Court File and Parties
CITATION: Celenza v. Remax Premier Inc., 2016 ONSC 628
COURT FILE NO.: CV-15-541064
DATE: 20160126
ONTARIO
SUPERIOR COURT OF JUSTICE
BETWEEN:
JERRY CELENZA
Plaintiff
– and –
REMAX PREMIER INC., GABRIEL BIANCHI, and 2354918 ONTARIO INC.
Defendants
Charles Wagman, for the Plaintiffs
J. Daniel McConville, for the Defendants
HEARD: January 22, 2016
M. D. FAIETA j.
REASONS FOR DECISION
INTRODUCTION
[1] The plaintiff, Jerry Celenza, and the defendant, Gabriel Bianchi, are real estate agents. Bianchi owns and operates a real estate brokerage under the name Remax Premier Inc. (“Premier”). Premier operates under a franchise agreement with RE/MAX Ontario – Atlantic Canada Inc. (“Re/Max Canada”). Premier has a number of branch offices within an exclusive territory. At that time, Celenza owned and operated a real estate brokerage under the name Home at Ease Realty Inc.
[2] In 2012 Celenza approached Re/Max Canada about obtaining a Remax franchise within Premier’s territory. Re/Max Canada directed Celenza to Bianchi.
[3] Celenza and Premier entered a joint venture agreement on January 7, 2013 to open a new Premier branch office in Vaughan, Ontario (“JVA”). Under the JVA, 2354918 Ontario Inc. (“235”) was to be the bare trustee for the purpose of holding and dealing with any and all of the assets of this joint venture (“JV”). Bianchi and Celenza are the directors, officers and equal shareholders of 235. Under the JVA, Celenza and Premier were required to equally fund the costs of the JV.
[4] Premier leased premises for the Branch Office by agreement dated March 6, 2013.
[5] Celenza and Premier entered an Independent Contractor Agreement dated June 1, 2013 (“ICA”). Under the ICA, Premier agreed to pay Celenza the full amount of any real estate commissions paid to and received by Premier in respect of the sale of a property listed by Celenza or a property sold as a result of his negotiations.
[6] The Branch Office required renovations that were completed in November 2014. A receptionist was hired and started work in December 2014. Since that time Celenza has been the sole real estate agent associated with the Branch Office with the exception of one or two other real estate agents that have for various periods of time been associated with it.
[7] The leasehold improvements were supervised and paid by Premier. Bianchi states that Celenza has refused to pay for his share of the leasehold improvements as well as the JV’s operating expenses. Celenza denies that he approved these expenses. Premier has withheld $24,948.30 in commissions for sales in 2014 and $152,206.29 in commissions for sales in 2015.
[8] Any commissions paid to Celenza by Premier under the ICA would have formed part of “Gross Receipts”. The JVA provides that these gross receipts are to be shared between Premier, the Branch Office Manager, 235 and Celenza, as the real estate agent who earned the commission.
[9] Premier submits that these commissions were withheld to pay for amounts owed by Celenza under the JVA. Premier submits that this withholding is authorized by the ICA.
[10] According to his Notice of Motion, as modified by the draft Order that was presented for consideration, Celenza seeks the following interlocutory orders:
(1) An order directing Premier and Bianchi to release $71,561.75, being 70 percent of all commissions earned by Celenza as a real estate agent working under Premier’s real estate broker licence since September 2015;
(2) An order directing Premier and Bianchi to continue releasing 70 percent of all commissions earned by Celenza under Premier’s real estate broker licence until further order of this Court;
(3) An order appointing Celenza as office manager of the Branch Office at 9600 Islington Avenue, Vaughan, Ontario established under the Joint Venture Agreement dated January 7, 2013;
(4) An order prohibiting Premier and Bianchi from incurring any further expenses on behalf of 235 or charging any fees or expenses to 235 over $1,000.00 without Celenza’s written approval.
[11] The following issues are raised by this motion:
(1) Is the interlocutory order sought by Celenza a mandatory injunction?
(2) Has Celenza satisfied the test for obtaining an interlocutory injunction?
[12] For the reasons that follow, I have dismissed Celenza’s motion for an interlocutory injunction.
ANALYSIS
[13] The purpose of an interlocutory injunction is as follows:
The aim of an interlocutory injunction is to preserve that court’s ability to do justice for the plaintiff or applicant until the trial or hearing of the action or application. The problem for the law is how to achieve this purpose fairly when it will be unclear whether the plaintiff or applicant will eventually succeed, and where a pre-trial or pre-hearing remedy might do harm to the defendant or respondent should it turn out later that the interlocutory order should not have been granted.[^1]
[14] In RJR – MacDonald v. Canada (Attorney General) 1994 117 (SCC), [1994] 1 S.C.R. 311, at para. 43, the Supreme Court of Canada described the three-part test for an interlocutory injunction is as follows:
(1) Is there a serious issue to be tried?
(2) Will the moving party suffer irreparable harm if an injunction is refused?
(3) Does the balance of convenience favour granting an injunction?
[15] The first branch of the test for an interlocutory injunction requires that Celenza demonstrate a “strong prima facie case” if an interlocutory injunction is in the nature of a mandatory order.[^2] There are two reasons for this higher standard: (1) an interlocutory, mandatory injunction is very intrusive given that the ultimate merits of the plaintiff’s claim remains undetermined; (2) it is more feasible for a court to restrain a defendant’s conduct than to compel it.[^3]
ISSUE #1: IS THE REQUESTED INTERLOCUTORY INJUNCTION IN THE NATURE OF A MANDATORY INJUNCTION?
[16] In 1711811 Ontario Ltd. v. Buckley Insurance Brokers Ltd. [2014] O.J. No. 697, 2014 ONCA 125, at paras. 57-58, the Ontario Court of Appeal explained:
A mandatory injunction is one that requires the defendant to act positively. It may require the defendant to take certain steps to repair the situation consistent with the plaintiff’s rights, or it may require the defendant to carry out an unperformed duty to act in the future…Mandatory injunctions are rarely ordered and must be contrasted with the usual type of injunctive relief, which prohibits certain specified acts.
Because of their very nature, mandatory injunctions are often permanent.
[17] The relief sought by Celenza, other than in respect of item 4 which seeks to restrain Premier and Bianchi from making expenditures of more than $1,000 with Celenza’s approval, is primarily in the nature of a mandatory injunction.
ISSUE #2: HAVE THE PLAINTIFFS SATISFIED THE TEST FOR AN INTERLOCUTORY INJUNCTION?
[18] The application of the three-part test for an interlocutory injunction in these circumstances is described below.
Strong Prima Facie Case
[19] This stage of the analysis requires a preliminary assessment of the strength of the plaintiff’s case. A prolonged examination of the merits is generally neither necessary nor desirable. A final determination of the issue(s) must be avoided.[^4]
[20] The first branch of the test requires that the plaintiff show that its claim raises a serious question to be tried. The threshold is low – the claim must not be frivolous or vexatious. [^5]
[21] When the relief sought is in the nature of a mandatory order, a more stringent test is applied. In such circumstances, a plaintiff must show that it has a strong prima facie case which means that it must show that its claim is almost certain to succeed.[^6]
[22] Celenza submits that the following matters raise serious questions to be tried.
Celenza did not approve expenditures over $1,000
[23] Celenza alleges that the JVA provides that “…Celenza’s approval was required before any expenses exceeding $1,000 could be incurred”. However the obligation is not stated in such unequivocal terms in the JVA. Article 4.7(a)(i) of the JVA requires Celenza’s written approval for such expenses unless the parties otherwise agree. It states:
Except as may be otherwise agreed by the Members [which means the parties to the JVA], the documents, instruments or agreement required to carry out the purposes of the Joint Venture shall or may be executed…by the following persons and in accordance with the following rules: (a) execution by at least one (1) representative of each of the Members shall be required for…all Project Contracts…which are to be executed by the Trustee and which create a financial liability of the Joint Venture in excess of $1,000.00. [Emphasis added]
[24] Celenza states that he did approve leasehold renovation costs or leasehold operating expenses.
[25] With respect to the approval of leasehold renovation costs, Celenza states:
The lease was for five years to commence on April 5, 2013, with a two-month rent-free period for leasehold improvements.
Bianchi took it upon himself to build the Branch Office, given his extensive prior experience in building offices.
I pressured Bianchi on a weekly basis to start the leasehold improvements. … It was only in or about February 2014, that Bianchi commenced hiring contractors to do the leasehold improvements. In the meantime, rent had to be paid for an empty office.
Bianchi engaged the services of his wife to supervise the leasehold improvements. Bianchi told me that Mrs. Bianchi would be paid $3,000 for her services. I later found that she had been paid $10,000.00. I had not authorized or approved this amount.
Mr. and Mrs. Bianchi hired all contractors and paid all bills regarding the leasehold improvements to the Branch Office through Premier and advised me that the account would settled with me after the completion of the work. My approval was not obtained prior to incurring expenses on behalf of the Branch Office.
The leasehold improvements were completed in November 2014.[^7]
[Emphasis added]
[26] In response, Bianchi states:
ReMax Premier did not want to be responsible for the renovations to the leased premises, and would have been more than willing to have Celenza complete them. However Celenza showed no interest in doing so, and ultimately asked me to take on the renovation. I agreed to take it on but Celenza was heavily involved in all aspects of the renovation including all major decisions and most if not all minor day to day decisions. Celenza was on site all the time during the renovation. In fact, Celenza insisted that the Joint Venture work with a specific contractor that he knew (NuLeaf Contracting), which I agreed to. Celenza was involved in every meeting I can remember developing plans with that contractor. Ultimately NuLeaf gave us a quote that Celenza thought was high, and he insisted we not hire him because it was too expensive. At that point Celenza insisted that I take over the renovation process because I had more experience with it, and I agreed to assist. It is ridiculous for Celenza to now claim…that I took it upon myself to do this.
Celenza clearly knew that the Joint Venture was taking on substantial expenses during the renovation (and even during the planning stage), but he never complained about them or suggested he had not consented to those expenses at that time.
In response to paragraph 33, Celenza did not pressure me on a weekly basis to start the renovations. It took time to design the space and the Joint Venture did not have funds to commence construction which led to delays.
Regarding Celenza’s allegations…that I engaged my wife to supervise the renovations and paid her $10,000.00, Celenza completely mischaracterizes the events. Celenza expressed how grateful he was for my wife’s contributions at the time (she worked for 14 months on the project) and specifically stated that the $10,000.00 fee was too little given the amount of time and effort she committed to the project. My wife has not yet been paid any of the amount due to her, specifically because Celenza has not funded his share of the costs.
Although the JVA states that the expenses over $1,000.00 were to be approved in writing, we trusted Celenza and worked informally with him, which resulted in both parties failing to follow the letter of the JVA in this regard.
Regardless, Celenza was aware of all significant expenses and approved them verbally as the work took place. If Celenza had any concerns he presumably would have voiced them at the time, yet he has not produced any documents (and I am not aware of any documents) in which he complains about those costs being incurred without his knowledge while the renovation was ongoing. Celenza could see for himself that substantial work was being done and expenses incurred (he knew he was not paying for them), yet he never complained. To the contrary, I think he was grateful that we were not being more forceful in demanding he pay his 50% share immediately…We did agree that the accounting and expenses for the office would be done through ReMax Premier since it had the accounting software to do so, and we would settle up with Celenza each quarter. ReMax Premier demanded payment from October 2014 onward as set out below.[^8] [Emphasis added]
[27] In a supplementary affidavit, Celenza states:
With respect to the leasehold improvements, it should be noted that Bianchi and I agreed that the budge to build the office should be around $80-85,000. In that regard, we rejected a detailed proposal from NuLeaf Contracting Ltd. that estimated the work at $125,000.00, plus HST. We decided to reduce the number of offices to be built within the premises to keep the costs down. Despite that decision…$106,785.58 was purportedly spent to build the Branch Office.[^9]
[28] With respect to leasehold operating expenses, Celenza states:
The total monthly rent for the office space is in the sum of $5,567.23. I do not know how much the receptionist is being paid. Likewise, I do not know what the total amount of other monthly expenses are, such as utility bills. Bianchi and ReMax Premier have not disclosed what amounts they have been charging the Trustee of account of any office expenses.[^10]
[29] In response, Bianchi states:
Regarding Celenza’s complaint…that I have not provided invoices for carrying costs of the Joint Venture office, those costs are straightforward and cannot reasonably be in dispute. We both agree that the rent is $5,567.23…The landlord recently emailed both me and Celenza to request post-dated rent cheques for 2016. Celenza did not respond so ReMax Premier delivered the cheques. The balance of the carrying costs are the utilities, including phone and internet, and the cost of staffing the office with a receptionist which varies but is about $3,000 per month.[^11]
[30] In light of the above evidence, I find that there is a serious issue for trial regarding whether Premier breached Article 4.7(a)(i) of the JVA by failing to obtain Celenza’s approval for expenses for the JV that were greater than $1,000.00. Using the language of the JVA, the question is whether Celenza “otherwise agreed” to the expenditures. A further issue is whether the obligation extends to recurring expenses. In other words does this requirement in the JVA apply to a periodic expense that is less than $1,000.00 if the cumulative cost over time of that expense is greater than $1,000.00?
Celenza Not Appointed Office Manager
[31] Paragraph 31 of the Statement of Claim alleges that Celenza was not appointed as Office Manager of the Branch Office in breach of the JVA.
[32] However, Article 4.1 of the JVA appoints Celenza as the Branch Office Manager for and during the term of the JVA.
[33] In my view, the relief sought is unnecessary given that Celenza was appointed as the Branch Manager under the JVA. Whether Celenza has relinquished that role in accordance with Article 4.1 of the JVA is another matter, however that point was not addressed on this motion.
Release of Commissions to Celenza
[34] Celenza alleges that Premier has breached the JVA and ICA by failing to release commissions.
[35] The ICA provides that:
• The commissions payable in respect of each listing secured by [Celenza] or in respect of any property sold, leased or referred by [Celenza] shall be fixed by [Celenza]. When any property is sold or leased as a result of [Celenza’s] negotiations, [Celenza] will be paid 100% of the real estate commission paid to and received by [Premier] in respect of such sale or lease, subject to the relevant provisions contained herein, Schedule “A” is applicable, and to the obligation of the Brokerage to divide such commission between the Listing and Buyer Representations or otherwise in accordance with the custom of the trade, at the applicable time, and subject to subsection (b) hereof.[^12] [Emphasis added]
• Any and all amounts owing to [Premier] by [Celenza] pursuant to this agreement or otherwise, including, without limitation, all fees, late charges, interest and expenses and other loss, cost and expense of any nature or kind(“indebtedness”) shall be deducted from such commissions prior to distribution to [Celenza]; provided, it is agreed that, to the extent of such indebtedness the commissions from time to time payable to [Celenza] are held in trust for [Premier] and may be retained by it as its property absolutely.[^13] [Emphasis added]
• If and whenever pursuant to the terms of this agreement or otherwise [Celenza] becomes liable to pay to [Premier] any monies, then such monies may be deducted by [Premier] from any monies that may be due and owing to [Celenza].[^14] [Emphasis added]
• [Celenza] agrees [that Premier] may withhold all amounts payable to [Celenza] by [Premier] until it has funds in its possession that would otherwise be payable to [Celenza] sufficient to fully pay its reasonable estimate of the maximum amount [Premier] could be found to be liable to pay, by reason of any anticipated loss, cost, damage, expense, penalty or fine to or for [Premier], attributable to any wrongful or negligent act or failure of [Celenza];[^15]
• If at any time during the continuance of this Agreement or after the termination hereof, any dispute, difference or question shall arise between the parties hereto concerning the interpretation, meaning or effect of this Agreement, or anything herein contained, or the rights or liabilities of the parties to this Agreement or otherwise in relation to the subject matter hereof, then any such dispute, difference or disagreement may be determined by arbitration in accordance with the following provisions … .[^16] [Emphasis added]
[36] Under the ICA Celenza states that 30 percent of his commissions have been unlawfully retained by Premier since January 2015 and that 100 percent of his commissions have been unlawfully retained by Premier since September 2015.
[37] Bianchi states that Celenza’s commissions have been withheld because he is indebted, under the JVA, to Premier for the costs of renovating and operating the Branch Office. Bianchi states:
…it became increasingly clear over the summer of 2015 that Celenza had no intention of paying back the amounts he owes under the JVA and instead would simply make allegations of impropriety towards me and ReMax Premier to attempt to minimize his liability. As a result around September, 2015, pursuant to the terms of the ICA including Section 17, ReMax Premier began withholding amounts owed to Celenza for his completed real estate transactions against the proper debts due to ReMax Premier from Celenza. ReMax Premier did so as a last resort only when it became clear from Celenza’s statements and actions that he had no intention of paying his debts. Those commissions are lawfully withheld under the ICA.
[38] Premier submits that the withholding of commissions from Celenza by Premier is governed by the ICA. It further submits that any dispute under the ICA is required to be submitted to arbitration under Article 18 of the ICA.
[39] Celenza disputes that he is indebted to Premier. In fact, he states that Premier, owes him money under the JVA.
[40] On its face, it appears that Premier entitled to withhold commissions payable to Celenza for any indebtedness to Premier. The real issue is whether Celenza is indebted to Premier. Much of the evidence of payments by Celenza and Premier to, or on behalf of, the JV and expenses incurred on behalf of the JV that was submitted by the parties is conflicting and unclear. Celenza has retained a forensic accountant to determine the respective contributions of each party to the JV and to examine the expenses incurred and determine if those were proper. Hopefully that forensic analysis will provide some clarity. A further issue is whether this dispute must be submitted to arbitration, as suggested by Premier, despite that the ICA states that disputes under that agreement “may” be submitted to arbitration. In my view, Celenza has not established a strong prima facie case regarding his claim that Premier has illegally withheld his commissions. At best, this allegation raises a serious issue to be tried for the following reasons.
[41] Given my findings, the only issue that remains to be considered below is whether Celenza is entitled to an interlocutory injunction to restrain Premier and Bianchi from incurring any further expenses on behalf of 235 or charging any fees or expenses to 235 in an amount greater than $1,000.00 without Celenza’s written approval.
Irreparable Harm
[42] In RJR MacDonald Inc. v. Canada (Attorney General) the Supreme Court of Canada explained “irreparable harm” as follows:
“Irreparable” refers to the nature of the harm suffered rather than its magnitude. It is harm which either cannot be quantified in monetary terms or which cannot be cured, usually because one party cannot collect damages from the other. Examples of the former include instances where one party will be put out of business by the court’s decision…where one party will suffer permanent market loss or irrevocable damages to its business reputation…or where a permanent loss of natural resources will be the result if a challenged activity is not enjoined.[^17] [Emphasis added]
[43] In my view, a breach of the JVA by Premier will not result in irreparable harm to Celenza as any such breach is quantifiable in monetary terms.
Balance of Convenience
[44] The assessment of the balance of convenience requires the “…determination of which of the two parties will suffer the greater harm from the granting or refusal of an interlocutory decision, pending a decision on the merits.”[^18]
[45] Given that Celenza has not established irreparable harm, it follows that he also not established that the balance of convenience favours the issuance of an interlocutory injunction restraining Premier and Bianchi from incurring any further expenses on behalf of 235 or charging any fees or expenses to 235 over $1,000.00 without Celenza’s written approval.
CONCLUSIONS
[46] I have dismissed Celenza’s motion for an interlocutory injunction.
[47] The Defendants shall submit their costs submissions by February 2, 2016. Celenza shall submit his costs submissions by February 9, 2016. These submissions shall be no longer than 3 pages, exclusive of an outline of costs. The submissions may be delivered by email to my assistant.
[48] While the temporary relief sought by Celenza has been denied, the parties realize this action remains to be determined on its merits. At the hearing of this motion, counsel for the parties acknowledged that the expense of this action may not be proportionate to the interests at stake if this action proceeds further. Pursuant to Rule 50.13 of the Rules of Civil Procedure I direct that a case conference be held on Thursday, February 25, 2016 at 3:00 p.m. in my office to attempt to settle this action. Celenza and Bianchi shall attend in person with their counsel. The parties shall exchange all documents which they rely upon as evidence of expense incurred on behalf of the JV or as evidence of funds contributed to the JV. The parties shall exchange any banking records, including cancelled cheques that they hold for 235. Celenza shall provide a copy of the forensic study to the other parties. The above documents shall be exchanged by February 17, 2016. A brief teleconference shall be held on February 18, 2016, at 8:30 a.m., to address any issues that may arise in preparation for settlement conference. My assistant will provide the teleconference details to counsel.
Mr. Justice M. D. Faieta
Released: January 26, 2016
CITATION: Celenza v. Remax Premier Inc., 2016 ONSC 628
COURT FILE NO.: CV-15-541064
DATE: 20160126
ONTARIO
SUPERIOR COURT OF JUSTICE
BETWEEN:
JERRY CELENZA
Plaintiff
– and –
REMAX PREMIER INC., GABRIEL BIANCHI, and 2354918 ONTARIO INC.
Defendants
REASONS FOR JUDGMENT
Mr. Justice M. D. Faieta
Released: January 26, 2016
[^1]: Paul M. Perell and John W. Morden, The Law of Civil Procedure in Ontario, Second Edition, LexisNexis, 2014, page 193. [^2]: Cytrynbaum v. Look Communications Inc., 2013 ONCA 455, (2013) 116 O.R. (3d) 241, para. 54. [^3]: Paul M. Perell and John W. Morden, The Law of Civil Procedure in Ontario, Second Edition, LexisNexis, 2014, page 194. [^4]: RJR MacDonald Inc. v. Canada (Attorney General), at para. 49-50; Cytrynbaum v. Look Communications Inc., 2013 ONCA 455, (2013) 116 O.R. (3d) 241, para. 54. [^5]: RJR MacDonald Inc. v. Canada (Attorney General), at para. 49-50. [^6]: Barton-Reid Canada Ltd. v. Alfresh Beverages Canada Corp., 2002 34862 (ON SC), [2002] O.J. No. 4116, at para. 12. [^7]: Affidavit of Jerry Celenza, sworn December 10, 2015, paras.31-37. [^8]: Affidavit of Gabriel Bianchi, sworn January 3, 2016, paras. 21-26. [^9]: Supplementary Affidavit of Jerry Celenza, sworn January 13, 2016, para.9. [^10]: Affidavit of Jerry Celenza, sworn December 10, 2015, para. 44. [^11]: Supplementary Affidavit of Gabriel Bianchi, sworn January 16, 2016, para.3. [^12]: Article 5(a) of the ICA. [^13]: Article 5(c ) of the ICA. [^14]: Article 22 of the ICA. [^15]: Article 17(b) of the ICA. [^16]: Article 10.1 of the ICA. [^17]: RJR MacDonald Inc. v. Canada (Attorney General), at para. 59. [^18]: RJR, at para 62, 63.