NEWMARKET COURT FILE NO.: CV-17-131492-00 DATE: 20180704 SUPERIOR COURT OF JUSTICE - ONTARIO

RE: Leslie Rivas, Plaintiff (Responding Party) AND: Michael Anobile, Defendant (Moving Party)

BEFORE: THE HON. MR. JUSTICE G.M. MULLIGAN

COUNSEL: D. LaFramboise, Counsel for the Plaintiff (Responding Party) D. Saverino, Counsel for the Defendant (Moving Party)

HEARD: May 23, 2018

ENDORSEMENT ON SUMMARY JUDGMENT MOTION

OVERVIEW

[1] The Defendant Michael Anobile (“Anobile”) brings a summary judgment motion seeking to dismiss a claim brought against him by the Plaintiff Leslie Rivas (“Rivas”).

[2] That claim involves Rivas’s former principal residence at 99 Best View Crescent in Vaughan, Ontario, which she originally purchased in 2008 (the “Property”). Rivas claims that the Property was fraudulently transferred from her name to Anobile’s.

[3] Rivas commenced her claim by Statement of Claim dated June 19, 2017. Anobile then filed a statement of defence in connection with this claim. To support his summary judgment motion, Anobile filed an affidavit sworn November 10, 2017, then a supplementary affidavit sworn March 15, 2018. In further support, Anobile also filed affidavits of Anthony Venditti—a real estate agent—and Nick McKenna, a renovator.

[4] Rivas responded to this motion by filing an affidavit sworn February 11, 2018, together with a supplementary affidavit sworn March 23, 2018. She was cross-examined on her affidavits on April 26, 2018. Rivas also filed an affidavit of her father, Carlos Rivas, sworn February 11, 2018.

[5] Both parties filed factums and casebooks of authorities for this motion.

[6] By way of background, it is undisputed that separate litigation is ongoing involving these parties. Before this claim was commenced, Michael Anobile and Manautou Products and Services Ltd. (“Manautou”) commenced an action against Leslie E. Rivas Goody and Leslie Rivas Ltd.

[7] Anobile acknowledged that he is Manautou’s principal. The plaintiffs in that action—Anobile and Manautou—claim damages for oppression and breach of contract, for which the defendants filed a statement of defence. That matter is ongoing. The issues in that litigation do not directly involve the issues between the parties in this action.

THIS ACTION

The Property Transfers

[8] Rivas’s affidavit indicates that she originally purchased the Property for $390,000, with the benefit of a first mortgage of $359,424. In 2011, she obtained a second mortgage of $55,000. In 2012, the first mortgage was replaced by new financing in the amount of $393,750.

[9] The Property was subsequently transferred twice, both of which require close scrutiny.

Transfer One

[10] The first transfer occurred on June 25, 2013: a private sale with Rivas as vendor and Anobile as purchaser. The parties entered an Agreement of Purchase and Sale dated May 27, 2013 (the “2013 APS”). Under it, the purchase price was stated as $610,000 with a $50,000 deposit being paid to Rivas.

[11] Rivas was separately represented in connection with that transfer. A reporting letter dated July 1, 2013—titled “To be picked up”—indicated that Rivas paid off the existing first and second mortgages and received a cheque for $99,542.99. Attached to this first reporting letter from her solicitor were documents signed by Rivas including: the vendor’s closing certificate; an acknowledgement and direction authorizing electronic registration; and a statutory declaration sworn June 17, 2013, commissioned by an individual employed by her solicitor.

[12] In addition, this reporting letter contained a lease agreement between Rivas and Anobile, indicating that she would rent the home for a three-year term at $2,500 monthly. Neither party referenced this lease agreement in the affidavits they filed for this motion. It is clear from the affidavits, however, that Rivas remained in possession of the Property.

[13] As purchaser, Anobile received reporting letters dated July 10, 2013, and July 15, 2013. Those letters indicated that Anobile’s lawyer paid the $560,119.10 balance to close this transaction (a $50,000 deposit having already been paid directly to Rivas as vendor). The trust ledger indicates that Anobile injected $141,600 in addition to the new financing arranged, to provide his solicitor with the balance of necessary funds for the closing and related expenses.

Transfer Two

[14] The second transfer occurred on August 31, 2015. Anobile sold the Property to a third party pursuant to an Agreement of Purchase and Sale (the “2015 APS”). Rivas vacated the property. Anobile received a reporting letter dated November 5, 2015, indicating that three then-existing mortgages were paid out, including a first mortgage to TD Bank of $330,997, a second to TD Bank of $100,672, and a third private mortgage of $101,890.45. That reporting letter also indicated that Anobile received the net proceeds of $76,990.90.

[15] It appears from Anobile’s affidavit that the parties opened a joint bank account in May 2013, at the time of the transfer from Rivas to Anobile. A number of transactions were recorded in that account, including a $50,000 deposit dated June 5, 2013—seemingly the deposit given to Rivas for the 2013 APS. Her affidavit of February 11, 2018, stated at para. 18, “I found out after-the-fact that Anobile had opened a joint bank account and he was moving funds in and out of the account.”

[16] The strength of Rivas’s affidavit, and therefore her credibility, was considerably weakened on cross-examination for this motion. The questions and answers beginning at question #204 illustrate this:

Q. Do you know what account this is? A. It was a chequing account. Q. And whose name is this chequing account? Do you know? A. Both Mike and myself. Q. Were you aware that this account existed? A. Yes. Q. Did you open the account with Mike? A. Yes, I did. Q. Do you recall when? A. I don’t remember the exact date. Q. What was the purpose of you opening this account with Mike? A. We had a joint account because he held my house. Q. There were a number of expenses there, or purchases, or whatever they are. The Petro Canada, LCBO, Fortinos. Do you know who? A. The retail purchases were mine. Q. They’re all yours? Retail? A. Retail.

[17] With respect to the $50,000 deposit, Rivas stated at para. 19 of her affidavit:

You can see that the $50,000 was deposited into my account [the joint account] on June 5, 2013, and Anobile transferred the majority of the monies, $45,000, back to himself in two transactions, one on June 5, 2013, same day as a deposit, for $25,000 and the second on June 10, 2013 [for $20,000].

[18] Anobile does not dispute that he took back these deposit funds. As he stated in his affidavit of November 10, 2017, at para. 22, “[t]he purchase price was set at $610,000. A deposit of $50,000 was given to [Rivas] with a signed Purchase of Sale Agreement, which [Rivas] did return signed to me, as was agreed.” He later states in his affidavit at para. 41, “I, at no time, pocketed $50,000 and $175,000 as alleged by [Rivas].”

The Trust Agreement

[19] Anobile submits that he and Rivas had a trust agreement. By transferring the Property to him in this private sale, he would be able to secure more favourable financing and pay off the high interest mortgages then in place while Rivas owned the Property. He knew that Rivas had financial difficulties and that she had entered a separation agreement with her spouse. As he stated in his affidavit at para. 13:

To assist [Rivas] and to ensure that [she] and her two children continue to have a home, [she] and I agreed that [she] would sell the [Property] to me to be held in trust for [her] at no cost whatever to me.

As he further states at paras. 15 and 16:

I asked Doug LaFramboise, [Rivas’s] lawyer at the time, to prepare a Trust Agreement for this transaction, but Rivas advised her lawyer that she trusted me and didn’t require a Trust Agreement.

As part of the agreement to sell the [Property] to me, to hold in trust for [Rivas], she agreed to pay all costs to carry the home, just as though she were the registered owner.

[20] It is clear from the affidavits that Rivas continued to reside in the Property and make mortgage payments required by Anobile’s newly placed mortgagees. Further, she was cooperative and knowledgeable about the Property’s subsequent sale. She cooperated with the listing agent and gave vacant possession to allow the agreement’s completion.

[21] Rivas was mistaken about the sale price in her Statement of Claim, but subsequently acknowledged this error in her supplementary affidavit of March 23, 2018, at para. 12, “I was incorrect when I said the home sold for $745,000 when the documents show that it sold for $655,000.”

The Original Sale Price

[22] The original 2013 APS between the parties raises credibility issues for both parties. It stated the sale price as $610,000. But as Anobile sets out in his affidavit of November 10, 2017, “[t]he market value of the [Property] at the time was approximately $500,000 and $535,000.” At para. 23, he stated, “TD Canada Trust had the [Property] appraised at a value than (sic) $535,000.”

[23] Notwithstanding Anobile’s knowledge of the Property’s true value, he agreed to purchase it for $610,000, provided a deposit of $50,000, and returned substantially all of that deposit to himself through the joint chequing account shortly after closing. Perhaps the higher value on the 2013 APS and the lease agreement assisted him with refinancing. As he stated at para. 24, “[d]espite the lower appraised value, I was able to secure a first mortgage of $100,000 at 2.89% and a line of credit for $330,000 at 3.6% interest only payments.”

The Fraudulent Transfer Claim

[24] Rivas’s claim—that the Property was fraudulently transferred from her name to Anobile’s—was considerably weakened in her cross-examination. The following question and answer illustrates this:

Q. Were you aware in 2018 that Mr. Anobile transferred the property from your name to his name? A. Yes… Q. Your understanding was that he was a trustee of the property and you were the beneficial owner in 2013, correct? A. I don’t understand. The beneficial? I don’t understand what that means. Q. You were still the one – well, he was holding the property for you, but it was in his name? A. And it was my house.

Accounting Between the Parties

[25] As noted above, Rivas’s solicitor-prepared reporting letter—prepared after Rivas transferred the Property to Anobile—indicated that her mortgages were paid in full. But there was no evidence that she was provided a copy of Anobile’s reporting letter setting out Anobile’s obligations under the new mortgages he had arranged. In my view, Anobile had an obligation to provide Rivas—as the Property’s trustee and while she was a beneficial owner—with necessary information setting out her obligations under the new financing arrangements.

[26] As a result of the transfer between them, Anobile advanced certain funds but received partial repayments of those funds. As he states in para. 29 of his affidavit, Rivas:

received a cheque in the sum of $99,542.99 from her lawyer, Claudio Polsinelli, closing proceeds from the sale of the [Property] , which [Rivas] repaid the sum of $76,500, leaving a balance owing to Anobile in the sum of $68,000.

[27] Anobile then arranged a third mortgage while he was the registered owner. As he stated at para. 31 of his affidavit:

To secure the funds Anobile advanced for this transaction, [Rivas] and I agreed to secure a third mortgage for $75,000 at 10% interest to repay me. The balance of the funds were to be used to pay off [Rivas’s] Cadillac CTS loan and for her personal use and eliminate the $594.82 monthly payment [on the car loan] going forward.

[28] Anobile’s affidavit detailed his receipt of a reporting letter from a solicitor about this new private third mortgage, indicating that he received $72,503.69. This mortgage encumbered Rivas’s beneficial ownership and burdened her with a further mortgage payment at 10% interest. There was no evidence that this reporting letter was provided to Rivas, the Property’s beneficial owner.

[29] It is undisputed that Anobile resold the Property for $645,000 on August 31, 2015. As noted earlier, he then received a reporting letter from his solicitor that set out the payments made to discharge the first, second, and third mortgages.

[30] Although the third mortgage was for $75,000, $101,890.45 was paid out. The signed discharge statement showed that this also included an unsecured $20,000 loan to Rivas, together with substantial interest arrears. The lawyer’s report also included a trust ledger. In spite of Anobile’s role as trustee for the beneficial owner, Rivas, he did not provide a copy of this reporting letter to her. Instead, he provided a brief email with a breakdown of the funds, together with a copy of the statement of adjustments and real estate commission. That statement correctly reflected the sale price, the mortgage payments, the real estate commissions, and tax arrears. It also included, without detail, “Nick repairs, Mike paid, Mike loans $45,576”. It also reflected some financial advances made by Anobile to Rivas just before the closing. In my view, this email was a far cry from a trustee’s accounting to a beneficiary.

The Defendant’s Accounting

[31] Anobile attempted to provide an accounting in his factum. Paragraph 52 provides:

All funds with respect to the sale of the Property have been accounted for. See Schedule 1.

[32] That statement in the factum, however, goes well beyond para. 23 of Anobile’s affidavit which states, “[a]ll funds with respect to the transfer, sale and refinancing of the [Property] have been accounted for, all of which were used for the benefit of [Rivas] alone.”

[33] Schedule 1 was not attached or referenced in Anobile’s affidavit at para. 23. It appears it was first provided to Rivas by service of the amended factum dated May 11, 2018. Therefore, Rivas had no opportunity to cross-examine Anobile on the line-by-line details set out in Schedule 1. I am not satisfied that Schedule 1 constitutes evidence on this summary judgment motion.

THE LAW

Summary Judgment Motion

[34] There is no doubt that the court now enjoys expanded powers to deal with matters by way of summary judgment motion. Rules 20.04(2), (2.1) and (2.2) of the Rules of Civil Procedure, R.R.O. 1990, Reg. 194 provide:

General 20.04 (2) The court shall grant summary judgment if, (a) the court is satisfied that there is no genuine issue requiring a trial with respect to a claim or defence; or (b) the parties agree to have all or part of the claim determined by a summary judgment and the court is satisfied that it is appropriate to grant summary judgment.

Powers (2.1) In determining under clause (2) (a) whether there is a genuine issue requiring a trial, the court shall consider the evidence submitted by the parties and, if the determination is being made by a judge, the judge may exercise any of the following powers for the purpose, unless it is in the interest of justice for such powers to be exercised only at a trial:

1. Weighing the evidence.
2. Evaluating the credibility of a deponent.
3. Drawing any reasonable inference from the evidence.

Oral Evidence (Mini-Trial) (2.2) A judge may, for the purposes of exercising any of the powers set out in subrule (2.1), order that oral evidence be presented by one or more parties, with or without time limits on its presentation.

[35] Rule 20.05(1) provides:

Powers of Court 20.05 (1) Where summary judgment is refused or is granted only in part, the court may make an order specifying what material facts are not in dispute and defining the issues to be tried, and order that the action proceed to trial expeditiously.

[36] The Supreme Court of Canada had an opportunity to provide guidance regarding the summary judgment rules in Hryniak v. Mauldin, 2014 SCC 7, [2014] 1 S.C.R. 87. Justice Karakatsanis stated at para. 68:

While summary judgment must be granted if there is no genuine issue requiring a trial, the decision to use either the expanded fact-finding powers or to call oral evidence is discretionary. The discretionary nature of this power gives the judge some flexibility in deciding the appropriate course of action. This discretion can act as a safety valve in cases where the use of such powers would clearly be inappropriate. There is always the risk that clearly unmeritorious motions for summary judgment could be abused and used tactically to add time and expense. In such cases, the motion judge may choose to decline to exercise her discretion to use those powers and dismiss the motion for summary judgment, without engaging in the full inquiry delineated above.

[37] In Hawkshaw v. Bachly Investments Inc., 2017 ONSC 1364, [2017] O.J. No. 1158, Justice Glustein helpfully summarized Hyrniak’s governing principles (para. 49):

In Mayers v. Khan, 2017 ONSC 200 (Ont. S.C.J.) (“Mayers”), I summarized the applicable principles governing summary judgment arising out of Hryniak v. Mauldin, 2014 SCC 7 (S.C.C.) (“Hryniak”) and the applicable case law. I held (Mayers, at paras. 18-21):

Both parties rely on Hryniak. I summarize the Hryniak principles below:

i) Summary judgment must be interpreted broadly, favouring proportionality and fair access to the affordable, timely and just adjudication of claims. It is no longer merely a means to weed out unmeritorious claims but rather a "legitimate alternative means for adjudicating and resolving legal disputes" (Hryniak, at paras. 5 and 36);

ii) An issue should be resolved on a motion for summary judgment if the motion affords a process that allows the judge to make the necessary findings of fact, apply the law to those facts, and is a proportionate, more expeditious and less expensive process to achieve a just result than going to trial (Hryniak, at paras. 4 and 49);

iii) On a motion for summary judgment, the judge must first determine if there is a genuine issue requiring a trial based only on the evidence before the judge and without using the judge's fact-finding powers. If there appears to be a genuine issue requiring a trial, the judge should then determine if the need for a trial can be avoided by using the powers under Rules 20.04(2.1) and (2.2) (Hryniak, at para. 66); and

iv) The standard for determining whether summary judgment will provide a fair and just adjudication is not whether the procedure is as exhaustive as a trial, but rather "whether it gives the judge confidence that [the judge] can find the necessary facts and apply the relevant legal principles so as to resolve the dispute" (Hryniak, at para. 50). A judge must be confident that he or she can fairly resolve the dispute (Hryniak, at para. 57).

[38] In Baywood Homes Partnership v. Haditaghi, 2014 ONCA 450, 120 O.R. (3d) 438, Justice Lauwers cautioned about the use of affidavit evidence on a summary judgment motion where credibility is an issue (para. 44):

What happened here illustrates one of the problems that can arise with a staged summary judgment process in an action where credibility is important. Evidence by affidavit, prepared by a party's legal counsel, which may include voluminous exhibits, can obscure the affiant's authentic voice. This makes the motion judge's task of assessing credibility and reliability especially difficult in a summary judgment and mini-trial context. Great care must be taken by the motion judge to ensure that decontextualized affidavit and transcript evidence does not become the means by which substantive unfairness enters, in a way that would not likely occur in a full trial where the trial judge sees and hears it all.

CONCLUSION

Credibility and Summary Judgment

[39] During these transactions, Anobile was the Property’s trustee and Rivas the beneficial owner. She continued residing at the Property and made mortgage payments for the new financing that Anobile put in place.

[40] In my view, Anobile utterly failed in his duty to account to her as trustee during the currency of their agreement. Further, his brief accounting to her after he sold the Property left questions unanswered. He also moved money in and out of the joint account without adequate disclosure or agreement with her.

[41] At the same time, Rivas has serious credibility issues. Her broad allegations about fraud in her Statement of Claim and in her affidavits were virtually eliminated after cross-examination. In my view, she was knowledgeable about the Property transfer. She had independent legal advice and a report from her lawyer. She was aware that Anobile subsequently sold the Property. She received his email and a copy of the Statement of Adjustments. But she did not get the type of disclosure or report that she was entitled to receive as a beneficial owner pursuant to trust agreement between the parties.

[42] In my view, both parties’ credibility is further eroded by their entering into the 2013 APS for $610,000 when Anobile knew the Property was only worth $500,000 to $535,000. The only other written agreement between the parties was a lease signed by both of them. There is no evidence that Rivas ever made any lease payments, although it is not disputed that she made mortgage payments during her occupancy.

[43] This is exactly the sort of case envisioned by Lauwers J.A. in Baywood when he spoke of problems with the summary judgment process in actions where credibility is important.

[44] Anobile failed to properly account to Rivas for his actions as trustee. Rivas is entitled to an accounting of the steps taken by him during the currency of his trusteeship and the steps taken by him to repay to himself funds advanced to him, without there ever being any written agreement between the parties.

[45] I therefore dismiss the defendant’s summary judgment motion.

The Court’s Expanded Powers

[46] Although I dismiss Anobile’s claim, it is important to consider the court’s expanded powers under Rules 20.04 and 20.05 quoted above.

[47] I am satisfied that a mini-trial may be the most appropriate way to deal with this matter. I am satisfied that I can deal with this matter as trial management judge.

[48] I therefore direct that the parties, through their counsel, meet to discuss possible terms for a consent order as to process pursuant to Rule 20.05(2). If consent is arrived at, the parties may submit a draft order to me for consideration through my judicial assistant in Barrie. If no consent is arrived at, the parties may arrange for a brief attendance before me to set out directions and terms for a mini-trial.

[49] Counsel for the parties should also give serious consideration to whether or not this case should be tried together with, or immediately after the other litigation between the parties previously referred to.

COSTS

[50] If the parties are unable to reach agreement as to costs, I will receive brief written submissions from the plaintiff Rivas, not exceeding five (5) pages, and together with a bill of costs, within twenty (20) days from the release of this endorsement. The defendant Anobile will then have a further ten (10) days to reply, with submissions not exceeding five pages. There will be no right of reply.

MULLIGAN J. Date: July 4, 2018