, taking into account what appeared to be the present available equity in the property at the proposed date of sale and also the difference between the valuation obtained by the plaintiff as of 2013, and the amounts already paid to each of the two plaintiffs.
53In the event, the contemplated sale does not close the certificate of pending litigation will remain in place and the parties will be at liberty to have the court canvas what terms for removal of that certificate are appropriate at that point in time.
XI. Disposition
54The Motion for a leave to register a Certificate of Pending Litigation against the Airport Road Property was therefore granted at the conclusion of the argument before me.
55The Preservation Order preventing dealing with the property, made earlier by Master Dash was continued until the Registration of the CPL.
56The Certificate will be vacated simultaneously with the payment of $1,500,000 as outlined above, in the event the pending sale is completed in accordance with its terms.
XII. Costs
57Given the delays and ambiguities I am satisfied that this is an appropriate occasion where costs of the entire motion should be awarded “in the cause”.
Master D.E. Short
R.108/DS