Court File and Parties

COURT FILE NO.: D/966/96 DATE: 2016/05/02 SUPERIOR COURT OF JUSTICE - ONTARIO

RE: Joseph Rosati and Linda Rosati, Applicants AND: Laura Reggimenti, Respondent

BEFORE: Turnbull, J.

COUNSEL: Paul Amey, Counsel, for the Applicants Gary Joseph and Ryan Kniznik, Counsel, for the Respondent

HEARD: April 27, 2016

Endorsement

Motion for Preservation/ Non Dissipation Order

[1] This is a motion brought by the respondent Laura Reggimenti (Laura) for a preservation/ dissipation order against the world wide assets of the applicants Joseph Rosati (Joe) and Linda Rosati (Linda).

[2] After Laura and Joe separated in 1996, they were involved in extensive matrimonial litigation. They both filed voluntary assignments into bankruptcy in 1997.

[3] Further legal proceedings resulted in Minutes of Settlement being executed in October 2006. Shortly after the Minutes of Settlement were signed, Laura sought to set them aside. A two day trial occurred in January 2007 before Steinberg J. and at the conclusion of that matter, the learned judge confirmed the validity of the Minutes of Settlement.

[4] In 2009, Laura commenced this proceeding to set aside the order of Steinberg, J. on the grounds of fraud and non-disclosure.

[5] Since 2010, there have been a number of non-depletion orders against the real estate owned by the applicants. Those orders have been made against the matrimonial home of Joe and Linda. On August 6, 2009, Laura obtained a non-dissipation order to be registered against Joe and Linda’s former matrimonial home at 12 Pickard Avenue in Ancaster. In 2010, Pazaratz, J. ordered that the security should be increased to $500,000.00. In April 2013, Lococo, J. increased the security attached to the non-dissipation order to $850,000.00 and transferred the security from the Pickard Avenue property to Joe and Linda’s new home at 475 Ontario Street in Ancaster.

[6] Ultimately the trial began before Carpenter-Gunn J. in November 2013. After hearing approximately 13 days of evidence, the learned judge declared a mistrial on July 22, 2014. After the mistrial order, Joe and Linda brought a motion to vacate the order of Lococo, J.

[7] On September 17, 2014, Campbell, J. vacated the non-dissipation order in written reasons released to the parties. At paragraph 29 of his ruling, Justice Campbell concluded that Mr. Rosati had a desire to expand his business, invest locally and to be able to use his and Linda’s personal assets for their families’ own benefit. He concluded that rather than selling out and leaving the jurisdiction, they are well ensconced in the community and they intend to remain to see the end of this litigation. Justice Campbell further queried why Laura should continue to enjoy a secured position (should she win) when Linda and Joe could not enjoy the same position should Laura’s claim fail.

[8] In the detailed affidavit of Laura which is filed on this motion (dated April 15, 2016) she has outlined a series of real estate transactions in which Linda has purchased and mortgaged properties to a significant sum. In virtually every case, Joe has guaranteed the mortgage. Joe does not own any real estate in his name. Mr. Joseph has noted that Joe and Linda have pursued a pattern of purchasing properties and then significantly mortgaging them to make use of the equity. Mr. Amey has pointed out that virtually in every case, the funds taken out by way of additional mortgages, have been used for construction purposes to improve the properties or to again purchase further properties. Mr. Joseph noted that several preservation orders have been made and several unsuccessful motions brought to lift those preservation orders. Mr. Joseph has noted that notwithstanding these preservation orders, Joe acknowledges at paragraph 24 of his affidavit sworn April 19, 2016, that he has incurred approximately $1,100,000.00 in costs to pay his lawyers and accountants during the course of this lengthy proceeding. Mr. Joseph notes that Campbell, J. lifted the preservation order partially on the basis that Mr. Rosati needed access to $875,000.00 of equity but on the record before the court, it appears has only used $175,000.00. Hence Mr. Joseph argues that Joe has effectively made himself judgment proof over the years.

[9] In that respect, Mr. Joseph referred the court to the case of Lamont v. Kent [1999] O.J. No. 277. That was a decision of Sachs, J. of this court. The facts of that case are quite different from the one before this court. In the Lamont v. Kent case, the plaintiff was granted summary judgment against both defendants which had the effect of dissolving a previous court order freezing the defendants’ bank accounts. The defendants then attempted to withdraw all funds from their bank accounts. The plaintiff immediately brought a motion for a mareva injunction in aid of execution. At paragraph 11 of her decision, Sachs, J. noted that a mareva injunction is not confined to situations where a party is seeking to frustrate an order or judgment by moving assets out of the jurisdiction. She found it was also appropriate to prevent the defendants from making themselves judgment proof.

[10] The fact situation in that case is significantly different from the one at hand. The whole issue of the settlement of this action was considered by Steinberg, J. in 2007. This reconstituted action which commenced in 2009, has not yet gone to trial.

[11] In his submissions Mr. Joseph asked the court to require the defendants to post $875,000.00 of security in a form which is agreed to by the parties or found acceptable to the court. He has argued that that would effectively allow Joe and Linda to carry on their business of real estate investing while preserving adequate security for Laura. Mr. Joseph has noted that at paragraph 25 of his affidavit, Joe has sworn that he was unable to provide the $300,000.00 retainer to his former lawyer to permit that lawyer to continue to represent him at trial. Mr. Joseph indicates that this is clear evidence that Joe has insufficient assets to pay any judgment should there be success in this action.

Position of the Applicants

[12] Mr. Amey has reviewed in detail the dealings in real estate which have been undertaken by Laura and Joe. He indicates that the dealings are in the ordinary course of business and as an astute business man; Joe has legally and properly registered properties in the name of Linda. He noted that the original motion in this matter brought under Section 40 of the Family Law Act does not provide a remedy for Laura as he does not own any real estate in his own name. He submitted that effectively Laura seeking mareva injunction, would be tying up assets before trial. I concur.

[13] In Chitel v. Rothbart (1982), 38 O.R. (2d) 513 (Ont) (C.A.) the Court of Appeal outlined the criteria required to obtain a mareva injection. They are:

1. The plaintiff should make full and frank disclosure of all matters in her knowledge which are material for the judge to know.
2. The plaintiff should give particulars of her claim against the defendants stating the ground of her claim, the amount thereof, and fairly state the points made against him by the defendant.
3. The plaintiff should give some grounds for believing the defendants have assets here.
4. The plaintiff should give some grounds of believing there is risk of the assets being removed before the judgment or the award is satisfied.
5. The plaintiff must give an undertaking as to damages.

[14] On the record before this court, there is no question that the defendants do have assets in Ontario. Mr. Joseph has pointed out that the respondents have moved approximately $275,000.00 of funds to the United States with respect to a Florida property. However it is clear from the record that that is a recreational property which was purchased in 2011 by Linda Rosati. I do not find on the facts of this case before me that there is a risk of the assets being removed before the judgment or award is satisfied in this matter. I do not find that there is a real risk of dissipation or disappearance of assets. Mr. Rosati continues to work and invest in the real estate industry and obviously Linda does the same.

[15] During the course of submissions, counsel argued whether or not a prima facie case of fraud has been made out by Laura. In the course of these proceedings, I earlier issued written reasons dismissing a motion brought by the applicants for summary judgment primarily on the basis that the motion should not be brought in the middle of a trial. In that endorsement, I stated “At the present stage of the trial, I cannot say that based on all the evidence that there would not be a genuine issue for trial.” On the evidence before the court, while there is a genuine issue for trial, I cannot say that Laura has a strong prima facie case. In the affidavit of Joe sworn April 19, 2016, he noted a number of factors agreed to by Laura before signing the minutes of settlement in October 2006. In particular, some of those are as follows:

A) Laura did not believe Joe’s representations as to his income level. B) Laura settled because of other pressures going on and she could not see herself going through discoveries, preparing for it, and going through all the files. C) After Joe produced a banker’s box of financial documents, Laura did not insist upon a discovery following such production and neither she nor her lawyer took the time to review the documents. D) Laura had testified that she felt the matter had been going on long enough and wanted to settle the case. E) Although there was an order for Joe to produce 116 items, she never sought to enforce the order to ensure it was complied with before settlement. F) Laura was satisfied with the agreement when she signed it despite the fact she did it contrary to the advice of her partner Pat Cornelio who said she should not sign it without discussing it with her lawyer. G) Laura did not bother looking at the most recent disclosure provided by Joe because she did not care. She simply wanted to make a deal and have it done and over with.

[16] Justice Campbell noted in his ruling that based upon those admissions made at trial by Laura, Reilly, J., if he had known about such admissions, “would very likely not have made the original non-dissipation order.” In considering the issue of whether there is a “strong prima facie case” I have taken into account the four elements to a claim of fraud articulated by the Supreme Court of Canada in Hryniak v. Mauldin, 2014 SCC 7 at paragraph 87 which are:

A) a false representation by the defendant; B) Some knowledge of the falsehood by the defendant; C) The false representation caused the plaintiff to act; and D) The plaintiff’s actions resulted in a loss.

[17] Based on the record before this court, I am not satisfied that Joe and Linda have been acting in any way out of the ordinary course of their business. I am not satisfied that there is a real risk the assets will disappear in a manner clearly distinct from the usual or ordinary course of business or living of Linda and Joe.

[18] They have a right to carry on business in a lawful manner when they are defending a lawsuit. It is trite law that injunctive relief should not be granted lightly. In Ontario, execution before judgment is an exceptional remedy and I do not feel the grounds to justify it exist on the record before this court.

[19] I am not satisfied that any irreparable harm will be suffered by Laura if the relief sought is not granted. Joe continues to work in his real estate business and virtually all the properties are within the jurisdiction of this court.

[20] Laura did not offer any undertaking with respect to damages in the event her claim failed which is generally a condition of any injunction order under Rule 40.03 of the Rules of Civil Procedure. However, on the limited information provided to this court as to Laura’s assets, she cannot make a meaningful undertaking with respect to damages. However in the circumstances of this case, if I felt that an injunction or similar relief sought should be granted, I would have been prepared to exercise my discretion to waive the requirement of an undertaking.

[21] In the circumstances, the motion is dismissed. I will receive a costs summary and brief written submissions with respect to costs from Mr. Amey on or before May 15, 2016 and reply submissions from Mr. Joseph on or before May 30, 2016.

[22] I further would add this trial is scheduled to resume November 7, 2016. Considering this action was commenced in 2009, relatively speaking, it is not a long period of time before the parties hopefully will have some finalization of this protracted matter.

[23] If Laura becomes aware that Joe and/or Linda are removing assets from this jurisdiction, she can renew her motion before me.

Released: May 2, 2016

Turnbull, J.