Court File and Parties
Court File No.: CV-14-511191 Date: 2017-06-01 Ontario Superior Court of Justice
Application under the Partition Act, R.S.O. 1990, c. P.4
Between: LAURA MAMMONE, ANTONIO MAMMONE and DANIELE MAMMONE, ESTATE TRUSTEES of the ESTATE OF FRANK MAMMONE, Applicants – and – EMILIO MAMMONE and DENSITY GARDEN ENTERPRISES INC., Respondents
Counsel: Alastair McNish for the Applicants David Pomer and Arvid Shahmiry for the Respondents
Heard: May 29, 2017
Before: Perell, J.
Reasons for Decision
A. Introduction
[1] In a decision that was upheld by the Court of Appeal, Justice Dow made an Order under the Partition Act, R.S.O. 1990, c. P.4 for the sale of two properties. See Mammone Estate v. Mammone, 2016 ONSC 2681, aff’d 2017 ONCA 18.
[2] Justice Dow’s Order required the parties to co-operate in selling the two properties. The parties were not co-operating before Justice Dow’s Order. They did not co-operate after the Order or after the appeal.
[3] The Applicants are the Estate of Frank Mammone and the late Mr. Mammone’s adult children, Laura, Antonio, and Daniele. They bring a motion to vary Justice Dow’s Order to the effect that the Respondents’ co-operation in the sale of the properties is to be eliminated leaving the Applicants with the unilateral right to control the sale of the properties.
[4] The Respondents are Emilio Mammone (the late Frank Mammone’s brother and the uncle of Laura, Antonio and Daniele) and Density Garden Enterprises Inc., a corporation owned 50-50 by Emilio and Frank’s Estate. Emilio and Density Garden bring a cross-motion, which in practical effect, also seeks to vary the Order of Justice Dow. The Respondents seek an order that the Estate’s interest in both properties be sold to Emilio so that he will become the sole owner of the properties.
B. Factual and Procedural Background
[5] Before his death in 2006, Frank Mammone, along with his brother Emilio, owned a residential rental property municipally known as 7912 Kipling Avenue in Vaughan, Ontario.
[6] Frank and Emilio were also the co-owners of Density Garden Enterprises Inc., the sole asset of which was another nearby residential rental property municipally known as 7918 Kipling Avenue, Vaughan, Ontario.
[7] Frank’s death triggered disputes among the family because he sought to benefit his grandchildren at the expense of his spouse and his children. And when the trustees of Frank’s Estate sought to have the two properties sold, Emilio said that he had an oral and partially performed agreement with Frank to purchase Frank’s interest in both properties for $110,000.
[8] Some of the disputes came to a head when the Estate brought an application under the Partition Act to have the properties sold and Emilio brought a cross-application to enforce the oral agreement that he alleged he had with Frank.
[9] On May April 4, 2016, Justice Dow granted the Estate’s application and dismissed Emilio’s cross-application. Justice Dow made the following Order:
Order
THIS APPLICATION made by the Applicants for an order directing the properties municipally known as 7912 Kipling Avenue and 7918 Kipling Avenue, Vaughan, Ontario (the “Properties”) be sold, for an order directing an accounting of the income and expenses of the Properties, and for an order directing that the Respondent Density Garden Enterprises Inc. be wound up, and this CROSS-APPLICATION made by the Respondents for an order for specific performance directing that the Applicants’ one-half direct and indirect interests in the Properties be sold to the Respondent, Emilio Mammone, ….
THIS COURT ORDERS THAT the following lands and premises be listed for sale, marketed and sold: ….
THIS COURT ORDERS THAT the sale of the Properties shall be conducted in accordance with the following: (a) The Parties shall retain a real estate agent selected by the Applicants, to assist with the listing for sale, marketing and sale of the Properties, and who shall act on the instructions of the Applicants; (b) The Parties shall retain Frank Sgro, real estate solicitor, to assist with the completion of the legal work necessary to facilitate and effect the sale of the Properties; and (c) The Parties will accept offers to purchase either of the Properties if such offers are recommended for acceptance by the real estate agent identified in subparagraph (a) above, and will otherwise take all reasonable steps to co-operate with the real estate agent to effect the sale of the Properties.
THIS COURT ORDERS THAT the net proceeds of the sales of the Properties shall be paid as follows: (a) in respect of 7912 Kipling, (i) 50% thereof to the Estate of Frank Mammone, and (ii) 50% thereof to the Respondent Emilio Mammone, subject to the accounting hereafter referred to; (b) in respect of 7918 Kipling, (i) 50% thereof to the Estate of Frank Mammone, as a shareholder of 50% of the shares of the Respondent, Density Garden Enterprises Inc. and, (ii) 50% thereof to the Respondent Emilio Mammone, as a shareholder of 50% of the shares of the Respondent, Density Garden Enterprises Inc. subject to the accounting hereafter referred to.
THIS COURT ORDERS THAT upon the sale of 7918 Kipling and the accounting referenced in paragraph 6 below, the Respondent Density Garden Enterprises Inc. shall be wound up pursuant to section 207 of the Business Corporations Act, ….
THIS COURT ORDERS that the Cross-Application of the Respondents is dismissed.
THIS COURT ORDERS that the Respondents shall provide an accounting to the Applicants with respect to all rental and other revenues generated by the Properties, and all taxes and expenses paid …. The accounting agreed to by the Parties shall include an assessment of the services performed by Emilio Mammone for the purpose of calculating its value. …
….
[10] It should be noted that there are two main aspects of Justice Dow’s Order. The first aspect is a sale of the two properties through a real estate agent. The second aspect is that there was to be an accounting including an accounting of Emilio’s claim for a management fee for his services. Emilio is seeking approximately $100,000 for his services.
[11] In accordance with Justice Dow’s Order, the Applicants selected Alfredo DiGenova to be the listing agent. Emilio, however, refused to co-operate with the real estate agent, and he refused to allow “For Sale” signs to be placed on the properties.
[12] In June 2016, because of Emilio’s non-co-operation, the Applicants brought a motion, much like the one now before the court, to vary the Order of Justice Dow, but Emilio responded by appealing Justice Dow’s Order to the Court of Appeal and by moving for a stay of the Order pending the appeal.
[13] On July 15, 2016, Justice Juriansz granted Emilio’s motion for a stay pending the appeal.
[14] On January 12, 2017, the Court of Appeal upheld Justice Dow’s decision. The stay was lifted and the Applicants renewed their efforts to sell the properties.
[15] At first, it appeared that the properties would now be sold. Emilio indicated that the Applicants could deal with his son, Robert, to whom he had granted a power of attorney.
[16] Robert and the Applicants signed a listing agreement, but around this time, the family members continued squabbling about making payments to maintain the properties and to keep the mortgages and utility charges in good standing and about whether Emilio should or should not have re-rented the premises to new tenants.
[17] On March 15, 2017, Mr. DiGenova received an offer to purchase both properties for a total purchase price of $1.2 million. Mr. DiGenova recommended that the offer be accepted.
[18] Robert, however, refused to sign the offer, and instead Emilio offered to buy his late brother’s interest in both properties for $600,000. The Applicants rejected this offer and instead made a counter-offer that Emilio should pay $750,000 and also release his claim for a management fee.
[19] Emilio regarded the counter-offer as offensive, and in offensive response told his nieces and nephew what they could do with their offer. Robert’s power of attorney was rescinded.
[20] Meanwhile, Mr. DiGenova had obtained a new offer to purchase both properties. The purchase price was $1.425 million, but Emilio refused to sign a new listing agreement and he refused to accept the new offer.
[21] On April 24, 2017, Emilio advised that a tenant had vacated the basement apartment at 7918 Kipling leaving it in a state of disrepair and that he had hired a contractor to clean it and make repairs at a cost of approximately $10,000. The Applicants asked him not to incur this expense because the purchaser had agreed to by the properties "as is". Despite this request, Emilio went ahead and re-rented both properties and, as noted above, he brought an application to have the properties sold to him for $600,000. The Applicants brought their application to sell the properties and to remove Emilio as a participant in the sale process.
C. Discussion and Analysis
[22] It undoubtedly saves considerable legal expense if the parties to a Partition Act proceeding will co-operate to sell the property, but in the immediate case, the parties will not co-operate and more expensive direct court intervention is required. There is little doubt that Justice Dow’s Order is not working and that the Order needs to be revised to bring closure to this family dispute in a way that is fair to both sides.
[23] There is no dispute that the court has the jurisdiction to vary Justice Dow’s Order and both parties sought the court to exercise the jurisdiction in their favour and in a way that would disfavour the other.
[24] Court supervision in a Partition Act application is typically done by referring the sale to a Master, but, in my opinion, that is not necessary in the immediate case and all that is required is to delete paragraph 2 from Justice Dow’s Order and to substitute the following:
Order (Varied)
- THIS COURT ORDERS THAT the sale of the Properties shall be conducted in accordance with the following: (a) The Applicants shall retain and sign a standard listing agreement with a term of 45 days with Alfredo DiGenova, to assist with the listing for sale, marketing and sale of the Properties, and who shall act on the instructions of the Applicants; (b) The Parties shall retain Frank Sgro, real estate solicitor, to assist with the completion of the legal work necessary to facilitate and effect the sale of the Properties; (c) The acceptance of any offer is subject to court approval and if the Applicants receive an offer within the listing period, they may bring a motion for court approval of the sale; (d) The Respondent Emilio Mammone may submit offers but shall not have a right of first refusal; (e) If no offer is received within the period of the listing, the Applicants may apply for an order extending the time for the listing of the properties or for any other order that is just; (f) If the court approves the acceptance of the offer, and the Respondents refuse to sign the transfer to the purchaser, the court shall make a Vesting Order pursuant to s. 100 of the Courts of Justice Act; (g) The real estate commission, conveyancing lawyer’s fees shall be paid out of the proceeds of sale; and (h) If Emilio has not paid the costs awards of the Partition Act proceedings made against him, those costs shall be deducted from his share of the proceeds of sale.
[25] To avoid any confusion, I am not seized of this matter, but given my familiarity with it, the Applicants may inquire of my assistant to determine my availability to hear any motion to approve a sale of the properties or to extend the listing period. The Applicants may also set the motion down in the normal course as I am not seized of the matter.
D. Conclusion
[26] Order accordingly.
[27] If the parties cannot agree about the matter of costs, they may make submissions in writing beginning with the Applicants’ submissions within 20 days of the release of these Reasons for Decision followed by the Respondents’ submissions within a further 20 days.
Perell, J. Released: June 1, 2017