Court File and Parties

COURT FILE NO.: CV-16-24195 DATE: 20181005 ONTARIO SUPERIOR COURT OF JUSTICE

BETWEEN:

Gina O’Donnell, in her capacity as Estate Trustee of the Estate of Elio Affrin Quaggiotto, Deceased Applicant (Responding Party) – and – Michele Quaggiotto, Elmara Construction Co. Limited, Elmara Corp., 1758116 Ontario Corporation, Stan Dickson and 1508947 Ontario Limited Respondents (Moving Parties)

Counsel: Peter K. Hrastovec, for the Applicant (Responding Party) Tom Serafimovski, for the Applicant (in proceeding CV-18-26529) Stephanie Marentette Di Battista, for the Respondents (Moving Parties)

HEARD: September 17, 2018

Ruling on Motion

HEBNER J.:

[1] This motion was brought by the respondents requesting an order that the proceeding bearing court file number CV-16-24195 be tried together with the proceeding bearing court file number CV-18-26529. The applicant opposed the motion. This is my ruling on the motion.

Background Facts

[2] Elio Affrin Quaggiotto (“Elio”) died on January 20, 2014. He was survived by his former spouse, Gale Quaggiotto (“Gale”), his spouse at the time of death, Cecilia Kelly (“Cecilia”) and three children: Gina O’Donnell (“Gina”); Claudia Kalaydjian (“Claudia”); and Michele Quaggiotto (“Michele”).

[3] Elio was the founder of a construction company, Elmara Construction Co. Limited (“Elmara”). As a result of estate planning that took place in 2009, Michele, Gina and Claudia all became common shareholders in Elmara and Elio’s shares became special shares. Michele ran Elmara and Gina was the secretary/treasurer. Both of their signatures were required on cheques. Michele has now purchased the shares previously owned by Gina and Claudia and is the only common shareholder.

[4] Gina is the estate trustee for Elio’s estate. She was appointed the estate trustee by way of a certificate of appointment of estate trustee without a will issued on October 1, 2014. The appointment was made on consent of the entire family following a family meeting. Gina and Claudia are the powers of attorney for Gale. Michele continues to run Elmara.

[5] Shortly after Gina was appointed the estate trustee, the administration of the estate became adversarial. Gina claims that she was unable to obtain the necessary information for the administration of the estate from Michele. Gina also claims that she was unable to obtain details and documentation regarding a loan(s) that was allegedly advanced to Elmara by Stan Dickson, the principal of 1758116 Ontario Corporation.

Action Number CV-16-24195 (the “first action”)

[6] Gina brought the application bearing Court file number CV-16-24195 on September 29, 2016. Initially, she requested an order removing herself as Elio’s estate trustee. She has since reconsidered that position and no longer seeks her removal. She requested an order for production from the responding parties of information and documentation respecting the alleged loan and that she claims was necessary for the administration of the estate. Lastly, she sought to pass her accounts.

[7] The application has been dismissed against Elmara Corp, 1758116 Ontario Corporation, Stan Dickson and 1508947, leaving Michele and Elmara as respondents.

[8] Within the context of this action, Michele has made allegations of wrongdoing on the part of Gina. On November 15, 2016, Verbeem J. made an order giving directions. He ordered that the issues for trial are:

(a) issues relating to the alleged breach of fiduciary duty and/or obligation and alleged gross negligence for failure to:

i) maintain and keep accounts in accordance with section 39 of the Estates Act and Rule 74.17 of the Rules of Civil Procedure;

ii) maintain a proper standard of care and skill as it relates to the property of the estate;

iii) act in the best interests of the beneficiaries of the estate;

iv) properly ascertain and to satisfy liabilities of the estate;

v) properly manage estate assets;

vi) consider issues relating to the interest of Gale Quaggiotto as a dependent;

(b) issues relating to the quantification of applicable damages for losses suffered to the estate and interest thereto as applicable.

[9] Gina’s application has been set down for trial the week of November 26, 2018.

Action Number CV-18-26529 (the “second action”)

[10] This action was commenced by statement of claim issued June 19, 2018. The plaintiffs are G & C O’Donnell Holdings Inc. and Gina. The defendants are Michele, Elmara, Elmara Corp., EQ management Corp., 1508947 Ontario LTD and 1690178 Ontario Limited.

[11] This action has to do with an agreement that was reached between Gina and Michele (and their various corporations) in December 2015 whereby Gina agreed to sell her shares in Elmara to Michele for the sum of $460,000. A share purchase agreement was signed between the parties and both Gina and Michele had independent legal advice and assistance. The agreement provided that $260,000 of the purchase price would be paid on February 4, 2016, and the balance paid by way of promissory note. The promissory note was signed by Michele. It provided that $100,000 was to be paid on January 15, 2017, and the second payment of $100,000 was to be made on January 15, 2018. The promissory note was secured by a second position mortgage in the amount of $200,000 against the property municipally known as 5365 Walker Road, Tecumseh, Ontario. As part of the consideration for the transfer of the shares, Gina was granted a release excepting gross negligence and wilful acts.

[12] The first payment of $260,000 was made. The $100,000 payment due January 15, 2017 was made. The last payment due under the promissory note in the amount of $100,000 was not made on January 15, 2018. Gina commenced this action to collect the payment.

[13] Michele has filed a statement of defence and counterclaim alleging that he paid too high a price for the shares. Michele relies upon the doctrines of undue influence and economic duress. He alleges that Gina refused to pay interest owed on money loaned to the corporation by Mr. Dickson and that he was forced into the share transaction in order to deal with the loans. Michele claims that he was bullied into the transaction.

[14] Michele asserts by way of counterclaim that Gina engaged in oppressive or unfairly prejudicial conduct in exercising her powers as a director and secretary/treasurer of Elmara.

The Motion

[15] Michele brought this motion requesting an order that two proceedings be heard at the same time or one immediately after the other. The governing rule is r. 6.01(1) of the Rules of Civil Procedure, R.R.O. 1990, Reg. 194, which reads as follows:

6.01 (1) Where two or more proceedings are pending in the court and it appears to the court that,

(a) they have a question of law or fact in common;

(b) the relief claimed in them arises out of the same transaction or occurrence or series of transactions or occurrences; or

(c) for any other reason an order ought to be made under this rule,

the court may order that,

(d) the proceedings be consolidated, or heard at the same time or one immediately after the other; or

(e) any of the proceedings be,

(i) stayed until after the determination of any other of them, or

(ii) asserted by way of counterclaim in any other of them.

[16] When one of the factors (a), (b) or (c) have been met, the court is directed to use the balance of convenience test to determine whether or not the issues ought to be heard together. There are lists of factors in the jurisprudence to consider when determining the balance of convenience on such a motion. They include:

• the general convenience and expense;
• how far the actions/applications have progressed to date;
• whether the plaintiffs in each case have different solicitors;
• whether there will be a savings in pretrial procedures;
• what is the potential for a party to be seriously inconvenienced?
• will there be real savings in experts’ time and witness fees?
• will the order result in a delay of one of the actions?
• what is the nature of the two proceedings?

See: Agarwal v. York Fire & Casualty Insurance Co., 2012 ONSC 1411; and Jeffrie v. Hendrikson, [2011] N.S.J. No. 505.

[17] Counsel for the moving parties asserts that there is a connection between the two actions; that the parties are the same; that the issue of loans allegedly owed by Elmara to Stan Dickson will arise in both actions; that the value of Elio’s special shares will depend on the validity, or otherwise, of the Dickson loans.

[18] Counsel for Gina points out that she is represented by two different lawyers in each of the actions. When the second payment on the promissory note had not been paid, Gina returned to the firm who handled the share transfer in order to collect the debt. Counsel for Gina in both actions claim that the matters are separate; that regardless of the outcome of the first action, Gina is still owed $100,000 on the promissory note; that the matters are at different stages and ought to proceed separately.

Analysis

[19] The first question is whether either any of the factors in r. 6.01(1) have been satisfied.

[20] As for factor (a), counsel for Michele asserts that the issue of the validity and/or enforceability of the Dickson loans is common to both actions. Certainly the loans are relevant to the issues raised by Michele in the second action. Counsel for Michele asserts that they are also relevant to the first action as Elio’s estate has special shares in Elmara and the value of those shares will be impacted by the loans. In that sense, the loans may have some relevance.

[21] As for factor (b), the relief claimed does not arise out of the same transaction or series of transactions. The first action deals with Gina’s actions as estate trustee of Elio’s estate. The second action arises out of the share purchase transaction between Gina and Michele. Although both Michele and Gina have an interest in the outcome of both actions, the actions arise out of completely different factual circumstances. In my view, factor (b) has not been met.

[22] As for the third factor, I do not see any reason for the order sought to be made. The two actions, although involving the same parties, are different. The first action deals with Gina’s passing of accounts and her actions as trustee of her father’s estate. The application was issued in 2016. It is scheduled for trial in November 2018 and it ought to proceed in November. The second action deals with monies owing as a result of the promissory note given as consideration for a share transaction. This cause of action did not arise until the payment was missed on January 15, 2018. The counterclaim in the second action deals with Gina’s actions in her role as a director and secretary/treasurer of Elmara.

[23] The first action raises complex issues including, to name a few, breach of fiduciary duty; Gina’s obligation to the estate; Gina’s responsibility to maintain and keep accounts; Gina’s responsibility to maintain a proper standard of care; Gina’s responsibility to act in the best interests of the beneficiaries of the estate and manage estate assets and liabilities.

[24] The second action, to the contrary, is relatively simple, but for the counterclaim. The second action is focused on the agreement reached between Gina and Michele in December 2015 for the sale of Gina’s shares to Michele. This transaction is irrelevant to the matters raised in the estate litigation.

[25] The only issue in common seems to be the value of the estate’s shares in Elmara. This issue will not be dispositive of either action.

[26] The actions are at different stages. The first action is ready to proceed to trial in November. The second action is not. Examinations for discovery have been completed in the first action. The second action is still at the pleadings stage.

[27] Gina has different counsel in the two actions.

[28] Having balanced the various factors as set out above, I am of the view that it would not be appropriate to consolidate these two actions, or order that they be heard at the same time or one immediately after the other. It is my view that the first action ought to proceed to trial as scheduled and that the second action ought to proceed separately in due course.

Disposition

[29] For the foregoing reasons, the motion is dismissed.

[30] In the event the parties are unable to agree on costs, they may make written submissions, to include a costs outline, according to the following timeline:

1. Gina may make submissions within 20 days;
2. Michele may make submissions within 20 days thereafter;
3. Gina may make reply submissions within 10 days thereafter.

Original signed by Justice Pamela L. Hebner

Pamela L. Hebner Justice

Released: October 5, 2018