Court File and Parties

COURT FILE NO.: CV-18-599984 DATE: 2019/06/04 SUPERIOR COURT OF JUSTICE - ONTARIO

RE: GOLDBERG, Plaintiff AND: GALLUZZO et al., Defendants

BEFORE: MASTER RONNA M. BROTT

COUNSEL: Alan Price, for the Plaintiff Jessica Hewlett, for the Defendants Christina Galluzzo

Endorsement

The Facts

[1] On January 27, 2009, the plaintiff Henry Goldberg (“Goldberg”) commenced an action against Christina Galluzzo (“Christina”) and her husband Pat Galluzzo (“Pat”) for breach of contract in relation to a promissory note (“the first action”).

[2] The Statement of Claim in the first action was served on Pat in his personal capacity and as an adult member of the household on behalf of Christina. Christina was not advised of the first action nor was she personally served. Christina was noted in default in the first action and on March 18, 2009 Goldberg obtained default judgment.

[3] A Notice of Examination in Aid of Execution served on Christina in 2013 was Christina’s first knowledge of the first action. It was only then that Pat advised her that he had accepted service of the Statement of Claim on her behalf.

[4] Christina retained counsel and brought a motion to set aside the default judgment as against her. On consent, Goldberg set aside the default judgment and the writ of execution against her. She filed a Statement of Defence in the first action on June 30, 2014.

[5] Goldberg brought a motion before Justice Lederer on February 19, 2016 for an order directing a Reference to determine the plaintiff’s ability to recover against Pat’s interest in the property municipally known as 28 Totteridge Road, Toronto, Ontario (“the property”). The property was held in joint tenancy between Pat and Christina. The motion was served on Pat and Christina. The Judge ordered a reference to a Master who was to inquire into and determine all issues relating to the conduct of the sale of lands and to determine what property, or lands, or interest in the lands, was to be sold under the judgment, including the distribution of the proceeds of sale.

[6] Christina and Pat were served with the order of Justice Lederer. Christina appeared with counsel and Pat was self-represented when they appeared at the Reference hearing before Master Pope on November 1, 2016. Master Pope issued a Direction to the parties setting out detailed documentation to be exchanged and filed.

[7] In or around that time, Goldberg discovered that his writ of execution had expired in February 2016 and he brought an ex parte motion to renew it (“the renewal motion”) on February 16, 2017. He was ordered to bring the motion on notice to Christina.

[8] Christina and Pat separated on February 1, 2017. They entered into a written separation agreement which provides, inter alia, that Pat’s interest in the property is transferred to Christina in satisfaction of spousal support obligations and property equalization. On May 5, 2017 there was a transfer of the property from Pat to Christina and the mortgage was replaced. Christina now lives in the home and receives no payment from Pat for child support.

[9] On November 15, 2017 Goldberg consented to an Order dismissing the first action as against Christina without costs. Goldberg signed a Full and Final Release in Christina’s favour which included the following:

Henry Goldberg hereby releases and forever discharges CHRISTINA GALLUZZO from any and all actions, causes of action, claims and demands, for damages, loss or injury, howsoever arising, which heretofore may have been or may hereafter be sustained by me in consequence of a claim advanced by Henry Goldberg in Court File No. CV-09-371063 commenced in the City of Toronto, Ontario, including all damage, loss or injury not now known or anticipate, but which may arise in the future and all effects and consequences thereof.

[10] On June 19, 2018 Goldberg initiated the within action as against Christina and Pat seeking to set aside the alleged fraudulent conveyance on May 5, 2017 of the property. Before effecting service on Christina or Pat, Goldberg brought an ex parte motion seeking leave to issue a Certificate of Pending Litigation (“CPL”) and to have it registered against the property.

[11] In support of the CPL motion Goldberg relied on his Affidavit sworn June 14, 2018, a copy of the Statement of Claim in the first action, a copy of the Judgment and a copy of the abstract of title.

[12] On July 10, 2018 the ex parte Master granted Goldberg leave to issue the CPL. Christina now brings this motion seeking an Order discharging the CPL against the property.

The Law

[13] The law imposes an exceptional duty on the party who seeks ex parte relief. Rule 39.01(6) of the Rules of Civil Procedure states:

Where a motion or application is made without notice, the moving party or applicant shall make full and fair disclosure of all material facts, and failure to do so is in itself sufficient ground for setting aside any order obtained on the motion or application.

[14] The moving party is required to provide to the court, a balanced presentation of the facts. In other words, the moving party must inform the court of the facts and the law which are not only supportive of their case, but also those which favour the other side. Non-disclosure of material facts is a serious matter, and such failure will justify an Order setting aside a Certificate (790668 Ontario Inc. v. D’Andrea, 2003 CarswellOnt 689).

[15] The duty of full and frank disclosure is required to mitigate the obvious risk of injustice inherent in any situation where a Judge is asked to grant an order without hearing from the other side. (Anselmini v. Noonan Estate, 2008 CarswellOnt 262).

[16] Goldberg asserts that because the writ of seizure and sale was renewed on consent, and because the property had been transferred by then to Christina, there was urgency which required the motion be brought ex parte – on an urgent basis. Goldberg also submits that the Master hearing the ex parte motion did not request additional materials including the Release or settlement particulars. Nor did he order the motion be brought on notice. Goldberg opined that the Master must have determined that he did not require any further evidence and granted the CPL.

[17] In my view, the CPL against the property should be vacated for the following reasons:

1. It is improper for Goldberg to suggest the Master should have requested additional productions – including the Release. First, the onus is on the moving party on an ex parte motion to make full material disclosure and there was clearly only partial disclosure. Second, if the Master was not told of the Release, how would he know of it?
2. It is improper for Goldberg to have failed to disclose that his motion to renew the writ of seizure and sale was adjourned by a Master to be brought on notice to Christina. Goldberg knew of Christina’s history with the property and the probability that she would be represented by counsel. This amounts to material non-disclosure by the plaintiff. Further, Goldberg failed to provide any evidence or rationale as to why he did not bring the CPL motion on notice;
3. Goldberg failed to make full, frank and fair disclosure as he failed to disclose evidence of the settlement with Christina;
4. Goldberg failed to make full, frank and fair disclosure as he failed to disclose the Full and Final release in regards to the settlement;
5. The failure by Goldberg to make full disclosure is a breach of Rule 39.01(6) and accordingly, pursuant to that Rule, is sufficient ground for setting aside the order for leave to issue the CPL; and
6. The transfer to Christina of her ex-husband’s equity in the property represents her sole entitlement under the Family Law Act pursuant to their separation agreement. Without the transfer, Goldberg’s rights would take priority over Christina’s (and her children). As the balance of convenience is to be weighed heavily in favour of the defendant on these motions, it is weighed in Christina’s favour.

[18] A CPL will be discharged where there has been serious non-disclosure, even if the plaintiff may otherwise have been entitled to a Certificate. (Anselmini v. Noonan Estate, 2008 CarswellOnt 262). For these reasons, the CPL against property municipally described as 28 Totteridge Road, Toronto, Ontario is hereby discharged.

[19] The moving party delivered the costs outline following the completion of the hearing. The responding party delivered his Costs Outline on or about April 16, 2019. The parties agreed at the hearing that upon receipt of these Reasons, they would use best efforts to agree within 30 days, on the issue of costs, failing which they would exchange and file brief 1 – 2 page costs submissions within 60 days of today’s date. No reply submissions may be delivered without leave.

MASTER RONNA M. BROTT Date: June 4, 2019