COURT FILE NO.: CV-17-5302-00
DATE: 2019 10 04
ONTARIO
SUPERIOR COURT OF JUSTICE
BETWEEN:
Alearano Caroti, Jacinta Caroti, Ian Grounds, Moraig Grounds, Nancy Kostelac, Brain McDowell, Biljana Nizalek, Marielle Pelchat-Morris, Wilma Jesus, Monica Savona, Milena Boland, Frand Demaria, Jurica Biondic, Renato Biondic, Roberta Biondic and Boris Klecina
D. Cunningham, counsel for the Plaintiffs, Peter Pichelli, Todd Leslie, Frank Toth and 958041 Ontario Limited
Plaintiffs
- and -
Ante Kegalj, Anthony Vuletic, John Vuletic, Mira Vuletic, Embleton Properties Corp., 1857325 Ontario Ltd. and Bramption G&A Holdings Inc.
E. Hiutin, counsel for the Defendant, Brampton G&A Holdings Inc.
Defendants
-and between-
Anthony Vuletic, John Vuletic, Mira Vuletic, Embleton Properties Corp. and 1857325 Ontario Ltd.
G. D.E. Adair, Counsel for the Defendants/Plaintiffs by Counterclaim, Anthony Vuletic, John Vuletic, Mira Vuletic, Embleton Properties Corp. and 1857325 Ontario Ltd.
C. Abela, Counsel for the Plaintiffs/Defendants by Counterclaim, Aleardo Caroti, Jacinta Caroti, Ian Grounds, Moraig Grounds, Nacny Kostelac, Brain McDowell, Biljana Nizalek, Madelle Pelchat-Morris, Wilma Jesus, Monica Savona, Milena Boland, Frank Demaria, Jurica Biondic, Renato Biondic, Roberta Biondic and Boris Klecina
Plaintiffs by Counterclaim
-and-
Aleardo Caroti, Jacinta Caroti, Ian Grounds, Moraig Grounds, Nancy Kostelac, Brain McDowell, Biljana Nizalek, Marielle Pelchat-Morris, Wilma Jesus, Monica Savona, Milena Boland, Frand Demaria, Jurica Biondic, Renato Biondic, Roberta Biondic, Boris Klecina, Anna Bilich, Emma Faria, Katarina Granic, Anton Granic, Marianne Martinovic, Frank Samardzic and Robert Sokic
J. Macdonald, Counsel for the Defendants to Counterclaim, Robert Sokich and Anna Bilich
G. Karayannides, Counsel for the Defendants to the Counterclaim, Milena Boland, Frank Demaria, Jurica Biondic, Renato Biondic and Roberto Biondic
Defendants
HEARD: September 9, 2019
REASONS FOR DECISION
LEMAY J
[1] The action in this case relates to the property at 78 Cliffside Drive in Brampton. In 2002, it was an undeveloped and undivided property. It was purchased by the Defendants, the Vuletics. They had a number of lot holders, both Plaintiffs and other parties who were added to the action as necessary defendants. All of these parties purchased interests in the property. The Vuletics sold the property in 2016. The lot holders have not received any money as a result of that sale, although the Vuletics have a Vendor Take Back ("VTB") mortgage on the property. The relationship between the parties has broken down and this litigation has resulted.
[2] I have been case managing this action for some considerable time. I have even heard a summary judgment motion on the matter (see 2019 ONSC 168). However, in June of this year, counsel for some of the Plaintiffs changed while other lot holders who were unrepresented have retained counsel. As a result, the pleadings have been re-done.
[3] In addition, however, new counsel raised the issue of whether a Certificate of Pending Litigation ("CPL") and/or some other order should be registered against the property at the heart of this dispute.
[4] Specifically, Ms. Abela, on behalf of a group of Plaintiffs argues that the only way to ensure that the mortgage held by the Defendants, the Vuletics, is not assigned to a third party without notice of this litigation is to place a registration on title of the property. She argues that, if this registration is not complete, then her clients will be prejudiced. Finally, she also argues that there is no prejudice to the current owner of the property, Brampton G & A from having a registration against the property made. She also requests that a CPL be registered against the lots that the Vuletics will receive as a result of the agreement of purchase and sale. She is joined in this argument by Mr. MacDonald on behalf of his clients.
[5] Counsel for Brampton G & A argues that a CPL is an extraordinary remedy that would interfere with his client's title to the property. He also argues that there has been a considerable delay in bringing this motion, and that previous counsel (for at least some of the parties) had already resolved this issue by way of a consent Order. Finally, he argues that registering an Order on title is not necessary in this case.
[6] For the reasons that follow, I have determined that no further Orders should be registered on title at this point. The steps that the parties have taken to protect the interests of the Plaintiffs are more than sufficient at this stage.
Background Facts
a) The Parties
[7] The Defendants, John and Anthony Vuletic, originally purchased the property at 78 Cliffside Drive in Brampton in 2002. The Defendant Mira Vuletic is the wife of John and the mother of Anthony.
[8] The property at 78 Cliffside Drive was not registered in the Vuletics name. Instead, as a result of difficulties that the Vuletics had in obtaining financing, it was registered in the name of the Defendant, Ante Kegalj. In my summary judgment decision, I have detailed the history of how this came to be, as well as how the property ultimately came to be registered in the name of the Defendant 1857326 Ontario Ltd. ("185 Corp"). This history includes a discussion of the defendant, Embleton Properties Corp.
[9] There were numerous people who signed lot purchase agreements with the Vuletics ("lot holders"). There have been no monies paid to any of the lot holders under these agreements. The terms of those agreements remain in dispute, so I shall only refer to them as necessary. Some, but not all, of the lot-holders commenced actions against the Vuletics as Plaintiffs.
[10] There were originally two groups of Plaintiffs in this case and two separate actions. The first group, the Pichelli Parties, continue to be represented by Mr. Cunningham. They take no part in this motion. The second group was the Caroti parties. They were originally represented by Bonnie Roberts-Jones of Groia and Company. This group has now split into two groups and some of the Caroti parties are represented by Clyde and Company.
[11] As part of my role as a case management judge, I determined (in consultation with counsel) that the lot-holders who were not Plaintiffs were necessary parties to this action, and they were added. Two of those lot holders, Robert Sokich and Anna Bilich, are now represented by Mr. MacDonald. They had not taken part in the action until Mr. MacDonald was retained earlier this year.
b) The Property in Question
[12] The property at 78 Cliffside was a single property of approximately 12.8 acres in 2002. That year, John and Anthony Vuletic determined that the property would be a good investment. They then decided to sell lots to lot-holders. The money that was received from the lot-holders was used to finance the property, and there was a Vendor Take-Back mortgage that was also put on the property.
[13] There are different versions of the lot purchase agreements. In particular, the version that is alleged to have been signed by the Pichelli Parties is different from the versions signed by other parties. This is an issue that was discussed in the summary judgment motion decision and the factual dispute is being left for trial.
[14] However, for the purposes of this motion, there is a provision in each of the Lot Purchase Agreements that states as follows:
- d. The Purchaser covenants and agrees not to register this Agreement or notice of this Agreement or caution, certificate of pending litigation, Purchaser's Lien, or any other document providing evidence of this Agreement against title to the Land or the Lots and further agrees not to give, register, or permit to be registered any encumbrance against the Land or the Lots, it being expressly agreed to and understood by the parties that in no event shall the Purchaser be deemed or construed to have any interest whatsoever in the Land or Lots prior to closing and that the Purchaser's only remedy against the Vendor for Breach of this Agreement shall be rescission and a claim for the return of the Deposit and not a claim for specific performance or damages. Should the Purchaser be in default of the obligations hereunder, the Vendor may, as agent and attorney of the Purchaser, cause the removal of notice of this Agreement, caution or other document providing evidence of this Agreement or any assignment thereof, from title to the Land and/or Lots. In addition the Vendor shall have the right to declare this Agreement of Purchase and Sale to be null and void in accordance with paragraph 6 hereof. The Purchaser hereby irrevocably consents to a court order removing such notice of this Agreement, any caution, or any other document or instrument whatsoever from title to the Land and/or the Lots and agrees to pay all of the Vendor's costs and expenses in obtaining such order (including the Vendor's solicitor's fees on a solicitor and client basis).
[15] As I have noted above, because of financial issues, the Vuletics were not able to take title to the property in their own name. Instead, they put it in the name of Ante Kegalj, who was also one of the lot-holders. Mr. Kegalj signed a trust agreement in respect of this property.
[16] After the purchase of the property, the Vuletics made certain cash calls from the investors in order to pay for servicing costs related to the development of the property. Whether those cash calls were properly made, whether the Vuletics properly and diligently pursued the development of the property and whether the Vuletics made proper use of the funds that were generated from the mortgages and/or the cash calls are all questions in the underlying litigation.
[17] The one fact that can be agreed upon, however, is that the land has a plan of subdivision, but that no other services were installed on the property before it was sold to Brampton G & A. Prior to the commencement of the actions that I am case-managing, some litigation resulted from the slow development of the property
[18] The key piece of litigation (detailed in my summary judgment reasons) was between the Vuletics and Mr. Kegalj. It took place over a couple of years and led to the transfer of the title for the property from Mr. Kegalj to 185 Corp.
[19] It also led to an Order of Lederer J. that the Vuletics were to provide an accounting to the lot-holders on a regular basis. One of the allegations in this proceeding is that the Vuletics have failed to provide this accounting in a timely basis, or at all.
[20] There was also a proceeding brought in 2016 by a Mr. Robert Bilich, who was the brother of one of the investors. The reasons in that case are reported in Kegalj v. Embleton Properties Inc. (2016 ONSC 6264). In that case, Mr. Bilich raised some of the same allegations that are being made by the investors in this case. That action was dismissed.
[21] On September 14th, 2016, 78 Cliffside was purchased by Brampton G & A for approximately $15 million. At the time, title was held by 185 Corp. and the Agreement of Purchase and Sale ("APS") was with 185 Corp. However, the directing minds of 185 Corp. at the time were the Vuletics.
[22] As part of the APS, there was a VTB mortgage on the property for $11,359,500.00. Brampton G & A is the mortgagor and 185 Corp. is the mortgagee. Payments continued to be made by Brampton G & A to 185 Corp., presumably for the benefit of the Vuletics. To date, the Vuletics have received approximately $6 million in payments as a result of the ownership and sale of the property. The bulk of these monies were received from Brampton G & A, although other monies appear to have been received from the proceeds of mortgages that were placed on the property.
[23] There are additional interest payments that will become due under this mortgage, starting on September 12th, 2019. The mortgage comes due on September 12th, 2020. At that time the balance will be just over $10 million.
c) The Court's Previous Orders
[24] As I have noted, this matter is being case-managed and has been under case management since September of 2017. It originally came under case management when a motion similar to this one was brought by the Pichelli Parties. That motion was resolved on the basis that $1,650,000.00 would be paid into escrow if the matter was not resolved by the time the mortgage payment was due and payable.
[25] After case management commenced, there were a number of discussions both with myself and between the parties in an effort to have Brampton G & A removed from the action. Those efforts were successful, and an Order was issued on consent in respect of the Caroti parties. The two most relevant provisions of that Order (which is dated April 3rd, 2018) are as follows:
(c) Brampton G&A shall attorn to the jurisdiction of the Superior Court of Justice in this Action for the purpose of any further orders that are necessary for the adjudication of the claims, cross-claims, and counterclaims in the Action that require the involvement of Brampton G&A given the Mortgage registered on title to the Property on September 14, 2016.
(g) Brampton G&A shall be entitled to notice of any motion or proceeding from the Plaintiffs that requests relief from the Court that may affect the rights, interest, or obligations of Brampton G&A in the Mortgage and/or the Three Lots and such notice shall be provided to Brampton G&A in accordance with the Rules of Civil Proceeding as if Brampton G&A were still a party to the Action.
[26] In their negotiations, counsel on both sides discussed whether this Order should be placed on title. They ultimately determined that it would not be placed on title. Given the positions taken by the parties on this motion, it is necessary to review those negotiations in some detail.
[27] This matter originally came before me when the Pichelli Parties sought to obtain a CPL and a Mareva injunction on a short motion in September of 2017. In reading the materials to prepare for that motion, it became clear to me that this action was very complicated.
[28] I expressed concern to the parties about this relief. Ultimately, the Order set out at paragraph 25 was issued. At approximately the same time, I then began to case manage the actions.
[29] Shortly after beginning to case manage these actions, I discovered that the Caroti parties were on the verge of bringing an action similar to the one that had been brought by the Pichelli parties. As a result, I determined that these actions should all be case-managed together.
[30] Ms. Roberts-Jones, who was then acting for the Caroti parties, indicated that she also might want to bring a motion for a CPL and a Mareva injunction. The parties were encouraged to discuss and resolve the issues. I provided the parties with a deadline of January 23rd, 2018 to discuss the issues, including whether Brampton G & A should be a party to the action and the CPL.
[31] It was not resolved by this date, and I advised the parties that there would be a further appearance in the week of February 5th, 2018. The parties discussed the matter in the last week of January. Counsel for Brampton G & A stated as follows in an e-mail dated January 26th, 2018:
Martin, my clients advised that they do not know how such an order would impact bank financing. They don't want anything registered on title. One suggestion was an assignment of the charge to one of the lawyers as a trustee who will administer the funds as directed by the court, that way nothing has to be registered on title.
I have included Doug in this thread as he should be in these discussions too. If we can't resolve this by Monday, it looks like we will have to have an in person attendance.
Ps- I'm actually off today, but trying to see if we can resolve this. Thx.
[32] In response to this e-mail, there was an e-mail from one of Ms. Roberts-Jones' colleagues, Mr. Mendelzon, which stated as follows:
One concern that remains outstanding on our clients' end is that if 185 Corp were to transfer/sell the mortgage in contravention of the Order, we might be left with a bona fide purchaser for value without notice. I know Ed's clients have advised that they will not agree to have anything registered on title. As such, we suggest that the Mortgage be transferred to Mr. Pape's firm in trust, to be administered by the firm.
[33] The parties had further discussions, and ultimately agreed that nothing would be registered on title. Mr. Cunningham, on behalf of the Pichelli parties, was also involved in this discussion. It should be noted that the same order that was reproduced in part above at paragraph 25 was also issued and entered on the Pichelli action.
[34] The issues of the CPL, the preservation Orders and of registering the Orders on title were not raised again until there was a change in counsel in mid-2019. I signed a temporary Order in June of 2019, and the matter was scheduled to come before me for argument on September 9th, 2019.
d) The Agreement of the Parties
[35] At this point, I understand that Brampton G & A and the Plaintiffs have been able to agree on the following provisions that the Vuletics also do not object to:
a) A preservation Order pursuant to Rule 45 of the Rules of Civil Procedure is to issue both with respect to the VTB Mortgage that the Vuletics currently hold, as well as the three lots that the Vuletics claim entitlement to under the APS with Brampton G & A.
b) The interest and, if necessary, the principal with respect to the VTB Mortgage is to be paid into Court. These payments were to commence with the payment due on September 12th, 2019.
c) The Vuletics, if they receive title to the three lots in the development, are prohibited from transferring those lots to anyone else.
[36] These terms, which were agreed to in advance of the September 9th, 2019 hearing, have been incorporated into an Order, and I have signed that Order. The Order is in a slightly different from than the points reproduced above, but the substance is the same. If any additional Orders are required, I am prepared to sign them.
[37] The parties have not been able to agree either on whether the preservation Order with respect to the mortgage or a CPL in relation to the three lots that the Vuletics have been promised as a term of the APS. Neither the Vuletics nor the Pichelli Parties took a position on this issue at the hearing of the motion.
The Issues
[38] Although the parties have agreed on most of the relief on this motion, they have not been able to agree on two issues, as follows:
a) Should a CPL be granted to the Plaintiffs for the three lots that the Vuletics have claimed an interest in?
b) Should the Court's Orders respecting the mortgage be registered on title?
[39] I will outline the law and analysis that applies to both issues in the sections that follow.
Issue #1- Should a CPL Be Granted?
a) The Law
[40] The relevant principles relating to whether a CPL should be granted were set out by Master Glustein (as he then was) in Perruzza v. Spatone (2010 ONSC 841). At paragraph 20, he stated:
I rely on the following legal principles:
(i) The test on a motion for leave to issue a CPL made on notice to the defendants is the same as the test on a motion to discharge a CPL (Homebuilder Inc. v. Man-sonic Industries Inc., 1987 CarswellOnt 499 (Ont. Master) ("Homebuilder) at para. 1);
(ii) The threshold in respect of the "interest in land" issue in a motion respecting a CPL (as that factor is set out at section 103(6) of the Courts of Justice Act, R.S.O. 1990, c.43) is whether there is a triable issue as to such interest, not whether the plaintiff will likely succeed (1152939 Ontario Ltd. v. 20555835 Ontario Ltd, 2007 CarswellOnt 756 (Ont. S.C.J.), as per van Rensburg J., citing Transmaris Farms Ltd. v. Sieber, [1999] O.J. No. 300 (Ont. Gen. Div. [Commerical List]) at para. 62);
(iii) The onus is on the party opposing the CPL to demonstrate that there is no triable issue in respect to whether the party seeking the CPL has "a reasonable claim to the interest in the land claimed" (G.P.I Greenfield Pioneer Inc. v. Moore, 2002 CanLII 6832 (ON CA), 2002 CarswellOnt 219 (Ont. C.A.) at para. 20);
(iv) Factors the court can consider on a motion to discharge a CPL include (i) whether the plaintiff is a shell corporation (ii) whether the land is unique, (iii) the intent of the parties in acquiring the land, (iv) whether there is an alternative claim for damages, (v) the ease or difficulty in calculating damages, (vi) whether damages would be a satisfactory remedy, (vii) the presence or absence of a willing purchaser, and (vii) the harm to each party if the CPL is or is not removed with or without security (572383 Ontario Inc. v. Dhunna, 1987 CarswellOnt 551 (Ont. Master) at paras. 10-18); and
(v) The governing test is that the court must exercise its discretion in equity and look at all relevant matters between the parties in determining whether a CPL should be granted or vacated (931473 Ontario Ltd. v. Coldwell Banker Canada Inc, 1991 CarswellOnt 460 (Ont. Gen.Div).); Clock Investments Ltd. v. Hardwood Estates Ltd., 1977 CanLII 1414 (ON SC), 1977 CarswellOnt 1026 (Ont. Div. Ct.) at para. 9).
[41] In addition, the Courts have considered principles relating to the timing of a CPL. Where a party has delayed in seeking a CPL, this is a factor that the Court will consider in denying the request for a CPL. See Nanton v. Julien 2019 ONSC 68 (at para 30) and Wilanmar Holdings Ltd. v. Meredith 2008 CanLII 63166.
[42] With these principles in mind, I will now set out my analysis.
b) Analysis
[43] Determining whether a CPL should be registered on the property in this case requires me to determine a number of underlying issues:
a) Should the Court look behind the consent Order that was signed in 2018 relating to this issue?
b) Are the parties represented by Mr. MacDonald barred from obtaining a CPL because of the doctrine of laches?
c) Do the Plaintiffs meet the test for a CPL?
[44] I will deal with each of these issues in turn.
a) Is the Consent Order Binding?
[45] There are two points of law that arise in answering this question. First, Courts are generally cautious about setting aside orders, particularly those made on consent (see Clatney v. Quinn Thiele Mineault Grodzki 2016 ONCA 377). Second, the principles of res judicata and issue estoppel can apply to the same, or closely related, disputes over the same body of facts.
[46] In this case, when the whole context of the discussions between the parties are considered (as set out at paragraphs 30 to 32), it is clear that the parties discussed whether any orders should be placed on title and agreed that they would not be.
[47] In that regard, I note that the evidence of Mr. Hiutin on this point is uncontradicted, as Ms. Abela did not seek to lead an affidavit from either Ms. Roberts-Jones or Mr. Mendelzon (the former counsel) in this matter. In any event, the e-mail exchanges between the parties that I have reproduced above clearly support this conclusion.
[48] Having agreed to resolve the matter on the basis that nothing (including a CPL) would be registered against title, this Order binds the parties that agreed to it. The re-litigation of these issues is an attempt to reopen this Order and must be assessed in the context of the parties previous agreement.
[49] This brings me to the question of whether I should re-open the Order because of the passage of time. I reject that argument for two reasons:
a) Most importantly, the only issue raised by the passage of time is the fact that the mortgage is coming due. The preservation Order that the parties have agreed to should result in all of the money being paid into Court in any event, and should also prevent the transfer of the three lots. As a result, the fact that the mortgage is coming due has already been accounted for by the Orders the parties have signed.
b) The parties should be discouraged from re-litigating issues in this case. We are more than two years into the litigation, and we had to re-do the pleadings this summer. I make no judgment on whether the redoing of pleadings was necessary. However, I am concerned about the revisiting of the CPL issue. It was resolved earlier, and parties should not face re-litigation of issues that have already been determined.
[50] However, I am also of the view that not all of the parties are bound to these Consent Orders. As a result, I will address the other two arguments.
d) The Doctrine of Laches
[51] The doctrine of laches is an equitable doctrine, and the principles of equity apply to the granting of a CPL. While the doctrine of laches might theoretically be available in this case, I am not prepared to apply the doctrine of laches in this case.
[52] The doctrine of laches was summarized by the Supreme Court of Canada in M(K) v. M(H) (1992 CanLII 31 (SCC), [1992] 3 S.C.R. 6 (at para. 98):
Thus there are two distinct branches to the laches doctrine, and either will suffice as a defence to a claim in equity. What is immediately obvious from all of the authorities is that mere delay is insufficient to trigger laches under either of its two branches. Rather, the doctrine considers whether the delay of the plaintiff constitutes acquiescence or results in circumstances that make the prosecution of the action unreasonable. Ultimately, laches must be resolved as a matter of justice as between the parties, as is the case with any equitable doctrine.
[53] Brampton G & A argues that Ms. Bilich and Mr. Sokich should have been aware of the problems with this property development as far back as 2003. In support of his position, counsel for Brampton G & A points to a number of events prior to 2016 that were a matter of public record and that he argues demonstrate that Mr. MacDonald's clients should have known to bring a motion to obtain a CPL a long time ago.
[54] The problem with this argument is that it is also a matter of public record that an accounting had been ordered by the Court after all of the events described in Brampton G & A's factum on this point had taken place. As a result, the question of whether litigation was necessary was still arguably an open one, although I make no final finding in that regard.
[55] As a result, the doctrine of laches does not apply, as Brampton G & A cannot establish (at least on this record) the existence of either acquiescence or of circumstances that make the prosecution of the action unreasonable. However, delay is still a factor that should be considered in deciding whether to grant a CPL. I will now turn to the test for granting a CPL.
e) Applying the Test for Granting a CPL
[56] As I have noted, the delay in seeking this remedy from the Court is a significant factor against granting a CPL. However, it is not the only factor to be considered.
[57] It is clear to me that there is an interest in land at least being alleged in this case on the basis of a trust. In addition, the agreements that the lot holders have signed are at least open to the interpretation that there is an interest in the property, which might entitle the various parties seeking the CPL to obtain it. In that regard, I am not persuaded that Brampton G & A has been able to demonstrate that there is no triable issue in respect to whether there is an interest in land.
[58] This brings me to the factors that are set out in paragraph (iv) of Master Glustein's (as he then was) analysis. First, the Plaintiffs in this case are not shell corporations.
[59] I have had no evidence on whether the land in this case is particularly unique. As a result, that is a factor that favours Brampton G & A's position on this motion.
[60] The next factor is the intent of the parties in acquiring the land. The original intent of the lot-holders was to ultimately end up owning lots. As a result, the intent was to own the land, which is a factor that favours the parties seeking the CPL. However, this is not a significant factor as there are only three lots left that anyone claims title over.
[61] The next three factors relate to damages. The damages calculation in this case has the potential to be quite difficult. However, there is clearly a claim in damages in this case and that damages would be a satisfactory remedy.
[62] In that regard, it should be noted that these lots were purchased as investments. As noted in DiFillipo v. DiFillipo (2013 ONSC 5460 at paras 13-14), investment properties do not generally attract a CPL as they are not viewed as being unique. (see also Hunter's Square Developments Inc. v. 351658 Ontario Ltd. (2002) 2002 CanLII 49491 (ON SC), 60 O.R. (3d) 264 at para 45, aff'd (2002) 2002 CanLII 9163 (ON CA), 62 O.R. (3d) 302). This is a factor that strongly favours denying a CPL in respect of the three lots.
[63] The final factor is the harm that each party would suffer if I did or did not grant a CPL. In that regard, I would note:
a) The prejudice claimed by Brampton G & A is that they would be unable to develop the property, as they would be unable to register easements or otherwise engage in planning. There are two problems with this assertion. First, the evidence is provided through counsel on the basis of information and belief. As a result, I do not view it as being particularly strong. Second, I heard no good argument in response to the argument from Ms. Abela and Mr. MacDonald that the Court could simply lift the CPL (or other Order on title) on a temporary basis in order to ensure that development work could proceed uninterrupted.
b) The prejudice claimed by Ms. Abela and Mr. MacDonald's clients is that the Vuletics have demonstrated a willingness to use the property as their own personal bank, and that they might abscond to Croatia. This claim of prejudice is also weak for two reasons. First, there is already a preservation Order in place. Second, the evidence on the likelihood of the Vuletics absconding is not concrete. It is limited to the fact that John Vuletic and his wife have a house in Croatia, they travel there and that they have a daughter that lives there. This has to be balanced against the fact that the Defendant Anthony Vuletic, the son of John and his wife, lives in Canada.
[64] In my view, the prejudice that would be suffered by the parties favours, but only slightly, the parties seeking the CPL. It is not enough, in my view, to overcome the other reasons for not granting a CPL in this case. In this regard, I note the points that have been made above, especially the points about this being an investment property, which is a very significant consideration. I also note that Brampton G & A is a bona fide purchaser without notice. As a result, the Court should be cautious about constraining Brampton G & A's property rights.
[65] I should also briefly deal with two arguments that were raised, but are not essential to my disposition of this motion. First, there is the claim raised by Brampton G & A that the agreements that the lot-holders signed preclude them from registering anything on title in any event. In support of this position, Brampton G & A relies on Chiu v. Pacific Mall Developments Inc. ([1998] O.J. No. 3075 (Gen. Div.)), which suggests that a non-registration clause precludes parties from registering a CPL against land even if the agreement is treated as at an end.
[66] In response to this argument, Ms. Abela directs my attention to the decision in 2033363 Ontario Ltd. v. Georgetown Estates Corp. ([2006] O.J. No. 687 (Ont. Master)), which distinguishes the Chiu decision based on the fact that it had specific language about the CPL.
[67] These case raise an interesting legal question. However, given my determination on the other issues in this motion, it is not necessary for me to answer that question.
[68] Second, Brampton G & A argues that the Order reproduced at paragraph 25, above, means that they are no longer a party to this action and that the moving parties cannot claim relief against Brampton G & A without suing them separately. I reject that argument. Paragraph (c) of the Order produced at paragraph 25 makes it clear that Brampton G & A is required to attorn to this Court's jurisdiction for any further Orders that may be necessary given the registration of the mortgage on the property. Further orders in this regard were foreseeable (as is clearly envisioned by both paragraphs of the Order reproduced at paragraph 25), and Brampton G & A remains a proper party to this motion.
[69] For the foregoing reasons, the claim for a CPL in respect of the three lots is dismissed.
Issue #2- Should the Mortgage Be Registered on Title?
[70] Much of the analysis I have set out above applies in this case as well. As a starting point, the relief that the moving parties have obtained should be considered. An Order under Rule 45 has been agreed to. It is important to remember both what the test for granting this type of relief is and why it is granted.
[71] In Sadie Morris Realty Corp. v. 1667038 Ontario Inc. (2012 ONCA 475), Goudge J.A. stated (at paras. 18 to 20):
- In my view, the policy approach dictated by this caution must inform the test required by rule 45.02. In News Canada Canada Marketing Inc. v. TD Evergreen, [2000] O.J. No. 3705 (Ont. S.C.J.), at para. 14, Nordheimer J. put forward a test which does that, and which I would adopt:
I conclude therefore that the appropriate test for relief under rule 45.02 should require the plaintiff to establish that:
(a) The plaintiff claims a right to a specific fund;
(b) there is a serious issue to be tried regarding the plaintiff's claim to that fund;
(c) the balance of convenience favours granting the relief sought by the plaintiff.
- The first of these requirements, the one under special scrutiny in this appeal, faithfully reflects the language of rule 45.02. It requires that there be a specific fund readily identifiable when the order is sought. It also requires that the plaintiff assert a legal right to the specific fund as a claim in the litigation. While I do not find it to be a helpful descriptor, I think it is in his sense that past jurisprudence has sometimes described the specific fund as "earmarked to the litigation".
20 The second and third requirements, though not centrally in issue in this case, are equally important in manifesting the policy behind the rule. They ensure that interference with the defendant's disposition of assets is limited to cases where the plaintiff has a serious prospect of ultimate success, and there is something compelling on the plaintiff's side of the scales, such as a real concern that the defendant will dissipate the specific fund, that is sufficient to outweigh the defendants' freedom to deal with his or her property.
[72] It is understandable that Ms. Abela and Mr. MacDonald's clients wanted to protect the payments flowing from the mortgage as the maturity date for the mortgage is fast approaching. However, they have achieved a significant measure of that protection by way of the preservation Order.
[73] Both Ms. Abela and Mr. MacDonald argue that the preservation Order is insufficient, and that it must be registered on title. I disagree for the reasons set out above. In addition, I note the following points:
a) Generally, execution is not permitted before judgment. I acknowledge that the preservation Order is sought because the lot-holders need protection. The problem with this position, however, is that the lot-holders are seeking additional security (beyond a preservation Order) for approximately two-thirds of the assets in dispute in this case. That is a great deal of security in advance of a judgment.
b) The mortgage amounts will have to be paid into Court. As a result, any party that attempts to purchase the mortgage from the Vuletics should engage in due diligence. As a result of this due diligence, they will discover that the most recent payments under the mortgage have been made into Court.
c) The claims of the financial inaptitude and tendency to dissipate assets that have been made against the Vuletics are of limited assistance because of the existence of the preservation Orders in this case. It will be considerably harder, if not impossible, for the Vuletics to successfully dissipate any additional assets.
[74] As a result, the preservation Order will not be registered on title, and that portion of the motion is dismissed as well.
Conclusion and Costs
[75] For the foregoing reasons, I order as follows:
a) The preservation Order that was previously signed continues in place.
b) The remainder of the relief sought on this motion is dismissed.
[76] In terms of next steps in the action, I note:
a) The summary judgment motion on the Kegalj matter was set aside for December 9th and 10th, 2019. Those dates remain fixed.
b) The motion materials for the summary judgment motion should have been completed.
c) The parties are to confirm the timetable for materials for the summary judgment motion with my assistant, Sara Stafford.
d) The parties are to choose any day (except Friday) the week of October 28th, 2019 for a 9:30 appearance for all counsel. This appearance is to be in person, but designates may be sent.
[77] The parties are encouraged to agree on the costs. If they are unable to agree on costs then the timetable for costs submissions follows.
[78] Brampton G & A is to provide its costs submissions within ten (10) calendar days of today's date, being October 15th, 2019 (accounting for the holiday). Those submissions are to be no more than two (2) single-spaced pages in length, exclusive of bills of costs, offers to settle and case-law. Brampton G & A is to identify all parties it is seeking costs against, and is to serve all of those parties with costs.
[79] The parties against whom costs are claimed shall have a further ten (10) days to complete their costs submissions, and those submissions are due on October 25th, 2019. Again, those submissions are to be no more than two (2) single-spaced pages in length, exclusive of bills of costs, offers to settle and case-law.
[80] Brampton G & A are to have a further seven (7) calendar days to provide reply submissions, which are due on November 1st, 2019. Those submissions are not to exceed one single-spaced page in length.
[81] A hard copy of the costs submissions is to be filed with the Court office. My assistant is to be provided with an electronic copy of the costs submissions.
[82] There are to be no extensions in the time limits for preparing and filing costs submissions, even on consent, without my leave. If submissions are not made, I will assume that the parties have resolved the issue of costs between them.
LEMAY J
Released: October 4, 2019
COURT FILE NO.: CV-17-5302-00
DATE: 2019 10 04
ONTARIO
SUPERIOR COURT OF JUSTICE
BETWEEN:
Alearano Caroti, Jacinta Caroti, Ian Grounds, Moraig Grounds, Nancy Kostelac, Brain McDowell, Biljana Nizalek, Marielle Pelchat-Morris, Wilma Jesus, Monica Savona, Milena Boland, Frand Demaria, Jurica Biondic, Renato Biondic, Roberta Biondic and Boris Klecina
Plaintiffs
- and -
Ante Kegalj, Anthony Vuletic, John Vuletic, Mira Vuletic, Embleton Properties Corp., 1857325 Ontario Ltd. and Bramption G&A Holdings Inc.
Defendants
-and between-
Anthony Vuletic, John Vuletic, Mira Vuletic, Embleton Properties Corp. and 1857325 Ontario Ltd.
Plaintiffs by Counterclaim
-and-
Aleardo Caroti, Jacinta Caroti, Ian Grounds, Moraig Grounds, Nancy Kostelac, Brain McDowell, Biljana Nizalek, Marielle Pelchat-Morris, Wilma Jesus, Monica Savona, Milena Boland, Frand Demaria, Jurica Biondic, Renato Biondic, Roberta Biondic, Boris Klecina, Anna Bilich, Emma Faria, Katarina Granic, Anton Granic, Marianne Martinovic, Frank Samardzic and Robert Sokic
Defendants
REASONS FOR JUDGMENT
LEMAY J
Released: October 4, 2019