Court File and Parties
Court File No.: CV-18-591023 Date: 2019/07/03 Superior Court of Justice - Ontario
Re: YORK REGION VACANT LAND CONDOMINIUM CORPORATION NO. 1010, Plaintiff And: ROCCO A. MARCELLO, MIKE ROGERS et al., Defendants
Before: MASTER RONNA M. BROTT
Counsel: ROBERT STALEY AND JASON BERALL, for the Plaintiff Fax: 416-863-1716 STEPHEN BRUNSWICK AND MATTHEW SOKOLSKY, for the Defendants Podere Construction Ltd., Nicholas Fidei and Michael Marcello and the Defendants (Plaintiffs by Counterclaim), Rocco A. Marcello, Treasure Hill Developments Inc., Windsor Private Capital Inc., Windsor Private Capital L.P., Sage Grouse Management Corp. and Manziana Builders (BT) Corp. Fax: 416-628-2224 MELISSA MILES, for the defendant Rocco A. Marcello Fax: 416-593-5922 CAMERON J. WETMORE, for the defendants Adena Meadows Limited and Leslie-Wellington Developments Inc. Fax: 416-947-0079
Endorsement
[1] This is a motion by the plaintiff for leave to file a Fresh as Amended Statement of Claim which includes the addition of a new defendant, Patrick Greco.
[2] The plaintiff is a luxury gated community condominium corporation located in Aurora, Ontario next to undeveloped adjacent land. The plaintiff held easements over the adjacent land which rendered the adjacent lands undevelopable.
[3] Leslie-Wellington Developments Inc. (“Leslie-Wellington”) was the owner of the adjacent land. Manziana Builders (BT) Corp.(“Manziana”) purchased the adjacent land from Leslie-Wellington. Treasure Hills Developments Inc. (“Treasure Hills”) controlled Manziana. Mike Rogers (Rogers”) and Rocco Marcello (“Marcello”) were directors of the plaintiff condominium corporation.
[4] The plaintiff alleges that when Leslie-Wellington decided to transfer the adjacent land to Manziana, and in order to maximize the selling price, Manziana and Leslie-Wellington conspired with the defendants Rogers and Marcello to ensure the release of the easements for little to no value to the plaintiff. It is alleged that Rogers and Marcello misrepresented the situation to the plaintiff unit owners and further, they failed to disclose either the value of the easements or that the easements rendered the adjacent land undevelopable. Based on the alleged misinformation, the unit owners voted to release the easements. It is also alleged in the Statement of Claim that Marcello received secret benefits for his participation in the conspiracy.
Motions to Amend
[5] Rule 26.01 of the Rules of Civil Procedure provides that the granting of amendments is mandatory unless non-compensable prejudice would result. It states:
On motion at any stage of an action the court shall grant leave to amend a pleading on such terms as are just, unless prejudice would result that could not be compensated for by costs or an adjournment.
[6] Proposed amendments must comply with the rules of pleading including the rules against pleading evidence (Rule 25.06(1) and against pleadings that are scandalous, frivolous, vexatious or an abuse of process (Rule 25.11).
[7] The defendants opposing the amendment allege that leave should not be granted as the pleadings violate Rule 25.06(1) and Rule 25.11. They do not allege that leave to amend should not be granted because of prejudice.
[8] Paragraphs 8 and 95 of the Fresh as Amended Statement of Claim state:
The defendants Treasure Hill and Manziana are Ontario corporations of which the defendant Fidei is the President. They are majority owned and controlled directly or indirectly by Carlo Baldassarra (“Baldassarra”) and/or the Baldassarra family.
As described above, Treasure Hill is controlled directly or indirectly by Baldassarra and/or the Baldassara family, who are well funded and do not usually permit third parties such as Rocco to invest in their projects.
[9] The plaintiff submits that paragraph 8 describes some of the parties and paragraph 95 describes Marcello’s secret benefits received from the purchasers. It is the plaintiff’s submission that because the Baldessarra family owns and controls the purchaser group, and because they did not require funding from Marcello and do not usually permit ‘outsiders’ to invest in their projects, the pleading is relevant to the allegations that Marcello breached his fiduciary duty and the purchaser group conspired with Marcello. The plaintiff asserts that if relevant to matters in issue then the pleading cannot be scandalous.
[10] The Treasure Hill defendants oppose the references to the Baldassarra family on the basis that the pleadings are scandalous, irrelevant, argumentative, and inserted for colour.
[11] In Libfeld v Patica 2018, ONSC 3373 at paras 18 and 19, Justice Dietrich, although dealing with a pleading involving the piercing of the corporate veil, set out the following well established principles of law in relation to pleadings:
[18] A claim against a director (or officer) must attribute “specific, identified acts or omissions to the individual(s)” and the facts giving rise to personal liability must have been specifically pleaded, in order to survive a rule 21 motion;
[19] They have failed to plead the necessary material facts and particulars of a cause of action for negligent misrepresentation. Bold assertions are not enough.
Justice Deitrich found that although courts are generally reluctant to pierce the corporate veil, naming an individual in a pleading without suing them is usually inappropriate.
[12] On my reading, the paragraphs make scandalous references to the Baldassarra family. The Baldassarras are not parties to the action. The pleadings appear to be inserted as an attempt to embarrass the Baldassarra family. The pleading is irrelevant to these proceedings. In Besner/Vered v 561028 Justice Bell struck a pleading which he determined had been inserted solely for colour. He stated at paras 32 and 33:
[32] The plaintiff objects to the references to legal counsel in paragraphs 15 and 42 of the Statement of Defence and Counterclaim. The plaintiff says that these references are irrelevant and have been included in the pleading solely for colour. The defendants maintain that it is a material fact to the limitations defence that the plaintiff engaged legal counsel and when.
[33] Legal counsel is not a party to the litigation. I find that the references to legal counsel are irrelevant and are not material facts.
[13] The pleading is irrelevant to the proceedings. The action is not about the Baldassarra family – nor its relationship (if any) to the defendant. If the plaintiff wants financial information about the defendants, it can canvass that at the examination for discovery of the Treasure Hill defendants. The financial position of the Baldassarra family is irrelevant.
[14] Paragraphs 102 – 105 are as follows:
Discovery of the Defendants’ Misconduct
After Mangat was elected as a director in July 2017, Marcello contacted him about a business opportunity. In examining that opportunity, Mangat looked at Rocco’s Windsor Capital web site. Mangat noticed from the web site that Rocco, through Windsor Capital, had invested in the Keswick Project with Treasure Hill.
Mangat and Benlolo then met with Frank Stronach on October 31, 2017. Frank Stronach told Mangat and Benlolo that he had informed Fidei, prior to the release of the Easements, that the only way to get things done at YRVLCC was to make sure that Rocco was on board.
Mangat subsequently had a lunch meeting with Fidei on November 3, 2017, at which they spoke about the sale of the Adjacent Land. Mangat asked Fidei why Rocco was involved in the Keswick Project. Fidei told Mangat that Rocco was permitted to participate in the Keswick Project in return for Rocco’s assistance in securing the release of the Easements.
Arising from the communications referred to immediately above, the plaintiff YRVLCC came to learn of the defendants’ misconduct as pleaded in this statement of claim.
[15] The plaintiff submits that these paragraphs describe how the plaintiff discovered the claim in the Fall of 2017 which, they assert, must be pleaded to address a potential limitations issue.
[16] Both the Treasure Hill defendants and Marcello are opposed to these proposed amendments. The defendants submit that the impugned paragraphs have no bearing on the discoverability of any claims against the proposed defendant Greco. Rather, they assert that the paragraphs plead evidence, are hearsay, and are inserted for colour and an improper purpose.
[17] As Master Haberman noted in Witten v Bhardwaj, 2008 CarswellOnt 599, it is not always easy to distinguish between material facts and evidence. However, our rules should not be ignored and there must be limits placed on pleadings.
[18] The paragraphs are pleadings of evidence. They are not only pleading the evidence on which the material facts are to be proved, but they are attempting to impugn Marcello’s integrity right at the pleadings stage. Further, the paragraphs as pleaded have nothing to do with any involvement of Mr. Greco, the party the plaintiff is seeking to add.
[19] Paragraphs 8, 95 and 102-105 shall be struck from the proposed Fresh as Amended Statement of Claim.
[20] The parties agreed at the end of the hearing that they would use best efforts to agree within 30 days, on the issue of costs, failing which they would exchange brief 1 – 2 page costs submissions within 60 days of today’s date. No reply submissions may be delivered without leave.
MASTER RONNA M. BROTT