COURT FILE NO.: CV-17-2408-00, CV-17-5302-00

DATE: 2019 01 08

REVISED: 2019 02 26

Schedule A

ONTARIO

SUPERIOR COURT OF JUSTICE

BETWEEN:

Peter Pichelli, Todd Leslie, Frank Toth and 958041 Ontario Limited

Douglas M. Cunningham, for the Plaintiffs

Plaintiffs

• and -

Adair Barristers LLP, Geoffrey D.E. Adair, and Tracy Adair

William Pepall and Alan Melamud, for Geoffrey D.E. Adair and Adair Barristers LLP, David Steinberg for Tracy Adair

Defendants

AND BETWEEN:

Peter Pichelli, Todd Leslie, Frank Toth and 958041 Ontario Limited

Douglas M. Cunningham, for the Plaintiffs

Plaintiffs

• and -

Ante Kegalj, Anthony Vuletic, John Vuletic, Embleton Properties Corp., 1857325 Ontario Ltd. and Brampton G&A Holdings Inc.

Neil Paris for Ante Kegalj, Ed Hiutin for Brampton G &A Holdings Inc., Paul Pape for Anthony Vuletic, John Vuletic, Embleton Properties Corp. and 1857325 Ontario Ltd.

Defendants

AND BETWEEN:

Aleardo Caroti, Jacinta Caroti, Ian Grounds, Moraig Grounds, Nancy Kostelac, Brian McDowell, Biljana Nizalek, Marielle Pelchat-Morris, Wilma Jesus, Monica Savona, Milena Boland, Jurica Biondic, Renato Biondic and Boris Klecina

Bonnie Roberts Jones and Martin Mendelzon, for the Plaintiffs

Plaintiffs

• and -

Ante Kegalj, Anthony Vuletic, John Vuletic, Mira Vuletic, Embleton Properties Corp., 1857326 Ontario Ltd., and Brampton G & A Holdings Inc.

Neil Paris for Ante Kegalj, Ed Hiutin for Brampton G &A Holdings Inc., Paul Pape for Anthony Vuletic, John Vuletic, Embleton Properties Corp. and 1857325 Ontario Ltd.

Defendants

HEARD: April 9 and 10, 2018

AMENDED REASONS FOR DECISION

LEMAY J

[1] In 2002, the property at 78 Cliffside Drive in Brampton was a farm of approximately 12.8 acres. It was ripe for development, and John and Anthony Vuletic saw that opportunity. They gathered together third party investors and purchased the property for $1,200,000.00. The third party purchasers signed agreements that gave them entitlements to a certain number of lots. The plan was to subdivide the property, get it ready for development and sell it.

[2] The property was sold by the Vuletics to the Defendant Brampton G & A Holdings in 2016 for the sum of $15,386,000.00. A plan of subdivision is in place, but houses have not yet been constructed on the property. Approximately $3 million was paid out on the closing, and the rest is in the form of a vendor take-back mortgage, which matures in September of 2020. Some payments are to be made during the period of the mortgage, but the bulk of the funds are to be paid out at the end of the term of the mortgage.

[3] In the meantime, a number of investors have filed suit against the Vuletics, Brampton G & A, Ante Kegalj, and Geoffry and Tracy Adair. The claims are complex and will be detailed below. In essence, however, the various investors have claimed that the Vuletics and Mr. Kegalj (who was also an investor) engaged in fraudulent and improper conduct with respect to the management of the property. These lawsuits have been commenced by way of three separate actions. I am the case-management judge for all three actions.

[4] The parties have come to an agreement that allows for Brampton G & A not to have to participate in this action any further. The parties have then asked for summary judgment in three parts of the action. First, the Adair Defendant ask for summary judgment in the claim against them. That claim is only being advanced by on group of investors, a group that I will refer to as the Pichelli Plaintiffs. Second, Mr. Kaglj asks for summary judgment in the claim being advanced against him by the Pichelli Plaintiffs, although the Plaintiffs in the other action (“the Caroti action”) are also advancing a claim against him. Since Mr. Kagalj is likely to bring a motion for summary judgment once the pleadings in the Caroti Action have been finalized, I adjourned his summary judgment motion against the Pichelli Plaintiffs so that both motions for summary judgment can be heard together. Finally, the Vuletics are seeking summary judgment on their counterclaim, which they argue would end the action by the Pichelli Plaintiffs.

[5] For the reasons that follow, the summary judgment motions of the Adair defendants are granted. The Vuletics’ summary judgment motion is dismissed.

Background Facts

a) The Parties

[6] John Vuletic lives in Brampton. He has previously owned a drywall company and has asserted that he is familiar with the property development business.

[7] Anthony Vuletic is John’s son and was called to the Bar of Ontario in 2006. He also lives in Brampton.

[8] Embleton Properties is a company that was incorporated by the Vuletics and was intended to hold title to the Cliffside property when it was purchased. This company had its status cancelled by the Ontario Government in 2008. Both of the Vuletics were officers and directors of this company from its inception to the time its status was cancelled.

[9] 1857325 Ontario Ltd. (“185 Corp.”) is an Ontario corporation that was incorporated in 2011 to act as the nominee for the Vuletics. It is owned and controlled by the Vuletics.

[10] Mr. Ante Kegalj is an employee of a Toronto law firm. He has known the Vuletics for most of his life, as his parents have known John Vuletic and his wife for approximately 40 years. For reasons that I will come to, Mr. Kegalj was listed on the title of 78 Cliffside for a number of years.

[11] Peter Pichelli is an investor in the property purchased by the Vuletics; he was also Mr. John Vuletic’s long-time accountant and is currently a Trustee in Bankruptcy in Burlington, Ontario. Mr. Pichelli provided money for a number of the proposed lots in the 78 Cliffside property. 958041 Ontario Limited is a company that is owned and controlled by Mr. Pichelli.

[12] Todd Leslie and Frank Toth both invested in the Cliffside property by obtaining an interest in the lots that Mr. Pichelli subscribed for. They have joined Mr. Pichelli in his claims.

[13] Aleardo Caroti, Jacinta Caroti, Ian Grounds, Moraig Grounds, Nancy Kostelac and Marielle Pelchat-Morris are all people who had also purchased interests in lots at 78 Cliffside. They are all Plaintiffs in an action brought against Embleton, the Vuletics (including John’s wife Mira), Mr. Kegalj, 185 Corp. and Brampton G & A.

[14] Geoffrey Adair is a Toronto-based litigator who was counsel to Embleton and the Vuletics on litigation that they had with Mr. Kegalj as well as other actions related to the Cliffside property. Tracy Adair is his wife. They are Defendants in an action brought by the Pichelli Plaintiffs relating to the mortgage that Mr. Adair placed on 78 Cliffside to secure his fees. Mr. Adair’s law firm, Adair Barristers, is also a Defendant in this action. Where I refer to Mr. Adair in these reasons, I am also referring to his law firm, as the causes of action against Mr. Adair and his law firm completely overlap.

[15] Brampton G & A is a Defendant in all of the actions except the one against the Adairs. However, as I have noted above, the parties have come to an agreement that permits Brampton G & A to not participate in this litigation.

b) The Purchase of the Property

[16] The Vuletics attempted to interest various investors in the purchase of lots or portions of the property, as it had not yet been subdivided. The Vuletics believed that the property could be subdivided into approximately 50 single family residential lots. Somewhere around 22 people purchased approximately 28 of the lots. They all provided funds to the Vuletics.

[17] Ultimately, the property was purchased in the name of Mr. Kegalj, as the Vuletics did not have the credit history necessary to obtain and hold a mortgage on the 78 Cliffside property. He signed a Declaration of Trust that confirmed that the property was held in trust for Embleton. Over the course of his relationship with the Vuletics, Mr. Kegalj acquired an interest in four lots on the property.

[18] After the purchase of the property, the Vuletics made certain cash calls from the investors in order to pay for servicing costs related to the development of the property. Whether those cash calls were properly made, whether the Vuletics properly and diligently pursued the development of the property and whether the Vuletics made proper use of the funds that were generated from the mortgages and/or the cash calls are all questions in the underlying litigation.

[19] The one fact that can be agreed upon, however, is that the land has a plan of subdivision, but that no other services were installed on the property before it was sold to Brampton G & A. Prior to the commencement of the actions that I am case-managing, some litigation resulted from the slow development of the property, and I now turn to those cases.

c) The Litigation Between Kegalj and the Vuletics

[20] In March of 2010, Mr. Kegalj commenced an action against the Vuletics in their personal capacity and Embleton. In that action, Mr. Kegalj sought a declaration that he was a partner in the development of the property. He also obtained and registered a Certificate of Pending Litigation on the property.

[21] In July of 2011, in the middle of trial, the Kegalj claim was resolved on the basis of minutes of settlement. Those minutes read as follows:

The parties hereto on their own behalf and the defendant Vuletics on behalf of Embleton Properties Corp., agree to settle this action on the following terms:

1. Title to subject property Part Lot 5, Concession 5 WHS, Parts 1, 2, 3 and 4 on Plan 43R-3552, City of Brampton to be transferred forthwith upon demand being made, to any or all of the defendants and/or their nominee.

2. Plaintiff Kegalj to arrange first mortgage for defendants or their nominee in amount $1 million, if demanded by Vuletics, on terms:

• 1 year term

• Open

• 3.75% interest

• $40,000 finder’s fee off top

3. Proceeds of any new first mortgage to be used to pay property taxes/planner and Bramwest and Bonk line of credit otherwise be paid to independent third party (agreed or court appointed) to be drawn down by Vuletics in payment of legitimate, reasonable and necessary development and servicing costs, such development costs to include an allowance of up to $35,000 per year to John and Anthony Vuletic on account of management fees.

4. Parties to enter into second mortgage in favour of Kegalj in the amount of $785,000 having following terms:

• Open

• Interest at 4.75% per annum payable upon discharge

• Term to be 2 years 3 months

• Mortgage to be postponed to any new first or first arranged after draft plan approval, such mortgage not to exceed $2.5 million.

• Additional term as per clause 5 below.

5. Upon any discharge of the said second mortgage in addition to the principal and interest then outstanding, the Vuletics to pay Kegalj as a condition of discharge an amount equal to the value of 1 premium and 3 standard lots as determined by an agreed upon/or court appointed appraiser on an “as serviced” basis less the total of $215,000 and $785,000.

6. Parties to enter into new second mortgage upon discharge of above mortgage for $100,000 payable to Kegalj without interest and at earlier of 2 years or substantial completion of servicing. Alternative Vuletics have option to pay Kegalj $100,000.

7. An independent account mutually agreeable to the parties or appointed by the court shall prepared an accounting of all project monies received and disbursed to date, which accounting shall be sent to all Lot Purchasers and to the plaintiff Kegalj. Thereafter the said accountant will prepare quarterly accounting reports to be submitted to Lot Purchasers and Kegalj forthwith upon completion of same.

8. Parties to exchange Mutual Releases for all claims including claim to lots or interest in property by Kegalj, save and excepting enforcement of terms hereof.

[22] In addition to resolving Mr. Kegalj’s claim, these minutes also required that additional information be given to the lot holders. An accountant was to be retained, and was to provide quarterly reports to all of the lot holders. This additional requirement was specifically placed into the minutes by Lederer J. by way of an endorsement on July 11th, 2011.

[23] The Vuletics and Mr. Kegalj had further problems with the minutes of settlement. As a result, there was a further appearance before Lederer J. on September 20th, 2011. At that time, an Order preventing the sale of the property, which was still in Mr. Kegalj’s name, was made on consent.

[24] Finally, in December of 2011, a further attendance was required before Lederer J. On December 18th, 2011, Lederer J. signed an order directing transfer of the property to 185 Corp., as well as further modifying the minutes of settlement between the parties.

[25] Ultimately, the property was transferred by Mr. Kegalj to 185 Corp., and the terms of the transfer were modified such that Mr. Kegalj was to be given a mortgage in the sum of $785,000.00 in order to compensate for debts that had been incurred in his name. However, he was also required to pay costs to the Vuletics and fees to the accountant that was retained.

[26] As part of the settlement of the Kegalj action, an accounting was to be done on a quarterly basis. An accountant, Mark Hinchcliffe, was retained. An accounting from Mr. Hinchcliffe has been included in the motion materials before me. However, because the adequacy of the accounting is an issue in this proceeding, I am not reaching any conclusions about what it shows.

[27] One other proceeding relating to the action between the Vuletics and Mr. Kegalj was brought in 2016 by a Mr. Robert Bilich, who was the brother of one of the investors. The reasons in that case are reported in Kegali v. Embleton Properties Inc., 2016 ONSC 6264. In that case, Mr. Bilich was raising some of the same allegations that are being made by the investors in this case. I will have more to say about this action in the section on the Adairs’ summary judgment motion, but as I have noted, it concerns the mortgage that was placed on 78 Cliffside Drive by Mr. Adair to secure his fees.

[28] It appears that there may have been some other proceedings in relation to the property, including the exchanges of “strips” of land with an adjoining property, and some other litigation. These matters are not relevant to the issues that I have to decide, so I will not detail them in these reasons.

d) The Sale of the Property

[29] The Vuletics and 185 Corp. sold 78 Cliffside to Brampton G & A. The Agreement of Purchase and Sale was entered into on May 26th, 2016. The sale closed in September of 2016.

[30] The financial terms of the sale were as follows:

a) A deposit of $100,000.00 would be paid within 48 hours of acceptance of the offer.

b) A further deposit of $400,000.00 would be paid after the fulfilment of some conditions.

c) At closing, 25% of the purchase price would be paid to 185 Corp.

d) A vendor take-back mortgage would be registered against the property, with no interest for the first nine months, and 4% interest, payable quarterly, after that.

e) Principal repayments would be made on the first and second anniversary of the mortgage in the sum of $770,000.00 and $700,000.00 respectively.

f) The balance of the mortgage would mature four (4) years from the date of closing.

[31] As far as the court is aware, Brampton G & A is continuing to adhere to these terms, subject to changes agreed to by the parties in order to ensure that Brampton G & A does not have to actively participate in this litigation.

[32] There may also be a term in the agreement relating to the re-transfer of some lots to the Vuletics by Brampton G & A. I am not going to comment on the meaning or significance of those terms, as the interpretation of these terms may arise at other points in this litigation.

[33] It was, however, the sale of the property to Brampton G & A that seems to have been the event that triggered the actions before me. I will now describe those actions.

e) The Actions

[34] I am case-managing three different actions. First, there is the claim in Court File No. CV-17-1481, which has been brought by the Pichelli parties against the Vuletics, their companies and Mr. Kegalj.

[35] The second claim in Court File No. CV-17-2408 was also brought by the Pichelli parties, this time against Mr. and Mrs. Adair.

[36] Finally, there is the claim in Court File No. CV-17-5302, which was brought by the Caroti Plaintiffs against the Vuletics (including Ms. Vuletic), Embleton, 185 Corp. and Brampton G & A.

[37] In order to ensure that all relevant parties were made part of this action, I provided both the Pichelli Plaintiffs and the Caroti Plaintiffs with the opportunity to attempt to add the rest of the lot holders to their claims. Counsel for the Pichelli Plaintiffs indicated that his client had no interest in adding other parties to his claim. Counsel for the Caroti Plaintiffs agreed that they could be added to her claim. In the event that they were not prepared to be added as Plaintiffs, then they would be added as third party Defendants to this action. I understand that this has been completed, but I have only listed the original Plaintiffs in the Caroti action above.

[38] After some discussion with counsel, it was determined that four summary judgment motions were going to be brought. None of these motions involved the Caroti Plaintiffs. As a result, it was also agreed that I would not make any findings with respect to the meaning of the Lot Purchase Agreements without giving counsel for the Caroti Plaintiffs the opportunity to provide submissions. Ultimately, I adjourned Mr. Kegalj’s motion for summary judgment so that it would be heard with Mr. Kegalj’s proposed motion for summary judgment in the Caroti Action.

Issues

[39] The issues in this case are different for each of the summary judgment motions. However, I have determined that one decision is appropriate in this case as the underlying facts are all related.

[40] As a result, the issues are, generally speaking, as follows:

a) Do the Pichelli Plaintiffs have a cause of action against the Adair Defendants or should summary judgment be granted to dismiss their claims?

b) Did the Pichelli Plaintiffs have an agreement with the Vuletics when the Lot Purchase Agreements were signed? If so, should summary judgment be granted in that action?

[41] I will analyze each of these motions in turn. Before doing that, however, it is important to set out some of the principles relating to summary judgment that apply to this case.

[42] I should also address one preliminary issue, which is the claim that these summary judgment motions are brought before discovery and put the Pichelli Plaintiffs at a substantial disadvantage. This claim was made by the Pichelli Plaintiffs in the Kegalj summary judgment motion but could also be raised in respect of the other two motions. I reject it in both of the motions I am deciding for three reasons. First, the Pichelli Plaintiffs have a considerable familiarity with many of the facts in this case, and they had the opportunity to cross-examine all of the other Defendants in order to obtain additional evidence. This eliminates most, if not all, of the concerns that might exist about any disadvantages of the timing of these motions.

[43] Second, as will be seen, most of the determinations on this motion turn on legal, rather than factual, issues. Since many of the details of the transaction are already known, the Pichelli Plaintiffs are not at a disadvantage in responding to them.

[44] Finally, as discussed in my analysis of the summary judgment principles, the principle that parties must lead trump or risk losing continues to apply. The continued application of this principle has ensured a robust record that also serves to reduce, if not eliminate, any disadvantage that flows from discovery not having been completed.

The Principles Relating to Summary Judgment

[45] Rule 20.04(2)(a) of the Rules of Civil Procedure (R.R.O. 1990, Reg. 194) requires a court to grant summary judgment where there is no genuine issue requiring a trial.

[46] The Supreme Court of Canada has outlined a number of principles in Hryniak v. Mauldin, 2014 SCC 7, [2014] S.C.R. 87. These principles expanded the use of summary judgment in accordance with the changes to the Rules of Civil Procedure implemented after the Osborne report was presented.

[47] The steps to take in conducting the Hryniak analysis are set out in Sweda Farms Ltd. v. Egg Farmers of Ontario, 2014 ONSC 1200 where Corbett J. states (at paragraph 33):

As I read Hryniak, the court on a motion for summary judgment should undertake the following analysis:

1. The court will assume that the parties have placed before it, in some form, all of the evidence that will be available for trial;

2. On the basis of this record, the court decides whether it can make the necessary findings of fact, apply the law to the facts, and thereby achieve a fair and just adjudication of the case on the merits;

3. If the court cannot grant judgment on the motion, the court should:

a. Decide those issues that can be decided in accordance with the principles described in 2), above:

b. Identify the additional steps that will be required to complete the record to enable the court to decide any remaining issues;

c. In the absence of compelling reasons to the contrary, the court should seize itself of the further steps required to bring the matter to a conclusion.

[48] One of the points that is clear from this passage is that the parties will place everything before the Court that would be available at trial, and that the old rules that a party is to put its best foot forward still apply. See Toronto Dominion Bank v. Konga, 2016 ONSC 1628, at paragraph 16. Indeed, as noted by Corbett J. in Sweda, supra, this rule will be more important because the Court will rely on the record before it to determine what steps should be followed.

[49] However, our Court of Appeal has expressed concerns about the granting of partial summary judgment. In Butera v. Chown, Cairns LLP, 2017 ONCA 783, 137 O.R. (3d) 561, Pepall J.A. stated:

30. First, such motions cause the resolution of the main action to be delayed. Typically, an action does not progress in the face of a motion for partial summary judgment. A delay tactic, dressed as a request for partial summary judgment, may be used, albeit improperly, to cause an opposing party to expend time and legal fees on a motion that will not finally determine the action and, at best, will only resolve one element of the action. At worst, the result is only increased fees and delay. There is also always the possibility of an appeal.

31. Second, a motion for partial summary judgment may be very expensive. The provision for a presumptive cost award for an unsuccessful summary judgment motion that existed under the former summary judgment rule has been repealed, thereby removing a disincentive for bringing for bringing partial summary judgment motions.

32. Third, judges, who already face a significant responsibility addressing the increase in summary judgment motions that have flowed since Hryniak, are required to spend time hearing partial summary judgment motions and writing comprehensive reasons on an issue that does not dispose of the action.

33. Fourth, the record available at the hearing of a partial summary judgment motion will likely not be as expansive as the record at trial therefore increasing the danger of inconsistent findings.

[50] These principles have also been enunciated in other cases, such as Canadian Imperial Bank of Commerce v. Deloitte & Touche, 2016 ONCA 922, 133 O.R. (3d) 561. It is clear that, when considering partial summary judgment, the Court must proceed cautiously. These principles apply equally when dismissing the claims of some, but not all, Plaintiffs against a Defendant even if those claims are brought in different actions.

[51] I will now apply these principles to each of the summary judgment motions before me.

Issue #1- The Adair Summary Judgment Motion

a) The Positions of the Parties

[52] The Pichelli Plaintiffs are claiming damages for breach of warranty of authority, fraudulent misrepresentation, deceit, conversion, detinue, breach of fiduciary duty, intentional interference with economic relations and unjust enrichment. In addition, the Pichelli Plaintiffs are seeking a declaration that the Adair defendants are trustees de son tort in favour of the Pichelli Plaintiffs.

[53] In essence, the Pichelli Plaintiffs are claiming that the Adair Defendants owed them a duty of care as beneficial owners of the property and, further, that the Adair Defendants breached that duty of care by securing legal fees through a mortgage on the property, given what they knew about the history of the property. The Pichelli Plaintiffs advance four separate issues for consideration:

a) The fact that Embleton Corporation had been dissolved in January of 2008 created legal implications for Mr. Adair and Adair Barristers that meant he had responsibilities to the individual lot holders.

b) Mr. Adair and Adair Barristers owed a duty of care to the lot purchasers.

c) A resulting trust was created in this case by operation of law, which resulted in rights accruing to the lot holders.

d) In the case of Ms. Adair, she was a stranger to the parties, did not provide any consideration for the assignment of the alleged debt, and as a result made false representations on the registration of the debt that allow the lot holders to make a claim against her for the value of the debt.

[54] The Adair Defendants, each of whom is separately represented on this motion, argue that the claims against them should be summarily dismissed. Their position is that the duty a lawyer owes to a non-client is strictly limited at law to situations where there is reliance by the non-client on the lawyer. Further, in this case there was no reliance by the Pichelli Plaintiffs on Mr. Adair or on anything he did or failed to do. Finally, the Adair Defendants argue that none of the causes of action that the Pichelli Plaintiffs have advanced can be sustained.

[55] I will outline relevant facts additional to the ones that are set out above, and then I will set out my legal analysis and conclusions. In my legal analysis and conclusions, I will set out my answers to the four points raised by the Pichelli Plaintiffs and will then address any further issues that arise as a result of the specific causes of action pled against either of the Adairs by the Pichelli Plaintiffs.

b) The Underlying Additional Facts

[56] I have described the litigation between Mr. Kegalj and the Vuletics above. Mr. Adair was counsel to the Vuletics and Embleton in that litigation. During the course of that litigation, it is clear that Mr. Adair did not have any communications with the Pichelli Plaintiffs.

[57] Mr. Adair was originally retained in 2009. As noted above, he defended the 2010 action brought by Mr. Kegalj. At the end of that action, the Vuletics and Embleton owed legal fees to Mr. Adair that had accrued throughout the course of the action.

[58] However, the Vuletics were not in a position to pay those fees. As a result, they agreed to put a charge on the property in the amount of $425,000.00 in favour of Mr. Adair. Those fees were, as agreed by Mr. Adair and the Vuletics, based on the actual time spent, the disbursements incurred, the risk of non-payment and the success in the litigation.

[59] After the Kegalj action was completed, Mr. Adair acted for the Vuletics and Embleton on other issues related to the property up until 2016. Those issues were:

a) An action brought by Anna Leverezia, a lot purchaser. This action was settled at an early stage of the litigation.

b) An action relating to a dispute over a mutual exchange of strips of land with an adjoining landowner, which was settled at mediation.

c) A motion brought by the brother of a lot purchaser, Mr. Robert Bilch. This action raised some of the same allegations as are made in the actions before me, but it was dismissed by Lederer J., as I have discussed above.

[60] Mr. Adair did not act for the Vuletics, Embleton or 185 Corp. on the sale of the property in 2016. According to Mr. Adair’s Affidavit, it came to his attention that the accounting that had been directed by Lederer J. had not been performed. This was an issue in the motion brought by Mr. Bilch in 2016. Lederer J. gave reasons in the Bilch matter, as cited above.

[61] In considering whether the minutes of settlement had been complied with, Lederer J. stated (at paragraph 14):

[14] The matter returned to court on September 26, 2016. It became immediately apparent that the schedule that had been set had not been followed. It was not until August 24, 2016 that counsel for the defendants delivered further material, most importantly from the perspective of the court, an up-to-date accounting of the income and expenditures associated with the development project. The accounting was included as an exhibit in an affidavit prepared by a “chartered professional accountant”. The accountant had been retained during April 2016 to undertake the task. As part of the affidavit, he explained the delay as resulting from the time of year (a busy one) and the need to collect the necessary information. The resulting accounting demonstrates that there is only $2,863.73 that cannot be accounted for. The list of headings which identify the expenditures all appear to be consistent with those that would be a part of a real estate development. While not excusing the delay or the failure of the defendants to comply with the Revised Minutes of Settlement, this document does provide advice to the investors as to the state of the project and would give them some basis to determine if they had questions or concerns that required further investigation or action. As such, the initial concern of the court, as raised at the trial, was met, albeit belatedly. More directly, if it could be said that the defendants were, as a result of breaching the promises made to the court as part of the settlement, in contempt of the court, the contempt has been purged.

[62] Ultimately, given the work that Mr. Adair had performed by the fall of 2015, he and the Vuletics agreed on a total fee of $700,000.00 plus disbursements and taxes. As a result, a $700,000.00 mortgage, bearing interest at a rate of 6%, was placed on the property, and the previous mortgage was discharged.

[63] Prior to registering the charge on title, Mr. Adair had assigned the underlying debt owed to him to Ms. Adair so that the interest on the debt would be taxable in her hands.

[64] When the sale closed, the mortgage was discharged and the interest was paid to Ms. Adair. The fees were processed through Mr. Adair’s trust account as payment of accounts due.

[65] After the sale was closed, Mr. Adair wrote to Mr. Pichelli and the other investors on October 21, 2016 advising of the details of the sale of the property and that the Vuletics proposed eventual distributions to the investors. The parties agree that this is the first communication between Mr. Adair and any of the Pichelli Plaintiffs. Further, the first time that Mr. Pichelli became aware of Mr. Adair having been retained to deal with litigation matters on the property was when Mr. Pichelli saw Mr. Adair’s name on documents delivered to his office at this time.

[66] Mr. Adair stated in his Affidavit that he was not aware that Embleton’s status as a corporation was cancelled by the Ontario Government in 2008. It is, however, clear that that Embleton’s status was cancelled in 2008. For the purposes of this motion, I will conduct my analysis on the basis that Mr. Adair knew or ought to have known that Embleton had no status as a company when he commenced acting for Embleton and the Vuletics. I understand that the retainer began in 2009.

c) Analysis and Conclusions

[67] There are a number of complicated claims advanced by the Pichelli parties against the Adairs. At a high level, those claims amount to a complaint that Mr. Adair owed the Pichelli Plaintiffs a duty of care because they had a beneficial interest in the property.

[68] In light of the allegations in the various claims about the property, the accounting and the alleged misuse of the equity in the property by the Vuletics, I do not intend to address the question of who had a beneficial interest in the property in any great detail.

[69] In my view, it is sufficient to dispose of this motion on the general question of whether Mr. Adair owed a duty of care to the Pichelli parties. In my view, he did not for the simple reason that he was not their lawyer and had never met them. Similarly, Ms. Adair, as the assignee of a debt owing to Mr. Adair, could not have obligations to the lot holders that did not flow from her assumption of the debt owing to Mr. Adair. On that basis, the motion is granted, and the Adair action is dismissed.

[70] To explain my reasons for reaching this conclusion, I will address each of the four specific issues raised in the Pichelli Plaintiffs’ factum as well as briefly comment on each of the causes of action that they have raised in the claim against the Adair Defendants. I will address the relevant law as it arises.

The Significance of the Dissolution of Embleton

[71] The Pichelli Plaintiffs argue that Mr. Adair ignored the dissolution of Embleton, which they submit had serious implications for the rights and interests of the lot purchasers. They also argue that it would have been impossible for Mr. Adair to provide his undivided loyalty to both Embleton and to the Vuletics.

[72] As a result, the interests of Embleton and the Pichelli Plaintiffs (and other lot purchasers) were inextricably linked and aligned, as well as being adverse to the interests of the Vuletics. The key points of the Pichelli Plaintiffs’ arguments on this issue are set out at paragraphs 77-79 of their factum, which read as follows:

77. After he learned in 2010 of the dissolved status of Embleton Corp., the reasonable and logical step for GA [“Geoffrey Adair”] as Embleton’s purported counsel would have been to notify the Lot Purchasers because their interests were aligned with Embleton Corp., they had contractual rights that would be adversely affected by Embleton’s dissolution, and they had a continuing interest in the Property and its development.

78. GA incorrectly and unreasonably believed that it was not in Embleton’s interests to contact the very investors who had sustained the corporation and expected Embleton Corp. to develop the Property. Instead, he testified that he believed that contacting the Lot Purchasers and giving them notice of the dissolution of Embleton Corp. would have amounted to acting against the interests of his clients.

79. The reality is that contacting the Lot Purchasers and advising them of the existence of the 2010 Action and the dissolved status of Embleton Corp. was squarely in the interests of Embleton Corp. It just did not happen to be in the interests of the Vuletics in their personal capacity. GA failed to understand and appreciate the conflict of interest he was in. In the end, he decided to act exclusively in the interests of the Vuletics and take instructions from them alone and carry on as if the interests of Embleton Corp. (and the Lot Purchasers) just did not matter.

[73] There are a number of problems with these arguments. First, Mr. Adair was retained by the Vuletics and by Embleton. As a result, he owed all of his clients a duty to keep their information confidential. Contacting the Pichelli parties would not have been a “reasonable and logical step”. Instead, contacting them would have been a breach of Mr. Adair’s obligations to his clients to maintain client confidentiality.

[74] Second, the submissions of the Pichelli Plaintiffs conflate the interests of Embleton and the purchasers in the property. Even on a cursory analysis of this transaction, that conflation is not justified. Before its dissolution, Embleton arguably owned the residual lots (the ones that had not been sold) after it was subdivided. As a result, I can see at least two ways in which the interests of Embleton might have diverged from those of the lot holders:

a) If lot holders had not paid all of the capital calls that were made by the Vuletics, there is an argument that Embleton would have been entitled to rescind their agreements on the basis of default (see section 6 of at least some of the agreements). I make no comment on whether non-payment of the charges would actually result in default, as that issue may arise at some stage in this litigation.

b) There were originally supposed to be approximately 50 lots. If Embleton had been able to persuade the City of Brampton to permit the subdivision to be a larger number of lots, that might have been in Embleton’s interests as it would have had a greater proportion of the land. This increase in lots would not, however, have been in the interests of the individual lot holders, as that would have reduced the value of each individual lot.

[75] Third, there is the question of whether it would have been in Embleton’s interests to contact the lot holders generally and the Pichelli Plaintiffs specifically. The Pichelli Plaintiffs argue that it was squarely in Embleton’s interests to contact them. However, I can see no explanation as to why it was squarely in Embleton’s interests to tell a party with potentially divergent interests that Embleton no longer existed.

[76] Finally, even if it might have been in Embleton’s interests to contact the lot purchasers, this was not done and there was no obligation on either Embleton or Mr. Adair to contact the Pichelli Plaintiffs as lot purchasers. The fact that doing something is in a party’s interests does not mean that the party is required to do it.

[77] This brings me to the question of whether Mr. Adair made misrepresentations to the court about the status of Embleton. Assuming, without deciding, that he did so, it is still not clear to me how that creates a cause of action for the Pichelli Plaintiffs. I will have more to say about misrepresentations below, but the connection between a misrepresentation to the court and the claim of a third party that is not involved in the action before the court is tenuous at best.

[78] Indeed, in Scott v. Valentine, 2012 ONSC 6349, Goldstein J. was faced with a case where Mr. Valentine had committed fraud by taking over a million dollars from Mr. Scott. This money was routed through the trust account of a law firm and then disbursed on Mr. Valentine’s instructions. Mr. Scott sued the law firm and claimed that it had breached the Rules of Professional Conduct. Mr. Scott claimed that this breach had created a duty of care on the part of the law firm to him.

[79] Goldstein J. rejected this claim, stating (at paragraph 35):

[35] I do agree with Mr. Sherkin’s position is that there is at least an argument to be made that the Defendants breached the Rules. That said, the breach, if one can be shown, may well go to whether the conduct of the Defendants breached their professional responsibilities, but in and of itself such a breach does not generate proximity where none exists. It strikes me that the Defendants may not have taken all the care that they should have to avoid being duped by an apparently unscrupulous client. Like Grace J. in Bruno Appliance and Furniture and Molloy J. in Brunt v. Yen I find the actions – or inaction – of the Defendants troubling, but there is no basis to find that they owed a duty of care in these circumstances. I add that Scott’s failure to properly safeguard his own interests provides no excuse for the Defendants. [Emphasis added.]

[80] In my view, the same analysis is applicable in this case. Anything that Mr. Adair may have done that breached the Rules of Professional Conduct or his obligations to the court does not create proximity where none existed. I should also note that I am not making any findings that Mr. Adair breached any of the Rules of Professional Conduct or any of his duties as an officer of the court.

[81] In that regard, I note that section 242(1)(b) of the Business Corporations Act (R.S.O. 1990 c. B.16) clearly states that a proceeding may be brought against a dissolved corporation. The recent case law generally supports the view that the dissolved corporation has the right to defend that action and that such rights are implicit in the wording of section 242(1)(b). (See Malmas v. Crerar Property Corp., 2010 ONSC 2883 (Ont. Div. Ct.), Tomken Kamato (V) Ltd. v. 752458 Ontario Ltd., 2014 ONSC 4484, cited with approval in Sickinger v. Krek, 2016 ONCA 459, at paragraphs 12, 13 and 16.)

[82] As a result, even if Mr. Adair was aware that Embleton had been dissolved, Embleton was still legally allowed to defend the Kegalj action and the argument of the Pichelli Parties on this point cannot be sustained.

[83] Finally, there is the claim of the Pichelli Plaintiffs that the Vuletics had no legal authority to deal with the equity in the property as they saw fit. I do not need to reach a conclusion on that issue in this motion. If the Vuletics dealt improperly with the property, then that is a matter that can be dealt with through the claim against them.

[84] As a result, I am of the view that the fact that Embleton Corp. did not exist as an entity does not impose obligations on Mr. Adair with respect to the interests of the Pichelli Plaintiffs.

The Duty of Care

[85] A lawyer usually only owes a duty of care to his own client (see Baypark Investments Inc. v. Royal Bank (2002), 57 O.R. (3d) 528 (Ont. S.C.), aff’d [2002] O.J. No. 4377 (Ont. C.A.)). Only in very limited circumstances will a lawyer be held to owe a duty of care to a third party.

[86] Those limited circumstances will generally only arise where the non-party reasonably relied on the lawyer and the lawyer knew or ought to have known of that reliance. (See Chand Morningside Plaza Inc. v. Badhawar, 2015 ONSC 293.)

[87] The key reason for this principle is explained in Kamahap Enterprises Ltd. v. Chu’s Central Market Ltd. ((1998), 64 D.L.R. (4th) 167 (B.C.C.A.)). A lawyer’s loyalty in arms-length transactions should not be divided, particularly given the potential for conflict that exists with any transaction. In other words, a lawyer has an obligation to protect his or her client’s interests in any transaction, and requiring the lawyer to care for the interests of another party in the same transaction might interfere with that duty.

[88] In essence, the duty of care that a lawyer owes to a non-party is very limited because lawyers owe a very high duty of care to their clients. That duty includes the obligation to keep client communications and information, even information otherwise publicly available, confidential.

[89] The facts then need to be considered to determine whether there was any reasonable reliance by the Pichelli Plaintiffs on any of Mr. Adair’s conduct. In my view, there was not for two reasons:

a) The first communication that the Pichelli Plaintiffs received from Mr. Adair was in 2016, long after all of the litigation in this case was completed.

b) The Pichelli Plaintiffs were not aware of any of the actions that Mr. Adair was taking on behalf of his clients. As a result, they could not reasonably have relied on any actions or representations of Mr. Adair.

[90] The Pichelli Plaintiffs also argue, in essence, that the Vuletics’ conduct resulted in economic harm to the Pichelli Plaintiffs and that this harm was foreseeable by Mr. Adair. I am not required to decide whether the Vuletics caused any economic harm to the Pichelli Plaintiffs in order to be able to reject this argument. If the Pichelli Plaintiffs cannot establish reliance, then even foreseeable economic harm does not create the necessary proximity.

[91] On that point, the decision in Seaway Trust Co. v. Markle ([1991] O.J. No. 479 (Gen. Div.)) is instructive. In that case, the Plaintiffs claimed that the sale of a building was used to defraud them by inflating the cost of the building. The purchaser Plaintiffs sued the parties involved in the alleged increase in the value of the property as well as the law firm that had acted for those parties. The Plaintiffs alleged both fraud and negligence on the part of the law firm that had acted for the vendors.

[92] While the claim of fraud was allowed to proceed, the claim in negligence was dismissed on a summary basis. Lane J. found, even under the old and much narrower summary judgment rules, that the claim in negligence could not succeed. He stated (at paragraph 25):

25. The facts in Wynston are quite similar to the allegations made against Meretsky in the negligence claim. A duty of care is put forward based upon the allegation that Meretsky “knew or ought to have known” that the transaction was fraudulent. No reliance by the plaintiffs on Meretsky nor special undertaking by Meretsky is pleaded. In my view based on the authorities just discussed, in the absence of such pleading and in the absence of actual participation in the fraud, Meretsky owed no duty of care to the plaintiffs in law. In the circumstances none was owed by Fogler, Rubinoff, either. The duty of a solicitor who is not a party to, but knows of a fraud upon the opposite party in a commercial transaction where all parties have, and rely upon, their own solicitors, is, according to Wynston, supra, not to himself misrepresent the transaction. No plea is made that Meretsky made any such misrepresentation. The claim in negligence cannot stand. [Emphasis added.]

[93] In this case, there is a claim of fraudulent misrepresentation being made against Mr. Adair. There are two insurmountable problems with this claim. First, Mr. Adair was not involved in any “transaction” between the Pichelli Plaintiffs and the Vuletics. As a result, there is insufficient proximity between Mr. Adair and the Pichelli parties, and a duty of care cannot be established.

[94] Second, and more importantly, the requisite elements of claim for fraud cannot be made out. One of those elements is that the person alleged to have committed the fraud must have made a false representation (see Gregory v. Jolley (2001), 54 O.R. (3d) 481 (C.A.), at paragraph 15). In this case, Mr. Adair did not make any representations to the Pichelli parties.

[95] For the foregoing reasons, the claims of fraud, breach of duty of care and the related claims cannot succeed against the Adairs.

The Creation of a Resulting Trust

[96] The Pichelli Plaintiffs argue that a resulting trust was created by the servicing costs in this case. I am not reaching any conclusions in that regard. However, even if a resulting trust was created, Mr. Adair would still not owe any duty of care to the Pichelli Plaintiffs. The resulting trust would be against the property, and not against the lawyer who performed work in Court in relation to the property. As a result, I reject this argument.

The Issues Relating to Tracy Adair

[97] The Pichelli Plaintiffs argue that Ms. Adair was allegedly assigned a debt for which she knew or ought to have known had no basis in law. She did not provide valuable consideration for the assignment of this debt and falsely represented that she was owed a debt by 185 Corp. As a result, the money paid out to Ms. Adair on the mortgage should be returned so that it can be distributed to lot holders, including the Pichelli Plaintiffs. The lot holders (including the Pichelli Plaintiffs) are entitled to these monies because they have a beneficial interest in the property.

[98] Ms. Adair argues that the Pichelli Plaintiffs have no basis in law for their claim that the property could not be encumbered by the Adairs without consulting with the Pichellis. I accept this argument.

[99] As I have indicated above, I do not intend to resolve the question of whether the Pichelli Plaintiffs had a beneficial interest in the property. This could affect determinations in the Caroti action, and they have not had the opportunity to be heard on these issues.

[100] However, I can resolve this matter by considering four points. I note that my analysis will generally follow the steps in the analysis performed by the Court of Appeal in Di Michele v. Di Michele, 2014 ONCA 261. In my view, many of the conclusions reached by Gillese J.A. in that decision are applicable here.

[101] First, even if the Pichelli Plaintiffs (and other lot holders) have some beneficial interest in the property, the registered owner of the property at the time that the mortgages were granted was 185 Corp. As a result, pursuant to section 93(1) of the Land Titles Act (R.S.O. 1990 c. L.5), 185 Corp. had the authority to grant a mortgage and the Pichelli Plaintiffs cannot challenge the mortgage on that basis.

[102] Second, there is the question of value. The Pichelli Plaintiffs argue that Mr. Adair did nothing of value for 185 Corp. I disagree. It must be remembered that the outcome of the proceeding before Lederer J. was that the property was ordered to be transferred from Mr. Kegalj. 185 Corp. was created by the Vuletics to hold title to the property. As a result, 185 Corp. was a beneficiary of the work that Mr. Adair performed in order to obtain the court Order. The value for the work performed is clear.

[103] Third, charges on land can be assigned pursuant to section 7(1) of the Land Registration Reform Act (R.S.O. 1990 c. L.4). Mr. Adair’s reasons for transferring this charge to his wife are a matter that is between the two of them. In the absence of a viable claim against Mr. Adair, it is not open to the Pichelli Plaintiffs to challenge the assignment of this charge to Mrs. Adair.

[104] Finally, there is the question of priority and notice. If the Pichelli Plaintiffs have a beneficial interest in the property, then it would arise by way of a trust. section 62(2) of the Land Titles Act states:

Description of owner as a trustee

62(2) Describing the owner of freehold or leasehold land or of a charge as a trustee, whether the beneficiary or object of the trust is or is not mentioned, shall be deemed not to be a notice of a trust within the meaning of this section, nor shall such description impose upon any person dealing with the owner the duty of making any inquiry as to the power of the owner in respect of the land or charge or the money secured by the charge, or otherwise, but, subject to the registration of any caution or inhibition, the owner may deal with the land or charge as if such description had not been inserted. R.S.O. 1990, c. L.5, s. 62 (2).

[105] As noted in Di Michelle, supra (at paragraph 70), this provision means that, absent a caution on the title, the registered owner can deal with the property without considering the description of a trustee. However, the law on this point goes further. Under Ontario’s land titles system, the rights of a bona fide purchaser (which include mortgagees) for value who has registered its interest in the property trump prior unregistered interests (see Di Michelle, supra, at paragraph 107 and the cases cited therein).

[106] Under either principle, the Pichelli Plaintiffs did not have a caution registered on the title. As a result, the Adairs were entitled to attach an encumbrance to the property without regard to any interests that the Pichelli Plaintiffs may have had in the property.

The Other Causes of Action

[107] Most of the specific causes of action that the Pichelli Plaintiffs raise in the Adair action can be disposed of based on the analysis above. In particular, the claims for breach of warranty of authority, breach of fiduciary duty and fraudulent misrepresentation all fail on the grounds I have enumerated above. Specifically, there was no duty of care owed by Mr. Adair to the Pichelli Plaintiffs, and there was no relationship between them that would support a breach of fiduciary duty or a fraudulent misrepresentation. As Mr. Adair was unknown to the Pichelli Plaintiffs, he could not have engaged in fraudulent misrepresentation towards them.

[108] In order to establish the claims for conversion and detinue, the Pichelli Plaintiffs must be able to establish that they were in actual possession or entitled to immediate possession of the monies used to pay the mortgage (see Biondich v. Kingscroft Investments Ltd., [2002] O.J. No. 4742 (S.C.), and UBS Wireless Services Inc. v. Inukshuk Wireless Partnership, 2008 CarswellOnt 2481, at paragraph 31). In this case, regardless of how the agreement between the Pichelli Plaintiffs and the Vuletics is characterized, there is no grounds to support a claim that the Pichellis were entitled to immediate possession of the funds from the proceeds of sale. In any event, the property was not sold until long after Mr. Kegalj was removed from title.

[109] There is also the issue of whether the property in this case can even be subject of a claim for conversion or detinue as it was real, rather than personal, property. In my view, the authorities suggest that these two torts only apply to cases of personal property rather than real property. (See 2015582 Ontario Ltd. (Performance Plus Golf Academy) v. 375445 Ontario Limited (Hydeaway Golf Club), 2017 ONCA 980, 138 O.R. (3d) 561, at paragraph 62.) Any interests, contingent or otherwise, that the Pichelli Plaintiffs had in 78 Cliffside was an interest in real property and these torts are not applicable.

[110] In order to establish the tort of intentional interference with economic relations (also known as the “unlawful means tort”), the Defendant must commit an unlawful act against a third party that is intended to cause economic harm to the Plaintiff (see A.I. Enterprises v. Bram Enterprises, 2014 SCC 12, [2014] 1 S.C.R. 177, at paragraph 23). In this case, the Pichelli Plaintiffs are claiming that the unlawful act was against them directly. This tort, therefore, cannot apply in this case.

[111] This brings me to the claim of unjust enrichment. This requires three elements to be established: a benefit, a corresponding deprivation, and the absence of a juristic reason for the enrichment. Putting aside any issues relating to the benefit and the corresponding deprivation, on the record before me the Pichelli Plaintiffs’ claim in this regard fails because there is a juristic reason for the enrichment in this case. Mr. Adair performed work for the Vuletics that resulted in Mr. Kegalj being required to remove himself from the title to the property and return that title to a company controlled by the Vuletics.

[112] If Mr. Kegalj had continued to remain on title for the entirety of the property, there would have been even more problems with this action and the lot holders would have had even more to be concerned about. As a result, there is clearly a juristic reason for Mr. Adair to have received legal fees from 185 Corp. for the work he performed.

[113] Finally, there is the claim that Mr. Adair was a trustee de son tort. This cause of action arises where a person who is a stranger to a trust takes on responsibility to “possess and administer trust property for the beneficiaries” (see Donovan V.M. Waters et. al., Waters Law on Trusts in Canada, 4th ed. (Carswell, 2012), p. 490-491). In this case, Mr. Adair was acting as counsel in a litigation action. He did not take possession of the property or administer it for any beneficiaries.

[114] In my view, it would be stretching the definition of “administering” property beyond recognition to find, without more, that a lawyer who acts for a party in litigation over a piece of property became an administrator of that property. The trustee de son tort claim also fails.

Conclusion on Issue #1

[115] Given my conclusion on the issues, there is no genuine issue requiring a trial, as none of the claims made by the Pichelli Plaintiffs could succeed. Summary judgment is a fair, just, and proportionate way to resolve this claim.

[116] For the foregoing reasons, the summary judgment motion brought by the Adair Defendants against the Pichelli Plaintiffs is granted, and the action against the Adair Defendants is dismissed.

Issue #2- The Vuletics’ Summary Judgment Motion

[117] In their motion for summary judgment, the Vuletics are seeking an Order dismissing the action brought by the Pichelli Plaintiffs. The Vuletics are also asking that the monies paid by the Pichelli Plaintiffs should either be forfeited or refunded to the Pichelli Plaintiffs with interest paid at the rate within the Courts of Justice Act (R.S.O. 1990, c. C.43).

[118] In essence, the Vuletics argue that the agreement between the parties that the Pichelli Plaintiffs advance on this motion is a forgery and, therefore, the parties never had an agreement. The Pichelli parties argue that the agreement that they have put forward is the correct agreement and that it is the Vuletics who forged their agreement.

[119] While it is entirely possible that the agreement that the Pichelli parties have put before the Court as the agreement is not, in fact, the agreement that was signed, this is not a matter that can be disposed of by way of summary judgment. I will outline the additional facts that are relevant to this motion, and then provide the reasons for my conclusion.

a) Additional Facts

[120] As I have noted above, Peter Pichelli was John Vuletic’s long-time accountant. As a result of his relationship with John Vuletic, he had some familiarity with the purchase of the Cliffside property.

[121] In the spring of 2001, the Vuletics decided to acquire the property at 78 Cliffside Drive in Brampton. The Vuletics believed that there was a reasonable prospect that the property could be rezoned and subdivided.

[122] However, the Vuletics did not have the money to purchase the property on their own. As a result, they determined that they should create Lot Purchase Agreements (“LPAs”), in which individuals were sold the right to obtain a lot upon the registration of the plan of subdivision. The Vuletics retained the firm of Zaldin and Fine to draft a standard form LPA.

[123] In the materials that have been filed, most of the LPA’s conform, in broad terms, to the LPA that was prepared by Zaldin and Fine. The agreement that Peter Pichelli proffers as the LPA he signed does not conform to the standard form LPA. The agreement that the Vuletics advance as the one that Peter Pichelli signed does conform to the standard form LPA.

[124] The parties have each provided a different version how these agreements came to be signed. For reasons that I will come to, I do not intend to resolve the factual differences between the two versions of events.

[125] It is clear that, sometime in the spring of 2002, John Vuletic and Peter Pichelli spoke about the possibility of Pichelli purchasing one or more lots in this development. Both parties agree that Mr. Pichelli visited the property, and told John Vuletic that was prepared to purchase one or more lots.

[126] It also appears that Peter Pichelli purchased five of these lots. Mr. Pichelli has no records outlining his communications with his clients, and I have not heard his evidence. It is, therefore, not clear as to what instructions his clients provided to him in order for him to purchase these lots on their behalf.

[127] The agreement between the parties appears to have been signed on July 3rd, 2002. The events that led the parties to sign whichever agreement is the true copy are not clear. However, no one disputes that money changed hands and that Mr. Pichelli made further contributions to the property after July of 2002. It is not clear as to the extent of those contributions, and I make no findings in that regard.

[128] It is also clear that the agreement that Pichelli claims he signed in this case is significantly different than the agreements signed by all of the other parties. Those differences include the following:

a) The rights of the Vuletics to encumber the property. In the Pichelli LPA, those rights appear to be much more limited than in the standard LPA.

b) The ability to select lots appears to be more extensive in the Pichelli LPA than it is in the standard LPA.

c) The provisions for rescission of the agreement appear to be more favourable to the Pichellis in their version of the LPA than in the Vuletics’ version.

d) The covenants that the purchaser is required to adhere to appear to be significantly stronger in the Vuletics’ version of the LPA than in the Pichelli version.

[129] Given my conclusion that summary judgment should not be granted in this case, I do not intend to analyze these differences in any detail. I would simply note that the differences in the agreement appear to me to be commercially significant.

b) Analysis

[130] There are a number of reasons why the Pichelli action cannot be disposed of on a summary basis, or a partial summary basis.

[131] First, there are significant issues of credibility. There is a clear dispute between the parties as to which version of the LPA Peter Pichelli actually signed. There is also a clear dispute as to the events that led to the signing of the agreement, whichever version was signed. These are questions that are generally best left to viva voce evidence.

[132] Second, there is the question of whether the issues on this summary judgment motion can be extricated from the larger questions to be determined in all of the actions. Counsel for the Vuletics argues that the findings of fact necessary to dispose of the Pichelli action can be extricated from the larger action for two reasons:

a) The agreement that the Pichellis claim to have signed is not commercially reasonable, and as a result the alleged LPA that the Pichelli parties advance cannot be the one that was actually signed.

b) There are internal inconsistencies in Mr. Pichelli’s evidence that demonstrate that his version of events has no air of reality.

[133] I understand counsel for the Vuletic’s argument that the LPA proffered by the Pichelli Plaintiffs as the one that they signed is not commercially reasonable, particularly when compared with all of the other LPAs that were signed in this case. However, determining which agreement the Pichellis signed requires a consideration of what terms were commercially reasonable. This will require a Court to inquire into the extent to which the Vuletics could encumber the property without risking complaints from the lot holders as well as other issues relating to the structure of the transaction as a whole.

[134] Those questions are at the very heart of both the claims advanced by the Pichelli Plaintiffs and the claims advanced by the Caroti Plaintiffs. Determining which version of the agreement the Pichelli Plaintiffs signed necessarily requires an analysis of the structure of the entire series of agreements. It is difficult to conduct that analysis without considering the facts as they relate to the Caroti Plaintiffs. As a result, making a decision on the question of which agreement was signed by the Pichellis at this point raises all of the risks of partial summary judgment identified by the Court of Appeal, and set out at paragraph 49 above.

[135] Then, there are the internal inconsistencies in Mr. Pichelli’s argument. Those inconsistencies clearly exist. However, there are also inconsistencies in the version of events advanced by the Vuletics. I make no comment on which version of events may be more inconsistent, as I am of the view that a trial is required to resolve this dispute. It is not a question that can be extricated from the larger issues in this litigation.

[136] Counsel for the Vuletics argues that I can decide that the Vuletics and the Pichellis were not ad idem and that no contract was formed. The problem with that argument is that there are signatures on two agreements. As a result, I am not sure that finding that there was no agreement is the only outcome that is available to a Court. It is equally possible that a Court could find that there was a contract in this case, but that one side or the other has lied about its terms and subsequently forged a document. This is, however, a question that can only be determined after a full trial.

[137] This brings me to the question of remedy. Even if I could resolve the question of which LPA was actually signed or whether the parties were ad idem, there would then be the question of what remedy, if any, the Pichelli Plaintiffs would be entitled to. Determining which LPA was the actual agreement between the Pichelli Plaintiffs and the Vuletics would not resolve the action between them.

[138] As I noted at paragraph 206, it is possible that a Court would conclude that there was an agreement between the Pichellis and the Vuletics. The fact that one side subsequently misled the Court about the terms of that agreement would be an issue to consider in determining the available remedy, particularly since there is no dispute that Mr. Pichelli paid monies to Mr. Vuletic on account of the 78 Cliffside property.

[139] Finally, even if there was no agreement, the payment of the money creates the potential for the Pichellis to have access to other remedies to account for their money. Again, determining what remedies (if any) are appropriate can only be done in the context of the larger action.

[140] As a result, the claim between the Pichelli Plaintiffs and the Vuletics is not amenable to summary judgment, and the Vuletics’ motion for summary judgment is dismissed.

Conclusion

[141] For the foregoing reasons, the summary judgment motion of the Adair parties succeeds, and the actions against them are dismissed. The Vuletics’ summary judgment motion is dismissed, and the action against them will continue.

[142] Responding submissions from parties against whom costs are sought are due within fourteen (14) days thereafter. Those submissions are not to exceed one (1) single-spaced page, exclusive of case-law. There are to be no reply submissions without my leave.

[143] For clarity, parties are entitled to make separate costs submissions on each motion that they participated in. However, every party is to serve their costs submissions on all of the other parties.

[144] Then, there is the issue of next steps in this litigation. A further case conference is required, and I am of the view that it should be done in person because of the number of parties involved in this case, even after some of the actions are dismissed. I am also of the view that it needs to be completed as soon as possible.

[145] However, I am currently sitting as one of the Civil Blitz judges, and it is quite possible that I will be sitting out of Brampton for the remainder of January. As a result, the parties are to canvass dates in the weeks of February 19th and 25th, 2019, for a 9:00 am in-person appearance in Brampton.

[146] In advance of that appearance, the parties (including the Caroti Plaintiffs) are to consider, discuss and agree, if possible, on the following issues:

a) What additional documentary discovery, if any, is required?

b) What other discovery is required? Who is being discovered?

c) What other steps are required to make these actions ready for trial?

d) Are there any other issues where the parties are going to ask me to make summary dispositions?

e) Are there going to be any expert reports? If so, in what areas?

f) When are the parties going to be ready for trial? I see no reason why the parties would not be ready for trial for the May 2020 Civil Blitz list, but that is an issue that can be discussed.

[147] Finally, I apologize to the parties for the length of time it took to release these reasons. However, as can be seen from them, these motions were quite complex and required detailed consideration.

LEMAY J

Released: January 8, 2019

Revised: February 26, 2019

COURT FILE NO.: CV-17-2408-00, CV-17-5302-00

DATE: 2019 01 08

Schedule A

ONTARIO

SUPERIOR COURT OF JUSTICE

BETWEEN:

Peter Pichelli, Todd Leslie, Frank Toth and 958041 Ontario Limited

Douglas M. Cunningham, for the Plaintiffs

Plaintiffs

• and -

Adair Barristers LLP, Geoffrey D.E. Adair, and Tracy Adair

William Pepall and Alan Melamud, for Geoffrey D.E. Adair and Adair Barristers LLP, David Steinberg for Tracy Adair

Defendants

AND BETWEEN:

Peter Pichelli, Todd Leslie, Frank Toth and 958041 Ontario Limited

Douglas M. Cunningham, for the Plaintiffs

Plaintiffs

• and -

Ante Kegalj, Anthony Vuletic, John Vuletic, Embleton Properties Corp., 1857325 Ontario Ltd. and Brampton G&A Holdings Inc.

Neil Paris for Ante Kegalj, Ed Hiutin for Brampton G &A Holdings Inc., Paul Pape for Anthony Vuletic, John Vuletic, Embleton Properties Corp. and 1857325 Ontario Ltd.

Defendants

AND BETWEEN:

Aleardo Caroti, Jacinta Caroti, Ian Grounds, Moraig Grounds, Nancy Kostelac, Brian McDowell, Biljana Nizalek, Marielle Pelchat-Morris, Wilma Jesus, Monica Savona, Milena Boland, Jurica Biondic, Renato Biondic and Boris Klecina

Bonnie Roberts Jones and Martin Mendelzon, for the Plaintiffs

Plaintiffs

• and -

Ante Kegalj, Anthony Vuletic, John Vuletic, Mira Vuletic, Embleton Properties Corp., 1857326 Ontario Ltd., and Brampton G & A Holdings Inc.

Neil Paris for Ante Kegalj, Ed Hiutin for Brampton G &A Holdings Inc., Paul Pape for Anthony Vuletic, John Vuletic, Embleton Properties Corp. and 1857325 Ontario Ltd.

Defendants

HEARD: April 9 and 10, 2018

REASONS FOR DECISION

LEMAY J

[148] In 2002, the property at 78 Cliffside Drive in Brampton was a farm of approximately 12.8 acres. It was ripe for development, and John and Anthony Vuletic saw that opportunity. They gathered together third party investors and purchased the property for $1,200,000.00. The third party purchasers signed agreements that gave them entitlements to a certain number of lots. The plan was to subdivide the property, get it ready for development and sell it.

[149] The property was sold by the Vuletics to the Defendant Brampton G & A Holdings in 2016 for the sum of $15,386,000.00. A plan of subdivision is in place, but houses have not yet been constructed on the property. Approximately $3 million was paid out on the closing, and the rest is in the form of a vendor take-back mortgage, which matures in September of 2020. Some payments are to be made during the period of the mortgage, but the bulk of the funds are to be paid out at the end of the term of the mortgage.

[150] In the meantime, a number of investors have filed suit against the Vuletics, Brampton G & A, Ante Kegalj, and Geoffry and Tracy Adair. The claims are complex and will be detailed below. In essence, however, the various investors have claimed that the Vuletics and Mr. Kegalj (who was also an investor) engaged in fraudulent and improper conduct with respect to the management of the property. These lawsuits have been commenced by way of three separate actions. I am the case-management judge for all three actions.

[151] The parties have come to an agreement that allows for Brampton G & A not to have to participate in this action any further. The parties have then asked for summary judgment in three parts of the action. First, the Adair Defendants ask for summary judgment in the claim against them. That claim is only being advanced by one group of investors, a group that I will refer to as the Pichelli Plaintiffs. Second, Mr. Kegalj asks for summary judgment in the claim being advanced against him by the Pichelli Plaintiffs, although the Plaintiffs in the other action (“the Caroti action”) are also advancing a claim against him. Finally, the Vuletics are seeking summary judgment on their counterclaim, which they argue would end the action by the Pichelli Plaintiffs.

[152] For the reasons that follow, the summary judgment motions of the Adair Defendants and Mr. Kegalj are granted. The Vuletics’ summary judgment motion is dismissed.

Background Facts

a) The Parties

[153] John Vuletic lives in Brampton. He has previously owned a drywall company and has asserted that he is familiar with the property development business.

[154] Anthony Vuletic is John’s son and was called to the Bar of Ontario in 2006. He also lives in Brampton.

[155] Embleton Properties is a company that was incorporated by the Vuletics and was intended to hold title to the Cliffside property when it was purchased. This company had its status cancelled by the Ontario Government in 2008. Both of the Vuletics were officers and directors of this company from its inception to the time its status was cancelled.

[156] 1857325 Ontario Ltd. (“185 Corp.”) is an Ontario corporation that was incorporated in 2011 to act as the nominee for the Vuletics. It is owned and controlled by the Vuletics.

[157] Mr. Ante Kegalj is an employee of a Toronto law firm. He has known the Vuletics for most of his life, as his parents have known John Vuletic and his wife for approximately 40 years. For reasons that I will come to, Mr. Kegalj was listed on the title of 78 Cliffside for a number of years.

[158] Peter Pichelli is an investor in the property purchased by the Vuletics; he was also Mr. John Vuletic’s long-time accountant and is currently a Trustee in Bankruptcy in Burlington, Ontario. Mr. Pichelli provided money for a number of the proposed lots in the 78 Cliffside property. 958041 Ontario Limited is a company that is owned and controlled by Mr. Pichelli.

[159] Todd Leslie and Frank Toth both invested in the Cliffside property by obtaining an interest in the lots that Mr. Pichelli subscribed for. They have joined Mr. Pichelli in his claims.

[160] Aleardo Caroti, Jacinta Caroti, Ian Grounds, Moraig Grounds, Nancy Kostelac and Marielle Pelchat-Morris are all people who had also purchased interests in lots at 78 Cliffside. They are all Plaintiffs in an action brought against Embleton, the Vuletics (including John’s wife Mira), Mr. Kegalj, 185 Corp. and Brampton G & A.

[161] Geoffrey Adair is a Toronto-based litigator who was counsel to Embleton and the Vuletics on litigation that they had with Mr. Kegalj as well as other actions related to the Cliffside property. Tracy Adair is his wife. They are Defendants in an action brought by the Pichelli Plaintiffs relating to the mortgage that Mr. Adair placed on 78 Cliffside to secure his fees. Mr. Adair’s law firm, Adair Barristers, is also a Defendant in this action. Where I refer to Mr. Adair in these reasons, I am also referring to his law firm, as the causes of action against Mr. Adair and his law firm completely overlap.

[162] Brampton G & A is a Defendant in all of the actions except the one against the Adairs. However, as I have noted above, the parties have come to an agreement that permits Brampton G & A to not participate in this litigation.

b) The Purchase of the Property

[163] The Vuletics attempted to interest various investors in the purchase of lots or portions of the property, as it had not yet been subdivided. The Vuletics believed that the property could be subdivided into approximately 50 single family residential lots. Somewhere around 22 people purchased approximately 28 of the lots. They all provided funds to the Vuletics.

[164] Ultimately, the property was purchased in the name of Mr. Kegalj, as the Vuletics did not have the credit history necessary to obtain and hold a mortgage on the 78 Cliffside property. He signed a Declaration of Trust that confirmed that the property was held in trust for Embleton. Over the course of his relationship with the Vuletics, Mr. Kegalj acquired an interest in four lots on the property.

[165] After the purchase of the property, the Vuletics made certain cash calls from the investors in order to pay for servicing costs related to the development of the property. Whether those cash calls were properly made, whether the Vuletics properly and diligently pursued the development of the property and whether the Vuletics made proper use of the funds that were generated from the mortgages and/or the cash calls are all questions in the underlying litigation.

[166] The one fact that can be agreed upon, however, is that the land has a plan of subdivision, but that no other services were installed on the property before it was sold to Brampton G & A. Prior to the commencement of the actions that I am case-managing, some litigation resulted from the slow development of the property, and I now turn to those cases.

c) The Litigation Between Kegalj and the Vuletics

[167] In March of 2010, Mr. Kegalj commenced an action against the Vuletics in their personal capacity and Embleton. In that action, Mr. Kegalj sought a declaration that he was a partner in the development of the property. He also obtained and registered a Certificate of Pending Litigation on the property.

[168] In July of 2011, in the middle of trial, the Kegalj claim was resolved on the basis of minutes of settlement. Those minutes read as follows:

The parties hereto on their own behalf and the defendant Vuletics on behalf of Embleton Properties Corp., agree to settle this action on the following terms:

1. Title to subject property Part Lot 5, Concession 5 WHS, Parts 1, 2, 3 and 4 on Plan 43R-3552, City of Brampton to be transferred forthwith upon demand being made, to any or all of the defendants and/or their nominee.

2. Plaintiff Kegalj to arrange first mortgage for defendants or their nominee in amount $1 million, if demanded by Vuletics, on terms:

• 1 year term

• Open

• 3.75% interest

• $40,000 finder’s fee off top

3. Proceeds of any new first mortgage to be used to pay property taxes/planner and Bramwest and Bonk line of credit otherwise be paid to independent third party (agreed or court appointed) to be drawn down by Vuletics in payment of legitimate, reasonable and necessary development and servicing costs, such development costs to include an allowance of up to $35,000 per year to John and Anthony Vuletic on account of management fees.

4. Parties to enter into second mortgage in favour of Kegalj in the amount of $785,000 having following terms:

• Open

• Interest at 4.75% per annum payable upon discharge

• Term to be 2 years 3 months

• Mortgage to be postponed to any new first or first arranged after draft plan approval, such mortgage not to exceed $2.5 million.

• Additional term as per clause 5 below.

5. Upon any discharge of the said second mortgage in addition to the principal and interest then outstanding, the Vuletics to pay Kegalj as a condition of discharge an amount equal to the value of 1 premium and 3 standard lots as determined by an agreed upon/or court appointed appraiser on an “as serviced” basis less the total of $215,000 and $785,000.

6. Parties to enter into new second mortgage upon discharge of above mortgage for $100,000 payable to Kegalj without interest and at earlier of 2 years or substantial completion of servicing. Alternative Vuletics have option to pay Kegalj $100,000.

7. An independent account mutually agreeable to the parties or appointed by the court shall prepared an accounting of all project monies received and disbursed to date, which accounting shall be sent to all Lot Purchasers and to the plaintiff Kegalj. Thereafter the said accountant will prepare quarterly accounting reports to be submitted to Lot Purchasers and Kegalj forthwith upon completion of same.

8. Parties to exchange Mutual Releases for all claims including claim to lots or interest in property by Kegalj, save and excepting enforcement of terms hereof.

[169] In addition to resolving Mr. Kegalj’s claim, these minutes also required that additional information be given to the lot holders. An accountant was to be retained, and was to provide quarterly reports to all of the lot holders. This additional requirement was specifically placed into the minutes by Lederer J. by way of an endorsement on July 11th, 2011.

[170] The Vuletics and Mr. Kegalj had further problems with the minutes of settlement. As a result, there was a further appearance before Lederer J. on September 20th, 2011. At that time, an Order preventing the sale of the property, which was still in Mr. Kegalj’s name, was made on consent.

[171] Finally, in December of 2011, a further attendance was required before Lederer J. On December 18th, 2011, Lederer J. signed an order directing transfer of the property to 185 Corp., as well as further modifying the minutes of settlement between the parties.

[172] Ultimately, the property was transferred by Mr. Kegalj to 185 Corp., and the terms of the transfer were modified such that Mr. Kegalj was to be given a mortgage in the sum of $785,000.00 in order to compensate for debts that had been incurred in his name. However, he was also required to pay costs to the Vuletics and fees to the accountant that was retained.

[173] As part of the settlement of the Kegalj action, an accounting was to be done on a quarterly basis. An accountant, Mark Hinchcliffe, was retained. An accounting from Mr. Hinchcliffe has been included in the motion materials before me. However, because the adequacy of the accounting is an issue in this proceeding, I am not reaching any conclusions about what it shows.

[174] One other proceeding relating to the action between the Vuletics and Mr. Kegalj was brought in 2016 by a Mr. Robert Bilich, who was the brother of one of the investors. The reasons in that case are reported in Kegali v. Embleton Properties Inc., 2016 ONSC 6264. In that case, Mr. Bilich was raising some of the same allegations that are being made by the investors in this case. I will have more to say about this action in the section on the Adairs’ summary judgment motion, but as I have noted, it concerns the mortgage that was placed on 78 Cliffside Drive by Mr. Adair to secure his fees.

[175] It appears that there may have been some other proceedings in relation to the property, including the exchanges of “strips” of land with an adjoining property, and some other litigation. These matters are not relevant to the issues that I have to decide, so I will not detail them in these reasons.

d) The Sale of the Property

[176] The Vuletics and 185 Corp. sold 78 Cliffside to Brampton G & A. The Agreement of Purchase and Sale was entered into on May 26th, 2016. The sale closed in September of 2016.

[177] The financial terms of the sale were as follows:

a) A deposit of $100,000.00 would be paid within 48 hours of acceptance of the offer.

b) A further deposit of $400,000.00 would be paid after the fulfilment of some conditions.

c) At closing, 25% of the purchase price would be paid to 185 Corp.

d) A vendor take-back mortgage would be registered against the property, with no interest for the first nine months, and 4% interest, payable quarterly, after that.

e) Principal repayments would be made on the first and second anniversary of the mortgage in the sum of $770,000.00 and $700,000.00 respectively.

f) The balance of the mortgage would mature four (4) years from the date of closing.

[178] As far as the court is aware, Brampton G & A is continuing to adhere to these terms, subject to changes agreed to by the parties in order to ensure that Brampton G & A does not have to actively participate in this litigation.

[179] There may also be a term in the agreement relating to the re-transfer of some lots to the Vuletics by Brampton G & A. I am not going to comment on the meaning or significance of those terms, as the interpretation of these terms may arise at other points in this litigation.

[180] It was, however, the sale of the property to Brampton G & A that seems to have been the event that triggered the actions before me. I will now describe those actions.

e) The Actions

[181] I am case-managing three different actions. First, there is the claim in Court File No. CV-17-1481, which has been brought by the Pichelli parties against the Vuletics, their companies and Mr. Kegalj.

[182] The second claim in Court File No. CV-17-2408 was also brought by the Pichelli parties, this time against Mr. and Mrs. Adair.

[183] Finally, there is the claim in Court File No. CV-17-5302, which was brought by the Caroti Plaintiffs against the Vuletics (including Ms. Vuletic), Embleton, 185 Corp. and Brampton G & A.

[184] In order to ensure that all relevant parties were made part of this action, I provided both the Pichelli Plaintiffs and the Caroti Plaintiffs with the opportunity to attempt to add the rest of the lot holders to their claims. Counsel for the Pichelli Plaintiffs indicated that his client had no interest in adding other parties to his claim. Counsel for the Caroti Plaintiffs agreed that they could be added to her claim. In the event that they were not prepared to be added as Plaintiffs, then they would be added as third party Defendants to this action. I understand that this has been completed, but I have only listed the original Plaintiffs in the Caroti action above.

[185] After some discussion with counsel, it was determined that three summary judgment motions were going to be brought. None of these motions involved the Caroti Plaintiffs. As a result, it was also agreed that I would not make any findings with respect to the meaning of the Lot Purchase Agreements without giving counsel for the Caroti Plaintiffs the opportunity to provide submissions.

Issues

[186] The issues in this case are different for each of the summary judgment motions. However, I have determined that one decision is appropriate in this case as the underlying facts are all related.

[187] As a result, the issues are, generally speaking, as follows:

a) Do the Pichelli Plaintiffs have a cause of action against the Adair Defendants or should summary judgment be granted to dismiss their claims?

b) Do the Pichelli Plaintiffs have a cause of action against Mr. Kegalj or should summary judgment be granted to dismiss their claims?

c) Did the Pichelli Plaintiffs have an agreement with the Vuletics when the Lot Purchase Agreements were signed? If so, should summary judgment be granted in that action?

[188] I will analyze each of these motions in turn. Before doing that, however, it is important to set out some of the principles relating to summary judgment that apply to this case.

[189] I should also address one preliminary issue, which is the claim that these summary judgment motions are brought before discovery and put the Pichelli Plaintiffs at a substantial disadvantage. This claim was made by the Pichelli Plaintiffs in the Kegalj summary judgment motion but could also be raised in respect of the other two motions. I reject it in all three motions for three reasons. First, the Pichelli Plaintiffs have a considerable familiarity with many of the facts in this case, and they had the opportunity to cross-examine all of the other Defendants in order to obtain additional evidence. This eliminates most, if not all, of the concerns that might exist about any disadvantages of the timing of these motions.

[190] Second, as will be seen, most of the determinations on this motion turn on legal, rather than factual, issues. Since many of the details of the transaction are already known, the Pichelli Plaintiffs are not at a disadvantage in responding to them.

[191] Finally, as discussed in my analysis of the summary judgment principles, the principle that parties must lead trump or risk losing continues to apply. The continued application of this principle has ensured a robust record that also serves to reduce, if not eliminate, any disadvantage that flows from discovery not having been completed.

The Principles Relating to Summary Judgment

[192] Rule 20.04(2)(a) of the Rules of Civil Procedure (R.R.O. 1990, Reg. 194) requires a court to grant summary judgment where there is no genuine issue requiring a trial.

[193] The Supreme Court of Canada has outlined a number of principles in Hryniak v. Mauldin, 2014 SCC 7, [2014] S.C.R. 87. These principles expanded the use of summary judgment in accordance with the changes to the Rules of Civil Procedure implemented after the Osborne report was presented.

[194] The steps to take in conducting the Hryniak analysis are set out in Sweda Farms Ltd. v. Egg Farmers of Ontario, 2014 ONSC 1200 where Corbett J. states (at paragraph 33):

As I read Hryniak, the court on a motion for summary judgment should undertake the following analysis:

1. The court will assume that the parties have placed before it, in some form, all of the evidence that will be available for trial;

2. On the basis of this record, the court decides whether it can make the necessary findings of fact, apply the law to the facts, and thereby achieve a fair and just adjudication of the case on the merits;

3. If the court cannot grant judgment on the motion, the court should:

d. Decide those issues that can be decided in accordance with the principles described in 2), above:

e. Identify the additional steps that will be required to complete the record to enable the court to decide any remaining issues;

f. In the absence of compelling reasons to the contrary, the court should seize itself of the further steps required to bring the matter to a conclusion.

[195] One of the points that is clear from this passage is that the parties will place everything before the Court that would be available at trial, and that the old rules that a party is to put its best foot forward still apply. See Toronto Dominion Bank v. Konga, 2016 ONSC 1628, at paragraph 16. Indeed, as noted by Corbett J. in Sweda, supra, this rule will be more important because the Court will rely on the record before it to determine what steps should be followed.

[196] However, our Court of Appeal has expressed concerns about the granting of partial summary judgment. In Butera v. Chown, Cairns LLP, 2017 ONCA 783, 137 O.R. (3d) 561, Pepall J.A. stated:

30. First, such motions cause the resolution of the main action to be delayed. Typically, an action does not progress in the face of a motion for partial summary judgment. A delay tactic, dressed as a request for partial summary judgment, may be used, albeit improperly, to cause an opposing party to expend time and legal fees on a motion that will not finally determine the action and, at best, will only resolve one element of the action. At worst, the result is only increased fees and delay. There is also always the possibility of an appeal.

31. Second, a motion for partial summary judgment may be very expensive. The provision for a presumptive cost award for an unsuccessful summary judgment motion that existed under the former summary judgment rule has been repealed, thereby removing a disincentive for bringing for bringing partial summary judgment motions.

32. Third, judges, who already face a significant responsibility addressing the increase in summary judgment motions that have flowed since Hryniak, are required to spend time hearing partial summary judgment motions and writing comprehensive reasons on an issue that does not dispose of the action.

33. Fourth, the record available at the hearing of a partial summary judgment motion will likely not be as expansive as the record at trial therefore increasing the danger of inconsistent findings.

[197] These principles have also been enunciated in other cases, such as Canadian Imperial Bank of Commerce v. Deloitte & Touche, 2016 ONCA 922, 133 O.R. (3d) 561. It is clear that, when considering partial summary judgment, the Court must proceed cautiously. These principles apply equally when dismissing the claims of some, but not all, Plaintiffs against a Defendant even if those claims are brought in different actions.

[198] I will now apply these principles to each of the summary judgment motions before me.

Issue #1- The Adair Summary Judgment Motion

a) The Positions of the Parties

[199] The Pichelli Plaintiffs are claiming damages for breach of warranty of authority, fraudulent misrepresentation, deceit, conversion, detinue, breach of fiduciary duty, intentional interference with economic relations and unjust enrichment. In addition, the Pichelli Plaintiffs are seeking a declaration that the Adair defendants are trustees de son tort in favour of the Pichelli Plaintiffs.

[200] In essence, the Pichelli Plaintiffs are claiming that the Adair Defendants owed them a duty of care as beneficial owners of the property and, further, that the Adair Defendants breached that duty of care by securing legal fees through a mortgage on the property, given what they knew about the history of the property. The Pichelli Plaintiffs advance four separate issues for consideration:

a) The fact that Embleton Corporation had been dissolved in January of 2008 created legal implications for Mr. Adair and Adair Barristers that meant he had responsibilities to the individual lot holders.

b) Mr. Adair and Adair Barristers owed a duty of care to the lot purchasers.

c) A resulting trust was created in this case by operation of law, which resulted in rights accruing to the lot holders.

d) In the case of Ms. Adair, she was a stranger to the parties, did not provide any consideration for the assignment of the alleged debt, and as a result made false representations on the registration of the debt that allow the lot holders to make a claim against her for the value of the debt.

[201] The Adair Defendants, each of whom is separately represented on this motion, argue that the claims against them should be summarily dismissed. Their position is that the duty a lawyer owes to a non-client is strictly limited at law to situations where there is reliance by the non-client on the lawyer. Further, in this case there was no reliance by the Pichelli Plaintiffs on Mr. Adair or on anything he did or failed to do. Finally, the Adair Defendants argue that none of the causes of action that the Pichelli Plaintiffs have advanced can be sustained.

[202] I will outline relevant facts additional to the ones that are set out above, and then I will set out my legal analysis and conclusions. In my legal analysis and conclusions, I will set out my answers to the four points raised by the Pichelli Plaintiffs and will then address any further issues that arise as a result of the specific causes of action pled against either of the Adairs by the Pichelli Plaintiffs.

b) The Underlying Additional Facts

[203] I have described the litigation between Mr. Kegalj and the Vuletics above. Mr. Adair was counsel to the Vuletics and Embleton in that litigation. During the course of that litigation, it is clear that Mr. Adair did not have any communications with the Pichelli Plaintiffs.

[204] Mr. Adair was originally retained in 2009. As noted above, he defended the 2010 action brought by Mr. Kegalj. At the end of that action, the Vuletics and Embleton owed legal fees to Mr. Adair that had accrued throughout the course of the action.

[205] However, the Vuletics were not in a position to pay those fees. As a result, they agreed to put a charge on the property in the amount of $425,000.00 in favour of Mr. Adair. Those fees were, as agreed by Mr. Adair and the Vuletics, based on the actual time spent, the disbursements incurred, the risk of non-payment and the success in the litigation.

[206] After the Kegalj action was completed, Mr. Adair acted for the Vuletics and Embleton on other issues related to the property up until 2016. Those issues were:

a) An action brought by Anna Leverezia, a lot purchaser. This action was settled at an early stage of the litigation.

b) An action relating to a dispute over a mutual exchange of strips of land with an adjoining landowner, which was settled at mediation.

c) A motion brought by the brother of a lot purchaser, Mr. Robert Bilch. This action raised some of the same allegations as are made in the actions before me, but it was dismissed by Lederer J., as I have discussed above.

[207] Mr. Adair did not act for the Vuletics, Embleton or 185 Corp. on the sale of the property in 2016. According to Mr. Adair’s Affidavit, it came to his attention that the accounting that had been directed by Lederer J. had not been performed. This was an issue in the motion brought by Mr. Bilch in 2016. Lederer J. gave reasons in the Bilch matter, as cited above.

[208] In considering whether the minutes of settlement had been complied with, Lederer J. stated (at paragraph 14):

[14] The matter returned to court on September 26, 2016. It became immediately apparent that the schedule that had been set had not been followed. It was not until August 24, 2016 that counsel for the defendants delivered further material, most importantly from the perspective of the court, an up-to-date accounting of the income and expenditures associated with the development project. The accounting was included as an exhibit in an affidavit prepared by a “chartered professional accountant”. The accountant had been retained during April 2016 to undertake the task. As part of the affidavit, he explained the delay as resulting from the time of year (a busy one) and the need to collect the necessary information. The resulting accounting demonstrates that there is only $2,863.73 that cannot be accounted for. The list of headings which identify the expenditures all appear to be consistent with those that would be a part of a real estate development. While not excusing the delay or the failure of the defendants to comply with the Revised Minutes of Settlement, this document does provide advice to the investors as to the state of the project and would give them some basis to determine if they had questions or concerns that required further investigation or action. As such, the initial concern of the court, as raised at the trial, was met, albeit belatedly. More directly, if it could be said that the defendants were, as a result of breaching the promises made to the court as part of the settlement, in contempt of the court, the contempt has been purged.

[209] Ultimately, given the work that Mr. Adair had performed by the fall of 2015, he and the Vuletics agreed on a total fee of $700,000.00 plus disbursements and taxes. As a result, a $700,000.00 mortgage, bearing interest at a rate of 6%, was placed on the property, and the previous mortgage was discharged.

[210] Prior to registering the charge on title, Mr. Adair had assigned the underlying debt owed to him to Ms. Adair so that the interest on the debt would be taxable in her hands.

[211] When the sale closed, the mortgage was discharged and the interest was paid to Ms. Adair. The fees were processed through Mr. Adair’s trust account as payment of accounts due.

[212] After the sale was closed, Mr. Adair wrote to Mr. Pichelli and the other investors on October 21, 2016 advising of the details of the sale of the property and that the Vuletics proposed eventual distributions to the investors. The parties agree that this is the first communication between Mr. Adair and any of the Pichelli Plaintiffs. Further, the first time that Mr. Pichelli became aware of Mr. Adair having been retained to deal with litigation matters on the property was when Mr. Pichelli saw Mr. Adair’s name on documents delivered to his office at this time.

[213] Mr. Adair stated in his Affidavit that he was not aware that Embleton’s status as a corporation was cancelled by the Ontario Government in 2008. It is, however, clear that that Embleton’s status was cancelled in 2008. For the purposes of this motion, I will conduct my analysis on the basis that Mr. Adair knew or ought to have known that Embleton had no status as a company when he commenced acting for Embleton and the Vuletics. I understand that the retainer began in 2009.

c) Analysis and Conclusions

[214] There are a number of complicated claims advanced by the Pichelli parties against the Adairs. At a high level, those claims amount to a complaint that Mr. Adair owed the Pichelli Plaintiffs a duty of care because they had a beneficial interest in the property.

[215] In light of the allegations in the various claims about the property, the accounting and the alleged misuse of the equity in the property by the Vuletics, I do not intend to address the question of who had a beneficial interest in the property in any great detail.

[216] In my view, it is sufficient to dispose of this motion on the general question of whether Mr. Adair owed a duty of care to the Pichelli parties. In my view, he did not for the simple reason that he was not their lawyer and had never met them. Similarly, Ms. Adair, as the assignee of a debt owing to Mr. Adair, could not have obligations to the lot holders that did not flow from her assumption of the debt owing to Mr. Adair. On that basis, the motion is granted, and the Adair action is dismissed.

[217] To explain my reasons for reaching this conclusion, I will address each of the four specific issues raised in the Pichelli Plaintiffs’ factum as well as briefly comment on each of the causes of action that they have raised in the claim against the Adair Defendants. I will address the relevant law as it arises.

The Significance of the Dissolution of Embleton

[218] The Pichelli Plaintiffs argue that Mr. Adair ignored the dissolution of Embleton, which they submit had serious implications for the rights and interests of the lot purchasers. They also argue that it would have been impossible for Mr. Adair to provide his undivided loyalty to both Embleton and to the Vuletics.

[219] As a result, the interests of Embleton and the Pichelli Plaintiffs (and other lot purchasers) were inextricably linked and aligned, as well as being adverse to the interests of the Vuletics. The key points of the Pichelli Plaintiffs’ arguments on this issue are set out at paragraphs 77-79 of their factum, which read as follows:

77. After he learned in 2010 of the dissolved status of Embleton Corp., the reasonable and logical step for GA [“Geoffrey Adair”] as Embleton’s purported counsel would have been to notify the Lot Purchasers because their interests were aligned with Embleton Corp., they had contractual rights that would be adversely affected by Embleton’s dissolution, and they had a continuing interest in the Property and its development.

78. GA incorrectly and unreasonably believed that it was not in Embleton’s interests to contact the very investors who had sustained the corporation and expected Embleton Corp. to develop the Property. Instead, he testified that he believed that contacting the Lot Purchasers and giving them notice of the dissolution of Embleton Corp. would have amounted to acting against the interests of his clients.

79. The reality is that contacting the Lot Purchasers and advising them of the existence of the 2010 Action and the dissolved status of Embleton Corp. was squarely in the interests of Embleton Corp. It just did not happen to be in the interests of the Vuletics in their personal capacity. GA failed to understand and appreciate the conflict of interest he was in. In the end, he decided to act exclusively in the interests of the Vuletics and take instructions from them alone and carry on as if the interests of Embleton Corp. (and the Lot Purchasers) just did not matter.

[220] There are a number of problems with these arguments. First, Mr. Adair was retained by the Vuletics and by Embleton. As a result, he owed all of his clients a duty to keep their information confidential. Contacting the Pichelli parties would not have been a “reasonable and logical step”. Instead, contacting them would have been a breach of Mr. Adair’s obligations to his clients to maintain client confidentiality.

[221] Second, the submissions of the Pichelli Plaintiffs conflate the interests of Embleton and the purchasers in the property. Even on a cursory analysis of this transaction, that conflation is not justified. Before its dissolution, Embleton arguably owned the residual lots (the ones that had not been sold) after it was subdivided. As a result, I can see at least two ways in which the interests of Embleton might have diverged from those of the lot holders:

a) If lot holders had not paid all of the capital calls that were made by the Vuletics, there is an argument that Embleton would have been entitled to rescind their agreements on the basis of default (see section 6 of at least some of the agreements). I make no comment on whether non-payment of the charges would actually result in default, as that issue may arise at some stage in this litigation.

b) There were originally supposed to be approximately 50 lots. If Embleton had been able to persuade the City of Brampton to permit the subdivision to be a larger number of lots, that might have been in Embleton’s interests as it would have had a greater proportion of the land. This increase in lots would not, however, have been in the interests of the individual lot holders, as that would have reduced the value of each individual lot.

[222] Third, there is the question of whether it would have been in Embleton’s interests to contact the lot holders generally and the Pichelli Plaintiffs specifically. The Pichelli Plaintiffs argue that it was squarely in Embleton’s interests to contact them. However, I can see no explanation as to why it was squarely in Embleton’s interests to tell a party with potentially divergent interests that Embleton no longer existed.

[223] Finally, even if it might have been in Embleton’s interests to contact the lot purchasers, this was not done and there was no obligation on either Embleton or Mr. Adair to contact the Pichelli Plaintiffs as lot purchasers. The fact that doing something is in a party’s interests does not mean that the party is required to do it.

[224] This brings me to the question of whether Mr. Adair made misrepresentations to the court about the status of Embleton. Assuming, without deciding, that he did so, it is still not clear to me how that creates a cause of action for the Pichelli Plaintiffs. I will have more to say about misrepresentations below, but the connection between a misrepresentation to the court and the claim of a third party that is not involved in the action before the court is tenuous at best.

[225] Indeed, in Scott v. Valentine, 2012 ONSC 6349, Goldstein J. was faced with a case where Mr. Valentine had committed fraud by taking over a million dollars from Mr. Scott. This money was routed through the trust account of a law firm and then disbursed on Mr. Valentine’s instructions. Mr. Scott sued the law firm and claimed that it had breached the Rules of Professional Conduct. Mr. Scott claimed that this breach had created a duty of care on the part of the law firm to him.

[226] Goldstein J. rejected this claim, stating (at paragraph 35):

[35] I do agree with Mr. Sherkin’s position is that there is at least an argument to be made that the Defendants breached the Rules. That said, the breach, if one can be shown, may well go to whether the conduct of the Defendants breached their professional responsibilities, but in and of itself such a breach does not generate proximity where none exists. It strikes me that the Defendants may not have taken all the care that they should have to avoid being duped by an apparently unscrupulous client. Like Grace J. in Bruno Appliance and Furniture and Molloy J. in Brunt v. Yen I find the actions – or inaction – of the Defendants troubling, but there is no basis to find that they owed a duty of care in these circumstances. I add that Scott’s failure to properly safeguard his own interests provides no excuse for the Defendants. [Emphasis added.]

[227] In my view, the same analysis is applicable in this case. Anything that Mr. Adair may have done that breached the Rules of Professional Conduct or his obligations to the court does not create proximity where none existed. I should also note that I am not making any findings that Mr. Adair breached any of the Rules of Professional Conduct or any of his duties as an officer of the court.

[228] In that regard, I note that section 242(1)(b) of the Business Corporations Act (R.S.O. 1990 c. B.16) clearly states that a proceeding may be brought against a dissolved corporation. The recent case law generally supports the view that the dissolved corporation has the right to defend that action and that such rights are implicit in the wording of section 242(1)(b). (See Malmas v. Crerar Property Corp., 2010 ONSC 2883 (Ont. Div. Ct.), Tomken Kamato (V) Ltd. v. 752458 Ontario Ltd., 2014 ONSC 4484, cited with approval in Sickinger v. Krek, 2016 ONCA 459, at paragraphs 12, 13 and 16.)

[229] As a result, even if Mr. Adair was aware that Embleton had been dissolved, Embleton was still legally allowed to defend the Kegalj action and the argument of the Pichelli Parties on this point cannot be sustained.

[230] Finally, there is the claim of the Pichelli Plaintiffs that the Vuletics had no legal authority to deal with the equity in the property as they saw fit. I do not need to reach a conclusion on that issue in this motion. If the Vuletics dealt improperly with the property, then that is a matter that can be dealt with through the claim against them.

[231] As a result, I am of the view that the fact that Embleton Corp. did not exist as an entity does not impose obligations on Mr. Adair with respect to the interests of the Pichelli Plaintiffs.

The Duty of Care

[232] A lawyer usually only owes a duty of care to his own client (see Baypark Investments Inc. v. Royal Bank (2002), 57 O.R. (3d) 528 (Ont. S.C.), aff’d [2002] O.J. No. 4377 (Ont. C.A.)). Only in very limited circumstances will a lawyer be held to owe a duty of care to a third party.

[233] Those limited circumstances will generally only arise where the non-party reasonably relied on the lawyer and the lawyer knew or ought to have known of that reliance. (See Chand Morningside Plaza Inc. v. Badhawar, 2015 ONSC 293.)

[234] The key reason for this principle is explained in Kamahap Enterprises Ltd. v. Chu’s Central Market Ltd. ((1998), 64 D.L.R. (4th) 167 (B.C.C.A.)). A lawyer’s loyalty in arms-length transactions should not be divided, particularly given the potential for conflict that exists with any transaction. In other words, a lawyer has an obligation to protect his or her client’s interests in any transaction, and requiring the lawyer to care for the interests of another party in the same transaction might interfere with that duty.

[235] In essence, the duty of care that a lawyer owes to a non-party is very limited because lawyers owe a very high duty of care to their clients. That duty includes the obligation to keep client communications and information, even information otherwise publicly available, confidential.

[236] The facts then need to be considered to determine whether there was any reasonable reliance by the Pichelli Plaintiffs on any of Mr. Adair’s conduct. In my view, there was not for two reasons:

a) The first communication that the Pichelli Plaintiffs received from Mr. Adair was in 2016, long after all of the litigation in this case was completed.

b) The Pichelli Plaintiffs were not aware of any of the actions that Mr. Adair was taking on behalf of his clients. As a result, they could not reasonably have relied on any actions or representations of Mr. Adair.

[237] The Pichelli Plaintiffs also argue, in essence, that the Vuletics’ conduct resulted in economic harm to the Pichelli Plaintiffs and that this harm was foreseeable by Mr. Adair. I am not required to decide whether the Vuletics caused any economic harm to the Pichelli Plaintiffs in order to be able to reject this argument. If the Pichelli Plaintiffs cannot establish reliance, then even foreseeable economic harm does not create the necessary proximity.

[238] On that point, the decision in Seaway Trust Co. v. Markle ([1991] O.J. No. 479 (Gen. Div.)) is instructive. In that case, the Plaintiffs claimed that the sale of a building was used to defraud them by inflating the cost of the building. The purchaser Plaintiffs sued the parties involved in the alleged increase in the value of the property as well as the law firm that had acted for those parties. The Plaintiffs alleged both fraud and negligence on the part of the law firm that had acted for the vendors.

[239] While the claim of fraud was allowed to proceed, the claim in negligence was dismissed on a summary basis. Lane J. found, even under the old and much narrower summary judgment rules, that the claim in negligence could not succeed. He stated (at paragraph 25):

25. The facts in Wynston are quite similar to the allegations made against Meretsky in the negligence claim. A duty of care is put forward based upon the allegation that Meretsky “knew or ought to have known” that the transaction was fraudulent. No reliance by the plaintiffs on Meretsky nor special undertaking by Meretsky is pleaded. In my view based on the authorities just discussed, in the absence of such pleading and in the absence of actual participation in the fraud, Meretsky owed no duty of care to the plaintiffs in law. In the circumstances none was owed by Fogler, Rubinoff, either. The duty of a solicitor who is not a party to, but knows of a fraud upon the opposite party in a commercial transaction where all parties have, and rely upon, their own solicitors, is, according to Wynston, supra, not to himself misrepresent the transaction. No plea is made that Meretsky made any such misrepresentation. The claim in negligence cannot stand. [Emphasis added.]

[240] In this case, there is a claim of fraudulent misrepresentation being made against Mr. Adair. There are two insurmountable problems with this claim. First, Mr. Adair was not involved in any “transaction” between the Pichelli Plaintiffs and the Vuletics. As a result, there is insufficient proximity between Mr. Adair and the Pichelli parties, and a duty of care cannot be established.

[241] Second, and more importantly, the requisite elements of claim for fraud cannot be made out. One of those elements is that the person alleged to have committed the fraud must have made a false representation (see Gregory v. Jolley (2001), 54 O.R. (3d) 481 (C.A.), at paragraph 15). In this case, Mr. Adair did not make any representations to the Pichelli parties.

[242] For the foregoing reasons, the claims of fraud, breach of duty of care and the related claims cannot succeed against the Adairs.

The Creation of a Resulting Trust

[243] The Pichelli Plaintiffs argue that a resulting trust was created by the servicing costs in this case. I am not reaching any conclusions in that regard. However, even if a resulting trust was created, Mr. Adair would still not owe any duty of care to the Pichelli Plaintiffs. The resulting trust would be against the property, and not against the lawyer who performed work in Court in relation to the property. As a result, I reject this argument.

The Issues Relating to Tracy Adair

[244] The Pichelli Plaintiffs argue that Ms. Adair was allegedly assigned a debt for which she knew or ought to have known had no basis in law. She did not provide valuable consideration for the assignment of this debt and falsely represented that she was owed a debt by 185 Corp. As a result, the money paid out to Ms. Adair on the mortgage should be returned so that it can be distributed to lot holders, including the Pichelli Plaintiffs. The lot holders (including the Pichelli Plaintiffs) are entitled to these monies because they have a beneficial interest in the property.

[245] Ms. Adair argues that the Pichelli Plaintiffs have no basis in law for their claim that the property could not be encumbered by the Adairs without consulting with the Pichellis. I accept this argument.

[246] As I have indicated above, I do not intend to resolve the question of whether the Pichelli Plaintiffs had a beneficial interest in the property. This could affect determinations in the Caroti action, and they have not had the opportunity to be heard on these issues.

[247] However, I can resolve this matter by considering four points. I note that my analysis will generally follow the steps in the analysis performed by the Court of Appeal in Di Michele v. Di Michele, 2014 ONCA 261. In my view, many of the conclusions reached by Gillese J.A. in that decision are applicable here.

[248] First, even if the Pichelli Plaintiffs (and other lot holders) have some beneficial interest in the property, the registered owner of the property at the time that the mortgages were granted was 185 Corp. As a result, pursuant to section 93(1) of the Land Titles Act (R.S.O. 1990 c. L.5), 185 Corp. had the authority to grant a mortgage and the Pichelli Plaintiffs cannot challenge the mortgage on that basis.

[249] Second, there is the question of value. The Pichelli Plaintiffs argue that Mr. Adair did nothing of value for 185 Corp. I disagree. It must be remembered that the outcome of the proceeding before Lederer J. was that the property was ordered to be transferred from Mr. Kegalj. 185 Corp. was created by the Vuletics to hold title to the property. As a result, 185 Corp. was a beneficiary of the work that Mr. Adair performed in order to obtain the court Order. The value for the work performed is clear.

[250] Third, charges on land can be assigned pursuant to section 7(1) of the Land Registration Reform Act (R.S.O. 1990 c. L.4). Mr. Adair’s reasons for transferring this charge to his wife are a matter that is between the two of them. In the absence of a viable claim against Mr. Adair, it is not open to the Pichelli Plaintiffs to challenge the assignment of this charge to Mrs. Adair.

[251] Finally, there is the question of priority and notice. If the Pichelli Plaintiffs have a beneficial interest in the property, then it would arise by way of a trust. section 62(2) of the Land Titles Act states:

Description of owner as a trustee

62(2) Describing the owner of freehold or leasehold land or of a charge as a trustee, whether the beneficiary or object of the trust is or is not mentioned, shall be deemed not to be a notice of a trust within the meaning of this section, nor shall such description impose upon any person dealing with the owner the duty of making any inquiry as to the power of the owner in respect of the land or charge or the money secured by the charge, or otherwise, but, subject to the registration of any caution or inhibition, the owner may deal with the land or charge as if such description had not been inserted. R.S.O. 1990, c. L.5, s. 62 (2).

[252] As noted in Di Michelle, supra (at paragraph 70), this provision means that, absent a caution on the title, the registered owner can deal with the property without considering the description of a trustee. However, the law on this point goes further. Under Ontario’s land titles system, the rights of a bona fide purchaser (which include mortgagees) for value who has registered its interest in the property trump prior unregistered interests (see Di Michelle, supra, at paragraph 107 and the cases cited therein).

[253] Under either principle, the Pichelli Plaintiffs did not have a caution registered on the title. As a result, the Adairs were entitled to attach an encumbrance to the property without regard to any interests that the Pichelli Plaintiffs may have had in the property.

The Other Causes of Action

[254] Most of the specific causes of action that the Pichelli Plaintiffs raise in the Adair action can be disposed of based on the analysis above. In particular, the claims for breach of warranty of authority, breach of fiduciary duty and fraudulent misrepresentation all fail on the grounds I have enumerated above. Specifically, there was no duty of care owed by Mr. Adair to the Pichelli Plaintiffs, and there was no relationship between them that would support a breach of fiduciary duty or a fraudulent misrepresentation. As Mr. Adair was unknown to the Pichelli Plaintiffs, he could not have engaged in fraudulent misrepresentation towards them.

[255] In order to establish the claims for conversion and detinue, the Pichelli Plaintiffs must be able to establish that they were in actual possession or entitled to immediate possession of the monies used to pay the mortgage (see Biondich v. Kingscroft Investments Ltd., [2002] O.J. No. 4742 (S.C.), and UBS Wireless Services Inc. v. Inukshuk Wireless Partnership, 2008 CarswellOnt 2481, at paragraph 31). In this case, regardless of how the agreement between the Pichelli Plaintiffs and the Vuletics is characterized, there is no grounds to support a claim that the Pichellis were entitled to immediate possession of the funds from the proceeds of sale. In any event, the property was not sold until long after Mr. Kegalj was removed from title.

[256] There is also the issue of whether the property in this case can even be subject of a claim for conversion or detinue as it was real, rather than personal, property. In my view, the authorities suggest that these two torts only apply to cases of personal property rather than real property. (See 2015582 Ontario Ltd. (Performance Plus Golf Academy) v. 375445 Ontario Limited (Hydeaway Golf Club), 2017 ONCA 980, 138 O.R. (3d) 561, at paragraph 62.) Any interests, contingent or otherwise, that the Pichelli Plaintiffs had in 78 Cliffside was an interest in real property and these torts are not applicable.

[257] In order to establish the tort of intentional interference with economic relations (also known as the “unlawful means tort”), the Defendant must commit an unlawful act against a third party that is intended to cause economic harm to the Plaintiff (see A.I. Enterprises v. Bram Enterprises, 2014 SCC 12, [2014] 1 S.C.R. 177, at paragraph 23). In this case, the Pichelli Plaintiffs are claiming that the unlawful act was against them directly. This tort, therefore, cannot apply in this case.

[258] This brings me to the claim of unjust enrichment. This requires three elements to be established: a benefit, a corresponding deprivation, and the absence of a juristic reason for the enrichment. Putting aside any issues relating to the benefit and the corresponding deprivation, on the record before me the Pichelli Plaintiffs’ claim in this regard fails because there is a juristic reason for the enrichment in this case. Mr. Adair performed work for the Vuletics that resulted in Mr. Kegalj being required to remove himself from the title to the property and return that title to a company controlled by the Vuletics.

[259] If Mr. Kegalj had continued to remain on title for the entirety of the property, there would have been even more problems with this action and the lot holders would have had even more to be concerned about. As a result, there is clearly a juristic reason for Mr. Adair to have received legal fees from 185 Corp. for the work he performed.

[260] Finally, there is the claim that Mr. Adair was a trustee de son tort. This cause of action arises where a person who is a stranger to a trust takes on responsibility to “possess and administer trust property for the beneficiaries” (see Donovan V.M. Waters et. al., Waters Law on Trusts in Canada, 4th ed. (Carswell, 2012), p. 490-491). In this case, Mr. Adair was acting as counsel in a litigation action. He did not take possession of the property or administer it for any beneficiaries.

[261] In my view, it would be stretching the definition of “administering” property beyond recognition to find, without more, that a lawyer who acts for a party in litigation over a piece of property became an administrator of that property. The trustee de son tort claim also fails.

Conclusion on Issue #1

[262] Given my conclusion on the issues, there is no genuine issue requiring a trial, as none of the claims made by the Pichelli Plaintiffs could succeed. Summary judgment is a fair, just, and proportionate way to resolve this claim.

[263] For the foregoing reasons, the summary judgment motion brought by the Adair Defendants against the Pichelli Plaintiffs is granted, and the action against the Adair Defendants is dismissed.

Issue #2- The Summary Judgment Motion of Mr. Kegalj

a) The Positions of the Parties

[264] The Pichelli Plaintiffs are pursuing the action against Mr. Kegalj on a number of grounds. Those grounds can be summarized as follows:

a) That Mr. Kegalj had a significant role in the property and, as a result, he had a duty to provide information to the Pichelli Plaintiffs.

b) That Mr. Kegalj had a special and secret interest in the property. As a result, he was unjustly enriched at the expense of, inter alia, the Pichelli Plaintiffs.

c) That Mr. Kegalj engaged in fraudulent conduct towards the Plaintiffs.

[265] In addition, as in the action against the Adair Defendants, the Pichelli Plaintiffs are advancing a number of other causes of action against Mr. Kegalj. These causes of action are breach of contract, misrepresentation, conversion, detinue, deceit, fraud, breach of fiduciary duty, breach of trust and unjust enrichment. In addition, the Pichelli Plaintiffs claim that Mr. Kegalj was a trustee de son tort and owed them obligations as a result. Finally, the Pichelli Plaintiffs claim punitive, exemplary and/or aggravated damages against Mr. Kegalj.

[266] Mr. Kegalj argues that summary judgment should be granted because he had no relationship with, or obligation to, any of the Pichelli Plaintiffs. As a result, none of the causes of action that the Pichelli Plaintiffs have asserted against Mr. Kegalj can be sustained. He seeks to have the action dismissed. Mr. Kegalj also argues that the claims made by the Pichelli Plaintiffs are beyond the time periods under the Limitations Act, 2002 (S.O. 2002, c. 24, Sched. B) and should be dismissed on that basis as well.

[267] I will outline relevant facts in addition to those that I have previously set out in this judgment, and then I will set out my legal analysis and conclusions. In my legal analysis and conclusions, I will address the three specific points I have outlined above. Once I have done that, I will provide my analysis on each of the causes of action that have not been addressed already.

b) Additional Facts

[268] As I have indicated above, Mr. Kegalj had known the Vuletic family for a long time. He was approached by the Vuletics in July of 2001. The Vuletics told Mr. Kegalj that they had found the property at 78 Cliffside Drive, and that it was an ideal site to purchase as it could very well be subdivided and developed at a profit.

[269] The Vuletics also told Mr. Kegalj that they did not have enough money to buy the property on their own. As a result, Mr. Kegalj recruited investors for the project and helped the Vuletics raise funds for the purchase of the property.

[270] In 2002, when the property was purchased, Mr. Kegalj went on title. He executed a declaration of trust which reads, in part, as follows:

1. I entered into an Agreement of Purchase and Sale dated January 31, 2002 in the name of Ante Kegalj (in trust), a copy of which is attached hereto, pursuant to which I agreed to purchase from Carol Diane Taylor the property known municipality as 78 Cliffside Drive, Brampton and legally described as Part of Lot 5, Concession 5 W.H.S. designated as Parts 1, 2, 3,4 and Plan 43R-3552, City of Brampton, Regional Municipality of Peel (the “Property) on the terms and conditions set out in the Agreement of Purchase and Sale.

2. I was acting as trustee solely on behalf of Embleton Properties Corp. (“Embleton”) when I executed the said Agreement of Purchase and Sale.

3. I will execute any and all documents in order to confirm the trust herein before set out and hereby confirm that I have no beneficial interest in the Property but am merely acting in all respects in relation to the Property as a trustee for an upon the terms and conditions set out in this declaration.

4. I covenant for my heirs, executors, administrators, successors and assigns that I will at any time hereafter upon request and at the Cost of Embleton, its successors or assigns, convey the Property unto Embleton or to whomever Embleton shall designate in writing, by a good conveyance and shall release unto Embleton, its successors and assigns, all claim and/or interest upon and/or in the Property.

[271] After the property had been purchased, Mr. Kegalj helped the Vuletics raise funds for the property so that the transaction could close.

[272] Mr. Kegalj has stated that, after the closing of the property, he only had a minimal involvement in its development. The Pichelli Plaintiffs claim that, to the contrary, Mr. Kegalj was an active participant in the property. I will return to that issue below.

[273] In any event, between 2002 and 2009, the 78 Cliffside Drive property was refinanced on a number of occasions. Mr. Kegalj remained on title, and continued to execute documents that he was given by the Vuletics. How much he knew about any concerns regarding the property is a matter I will also return to below.

[274] In 2010, Mr. Kegalj says he became suspicious about the manner in which the Vuletics were managing this property. He commenced the lawsuit, the details of which are outlined above.

[275] After that lawsuit was resolved in 2011, Mr. Kegalj declared bankruptcy in 2012 and was given an absolute discharge from that bankruptcy in 2014.

[276] There are various explanations that have been provided in terms of the benefits that Mr. Kegalj received under his agreement with the Vuletics to resolve the litigation. For the purposes of deciding this motion, I will assume (without deciding) that Mr. Kegalj received those benefits and transferred them to another party.

[277] In his Affidavits filed for this motion, Mr. Pichelli confirms that, prior to 2016, he had never heard of Mr. Kegalj. He also confirms that none of the Pichelli Plaintiffs had any contact with Mr. Kegalj in this matter.

c) Analysis and Conclusions

[278] Paragraph 13 of the Pichelli Plaintiffs’ factum notes that Mr. Kegalj’s counsel did not cross-examine Mr. Pichelli. As a result, according to counsel “Pichelli’s evidence stands unchallenged and undisputed by [Mr. Kegalj]”. This observation is made, in part, to support the detailed arguments that have been made by the Pichelli parties about the credibility of Mr. Kegalj. I make three observations in response to this statement:

a) There are portions of Mr. Pichelli’s Affidavit that contain legal argument rather than just facts. I am of the view that it is not reasonable to assume that just because Mr. Kegalj did not cross-examine on these legal arguments, he accepts them.

b) Mr. Kegalj did file an Affidavit in which he challenged many of the facts set out in the Pichelli Affidavit. That is also part of the evidentiary record on this motion.

c) For the purposes of this motion, I have assumed (without deciding) that Mr. Kegalj was in fact an active participant in the management of the property between 2002 and 2010 when he commenced his lawsuit. My reasons for this conclusion are set out below. This conclusion significantly reduces the importance of credibility to the determination of these issues, as it means that I am deciding the motion based on a presumed rejection of much of Mr. Kegalj’s evidence.

[279] This brings me to the specific issues raised by the Pichelli Plaintiffs in their claim.

Did Mr. Kegalj Have a Significant Role in the Property? If so, did he have a Duty to Provide Information to the Pichelli Plaintiffs?

[280] I now return to the issue of Mr. Kegalj’s role in the property, as discussed at paragraphs 125 and 126 above. As I have stated, I am assuming (but not deciding) that Mr. Kegalj had a significant role in the management of the property. I am also assuming, but not deciding, that the Vuletics were using the funds generated from the mortgages for personal expenses and that Mr. Kegalj knew (or ought to have known) this.

[281] I am assuming these conclusions because it puts the Pichelli Plaintiffs’ case at its highest, but it is not necessary or appropriate to actually decide these issues at this point.

[282] It is not necessary because, as I will explain, even if Mr. Kegalj did have a significant role in the management of the property and did know about the alleged misuse of funds by the Vuletics, he did not owe any duties to the Pichelli Plaintiffs as he had no relationship with them. Indeed, Mr. Kegalj and the Pichelli Plaintiffs were not aware of each other until well after the action between Mr. Kegalj and Embleton had been disposed of. On Mr. Pichelli’s evidence, he was not aware of Mr. Kegalj until late 2016 and was not aware that Mr. Kegalj was on title to the property either.

[283] It is also not appropriate to make these factual determinations for two reasons. First, there is the existence of the Caroti action. The Caroti Plaintiffs have made claims against Mr. Kegalj and, on reading the pleadings, it is possible that a Court will find that Mr. Kegalj had duties to some (or all) of the Caroti Plaintiffs because he had a significant role in managing the property and he either had relationships with some (or all) of the Caroti Plaintiffs or, made representations directly or indirectly to them. This issue may have to be decided in the Caroti litigation, and it should not be decided here.

[284] Second, the alleged misuse of the funds by the Vuletics is a question that is at the heart of both the Pichelli and the Caroti actions. It is not appropriate to make any determinations about the alleged misuse of funds on a summary judgment motion where not all of the parties are represented.

[285] This brings me to the question of whether Mr. Kegalj owed a duty of care to the Pichelli Plaintiffs. Based on the pleadings, there are two possible ways in which Mr. Kegalj could have owed the Pichelli Plaintiffs a duty of care. First, if he was a fiduciary. Second, if he was a trustee (or a trustee de son tort) to the Pichelli Plaintiffs.

[286] I start with the issue of fiduciary duty. On the facts of this case, there are two ways in which the Pichellli Plaintiffs could establish their fiduciary duty claim. First, if Mr. Kegalj was in partnership with the Pichelli Plaintiffs. Second, a duty of care can arise in some ad hoc circumstances.

[287] On the question of partnership, I start by noting that there is no partnership agreement. A partnership can be formed by an unwritten agreement. However, that agreement must meet the usual requirements for a contract. Those requirements include offer, acceptance, certainty of terms and the like (see Blue Line Hockey Acquisition Co v. Orca Bay Hockey Ltd. Partnership, 2008 BCSC 27, 40 B.L.R. (4th) 36, at paragraphs 38-46, aff’d 2009 BCCA 34, 52 B.L.R. (4th) 108, leave to appeal denied [2009] S.C.C.A. 176; see also Anighoro v. 2180628 Ontario Inc., 2017 ONSC 4812, at paragraph 20).

[288] In this case, there is no relationship whatsoever between Mr. Kegalj and the Pichelli parties. The requirements for an unwritten contract could not have been met. As a result, there can be no partnership between them, even if they had an interest in the same property. Therefore, Mr. Kegalj cannot owe fiduciary duties to the Pichellis as a result of any partnership.

[289] This brings me to the question of an ad hoc trust relationship. In [Frame v. Smith ([1987] 2 S.C.R. 99])](https://www.canlii.org/en/ca/scc/doc/1987/1987canlii74/1987canlii74.html) Wilson J. (in dissent) set out three factors that generally have to be established in order to demonstrate the existence of a fiduciary duty (at paragraph 39):

a) The fiduciary has scope for the exercise of some discretion or power.

b) The fiduciary can unilaterally exercise that power or discretion so as to affect the legal or practical interests of the beneficiary.

c) The beneficiary is peculiarly vulnerable to or at the mercy of the fiduciary holding the discretion or power.

[290] This test has been expanded upon in Elder Advocates of Alberta Society v. Alberta, 2011 SCC 24 at paragraphs 29-36. In that decision McLachlin C.J.C. stated that, while useful, the “hallmarks” set out in Frane, supra, were not sufficient to found a breach of fiduciary duty. The test was reformulated.

[291] Regardless of which test is used, however, the Pichelli Plaintiffs cannot success in meeting that test.

[292] In this case, Mr. Kegalj did not have any power over the Pichelli’s investments. He was simply holding the property in trust for Embleton. It was the Vuletics who directed the activities relating to the property. A claim for an ad hoc trust cannot succeed on that ground alone. In addition, however, there is no evidence of a peculiar vulnerability on the part of the Pichelli Plaintiffs.

[293] Finally, part of McLachlin CJC’s reformulated test is based on Perez v. Galambos, 2009 SCC 48, [2009] 3 S.C.R. 247. In that decision, Cromwell J. stated (at paragraph 66):

66. In my view, while a mutual understanding may not always be necessary (a point we need not decide here), it is fundamental to ad hoc fiduciary duties that there be an undertaking by the fiduciary, which may be either express or implied, that the fiduciary will act in the best interests of the other party. In other words, while it may not be necessary for the beneficiary in all cases to consent to this undertaking, it is clearly settled that the undertaking itself is fundamental to the existence of an ad hoc fiduciary relationship. To explain why I have reached this conclusion, I need to go back to some basic principles of fiduciary law.

[294] In this case, there is no undertaking that has been given by Mr. Kegalj to operate in the best interests of the Pichelli Plaintiffs. Indeed, Mr. Kegalj did not know the Pichelli Plaintiffs, and there is no evidence that he was even aware of their existence.

[295] Counsel for the Pichelli Plaintiffs argues that Mr. Kegalj acknowledged that he would hold the property in trust for the Vuletics, the investors and himself. Even if this were true – and as outlined below, there is no credible evidence that Mr. Kegalj was holding the property in trust for the investors – it still would not create a trust relationship between the Pichelli Plaintiffs and Mr. Kegalj where none would otherwise exist.

[296] Another way to view this issue is to consider whether the three certainties (intention, subject matter or objects) that are required to establish an express trust are met in this case. (See the discussion in Burns Bog Conservation Society v. Canada (Attorney General), 2012 FC 1024, 71 C.E.L.R. (3d) 118, at paragraph 35, aff’d 2014 FCA 170, 83 C.E.L.R. (3d) 1.)

[297] In my view, at least two of the certainties are not met even on the facts as asserted by the Pichelli Plaintiffs. Certainty of intention requires the trustee to have a specific obligation to hold the property for the benefit of another entity. The moral obligation that Mr. Kegalj appears to have felt to the other lot holders is not enough to establish a certainty of intention.

[298] Certainty of objects also cannot be established in this case. Mr. Kegalj did not know of the existence of the Pichelli Plaintiffs. In addition, there is no credible evidence that Mr. Kegalj was holding the property in trust for the individual investors. Instead, he was holding it in trust for Embleton. Indeed, the agreement he signed with Embleton made it clear that he was holding the property solely for Embleton’s benefit. In Burns Bog, supra (at paragraph 22), the Court noted that, where there is a contractual relationship, contracts should not be distorted to impose a trust. As I have already outlined above, Embleton may have had different interests than the individual lot holders, which would have made it challenging for a trustee to act as trustee for both the lot holders and Embleton.

[299] Then, there is the question of a constructive trust. As counsel for Mr. Kegalj correctly notes, a constructive trust is a remedy, and not a cause of action. (See Bell v. Bailey, (2001) 203 D.L.R. (4th) 589 (Ont. C.A.)). A constructive trust can be imposed if there is either an unjust enrichment or in cases of wrongful gains if four conditions exist. I will address the unjust enrichment issue in the next section.

[300] Regarding wrongful gains, in Soulos v. Korkontzilas ([1997] 2 S.C.R. 217), McLachlin J. (as she then was) observed that the wrongful nature of an act may be sufficient to constitute a breach of a trust-like responsibility. After a detailed review of the law, McLachlin J. then listed (at paragraph 45) the four requirements to establish a constructive trust based on wrongful conduct:

a) The Defendant must have been under an equitable obligation, that is, an obligation of the type that courts of equity have enforced, in relation to the activities giving rise to the assets in his hands;

b) The assets in the hands of the defendant must be shown to have resulted from deemed or actual agency activities of the defendant in breach of his equitable obligation to the plaintiff;

c) The Plaintiff must show a legitimate reason for seeking a proprietary remedy, either personal or related to the need to ensure that others like the defendant remain faithful to their duties and;

d) There must be no factors which would render the imposition of a constructive trust unjust in all of the circumstances of the case; e.g., the interests of intervening creditors must be protected.

[301] In this case, the problems with the argument advanced by the Pichelli Plaintiffs arise on the first two branches of the test. Kegalj did not owe the Pichelli Plaintiffs an equitable obligation, and he did not have an agency relationship with them for the same reason. Mr. Kegalj did not know of the existence of the Pichelli Plaintiffs, and they were not aware of his existence either. In the absence of any equitable obligation or any agency relationship, it would be impossible to establish a legitimate reason for the Pichelli Plaintiffs to have a proprietary remedy against Mr. Kegalj.

[302] In terms of my conclusion on the issue of a constructive trust, I note that I am expressly not reaching any conclusions about whether the payment of servicing costs by the lot holders created a resulting trust as against the Vuletics. That is an issue that remains to be determined.

[303] Finally, there is the issue of whether Mr. Kegalj became a trustee de son tort. The requirements to establish this type of trust are set out at paragraph insert number above. In this case, Mr. Kegalj did have possession of the property. However, he held the property under an explicit trust agreement for the benefit of Embleton. While Mr. Kegalj may have been a trustee de son tort with respect to Embleton, his obligations could not extend to other parties that he did not know the identity of.

[304] Further, Mr. Kegalj was a trustee to Embleton. As I have noted at paragraph 74, supra, the interests of Embleton and the Pichelli Plaintiffs in respect of the property might diverge. It would be an odd result if Embleton’s express agreement for Kegalj to hold the property solely in trust for it was expected to give way to rights of arms-length third parties that Embleton had contracts with.

Was Mr. Kegalj Unjustly Enriched?

[305] The requirements for unjust enrichment were set out in Kerr v. Baranow, 2011 SCC 10, [2011] 1 S.C.R. 269, at paragraphs 36-41. These requirements are:

a) An enrichment of Mr. Kegalj;

b) A corresponding deprivation to the Pichelli Plaintiffs; and

c) No juristic reason for the enrichment.

[306] The analysis of this issue starts with defining what the “enrichment” Mr. Kegalj has received. On the facts of this case, it can only be the entitlements and preferences that he received as a result of the settlement of the trial before Lederer J. While Mr. Kegalj argues that he no longer has any right to the benefits he was given under the agreement, he did receive those benefits.

[307] However, he was required to pay legal fees to the Vuletics, as well as paying his own legal fees. He was also required to obtain new financing on the property for the Vuletics. Finally, he was required to transfer title to the property from himself to a company determined by the Vuletics.

[308] As a result, it is difficult to say that Mr. Kegalj was “enriched” by receiving these entitlements, especially since he was also one of the investors in the property. I am, in particular, not persuaded by the submission of the Pichelli parties that this was a “lucrative and self-serving settlement”.

[309] I also reject the Pichelli Plaintiffs’ statement that this settlement was a secret deal. It was the subject of a Court order which was made in public. There was no confidentiality clause in the agreement between the parties and certainly no confidentiality clause in any of the endorsements or Orders of Lederer J.

[310] This brings me to the fact that there is a juristic reason for any enrichment in this case. Specifically, Mr. Kegalj and the Vuletics entered into minutes of settlement, which amount to a contract. A contract is one of the types of juristic reasons described in Kerr, supra (at paragraph 41). Further, this contract was approved, enforced and revised by way of Orders made by Lederer J.

[311] Finally, I note that I have not addressed the issue of whether the Pichelli Plaintiffs suffered any deprivation as a result of Mr. Kegalj’s alleged enrichment. The gains and losses from this investment are a matter to be determined, and it is neither necessary not appropriate to resolve the question of what, if anything, the Pichelli Plaintiffs lost at this stage of the proceeding.

Did Mr. Kegalj Engage in Fraudulent Conduct?

[312] The Pichelli Plaintiffs allege that Mr. Kegalj knew that the Vuletics were fraudulently taking mortgages out on the property, failing to develop the property, and using the equity in the property to fund their own lifestyle. The Pichelli Plaintiffs also argue that Mr. Kegalj was an active participant in this fraud. As a result, the Pichelli Plaintiffs argue that Mr. Kegalj is liable to them for damages.

[313] The cause of action that the Pichelli Plaintiffs seek to establish can either be characterized as fraud or as the tort of deceit. The tests for fraud, deceit and fraudulent misrepresentation are generally the same. As set out in Bruno Appliance and Furniture Inc. v. Hryniak, 2014 SCC 8, [2014] 1 S.C.R. 126, at paragraphs 17-21, the Pichelli Plaintiffs must demonstrate:

a) A false representation made by Mr. Kegalj;

b) Some understanding on Kegalj’s part that the statement was false. In other words, the statement was made either recklessly, with the knowledge that it was false, or without belief in its truth.

c) The representation was made with the intention of deceiving the Pichelli Plainiffs and suffered a loss as a result.

d) The Pichelli Plaintiffs were induced to act on the false representations and suffered a loss as a result.

[314] The Pichelli claim articulates a number of claims that, if true, could very well amount to false representations. The problem is that none of those claims apply to anything that Mr. Kegalj said to any of the Pichelli Plaintiffs. Indeed, there is no evidence that Mr. Kegalj made any misrepresentations to the Pichelli Plaintiffs, either knowingly or recklessly.

[315] To put it another way, since Mr. Kegalj and the Pichelli Plaintiffs were strangers to each other until long after the 2011 action had been disposed of, it is not possible for Mr. Kegalj to have made any misrepresentations that the Pichelli Plaintiffs have relied on. The tort of fraudulent misrepresentation, whether characterized as fraud, fraudulent misrepresentation or deceit cannot succeed on the facts of this case.

[316] One of the key arguments that the Pichelli Plaintiffs make is that Kegalj did not disclose the events between 2002 and 2009, the existence of his action against Embleton or other relevant facts to all of the lot holders. I am not aware of any free-standing duty to disclose issues with an investment to a third party whose existence and identity is not known. I also do not see how a failure to disclose this information would amount to fraudulent misrepresentation.

[317] The Pichelli Plaintiffs also argue that Mr. Kegalj was entitled to secret benefits as a result of his involvement in the Vuletics’ alleged scheme. Even if these benefits were not justified, this argument also does not assist the Pichelli Plaintiffs because the benefits were granted by Embleton and/or the Vuletics. As a result, any claim about the impropriety of those benefits lies against Embleton and/or the Vuletics.

[318] Finally, I note that, in his factum, counsel for the Pichelli Plaintiffs makes much of the fact that Mr. Kegalj allegedly received rights and entitlements (such as a premium lot) for collecting deposit monies for the property. The Pichelli Plaintiffs allege that Mr. Kegalj had an obligation to disclose these entitlements and did not do so. The problem with this argument as it applies to the Pichelli Plaintiffs is that Mr. Kegalj did not know any of them, did not collect any money from them, and had no duty to disclose anything to them. It would be very unusual for someone to have a duty to disclose information to someone who they do not know existed. I see no reason to infer such a duty in this case.

The Other Causes of Action

[319] There is no basis for a breach of contract claim in this case. There was no contract between Kegalj and the Pichelli Plaintiffs, either in writing or otherwise. As Mr. Pichelli notes in his Affidavit, there was never any direct contact between Mr. Kegalj and any of the Pichelli Plaintiffs. Further, Mr. Kegalj was never a principal of Embleton.

[320] Mr. Kegalj’s trust agreement was with Embleton. It is arguable that he had a contract with Embleton to hold the property. However, this agreement did not create any obligations to unnamed third parties that Mr. Kegalj did not even know the identity of.

[321] There is simply no evidence to support the conclusion that there was even a contract formed between the Pichelli Plaintiffs and Mr. Kegalj, much less that there was a breach of contract.

[322] Then, there are the claims for conversion and detinue. As I have noted in my analysis of the Adair action, an immediate right to the possession of the chattel claimed is required (see paragraph 109 above). As I have noted above, the Pichelli parties did not have such an immediate right and, as a result, this claim fails against Mr. Kegalj as well.

[323] Finally, there is the claim for misrepresentation. In my view, the claim of fraudulent misrepresentation is addressed by the analysis set out in paragraphs 169-175, above. Again, this claim cannot succeed because there was no relationship between Mr. Kegalj and the Pichelli Plaintiffs.

[324] There is also a claim for negligent misrepresentation. The leading case on that issue is Queen v. Cognos ([1993] 1 S.C.R. 87). In that case the Supreme Court set out five criteria that had to be met to establish a claim for negligent misrepresentation. It is not necessary to review all these criteria to dispose of the claim of negligent misrepresentation. It is sufficient to note that negligent misrepresentation requires a relationship between the parties of some sort, and none existed here. This claim also fails.

The Accounting

[325] As I have noted elsewhere in these reasons, the Vuletics and Mr. Kegalj had agreed that there would be an accounting conducted for the benefit of the rest of the investors. The Pichelli Plaintiffs argue that Mr. Kegalj owed a duty to the other lot holders to ensure that this accounting was performed, and the fact that this accounting was not performed in a timely way is his responsibility.

[326] I reject this argument for four reasons. First, it is clear from reading the transcript of the April 25th, 2016, proceeding before Lederer J. that the Court’s expectation was that the Vuletics would ensure that this accounting took place. Second, neither the agreement nor the Order of Lederer J. assigned responsibility for ensuring that this accounting was done regularly to Mr. Kegalj. His only obligation was to pay for some of the accounting work. Third, the records that were necessary to complete the accounting were all in the possession of the Vuletics. As a result, it is reasonable to conclude that this accounting was their responsibility rather than Mr. Kegalj’s. Finally, as a result of the Order of Lederer J., Mr. Kegalj transferred title in the property to the Vuletics. He no longer had any kind of relationship to the property once the transfer was complete, and could not have been expected to perform an accounting for property he had no interest in.

Limitations Act Arguments

[327] I have granted Mr. Kegalj’s summary judgment motion on other grounds. Given the length of the relationships between various parties involved in this action, I am expressly not making any findings regarding the Limitations Act issues raised by Mr. Kegalj. This issue may arise in the other proceedings, particularly the ones brought against Mr. Kegalj.

The Claim for Punitive Damages

[328] This claim also fails. Mr. Kegalj relies on Vorvis v. ICBC ([1989] 1 S.C.R. 1085) for the proposition that an independent actionable wrong is required to establish entitlement to damages for mental distress.

[329] The holding in Vorvis was explained and expanded upon by the Supreme Court of Canada in Fidler v. Sun Life, 2006 SCC 30, [2006] 2 S.C.R. 3. In that decision, the Supreme Court noted that there could be damages for mental distress in some contractual cases, particularly where “peace of mind” is an issue (see paragraphs 43 and 44 of Fidler).

[330] However, there is no contract in this case between Mr. Pichelli and Mr. Kegalj. As a result, the general principle in Vorvis, which was an employment case, is applicable here. In the absence of an independent actionable wrong, there is no basis for punitive damages.

[331] Given that I have found that Mr. Kegalj has not breached any obligations to the Pichelli parties and that he does not owe them any duties, the punitive damages claim cannot succeed.

Conclusion on the Kegalj Claim

[332] As a final note, I should address the assertion made by the Pichelli Plaintiffs that there are “credibility issues and material facts in issue.” I reject this assertion. As I have noted throughout these reasons, even if everything that the Pichelli Plaintiffs claim is true about Mr. Kegalj’s conduct, they still cannot establish a cause of action against him. The Pichelli Plaintiffs and Mr. Kegalj were strangers to each other.

[333] For the foregoing reasons, the claim advanced by the Pichelli Plaintiffs against Mr. Kegalj is dismissed.

Issue #3- The Vuletics’ Summary Judgment Motion

[334] In their motion for summary judgment, the Vuletics are seeking an Order dismissing the action brought by the Pichelli Plaintiffs. The Vuletics are also asking that the monies paid by the Pichelli Plaintiffs should either be forfeited or refunded to the Pichelli Plaintiffs with interest paid at the rate within the Courts of Justice Act (R.S.O. 1990, c. C.43).

[335] In essence, the Vuletics argue that the agreement between the parties that the Pichelli Plaintiffs advance on this motion is a forgery and, therefore, the parties never had an agreement. The Pichelli parties argue that the agreement that they have put forward is the correct agreement and that it is the Vuletics who forged their agreement.

[336] While it is entirely possible that the agreement that the Pichelli parties have put before the Court as the agreement is not, in fact, the agreement that was signed, this is not a matter that can be disposed of by way of summary judgment. I will outline the additional facts that are relevant to this motion, and then provide the reasons for my conclusion.

a) Additional Facts

[337] As I have noted above, Peter Pichelli was John Vuletic’s long-time accountant. As a result of his relationship with John Vuletic, he had some familiarity with the purchase of the Cliffside property.

[338] In the spring of 2001, the Vuletics decided to acquire the property at 78 Cliffside Drive in Brampton. The Vuletics believed that there was a reasonable prospect that the property could be rezoned and subdivided.

[339] However, the Vuletics did not have the money to purchase the property on their own. As a result, they determined that they should create Lot Purchase Agreements (“LPAs”), in which individuals were sold the right to obtain a lot upon the registration of the plan of subdivision. The Vuletics retained the firm of Zaldin and Fine to draft a standard form LPA.

[340] In the materials that have been filed, most of the LPA’s conform, in broad terms, to the LPA that was prepared by Zaldin and Fine. The agreement that Peter Pichelli proffers as the LPA he signed does not conform to the standard form LPA. The agreement that the Vuletics advance as the one that Peter Pichelli signed does conform to the standard form LPA.

[341] The parties have each provided a different version how these agreements came to be signed. For reasons that I will come to, I do not intend to resolve the factual differences between the two versions of events.

[342] It is clear that, sometime in the spring of 2002, John Vuletic and Peter Pichelli spoke about the possibility of Pichelli purchasing one or more lots in this development. Both parties agree that Mr. Pichelli visited the property, and told John Vuletic that was prepared to purchase one or more lots.

[343] It also appears that Peter Pichelli purchased five of these lots. Mr. Pichelli has no records outlining his communications with his clients, and I have not heard his evidence. It is, therefore, not clear as to what instructions his clients provided to him in order for him to purchase these lots on their behalf.

[344] The agreement between the parties appears to have been signed on July 3rd, 2002. The events that led the parties to sign whichever agreement is the true copy are not clear. However, no one disputes that money changed hands and that Mr. Pichelli made further contributions to the property after July of 2002. It is not clear as to the extent of those contributions, and I make no findings in that regard.

[345] It is also clear that the agreement that Pichelli claims he signed in this case is significantly different than the agreements signed by all of the other parties. Those differences include the following:

a) The rights of the Vuletics to encumber the property. In the Pichelli LPA, those rights appear to be much more limited than in the standard LPA.

b) The ability to select lots appears to be more extensive in the Pichelli LPA than it is in the standard LPA.

c) The provisions for rescission of the agreement appear to be more favourable to the Pichellis in their version of the LPA than in the Vuletics’ version.

d) The covenants that the purchaser is required to adhere to appear to be significantly stronger in the Vuletics’ version of the LPA than in the Pichelli version.

[346] Given my conclusion that summary judgment should not be granted in this case, I do not intend to analyze these differences in any detail. I would simply note that the differences in the agreement appear to me to be commercially significant.

b) Analysis

[347] There are a number of reasons why the Pichelli action cannot be disposed of on a summary basis, or a partial summary basis.

[348] First, there are significant issues of credibility. There is a clear dispute between the parties as to which version of the LPA Peter Pichelli actually signed. There is also a clear dispute as to the events that led to the signing of the agreement, whichever version was signed. These are questions that are generally best left to viva voce evidence.

[349] Second, there is the question of whether the issues on this summary judgment motion can be extricated from the larger questions to be determined in all of the actions. Counsel for the Vuletics argues that the findings of fact necessary to dispose of the Pichelli action can be extricated from the larger action for two reasons:

a) The agreement that the Pichellis claim to have signed is not commercially reasonable, and as a result the alleged LPA that the Pichelli parties advance cannot be the one that was actually signed.

b) There are internal inconsistencies in Mr. Pichelli’s evidence that demonstrate that his version of events has no air of reality.

[350] I understand counsel for the Vuletic’s argument that the LPA proffered by the Pichelli Plaintiffs as the one that they signed is not commercially reasonable, particularly when compared with all of the other LPAs that were signed in this case. However, determining which agreement the Pichellis signed requires a consideration of what terms were commercially reasonable. This will require a Court to inquire into the extent to which the Vuletics could encumber the property without risking complaints from the lot holders as well as other issues relating to the structure of the transaction as a whole.

[351] Those questions are at the very heart of both the claims advanced by the Pichelli Plaintiffs and the claims advanced by the Caroti Plaintiffs. Determining which version of the agreement the Pichelli Plaintiffs signed necessarily requires an analysis of the structure of the entire series of agreements. It is difficult to conduct that analysis without considering the facts as they relate to the Caroti Plaintiffs. As a result, making a decision on the question of which agreement was signed by the Pichellis at this point raises all of the risks of partial summary judgment identified by the Court of Appeal, and set out at paragraph 49 above.

[352] Then, there are the internal inconsistencies in Mr. Pichelli’s argument. Those inconsistencies clearly exist. However, there are also inconsistencies in the version of events advanced by the Vuletics. I make no comment on which version of events may be more inconsistent, as I am of the view that a trial is required to resolve this dispute. It is not a question that can be extricated from the larger issues in this litigation.

[353] Counsel for the Vuletics argues that I can decide that the Vuletics and the Pichellis were not ad idem and that no contract was formed. The problem with that argument is that there are signatures on two agreements. As a result, I am not sure that finding that there was no agreement is the only outcome that is available to a Court. It is equally possible that a Court could find that there was a contract in this case, but that one side or the other has lied about its terms and subsequently forged a document. This is, however, a question that can only be determined after a full trial.

[354] This brings me to the question of remedy. Even if I could resolve the question of which LPA was actually signed or whether the parties were ad idem, there would then be the question of what remedy, if any, the Pichelli Plaintiffs would be entitled to. Determining which LPA was the actual agreement between the Pichelli Plaintiffs and the Vuletics would not resolve the action between them.

[355] As I noted at paragraph 206, it is possible that a Court would conclude that there was an agreement between the Pichellis and the Vuletics. The fact that one side subsequently misled the Court about the terms of that agreement would be an issue to consider in determining the available remedy, particularly since there is no dispute that Mr. Pichelli paid monies to Mr. Vuletic on account of the 78 Cliffside property.

[356] Finally, even if there was no agreement, the payment of the money creates the potential for the Pichellis to have access to other remedies to account for their money. Again, determining what remedies (if any) are appropriate can only be done in the context of the larger action.

[357] As a result, the claim between the Pichelli Plaintiffs and the Vuletics is not amenable to summary judgment, and the Vuletics’ motion for summary judgment is dismissed.

Conclusion

[358] For the foregoing reasons, the summary judgment motions of the Adair parties and Mr. Kegalj succeed, and the actions against them are dismissed. The Vuletics’ summary judgment motion is dismissed, and the action against them will continue.

[359] Costs submissions are due from any party claiming costs from another party within fourteen (14) days of the release of these reasons. Those submissions are not to exceed three (3) single-spaced pages, exclusive of offers to settle, bills of cost and case-law.

[360] Responding submissions from parties against whom costs are sought are due within fourteen (14) days thereafter. Those submissions are not to exceed one (1) single-spaced page, exclusive of case-law. There are to be no reply submissions without my leave.

[361] For clarity, parties are entitled to make separate costs submissions on each motion that they participated in. However, every party is to serve their costs submissions on all of the other parties.

[362] Then, there is the issue of next steps in this litigation. A further case conference is required, and I am of the view that it should be done in person because of the number of parties involved in this case, even after some of the actions are dismissed. I am also of the view that it needs to be completed as soon as possible.

[363] However, I am currently sitting as one of the Civil Blitz judges, and it is quite possible that I will be sitting out of Brampton for the remainder of January. As a result, the parties are to canvass dates in the weeks of February 19th and 25th, 2019, for a 9:00 am in-person appearance in Brampton.

[364] In advance of that appearance, the parties (including the Caroti Plaintiffs) are to consider, discuss and agree, if possible, on the following issues:

a) What additional documentary discovery, if any, is required?

b) What other discovery is required? Who is being discovered?

c) What other steps are required to make these actions ready for trial?

d) Are there any other issues where the parties are going to ask me to make summary dispositions?

e) Are there going to be any expert reports? If so, in what areas?

f) When are the parties going to be ready for trial? I see no reason why the parties would not be ready for trial for the May 2020 Civil Blitz list, but that is an issue that can be discussed.

[365] Finally, I apologize to the parties for the length of time it took to release these reasons. However, as can be seen from them, these motions were quite complex and required detailed consideration.

LEMAY J

Released: January 8, 2019

COURT FILE NO.: CV-17-2408-00, CV-17-5302-00

DATE: 2019 01 08

ONTARIO

SUPERIOR COURT OF JUSTICE

BETWEEN:

Peter Pichelli, Todd Leslie, Frank Toth and 958041 Ontario Limited

Plaintiffs

• and -

Adair Barristers LLP, Geoffrey D.E. Adair, and Tracy Adair

Defendants

-AND BETWEEN-

Peter Pichelli, Todd Leslie, Frank Toth and 958041 Ontario Limited

Plaintiffs

Ante Kegalj, Anthony Vuletic, John Vuletic, Embleton Properties Corp., 1857325 Ontario Ltd. and Brampton G&A Holdings Inc.

Defendants

-AND BETWEEN-

Aleardo Caroti, Jacinta Caroti, Ian Grounds, Moraig Grounds, Nancy Kostelac, Brian McDowell, Biljana Nizalek, Marielle Pelchat-Morris, Wilma Jesus, Monica Savona, Milena Boland, Jurica Biondic, Renato Biondic and Boris Klecina

Plaintiffs

Ante Kegalj, Anthony Vuletic, John Vuletic, Mira Vuletic, Embleton Properties Corp., 1857326 Ontario Ltd., and Brampton G & A Holdings Inc.

Defendants

REASONS FOR JUDGMENT

LEMAY J

Released: January 8, 2019

COURT FILE NO.: CV-17-2408-00, CV-17-5302-00

DATE: 2019 01 08

REVISED: 2019 02 26

ONTARIO

SUPERIOR COURT OF JUSTICE

BETWEEN:

Peter Pichelli, Todd Leslie, Frank Toth and 958041 Ontario Limited

Plaintiffs

• and -

Adair Barristers LLP, Geoffrey D.E. Adair, and Tracy Adair

Defendants

-AND BETWEEN-

Peter Pichelli, Todd Leslie, Frank Toth and 958041 Ontario Limited

Plaintiffs

Ante Kegalj, Anthony Vuletic, John Vuletic, Embleton Properties Corp., 1857325 Ontario Ltd. and Brampton G&A Holdings Inc.

Defendants

-AND BETWEEN-

Aleardo Caroti, Jacinta Caroti, Ian Grounds, Moraig Grounds, Nancy Kostelac, Brian McDowell, Biljana Nizalek, Marielle Pelchat-Morris, Wilma Jesus, Monica Savona, Milena Boland, Jurica Biondic, Renato Biondic and Boris Klecina

Plaintiffs

Ante Kegalj, Anthony Vuletic, John Vuletic, Mira Vuletic, Embleton Properties Corp., 1857326 Ontario Ltd., and Brampton G & A Holdings Inc.

Defendants

REASONS FOR JUDGMENT

LEMAY J

Released: January 8, 2019

Revised: February 26, 2019