NEWMARKET

COURT FILE NO.: CV-12-111199-00

DATE: 20151105

ONTARIO

SUPERIOR COURT OF JUSTICE

BETWEEN:

Vitullo Farms Inc. and 2202516 Ontario Corp.

Plaintiffs

– and –

Di Poce Management Limited

Defendant

Michael McQuade, for the Plaintiff

Fernando Souza, for the Defendant

AND BETWEEN:

Di Poce Management Limited

Plaintiff by Counterclaim

– and –

Vitullo Farms Inc., 2202516 Ontario Corp., Vanguard Realty Brokerage Corporation and Paul Michael Miceli

Defendants by Counterclaim

Fernando Souza, for the Plaintiff by Counterclaim

Michael McQuade, for the Defendants by Counterclaim, Vitullo Farms Inc. and 2202516 Ontario Corp.

HEARD: October 27, 2015

RULING ON MOTION

gilmore J.:

Overview

[1] This is the defendant’s motion for an order compelling Albert Vitullo, as a representative of the plaintiffs, to provide an answer as to which Vitullo entity or family member had an interest in Vanguard Realty Brokerage Corporation (Vanguard) at the relevant time.

[2] This matter arises as a result of a claim by the plaintiffs for specific performance with respect to a real estate transaction, which was to have closed on July 16, 2012.

[3] The defendant has counterclaimed against the plaintiff, specifically as follows:

(d) at all material times, the Plaintiffs failed to disclose to DiPoce that their agent, Miceli, was in fact the brother-in-law of the principal of the purchaser, and had a vested interest in the acquisition of the Property.

[4] On July 15, 2014, Albert Vitullo attended an examination for discovery as a representative of the plaintiffs. An excerpt from the examination for discovery is required to fully understand the nature and background of the refusal:

16 Q. One of the other companies involved was the Vanguard Realty Brokerage Corporation?

A. Mm – hmm.

17 Q. You’re familiar with that company?

A. Yes, I am.

18 Q. One of the, I guess, the agents and CEO of that company is Paul Michael Micheli?

A. Yes.

19 Q. Do you know who he is?

A. Yes.

20 Q. What’s his family relationship to yourself?

A. My brother-in-law.

21 Q. I understand that you and your father or companies associated with you at one time had an interest in Vanguard Realty?

A. Correct.

22 Q. Is that still the case or - -

A. No, it is not. It was set up in trust for another family member. That didn’t transpire so we dissolved it.

23 Q. Do you know when all those - - the transactions in relation to Vanguard Realty, when they happened, when they were dissolved, things of that nature?

A. Maybe November, December 2012.

24 Q. Now, do you remember money changing hands in terms of when it was dissolved or transferred or otherwise dealt with?

A. I’d have to check with my lawyer on that. I don’t know.

25 Q. Who would the lawyer be, Mr. Presta?

A. Presta is my lawyer.

26 Q. Any other lawyers involved in that transaction?

A. Maybe Vanguard’s.

27 Q. Do you remember what interest you or your dad had in Vanguard?

A. Well, off the top of my head I don’t know.

28 Q. So, counsel, I’d like an undertaking to know at the time of the transaction which would have been in 2012 what the shareholding interest or interest was of the Vitullos in Vanguard and advise by way of undertaking?

Mr. Neirinck: Why?

Mr. Bisceglia: Why? It’s relevant to the pleading.

Mr. Neirinck: Right. I don’t think it’s relevant. We’re not going to do it.

Maybe Vanguard will feel differently when you ask questions about Vanguard.

[5] Subsequent to the discovery, the plaintiffs provided certain undertakings. With respect to the refusal of question 28, as above, the plaintiff somewhat corrected his answer as follows:

First, we wish not to answer Q.28 but correct the answer to Q.21. Vince Vitullo has never directly or indirectly had any sort of interest of any kind in Vanguard Realty Brokerage Corporation (“Vanguard”). He has never been a shareholder, director or officer of Vanguard. Second, as to Albert Vitullo, I can’t see how whether or not he happened to hold shares in Vanguard between the beginning of negotiations for and the closing date of the Agreement of Purchase and Sale for the subject property is or could possibly be relevant to the issues in this action. If you believe you have a basis for asking for particulars of any shareholding interest, please let me know so that I may take it under consideration. For the moment, the question is refused because of lack of relevance.

The Position of the Moving Party Defendant

[6] The moving party takes the position that the earlier answer of Mr. Vitullo has been partly corrected and partly refused. They submit that it is now no longer possible for the plaintiff to take the position that the issue is not relevant. Having answered the question, the issue of relevance is presumed. Counsel relies on Towne v. Miller, 2001 CarswellOnt 3828 O.S.C.J. In that case, at paragraphs 8 and 9, the court stated that an undertaking is an acknowledgment that a question is proper and that the subject matter of the undertaking is relevant. Therefore, counsel should not be permitted to renege on a production undertaking where counsel subsequently comes to the belief that a document or part of it is not relevant in the action. Briefly, the moving party defendant’s position is that once the undertaking is given, counsel is bound to answer it.

[7] The defendant’s alternative argument is that this issue is relevant because the relationship between the broker and the plaintiffs is pleaded in the statement of defence. Specifically, the defendant pleads that Miceli was in a conflict of interest and that the shareholding interest at Vanguard becomes relevant as a result.

The Position of the Responding Party Plaintiff

[8] The plaintiff submits that Q.28 of the transcript makes it clear that plaintiff’s counsel never agreed to answer on the basis of relevance. The question was properly refused.

[9] The plaintiff submits that the defendant wanted to sell and his agent discussed a price adjustment with Vanguard and/or Mr. Miceli. The defendant or its representative never spoke directly with Vanguard or Mr. Miceli.

[10] As well, the plaintiff submits that their counsel does not represent Vanguard and points out that when the defendant examined Vanguard some weeks ago, Vanguard also refused the same request. The plaintiff’s submit that the defendant is attempting to get through the back door what they could not get by way of a direct examination of Vanguard.

[11] Finally, the cases cited by the defendant deals with a situation in which undertakings were given and then reneged upon. That is not the same as the facts of this case, in which no undertaking was actually given.

Analysis and Ruling

[12] The main issue in this motion is whether the requested disclosure of Mr. Vitullo is relevant with respect to the pleadings and factual matrix of this case. I find that it is relevant. It is clear that the issue of conflict of interest with respect to Mr. Miceli is in issue. Therefore, the shareholding of Vanguard does become relevant, as submitted by defendant’s counsel.

[13] There is also the issue of Mr. Vitullo’s admission during the course of his discovery that Mr. Miceli was his brother-in-law and that he and his father had a shareholding interest in Vanguard. The fact that this answer was later corrected does not mean that the matter is no longer relevant.

[14] Mr. Vitullo shall therefore be required to give the undertaking requested in Q.28 of the transcript of his examination for discovery. He has seven days to do so.

Costs

[15] The parties agree that costs would be fixed at $1,500. The defendant has been successful and costs are therefore awarded to the defendant in the amount of $1,500, payable forthwith.

Madam Justice C.A. Gilmore

Released: November 5, 2015