Court File and Parties
COURT FILE NO.: CV-16-560908 DATE: 20170705 SUPERIOR COURT OF JUSTICE - ONTARIO
RE: GLOUCESTER GATE INC., Applicant AND: JOSEPH PARLATO, Respondent
COUNSEL: Puja Walia, for the Appellant Lev Abramovich, for the Respondent
BEFORE: Mr. Justice Monahan
HEARD: June 30, 2017
Endorsement
[1] This matter involves a dispute between the Applicant, Gloucester Gate Inc. (the “Corporation”), the manager of Gloucester Gate Residences Co-ownership located at 30 Gloucester Street, Toronto, and Mr. Joseph Parlato, an owner and resident of suite 1812 in the apartment complex. The dispute arises out of repairs that were made to the bathtub drain in Mr. Parlato’s unit in February of 2015.
[2] On February 2, 2015, the Corporation was made aware of the fact that water was leaking into suite 1712, located directly below the unit owned and occupied by Mr. Parlato. Following an investigation by the Corporation’s plumber, the Corporation was advised that the leak was originating in the unit occupied by Mr. Parlato. By way of a letter dated February 3, 2015, Mr. Parlato was notified that the Corporation’s plumber would be entering his unit the next day to carry out the necessary repairs to the bathtub drain, and that all associated costs would be charged back to Mr. Parlato.
[3] On February 4, 2015, the Corporation’s plumber was able to make the necessary repairs by accessing the bathtub drain in Mr. Parlato’s unit by cutting a hole in the ceiling of the bathroom in unit 1712. The invoice for the repairs was in the amount of $1,771.51. Mr. Parlato disputed his liability to reimburse the Corporation for the cost of the plumbing repairs. The Corporation sought reimbursement for the plumbing repair costs by way of letters dated April 16, 2015, and August 19, 2015, but Mr. Parlato failed to reimburse the Corporation as requested.
[4] Accordingly, the Corporation retained legal counsel in an attempt to resolve the matter. The Corporation’s legal counsel, Mr. Gerry Hyman, wrote to Mr. Parlato on October 29, 2015, referring to the amount owing by Mr. Parlato. Mr. Hyman further stated as follows:
“I am advised that no payment has been made. Should payment of that amount together with the Corporation’s legal costs for this letter of $194.36, being a total of $1,965.87, not be paid in full on or before November 6, 2016, the Corporation will institute legal action at your expense. The Corporation will also be entitled to the remedies provided in ss. 8.02 of the Co-ownership Agreement which includes taking possession of your unit and foreclosing your co-ownership interest.”
[5] In response to this letter, on November 3, 2015, Mr. Parlato complied with Mr. Hyman’s request and provided a cheque in the amount of $1,965.87, made payable to Mr. Hyman. Mr. Hyman was advised that the payment was being paid under protest. Nevertheless as of this date the Corporation had been reimbursed for the plumbing repairs as well as the legal costs identified in Mr. Hyman’s letter, which seemingly should have resolved the matter.
[6] Mr. Hyman responded to the November 3, 2015 correspondence and payment from Mr. Parlato on January 29, 2016, confirming that he had received a cheque payable in the amount of $1,965.87, comprising payment of the amount specified in his October 29, 2015 letter. He further stated as follows:
“The payment was made under protest pending legal action by your client. I deposited the funds in my trust account although the cheque was not payable to me in trust and I did not receive a request that the funds be held in trust. Further, in your November 3, 2015 letter you advised that legal action will be commenced to recover the payment which is a clear indication that you and Mr. Parlato intended that the funds be delivered to Gloucester Gate Inc. and I will do so in accordance with my client’s request”.
[7] Although Mr. Hyman noted the potential for legal action by Mr. Parlato, he confirmed that the amount claimed by the Corporation had been paid to him, and that he was forwarding the funds to the Corporation.
[8] For reasons that are not disclosed on the record, Mr. Hyman did not in fact transfer the funds to Gloucester Gate Inc. and, instead, retained them in his trust account. This led to a new demand from the Corporation, in a letter to Mr. Parlato dated May 4, 2016, wherein Mr. Parlato was informed that he “must authorize the corporation to transfer the $1,965.87 in Gerry Hyman’s trust account.” The Corporation further stated that failure to provide the requested “authorization” by May 18, 2016 would result in Mr. Parlato being in default of his obligations, with the result that he would be subject to a lien being registered against the property, such lien being enforceable through an order for vacant possession of his unit.
[9] The May 4, 2016 letter from the Corporation also demanded payment for additional legal fees of $763.89 from Mr. Hyman, as well as $122.61 for further work by the plumbing repair firm in January 2016, for a total payable of $886.50.
[10] Mr. Parlato failed to provide the authorization to transfer the funds as requested in the May 4, 2016 letter which, predictably, produced further involvement from legal counsel and mounting costs. On June 22, 2016, Michael Spears, who had been now been retained by the Corporation in place of Mr. Hyman, wrote to Mr. Parlato noting that he had failed to provide the requested authorization to transfer the funds from Mr. Hyman’s trust account. Mr. Parlato was informed that the Corporation now had a lien against his unit. He was advised that he must, within 30 days, cure his default by providing the “authorization” to transfer the “trust monies” of $1,965.87. Further, in addition to the $886.50 demanded in the May 4, 2016 letter, Mr. Spears demanded payment of an additional $1,420.80 in legal costs incurred by his firm in pursuing the matter.
[11] Mr. Parlato failed to meet these requests and on September 21, 2016 the Corporation instituted this application in which it sought, inter alia, declarations that Mr. Parlato was in default of the terms of the co-ownership agreement, that the Corporation may dispose of his co-ownership interest in the property to satisfy all arrears, along with an order that Mr. Parlato give the Corporation vacant possession of unit 1812 within 30 days.
[12] Over the subsequent months, there was extensive correspondence between counsel for the parties, and a number of adjournments for a variety of reasons, leading up to the hearing of this matter. In April 2017, Mr. Parlato paid the $886.50 claimed in the letter of May 4, 2016, but continued to deny responsibility for the plumbing repairs or any costs associated with such repairs.
[13] Having reviewed the documentary evidence filed in this matter as well as the arguments of legal counsel, I am satisfied that the repairs to Mr. Parlato’s unit were appropriately carried out by the Corporation on February 4, 2015. Notice had been provided in writing the previous day to Mr. Parlato in accordance with the Co-ownership Agreement. The investigations that were carried out by the plumbing repair company indicated that Mr. Parlato’s unit was the source of the leaks into unit 1712. Although Mr. Parlato denied that his bathub drain was the actual source of the leaking into unit 1712, I am of the view that the Corporation was entitled to rely upon the investigations and opinion provided by the plumbing repair company. The Corporation paid the invoice from the plumbing company in good faith and should have been reimbursed by Mr. Parlato.
[14] I therefore find that Mr. Parlato was obliged to reimburse the Corporation for the plumbing repair expenses incurred in good faith by the Corporation on February 4, 2015, and that his failure to do so in response to reasonable requests in April and August of 2015 placed him in breach of his obligations under the Co-Ownership Agreement. The Corporation was entitled to take steps to recover the amounts owing by Mr. Parlato, including retaining legal counsel, and Mr. Parlato was required under the Agreement to reimburse the Corporation for any such reasonable steps taken to enforce its rights.
[15] That being said, the letter from Mr. Hyman dated October 29, 2015, proposed a resolution whereby Mr. Parlato would pay the amount of $1,965.87 by no later than November 6, 2015, representing the plumbing repair costs as well as legal costs incurred to that date. Mr. Parlato acceded to that request by making the requested payment on November 3, 2015, prior to the deadline of November 6, 2015, set out in Mr. Hyman’s letter. Although Mr. Parlato indicated that he was paying the money “under protest” he did not request Mr. Hyman to hold the money in trust, and there was no reason for Mr. Hyman to have held the funds in trust, much less to demand an “authorization” to release the funds from his trust account. Indeed, in his subsequent letter in January 2016, Mr. Hyman advised that he was going to transfer the funds to the Corporation. This should have resolved the Corporation’s claim, cured the default that had occurred when Mr. Parlato failed to reimburse the plumbing repair costs, and brought the matter to a close.
[16] Instead, Mr. Hyman failed to act in accordance with his letter of January 2016 and deposited the funds into his trust account. This led to the repeated demands that Mr. Parlato provide an “authorization” to release the funds from trust, a request which prolonged and escalated the matter, added significantly to the cost of resolving the issues and was, in my view, entirely unnecessary.
[17] In my view, Mr. Parlato was entitled to proceed on the basis that payment of the amount requested in Mr. Hyman’s letter of October 29, 2015 would resolve the matter. The fact that Mr. Parlato paid the money “under protest” does not detract from the fact that he had, in substance, complied wtih Mr. Hyman’s request. I do not believe that the Corporation should be permitted to later resile from the resolution proposed by its own counsel, through subsequently requesting the payment of additional legal or plumbing repair costs, the provision of an “authorization” to transfer funds from the lawyer’s trust account, and reimbursement for additional legal costs incurred to pursue these matters. The matter should have been at an end upon the payment of the funds by Mr. Parlato on November 3, 2015.
[18] I would therefore find as follows: (i) Mr. Parlato was in breach of his obligations under the Co-Ownership Agreement upon his failure to reimburse the Corporation for the plumbing repair costs incurred on February 4, 2015; (ii) this default was cured by the November 3, 2015 payment by Mr. Parlato; and (iii) the Corporation is not entitled to any additional declaratory and other relief as sought on this motion, apart from the declaration in subparagraph (i) immediately above.
[19] Further, I find that Mr. Parlato is entitled to a refund of the $886.50 paid on April 18, 2017, in respect of the additional legal fees and plumbing costs claimed in May 2016, as the demand for these amounts was inconsistent with the resolution proposed by Mr. Hyman and accepted by Mr. Parlato on November 3, 2015. The Corporation shall reimburse Mr. Parlato for this amount within 30 days.
[20] As success on this matter is divided, I decline to make any order respecting costs.