SUPERIOR COURT OF JUSTICE - ONTARIO
COURT FILE NO.: FS-13-385616
DATE: 20151113
RE: Antonina Masci, Applicant
AND:
Dominic Benedetto Masci, Antonietta Masci, Giulio Masci, Respondents
BEFORE: Kiteley J.
COUNSEL:
Annette DiNardo, for the Applicant
Mark A. Russell, for the Respondents Antonietta Masci and Giulio Masci
HEARD: November 12, 2015
ENDORSEMENT
[1] Antonina Masci and Dominic Masci were married in 1994. They have 4 children born in 1995, 1998 and twins in 2001. They separated under the same roof on October 2, 2012.
[2] This Application was issued on March 27, 2013. The Respondents Antonietta Masci and Giulio Masci are the parents of Dominic. At the time of the separation, the family was living at 72 Elmhurst which is owned by Antonietta Masci and Giulio Masci.
[3] The Applicant brought an ex parte motion which was heard by Justice Harvison Young on November 5, 2015. She made an order and adjourned the motion to be heard on notice on November 12, 2015. Dominic Masci is not involved in this motion. For purposes of this motion, when I refer to the Respondents, I mean Antonietta Masci and Giulio Masci.
[4] On November 5, 2015, on the basis of the affidavit of the Applicant, Justice Harvison Young made an order as follows:
Antonietta Masci and Giulio Masci preserve the property municipally known as 72 Elmhurst Avenue, Toronto, and not take any steps to encumber, dispose of, or otherwise deal with this property without further Order of the Court.
Antonietta Masci and Giulio Masci forthwith discharge the Bank of Nova Scotia collateral mortgage registered as instrument #AT3902635 on the property municipally known as 72 Elmhurst Avenue, Toronto.
A Certificate of Pending Litigation be issued against the property municipally known as 72 Elmhurst Avenue, Toronto [legal description omitted]
This Order shall forthwith be served by Annette DiNardo on (a) Bank of Nova Scotia located at 10 Wright Blvd., Stratford, Ontario, N5A 7X9 (b) William Friedman/Mark Russell (counsel for Antonietta Masci and Giulio Masci) and (c) Avra Rosen (counsel for Dominic Benedetto Masci).
Costs on a full and substantial indemnity basis.
[5] At the time of the separation of the Applicant and her husband and the children were living at 72 Elmhurst and it is referred to as their matrimonial home. Title to that property has been and is held in the name of the Respondents. In her Application, the Applicant sought the following relief:
50(d) A declaration that the Co-Respondents Giulio Masci and Antonietta Masci hold one-half of the legal and equitable title in the land and premises municipally known as 72 Elmhurst Avenue Toronto, Ontario, . . . in trust for the Applicant based on their having been unjustly enriched and a remedial constructive trust.
50(e) In the alternative . . . a declaration that the Co-Respondents Giulio Masci and Antonietta Masci hold one-half of the legal and equitable title in the land and premises municipally known as 72 Elmhurst Avenue . . in trust for the Applicant based on a resulting trust.
50(f) In the further alternative. . . an Order that the Co-Respondents Giulio Masci and Antonietta Masci pay the sum of $800,000 in damages to the Applicant to compensate her for the unjust enrichment. . .
50(g) An order authorizing the issuance of a certificate of pending litigation . . .
50(h) An Order for the sale of the land and premises . . .
50(i) An Order prohibiting the Respondent Dominic Benedetto and or the Co-Respondents Giulio Masci and Antonietta Masci from selling, disposing of, dissipating, encumbering, mortgaging, or otherwise dealing with the property. . .
[6] In their Answers, the Respondents challenge the claims made with respect to that property.
[7] Dominic Masci left the residence in June 2014 as a result of an assault charge that was laid against him. He has lived with his parents since then. He entered into a peace bond in 2015 with respect to that charge.
[8] Justice Goodman was managing this file from August 2014 to August 2015 during which she held settlement conferences and trial management conferences. In her endorsement dated June 26, 2015 she set the trial date tentatively for the week of November 23, for 4 weeks. That date was confirmed in her endorsement dated August 10, 2015.
[9] After serving the November 5 order as directed, counsel for the Applicant served an affidavit sworn November 9. Counsel for the respondents served a responding affidavit on the morning of the motion which caused counsel for the applicant to deliver a handwritten reply affidavit. Counsel for the applicant also served a factum.
[10] The issue is whether the ex parte order of Harvison Young should be continued until judgment after the trial.
[11] At the questioning held on September 24, 2013 Antonietta Masci said that she and her husband owned 5 properties including 72 Elmhurst all of which were mortgage free. Based on the evidence before me, on June 3, 2015, the respondents caused to be registered against title to 72 Elmhurst a collateral mortgage in the amount of $1,475,000. It secures a line of credit not to exceed $516,200. As of this motion, the respondents have withdrawn $90,022.90 against that line of credit.
[12] Counsel for the Applicant takes the position that the Respondents had a positive duty to disclose that they had registered a collateral mortgage, that the principal amount secured was $1.475 million, that the mortgage secured a line of credit in the maximum amount of $516,200 and that the line of credit had been used to incur indebtedness of $90,022.90. She pointed out that the Respondents had not disclosed any of that information notwithstanding attendances at settlement and trial management conferences and the impending trial.
[13] I did not receive authorities from counsel for the applicant that such a positive duty existed nor did I receive authorities from counsel for the respondent that such a positive duty did not exist. Unlike the fiduciary duty which arises between spouses, I was given no authority that such a duty arises in circumstances in which a daughter–in-law sues her mother and father in law. There was no request for an affidavit of documents nor was I referred to any request for documents or information At the questioning held on September 24, 2013 there was no undertaking to provide information and documents should there be encumbrances registered on the subject property or other properties. In her TMC endorsement, Goodman J. had not ordered the Respondents to deliver form 13.1 or form 13 financial statements. I agree with counsel for the Respondents that there has been no specific duty to disclose those transactions.
[14] I also agree with counsel for the respondents that there was no legal impediment to them using title to property that they own to register a mortgage to secure a line of credit. The Application included a claim for a CPL and for a preservation order but no orders were ever requested or made. The steps taken by the Respondents to register a collateral mortgage to secure a line of credit were not wrongful.
[15] In her factum, counsel for the Applicant asks the court to order an interlocutory injunction or mandatory order as described in RJF-MacDonald Inc. v. Canada (Attorney General).
[16] I agree with counsel for the Applicant that the issues of trust raised by her constitute serious questions to be tried.
[17] I turn to whether the Applicant would suffer irreparable harm if the motion for an injunction were refused. For purposes of this motion, counsel assumed that the value of 72 Elmhurst was approximately $1.6 million. The Applicant asks for a declaration that she be a 50% beneficial and legal owner. If after trial such an order were made, a mortgage liability in the full amount of $1,475,000 would cause her harm, which, for purposes of this motion, I consider to be irreparable.
[18] On the question of balance of convenience, the Respondents through counsel take the position that they may need to draw on the line of credit up to $250,000 for, amongst other things, legal fees and disbursements in connection with the imminent trial. If they are required to discharge the mortgage, they will be prejudiced in their need to be represented for this important trial. Counsel has advised that the Respondents are prepared to limit their use of the line of credit to a total of $250,000 (including the existing $90,022.90) until the judgment after trial but, to have access to such funds, the collateral mortgage must stay in place. Prior to the return of the motion, counsel for the Respondents had proposed that his clients give an undertaking not to draw on the line above a specific amount. I understand why Ms. DiNardo would have rejected an undertaking. Given the willingness on the part of the Respondents to restrain their use of the line of credit which is secured by the mortgage, I consider it prudent to make an order to that effect.
[19] Counsel for the Respondents took the position that the balance of convenience is in favour of his client because, as he pointed out, the relief sought by the Applicant is in the alternative and that she seeks damages in the amount of $800,000 in which case there would be sufficient equity in the property even if the collateral mortgage secured a debt of $250,000. I agree with that calculation. Indeed, many trust claims are disposed of on the basis of damages. In this case, the property in question is the matrimonial home. The Applicant continues to reside there with some of the children. It may be that the trial judge might find it to be sufficiently unique that the remedy is a declaration rather than damages.
[20] Having found that there is a serious issue to be tried and the possibility of irreparable harm, I conclude that the balance of convenience can be addressed by leaving the mortgage registered against title but limiting the credit for which it stands as security.
[21] In her factum, counsel for the Applicant indicated that her client would give the undertaking with respect to damages. Neither counsel addressed that issue during oral submissions and I make no order requiring an undertaking.
[22] On the basis of her claim for a constructive trust and to the remedy of transfer of title to the extent of 50%, the Applicant has made a claim for an interest in land and established entitlement to CPL. That aspect of the order will continue.
[23] As indicated above, in her November 5 order, Harvison Young J. made a preservation order. In her factum, counsel for the Applicant acknowledged that there is no provision in the Family Law Act for such an order but she relied on rule 45.01(1) of the Rules of Civil Procedure. Given the CPL order that will continue and the fact that the Applicant occupies the home, I see no reason to consider a preservation order.
[24] While not wrongful, the steps taken by the Respondents were unfortunate. Goodman J. made an order (I assume at the request of their counsel) that these Respondents are not required to provide disclosure in the form of a 13.1 financial statement. That means that the Applicant would only have found out by searching title at intervals or, as happened here, by accident. The discovery less than 4 weeks before trial understandably set off alarm bells and precipitated the motion heard on November 5 and adjourned to November 12. The Applicant will obtain some relief but the Respondents are also successful in sustaining the registration of the mortgage and in having access to the line of credit. Success was divided. Neither party should pay or recover costs.
[25] I note that on November 5, 2015, Harvison Young J. provided for costs on a full and substantial indemnity basis. Having had the benefit of the responding and reply affidavits, I am persuaded that that order ought to be set aside.
[26] Counsel for the Respondents also challenged the ex parte motion because in her TMC endorsement dated August 10, 2015. Goodman J. made an order that neither party could bring a motion without leave from me as Team Leader or the Acting Team Leader.
[27] Ms. DiNardo explained how her client had found out about the mortgage. The Applicant had gone to her bank to borrow to pay legal fees with respect to the pending trial. On making inquiries about what credit might be available, she was told that the respondents had registered a mortgage against title to 72 Elmhurst in the amount of $1,475,000 Million. She immediately advised her counsel who raised the issue with counsel for the respondents. There were several communications between counsel before Ms. DiNardo brought on the ex parte motion on November 5. Ms. DiNardo advises that she attempted to comply with the endorsement of Goodman J. that no motions be brought without leave from me or the Acting Team Leader. As it happened, November 5 was the second day of a semi-annual judges’ educational program and I was involved in that program and I was not available. Justice Harvison Young was on stand-by for emergency motions and it was for that reason that she dealt with the matter. I accept that Ms. DiNardo made an attempt to comply and it was through circumstances beyond her control that compliance was not possible.
ORDER TO GO AS FOLLOWS:
[28] Until further order of this court, Antonietta Masci and Giulio Masci are prohibited from drawing on the line of credit with the Bank of Nova Scotia, which line of credit is secured by a collateral mortgage registered as instrument #AT3902635 to an amount that exceeds $250,000 including the existing liability of $90,022.90.
[29] Until further order of this court, the Bank of Nova Scotia shall not advance to Antonietta Masci and Giulio Masci or either of them any amount that exceeds $250,000 including the existing liability of $90,022.90.
[30] The Bank of Nova Scotia has 10 days after service of this order to bring a motion on notice to all parties through counsel to set aside or vary any aspect of this order that affects its interests.
[31] Paragraph 1 of the order dated November 5, 2015 is set aside and is of no force and effect as of November 5, 2015.
[32] Paragraph 2 of the order dated November 5, 2015 is set aside and is of no force and effect as of November 5, 2015.
[33] Paragraph 3 of the order dated November 5, 2015 continues until further order of this court.
[34] Paragraph 5 of the order dated November 5, 2015 is set aside and is of no force and effect as of November 5, 2015.
[35] Neither the Applicant nor the Respondents Antonietta Masci and Giulio Masci shall pay costs of this motion including the attendance on November 5, 2015 and November 12, 2015.
[36] Counsel may forward approved draft order to my attention for signing.
Kiteley J.
Date: November 13, 2015