De Luca v. Zomparelli, 2018 ONSC 3789
Motion Heard: 2018 06 18
SUPERIOR COURT OF JUSTICE - ONTARIO
RE: Enzo De Luca, Alessandro De Luca and Colio Estate wines Inc.
v.
Lorenzo Zomparelli, Elsa Zomparelli, Rose Siciliano also known as Rosina Siciliano and Div-Co Contracting Inc.
BEFORE: MASTER R.A. MUIR
COUNSEL: Emilio Bisceglia for the moving parties/plaintiffs
Evan Tingley for the responding party Rose Siciliano, defendant
REASONS FOR DECISION
1The plaintiffs bring this motion pursuant to section 103 of the Courts of Justice Act, RSO 1990, c. C43 and Rule 42.01 of the Rules of Civil Procedure, RRO 1990, Reg. 194 (the “Rules”) for an order granting them leave to issue a certificate of pending litigation (“CPL”) in respect of certain lands and premises known municipally as 183 McClure Drive, King City Ontario (the “Property”). They also seek leave to amend their statement of claim to add the legal description of the Property.
2The plaintiffs make a claim against the Zomparelli defendants for re-payment of the sum of $942,047.33 allegedly loaned to those defendants and evidenced by promissory notes. The plaintiffs also seek the return of $314,648.50 allegedly paid to the Zomparelli defendants for construction work performed in connection with a property in Thornbury, Ontario.
3The defendant Rose Siciliano (“Rose”) is the registered owner of the King City Property. She has entered into an agreement of purchase and sale to sell the Property to an arms’ length purchaser (the “APS”). The APS is scheduled to be completed on June 20, 2018, just two days from now. Given the obvious urgency of this matter, it was necessary for these reasons to be prepared on an expedited basis.
4The plaintiffs’ claim that the Property does not belong to Rose and is actually held in trust for the defendant Lorenzo Zomparelli (“Lorenzo”) who they say is the true beneficial owner. The plaintiffs also appear to be claiming an equitable mortgage over the Property.
5At the outset of the argument of this motion, the plaintiffs sought leave from the court to file additional affidavit evidence after conducting cross-examinations. Counsel for Rose objected to the late introduction of this evidence. In my view, it is appropriate that the supplementary affidavit be accepted by the court. For the most part, the evidence in the supplementary affidavit arises from documents produced by Rose following her cross-examination on June 12, 2018. There is some information in the affidavit that could have been provided prior to the cross-examination but that is really just evidence that adds context to the evidence produced by Rose after the cross-examination. In my view, this affidavit meets the test under Rule 39.02. Its late filing was necessary given the late production in question and the urgency of this matter. See Shah v. LG Chem Ltd., 2015 ONSC 776 at paragraphs 23 to 25.
6I am also prepared to grant leave to the plaintiffs to amend their statement of claim to add the legal description of the Property. This is a minor amendment that in no way prejudices Rose or the other defendants. Rule 26.01 is mandatory.
7Rose is the sister of the defendant Elsa Zomparelli (“Elsa”) and the sister-in-law of the defendant Lorenzo. Rose bought the Property in 2007. She is the sole registered owner of the Property. It has always been in her name. The purchase was financed by a conventional first mortgage and a loan from her parents secured by a second mortgage. Rose is the only person obligated to pay the registered mortgages. The Property was purchased before any dispute arose between the plaintiffs and Lorenzo. Rose claims not to know any of the plaintiffs and her evidence in this respect was not seriously challenged.
8Rose never lived at the Property. Lorenzo performed renovation work at the Property. Rose did not pay him for this work because she alleged Lorenzo owed her money. It appears that at some point in 2013 she agreed to rent the Property to Lorenzo and Elsa. The arrangement was informal. There was a verbal agreement to pay rent but rent was not always paid on a regular basis. It appears that Lorenzo also agreed to pay other expenses associated with the Property and perform renovation and other work.
9It is also clear from the evidence on this motion that a significant portion of the funds advanced to Lorenzo by the plaintiffs ended up being used to cover expenses associated with the Property. The funds found their way to the Property, in part, by way of direct payments to Rose (but deposited to her bank account by Lorenzo), the funding of renovation work, payments to settle lien claims and payments to the first mortgagee.
10The plaintiffs’ evidence is that after the loans and payments were made, but before this litigation began, Lorenzo agreed to re-pay the plaintiffs from the proceeds from the sale of the Property.
11The plaintiffs’ position is that the evidence of the loan and other payments being used to pay expenses related to the Property and Lorenzo’s alleged agreement to re-pay the plaintiffs from the proceeds of sale of the Property support their claim that Lorenzo is the beneficial owner and support their claim to an equitable mortgage or other interest in the Property.
12The parties are in general agreement with respect to the proper test on a motion of this nature. The threshold question is whether there exists a triable issue with respect to an interest in land. The onus is on the party opposing the CPL but the standard is not a high one. Once the initial threshold has been met, the court may then look at other factors. In terms of this motion, I would identify such potential considerations as whether granting the interest in land would be the appropriate remedy or whether damages would be an adequate remedy. The court may also look to any potential prejudice to the parties and any delay in bringing the motion for the CPL. Ultimately, when considering these additional factors, the court must exercise its discretion in equity and look to all relevant matters and make the order that is just in the circumstances. See Avan v. Benarroch, 2017 ONSC 4729 (Master) at paragraphs 16 to 18 and Time Castle Holdings Inc. v. Summit Green Land Corporation, 2009 CanLII 17356 (ON SC) at paragraph 30.
13I have considered these factors and principles in relation to the evidence and argument on this motion. I have determined that it would not be just, in the circumstances of this motion, to grant the CPL relief the plaintiffs are requesting.
14I am simply not satisfied that the plaintiffs’ claims meet the initial threshold of a reasonable claim to an interest in land as required on a motion seeking leave to issue a CPL. For the purposes of this analysis, I accept that the monies the plaintiffs advanced to Lorenzo were used to support the Property in terms of paying the mortgage and other expenses. Some of those payments were deposited directly to Rose’s mortgage bank account. However, the simple fact of these payments does not give an unsecured creditor an interest in land by way of a claim to a beneficial ownership or an equitable mortgage as claimed in the statement of claim. This is not a situation where trust money is being traced or an agreement exists to grant the plaintiffs an interest in the Property. The plaintiffs made an unsecured loan to Lorenzo and perhaps to Elsa and the corporate defendant. The money was used by Lorenzo to pay expenses associated with the Property. That, by itself, does not entitle the plaintiffs to an interest in the Property. That is why a lender may choose to insist on a form of security such as a mortgage or a personal guarantee from the registered owner of the Property.
15The evidence the plaintiffs rely on in support of their argument that the Property is in fact beneficially owned by Lorenzo is not compelling. The fact that Lorenzo was using the funds from the plaintiffs to cover expenses related to the Property does not persuade me that he may be a beneficial owner. Lorenzo and Elsa were living at a Property legally owned by Rose. It makes sense that they would cover expenses associated with the Property. This a family situation. The arrangements between Rose and Lorenzo and Elsa were informal and not well documented. This is hardly surprising in these circumstances. Rose’s evidence is that Lorenzo owed her money as well as being her tenant. The property was purchased by Rose before the plaintiffs had a dispute with Lorenzo. Part of the purchase price was financed by Rose’s parents. She is the only name on title and the only person obligated to pay the mortgages. She does not know the plaintiffs and had no direct dealings with them. The text messages the plaintiffs point to as evidence of Lorenzo’s promise to pay his debts from the sale of the Property are vague and very general in nature. They certainly do not support the plaintiffs’ argument that Lorenzo is the beneficial owner of the Property or that the plaintiffs have a trust or other legal interest in the Property. Finally, there is little evidence to support the claim for an equitable mortgage, such as an explicit, or even implicit, agreement that the monies advanced would be secured by the Property.
16I have therefore concluded that the plaintiffs have not met the initial threshold applicable to a motion of this nature. A reasonable claim to a triable issue of an interest in the Property has not been established.
17The plaintiffs are hereby granted leave to amend their statement of claim as requested at paragraph 4 a) of their further amended notice of motion. The balance of the relief on this motion is dismissed.
18Rose has been successful and is entitled to costs. However, her costs are significantly higher than the plaintiffs’ costs and only one responding affidavit was prepared. Rose did not cross-examine any witnesses. In my view, it is fair and reasonable for the plaintiffs to pay Rose’s costs of this motion fixed in the amount of $7,500.00, inclusive of HST and disbursements. These costs shall be paid by July 18, 2018.
Master R.A. Muir
DATE: 2018 06 18```