Welton v. United Lands Corporation Limited, 2019 ONSC 3623

COURT FILE NOS.: 12-37787 and 15-55054

DATE: 2019-06-28

ONTARIO

SUPERIOR COURT OF JUSTICE

B E T W E E N:

Court File No.: 12-37787

Darlene Welton

Sara J. Erskine, for the Plaintiff

Plaintiff

• and -

United Lands Corporation Limited and Stonebrook Properties Inc.

Cameron D. Neil, for the Defendants

Defendants

A N D B E T W E E N:

Court File No.: 15-55054

Darlene Alice May Welton

Sara J. Erskine, for the Plaintiff

Plaintiff

• and -

United Lands Corporation Limited and Stonebrook Properties Inc.

Cameron D. Neil, for the Defendants

Defendants

HEARD: at Hamilton May 21 to June 10, 2019

REASONS FOR JUDGMENT

OVERVIEW

[1] John Welton (John) and David Welton (David), through their real estate development companies, built high rise condominium buildings. For many years, John and David maintained a close and friendly relationship through boom and bust.

[2] Their business was conducted informally and often without written agreements. The two brothers generally split a 50/50 share in the projects they were involved with.

[3] In 2005, the brothers commenced a new condominium complex at Southdown Road and Lakeshore Roads in Mississauga. The project comprised two phases. Phase I was launched in September 2006, and the last unit in the project closed in December 2010. Phase II launched in June 2010, but the project was cancelled in May 2012.

[4] The plaintiff Darlene Welton (Darlene) was David’s wife. The Welton brothers’ corporation, Stonebrook Properties Inc. (Stonebrook), engaged Darlene as Vice President of Marketing and Sales. Darlene’s role was to sell condo units in Phase I and Phase II of Stonebrook. A dispute arose between the brothers regarding the rate of commission and remuneration due and payable to Darlene. In December 2010, the brothers agreed that all contracts would be jointly signed by their investment companies and that primary responsibility for the Stonebrook project was given to David.

PLAINTIFF’S CLAIM #1

[5] The plaintiff alleges that her unpaid commission became due on December 7, 2010, at a time when the Stonebrook Phase I project closed and the proceeds from these sales were paid in full to the defendants. Consequently, the plaintiff filed a claim on October 25, 2012, seeking to be paid for her unpaid commission or alternatively unpaid salary.

PLAINTIFF’S CLAIM #2

[6] From 2011 to 2013, Darlene performed work on a technical audit that was required for Stonebrook Phase I, which she claims is separate and distinct from her duties as the Vice President (VP) of Marketing and Sales. She seeks to be paid $220,000 per year, which she claims David and John agreed to pay her for the technical audit work that she was involved in from February 8, 2010 until November 18, 2013. Darlene launched the second action in October 30, 2015. The defendants deny any agreement to pay Darlene $220,000 per annum at any time regarding the Stonebrook Properties. In the alternative, in Darlene’s second claim, she seeks quantum merit relief for services rendered in the technical audit.

[7] The defendant pleads that the second claim is statute barred through the expiration of the relevant limitation period. The defendant also notes that the second claim was made by the launching of the second lawsuit in October 2015, two years after the brothers’ deaths. The defendants also indicate that the first time that they became aware of Darlene’s second claim was when they were served with the Statement of Claim in late 2015 and there was a no valid employment contract between the defendants, John or any of his companies, and the plaintiff. Further, the defendants contend that John and his investment company, Johwel, were required to approve and be provided with evidence of any contract involving the plaintiff, pursuant to the December 2010 agreement between the Welton brothers and this was not done.

[8] The defendants rely on the fact that from 2010 to 2015, the plaintiff did not request any remuneration for work on the technical audit prior to the commencement of the second action in October 30, 2015.

ISSUES

Plaintiff’s claim #1 – October 2012

1. What is the amount, if any, of unpaid commissions and/or wages that are due to the plaintiff by the defendants?

Plaintiff’s claim #2 – October 2015

2. What is the amount, if any, of unpaid remuneration for work Darlene undertook on the technical audit that was performed on or about February 2010 until November 18, 2013?

FACTS

Plaintiff’s Evidence

Darlene Welton – Examination-in-Chief

[9] Darlene is the plaintiff in this action. Prior to working for the defendant company, Stonebrook, she was employed at Hunter Milborne as a Director of Marketing and Sales. Her job was to work with developers in the construction and sales or units in high rise developments.

[10] Darlene met David in approximately 2003-2004. David, along with his brother and partner John, were developing a property known as Oakridge Heights.

[11] Approximately one year later, Darlene married David. Darlene left Hunter Milborne in 2006. Darlene went to work for Stonebrook in 2005. Stonebrook was developing condominium units at Lakeshore Road and Southdown Road near the Clarkson GO Station in Mississauga.

[12] Stonebrook was owned by David and John on a 50/50 basis.

[13] At a family function in 2005, David asked Darlene and John to come into the office at David and Darlene’s home in Mississauga.

[14] David brought John up to speed on the Stonebrook property and told John that Darlene was going to take over marketing and sales on the Stonebrook development. John was very frugal. David suggested that Darlene get 2% of revenues in commissions. John asked what other people paid. David said that 1.5 – 2% was the going rate. Darlene wanted 3% as she was going to run the head office plus work on weekends as purchases usually take place on weekends. Further, Darlene was going to give up her job at Hunter Milborne and work full time on the Stonebrook project. John would not agree to 3% but agreed to 2%. The agreement was between family and nothing was put in writing.

[15] Darlene kept a journal and may have noted the 2% agreement, but she does not think so. She is unable to locate this journal.

[16] In Exhibit 1, Volume 5, at Tab 173, the corporate profile report lists Darlene as an officer since June 9, 2006.

[17] Darlene was involved in a variety of capacities in developing the Stonebrook Property—i.e., including setting up a sales office, involvement with purchases of suites and arranging adjustments to individual suites, dealing with individual complaints, visiting other developers to see what was competitive, and hiring an administrative and sales team. Darlene was the VP of Marketing and Sales for Stonebrook. She would work with purchasers from the date of sale until the final closings. This would start in 2006 and extend to beyond 2010.

[18] Volume 1, Tab 8 contains T4s from 2006 until 2012. These T4s indicate Darlene’s income would generally vary in 2007-2012 from $65,000 to $82,500, except for 2010 when Darlene had a declared income of approximately $265,000.

[19] The $265,000 amount was partial payment of what was owing to Darlene.

[20] Exhibit 1, Volume 1, at Tab 13, is a document that indicates at p. 134 that Darlene had been paid, as at February 23, 2010, $313,055.61 and was listed as “Marketing Personnel.”

[21] Exhibit 1, Volume 1, Tab 14, at p. 136, is a statement dated February 26, 2010, that Darlene prepared that indicates (after deducting insider sales of four condo units to John and David) she was owed 2% commission of $53,400,542.50 in condo sales for a total bill of $1,068,010.00. After deducting $313,055.61 advances (see Exhibit 1, Volume 1, Tab 13) the balance due was $754,954.39. At p. 130 of Exhibit 1, Volume 1, Tab 14 there are signatures that indicate head office received the statement. No date is stamped but there is a standard stamp that has initials signed by Dolores Gosine and David Welton.

[22] Volume 1, Tab 16, at p. 142, is a cheque stub type of document that shows for the payroll ending July 3, 2010 Darlene was paid $200,000 “taxable earnings commission”—year to date information indicated that taxable earnings were $235,047.46 with federal tax of $99,465.84 being deducted. The T4 at p. 70, Tab 8 of Volume 1, Exhibit 1 indicates that a further approximately $30,000 was paid in the remainder of 2010 for a total employment income of $265,087.96 for 2010.

[23] Plaintiff’s counsel reviewed the documentary material in Exhibit 1 with Darlene.

[24] The following themes emerged:

1. THERE WERE NUMEROUS PROBLEMS WITH THE CONSTRUCTION OF THE CONDO UNITS IN PHASE I OF THE STONEBROOK PROPERTY

[25] As outlined in Exhibit 1, Volume 1, Tab 17, a memorandum dated July 12, 2010 from David to Colin Pillar, VP of Development and Construction, the project in 2009 and 2010 was weeks and/or months behind schedule.

[26] The first move-ins were delayed by two months until February 2010. Darlene testified she was in Florida in February 2010 when unit owners were moving into unfinished units. She had to return to Canada to deal with the problems outlined in Tab 17 at pp. 144-46. Darlene testified that construction usually occurs 10 floors above finished units, but in Phase I, construction was occurring at the same floor or one floor above finished units.

[27] Sales for Phase II started in March 2010, but she was still dealing with problems in Phase I (see Exhibit 1, Volume 1, Tab 25).

[28] As outlined in Exhibit 1, Volume 2, Tab 81, p. 436, emails dated July 26, 2011, indicate there are water leakage problems at Stonebrook Phase I and there is reference to the ongoing parking shortage problem. Darlene indicates that “Colin seems to be in control of the water leakage situation.”

2. CONFLICT BETWEEN DARLENE WELTON AND OTHERS INVOLVED IN STONEBROOK PROPERTIES

[29] As outlined at Exhibit 1, Volume 1, Tab 17, p. 146, David indicates to Colin Pillar, “your actions have indicated resentment to Darlene’s involvement in the project.”

[30] As outlined in a series of emails in February 2011 included in Exhibit 1, Volume 1, Tabs 31-34, Darlene was going to buy a condo unit for herself—Suite 107—for a reduced price due to a variety of defects with the unit. John objected to this sale as he wished the unit to be purchased for his daughter, Carolyn. Eventually, Darlene agreed to have the unit sold to Carolyn (see Tab 34).

[31] John asked for a complete formal description of Darlene’s responsibilities on February 21, 2011 (see Exhibit 1, Volume 1, Tab 35, at p. 252).

[32] At Exhibit 1, Volume 2, Tab 73, emails are exchanged on July 8 and July 9, 2011. Darlene denies John’s suggestion that Darlene is writing David’s emails. Curiously, Darlene signs off on this denial in an email sent to John by David (see Tab 73, at p. 378).

[33] Darlene testified that by summer 2011, John was obviously suffering from dementia as well as terminal lymphoma.

3. CONFLICT AND CONFUSION REGARDING DARLENE’S TERMS OF REMUNERATION

[34] Darlene, as previously discussed, testified that both John and David agreed to Darlene receiving a 2% commission on sales revenues.

[35] At Exhibit 1, Volume 2, Tab 69, in an email dated June 28, 2011, John is proposing to disperse their properties and is proposing values for equalization payments. At para. 5, John indicates David is pressing for payment for Darlene’s marketing fees but indicates at p. 367, “no contract exists which if there was one, it would have to be signed by JWW [John Welton].”

[36] At Exhibit 1, Volume 2, Tab 77, in a statement dated July 18, 2011, Darlene claims 2% commission on total sales, net of all taxes, of 2% x 61,216,444 = $1,224,328.88. After deducting advances of $403,055.61 to date, a balance of $821,273.27 is due.

[37] On August 1, 2011, (see Exhibit 1, Volume 2, Tab 85, p. 446, at para. 13) David demands that holding back proceeds of loans on Stonebrook I and money due to Darlene needs to be taken care of and “your arrogance in the above two matters is not acceptable.”

[38] On August 2, 2011, John advises that Darlene is not registered with OREA and cannot charge commissions. David replies on August 3, 2011, that OREA registration is not required to pay Darlene and, at p. 464, indicates “our contract with Darlene is 2% of sale price net of HST/GST” (see Exhibit 1, Volume 2, at Tab 89). Darlene testified that she did not write David’s memorandum in Tab 89 and did not receive the $312,712.39 referenced at p. 462 of John’s email.

[39] On August 4, 2011, Stonebrook received a statement from Darlene. Darlene testified she did not review it and “it needs to be corrected.” This statement, found at Tab 87 of Exhibit 1, Volume 2, at p. 457, notes total sales net of taxes on August 1, 2011 of $61,221,868.02. Adjustments of $579,542.00 are deducted from net sales to pay for other sales agents’ commissions, the sales offices’ salaries, and expenses. Two percent of the remaining total of $60,642,326.02 involves a commission of $1,212,846.52, and after deducting advances of $554,082, the balance due is $658,764.52.

[40] No other invoices were sent between August 4, 2011 (Tab 87 invoice at p. 457) and June 4, 2012 (Tab 77A invoice, which indicates 2% commission total of $1,321,956.42 with advances of $705,721.48 and balance due of $616,234.94 due on June 4, 2012, regarding Phase I).

[41] After the August 3, 2011 memorandum sent to John from David (which indicates Darlene is to be paid 2% of sale price net of HST/GST), John on that same day delivers to David on August 3, 2011, a memorandum addressed to Darlene. John indicates in that memorandum at Exhibit 1, Volume 2, Tab 90, at p. 467:

[42] In an email dated August 11, 2011, at Exhibit 1, Volume 2, Tab 94, p. 485 from John to Stanley Rose and David, John suggests that an unsold unit be provided to Darlene, “towards compensation for the yet to be determined and agreed claim for marketing fees as being outlined in a letter to her.”

[43] By January 12, 2012, John retained a lawyer to represent him (Jerome Morse). Mr. Morse at Exhibit 1, Volume 2, Tab 115, at p. 584 repeats the offer to transfer an unsold unit in Stonebrook Phase I to Darlene “assuming the value is less than the finalized account.”

[44] At Exhibit 1, Volume 2, Tab 96, at p. 492, in an email dated August 16, 2011, John indicates that “I have enquired about your marketing and associated services in Stonebrook Phase I and advised by David that there is no contract.” John indicates that Darlene’s payments will continue but asks for a report. Darlene did not furnish a report.

[45] Darlene’s monthly draws continued until the end of 2012. Exhibit 1, Volume 5, Tab 182 indicates that on January 16, 2013, Darlene’s pay cheque is missing.

[46] By October of 2011, sales for Stonebrook II were underway. A certain level of sales was required to meet loan construction requirements. Darlene testified that a proposed large block sale did not materialize. Accordingly, as indicated in an email dated October 19, 2011, from Darlene to John (see Exhibit 1, Volume 2, Tab 106, at p. 545), Darlene proposed to raise outside real estate agents’ commission to 4% from 1%. Darlene proposed to reduce her compensation from 2% to 1% for the balance of future Stonebrook Phase II sales. On October 20, 2011, at Exhibit 1, Volume 2, Tab 107, at p. 547, John responded that those actions outlined at Tab 106 were unacceptable and that unilateral changes to the existing operating strategy were unacceptable.

[47] By November of 2011, there were still 16 units left to be sold at Phase I. Darlene testified that she met with three agents who had previously sold the most units and she divided up the remaining units among those agents. They were given a commission rate at the industry standard (which is 1% – 4%), but they agreed to take a bit less at a 3% commission. At Exhibit 1, Volume 2, Tab 110, at p. 557, in a November 1, 2011 email, John objected to this arrangement, declaring “You have exceeded your authority in this matter and, as recently advised, your activities beyond what is previously approved should be at your expense. You could not be expecting to receive your not-yet-agreed commission in addition to 4% or 4.25% being paid to others… this letter confirms that compensating adjustments will be expected when agreement is reached as to your not-yet-existing contract for compensation on all accepted sales.” At p. 558, John concludes, “Resolution of the ownership of Phase II is not yet finalized and your fees are also as yet not finalized.”

[48] At Exhibit 1, Volume 2, Tab 111, at p.563, David, in an email dated November 2, 2011, indicates that Darlene Welton’s fees were finalized at the beginning of the project. Darlene testified that this refers to her 2% commission.

[49] At Exhibit 1, Volume 2, Tab 119, at p. 607, John’s counsel, Jerome Morse, on February 14, 2012, indicated that settlement of Darlene’s fees are “to be based on verbal agreement – that Darlene Welton is to be paid the same remuneration as the previously marketing consultant and current industry practices.”

[50] Darlene testified that Stonebrook Phase II was cancelled in April/May 2012. The purchasers got their deposits returned with interest (see Exhibit 1, Volume 3, Tab 125, at p. 642).

[51] In an email dated November 5, 2012, at Exhibit 1, Volume 3, Tab 128, John indicates that there is no record of sales agent Susan Clarke having a contract or being an employee of Stonebrook or United Lands.

[52] John is obviously incorrect as the business records confirm that Susan Clarke was a paid employee of Stonebrook and had a contract (see Volume 1, Tab 11 A-G and Volume 3, Tab 129 at p. 653).

[53] At Volume 3, Tab 131, at p. 662, in an email dated May 22, 2012, John admits he is mistaken about Susan Clarke. John advised David that he distinctly remembers David telling him that Darlene was to be hired under the same basis as previous marketing and sales consultants such as Hunter Milborne, Paul Kennedy, and Linda Davies.

[54] At Exhibit 1, Volume 3, Tab 135, at p. 683, on June 4, 2012, John’s lawyer, Jerome Morse, advises that Darlene’s remuneration was not a subject of negotiations but “a reasonable invoice for Ms. Welton’s advertising work would be acceptable.”

[55] On June 4, 2012, at Tab 136, at p. 687, Darlene advises that seven units remain unsold at Stonebrook I. Her account, at p. 688, includes a 2% commission on total sales net of taxes, totalling $1,321,956.42 and her balance due is $616,234.94 after taking into account advances of $705,721.48. In addition, as seen from Exhibit 1, Volume 1, Tab 77B, there is an additional balance due, based on 2% commission, on Phase II sales of $744, 898.76 on June 4, 2012.

[56] On June 6, 2012, at Exhibit 1, Volume 3, Tab 137, at p. 694, John again disagrees that a 2% commission was ever agreed to. John again indicates that Darlene’s appointment was on the same terms as previous incumbents, which translates into a 1.5% commission.

[57] On June 18, 2012, David writes a letter to Darlene which states at Exhibit 1, Volume 3 Tab 138, at p. 697:

[58] At Volume 3, Tab 148, at p. 736, on July 16, 2012, Darlene’s lawyer, Robert Whitmore, writes John demanding payment of the 2% commission in Phases I and II of Stonebrook totalling, after payments of $705,721.48 received, a further balance due of $1,361,133.70.

[59] At Exhibit 1, Volume 3, Tab 149, pp. 738-741, Jerome Morse outlines a calculation at a 1.5% commission rate, and after considering credits for commission paid to other employees, that only $14,898.26 is outstanding.

TARION PROCESS AND TECHNICAL AUDIT

[60] Darlene Welton was involved in the technical audit of Stonebrook Phase I. This involves identifying deficiencies identified in the common areas of the building. The builder is responsible for repairs for warranted matters. Otherwise, the Condo Board does the repairs. In cases of dispute, representatives from Tarion Warranty Corporation decide who is responsible.

[61] Tabs 157 and 158 of Volume 3 and Volume 4 of Exhibit 1, contain correspondence and documents identifying required repairs, if they are under warranty, and when and if repairs were completed.

[62] Darlene attended a meeting with the Condo Board regarding common elements in December 2012 (see Exhibit 1, Volume 5, Tab 175), corresponded with the Board regarding warranty repairs and email complaints (see February 22, 2013 email in Exhibit 1, Volume 5, Tab 192), and did walk-throughs with Condo Board members (see May 2, 2013 email at Exhibit 1, Volume 5, Tab 204). Johwel had nothing to do with the audits. On May 31, 2013, Darlene attended a meeting with John’s two sons, John Z. Welton and Dan Welton to discuss Phase I waterproofing (see Exhibit 1, Volume 5, Tab 217). The building was leaking—especially the garage and south east part of the building. There were problems with the heat pump and units flooding (see Exhibit 1, Volume 6, Tab 239).

[63] John passed away May 9, 2013 (see Exhibit 1, Volume 5, Tab 206 obituaries). It appears that John’s two sons dealt with Darlene thereafter.

[64] David died on September 23, 2013, and Darlene inherited the Darwel business.

[65] Exhibit 1, Volume 6, Tab 251, dated October 2013, indicates that John’s sons and Darlene were working together to deal with the leakage and repair issues and make an offer to the Condo Board.

[66] On November 14, 2013, Darlene contacted John Z. Welton and Dan Welton to discuss the Board’s offer for a $80,000 settlement (see Exhibit 1, Volume 6, Tab 259, at p. 1872).

[67] On November 15, 2013, John Z. Welton and Dan Welton agree with Darlene, on behalf of Darwel, to offer $50,000 to settle all outstanding repair issues (see Exhibit 1, Volume 6, Tab 261, at p. 1877). The Condo Board accepted the $50,000 offer and signed off that all the warranties Tarion could enforce were dealt with by satisfactory repairs.

[68] With this settlement, Stonebrook Phase I was finalized. Darlene had seen the project through to the end regarding outstanding repairs issues and her involvement ended in December 2013 (see November 22, 2013 email at Exhibit 1, Volume 6, Tab 264, at p. 1885).

[69] Darlene indicated she expected to get paid for the Tarion work when the job was completed. She requested payment from Stonebrook, but she was never paid for any of the Tarion warranty work.

DARLENE WELTON - CROSS-EXAMINATION

[70] John had aggressive skin cancer—melanoma and not lymphoma. David had part of his left lung removed between 2009-2011 during the Stonebrook project. David also had a failed hip replacement prior to 2007, which left him disabled on his left side.

[71] In September 2010, the head office was moved downstairs due to the better space and no stairs—the brothers were aging.

[72] Around September 2010, issues arose between the brothers and David brought the Davwel records home. Her final pay cheque was 2012. When Darlene was in her 20s, in the 1960s, she worked for Robert McClintock and she personally was not involved in any high-rise construction. She worked for J. Lawson in the 1970s and was not involved with any high-rise construction. With Hunter Milborne, she had no in field high-rise construction experience. Hunter Milborne had five employees. She was senior VP and the only VP.

[73] Regarding the Oak Ridges Heights project, she had no contract, but she saw and was privy to the contract between Hunter Milborne and the Oak Ridges project. At her earlier examination for discovery at pp. 20-21, she testified she was not privy to any contracts between Hunter Milborne and the Oak Ridges project.

[74] As part of her general duties with Hunter Milborne, she worked with the developer from the time he/she bought the land until the development was completed. She did not however liaise between the developer and tradespeople. In her discovery at p. 12, she testified she did liaise between the developer and trades sometimes. At trial Darlene testified she did not speak to the tradespeople.

[75] Darlene was present when decisions were made regarding advertising, but she did not attend all the media meetings. At p. 13, Q. 57 of her examination for discovery, she testified that she went to all media meetings. At trial, Darlene indicated all was too strong of a word; she went to most meetings.

[76] Regarding her general duties specifically at Hunter Milborne, Darlene Welton’s testimony at trial differed from her discovery in a variety of ways, including:

1. At trial, Darlene testified her role was not to hire the public relations agency (PR agency) but to work with them. At her prior discovery, she testified, at p. 14, that “I had that along with the public relations we would hire.”

2. At trial, Darlene testified that she would work with advertising agencies but had no role in hiring an advertising firm. At p. 14 of the discovery, she testified, “Sometimes I hired the advertising firms.”

Darlene explained that the reasons for the inconsistencies regarding her testimony regarding hiring advertising and public relations companies was that she was talking about her involvement with United Lands.

3. At trial, Darlene testified that she would not put together colour boards—the design team did. At trial, Darlene testified that the homeowners selected their own colour boards. At p. 14 of her prior discovery, she stated, “I would select colour boards for colour selections for the homeowner. I would select the designs, approve the designs of the interior designers which I also usually – not hired but approved. The developer hired, but I would approve of which one.”

4. At trial, Darlene testified that she never signed deals when she was with Hunter Milborne—she generally approved deals.

At p. 14 of her discovery, she testified, “I had a huge role with every developer with the purchasers. Obviously I’m not a salesperson, but my sales staff would do the deals. I usually approved every deal before I would either sign the deals or it went to the developer for signing.” [Emphasis added].

5. At trial, Darlene testified that she and her sales team at Hunter Milborne did not hand out forms regarding PDI’s and warranty deficiencies. The administrative staff at the sales centre may have had the forms.

At p. 15 of her prior discovery, she testified as follows:

Q. So can you explain what you mean by dealing with deficiencies?

A. Deficiencies happen when you sell a unit and it’s finally built, the purchaser will move into that suite. That’s their new home. They have two years in which to voice and record and report all the grievances.

Under – it is up to the developer to – and they have all the forms which we provide to them. It’s up to the developer to repair all those deficiencies for the home owner, as per the Tarion guide, the homeowner program, ownership program, warranty program.

6. At trial, Darlene testified that the sub trades carried out the deficiency repairs. She was not involved with the trades. It was the developer’s role to address deficiencies.

At her prior discovery, at p. 16, Darlene testified:

A. My role would be to ensure through the sales team that the -- there’s always somebody in charge of doing the subtrades, bringing in the trades to fix those deficiencies. My role is to keep the home owner happy, to make sure that the staffing, whoever is in charge of it, makes it happen.

Darlene explained that answer was in error—she was talking about Stonebrook and not Hunter Milborne.

7. At trial, Darlene testified that it probably was not the sales staffs’ role to determine if the deficiencies complaint was legitimate, but there were exceptions where that would happen.

At p. 16, Qs. 67 and 68, Darlene testified:

67. Q. In my experience as a new home owner, the owners actually develop a rapport with the sales staff.

A. Oh, yes.

68. Q. And look to the sales staff to help them when there’s a problem?

A. Absolutely. And the sales staff look to me and we determine what was legitimate and what wasn’t, and as a home owner, some is and some isn’t.

Darlene again conceded that answer was in error regarding Hunter Milborne involvement.

8. Darlene indicated that she did not review the discovery hearing transcript in great detail. She testified at trial she did not remember reading the transcript.

9. At trial, Darlene testified that she did not make any correction to the transcript. Exhibit 2 was entered, which indicated that Darlene, through her counsel, made nine corrections to her transcript starting at p. 41 going forward. There were no corrections regarding pp. 12-17 of the transcript. In my opinion, it is clear that the questions asked at pp. 12-17 relate to Hunter Milborne only (see references to Hunter Milborne at pp. 12, 15 and 17).

[77] Regarding Exhibit 1, Volume 3, Tab 128, at p. 651, the statement dated August 1, 2011 and stamped as received August 4, 2011, was prepared by Rosemary Birk or Cara at David’s direction. David delivered the document to the head office.

[78] There were no statements or invoices prepared in 2005, 2006, 2007, 2008, or 2009. The first invoice was February 26, 2010, which appears at Exhibit 1, Volume 1, Tab 14, at p. 136.

[79] From 2005–2009, she received a draw of $5,000 per month as payment towards commission. She received $200,000 in July 2010 (see Exhibit 1, Volume 1, Tab 16, at p. 142).

[80] At trial, Darlene said she prepared the first invoice in February 2010 in order to get paid or she would have to wait forever.

At trial, Darlene testified:

1. there were no issues regarding accuracy in submitting the February statement;

2. she did not do it to keep Sidney Dick organized;

3. David was not involved in the invoice—she could not recall how the decision was made—she decided it was time for her to get partial payment.

However, at her prior discovery, on September 25, 2015, Darlene testified:

1. she rendered the statement for accuracy and that was the only reason (p. 69 of transcript);

2. it was necessary to tender a statement to keep Sidney Dick organized and have the figures be accurate (see p. 69 of transcript); and

3. David asked her to render an invoice. She did not determine to do it on her own. It was a joint decision between David and her as they worked together each and every day (see transcript pp. 64-69).

She never submitted an invoice for $220,000.

[81] David signed the company cheques. He signed the Exhibit 3 cheque for $107,266.85 dated July 3, 2010, (see Exhibit 3) and the $20,000 June 12, 2007, cheque (see Exhibit 4).

[82] The Exhibit 3 cheque had company employee deductions (see Exhibit 1, Volume 1, Tab 16).

[83] She does not know if the Exhibit 4 cheque had any employee deductions. There were two signatures on Darlene’s statement/invoice at Exhibit 1, Volume 1, Tab 14, at p. 138, dated February 26, 2010, and Darlene’s statement/invoice dated August 1, 2011 at Volume 2, Tab 87, at p. 457.

[84] John’s signature does not appear. David’s signature appears there. Darlene testified the other signature is Dolores Gosine but she is not 100% certain. When it was suggested the other signatures says “OK”, Darlene is not certain. In the Exhibit 5 undertaking chart, at point 4, Darlene indicates the other signatures is Dolores Gosine. In the past, her position was that Dolores Gosine was signing on John’s behalf. At trial, Darlene is not sure if it is Dolores Gosine’s signature.

[85] On August 2, 2011, per Volume 2, Tab 89 email, at p. 462, John emails David and Darlene and John refers to the Exhibit 1, Volume 1, Tab 14 February 26, 2010 invoice indicating $754,954.37 is due to Darlene. Darlene testified that things were not friendly at this point but she took that email to mean that John was going to pay 2%.

[86] At Exhibit 1, Volume 2, Tab 90, on August 3, 2011, John indicates to Darlene that John is not agreeing to 2% and the rate has yet to be agreed upon. This email was hand delivered to David. Darlene agreed that nowhere in the record is there any confirmation that John agreed to 2%. Darlene indicated that John would change his mind repeatedly.

[87] Darlene’s position is that the 2% agreement should not factor in what was paid to other sales representatives. Those amounts are irrelevant.

[88] Darlene was referred to Exhibit 1, Volume 2, Tab 87 (August 1, 2011), Tab 91, (August 3, 2011) and Tab 93 (August 4, 2011), where Darlene asks for and receives a breakdown of what employees are being paid with a breakdown of what relates to Phase I and II of Stonebrook. The Tab 87 August 1, 2011 statement/invoice makes adjustment for salaries and benefits paid to employees for Phase I. Darlene denied the suggestion that the issue was not whether these expenses should factor in but whether the proper allocation was Phase I and Phase II. Darlene had no explanation as to why she wanted the employee information regarding commission/expenses as broken down in the Tab 93 email from Dolores.

[89] In-chief, Darlene had testified that she learned about John’s dementia in the summer of 2011. They noticed a change in his behaviour then. In the Exhibit 5 response to undertaking at point 5, the answer was that she learned of John’s dementia in May 2010. Darlene was not sure but she was guessing John’s dementia started to arise in 2011.

[90] At Exhibit 1, Volume 1, Tab 35, at p. 252, John refers to Darlene’s marketing contract in February 21, 2011. There was no reference by John to any three person meetings in 2005/2006. She was aware of this email as she and David shared their emails. She never wrote to John to remind him of their three-way meeting. Darlene agreed that there is nothing in the written record from David or her reminding John of their three-way meeting.

[91] In the three-way meeting, Darlene testified at trial both in-chief and initially in cross-examination that it was David who suggested the 2% rate.

[92] However, Darlene provided a different answer at the discovery at pp. 58-60:

210 Q. So I appreciate all that information. My next question has to do with the percentage itself. Obviously we’re dealing with a large – well, we don’t have to put the word “large” in front it, but we’re dealing with a condo project that garners millions upon millions of dollars in revenue; right?

A. Yes.

211 Q. So single point, a single percentage point can make a big difference in your pay?

A. Yes.

212 Q. Why 2 per cent as opposed 1.6, 1.7, 1.75, 1.8? Was that discussed as this meeting that you’ve described.

A. Me. I described early on John and David thought 2 per cent would be a fair amount for me for the amount of work that I expected to do and because I left the job market downtown to join United Lands.

213 Q. Do you have a strong recollection of this meeting?

A. Yes, I do.

214 Q. Do you know who the first person was that raised this idea of 2 per cent rather than any other rate?

A. Two per cent was just percentage. I believe it was John, and David agreed, but it could have been – could have been David, and John agreed, because I know I took out my calculator to determine what that amount would be, and I agreed.

215 Q. So your information is that it definitely wasn’t you who came up with two?

A. Definitely not. I would have come up with more.

216 Q. Okay.

A. Quite honestly.

217 Q. You say that now, but you’re not suggestion that you said it should be higher at the time?

A. Yes, I did. I said it should be 3?

218 Q. You said it should be 3?

A. Yes. But I said, “Boys, I’ll accept two.” I called them “big bro” and “little bro.”

219 Q. And so sitting here today, looking back on that meeting, you can’t recall whether it was David who suggested two and John agreed or John who suggested two and David agreed?

A. I believe it was John who suggested 2 per cent.

220 Q. And you initially presented 3 per cent. Do you recall whether David presented any kind of a figure to the meeting?

A. No, he agreed with what John – well, it was actually John because David agreed and he asked me, “Is that okay with you, Darlene?” And I said “Well, 3 per cent would even sound better boys.” And we all laughed and I said, “No, I’ll accept two.”

[93] After being read this portion of the discovery, Darlene testified that David and John had a discussion at the three-way meeting and it was John who was comfortable with 2%.

[94] On August 3, 2011, at Tab 90 in Exhibit 1, Volume 2, at p. 467, and August 16, 2011, at Exhibit 1, Volume 2, Tab 96, at p. 492, it was apparent that John was not agreeing to the 2% being requested.

[95] On June 6, 2012, at Exhibit 3, Volume 3, Tab 137, at p. 694, John disagrees that a 2% commission applies and requests information as to how she arrived at the 2% rate. John suggests he was advised by David she would receive the same as other incumbents, i.e. 1.5%.

[96] At p. 695, John basically suggests that if Darlene disputes his position, she should refer the matter for counsel for a lawsuit, which he will vigorously defend.

[97] Darlene indicated that it was David who was angrier at this response.

[98] Darlene agreed that in June 2012, litigation was a real possibility, and by July 9, 2012, a draft letter had been prepared by her legal counsel regarding the 2% nonpayment (see Exhibit 1, Volume 3, Tab 146, at p. 731).

[99] Pursuant to Exhibit 1, Volume 3, Tab 143, David retained a lawyer (Stanley Rose) by June 27, 2012, and, at p. 716, Mr. Rose indicated that Darlene would deal with her payment issues through her lawyer.

[100] Darlene prepared an outstanding remuneration chart dated June 18, 2012 (see p. 737 of Tab 148 of Volume 3, Exhibit 1 (this was attached to Mr. Whitmore’s demand letter dated July 16, 2012—see p. 736)).

[101] Darlene agreed that it was no coincidence that on June 18, 2012 (the date of her remuneration chart), David composed a letter that appears at Exhibit 1, Volume 3, Tab 138, at p. 697 as follows:

[102] Darlene took this Tab 138 letter to her lawyer. She testified at trial that she read the letter and agreed with its contents. The letter was typed up by one of Rosemary, Cara, or Nadine. Darlene had no involvement with drawing it up. It was David’s idea. David was a brilliant man and had all of his faculties. She saw the contents of the letter and had no issues with its accuracy. She believes Mr. Whitmore had this letter when he sent out the Exhibit 148 demand letter/invoice on July 16, 2012.

[103] Darlene took no issue with the Exhibit 1, Volume 3, Tab 138, June 18, 2012 letter composed by David regarding its completeness or anything at all. She testified at trial, “It was what was agreed upon.”

[104] It was suggested that the first time the $220,000 per annum amount ever shows up was in that June 18, 2012 letter. This letter makes no reference to John. Darlene agreed this was a critical juncture of the events—John, six days earlier, had told her to seek counsel. She agreed she was in the process of doing so and prepared a chart making reference to a payment of $220,000 per annum as part of the alleged agreement. The Tab 138 letter by David confirmed the 2005 agreement between “you and I” that is David and Darlene. John is not mentioned.

[105] The Exhibit 1, Volume 3, Tab 148 demand letter from Mr. Whitmore dated July 16, 2012, refers to the $220,000 per annum payment. Prior to June 18, 2012, there are no documents or written records that Darlene should be paid $220,000 per year. Darlene herself never invoiced $220,000 and was never put on the payroll at $220,000. Darlene could not explain why that happened and agreed that her draw was $5,000 per month, which was nowhere near $220,000 per year. Both the other two VPs—Colin Pillar and Sidney Dick—were paid on a monthly basis. Colin had been with David for a long time.

[106] David and she never sought to have John either assessed or declared mentally incompetent. After the 2012 lawsuit that Darlene initiated, David authorized John to have carriage of the lawsuit (see November 15, 2012, November 28, 2012 letters from David’s lawyer (Mr. Rose) to John’s lawyer (Mr. Morse) in Exhibit 1, Volume 4, Tab 161, at p. 1343 and Exhibit 1, Volume 5, Tab 170, at p. 1395). Darlene testified that John was pretty ill at this point and was very frail. John oversaw the CREG Project, but David and Darlene were not worried as Colin Pillar was taking care of the project.

[107] Regarding Stonebrook Phase II, Darlene was claiming 2% of sales of 37 million for 134 units sold (see Volume 3, Tab 148, at p. 737 per June 18, 2012 schedule). She was asking for full commission even though the project was cancelled, deposits returned, and there were no revenues for Stonebrook Phase II sales. Phase II was launched in 2010 after Phase I and was open for about a year. She was seeking $744,898.76 for a year period from Phase II sales. At Hunter Milborne, Darlene testified at this time that her base salary was $175,000. When it was suggested her base salary at Hunter Milborne was $90,000 with bonuses raising it to $150,000, Darlene testified that it was more, and in the last year at Hunter Milborne, in 2004-2005, she made over $200,000. Darlene agreed that at her discovery she provided the following evidence at p. 17 of the transcript:

69 Q. Okay. So still speaking with respect to your time at Hunter Milborne, were you an employee of Hunter Milborne or were you a contractor with Hunter Milborne?

A. Independent contractor with Hunter Milborne. I don’t know, guess I’d be a bit of both because I had guaranteed salary of $90,000 a year plus commission on top. No, I was an independent contractor, I would believe.

70 Q. So they were willing to give you a guaranteed salary?

A. Mm-hmm. Plus my bonuses each year.

71 Q. And how was your – what was your bonus based on?

A. My total yearly income would be $150,000 a year.

[108] At trial, Darlene mentioned that she made more than $150,000 per year, guessing she made over $200,000.

[109] Darlene agreed that any project could be cancelled and that a sale was a hope to get money. Sales revenues were actual collections of money.

[110] At Volume 3, Tab 138, David, a brilliant man in possession of his faculties, wrote on June 18, 2012, that the agreed upon remuneration was 2% of sales revenue net of taxes or $220,000 per annum, whichever is greater. Darlene took no issue with that statement.

[111] In her chart dated June 18, 2012, attached to her lawyer Robert Whitmore’s letter at Exhibit 1, Volume 3, Tab 148, at p. 737 and in her statement dated June 4, 2012 at Exhibit 1, Volume 2, Tab 77A, at p. 389, Darlene states that advances were $705,721.48. These figures were subject to verification. However, her statements in Exhibit 1, Volume 2, Tabs 77C and 77D had advances as high as $727,189.82 as at November 21, 2012. Darlene does not dispute the $727,189.82 amount. Rosemary Birk prepared these statements. From 2005-2012, Darlene was involved with Davwel but was not paid by Davwel. In 2013, Davwel paid her $7500 plus HST per month. She was appointed as a director of Davwel in 2012.

INSIDER SALES

[112] There was a lot of controversy regarding Unit 1810. This was a penthouse suite that David bought with his own money. David customized the suite with his friends and then wanted to sell it. John thought it was finished with company money and David was going to take 100% of the profit and not 50%. The dispute was resolved by giving John suite 107 for free. David also initiated an audit, which John did not want and, ultimately, David did not go through with a further investigation as KPMG recommended.

TECHNICAL AUDIT AND TARION PROCESS

[113] The Tarion work was started in 2011. Darlene did not submit any invoices at any time for any Tarion work. No invoices were submitted in any of the years from 2011-2015. There was no demand for payment by letter for the Tarion work. The demand for payment was commenced by the lawsuit in 2015.

[114] The final sales for Stonebrook Phase I were in December 2011, and the final closing was in December 2010.

[115] As can be gleaned from Exhibit 1, Volume 2, Tab 102, at p. 505, Darlene’s new role in or about September 1, 2011, was to be involved in the construction process regarding deficiencies in the units and common areas. Darlene did not agree that this time was an opportunity to resolve commission issues.

[116] As seen from John’s email dated June 6, 2012, at Exhibit 1, Volume 3, Tab 137, John refers to seven unsold units (regarding Phase I) and indicates Darlene’s role as a sales and marketing consultant were done once they were dealt with and indicated that future remuneration should come from David.

[117] In May 2013, John passed away. John’s two sons supplanted John afterward. She took John’s two sons to Stonebrook to examine a water leakage problem. She did not raise any issues with them that she was not being paid and would be seeking $220,000 per year for work that their father refused to pay for. Darlene testified that she was more concerned with waterproofing than her salary dispute. Her claim is for $220,000 per year for 2011 and 2012, but when the two sons came on board in 2013, she was owed $440,000 but did not think it was an issue.

[118] David was not very computer literate. He did not type any of the correspondence. He dictated and wrote long-hand. She printed out his emails and left them on his desk.

MIXING OF EMAILS

[119] At trial, Darlene indicated that David would look for her emails and other emails as well.

[120] However, as indicated at p. 46 of Darlene’s discovery on June 1, 2018, Darlene testified at that time that the only thing that David would monitor would be primarily emails coming from Darlene.

[121] It was suggested that she would sign off on David’s emails and the recipient would not know who actually sent it. Darlene testified that David would often ask her to respond to John’s email. At the end, that task was given to Rosemary. Examples of David and Darlene mixing emails are as follows, from Exhibit 1 volumes:

• Volume 1, Tab 26, pp. 170-71: November 4, 2010 email from: darlene.welton@rogers.com to: Colin Pillar, John Welton – signed off by Dave Welton.

• Volume 1, Tab 42, pp. 271-72: March 25, 2011 email from: Darlene Welton to: John Welton – signed off by Dave Welton.

• Volume 1, Tab 44, p. 278: April 1, 2011 email from: Darlene Welton to: John Welton – signed off by Dave Welton.

• Volume 1, Tab 52, p. 311: April 21, 2011 email from: david.welton@rogers.com to John Welton – signed off by Darlene (Darlene testified she authored this email).

• Volume 2, Tab 63, p. 337: May 24, 2011 email from: darlene.welton@rogers.com to: John, John/Joan (jww@hotmail.com), Collin Pillar – signed off by Dave.

• Volume 2, Tab 73, p. 378: July 9, 2011 email from: david.welton@rogers.com to: John Welton – signed off by Darlene Welton (Darlene testified that Rosemary had control of his computer and someone would type it for Darlene).

• Volume 2, Tab 88, p. 459: August 1, 2011 email from: darlene.welton@rogers.com to jwwelton@hotmail.com, john@unitedlands.com – signed off by Dave.

• Volume 2, Tab 104, p. 530: September 16, 2011, 11:07 p.m. email from: david.welton@rogers.com to: John Welton.

[122] Regarding the Volume 2, Tab 104 email, Darlene tells John she has printed his email. David has returned for the night. Darlene signs off.

[123] Darlene testified she cannot explain the Volume 2, Tab 104 email. She did not recall ever using David’s computer. Counsel pointed out that Darlene earlier in cross-examination was resisting admitting she was using David’s computer. Further examples of mixing emails are:

• Volume 2, Tab 106, p. 545: October 19, 2011 email from: darlene.welton@rogers.com to: John Welton, john@unitedlands.com – David signs off this email.

• Volume 2, Tab 108, p. 549: October 27, 2011 email from: Darlene Welton to: John Welton – David signs off on this email.

• Volume 2, Tab 112, p. 565: November 3, 2011 email from: Darlene Welton to: John Welton – David signs off on this email.

• Volume 2, Tab 117, p. 598: February 5, 2012 email from: Darlene Welton to: John Welton, jwwelton@hotmail.com, John – john@unitedlands.com – David signs off indicating Darlene’s commission account has never been fully resolved. John is reminded that he is a 50% partner in Stonebrook.

DARLENE’S EXPERIENCE

[124] With John and Dave’s passing, John’s sons took positions on behalf of Davwel (see for example, Exhibit 1, Volume 6, Tab 261, at pp. 1877-78 regarding negotiations of $50,000 offer to the Condo Board for a friend).

Tarion Release

[125] Barry Lyon was employed as a consultant on the Stonebrook project (see Exhibit 1, Volume 3, Tab 142, at p. 709).

[126] Darlene’s salary claim ends at 2013.

[127] It was suggested that in the three-way meeting between John, David, and Darlene, that it was never expected her role would include finishing the construction of Stonebrook. Darlene testified it was in her mind to do whatever was necessary to bring the project to a successful conclusion for the family.

[128] Darlene indicated that she had decades of experience in high rise construction. She admitted that her experience was in marketing and sales. She was never a construction manager, construction supervisor, or VP of construction.

DARLENE WELTON - RE-EXAMINATION

[129] Darlene indicated that she sometimes made errors in 2015 in her discovery at pp. 12-17. She mixed in her experience at Stonebrook.

[130] At pp. 45-56 of the 2015 discovery, she outlines her greater involvement at Stonebrook which included: longer work hours; more active roles in design, planning, PR, and advertising; more active in resolving construction problems; and involved in numerous problems presented by people moving into an unfinished building, which included problems such as waterproofing, soundproofing, and lack of parking.

[131] Darlene has never been a director or shareholder of Davwel. Scotia Trust is currently administering Davwel and it is part of David Welton’s estate.

ROSEMARY BIRK – EXAMINATION IN-CHIEF

[132] Rosemary Birk (Rosemary) was a Customer Service Representative for Stonebrook Properties Inc. and worked at the customer service office on the Stonebrook project. All documents went through her office and she was the frontline for the construction deficiencies. Davwel and Johwel had a 50% partnership in all projects conducted by United Lands Corporation.

[133] In February 2006, she was physically transferred to the construction trailer. Phase I of Stonebrook was 18 stories and contained 226 condo units and closed in 2010. Phase II was likewise to be 18 stories and contain 225 condo units but was never built. Rosemary was the office manager at Stonebrook and prepared everything related to administration at the Stonebrook site. She received $67,000 per annum in that capacity from December 2006 to the end of April 2012.

[134] Rosemary also reported to Darlene, who was VP of Stonebrook Properties Inc. Darlene was at the construction trailer and later at the sales office, when it was built, almost every day. Darlene was involved in sales and would decide on advertising strategies.

[135] Rosemary could sign deals but would contact Darlene with every deal.

[136] Regarding John’s complaint dated February 22, 2011, at Exhibit 1, Volume 1, Tab 35, at para. 6, that Rosemary did NOT have authority to bind the corporation; this was the first time this issue was raised.

[137] Regarding David’s email to John at Exhibit 1, Volume 2, Tab 89, dated August 3, 2011, (from Darlene Welton’s email account) at p. 462, Rosemary would type out emails like this for David and send them out. Paragraph 3 of the email, at p. 464, pointed out that Rosemary did not need to be a licenced real estate agent if she worked for a developer and she could earn commission on sales in that capacity.

[138] Regarding Tab 89, at p. 464, which is a memorandum in response to John from Dave, Rosemary testified that John, after years of non-involvement with Stonebrook Phase I, stuck his nose into that project at a time when things were blowing up between the two brothers. Stonebrook Phase I was behind schedule. It was originally slated to open in 2008. Everything was delayed. This resulted in people moving in with construction occurring a floor above them. The cause of the delay was that Stonebrook Phase I did not have the necessary sales required to get the construction loans needed to move forward. By the end of 2010, the brothers were squabbling, including disagreements about the performance of Colin Pillar, the VP of Development and Construction. Phase II sales opened in the spring: May 2010. Phase II had 134 sales. David and Darlene ran the Stonebrook project, and Rosemary did the accounting. Darlene would meet the customers and performed a PR role.

[139] All of David’s emails were sent to her and she printed them out. Rosemary went back and forth from the site office to David’s office at her home.

[140] Regarding the Exhibit 1, Volume 2, Tabs 59 and 60 emails, Rosemary typed out the Tab 60 email for David. David responded to John’s concerns about lack of parking spaces. There were 450 units but only 380 parking units. More parking spots should have been planned. This impacted sales. The architect had changed the parking spot allocation.

[141] Rosemary typed and sent out the email in Exhibit 1, Volume 1, Tab 44, dated April 1, 2011. This related to David buying suite 1810 in order to move out of his large house on Temagami, but later David decided to sell it, and John and David had a dispute regarding the unit.

[142] Regarding the statements and invoices concerning Darlene’s commission at Exhibit 1, Volume 2, Tabs 77 and 87, she prepared and typed out these statements for David. Rosemary used her closing lists to prepare the total commissions. The advances to date totals came from Dolores Gosine from head office to indicate how much.

[143] Regarding the Exhibit 1, Volume 3, Tab 138, June 18, 2012 letter from David Welton to Darlene Welton, Rosemary prepared it for David. Darlene was not present for the preparation of this letter. This letter was accurate and David was lucid when it was written.

ROSEMARY BIRK - CROSS-EXAMINATION

[144] The Volume 3, Tab 138, June 18, 2012 letter at p. 697 has David Welton’s signature. Rosemary has seen his signature thousands of times.

[145] Regarding the Exhibit 1, Volume 2, Tab 87 statement/invoice, dated August 1, 2011, Dolores would have stamped it as received on August 4, 2019. The signature on the bottom left hand corner is David’s signature. David wrote “OK” above his signature. Rosemary saw him sign it. She wrote in August 4, 2011, beside his signature.

[146] Likewise, regarding the Exhibit 1, Volume 1, Tab 14, p. 138, statement invoice dated February 26, 2010, the signature belongs to David. David wrote his signature with the word “ok” above it. She prepared this statement/invoice.

[147] Rosemary also prepared all the statements/invoices that appear in Exhibit 1, Volume 2, at Tab 77. Dated instructed her to prepare them.

[148] David’s email account was on her computer, it was davwelinvestments@rogers.com. The davidwelton@rogers.com and darlenewelton@rogers.com were on David and Darlene’s computers at home. David was always working and he would ask her to go on his computer, and Rosemary would send out emails on his email account.

[149] John cut off Darlene’s cheques from Stonebrook on December 31, 2012. Darlene complained about it for months. On June 1, 2013, David put her on the Davwel payroll. She basically replaced David and received the $7,500 per month that was previously paid to David.

[150] David was a sweetheart. David was very articulate and if you made a mistake in constructing a sentence, David would pick it out and state, “You call this a sentence?” David was a person that paid attention to detail. Even at the end, leading up to his death in August/September 2013, despite his declining mobility and eventually being reduced to a wheelchair and being bed ridden, his mind was always “sharp as a tack.”

JASMINE CRACKNELL-YOUNG – EXAMINATION IN-CHIEF

[151] Ms. Cracknell-Young is a partner of N. Barry-Lyon Consultants Limited (NBCL) and was qualified by the plaintiff to give expert opinion evidence in the following areas:

(1) The duties and responsibilities of listing brokers for high rise condos

(2) The compensation provided to real estate brokers.

(3) The duties and responsibilities of an in-house VP of marketing and sales and their compensation.

[152] Ms. Cracknell-Young’s report was entered as Exhibit 8.

[153] The report sets out, at p. 2, para. 3.0, a number of specific typical real estate broker duties and responsibilities.

[154] At para. 4.0 of the report, Ms. Cracknell-Young indicates there is no standard commission for listing brokers in the context of a high rise condominium development in the Greater Toronto Area.

[155] The commission rate depends on a number of factors, including the factors set out at para. 4.0 of the Cracknell-Young report. Based on Ms. Cracknell-Young’s experience, listing agents’ sales commissions vary widely, typically between 1% and 2%. The report attaches as Appendix A, a listing real estate broker’s contract which includes a commission of 2% net of GST for a new condominium project in 2008.

[156] Stonebrook Phase I was a standalone higher end condominium project (i.e. it had a pet dog spa). Higher end projects take longer but procure a higher price and larger sales. Larger unit condominium projects attract a lower commission rate. Stonebrook Phase I was a medium size project. The more services a broker is required to provide produces a higher commission rate. High competition produces a lower commission rate.

[157] Bonuses can be paid on top of commission if units are sold in a short time frame or if units are sold to meet a certain bench mark.

[158] CB Ross Partners prepared a report for the defendants and it was filed as Exhibit 9. This report includes four samples of commission agreements between 2006 and 2010. These agreements are filed as Appendices A-D in Exhibit 9.

[159] Appendix A is a Hunter Milborne Contract in November 2006. This contract provides for a commission of 1.25% of sales prices net of GST at para. 5. In addition, para. 7 provides for up to a bonus of 0.6% of sales if certain bench works are met within six months or an additional bonus of 0.4% of sales if certain benchmarks are met within eight months. Accordingly, the top commission rate could be 1.25% + 0.6% = 1.85%.

[160] Appendix B is a contract that involves Baker Real Estate regarding a commission of 1.5% of the gross price. This is a large project totaling 473 units, which would generally exact a lower commission rate.

[161] Appendix C is a contract involving Insite Realty Corp. This agreement involves 341 units, which is a medium to large project. The commission rate is 1.25% of the net price (see para. 2). Para. 14 of the contract provides for a maximum of 35 units, at a 2% commission rate if these units are sold within two months following launch. Further, para. 12 allows the sales agent to purchase up to six units at a 4% discount of the list price. The sales agent could either resell those units at a profit or would rent them out. Generally, a building takes two to five years to complete and you can expect price appreciation.

[162] Appendix D is another Hunter Milborne project covering a 48 month time frame. The commission rate is 1.25% of the net revenue.

[163] In addition, the Appendix D, Hunter Milborne contract provides for an option of purchasing 15 units at 5.25% discount to be credited on closing. (No commission is payable on those 15 units).

[164] The following evidence, at this trial, is consistent with the duties of a vice president of marketing and sales but is not done by an outside listing real estate broker:

• set up a sales office;

• hire staff and sales agents;

• assist with architects regarding design and preparation of marketing materials;

• work with agencies regarding advertising and marketing;

• review and approve legal drafts and review Agreements of Purchase and Sale (APS);

• Prepare unit prices, price increases, co-broker commissions; and

• Approve sales programs and sales strategies.

[165] Further an outside broker would not be involved in:

• Assisting unit owners with more insurance and pre-delivery inspections;

• Dealing with unit owners’ complaints after move-ins;

• Assisting with inside finishes of condo suites; and

• Involvement with the Tarion 30-day process and technical audits.

[166] Darlene was involved in all four of the four processes listed above.

JASMINE CRACKNELL-YOUNG - CROSS-EXAMINATION

[167] Ms. Cracknell-Young is familiar with a number of large brokerage firms including:

1. Hunter Milborne.

2. Baker Real Estate.

3. PMA Brethour.

4. In2uition.

5. Onsite Marketing.

6. Norman Hill.

[168] She had access to other samples of contracts from these other brokers. She provided only one contract with a 2% contract and provided no other 2% commission examples. She reviewed more than a dozen contracts for the time period 2006-2011. She provided no contracts of 1%, 1.25%, or 1.5%. Two percent is not commonplace, but there is no standard. Ms. Cracknell-Young does not know how many 2% commission contracts were entered into between 2006-2011.

[169] In Schedule A of the one contract she provided involving In2uition Realty and TFN Realty, paragraph 6 indicates that In2uition would supply the services of a sales manager and a broker – Debbie Cosic. Paragraph 9 required the broker to provide additional sales agents at peak times. It is standard that the Schedule A duties of the sales broker are included as part of the commission rate. It would be unusual for example, to have Debbie Cosic and sales people charge for their time in addition to the commission price.

[170] As indicated in the CB Ross report (Exhibit 9), there is a payment time frame outlined in the contracts which is marked by benchmarks, i.e.:

1. The deal going firm, the APS is not cancelled.

2. Breaking ground, construction begins.

3. Final closing.

[171] The developer at final closing then gets his revenue.

[172] A condo project can be cancelled. The standard APS provides for that to protect the developer.

[173] In a one-third payment schedule, if the project gets cancelled before the ground breaks, the broker will still demand the one-third payment but walks away from the other two-thirds. The purchaser of the unit gets the deposit back.

[174] In the five reports in the Exhibit 8 and 9, none of the contracts contemplate a 100% commission on sales before bench marks are reached. That type of 100% payment is not reasonable as it would not be commercially viable for a developer to receive no revenue on a cancelled project but still have to pay out millions in commissions.

[175] Per Schedule A of the In2ution contract in Ms. Cracknell-Young’s Exhibit 8 expert report, sales representatives were available to work on weekends. A VP of Marketing and Sales was not necessary for a developer, but it is common. It depends on the size of the developer, number of projects and number of sales in a year. The Welton brothers had no VP for Marketing and Sales for decades prior to the Stonebrook project.

[176] Per para. 5.0 of Ms. Cracknell-Young’s Exhibit 8 expert report, there is a reference to most “large” development companies having a person with duties that oversees marketing and sales such as a VP of Marketing and Sales.

[177] “Large” in this context depends on the number of projects and employees. Large would include five ongoing projects at a time, the sale of 200-400 condo units, or a “large” project such as 1200 units.

CHRISTINE OWEN - AFFIDAVIT

[178] The plaintiff filed as Exhibit 6 the affidavit of Christine Owen. The defendant waived his right to cross-examine Ms. Owen.

[179] Ms. Owen was the project coordinator for the complete build of Stonebrook Phase I from start to finish, including the technical audit.

[180] Ms. Owen, after returning from a sick leave from May 14, 2010, to October 18, 2010, no longer reported to Colin Pillar, VP of Development and Construction. She instead reported to David and Darlene. Ms. Owen’s affidavit outlines her involvement in working with and reporting to Darlene in dealing with deficiencies in the first year audit dealing with Stonebrook’s responses to the Tarion Warranty and audit process. As indicated in para. 24 of Exhibit 6, Darlene had a hands on approach to managing the technical audit and Stonebrook’s Phase I completion; Darlene would visit the site physically to view deficiencies and assist in resolving them.

[181] The affidavit outlines both Ms. Owen’s and Darlene’s efforts in resolving issues related to the technical audit. In early 2019, her duties in relation to the technical audit and completion of Phase I were finished, and Ms. Owens’s employed was terminated.

ADMITTED FACTS AND PLAINTIFF’S READ-IN BRIEF

[182] The plaintiff filed, as part of its case, the Exhibit 10 Facts Admitted by The Defendants and Exhibit 11 Read-in Brief by the Plaintiff.

[183] Highlights of these documents include:

1. Para. 11 of Exhibit 10 indicates it was agreed that until December 2010, it was common practice for John and David to conduct business between Johwel and Davwel without written agreements. Mr. Dick’s testimony in Exhibit 11, Tab 1D, was that in December 2010, at the time of closing of Stonebrook Phase I, the traditional attitude of trust and support came to an end.

2. Paragraph 21 of Exhibit 10 confirms that until December 24, 2010, Johwel and Davwel had no written agreement that required each party’s signature for major contracts for consultants, sub trades, or lenders unless accepted in writing by either of them. Exhibit 1, Volume 1, Tab 27 contains the December 24, 2010 written agreement.

3. The Canadian Revenue Agency (“CRA”) issued a Ruling that Darlene was an employee of Stonebrook from January 1, 2008 to December 31, 2010.

4. Sidney Dick and Colin Pillar were employed as Vice Presidents of Stonebrook Properties.

5. Mr. Dick, at Tab 1B, Exhibit 11, testified that he was not aware of any issues regarding Darlene Welton’s 2010 statement and payments until late 2011 and in 2012.

6. Per Tab 1C of Exhibit 11, Susan Clarke entered into a contract with Stonebrook Properties and was paid by them. She was one of three persons who was paid commission. Ms. Clarke was paid $129,000 by June 30, 2010. The contract was not with Darlene.

7. Per Tab 1E of Exhibit 11, Mr. Dick testified that Darlene submitted an invoice in February 26, 2010 for Phase I of Stonebrook. John, in June of 2011, was requesting an invoice for estimate of fees for Phase I and Phase II.

8. Per Tab 1F of Exhibit 11, at pp. 91-93, Mr. Dick testified that there is nothing coming from Mr. Welton (John) in writing regarding the contract should be 1.5% up until August 2, 2011. As can be seen from the defendants’ response to undertakings, included in Tab 1F, the defendant has no documents to produce regarding any written communication from John Welton prior to August 2, 2011, to show that John disagrees with the 2% rate set out in Darlene’s invoice. Further, the defendant has no documents prior to June 6, 2012, in which the 1.5% commission rate alleged by the defendants was referred to.

9. Per Tab 1H of Exhibit 11, Mr. Dick testifies that there is no use of the term 1.5% in John Welton’s correspondence prior to June 6, 2012. The 1.5% is only referred to from June 2012 onward. This is confirmed in the memorandum at Tab 137 of Exhibit 1, Volume 3, dated June 6, 2012, and undertaking number 9 answer in Tab 1H of Exhibit 11, where the defendant has no documents to produce prior to June 6, 2012, in which the 1.5% commission alleged by the defendants is referred to.

DEFENDANT’S EVIDENCE

SIDNEY DICK – EXAMINATION IN-CHIEF

[184] Mr. Dick is an accountant. He has known the Welton brothers since the 1970s and performed their annual audits.

[185] In 1995, Mr. Dick worked as consultant for the Weltons’ company United Lands and helped in filing proposals in bankruptcy in 1998 due to a real estate crash. After the bankruptcy, the brothers returned to real estate condo development with the Oak Ridge Heights development in Oakville in 1998. Oak Ridge Heights was a three building development. The first building at Oak Ridge Heights was 50 Old Mill Road. Sales commenced in 2002-2003. United Lands personnel consisted of himself, as financial lead of company; the two brothers; Dolores Gosine, in charge of bookkeeping, accounting, and payroll; and Colin Pillar, who was the principal supervisor of construction from the digging of the hole until the finishing of the building. There was no VP of Marketing and Sales. Outside firms conducted sales and marketing, as required. This minimized costs. Marketing was done piecemeal, as needed. Outside agencies supplied the sales force. Hunter Milborne was retained to provide sales services. As indicated in Exhibit 1, Volume 1, Tab 6, Linda Davies signed a sales contract with United Lands on March 26, 1998, regarding Oak Ridge Heights. The contract stipulated a 1.5% commission (plus a potential $50,000 bonus) regarding the sale of 285 units at 50 Old Mill Road. At p. 50 of Tab 6 (Schedule A, at p. 7 of the contract), sales fees were listed as 1.5% with the commission due as follows:

(a) One-third – upon 60 days after APS completion;

(b) One-third – upon starting of construction; and

(c) One-third – upon closing of the sale.

[186] Darlene worked for Hunter Milborne, which had roles at Chestnut Place, Oak Ridge Heights, and Stonebrook. Darlene got personally involved with David and it filtered down that Darlene was involved in Stonebrook outside of Hunter Milborne’s involvement.

[187] David told Mr. Dick to pay Darlene $5,000 per month for advances against commission. Mr. Dick asked David, in about 2005/2006, “What’s the deal?” David said, “Just go for $5,000 now.” Exhibit 1, Volume 1, Tab 9 shows cheques to Darlene Welton in May, June, and July 2006 of $5,000, plus GST of $350 in May and June, and $5,000, plus GST of $300 in July. David signed these cheques and these cheques are consistent with Darlene being paid as a third-party consultant. These cheques are recorded in the accounting records at Exhibit 1, Volume 6, Tab 277A, at p. 4.

[188] Sometime in the summer of 2006, David wanted Darlene to be on their health plan. Dolores Gosine indicated that Darlene needed to be an employee. David said that the payroll burden would be charged against Darlene’s commission. Mr. Dick testified that David indicated that everything to her such as WSIB would be charged back against commission. Mr. Dick asked David, “What is the commission?” David did not respond. The cost consultant who prepared the budget just stuck in a random number for budget purposes for the bank.

[189] Exhibit 1, Volume 6, Tab 278, is a budget Mr. Dick prepared for Stonebrook Phase I on February 6, 2008. The entry at p. 1964 marked Marketing Development—entry 5220—refers to Darlene Welton. The entry budgets $215,000 to be paid to Darlene.

[190] In Exhibit 1, Volume 6, Tab 279 is a total cost report outlining total costs to date for Stonebrook Phase I, dated July 2017. The amount listed for entry 5220—payments to Darlene—at p. 568 show payments of $744,277. Stonebrook Phase I is described by the number 075-1075 Southdown Road, Mississauga.

[191] Exhibit 1, Volume 6, Tab 277A, at p. 1953 shows all the payments made to Darlene, including Stonebrook Phase I, including draws, CPP, WSIB, and cellphone payments, all totaling $744,277.23. This amount matches the total shown on the 5220 entry at p. 1968 of Tab 279, Volume 6 of Exhibit 1, dated July 2017. She was put on the payroll on September 2, 2006, and was paid continuously until the last payment on December 29, 2012. Tab 277 at p. 1943 shows payments to Darlene regarding 035-1035 Southdown Road—Stonebrook Phase II. These amounts were to be charged back against her commission.

[192] John passed away in 2013. He was born in 1929. John was very active until shortly before his death. He had a variety of business interests and was in his office from 10:00 a.m. until 6:00 p.m. until shortly before his death. John was a pretty sharp guy and always had a good memory.

[193] In January 2013, Mr. Dick agreed to be one of the executors to John’s will. John was diagnosed with melanoma in November 2012. In February 2013, John stopped going to the office. Mr. Dick brought the cheques to John’s home for him to sign. John was put in the Ian Campbell home in the beginning of April 2013. John was relatively capable but became physically less capable shortly before his death.

[194] David and John’s relationship broke down over the Stonebrook project. The following things contributed to the breakdown:

1. David and Darlene told John it was appropriate to have Colin Pillar be subjected to a KPMG audit involving Colin’s honesty and integrity. Colin had been with the company for 25-30 years. John did not like the idea of Colin’s honesty being questioned but John said to David, if you need it done, do it. John said David should pay for the audit.

2. David and Darlene bought two penthouse units and merged them stating they were going to move into it. Mr. Dick did not understand it as they had just finished a beautiful house in Temagami. However, David and Darlene decided to sell the penthouse units instead for $1.1 million. The units had been bought for $600,000. Mr. Dick was aware of the transaction but John was not. Mr. Dick told John about it in 2012 or earlier. John saw the transaction as David taking a company asset and selling it for a personal profit.

[195] The penthouse unit was unit 1810. In Exhibit 1, Volume 6, Tab 277B, at pp. 1955-59, all insider sales are highlighted. At p. 1959 on December 7, 2010, there is an entry that unit 1810 was sold for $1,179,150 to a Ms. Callocchia. This is listed as a company sale and the purchase and sale of Welton and Callocchia was reversed (see p. 1959).

[196] The insider sales, marked in pink at Exhibit 1, Volume 6, Tab 277B, are excluded from commission calculations.

[197] As can be seen at Exhibit 1, Volume 6, Tab 279, p. 1977, total sales for Phase I were $71,546,261 and total development costs were $72,110,320, which results in a loss of $1,455,789. However, the project was profitable as the land which was purchased originally for $2.75 million was appraised and showed an appreciation of approximately $4,583,000 for a total land value of $7.35 million (see Tab 279, at p. 1967).

[198] Regarding Phase II, 50% of the units were sold but almost all of the units sold were smaller units at a reduced price. The larger units were not selling and increased costs could not be added on to them. Further, the larger units did not have two parking spots, which was a competitive disadvantage. Surrounding sales in Port Credit and Burlington were $400 per square foot and their sales were much below that.

[199] The sold units was sold at prices that could not be recouped by the larger units. The Phase II project did not have the revenue in sales necessary to obtain the loans required to get the construction started. John decided the project was not viable and was going to lose money. The project was not profitable and John said he would not support it. Accordingly, the project was cancelled.

[200] Mr. Dick was asked to review Exhibit 1, Volume 2, Tabs 89, 90, 91, 93 and 87 concerning documents and emails between John, Darlene, and David spanning August 1 – August 4, 2011. At Tab 87, the August 1, 2011 statement signed by David on August 4, 2011, commissions are listed to Catherine Adams of $57,692 and to Susan Clarke of $129,000.

[201] As can be seen from the Exhibit 1, Volume 1, Tab 6, at p. 46, the March 22, 1998 contract with Oakridge and Linda Davies, the developer pays for the support staff and sales office expenses and the real estate broker is responsible to pay the sales personnel out of the commission payment received. Neither the Exhibit 1, Volume 1, Tab 14 statement of February 26, 2010, nor the Exhibit 1, Volume 2, Tab 87 statements follow the correct approach. The Tab 14 and Tab 87 statements do not follow the logic of the normal situation where the commission is designed to cover the payments paid to sales personnel.

[202] The bottom line is that in the Tab 87 statement, the amounts paid to Catherine Adams ($57,692) and Susan Clarke ($129,000) should have been deducted from the commission along with the advances to date of $554,082.

[203] Mr. Dick played no role in the transaction except that he told Darlene that the calculations in Tab 87 were incorrect. He did not comment on the commission rate.

[204] Exhibit 1, Volume 1, Tab 9 shows three cheques payable to Darlene Welton with the first cheque dated May 29, 2006. Mr. Dick testified that within three months prior to these cheques, David went into John’s office and closed the door. John afterward told Mr. Dick that Darlene would be the sales consultant on the Stonebrook project and that the sales commission rate would be the same as prior sales consultants. Mr. Dick assumed that the rate would be 1.5% but did nothing with that rate. Mr. Dick did not perform any calculations based on Darlene’s remuneration but Dolores Gosine may have.

[205] In Exhibit 1, Volume 3, Tab 149, at p. 741, there is a commission calculation regarding Phase I based on a rate of 1.5% with deductions taking into account insider sales and a deduction for commission paid to in house sales agents. A similar calculation appears at Exhibit 1, Volume 5, Tab 163, at p. 1376.

[206] These calculations are in the same format he would prepare as these calculations include all of the proper components in the proper place.

[207] Mr. Dick is familiar with the demand letter from Darlene’s lawyer that appears at Volume 3, Tab 148, at p. 736, dated July 16, 2012. This letter came out of the blue. No one knew anything about an agreement regarding an annual income of $220,000.

SIDNEY DICK - CROSS-EXAMINATION

[208] The company 956988 (“956”) was the operating company for the group of companies owned by Johwel and Davwel. Johwel and Davwel had a 50/50 partnership arrangement in their joint ventures.

[209] 956 had a head office, including construction equipment. 956 had employees such as Dolores Gosine who were paid by 956. The expenses incurred by 956 on any particular project were billed to that project as a management fee.

[210] Stonebrook Properties Inc. had employees of its own (see Exhibit 1, Volume 1, Tab 8 –Darlene’s T4s for 2006-2012; and see Exhibit 1, Volume 3, Tab 129 – list of Stonebrook employees).

[211] As can be seen from Exhibit 1, Volume 3, Tab 133, in 2012, Mr. Dick invoiced 956 $16,000 per month for a total of $192,000. Similarly, Colin Pillar invoiced $20,800 per month or $249,600 per year. Further, Colin Pillar received a $300,000 bonus for completing a building. Mr. Pillar was to get $300,000 for completing Stonebrook. Davwel reneged on its $150,000 share and Johwel honoured its part by giving Mr. Pillar a $150,000 equity position in a subsequent project (see p. 3 of the Answers to Undertaking, Item 6, entered as Exhibit 12).

[212] David and John got a monthly salary from 956 and the profits from any project were divided equally in the form of dividends, after taxes were paid by the investment companies. Regarding Stonebrook properties Inc., as can be seen from Exhibit 1, Volume 5, Tab 173, and Exhibit 1, Volume 1, Tab 12, in addition to the two brothers, the officers of Stonebrook Properties from June 10, 2009 onwards were Sidney Dick as Assistant Secretary, Darlene Welton as VP of Marketing and Sales, and Colin Pillar as Vice President of Development and Construction. Colin Pillar’s job was to manage the construction process. Along with Chris Owen, Colin Pillar was to look after deficiencies in construction and deal with the Tarion warranty issues and the technical audit involving mainly common areas.

[213] Mr. Dick’s role was to deal with the project’s financial aspects. Darlene prepared reports on sales and reported to him the total dollar amounts reached. A certain percentage of sales had to be reached before the bank would commit to bank loans. APS’s had to be signed as quickly as possible to meet the required threshold.

[214] As can be seen from Exhibit 1, Volume 2, Tabs 81 and 95, John contacted Darlene regarding design changes in some corner suites in Stonebrook Phase II, and these units had to be held back from being sold.

[215] It is common to see units sold at a discount to “insiders” such as employees, contractors, or developers. This is a form of compensation particularly since most condos appreciate over time. David bought unit 1810 and had wanted to move in despite completing construction on his Temagami home in 2003-2004.

[216] David indicated in late 2010 and early 2011 that he wanted to retire. Mr. Dick was asked to prepare a schedule for a purported equalization of assets between the two brothers. David did not agree with the schedule John proposed.

[217] As can been seen from Exhibit 1, Volume 2, Tab 69, the June 28, 2011 email, John refers to payments owing for marketing (this would be owing to Darlene). John indicates, at p. 366, that Stonebrook Phase I has an amount of $300,000 net of draws and $500,000 owing for Stonebrook Phase II. John makes further references to Darlene’s compensation at p. 367, “No contract exists which if there was one, it would have to be signed by JWW” (John W. Welton).

[218] As can be seen from Exhibit 1, Volume 2, Tab 90 (August 3, 2011) and Exhibit 1, Volume 2, Tab 94 (August 11, 2011) at p. 485 John, during the equalization discussion, offers to give one of the unsold units in Stonebrook Phase I to Darlene to cover her outstanding commissions “yet to be determined”.

[219] Exhibit 1, Volume 6, Tab 277B, at p. 1959 indicates that John and David each brought four unsold units on December 27, 2012, for $463,716.81 per unit. In Exhibit 1, Volume 1, Tab 48, in April 2011, the unsold units were valued at a little over $500,000 per unit.

[220] Stonebrook Phase I was profitable. The municipal address of Stonebrook Phase I is 1055 Southdown Road. Phase II’s address is 1035 Southdown Road.

[221] The addressed listed at the selected jobs chart at Volume 6, Tab 279 indicates an address of 1075 Southdown Road. Some of the costs listed in Tab 279 may include costs for both Phase I and II. For example: the land acquisition costs at item 01100 apply for the combined land acquisition costs for both phases.

[222] Item 30010 is the construction management fee that would include costs billed by 965.

[223] Costs that pertain to both phases could be allocated equally to both phases or could be allocated to Phase I which would reduce Phase I’s profits but would increase profits of Phase II.

[224] In Exhibit 1,Volume 1, Tab 6, the contract between Oak Ridge Heights and Linda Davies in March 1998 indicates that:

(1) the owner pays for all the costs of the sales office including sales office staffing;

(2) the sales agents do not do any work regarding pre-delivery inspections, Tarion warranties, and do not get involved in construction of the units;

(3) the commission rate is 1.5%; and

(4) in addition to the 1.5% commission rate, the contract provides for a $50,000 bonus if 70% of the units were sold within 6 months.

[225] Mr. Dick got more information about commission rates from CB Ross.

[226] Attached to Mr. Dick’s affidavit was Tab 34 which was introduced as Exhibit 13. Exhibit 13 is virtually identical to Exhibit 9.

[227] Exhibit 13 is a CB Ross Partner report regarding sales commissions for high rise condos and is dated December 22, 2014. Para. 3(ii) indicates there is no standard for commissions.

[228] Four samples of commission agreements are attached as Appendix A-D. These Appendices can be summarized as follows:

Appendix A – Milborne Real Estate Contract – November 13, 2006

• Commission is 1.25% plus a bonus of 0.6% if 75% of the units are sold in 6 months or a bonus of 0.4% if 75% of the units are sold in 8 months

Appendix B – Baker Real Estate Contract – April 12, 2007

• This is a large condo unit consisting of 473 units

• The agent’s fee is 1.5% payable in 3 installments:

1. 1/3 upon the sale being firm

2. 1/3 upon breaking ground

3. 1/3 upon closing

There was no bonus structure.

Appendix C – Insite Realty Corp. – June 2007 – renewed June 2009

• (Note - In summer of 2010, Phase II at Stonebrook was being sold and in late 2010, people were moving into Stonebrook I.)

• The commission rate was 1.25%

• Per paragraph 14, a bonus rate of 2% was payable if certain listed individuals bought within 2 months.

• Per paragraph 12, sales agents could buy 6 units at a 4% discount

Appendix D – Hunter Milborne Contract – September 2010 – this was just after Phase II was being sold

• Commission was set at 1.25%

• Milborne could buy 15 units at a 5.25% discount

• 1/3 of the commission was payable upon a firm sale with the other 2/3 payable upon successful closing of the APS

[229] Regarding the Exhibit 1, Volume 2, Tab 89, August 2, 2011 email to David from John, John acknowledges the February 26, 2010 approved statement in the company files. The February 26, 2010 statement appears in Exhibit 1, Volume 1, at Tab 14.

[230] This email was sent before the offer to give Darlene one of the condos for her undetermined fees (see August 11, 2011 email at Exhibit 1, Volume 2, Tab 94).

[231] On August 16, 2011, John in Exhibit 1,Volume 2, Tab 96, advises that there is no contract with Darlene and agrees to continue her monthly draws until an eventual agreement is reached.

[232] A year earlier in July 2010, Darlene received a $200,000 cheque for “commission” (see Exhibit 1, Volume 1, Tab 16).

[233] Mr. Dick explained that David told him that Darlene had been waiting some time for her February 26, 2010 payment to be made. Mr. Dick testified that when Darlene’s February 26, 2010 statement came in, David approved it. However, sometime in 2010, it came to John’s attention and John rejected it. The statement, after it came in, went into a file for a while. The $200,000 that was paid in July 2010 was not as a result of the February 26, 2010 statement. It was paid because that amount was well within whatever amount Darlene would eventually get.

[234] Mr. Dick agreed that there was nothing in the record disputing the February 26, 2010 statement until 2011. However, there was also nothing in the record indicating a 2% commission prior to the February 26, 2010 statement. The year 2011 was 5 years after the alleged 2% agreement. All David said in 2006 to Mr. Dick was that Darlene in or about May 2006, before the first cheque was given to her, was that she had been hired.

[235] Mr. Dick never put any commission rate into the budget—it was an issue between the brothers. Mr. Dick assumed it would be 1.5%. Mr. Dick had never seen 2%. No one told him what the percentage would be. In the Exhibit 1, Volume 2, Tab 96, August 16, 2011 email from John, John indicates they have copies of arrangements with Hunter Milborne. Those contracts could not be found. Accordingly, Mr. Dick sought out CB Ross, who are cost estimators and provided the 4 sample contracts from 2006-2010. Mr. Dick did not tell that he wanted 1.5% commission examples. He did tell that he thought 2% was high and he wanted representative samples.

[236] Exhibit 1, Volume 2, Tab 96 also refers to receiving proposals for marketing Phase II from competitive marketing organizations.

[237] Exhibit 14, dated July 19, 2011, is such a proposal from a “long term relationship” individual, Andrew Brethour from PMA Brethour Real Estate Corporation. Mr. Brethour proposes a 1.25% commission rate net of HST plus a bonus plan to be negotiated. Mr. Brethour also proposes a 4% commission for investment brokers. The bank generally does not favour investors as purchases and disqualifies them for loan purposes.

[238] The proposed 1.5% commission rate was never communicated until June 2012.

[239] At Exhibit 1, Volume 3, Tab 137, at p. 694, John, in an email dated June 6, 2012, to Darlene, for the first time communicates a proposed 1.5% commission rate to Darlene.

[240] In Exhibit 1, Volume 2, Tab 89, dated August 3, 2011, David emails John and, at p. 464, indicates that “our contract with Darlene is 2% of the sale price net of HST/GST” and further, Darlene is not required to be licenced. John was not aware that commissions could be paid to unlicensed agents if those agents worked for the developer. David had always taken care of these matters.

[241] Mr. Dick did not know in 2006 what the commission arrangement was. Every invoice that Darlene sent was for 2%.

[242] In Exhibit 1, Volume 3, Tab 110, in November of 2011, John disagrees that 4% could be paid to outside brokers in addition to Darlene’s commission. In Exhibit 1, Volume 3, Tab 106, on October 19, 2011, Darlene had proposed increasing broker commission to 4% from 1% to stimulate sales.

[243] At Exhibit 1, Volume 3, Tab 137, at p. 695, on June 6, 2012, John tells Darlene that she is not an officer of Stonebrook and her title of VP of Marketing and Sales was for public relations purposes.

[244] At Exhibit 1, Volume 3, Tab 144, on June 7, 2012, David tells John that Darlene is an officer and director and attaches the June 10, 2009 resolution that John signed personally as a director. That resolution appointed Darlene as an officer and VP of Marketing and Sales.

[245] In 2011, John was 81. In 2012, John was 82 and suffering from melanoma, which caused his death.

[246] John also denied that Susan Clarke had a contract with Stonebrook as a sales agent and was not an employee of Stonebrook or United Lands (see Exhibit 1, Volume 3, Tab 128, at 649, May 11, 2012 email from John to David Welton). John refused to pay Ms. Clarke any severance pay per David’s request at Exhibit 1, Volume 3, Tab 127 (May 10, 2012 email from David to John). However, Exhibit 1, Volume 1, Tab 11A, clearly includes a contract between Susan Clark and Stonebrook Properties and provides for a 15-day written termination notice.

[247] John also indicates at Exhibit 1, Volume 3, Tab 128, at p. 651 that commissions for the sales agents should be paid by Darlene’s commission and includes the August approval statement listing sales agents’ commissions in Darlene’s August 1, 2011 invoice/statement. At Exhibit 1, Volume 6, Tab 277A, dated December 21, 2014, there are no charges against Darlene Welton for any of Susan Clarke’s commissions.

[248] At Exhibit 1, Volume 2, Tab 114, dated December 2011, David tells John he has many concerns and does not trust John anymore.

[249] At Exhibit 1, Volume 2, Tab 118, John emails David and a variety of others on February 7, 2012, strongly recommending to “your marketing organizations” price reductions for Phase I and Phase II units.

[250] Mr. Dick agrees that “marketing organizations” means Darlene. At Exhibit 1, Volume 2, Tab 119, dated February 4, 2012, at p. 607, John’s lawyer, Jerome Morse, agrees to pay Darlene “on the same remuneration as the previous marketing consultant and current industry practices.”

[251] Mr. Dick agreed that Darlene did not have the resources to do the marketing and the firm Tool Box was retained to do the marketing.

[252] In a memorandum dated June 25, 2012 at Exhibit 1, Volume 3, Tab 142, pages 708-712, sent to John by David, David indicates he has reviewed John’s emails and outlines numerous concerns in the first paragraph.

[253] At p. 710, David outlines that Susan Clarke does have a valid contract, contrary to John’s position and that allegations that Darlene was carrying on activities outside of her sales and marketing duties that sabotaged the company were baseless, unintelligent, false, and malicious.

[254] Mr. Dick indicated that John, from December 2010 onwards, was aware that Darlene was taking on more responsibility. Mr. Dick is not aware when or to what extent Darlene took on more responsibility beyond her sales and marketing duties.

SIDNEY DICK - RE-EXAMINATION

[255] Regarding Exhibit 1, Volume 6, Tab 277A, not too much should be read into it as individuals other than Darlene were put into separate accounts so as to give quick access to their payout totals.

[256] Regarding Exhibit 1, Volume 3, Tab 144 and the attachment at p. 721, the Resolution makes Darlene an officer of the company and not a director. When David mentions Darlene is an officer and director, at p. 719, he is mistaken as Darlene was not a director.

DOLORES GOSINE – EXAMINATION IN-CHIEF

[257] Ms. Gosine worked for the Welton brothers for 29 years. Her role was to take care of the accounting, general ledgers, and generate accounting reports and trial balances. She worked at head office and reported to Sidney Dick and David and John Welton. Colin Pillar and Shelley Arnold also worked at head office. She knew both brothers very well on a business level.

[258] From 2006-2013, John was in his 70s and 80s. During this time, John’s mind did not falter. John asked appropriate questions and knew what the cheques he was signing were about. John loved to hear about and get involved with projects.

[259] Sales was not done by staff. In the past, the company retained Linda Davies and Hunter Milborne to do sales. Ms. Gosine looked for the files for past contracts with those agencies but could only find the Linda Davies file. Revenue Canada only requires files to be kept for 7 years.

[260] On each project, the signing officers were David and John. She has seen David’s signatures many times. David stopped coming into the office in 2010-2011 and as disagreements between the brothers got stronger. David’s files were taken out of the office after office hours. Ms. Gosine would go to David’s Temagami home to get David to sign cheques.

[261] Darlene was hired and David gave directions as to how she was to be paid. The first few cheques were $5,000 in the spring of 2006 with GST/HST amounts added (see Exhibit 1, Volume 6, Tab 277A, at p. 1949). Shortly thereafter, in September 2006, Darlene, at David’s direction, was put on the payroll and paid bi-monthly (see Exhibit 1, Volume 6, Tab 277A, at p. 1946). This was done so that Darlene would be eligible for health coverage.

[262] There were some lump sum payments. For example, Exhibit 4 shows a $20,000 cheque payment made on June 12, 2007 (see also Exhibit 1, Volume 6, Tab 277A, at p. 1949).

[263] David would normally approve statements or invoices.

[264] Regarding Exhibit 1, Volume 1, Tab 14, the February 26, 2010 statement/account from Darlene Welton regarding Stonebrook Phase I, Ms. Gosine’s stamp is at p. 138. She did not fill any details and the stamp is not complete. There is no date stamp possibly because it did not come by regular mail. At p. 138, David’s signature appears and “OK” is written above David’s signature.

[265] Regarding Exhibit 1, Volume 2, Tab 87, at p. 457, there is another statement/account from Darlene Welton regarding Stonebrook Phase I, dated August 1, 2011. There is a received date stamp of August 4, 2011. This is done by Shelley Arnold. David has signed the statement and “OK” is written above his signature. The date, August 4, 2011, is handwritten beside David’s signature. This is Rosemary Birk’s writing, not Ms. Gosine’s. Ms. Gosine was not involved in the preparation of the statement but may have provided the commission amounts at p. 457.

[266] At Exhibit 1, Volume 2, Tab 91, Darlene sends an email to Ms. Gosine dated August 3, 2011, asking for a recalculation of salaries paid for Stonebrook Phase I only. Darlene also requests Ms. Gosine to remove all salaries except sales staff (Susan Clarke and Catherine Adams), receptionists, sales office, part-time help, and opening event help. The sales program for Phase II was launched on June 14, 2010, and Darlene asks that all salaries paid thereafter be paid regarding Phase II.

[267] At Exhibit 1, Volume 2, Tab 93, at p. 478, Ms. Gosine replies on August 4, 2011, and prepares a list of the Tab 91 requested salaries. Phase I salaries are listed under the column “As at June 30, 2010” and Phase II salaries are listed under “July 1, 2010 to July 31, 2011”.

[268] Jenny Cipriano is the receptionist at the sales office and Catherine Adams and Susan Clarke are sales staff.

[269] At Exhibit 1, Volume 6, Tab 279, at p. 1968, in the costs summary dated July 12, 2017, at 05800, home sales commissions are listed as $262,762.

[270] At Exhibit 1, Volume 3, Tab 149, Mr. Morse’s letter, dated July 26, 2012, at p. 741, home commission sales for Phase I are listed as $261, 268. This lower amount has had Christmas gifts deducted from the $262,762 total at Exhibit 1, Volume 6, Tab 279.

[271] At Exhibit 1, Volume 6, Tab 277B, Ms. Gosine recorded on October 2018 all of the sales on closing for Phase I.

[272] Insider sales are marked in pink at pp. 1955-59 of Tab 277B.

[273] Ms. Gosine tallied all the insider sales and prepared Exhibit 15 which shows that insider sales totalled $3,282,670.75.

[274] The total of all sales for Phase I, after deducting insider sales is $67,635,404.30.

[275] Exhibit 1, Volume 6, Tab 277 refers to benefits paid to Darlene Welton for Phase II and the benefit total is $6,040.41.

DOLORES GOSINE - CROSS-EXAMINATION

[276] The company is only required to keep files for CRA purposes for 7 years. After 7 years, the files get “tossed”.

[277] The only file Ms. Gosine could find regarding prior sales contracts is the Linda Davies contract that appears at Exhibit 1, Volume 1, Tab 6 and is dated March 26, 1998.

[278] At Exhibit 1, Volume 2, Tab 96, John in his email, dated August 16, 2011, states that he has copies of sales arrangements regarding Chestnut Place and Oakville projects involving Hunter Milborne. Ms. Gosine looked for these contracts in 2018-2019 but could not find them.

[279] Darlene was the first VP of Marketing and Sales. She was added to the payroll in September 2006 – see, Exhibit 1, Volume 6, Tab 277A, at p. 1946.

[280] David generally signed all the cheques but John could as well if David was away. This changed in late 2011, early 2012. Both brothers were required to sign cheques and Ms. Gosine shuttled back and forth to get the brothers to sign cheques.

[281] As can be seen from Exhibit 1, Volume 2, Tab 97, August 16, 2011, there was a CRA ruling that Darlene was an employee but was not insurable for Employment Insurance (“EI”). The company got a cheque back for previous remittances. Exhibit 1, Volume 6, Tab 277A shows deductions for EI. Regarding other entries such as Federal Express, Visa, petty cash, Grants International, Ms. Gosine does not recall what those were for. She would have to look at invoices.

[282] John’s mind did not falter. John stopped coming into the office in early 2013 and went to hospice care.

[283] During the Stonebrook project, John was in his 70s and 80s. He was still driving but was frailer after knee surgery. The office was moved to the ground floor in 2010.

DOLORES GOSINE - RE-EXAMINATION

[284] David still had to approve the references to Grants International and others in Exhibit 277A. Invoices were attached to the cheques.

SHELLEY ARNOLD – EXAMINATION IN-CHIEF

[285] From 1991-1994 and 2001-2013, Ms. Arnold worked for John as a secretary/assistant.

[286] John would read or write things and she would type it up as a draft. John would check it, make changes and then the typed document was mailed or emailed out.

[287] She knew John well—he was very intelligent. She was the only one who could read his writing. John was frugal and could be difficult. He let her know her errors but would then forget about it.

[288] From the period 2006-2013, John’s mind was sharp and just fine. She never noticed any decline. From 2006-2013, he was in his late 70s and 80s but went into the office every day. Eventually John worked out of his home and Ms. Gosine and she worked with John there.

[289] After the 2010 move downstairs, David was not in the office very much and his files were removed shortly thereafter.

SHELLEY ARNOLD - CROSS-EXAMINATION

[290] John was in the office every day from 2006-2013 and came in around 9:00-10:00 a.m. He took naps in the afternoons.

[291] The Exhibit 1,Volume 1, Tab 27, December 23, 2010 clarification document bears Ms. Arnold’s commission stamp and signature. This agreement was signed on December 24, 2010, and requires both parties to jointly sign major contracts.

[292] Regarding Exhibit 1, Volume 1, Tab 35, at pp. 251-52, February 21, 2011 email, she typed this memorandum from John’s writing. John checked and approved it. At p. 252, John indicates that David reported that Darlene’s contract was not available as the scope was to be similar to previous marketing contracts but additional duties have been added. Darlene also was to report to David and John with pertinent information.

[293] Regarding disputes between Susan Clarke’s contract and John’s claims that no officer signed it as expressed at Exhibit 1, Volume 3, Tab 144, at pp. 719-20, June 7, 2012, John’s mind was fine and she typed this from John’s handwritten notes. Exhibit 1, Volume 1, Tab 11A shows that Darlene signed the contract with Susan Clarke on November 22, 2011.

[294] At this time, Darlene was an officer with the company and John signed the resolution (see Exhibit 1, Volume 3, Tab 144, at p. 721).

[295] Ms. Arnold was unsure of John’s involvement in the technical audit.

COLIN PILLAR – EXAMINATION IN-CHIEF

[296] Colin Pillar has a degree in Urban Planning and Economics. He has worked for the Welton brothers from 1982 until their deaths in 2013. He still works for John’s sons.

[297] Colin is the VP of Development and Construction. He has supervised construction of 25 high-rise buildings leading up to the Stonebrook project. During these projects, Mr. Pillar reported to John and David.

[298] David and/or John were at the head office most days. It was a fairly informal office. Prior to Stonebrook, the main titles were John as President and David as Vice-President. During the Chestnut project, David and John suggested that Mr. Pillar add VP of Development and Construction to his business card.

[299] Stonebrook’s structure was different from the other projects. The main differences were: (1) different architects; and (2) Darlene was involved with David on the marketing side.

[300] There were a number of issues that caused delays in the Stonebrook construction including: (1) not having a full building permit; (2) a shoring problem involving fortifying the excavation; (3) delays in city permits; (4) slowing of the real estate market; and 4) construction delays—for example, the excavation contractor underestimated how tough the excavation was and he put a lien on the project.

[301] All these delays and difficulties produced very tight timelines in constructing the units and the timeline was too tight to do systematic construction and they were always scrambling.

[302] Further, Darlene gradually got involved in the construction and made decisions about model units on floors. These decisions were not made at Mr. Pillar’s request. This in turn caused confusion and conflict in the construction crew. Friction developed between Mr. Pillar and David and between Mr. Pillar and Darlene.

[303] In past projects, Mr. Pillar followed through with the Tarion Warranty process. With Stonebrook, he was not involved.

[304] Mr. Pillar was removed from the Stonebrook project immediately after registration.

[305] Mr. Pillar carried on with the CREG project. During the Tarion process, John would ask for Mr. Pillar’s advice on Stonebrook and they would visit Stonebrook and discuss issues.

[306] At Stonebrook, Chris Owen was at the site full time and had full time staff to deal with Tarion issues. John was concerned about the number of people involved and the costs that were accruing.

[307] In May 2013, John passed away. John’s sons asked for and received Mr. Pillar’s advice on the Tarion process.

[308] John had cancer and received radiation treatment. John handled it well despite being in pain. Mentally, John was sharp until the end. Despite failing physically, John met with Mr. Pillar regularly. John would discuss issues at hand and contributed in setting up the estate so that it could be managed well.

[309] Barry Lyons was consulted on pre-market studies and the pricing of units. They were involved in the Chestnut Place, Oakridge Heights, and Stonebrook projects.

COLIN PILLAR - CROSS-EXAMINATION

[310] David oversaw the construction of Stonebrook I. John looked after the financial aspects. Mr. Pillar was in charge of the construction until the building of Phase I was registered in November 2010. Phase I was substantially completed in February 2010.

[311] In 2010, Mr. Pillar earned $20,800 per month or $254,000 per year.

[312] He was supposed to get a $300,000 bonus for Stonebrook as per the usual arrangement. Mr. Pillar received half for CREG and put in $30,000 of his own money to get an $180,000 equity interest in Johwel projects.

[313] Per Exhibit 12, Item 6, Mr. Pillar did not dispute that the $150,000 he received was attributed to the Stonebrook project.

[314] David requested Darlene to get more involved in Stonebrook. Mr. Pillar testified he does not know why.

[315] Mr. Pillar was referred to Exhibit 1, Volume 1, Tab 17, a July 12, 2010 email from David to Colin Pillar. In that email David tells Colin Pillar that he is disappointed with the fact that the project is weeks behind schedule. David blames Mr. Pillar for many of the problems and explains that due to the chaos, David has asked Darlene to become more involved with staff issues and advised that Darlene was to become involved with the chaos and homeowner complaints in February 2010.

[316] David blames Mr. Pillar for strained relations with Chris Own, his key assistant. Chris Owen took a medical leave and her doctor ordered Chris not to communicate with Mr. Pillar upon her return.

[317] Mr. Pillar explained that the scheduling was not adequate and there was not enough time to complete construction as planned.

[318] The email also indicates that Darlene had to step in to take over files in the construction trailer due to the fact that the paperwork in the trailer was in a mess. Darlene became involved with the PDI process—pre-delivery process which involves: (1) arranging a date with homeowners to inspect their units for deficiencies; and (2) organize the tradespeople to come in and repair the deficiencies if and as required.

[319] This email restricts Mr. Pillar’s involvement in finishing the suites and indicates Mr. Pillar is to continue to be responsible for finishing common areas, recreation and pool areas, landscape and outside work, and administrative tasks in finalizing the project.

[320] The finishing of suites, the PDI process, and the 30 day Tarion forms are construction matters. Prior to Darlene taking over, these were duties that Mr. Pillar would normally perform.

[321] At Exhibit 1, Volume 1, Tab 18 is a memorandum from Colin Pillar to David dated July 20, 2010, which is a response to David’s Tab 17 memorandum. At p. 153, Mr. Pillar indicates that he does not resent Darlene. Mr. Pillar refers to a June 25, 2010 meeting that Darlene does not share Colin’s opinion that frank discussion had improved their working relationship. Mr. Pillar admits to finding it difficult to be held responsible without full control. Mr. Pillar indicates a desire for better communication to get back on track.

[322] However, pursuant to the Exhibit 1, Volume 1, Tab 15 email from David Welton dated November 11, 2010, David indicates that as of November 11, 2010, Colin Pillar will no longer be involved in the Stonebrook project and would be moved to another project. The email indicates, “Assuming Colin’s responsibilities will be Michael Lemon assisted by Kevin Belem”. Contact information for these two individuals is provided.

[323] Mr. Pillar testified that he was involved in Stonebrook after November 11, 2010, only when requested to do so by John.

[324] In November 2010, the main problems with Stonebrook related to (1) waterproofing; (2) soundproofing; and (3) parking and paving.

[325] Mr. Pillar testified that these problems were no longer his responsibility.

[326] However, on April 27, 2011 at Exhibit 1, Volume 1, Tab 54, David sends an email to John and Colin Pillar. David indicates that the November 11, 2010 notice should have stated that Colin was at another United Lands site. David indicates that Darlene worded the notice and “she did so without malice.” David also notes, at the Exhibit 1, Volume 1, Tab 17 memorandum dated July 12, 2010, that Colin “in hindsight, that this Stonebrook project together with the Peel opportunity has been a heavy load for you”. David indicates that if done again, Colin would have more qualified assistance that he was experiencing with Mike.

[327] David indicates the notice did not negate Colin Pillar from his common element responsibilities to Stonebrook and attaches at Exhibit 1, Volume 1, Tab 55 a memorandum, dated April 27, 2011, listing numerous items of outside work initiated by Colin that he should complete. The April 27, 2011, Exhibit 1, Volume 1, Tab 54 memorandum concludes that Chris Owen had been instructed to avoid all contact with Colin Pillar. Colin is to communicate with her through Darlene, Rosemary Birk, or Nadine Dos Santos.

[328] The Tab 54, April 27, 2011 memorandum also indicates, at p. 316, that grave mistakes have been made at Stonebrook in the areas of soundproofing, waterproofing, and parking requirements and that Colin must rectify these construction items and is accountable for them.

[329] Mr. Pillar testified that after receiving the November 2010 notice, he just provided advice as requested by John and was not involved at the Stonebrook project on a day-to-day basis. He was not involved unless John asked.

[330] At John’s request, Colin got Pylon Paving to come in to do the paving. At John’s request, Colin recommended Waterproof Master as a solution to waterproofing. John recommended Colin review the soundproofing situation and Colin made recommendations.

[331] Mr. Pillar was referred to Exhibit 1, Volume 2, Tabs 59, 60, and 61 in May 2011, which deal with communications involving John, David, Darlene, and Colin regarding the shortage of parking spots with Phase I and ultimately Phase II.

[332] Colin testified that all the parking spots designed in the original drawing were built. Some parking spots for Phase II were sold for Phase I units.

[333] David had been involved in the process of reducing the usual plan of 1.7 parking spots per unit as in the past, there were parking spots not sold and were left over. There was no room to build additional parking spots on the site. This would require excavating a further level into hard rock and below the water table, and the cost would be prohibitive.

[334] Regarding the Exhibit 1, Volume 2, Tab 120 email dated February 26, 2012, and Exhibit 1, Volume 2, Tab 114 email dated December 2, 2011, from John to David regarding parking concerns, Mr. Pillar testified that all the parking spots that were in the parking design were built. There was no shortage or surplus, but Colin was being accused of not building the parking spots that he was supposed to build.

[335] KPMG was retained to do an audit/investigation into alleged contract irregularities regarding contracts Colin Pillar signed. When the report was completed, David wanted further investigation but John indicated it was adequate and wanted to shut any further investigations down. This was a major bone of contention between the brothers but Colin was not aware of that.

[336] As can be seen from the following Exhibit 1 Volumes, Volume 2, Tab 58, May 2, 2011 email from Colin to John; Volume 2, Tab 68 June 23, 2011 email from Colin to David with John copied unto; Volume 2, Tab 63, May 24, 2011 email from Darlene to John and Colin; Volume 2, Tab 64, May 26, 2011 emails between Colin and Pylon Paving; Volume 2, Tab 71, July 7, 2011 email from Colin to David; Volume 2, Tab 75, July 11, 2011 email from Colin to David; and Volume 2, Tab 83, July 30, 2011 email to Colin from Dave with John copied unto, Colin was involved in considerable work relating to soundproofing, waterproofing, paving, window replacement, and parking issues regarding Stonebrook Phase I.

[337] Colin Pillar testified he did this work at John’s request. In many instances, he made recommendations and arranged for quotes, i.e. from Waterproof Masters. He was not there on a day-to-day basis.

[338] Details of the waterproofing problems are outlined at Exhibit 1, Volume 1, Tab 28, in a December 2010 report by Construction Control who was retained by the developer as part of the Tarion deficiency process. At pp. 218 and 222 water problems are outlined.

[339] Exhibit 1, Volume 2, Tab 66, dated June 2, 2011, is a quote obtained by Colin to deal with waterproofing problems. Exhibit 1, Volume 6, Tab 227 is a July 21, 2011 email from Colin to David. Colin refers to weekly meetings.

[340] Colin was not involved with weekly meetings, but was dealing with, in this email, water problems and was recommending that Waterproof Masters be retained. John and David agreed with this recommendation.

[341] Colin’s replacement, Michael, was not experienced in local construction and was not doing much.

[342] At Exhibit 1, Volume 2, Tab 80, there is an email dated July 25, 2011, from Chris Owen to John. Attached to the email is a video showing water streaming into the P1 parking area.

[343] Mr. Pillar testified that there was a mechanical failure of the large domestic water pipe entering the building. The pipe was repaired. (It is to be noted that at the Exhibit 1, Volume 2, Tab 81, July 26, 2011 email from Darlene to David, Darlene states that “Colin seems to be in control of the water leakage situation.”)

[344] Water problems persisted into 2012-2013. Waterproof Master did injection repairs which solved some problems but not others. Waterproofing was problematic as the south wall was not permanent and not waterproofed. Outside water repairs required an encroachment agreement with the City.

[345] After John died, Colin advised John’s sons, including providing input on waterproofing issues he was aware of.

[346] In Exhibit 1, Volume 6, Tab 230, at p. 1717, there is a June 28, 2013 email from Darlene Welton to John’s sons asking whether the sons have sought out additional proposals as a permanent solution to the waterproof “issues.” The email indicates Waterproof Masters was hired by Colin Pillar.

[347] At Exhibit 1, Volume 6, Tab 230, July 2, 2013, John Z. Welton replies, at p. 1716, that Colin Pillar did not hire Waterproof Masters or oversees their work. John Z. Welton states that Colin has not been involved in the project since it was registered in late 2010.

[348] Colin Pillar testified he recommended Waterproof Masters. Colin was involved with the project not as a supervisor but was involved as a resource and, as requested, he helped out on the project.

[349] In 2012, Colin Pillar’s salary was reduced voluntarily from $250,000 to $180,000. His $180,000 investment in Johwel is an ongoing investment.

DAN WELTON – EXAMINATION IN-CHIEF

[350] Dan Welton (Dan) John W. Welton’s son and the brother of John Z. Welton (John Z.).

[351] John W. Welton passed away in May 2013 from malignant melanoma.

[352] Dan worked for Universal Lands for about 10 years, including working on 5-6 high rises. In the mid-1990s, he opened his own construction business and, from then to the present, builds town homes.

[353] During the Stonebrook project period from 2006-2013, John was an active investor and worked at the office every day. John was very active and competent until his death in May 2013. The melanoma had spread to John’s brain in January-March 2013. However, John worked out and played tennis at the Ontario Racquet Club and there were no issues regarding dementia.

[354] Following John’s death, Darlene contacted Dan and his brother John Z. as they were executors of the will, directors of Johwel, and each were 1/3 owners of Johwel.

[355] Darlene wanted to meet to discuss a major water leak problem at Stonebrook that was a potential multimillion dollar problem. She was asking the brothers to approve $100,000 to $200,000 in remedial waterproofing work.

[356] At the meeting (see Minutes at Exhibit 1, Volume 6, Tab 219, May 31, 2013) that John Z. and Dan attended, Darlene brought a tradesperson and a handyman to discuss the proposed $100,000 to $200,000 proposal. Dan was shocked that there was no report from an engineer and/or an expert consultant. Dan consulted Colin Pillar who dismissed Darlene’s opinion.

[357] As can be seen from the Exhibit 1, Volume 6, Tab 229 email dated June 27, 2013 at pp. 1712-13 from John Z. Welton to Darlene (and Dan cc’d David Welton amongst others), Dan and John Z. Welton were concerned about the $500,000 spent on Stonebrook I after condo registration on staff and overhead alone. Dan testified they had no confidence in Darlene and the brothers offered to take over the resolution and completion of the Stonebrook Phase I Tarion and Condo Board issues. Darlene was instructed not to enter into any contracts regarding Stonebrook Phase I without their consent, especially in regard to waterproofing issues.

[358] Darlene, at the Exhibit 1, Volume 6, Tab 219, May 31 meeting or at the June 2013 correspondence, never indicated she was owed unpaid wages. John had taken over the CREG project and David had taken over the Stonebrook project. David never mentioned any unpaid wage issues. During the settlement negotiation between the Condo Board and the developer, there was no issue of unpaid wages to Darlene. Dan only learned of the unpaid wage issue when served with the court case papers.

DAN WELTON - CROSS-EXAMINATION

[359] John worked in the office in the mornings and took naps in the afternoon. Dan never reviewed his father’s correspondences.

[360] At the end, Dan was aware that his father was in charge of the CREG project and David was in charge of the Stonebrook project.

[361] It was not surprising for Stonebrook to have ongoing water problems.

[362] Regarding the minutes of the Exhibit 1, Volume 6, Tab 219 meeting on May 31, 2013, Darlene confirmed that an engineer had not been consulted on the waterproof problems. The post meeting note, at p. 1666, indicates that Darlene agreed that an engineer’s report is required.

[363] Dan testified that no engineer report was required as the matter was settled over a 2-3 month period.

[364] David died in September 2013.

[365] As can be seen from the Exhibit 1, Volume 6, Tab 251, John Z. Welton email to a lawyer Tim Pinos, Colin Pillar and Sidney Dick, an offer of settlement came from out of the blue.

[366] At Exhibit 1, Volume 5, Tab 211, p. 1611, a May 14, 2013 email from Darlene to John Z. indicated that she wanted water leaks addressed in the most cost-effective manner.

[367] At Exhibit 1, Volume 6, Tab 230, a June 28, 2013 email from Darlene to John Z. and Dan, Darlene indicated that at the prior meeting (on May 31, 2013) it was suggested that Dan and John Z. seek out additional proposals. That suggestion does not appear in the Exhibit 1, Volume 6, Tab 219, May 31, 2013 minutes.

[368] Dan testified he had experience in this field and spraying the back side of the wall slows the water leak but does not solve it. His involvement was to go to the May 31 meeting and suggest an engineer’s report. Further, he and his brother offered to take over the Stonebrook Phase I Tarion and Condo Board issues. Darlene did not accept that offer.

[369] The meeting suggested by David and Darlene on July 4, 2013 never took place.

[370] Dan did not attend Tarion meetings.

[371] Dan believed David took over the Tarion work. The Tarion work involves reviewing the technical audit items listed by the Condo Board. The list can go to hundreds of items. A person has to review it and give opinions on the suggested items and there is back and forth with the Condo Board.

[372] Dan was not aware that Darlene was on the payroll. He was aware that David and Darlene had Colin investigated and this was a source of dispute between the brothers.

[373] Dan did not know what Darlene was doing in February 2010 at Stonebrook. He was aware that David and John got a salary and split profits 50/50 on their projects.

[374] Colin Pillar did not think that the waterproofing was a multimillion dollar problem.

[375] Dan does not dispute that Darlene added value to the Tarion process as she assisted in the settlement with the Condo by making an initial $15,000 offer and then agreeing with them on a $50,000 settlement and following through on the paperwork required afterward (see October 18, 2013 email from Dan Welton to John Z. Welton and Colin Pillar at Exhibit 1, Volume 6, Tab 251A at p. 1842; and see October 19, 2013 emails between Darlene and Dan and John Z. Welton at Exhibit 1, Volume 6, Tab 251B, at p. 1846; November 15, 2013 emails between Darlene and Dan at Exhibit 1, Volume 6, Tab 261; and also see November 19 and 22, 2013 emails between Darlene and Dan at Exhibit 1, Volume 6, Tab 264).

[376] Overhead and expenses for Phase II would have occurred from 2010 until the Phase II termination in 2012. The $500,000 figure for Phase I overhead came from either Sidney Dick or Dolores Gosine.

[377] Neither Dan nor John Z. Welton received any monies from their involvement in 2013.

DAN WELTON – RE-EXAMINATION

[378] Dan’s involvement in waterproofing issues occurred from May 2013 until it was settled. Nothing was done regarding obtaining a consultant. Things dragged as David died in September 2013 and the Tarion process took over.

DEFENDANT EXPERT OPINION EVIDENCE

[379] On consent, the defendant filed and relied upon Exhibit 9, the CB Ross Partners report, authored by Charlie Ross, dated August 16, 2018, as expert opinion evidence regarding:

1. Quantity Surveying and project cost monitoring for high rise condominium projects; and

2. Charlie Ross’ review of line items and sales commission agreements, samples of which are provided in Exhibit 9 as Appendices A-D.

[380] This report was reviewed by the plaintiff’s expert Jasmine Cracknell-Young (see summary of her evidence). The plaintiff waived her right to cross-examine on the Exhibit 9 CB Ross report.

READ-IN BRIEF OF THE DEFENDANTS

[381] The defendant filed its read-in brief. The brief is divided into two tabs:

Tab 1 relates to Action #1 regarding Darlene Welton’s claim for commission; and

Tab 2 relates to Action #2 regarding Darlene Welton’s claim for Tarion work.

TAB 1 – “Commissions” Claim

TAB 1A

[382] Darlene testifies that her husband was 100% mentally competent, but in the last year, he was too physically challenged to attend the construction site. The staff at the office were not communicating with David and it was a hostile environment.

[383] Darlene referred to him for everything and David was exceptionally brilliant to the very end.

TAB 2 – “Tarion” Claim

TAB 2A

[384] Darlene always deferred important decisions to David. Chris Owen addressed everything to David and Darlene together or to David or to her. It was all the same to them.

[385] Regarding a list of day-to-day work items attached to a March 7, 2013 email from Chris Owen to Darlene Welton, Darlene testified that David wanted a written record to prove to John the volume of work Chris was doing regarding the technical audit. Even though the email refers to a list that Darlene is looking for, the direction to create the document came from David.

[386] On January 7, 2013, Darlene indicates to Chris the format was exactly what “we” needed. The “we” refers to David and Darlene.

[387] Regarding an April 22, 2013 email from Chris Owen to Darlene, there is a lengthy attachment with an update of Tarion work done from January 7, 2013 to April 22, 2013 in the format of previous reports. Chris was informing David of what was going on.

[388] Darlene would have given David a copy of what Chris gave her personally or what Chris emailed to Darlene. Chris would also email David. Anything to do with Stonebrook was given to David on a daily basis.

TAB 2B

[389] Darlene cannot recall rendering an invoice for Tarion work; it is suggested that Darlene never rendered any invoice on Tarion related work.

[390] Darlene explained that she never did that because she was very busy; i.e. busy with the technical audits, the brothers dying, and with issues at head office.

[391] There was also the issue of non-payment of the commissions. Darlene testified that she had no reason to believe that they would voluntarily pay her for her two years of work on the technical audit without legal involvement.

[392] The brothers knew she was doing the work and the subject of her compensation was never broached with the brothers or Sidney Dick. Darlene was an employee and not a consultant. Darlene was asked but did not provide an example of where a consultant waits until the end of a project to get paid and discuss compensation. Her response was that because she was family, it was less of an issue or a worry. Darlene testified, “I never worried about that.”

[393] At p. 55 of Darlene’s discovery transcript, Darlene testified that regarding Stonebrook, Colin would have been paid at the end of Stonebrook for his participation. Darlene should have been paid at the end of December 2010, when the last homeowner paid for their condominium, for all her work from 2005 to December 2010. That would have typically been her payout. It was common sense to wait until the technical audit was signed off and submit her invoice for payment. Since she had not been paid for the first one, Darlene testified at p. 56 that, “I doubt if it ever entered my mind to be worried about the second one”.

ANALYSIS OF EVIDENCE

[394] I have analyzed the voluminous documentary material and the trial evidence and make the following finding of facts regarding five distinct areas:

1. Credibility/reliability of Darlene Welton and the remaining trial witnesses;

2. The alleged agreement between Darlene Welton, David Welton, and John Welton;

3. Industry standards regarding commissions rates and sales compensation;

4. Stonebrook Phase II audits; and

5. Technical audit compensation.

1. CREDIBILITY/RELIABILITY OF DARLENE WELTON

[395] Darlene Welton’s evidence revealed the following inconsistencies and/or contradictions by other credible evidence:

(a) Inconsistency and/or Contradiction (1):

[396] Darlene’s statement/invoice at Exhibit 1, Volume 1, Tab 14, at p. 138, dated February 26, 2010, and Darlene’s statement/invoice dated August 1, 2011, at Volume 2, Tab 87, at p. 457 have two signatures. Darlene testified that David’s signature appears there.

[397] Darlene testified that the other signature is Dolores Gosine but she is not 100 percent certain. When it was suggested in cross-examination the other signatures says “OK,” Darlene is not certain. In the Exhibit 5 undertaking chart, at point 4, Darlene indicates the other signature is Dolores Gosine. Her position in the past was that Dolores Gosine was signing on John’s behalf. At trial, Dolores is not sure if it is Dolores Gosine’s signature. Dolores Gosine’s testimony, supported by Rosemary Birk, is that Dolores did not sign these documents. These documents were signed by David with “OK” written above. Both Dolores Gosine and Rosemary Birk were intimately familiar with David’s writing and Rosemary Birk testified she saw David sign Tab 87 with “OK” and David’s signature. I accept Ms. Gosine and Ms. Birk’s evidence regarding the signatures on these two statements/invoices as being David’s signature with David writing “OK” over his signature.

(b) Inconsistency and/or Contradiction (2):

[398] Darlene testified that by the summer of 2011, John was obviously suffering dementia. In cross-examination, Darlene was unsure but was “guessing” it started to arise in 2011. There was no medical evidence tendered to support Darlene’s “diagnosis” of obvious dementia. All of the defendant’s witnesses—Sidney Dick, Colin Pillar, Dolores Gosine, Shelly Arnold, and John’s son, Dan Welton testified that John was mentally competent to the end. Shelley Arnold testified John’s mind was sharp but John could be difficult.

[399] The documentary record generally supports the defendants’ witness’ opinion of John’s mental state. John, as pointed out by the plaintiff, made, in his emails, assertions that were incorrect, i.e. regarding the employment status and authority of Darlene Welton and Susan Clarke. I attribute these errors to John being “difficult” as testified to by Shelley Arnold as opposed to John having a defective mental state. See, for example, John’s email dated May 22, 2012, at Volume 3, Tab 131, at p. 662 where John admits his mistake regarding Susan Clarke and provides a coherent email addressing in detail the commission “agreement” details regarding Darlene. This email is composed almost one year after Darlene’s testimonial assertion of John having dementia in the summer of 2011. This email also refers to other relatively complex matters in a clear and concise manner.

[400] Further in the Exhibit 5 response to undertakings for a discovery of Darlene, at point 3, when asked when “John Welton revealed he was suffering from dementia,” Darlene’s answer was, “see May 3, 2010 email exchange between Ms. Welton and John Welton at Tab 1”.

(c) Inconsistency and/or Contradiction (3):

[401] As previously summarized, Darlene was cross-examined extensively on evidence she gave at the discovery regarding her duties at Hunter Milborne. Her trial evidence was contradicted numerous times by her discovery evidence provided at pp. 12-17.

[402] Darlene explained that the reasons for all these inconsistencies was that at the discovery she was talking about her involvement with United Lands. Her counsel referred me to further evidence provided by Darlene on this point at the discovery at pp. 45-46.

[403] I, however, conclude that Darlene was told explicitly three times in the discovery at pages 12, 15, and 17 that she was being asked about her duties at Hunter Milborne. I do not accept Darlene’s explanation regarding her contradictions between her trial evidence and discovery evidence relating to her Hunter Milborne duties.

(d) Inconsistency and/or Contradiction (4):

[404] Darlene testified at trial that she did not make any corrections to the discovery transcript. Exhibit 2 was entered, which indicated that Darlene, through her counsel, made nine corrections to her transcript starting at page 41 going forward.

(e) Inconsistency and/or Contradiction (5):

[405] As previously summarized, Darlene’s testimony at trial regarding the first February 2010 invoice differed from the evidence she gave at the discovery. Particularly significant is Darlene’s evidence at trial that David was not involved in the invoice whereas at the discovery she testified it was a joint decision made with David. Rosemary Birk testified she prepared this statement/ invoice. Rosemary prepared all the statements at Exhibit 1, Volume 2, Tabs 77 and 87 for David at David’s instruction.

(f) Inconsistency and/or Contradiction (6):

[406] Darlene’s position at trial is that 2% agreement should not factor in what was paid to other sales representatives. Darlene testified that those amounts were irrelevant. However, Exhibit 1, Volume 2, Tab 87, (August 1, 2011), Tab 91 (August 3, 2011), and Tab 93 (August 4, 2011) involves document and emails where Darlene asks for and receives a breakdown of what commissions relates to Phase I and Phase II. Darlene denied the suggestion that these amounts should factor into her commission billing. Darlene had no explanation as to why the Tab 87 invoice/statement did in fact make adjustments for Darlene Gosine’s breakdown of employee commission/expenses as outlined in Tab 93. Darlene testified in-chief she did not review the Tab 87 statement/invoice—it needed to be corrected. Darlene testified that no other invoices were sent between August 4, 2011 (Exhibit 1, Volume 2, Tab 87 invoice, at p. 457) and the next statement of June 4, 2012 (Exhibit 1, Volume 2, Tab 77A invoice). The June 4, 2012 invoice reverts back to the previous statement/invoices with a commission of 2% of total sales excluding insider sales and makes no provision for any of the adjustments outlined in the August 1, 2011 statement/invoice at Exhibit 1, Volume 2, Tab 87, at p. 457.

(g) Inconsistency and/or Contradiction (7):

[407] At Exhibit 1, Volume 1, Tab 35, at p. 252, on February 21, 2011, John refers to Darlene’s marketing contract. John states that David reported that Darlene’s contract was not available as the scope was similar to the previous marketing contract but with additional duties. Darlene was aware of this email but she never wrote John to remind John of their three-way meeting. Darlene agreed that there was nothing in the written record from David or her reminding John of their three-way meeting.

[408] In Exhibit 1, Volume 3, Tab 131, at, p. 662, on May 22, 2012, John writes to David and indicates that John distinctly remembers David telling John that Darlene’s remuneration would be under the same basis as previous marketing consultants such as Hunter Milborne, Linda Davies, and Paul Kennedy.

(h) Inconsistency and/or Contradiction (8):

[409] Regarding the three-way meeting, Darlene testified at trial both in-chief and in cross-examination that it was David who suggested the 2% commission rate. As previously summarized, at the discovery at pp. 58-60, Darlene gave a different answer and suggested at first it was John who suggested the amount and David agreed to it, but it could have been David’s suggestion and John agreed. Later Darlene indicated at the discovery, “I believe it was John who suggested 2 per cent.”

[410] After being read this portion of the discovery, Darlene testified that David and John had a discussion at the three-way meeting and it was John who was comfortable with 2%.

(i) Inconsistency and/or Contradiction (9):

[411] Darlene’s remuneration chart dated June 18, 2012, is attached to the Exhibit 1, Volume 3, Tab 148, July 16, 2012, demand letter from lawyer Robert Whitmore at p. 737. This is the same date as the June 18, 2012 letter signed by David at Exhibit 1, Volume 3, Tab 138, wherein David indicates what the agreement between the parties is. Darlene took this letter to her lawyer. Darlene read the letter and agreed with what was in it. The letter was written by David who was a brilliant man and had all of his faculties. Darlene saw the letter and had no issue with its contents. Darlene testified at trial regarding the Exhibit 1, Volume 3, Tab 138 letter, “It was what was agreed upon.” The letter makes no reference to John or any agreement involving John or any three-way meeting. The letter refers to a verbal agreement “Between you and I”, i.e. between David and Darlene. Darlene did not disagree that the first time the $220,000 amount ever shows up was in that June 18, 2012 letter. John six days earlier had told her to seek counsel. She prepared a chart and made $220,000 per annum part of the alleged agreement. Prior to June 18, 2012, there are no documents, written records, or invoices reflecting that Darlene should be paid $220,000 per year. Darlene agreed that her draw of $5,000 per month was nowhere near $220,000 per year.

(j) Inconsistency and/or Contradiction (10):

[412] At trial, Darlene testified her base salary at Hunter Milborne was $175,000. When it was suggested that her base salary was $90,000 with bonuses raising it to $150,000, Darlene testified that it was more. She testified that in her last year at Hunter Milborne in 2004-2005, she made over $200,000. Darlene agreed that in her discovery she testified that her base salary was $90,000 with bonuses raising her salary to $150,000 per year. At trial, Darlene continued to testify she made more than $150,000 per year; she guessed that she made over $200,000.

CONCLUSION

[413] As can be seen from the evidence summarized above, Darlene’s evidence presented numerous inconsistencies. Further, as outlined above, she was also contradicted by her discovery evidence, filed exhibits, undertaking answers, and the evidence of other witnesses.

[414] Accordingly, I find that Darlene’s testimony was neither credible nor reliable. I reject her evidence, particularly her evidence regarding the alleged three-way agreement in 2006. I reject her evidence that John agreed to pay a 2% commission and/or $220,000 per year.

[415] Regarding the remainder of the plaintiff’s witnesses and the defendants’ witnesses, I find them to be credible as their evidence was not contradicted in any material way. Further, their evidence was by and large supported by the documentary record.

2. ALLEGED AGREEMENT BETWEEN DARLENE WELTON, DAVID WELTON AND JOHN WELTON IN 2005

[416] In approximately 2004-2005, Darlene married David. In 2005, Darlene went to work for Stonebrook Properties. In 2006, Darlene left her sales job with Hunter Milborne. She made approximately $150,000 per year at Hunter Milborne.

[417] Stonebrook Properties was owned 50/50 by David and John. According to Darlene’s evidence in-chief, at a family function in 2005, David asked Darlene and John to come into the office at David and Darlene’s home at 405 Temagami Crescent in Mississauga. David told John that Darlene was going to take over marketing and sales on the Stonebrook property. Darlene testified John was very frugal, and when David suggested that Darlene get 2% of revenues in commission, John asked what other people paid. David said that 1.5-2% was the going rate. Darlene testified she wanted 3% as she was going to run the head office on weekends and purchases usually took place on weekends. Plus, Darlene was going to have to give up her full time job at Hunter Milborne in order to work full time at the Stonebrook project. Darlene testified that John would not agree to 3% but agreed to 2%. The agreement was between family and nothing was put in writing.

[418] Apparently, John and David had gotten along well for many years and it was common practice not to put agreements in writing between them (see Facts Admitted by Defendants at Exhibit 10, paras. 10 and 11).

[419] Darlene testified she kept a journal and would have noted details regarding the dinner menu and guests. She testified she may have noted the 2% agreement between the brothers and her but she does not think so. Darlene testified she is unable to locate this journal.

[420] The corporate profile report of Stonebrook Properties Inc. lists Darlene Welton as an officer since June 9, 2006 (see Exhibit 1, Volume 5, Tab 173, at p. 1417).

[421] On June 10, 2009, a resolution was signed by David Welton, John Welton, Sidney Dick, in their capacity as directors of Stonebrook Properties Inc., appointing five people as officers including John Welton, David Welton, Sidney Dick, Colin Pillar, and Darlene Welton. Darlene Welton was appointed as Vice President of Marketing and Sales. The resolution does not make Darlene Welton a director of Stonebrook (see Exhibit 1, Volume 3, Tab 144, at p. 721; and Exhibit 1, Volume 1, Tab 12, at p. 133).

[422] These corporate documents do not outline the remuneration that was being paid to any of Stonebrook’s officers/directors.

[423] Darlene was involved in the Stonebrook project in a variety of ways as previously summarized in the earlier summary regarding her evidence in-chief.

[424] Darlene’s income listed in her T4s from Stonebrook in 2007, 2008, 2009, 2011 and 2012 was in the $65,000 to $82,500 range. The exceptions departing from this range are in (1) 2006 – $25,000; and (2) 2010 where Darlene had a declared income from Stonebrook of approximately $265,000 (see Exhibit 1, Volume 1, Tab 8). In 2009, 2011, and 2012, Darlene’s T4 income was in a narrow range between $65,000 and $68,000. Darlene testified that on February 26, 2010, she submitted a statement indicating (after deductions for insider sales revenues) she was owed 2% commission on total sales net of GST of $54,947,251.50. Darlene deducted $313,055.61 as advances received for a total balance due of $754,954.39 (see Exhibit 1, Tab 14, at p. 136). At p. 138, there are signatures and a head office stamp indicating that head office received the statement. The stamp is undated. Darlene testified that the initials were signed by her husband and Dolores Gosine. I find that Darlene is mistaken. Rosemary Birk testified she prepared this Tab 14 statement. Both Dolores Gosine herself and Rosemary Birk testified that only David signed the document and signed “OK” along with his signature. The plaintiff called Rosemary Birk and the defendant called Dolores Gosine. Both were very familiar with David’s signature, were relatively independent witnesses, and were convincing in their explanation that the signature at Exhibit 1, Volume Tab 14, at p. 138 was “OK” signed by David Welton. Dolores Gosine testified that the “OK” writing was not hers and she did not sign the document. Dolores Gosine’s evidence in this regard is compelling. It is to be noted regarding this invoice that:

1. this is the first time—over four years after the alleged three-way meeting agreement in 2005—that the invoiced 2% commission rate appears in any documentation; and

2. the $754,954.39 was not paid in full.

[425] At Exhibit 1, Volume 1, Tab 16, at p. 142, there is a payroll document from Stonebrook that indicates $200,000 was paid to Darlene (see also Volume 1, Tab 6, Tab 277A, at p. 1948). After this $200,000 is paid, Stonebrook resumes paying Darlene for the remainder of 2010, 2011, and to December 29, 2012 her regular bi-weekly cheque which ends up totalling $67,589.91 for 2011 and $65,085.78 for 2012 (see Volume 1, Tab 6, Tab 277A, at pp. 1948-49; and Exhibit 1 Volume 1, at Tab 8, pp. 72-74).

[426] Darlene is no longer paid by Stonebrook commencing January 2013 (see Exhibit 1, Volume 6, Tab 277A, at p. 1949). Sidney Dick testified that sometime in 2010, Darlene’s February 2010 statement/invoice came to John’s attention and John rejected it. There is nothing until 2011 indicating John’s rejection.

[427] Darlene testified that John asked for a complete description of Darlene’s responsibilities on February 21, 2011 (see Exhibit 1, Volume 1, Tab 35, at p. 252). John writes at p. 252, “David reported that my request for a copy of Darlene’s marketing contract was not available as the scope was to be similar to the previous marketing contract but additional dates have been added.”

[428] It is to be noted that as of this date—February 22, 2011—it has been almost one year since Darlene submitted her first 2% invoice and in that year the bulk of the monies owing had not been paid. No one, not Darlene, not David, not John, in any email exchange (and they were occurring frequently) over the one year period from February 26, 2010, to February 22, 2011, refers to this alleged three-way meeting at Darlene’s and David’s home where this 2% agreement was supposedly made.

[429] It is to be noted as well, that relations between John and David had broken down in 2010 to the extent that neither trusted the other any longer. Accordingly, on December 24, 2010, David and John signed an agreement that henceforth major contracts needed to be signed jointly by their respective companies (see Exhibit 1, Volume 1, Tab 27, at p. 176).

[430] Darlene, in her testimony in-chief, testified that the brothers in 2011 entered into negotiations regarding dispersing their properties and proposing values for equalization payments. At the Exhibit 1, Volume 2, Tab 69 email to David from John dated June 28, 2011, at p. 367, John indicated that “David is pressing for payment to Darlene towards her fees for marketing but no contract exists which if there was one, would have to be signed by J.W.W. [John W. Welton].”

[431] Again, there is no response from Darlene and/or David referring to the alleged 2005 three-way agreement.

[432] Instead, at Exhibit 1, Volume 2, Tab 77, at p. 387, Darlene sends a statement dated July 18, 2011, where she claims 2% of total sales net of taxes excluding insider sales, without further explanation. Rosemary Birk testified she typed out these statements for David.

[433] John, on August 2, 2011, writes to David, copied to Darlene, regarding the February 26, 2010 statement submitted by Darlene and indicates that payments have reduced that invoice amount by $312,712.39. John refers to David threatening to put a lien on Stonebrook if Darlene’s fees are not paid (see Exhibit 1, Volume 2, Tab 89, at p. 462).

[434] On August 3, 2011, David writes to John with a copy to lawyer Stanley Rose and indicates that “our contract is 2% of the sale price net of HST/GST” (see Exhibit 1, Volume 2, Tab 89, at p. 464).

[435] This statement by David is somewhat contradicted by the statement/invoice from Darlene dated August 1, 2011, and stamped as received on August 4, 2011. Dolores Gosine testified that Shelley Arnold stamped August 4, 2011 on the document. Rosemary Birk testified that Rosemary herself printed the date August 4, 2011. Rosemary Birk saw David sign Tab 87 writing “OK” above his signature. Darlene, as summarized earlier, gave contradictory evidence regarding signatures on this invoice. Rosemary Birk testified she prepared and typed the Exhibit 1, Volume 2, Tab 87 statement for David. Contrary to previous Darlene statements/invoices, this statement/invoice with no explanation at all, adjusts total sales by excluding insider sales and, for the first time, reduces total sales by a variety of commission and sales, to arrive at a net sales figure that is $579,542 lower than the total sales and the 2% commission is applied to the net sales figures. Darlene testified she did not review Tab 87 and it needs to be corrected. Darlene testified that no other invoices were sent between August 4, 2011 (Exhibit 1, Volume 2, Tab 87 invoice, at p. 457) and the next statement of June 4, 2012 (Exhibit 1, Volume 2, Tab 77A invoice). The June 4, 2012 invoice reverts back to the previous statement/invoices with a commission of 2% of total sales excluding insider sales and makes no provision for any of the adjustments outlined in the August 1, 2011 statement/invoice at Exhibit 1, Volume 2, Tab 87, at p. 457.

[436] Darlene testified that after the August 3, 2011 memorandum was sent to John Welton (see Exhibit 1, Volume 2, Tab 89, at p. 464), which indicates Darlene is to be paid 2% of the sales price net of HST/GST, John, on the same day, August 3, 2011, hand delivered to David on August 3, 2011 a memorandum which indicated that, regarding the percentage of qualified sales, “the rate has yet to be agreed upon… It should be observed that the remuneration that may have been agreed between you and David for marketing and sales and other assistance may have been agreed between you and David but without my knowledge or agreement (approval)” (see Exhibit 1, Volume 2, Tab 90, at p. 467).

[437] In an email dated August 11, 2011, at Exhibit 1, Tab 94, p. 485, John writes to lawyer Stanley Rose and David and again repeats that Darlene’s compensation is yet to be determined.

[438] On November 1, 2011, at Exhibit 1, Volume 2, Tab 110, at p. 557, John again refers to Darlene’s commission as “not-yet-agreed commission.”

[439] At Exhibit 1, Volume 2, Tab 119, at p. 607, on February 14, 2012, Jerome Morse, John’s lawyer, agrees to pay Darlene “on the same remuneration as the previous marketing consultant and current industry practices.”

[440] On May 22, 2012, at Exhibit 1, Volume 3, at Tab 131, at p. 662, John sends an email to David, stating, “I distinctly remember when you requested my approval on appointing Darlene as marketing consultant your statement was that it would be under the same basis as previously marketing and sales consultants such as Hunter Milborne, Paul Kennedy and Linda Davies.”

[441] At Exhibit 1, Volume 3, Tab 135, at p. 683, on June 4, 2012, John’s lawyer, Jerome Morse, indicates that “a reasonable invoice for Ms. Welton’s advertising work would be acceptable.” Sidney Dick testified that Mr. Dick assumed the commission rate would be 1.5% but that was only communicated to Darlene for the first time in an email from John to Darlene at Volume 3, Tab 137, dated June 6, 2012, at p. 694.

[442] By June 2012, Darlene’s previous invoice statements had not be paid.

[443] Presumably in response to Mr. Morse’s position, Darlene sent two June 4, 2012 invoices to Stonebrook. They appear at Exhibit 1, Volume 2, Tab 77A and Tab 77B. Rosemary Birk testified she prepared and typed these statements for David. Tab 77A is in reference to Phase I of Stonebrook and indicates, at p. 389, after advances paid, $616,234.94 is due on 2% commission of total sales excluding insider sales net of taxes.

[444] Tab 77B is an invoice regarding Phase II of Stonebrook and, at p. 400, charges 2% of total sales net of taxes for a balance due of $744,898.76.

[445] On June 6, 2012 at Exhibit 1, Volume 3, Tab 137, at p. 694, John sends Darlene an email with reference to her June 4, 2012 statement, again disagreeing that a 2% commission was ever agreed upon. John again indicates that Darlene’s commission rate was to be on the same terms as previous incumbents which translates into a 1.5% commission.

[446] At Exhibit 1, Volume 3, Tab 138, the most pivotal document in this litigation appears. To put Tab 138 in context, it must be pointed out that since February 26, 2010, when Darlene submitted her first 2% commission invoice, which remained unpaid, a dispute between the brothers ensued which completely fractured their relationship. Further, by June 2012, David, John, and Darlene had lawyered up and litigation was not only being contemplated but was now inevitable.

[447] The evidence from Darlene and Rosemary Birk, uncontradicted by any evidence, was that David was a brilliant man; David was a man who looked at a sentence with a precise and clear mind, “sharp as a tack” (per Rosemary Birk) and was prone to point out any errors in sentence structure and meaning. As Rosemary Birk concluded, “David was a person who paid attention to detail.”

[448] This brilliant mind of David, knowing the importance and implications of Exhibit 1, Volume 3, Tab 138, wrote on June 18, 2012, the following letter:

[449] Rosemary Birk testified that she prepared this letter for David. Rosemary Birk testified that the letter was accurate and David was lucid. Darlene was not present for the letter’s preparation. Rosemary Birk confirmed that David signed the Exhibit 1, Volume 3, Tab 138 letter. She has seen his signature many times.

[450] Crucially, this Tab 138 letter, dated June 18, 2012, signed by David and addressed to Darlene Welton “confirm the verbal between you and I” i.e. David and Darlene.

[451] The Tab 138 letter also indicates the agreed upon remuneration is 2% of sales revenue or $220,000 per annum, whichever is greater. Sidney Dick, Stonebrook’s chief financial officer, was shocked to see this $220,000 per annum claim. Accordingly, it can be concluded that Sidney Dick, a key financial officer, was never advised of an agreement of a minimum $220,000 per annum payment to Darlene. Sidney Dick testified that the subsequent Exhibit 1, Volume 3, Tab 148 demand letter from Darlene’s lawyer asking for $220,000 came “out of the blue,” (the Tab 148 letter was dated July 16, 2012).

[452] In cross-examination, Darlene conceded that this reference to $220,000 per annum payment never appears in the documentary record prior to June 18, 2012.

[453] It is obvious that the Exhibit 1, Volume 3, Tab 138 letter was designed for litigation purposes. As can be seen in letters by Darlene’s lawyer, Robert Whitmore dated July 9, 2012 (Exhibit 1, Volume 3, Tab 146, at p. 731) and dated July 16, 2012 (Exhibit 1, Volume 3, Tab 148, at p. 736), refers to an agreement regarding 2% of sales revenues net of taxes or $220,000 per year, whichever is greater.

[454] Therefore, Mr. Whitmore threatens legal action based on the agreement described in David’s Exhibit 1, Volume 3, Tab 138 letter.

[455] As indicated in Exhibit 11, Tabs G and H (undertaking #8) Read-in Brief of the Plaintiff, there are no documents from John prior to August 2, 2011, where John disagrees with the 2% set out in Darlene’s initial invoice. Further, as set out in Exhibit 11, Tabs 1F and H (undertaking #9) there are no documents prior to June 6, 2012, in which the 1.5% commission rate is referred to by John. The 1.5% commission rate is only referred to from June 6, 2012, onwards.

[456] Sidney Dick, the company’s chief financial officer, testified that when Darlene was put on the payroll at David’s request in 2006. David requested that Darlene initially receive a $5,000 draw against commissions. Later, David wanted Darlene to be put on the health plan as an employee. Mr. Dick testified that everything would be charged against Darlene’s commission. When Mr. Dick asked David, “what is the commission,” David did not answer. A random number was then put into the budget by the cost consultant. Mr. Dick testified that insider sales, marked in pink at Exhibit 1, Volume 6, Tab 277B are excluded from commission calculations. Mr. Dick testified that the commission calculations at Exhibit 1, Volume 3, Tab 149, ay p. 741 and Exhibit 1, Volume 5, Tab 163, at p. 1376, are in the same format he would prepare as all the components are in the right places. Mr. Dick testified that three months before the first cheque to Darlene in May 2006, John, after a closed door meeting with David, told Mr. Dick that Darlene’s sales commission would be the same sales commission rate as prior sales consultants. Mr. Dick assumed it would be 1.5%.

[457] In cross-examination, Mr. Dick indicated that the Linda Davies contract at Exhibit 1, Volume 1, Tab 6 indicates the owner pays for the costs of the sales office including sales office salary and the sales agents does not do any work regarding pre-delivery inspections, Tarion warranties, and do not get involved in the construction. Para. 5.01 provides that Linda Davies “shall employ, compensate, train and supervise” the required number of qualified sales persons.

CONCLUSION REGARDING ALLEGED 2005 AGREEMENT BETWEEN DARLENE, DAVID AND JOHN

[458] For the reasons outlined above, I reject Darlene’s contention that John and David together in 2005 agreed to the greater of 2% sales commission for Stonebrook or $220,000 per annum for salary. Further, there was no reference to a 1.5% rate by John.

[459] I conclude that there was no verbal agreement regarding the specific commission rate and that it was understood between the parties, pursuant to the traditional way David and John conducted business between themselves for decades, that Darlene would receive a reasonable remuneration in according with industry standards. Sidney Dick, a credible witness, testified that in early 2006, John told Mr. Dick, after John and David met behind closed doors, that Darlene would be paid the same as prior sales consultants.

[460] Further, regarding David’s letter dated June 18, 2012, indicating an agreement of 2% commission rate or $220,000 per annum, I find that agreement also was never made. Sidney Dick testified that the first time he learned of this $220,000 per annum agreement was when he viewed the Exhibit 1, Volume 3, Tab 148 demand letter dated July 16, 2012, from Darlene’s lawyer. He was shocked to learn of that $220,000 per annum guarantee. Nowhere in the documentary record prior to June 18, 2012, does this $220,000 per annum agreement appear or is it referred to. As can be seen from Exhibit 1, Volume 6, Tab 277A, Darlene’s draw against commission was approximately $5,000 per month in May-August 2006 and $5,500 per month from September 2006 onward. Sidney Dick testified that this was done at David’s instruction. There was no mention of the commission rate or a guarantee of $220,000 per annum communicated by David to Mr. Dick and it appears nowhere in the documentary record before June 18, 2012. The draw amounts provided to Darlene result in Darlene’s annual incomes of $65,000-$82,500 in most years except 2010 (see T4’s at Exhibit 1, Volume 1, Tab 8). Further, David, prior to his letter of June 18, 2012, never communicates the alleged $220,000 annual income guarantee in writing to anyone in the record before me. David, a brilliant man, had lots of opportunity to communicate the $220,000 per annum guarantee. For example, at Exhibit 1, Volume 3, Tab 89, August 3, 2011, David indicates at p. 464, “our contract with Darlene is 2% of net sale price net of HST/GST.” There is no reference to a $220,000 per annum guarantee.

[461] Accordingly, I find that there is no three-way verbal agreement involving John, David, and Darlene regarding a 2% commission of sales revenues net of taxes or a salary of $220,000 per annum, whichever is greater. I find that there is no agreement between the parties of a 1.5% commission rate either. Further, I find that there was no agreement prior to June 18, 2012, to pay Darlene $220,000 per annum. I infer that David simply made that up to strengthen Darlene’s pending court case against John and Stonebrook Properties and was done to counter John’s assertion on June 6, 2012, at Exhibit 1, Volume 3, Tab 137 that Darlene’s appointment was made on the same terms as previous incumbents which involves a 1.5% commission and deductions for commissions paid to sales people. John states in Exhibit 1, Volume 3, Tab 131, at p. 662 that he remembers David, when appointing Darlene, stating Darlene would be paid the same as previous consultants. This statement is confirmed by Mr. Dick’s testimony that John told him that David had said Darlene would be paid the same as previous consultants. I find that the understanding of the parties was that Darlene would be paid the same as prior consultants, consistent with industry rates in a reasonable and fair amount.

3. INDUSTRY STANDARDS REGARDING COMMISSION RATES AND SALES COMPENSATION

[462] Rosemary Birk, the Customer Service Representative, indicated that Stonebrook Phase I was slated to open in 2008. Everything got delayed. The cause of the delay was that Stonebrook Phase I did not have the necessary sales required to get the construction loans required to move the project forward. Rosemary Birk testified that more parking spots should have been planned and the lack of parking spots impacted the sales.

[463] Ms. Cracknell-Young provided expert opinion evidence regarding compensation provided to real estate brokers and duties and responsibilities of those brokers and also the duties and compensation paid to Vice-Presidents of Marketing and Sales. Her report was filed as Exhibit 8. Ms. Cracknell-Young testified that there is no standard commissions for listing brokers in the context of a high rise condominium. In her experience, commissions vary widely between 1% and 2%. Larger unit projects and high competition attract a lower commission rate. Stonebrook was a medium-sized project. The more services a broker provides attracts a higher commission rate. Bonuses can be paid on top of commissions if units are sold in a shorter timeframe.

[464] Attached to Exhibit 8 is an example of a contract for a 2008 project between a builder and a broker.

[465] The significant features of this contract are:

1. Commission of 2% net of GST (para. 3A);

2. 50% of the commission is payable on the sale of the unit being firm and 50% upon closing (para. 3A);

3. In the event the project is cancelled, the builder agrees to pay the portion of the agent’s fee that has been earned pursuant to the schedule above but shall not pay the balance of the agent’s fee (para. 6B); and

4. The duties of the broker are set out in Schedule A and require the broker to supply a sales manager, sales agents, and administrative staff and to adequately staff the sales office seven days a week including weekends (see Schedule A).

[466] Exhibit 9, on consent, was filed as the defendant’s expert report dealing with similar issues of compensation and broker duties. Four sample agreements, spanning 2006-2010, are included in Exhibit 9. Exhibit 9 also indicates there is no standard for commissions. The significant portions of the appended contracts are as follows:

Appendix A – November 2006 – Broker – Milborne Real Estate

• Commission: - 1.25% on price net of HST (para. 5A)

• 0.4%-0.6% bonus dependent upon speed of sales (para. 6)

• commission range would be 1.25% to 1.85% (paras. 5-6)

• Payment Terms: - 1/3 upon accepted deal

• 1/3 upon first bank draw on construction start

• 1/3 on closing (para. 7)

• Project Cancelled: - if project does not proceed, broker keeps 1/3 of fees (para. 7)

• Duty of broker: - employ, compensate, and supervise sales persons. (para. 4)

Appendix B – April 12, 2007 – Broker – Baker Real Estate

• Commission: - 1.5% of gross price – no bonus structure

• large project – 473 units (para. 5)

• Payment Terms: - 33% upon receipt of first and second deposit

• 33% upon construction start

• 34% upon closing (para. 5)

• Project cancelled: - broker keeps initial commission of 33% if purchase agreement terminated and builder keeps deposit – no other payments (para. 5)

• Duties of broker: - agent responsible for cost and provision of qualified sales people (para. 8)

Appendix C – May 2009 – Broker – Insite Reality Corp.

• Commission: - 1.25% of net price (para. 2)

• bonus - 2% for 35 units if sold quickly (para. 14)

• agent can buy up to six units at 4% discount (para. 12)

• Payment Terms: - 25% when 120 units plus other conditions

• 25% upon first construction draw

• 25% after occupancy

• 25% upon final closing (para. 3)

• Project cancelled: - if vendor receives and retains 10% of sale, commission

payable

• if project terminated, agent retains fees prior to ` termination but no further fees are owing (para. 3)

• Duties of broker: - management of sales centre, hiring, training and support of sales representatives

• providing administrative staff (para. 5)

Appendix D – September 1, 2010 – Broker – Milborne Real Estate

• Commission: - 1.25% of net revenue

• bonus: - option of purchasing 15 units at a 5.25% discount but no commission payable (page 29 of Exhibit 9)

• Payment Terms: - 1/3 payable upon sale with 5% deposit received

• 2/3 payable upon closing (page 29 of Exhibit 9)

• Project cancelled: - broker keeps initial commissions and advances paid up to cancellation but owner has to liability thereafter (page 29 of Exhibit 9)

• Duties of broker: - Broker to staff sales centre with professional sales manager, seasoned sales associate(s) and sales administrator (p. 29-30 of Exhibit 9)

[467] After reviewing the five contracts included in Exhibits 8 and 9, the following conclusions can be drawn:

1. Commissions range from 1.25% to 2% with commissions at the lower range providing sales bonuses and incentives.

2. Payment terms can vary but generally 1/3 is paid upon sale and deposit received on a firm sale, 1/3 payable on construction start, and 1/3 upon closing.

3. Cancellation terms are provided which generally provide for the broker to keep the first commission payable at the sale—generally 1/3—but if the project is cancelled the broker does not receive the rest of his commission, i.e. the 2/3 due upon construction start and closing.

4. The broker provides for the hiring and compensation for all the sales and administrative staff at the sales centre which is generally open on weekends.

[468] Sidney Dick testified that United Lands had a contract for sales services in the past with Linda Davies. It appears at Exhibit 1, Volume 1, Tab 6, and was signed on March 26, 1998 regarding Oak Ridges Heights. This contract, at p. 50, stipulated a commission of 1.5% (with a potential $50,000 bonus) regarding the sale of 285 units. The contract stipulated, at p. 50 of Tab 6, at Schedule A, that commission was due as follows:

1/3 upon sales completion within 60 days, 1/3 upon construction start and 1/3 upon closing of the sale. If a project is cancelled, Schedule A provides that a minimum of 1/3 of commission on accepted offers shall be retained. As can be seen from Tab 6 at page 46, the real estate broker is responsible to pay the sales personnel out of the commission payments received.

[469] Sidney Dick testified that the Exhibit 1, Volume 2, Tab 87 statements follow the correct approach. The amounts in Tab 87 payable to Catherine Adams ($57,692) and Susan Clarke ($129,000) should have been deducted from Darlene’s commissions along with her advances. Mr. Dick testified that within three months prior to the Exhibit 1, Volume 1, Tab 9 cheques being issued, with the first cheque dated May 29, 2006, David went into David’s office and closed the door. John afterward told Mr. Dick that Darlene would be the sale consultant and that the sales commission rate would be the same as prior consultants.

[470] Dolores Gosine tallied all the insider sales and prepared Exhibit 15 which shows, regarding Phase I, the total insider sales to total $3,282,670.75. All sales after deducting insiders sales total $67,635,404.30 for Phase I. The only file that Ms. Gosine could find regarding prior sales contracts was the Linda Davies contract that appears at Exhibit 1, Volume 1, at Tab 6.

4. STONEBROOK PHASE II ACTIVITY

[471] Shortly after Darlene submitted her full invoice on February 26, 2010, Darlene testified that sales for Phase II started in March 2010. Rosemary Birk confirmed that Phase II sales started in spring, May 2010. Dolores Gosine testified that Phase II was launched on June 14, 2010. This is why Phase II salaries are listed under July 1, 2010 to July 31, 2011 at Exhibit 1, Volume 2, Tab 93.

[472] Darlene testified in cross-examination that Stonebrook Phase II was launched in the spring of 2010 and was open for about a year. Tabs 124, 125, 126 of Exhibit 1, Volume 3 confirm the plaintiff’s counsel’s submissions that Phase II was cancelled in May 2012. Darlene was asking for full commission even though the project was cancelled, deposits returned, and there were no revenues for Phase II. Darlene was claiming 2% of sales for $37 million for 134 units sold (see Exhibit 1, Volume 3, Tab 148 per her June 18, 2012 schedule at p. 737).

[473] According to Sidney Dick, John cancelled Phase II due to not enough sales revenue to obtain the required construction loans. John decided the project was going to lose money and it was cancelled (see Exhibit 1, Volume 3, Tab 124 where John’s letter discussed cancellation of Phase II to take place in or about May 2012).

TECHNICAL AUDIT COMPENSATION

[474] Darlene testified in cross-examination that from 2005-2012, she was involved with Davwel but was not paid by Davwel. In 2013, Davwel paid her $7,500 plus HST per month starting June 1, 2013.

[475] Darlene was appointed as a director of Davwel. Rosemary Birk confirmed that in June 2013, David put Darlene on the Davwel payroll after Darlene complained for months after John cut off Darlene’s cheques from Stonebrook on December 31, 2012.

[476] Darlene testified in cross-examination that Tarion work was started in 2011. Darlene did not submit any invoices for Tarion work from 2011-2015. There were no demand letters for payment. The demand for payment was commenced by a lawsuit in 2015.

[477] The final sales transfers of units for Stonebrook Phase I were completed in December 2012 (see Exhibit 1, Volume 6, Tab 277B). The final closing was in December 2010.

[478] As of September 1, 2011, there were still 16 unsold units in Phase I (see Exhibit 1, Volume 2, Tab 102, at p. 505). Darlene testified she was involved in the construction process at this time. John sent Darlene an email dated June 6, 2012, (see Exhibit 1, Volume 3, Tab 137, at p. 694), where John refers to 7 remaining unsold units and indicates that when those units are sold or ownership assumed, and that Darlene’s role as a sales and marketing consultant was done. By this time, Phase II had been cancelled. Further, John indicates that Darlene’s current activities were for David and any remuneration for those activities should be from Davwel. John stopped paying Darlene at the end of 2012 (see Exhibit 1, Volume 6, Tab 277A).

[479] John passed away on May 9, 2013, and John’s two sons supplanted John afterward. Darlene did not raise any issues with them that she was not being paid and would be seeking $220,000 per year for work that their father refused to pay for.

[480] Darlene indicates her claim is for $220,000 for 2011 and 2012 and when the two sons came on board in 2013, she was owed $440,000 but did not think it was an issue (see Read-in Brief of Defendants, Tab 2B and Darlene’s cross-examination at trial).

[481] As can be seen from Exhibit 1, Volume 6, Tabs 261 and 262, the Tarion claims were settled with a $50,000 payment agreement with the Condo Board in November 2013.

[482] Darlene testified in cross-examination that her salary claim ends at 2013; her husband David died on September 23, 2013.

[483] Darlene testified in cross-examination that her prior experience was in marketing and sales in high rise construction. She was never a construction manager, construction supervisor, or Vice President of Construction.

[484] Darlene, in the defendants’ Read-in Brief, testified she was silent on getting paid for work, outside of marketing, for her Tarion work in 2011, 2012, 2013, and 2014 until her lawsuit in October 2015. Darlene testified they had refused to pay for her commissions and she had no reason to believe they would voluntarily pay her for all the work she did on the technical audit. Darlene never broached the subject of payment with John’s sons when they took over. Darlene indicated consultants are paid at the end of their participation. Colin Pillar would be paid at the end of Stonebrook. Darlene indicated she was not a consultant, she was an employee.

[485] In the defendants’ Read-in Brief, at Tab 2B, p. 56 of her discovery, Darlene testifies, “It was very clear to John and David that I was being paid as a down payment towards my final commissions. I have been paid two per cent of all commissions.”

[486] Darlene also testified at p. 56 that the work flowed from the marketing and they overlapped. At Tab 2B, p. 83, Darlene indicated that if you’re family, it’s less of an issue or worry regarding waiting until the end of the project to discuss their compensation.

APPLICATION OF FACTS AND LAW TO ISSUES

ISSUE #1 – PLAINTIFF CLAIM #1 – COMMENCED ON OCTOBER 25, 2012

WHAT IS THE AMOUNT OF UNPAID COMMISSIONS AND/OR UNPAID WAGES DUE TO PLAINTIFF?

[487] As indicated in the evidence summary and analysis regarding the alleged agreement between John, David, and Darlene, there was no agreement in 2005 regarding Darlene’s commission rate and/or minimum remuneration/salary. I find that there was an agreement that Darlene was hired by Stonebrook as a Vice President of Marketing and Sales. Pursuant to the way the brothers had conducted business for decades, there was no formal written agreement and, as previously concluded, I infer that the understanding between the parties was that Darlene would be compensated fairly pursuant to industry standards and practices and in accordance with what past brokers had been paid by the brothers.

[488] Darlene was put on the payroll and David told Sidney Dick that the payments to Darlene were to be draws against commissions.

[489] Pursuant to Exhibit 1, Volume 6, Tab 277A, Darlene received regular draws from September 2006 until December 29, 2012. CPP, taxes, and EI were deducted. WSIB was paid. T4’s were prepared (see Exhibit 1, Volume 1, Tab 8). However, Sidney Dick indicated that all payments to Darlene were made on the understanding that all payments (including $20,000 in 2007 and $200,000 in July 2010) were draws against commissions to be paid at a commission rate that David did not disclose to Mr. Dick because, as I infer, there had been no discussion beyond an understanding in accordance with Welton brothers’ tradition that Darlene was to receive a fair remuneration in accordance with industry standards and the brothers’ past practices regarding commission rates.

[490] Without a contractual agreement regarding specific terms that have been agreed to, Darlene’s claim is in quantum meruit/ restitutionary quantum meruit.

[491] The Ontario Court of Appeal in Consulate Ventures Inc. v. Amico Contracting & Engineering (1992) Inc., 2007 ONCA 324, 233 O.A.C. 330, indicated at paras. 98 and 99:

[98] There are two difficulties with these comments. First, the authorities make clear that services provided in reliance on “some underlying measure of agreement” and at the request, or with the acquiescence, of the beneficiary of the services are compensable, although a valid enforceable contract between the parties may not exist. Services provided in these circumstances are not viewed as having been given gratuitously, based on speculation. G.H.L. Fridman, in his leading text Restitution, 2d ed. (Toronto: Carswell, 1992), put it this way at 301-02:

The decided cases reveal a sharp contrast between situations in which what the plaintiff did was done at the defendant’s request or with the knowledge and acquiescence of the defendant and those in which the plaintiff acted in his own supposed interests. In the latter instances, the plaintiff may have believed that ultimately he would profit from some contract that he hoped or expected would emerge from what was done. In the event, however, no such contract materialised. The plaintiff’s behaviour could be characterised as being tantamount to speculation. Such cases differ from those in which there is some underlying measure of agreement, although not sufficient to constitute a valid, enforceable contract, in virtue of which the plaintiff performs the work or provides the services that are at issue. There must be established some express, or sometimes implied, request to do the work or some encouragement on the part of the defendant of the plaintiff that may be said to have misled the plaintiff into the belief that a contract would result. At the same time, what the plaintiff does must be a reasonable and foreseeable response to the behaviour of the defendant. Furthermore, the consequence of what the plaintiff has done would seem to be that the defendant obtains a benefit of some kind. In other words, the defendant must be enriched by the plaintiff’s acts. [Footnotes omitted and emphasis added.]

[99] Thus, where the claim for restitutionary relief is based on quantum meruit, as in this case, an explicit mutual agreement to compensate for services rendered is not a prerequisite to recovery. It suffices if the services in question were furnished at the request, or with the encouragement or acquiescence, of the opposing party in circumstances that render it unjust for the opposing party to retain the benefit conferred by the provision of the services. See Fridman, supra, at pp. 290-92; Nicholson v. St. Denis (1975), 1975 CanLII 393 (ON CA), 57 D.L.R. (3d) 699 (Ont. C.A.), leave to appeal to S.C.C. refused, [1975] 1 S.C.R. x. (S.C.C.)

[492] In Jindal v. The Buffalo Group Developments Ltd., 2018 ONSC 3950, Lederer J. considered how to value a quantum meruit claim at paras. 34-36:

[34] The relevant request in the prayer for relief found in the Statement of Claim seeks: “Damages in the amount of $1,500,000 for breach of contract and/or restitutionary relief and/or quantum meruit.” In these circumstances the proper claim is for quantum meruit or more particularly restitutionary quantum meruit. Quantum meruit has been explained as follows:

… a quantum meruit claim is not dependant on the existence of a valid contract but is a discrete cause of action which contemplates a remedy for unjust enrichment or unjust benefit. The Court indicated that there will be two requisites to a successful quantum meruit claim: (1) That the services in question were furnished at the request, or with the encouragement or acquiescence of the opposing party; and (2) That such services have been furnished in circumstances that render it unjust for the opposing party to retain the benefit conferred by the provisions of the services.[11]

[35] In turn restitutionary quantum meruit applies:

…if the services in question were furnished at the request, or with the encouragement or acquiescence, of the opposing party in circumstances that rendered it unjust for the opposing party to retain the benefit conferred by the provision of services.[12]

[36] As a discrete cause of action restitutionary relief based on quantum meruit contemplates a remedy for unjust enrichment. The question becomes how is such a claim to be valued? It has been said that:

Where a claim is successful, the amount recovered by the Plaintiff will depend on the value of the services of work in terms of what the Defendant might reasonably have expected to pay for such services on the open market at the material time.[13]

[493] I find that the plaintiff has established a quantum meruit claim as she was hired by John and David to be the Vice President of Marketing and Sales. It was understood that Darlene was to be in charge of sales and marketing. The documentary record also establishes it would be unjust for Darlene not to receive a fair commission for her services.

[494] What then is the value of the services of work provided by Darlene?

[495] I find that both Darlene and Stonebrook benefitted from their arrangement. Stonebrook was able to secure a full time sales and marketing employee who could devote more time and effort than a broker could provide as successful brokers have a number of projects on the go. It can be reasonably argued that Darlene provided more services than a broker, especially with regard to her willingness to contribute to the Tarion process and construction issues (areas not normally done by brokers). However, it can also be reasonably argued that Darlene benefitted as well, as she was anticipating a commission that would result in a pay that would far exceed her past pay (her past pay was a base of $90,000, and with bonuses, $150,000 per annum). A dramatic increase in pay would apply even if she got the bottom end of the range of industry standard commission rates. For example, Phase II sales commenced in June 2010 and on June 4, 2012, Darlene submitted an invoice for $749,898.76 (see Exhibit 1, Volume 2, Tab 77B, at p. 400). At 1%-2% Darlene would receive commissions ranging between $372,449.38 and $744,898.76. Darlene testified that these commissions came from 134 unit sales over a one year period (see also her statement at Exhibit 1, Volume 3, Tab 148, at p. 737).

[496] Further, Darlene had none of the risks that a broker was exposed to—Darlene had no overhead and did not have to pay sales agents personally. Basically, her commission pay was being in part subsidized by Stonebrook for many years.

[497] Darlene had worked for Hunter Milborne prior to joining Stonebrook in 2005-2006 and it is worthwhile to look at the Hunter Milborne contracts to determine what commission rate Darlene could reasonably expect to earn.

[498] In Exhibit 9, Appendix A, there appears a Milborne Real Estate contract from November 2006, shortly after the time Darlene joined Stonebrook. The commission rate in Appendix A was 1.25% with bonuses of up to 0.6% if there were a sufficient number of sales in a short time. The evidence before me was that Stonebrook Phase I was delayed by years due to insufficient sales to trigger the construction bank loan and also due to numerous construction issues as well.

[499] If Appendix A of Exhibit 9 applied to Stonebrook, Darlene would have received 1.25% of sales net of HST minus payments to sales agents employed to facilitate sales.

[500] A second Hunter Milborne contract appears at Appendix D, of Exhibit 9, dated September 1, 2010. The commission rate is 1.25% of net revenue. There is an option to buy 15 units at a 5.25% discount.

[501] Accordingly, Appendix D would provide a 1.25% commission floor with a higher real rate depending on the exercise of the options to buy units which would result presumably in a commission rate somewhere in between the normal range of 1% to 2% commission. Appendix D also requires Hunter Milborne to be responsible to staff the Sales Centre with a professional sales manager and “seasoned” sales associate(s) and sales administrator.

[502] Exhibit 1, Volume 1, Tab 6 is a sales contract that the defendants entered into with Linda Davies in 1998. That contract provided a stipulated commission of 1.5% (with a potential bonus of $50,000) regarding the sale of 285 units. Exhibits 8 and 9 contain other contracts with a low commission rate at 1.25% (with bonus provisions) to a high commission rate of 2%.

[503] I infer that the experience of Darlene with Hunter Milborne (where the plaintiff worked prior to joining Stonebrook) and the Welton brothers was with contracts between 1.25% and 1.5% rates of commission with potential bonus provisions.

[504] Accordingly, I conclude that a reasonable commission rate, within the experience and expectations of the plaintiff and the defendants, and in conformity with industry standards, would be 1.5%, which is midway between the 1% and 2% typical commission ranges as indicated at p. 3 of the plaintiff’s Exhibit 8 expert report.

[505] Further, all of the contracts in Exhibit 8, Exhibit 9, and Exhibit 1, Volume 1, Tab 6 contain a provision that if the project is cancelled, the builder is not liable for commission payable upon future events that will not occur due to future cancellation. A typical sample schedule for commissions payable in the event of project cancellation is as follows:

• 1/3 upon firm sale of the unit;

• 1/3 upon start of construction; and

• 1/3 upon the close of the project.

[506] This first payment, in the contracts before me, varies from 25% to 33% to 50% due before cancellation of the project.

[507] Further, all of the contracts in the record provide for the broker to pay, from its commission, the services of the real estate sales agents in its employ.

[508] Sidney Dick testified that commissions paid to sales agents are deducted from agreed upon commission to the broker.

[509] Accordingly, I conclude that a fair rate of remuneration to Darlene for Stonebridge Phase I would be 1.5% of net sales, net of HST/GST and insider sales. This is the midpoint of the industry standard of 1% to 2% commission. From this total would be a deduction for payments to sales agents and sales personnel per the industry standard practice.

[510] Regarding Stonebridge Phase II, pursuant to the usual practice as I have found it, Darlene would be entitled to 1/3 of her commissions based on the same commission rate of 1.5% of net sales net of HST/GST as the project was cancelled before construction commenced.

[511] Mr. Neil, the defendants’ counsel, has provided me with a Decision Tree which lists possible calculations for Darlene’s remuneration. The calculations are based on sales figures and calculations that appear at Exhibit 1, Volume 6, Tabs 277A, 277B, and 279; Exhibit 15; Exhibit 1, Volume 2, Tab 77D; and Exhibit 1, Volume 5, Tab 163.

[512] I agree that these calculations are accurate and plaintiff’s counsel did not object to the Decision Tree calculations.

[513] Accordingly, consistent with my findings above, I find that a fair and reasonable remuneration, for Stonebrook Phases I and II, is as listed in Scenario 3 of the defendants’ Decision Tree as follows:

[514] To allow Darlene to receive 100% commission in Stonebrook Phase II would create a commercial absurdity. All the sample contracts in this record provide for a reduced commission upon cancellation of a project to protect the financial stability of the builder when a project is cancelled.

[515] The structure outlined above is both in accord with industry practice and is also in accord with an accepted legal precept, that is “an interpretation which is commercially absurd is one to be avoided” (see Royal Bank of Canada v. Robertson, 2016 NSSC 176, at paras. 16-18; Success International Inc. v. Environmental Export International of Canada Inc. 1995 CanLII 7186 (ON SC), [1995] OJ No. 969 (Ct. J Gen. Div.), at paras. 34-35; and Morgan v. John Bear Pontiac Buick Cadillac Ltd., 2010 ONSC 6231, at paras. 12-18).

CONCLUSION TO ISSUE #1 – PLAINTIFF CLAIM #1 – OCTOBER 25, 2012

[516] Darlene Welton is entitled to commissions to be paid as follows:

Stonebrook Phase I $8,985.83

Stonebrook Phase II $173,166.98

Total $182,152.81

ISSUE #2 – PLAINTIFF CLAIM #2 – COMMENCED ON OCTOBER 30, 2015

WHAT IS THE AMOUNT, IF ANY, OF UNPAID REMUNERATON FOR WORK DONE ON THE TECHNICAL AUDIT BY THE PLAINTIFF?

[517] In the Fresh as Amended Statement of Claim, in Action #2, commenced on October 30, 2015, the plaintiff indicates at para. 15 that she began work on the technical audit required by Tarion Warranty Corporation, on February 8, 2010. At para. 16, the plaintiff indicates she continued to work to complete the technical audit up to November 18, 2013, when the Condominium Board approved the audit.

[518] At paras. 23 and 24 of the Fresh as Amended Statement of Claim, the plaintiff claims for unpaid wages for the years 2011 to 2013 for work that she claims is separate and distinct from the sales commission amounts sought in the 2012 Action #1. The plaintiff seeks payment of $220,000 per annum either as a wage claim (pursuant to the alleged 2005 agreement with John and David), or alternatively as a quantum meruit claim in respect of the technical audit.

[519] In the 2012 Action #1, in the plaintiff’s statement of claim, the plaintiff seeks at para. 1, damages for unpaid commissions totalling $1,356,206.16, plus GST/HST, or in the alternative, wages of $893,643.51. At para. 6, the plaintiff indicates the alternative claim for wages is for $220,000 per year “under the terms of her employment.”

[520] Para. 5 of the statement of claim in Action #1 asks for commissions for the plaintiff, which she earned in regard to Stonebrook Phase I and II.

[521] According to the claim in Action #2, the Tarion work performed by the plaintiff was undertaken in February 2010 and completed in November 2013 – see paragraphs 14-16 of Fresh as Amended Statement of Claim.

[522] Action #1 was launched by the plaintiff on October 25, 2012. October 25, 2012 is over 18 months after Darlene’s work on Tarion (for which she received no pay) had commenced in February 2010 and was ongoing until October 2012 and continued on until the end of 2013. There is no claim or mention of this unpaid Tarion work in the statement of claim in Action #1.

[523] When Action #1 was commenced on October 25, 2012, both Welton brothers were still alive. At para. 9 of its Statement of Defence in Action #2, the defendants point out that Action #2 was commenced years after the deaths of David and John, notwithstanding the fact that Action #1 for alleged unpaid commissions was launched in 2012, three years before Action #2, concerning the same land development project.

[524] The defendant asks the Court to draw a negative adverse inference from this fact.

[525] Just prior to Action #1 being launched on October 25, 2012, the plaintiff Darlene, through her lawyer, Robert Whitmore, sent a demand letter dated July 16, 2012, to the plaintiff demanding payment for the higher of 2% commissions or $220,000 per year pursuant to an agreement (which I have found in Action #1 as a fact, did not exist) (see Exhibit 1, Volume 3, Tab 148 demand letter). Attached to the letter is a schedule entitled “Outstanding Stonebrook Remuneration” dated June 18, 2012, with reference to wages/commissions earned from income of $73,333 in 2005 and annual income for the complete years 2006-2012 calculated at a rate of $220,000 per year and refers to commissions earned for Stonebrook Phases I and II. There is no reference to any work related to the Tarion Warranty process. The plaintiff received this demand letter on July 17, 2012.

[526] Darlene’s last statement/invoice regarding Stonebrook Phase I was prepared upon David’s instructions and input. It appears at Exhibit 1, Volume 2, Tab 77D, at p. 418 and is dated November 21, 2012, shortly after Action #1 was commenced. There is no reference to any Tarion work in that invoice.

[527] On June 4, 2012, Darlene prepared upon David’s instruction and inputs, two statements/invoices for Stonebrook Phases I and II (see Exhibit 1, Volume 2, Tabs 77A and 77B at pp. 389 and 400). These statements/invoices were prepared just prior to the July 16, 2012 demand letter from Robert Whitmore, Darlene’s lawyer.

[528] There is no reference to any Tarion related work in those invoices. The evidence at trial is that Darlene never sent any invoices regarding Tarion work. The first “invoice” was service of the October 2015 Statement of Claim.

[529] On June 6, 2012, two days after the June 4, 2012 statements/invoices from Darlene, John sent an email to Darlene with David copied (see Exhibit 1, Volume 3, Tab 137). The Tab 137 email disputes the alleged 2% commission agreement and indicates that at the time of Darlene’s appointment, David advised that her appointment was made on the same terms as previous incumbents.

[530] This email was written at a time when Stonebrook Phase I had been completed and was going through the Tarion Warranty Process and John had cancelled Phase II a month earlier in May 2012.

[531] John indicated in the June 6, 2012 email at p. 694:

Thank you for your e-mail of June 4, 2012.

We note that you have advised that seven unsold units remain and observe that when those units are sold or ownership assumed between the two principals by partitioning, your appointment as sales and marketing consultant will be completed and no termination notice will be required. Most of your current activities appear to be undertaken on David’s behalf and any remuneration for those activities should be from Davwel. The same should apply to personnel providing personal assistance to David.

[532] John, as president of Stonebrook, in clear and unambiguous language is terminating her appointment with Stonebrook once the seven unsold units are sold or ownership assumed. As can be gleaned from Darlene’s final invoice at Exhibit 1, Volume 2, Tab 77D, November 21, 2012 at p. 464; Exhibit 1, Volume 6, Tabs 277A and 277B; Exhibit 15; Exhibit 1, Volume 3, Tab 163; Exhibit 1, Volume 6, Tab 279; Exhibit 1, Volume 3, Tab 137; and the defendant’s Decision Tree, John, the president and director of Stonebrook Properties Inc., had directed termination of Darlene’s position with Stonebrook once sales of all Stonebrook units had been told or transferred and this termination would be effective by no later than the end of December 2012 as all units had been transferred by December 27, 2012. Accordingly, Darlene’s position would be terminated per John’s Tab 137 email, and per Tab 277A in December 2012. Darlene received her last draw against commissions on December 29, 2012.

[533] David and Darlene’s response to the June 6, 2012 termination notice and denial of a 2% agreement was swift.

[534] David provided Darlene with the Exhibit 1, Volume 3, Tab 138 letter on June 18, 2012, indicating there was an agreement upon remuneration of 2% commissions or $220,000 per annum, whichever is greater. I have found this alleged agreement never existed.

[535] Also on June 18, 2012, Darlene prepared a list of Outstanding Stonebrook Remuneration based on David’s June 18, 2012 letter. She took these documents to her lawyer. On July 17, 2012, the defendants received a demand letter from Darlene’s lawyer demanding a payment for commissions, based on a 2% commission rate, of over $1.3 million.

[536] On October 25, 2012, Darlene issued a Statement of Claim against the defendants requesting payment of unpaid commissions owing to her in the amount of $1,356,206.16.

[537] Accordingly, the “employment situation” of Darlene in January 2013 was that John had told her in June 2012 that she was terminated once all the units were sold and transferred. The units were sold and transferred in December 2012 and Darlene’s draws against commissions were then halted and payments to her by Stonebrook stopped. Darlene’s response was to obtain a letter from John’s partner, her husband, David, outlining an agreement that did not exist, and on the strength of that letter, Darlene retained a lawyer, who after sending Stonebrook a demand letter, sued Stonebrook for over $1.3 million in October 2012.

[538] How could anyone reasonably think that they are still employed by Stonebrook given this scenario?

[539] I find that Darlene herself did not in fact consider herself in the employ of Stonebrook any longer. She worked for Davwel, her husband’s company, who had a half interest in Stonebrook, and in June 2013, Darlene received compensation of $7,500 per month from Davwel which is in line with her previous salary of $90,000 per year (without bonuses) prior to the Stonebrook project.

[540] The written record indicates that Darlene was involved in the Tarion Warranty process with Stonebrook for all of 2013. And why not? She was employed by Davwel, paid by Davwel and her husband David, owned Davwel and had a 50% interest in the Stonebrook project. Accordingly, it would be completely in Davwel, David, and Darlene’s interest to see the Stonebrook project to completion.

[541] Darlene sent no invoices for her Tarion work in 2013 to the defendants prior to launching Action #2 on October 30, 2015.

[542] The evidence before me is that after John and David’s death, Darlene, on behalf of Davwel, and John’s sons, Dan and John Z., on behalf of Johwel (the other 50% partner) in Stonebrook, collaborated in 2013 to achieve a $50,000 settlement to resolve all the Tarion issues by November 2013 (see for example the emails at Exhibit 1, Volume 6, Tab 261 on November 15, 2013; and Exhibit 1, Volume 6, Tab 264, on November 22, 2013). It is significant that during the settlement negotiations with the Condominium Board, Darlene writes to Stanley Rose on November 28, 2013, seeking legal advice and Darlene states in Exhibit 1, Volume 6, Tab 262, at page 1881:

“Last year, David and I met with Waterproof Masters who quoted an amount of $100,000 to do a full west wall application of all 3 garage levels which would stop all future leaking. It was a fair offer accompanied with a five year warranty, a guarantee that competing waterproofing companies do not offer. David and I (Davwel) wanted to accept the offer and commence work immediately. Alternatively, John and Dan (Johwel) refused to do this and instructed me to continue to patch.”

[543] I believe that Darlene, regarding Johwel’s refusal, is referring to a meeting held with Dan and John Z. earlier that summer. Dan testified that Darlene had spoken to John Z. and himself about a multimillion dollar water leak problem. Dan testified he went to a meeting on May 31, 2013 (see Exhibit 1, Volume 6, at Tab 219) and was shocked to learn that Darlene was prepared to spend a large amount of money to fix the waterproof problem without the advice of a consultant and/or engineer.

[544] Dan was concerned about Darlene’s competence and on June 27, 2013, John Z., sent Darlene, copied Dan, an email (see Exhibit 1, Volume 6, Tab 23