Falsetto v. Falsetto, 2019 ONSC 6405 COURT FILE NO.: 17-73750

DATE: 2019/11/04

ONTARIO

SUPERIOR COURT OF JUSTICE

B E T W E E N:

SALVATORE FALSETTO

Plaintiff

– and –

SALVATORE FILLIPO FALSETTO a.k.a. SAM FALSETTO a.k.a. SAM FALSETTO and FALSETTO HOMES INC., 99 CARTIER ST. APARTMENTS INC., CLARENCE STREET APARTMENTS INC., and BRONSON RIDGE APARTMENTS INC. and CANADIAN IMPERIAL BANK OF COMMERCE

Defendants

Carol Craig and Emma Costain, for the Plaintiff

Fred E. Seller and Geoffrey Cullwick, for the Defendants, Salvatore Fillipo Falsetto a.k.a. Sam Falsetto, Falsetto Homes Inc., 99 Cartier St. Apartments Inc., Clarence Street Apartments Inc., Bronson Ridge

Lisa Filgiano, for the Defendant, Canadian Imperial Bank of Commerce

HEARD: November 28, 2018 and March 28, 2019

RULING ON MOTION

(Setting Aside or Discharging a Certificate of Pending Litigation)

corthorn J.

Introduction

[1] Salvatore Falsetto and the defendant, Sam Falsetto, are father and son. At times, they have enjoyed a good relationship, and at other times have had a difficult one. For a number of years, until the summer of 2016, Sam was his father’s attorney for property. In that role, he was responsible for the management of his father’s assets.

[2] By the fall of 2017, the relationship between father and son had fractured. In October 2017, Salvatore obtained leave to issue a certificate of pending litigation and register the certificate on title to three residential apartment buildings (“the Certificate”). He did so on a motion made without notice to the defendants.

[3] Salvatore’s allegations against Sam include the misappropriation of Salvatore’s funds and that Sam arranged for three of the defendant corporations to apply those funds as down payments on the apartment buildings.

[4] On this motion, Sam requests that the October 2017 order be set aside or that the Certificate be discharged.

Background

[5] Salvatore has been divorced since 1987. He and his former wife had five children. After the divorce, Salvatore’s relationships with his children became fractured. Over time, Salvatore reconciled with each of his children, including Sam, the youngest and the only male child.

[6] Salvatore is in his late eighties and is retired. During his working life, Salvatore was involved in the purchase, renovation, and re-sale of residential homes and in the ownership of rental properties. Also involved in those real estate endeavours were Salvatore’s brother, Luigi, and his nephew, Alberto (Luigi’s son). By the time Luigi and Alberto became involved in those endeavours, Sam was working with his father.

[7] Salvatore ended up in litigation with Luigi and Alberto. In late 2013, a settlement of that litigation was reached. Luigi and Alberto paid Salvatore $6,500,000 (“the Funds”). In exchange, Salvatore transferred his ownership interest in two commercial plazas to Luigi and Alberto.

[8] Salvatore’s claim against Sam and the other defendants arises from the manner in which the Funds were used after they were paid to Salvatore.

[9] Sam alleges that, when Salvatore received the Funds, he was estranged from all his children except for Sam. He submits that, in keeping with Salvatore’s purportedly mean-spirited and vindictive nature, Salvatore chose to gift the Funds to Sam to ensure that none of Sam’s siblings would, through inheritance, receive any portion of the Funds.

[10] Salvatore claims that no such gift was ever made. He alleges that Sam was his attorney for property. To the extent that Sam made use of the Funds, Salvatore submits that Sam did so in that capacity and/or in his capacity as trustee of Salvatore’s assets.

[11] In 2014, Sam incorporated each of 99 Cartier Street Apartments Inc., Bronson Ridge Apartments Inc., and Clarence Street Apartments Inc. (collectively, “the Corporations”). Sam is the president, sole officer, and sole director of each of the Corporations.

[12] In 2014, a portion of the Funds was transferred to the Corporations. The transferred money was used by the Corporations for down payments on three residential rental properties (“the Properties”):

Jul. 31, 2014 - $1,750,000 for 200 Bronson Avenue;

Sept. 30, 2014 - $2,000,000 for 222 Clarence Street; and

Nov. 24, 2014 - $1,532,755 for 99 Cartier Street.

[13] Sam says that the Properties were purchased with Salvatore’s knowledge and understanding that the Corporations—not Salvatore—would be the owners of the Properties. Salvatore claims that he understood, from Sam, that the Properties were purchased for Salvatore’s benefit.

[14] As of 2016, Salvatore had reconciled with each of his daughters, including, in 2014, with Luisa. In 2016, with Luisa’s help, Salvatore learned that the Properties were owned by the Corporations.

[15] The Properties are only one portion of the assets that Salvatore understood were being managed by Sam for Salvatore’s benefit. Amidst concerns over Sam’s management of Salvatore’s assets, Salvatore executed a new power of attorney for property in August 2016. Luisa has been Salvatore’s attorney for property since that time.

[16] In August 2016, Salvatore’s former lawyer wrote to Sam requesting information with respect to transactions made with the Funds. Sam’s lawyer (also his lawyer of record in this action) responded on Sam’s behalf (a) requesting additional information, and (b) offering to arrange a meeting of the relevant parties to discuss matters. There was no further communication between the lawyers subsequent to late September 2016.

[17] Salvatore commenced this action in August 2017. It relates not only to the Properties, but also to Sam’s management of Salvatore’s other assets, including accounts with the defendant, Canadian Imperial Bank of Commerce (“CIBC”).

[18] In October 2017, Salvatore brought a motion without notice and obtained an order permitting him to have the Certificate registered on each of the Properties (“the Order”). Salvatore was, at the time, recovering from surgery. In support of the motion, Salvatore relied exclusively on an affidavit sworn by Luisa.

[19] Sam and the Corporations were served with the Order, the record on the motion, and the statement of claim in this action in October 2017. The Corporations responded in February 2018 with this motion for relief related to the Certificate.

[20] The motion was originally returnable in May 2018; it was adjourned until November 2018. The half-day scheduled initially by the parties for this motion proved to be insufficient. Oral argument on the motion was completed in late March 2019.

[21] The Corporations request that the Order be set aside or, in the alternative, that the Certificate be discharged. Salvatore argues that there is no basis for granting either form of relief.

The Issues

[22] The forms of relief requested by the Corporations require that the following issues be addressed:

Should the Order be set aside because of Salvatore’s failure to make full and fair disclosure to the court on the motion made without notice in October 2017?
Are the Corporations entitled to an order discharging the Certificate pursuant to one or both of ss. 106(3)(a) & (c) of the Courts of Justice Act, R.S.O. 1990, c. C.43 (“the CJA”)?

Issue No. 1 – Is the Order to be set aside because Salvatore failed to make full and fair disclosure to the court on the motion made without notice in October 2017?

a) Applicable Law

[23] The Corporations rely on r. 39.01(6) of the Rules of Civil Procedure, R.R.O. 1990, O. Reg. 194 as authority for their request to have the Order set aside. The rule provides that, “[w]here a motion or application is made without notice, the moving party or applicant shall make full and fair disclosure of all material facts, and failure to do so is in itself sufficient ground for setting aside any order obtained on the motion or application”. (Emphasis added.)

[24] Although the Order was obtained on a motion without notice, the document itself does not make note of this fact. The introductory paragraph of the Order reads as follows: “THIS MOTION, made by the Plaintiff, was heard this 20^th day of October 2017, at the courthouse…”. An order made on a motion without notice would typically include “made by the [moving party] without notice”. Regardless, it is undisputed that leave to issue the Certificate was obtained by Salvatore on a motion made without notice.

[25] What is meant by the requirement to “make full and fair disclosure of all material facts”? Justice Perrell summarized those requirements at para. 87 of his decision in Boal v. International Capital Management Inc., 2018 ONSC 2275:

When arguing the facts, the moving party cannot take unfair advantage of the absence of their adversary;
The moving party cannot intentionally mislead or deceive the court;
The moving party is obliged to fairly present both their case and the material facts that favour the opposing (and absent) party; and
In so doing, the moving party is not obliged to argue against their case or to argue both sides of the case.

[26] A finding that the moving party on a motion made without notice did not fully and fairly disclose all the material facts will not necessarily result in the order being set aside. If such a finding is made, the court must then decide whether, if full and fair disclosure of the material facts had been made, the order made without notice “may well not have been made”: see Khmelevskikh v. Zubashvili, 2018 ONSC 2160, at para. 30.

b) Positions of the Parties

[27] Sam submits that Salvatore failed to make full and fair disclosure of several material facts. Most significant among them was the fact that Sam was represented by counsel. Sam submits Salvatore also failed to disclose the following material facts:

Sam’s position, known to Salvatore when the motion was made, that Salvatore had gifted the Funds to Sam;
Salvatore had, in 2012, made a will in which he named Sam as the sole beneficiary of his estate (“the 2012 Will”);
The communication in August and September 2016 between Sam’s lawyer and Salvatore’s former lawyer, including the suggestion by Sam’s lawyer that the parties meet to discuss the matter;
That, before Sam was responsible for management of Salvatore’s assets, Salvatore had appointed his nephew, Alberto, as his attorney for property; and
That it was not Salvatore alone but rather Salvatore, with the assistance of Luigi and Alberto, who had grown Salvatore’s real estate business over the years.

[28] Sam also argues that there were no exceptional circumstances to support Salvatore’s decision to proceed with the motion without notice. Sam submits that the evidence did not support Salvatore’s alleged concerns about either his safety or the depletion of the Corporations’ respective assets (i.e., the Properties).

[29] Salvatore’s position is that there was full and fair disclosure of the material facts as they were known to him in October 2017. In response to the specific points raised by Sam, Salvatore makes the following arguments:

The level of representation by counsel that Sam had as of August and September 2016 did not give rise to an obligation to disclose to the court that Sam had a lawyer;
The existence of the 2012 Will was not a material fact for the purposes of the motion;
The emails exchanged between counsel in 2016 were not relevant when the motion was made without notice more than a year later. In any event, the emails sent by Sam’s lawyer were sent “Without Prejudice” and the contents of those emails could not be disclosed to the court; and
In the spring and summer of 2017, Sam orchestrated the sale of properties other than the Properties. By October 2017, Salvatore was, at a minimum, concerned about the Properties being further encumbered; at a maximum, he was concerned that the Corporations would sell the Properties.

c) Analysis

i) Failure to make full and fair disclosure

[30] For the reasons that follow, I find that Salvatore failed to make full and fair disclosure of material facts.

[31] First, Salvatore failed to disclose that his former lawyer received a response to his August 2016 letter. Not only did Salvatore fail to disclose that response, he misled the court by giving the impression that Sam had completely ignored the August 2016 letter.

[32] At para. 53 of her 2017 affidavit, Luisa refers to the August 2016 letter and the inquiry made on Salvatore’s behalf about Sam’s management of $10,500,000 of Salvatore’s assets. A copy of the letter is attached as an exhibit to the affidavit. Nowhere in the affidavit does Luisa mention that Salvatore’s former lawyer received a response on Sam’s behalf to the August 2016 letter, that Sam had retained a lawyer to respond to the inquiry, or that Sam’s lawyer was prepared to “sit and talk”.

[33] The quote, “sit and talk”, is from an email sent by Sam’s lawyer to Salvatore’s former lawyer on September 29, 2016. That email and the first email sent by Sam’s lawyer (on August 11, 2016) were not sent “Without Prejudice”.

[34] It is disingenuous for Salvatore to now suggest to the court that nothing about the emails exchanged could be disclosed because they were sent “Without Prejudice”. The complete email exchange could have been disclosed to the court with the substance of the “Without Prejudice” messages redacted. There was nothing to prevent Luisa from attaching the email chain as an exhibit to her 2017 affidavit, subject to the potential for redactions to be made to it. Had she done so, the court would have been made aware that

Sam had retained counsel;
Between August 11 and September 29, 2016, there was an exchange between the lawyers of six emails; and
Sam understood that his father might proceed with litigation.

[35] Instead of disclosing the email communication regarding the August 2016 letter, Luisa says, at para. 54 of her 2017 affidavit: “Sam has not provided my father with any of the information requested and outlined in the August 4, 2016 letter to date”. That statement is misleading because it omits reference to the email exchange between the lawyers. It is also misleading because it portrays Sam as having completely disregarded the request for information.

[36] The final email sent by Sam’s lawyer in September 2016 specifically recognized that, if Salvatore proceeded with a claim, the parties to the litigation would be required to fulfil discovery obligations. In that email, Sam’s lawyer states: “[w]e are not going to proceed in this manner, if you intend to sue, then sue and your questions will be answered in due course (as will ours). If you want to sit and talk, then we can sit and talk, you do not have the luxury of demanding information without responding to our requests for information”.

[37] The second reason why I find that Salvatore failed to make full and fair disclosure is that I reject Salvatore’s argument that Sam having retained counsel was, by October 2017, dated and no longer relevant. It is clear from Sam’s lawyer’s final email that Sam anticipated that his father would proceed with litigation. It could easily be inferred from that same email, and the exchange of emails that preceded it, that Sam intended to be represented by a lawyer—if not his lawyer at that time—for the purposes of the litigation.

[38] I take judicial notice of how this court handles motions made without notice where it is clear that at least one of the opposing parties has counsel (even if that individual is not yet the party’s lawyer of record). Generally speaking, the court is reluctant to hear a motion without notice in those circumstances. It is not uncommon for the motion to be adjourned, to provide the moving party the opportunity to serve the opposing party, and to bring the motion on notice—even on short notice, if necessary.

[39] An exception to this general practice may be made if the moving party demonstrates a degree of urgency such that the court concludes that the motion must be heard without notice even where the opposing party has retained counsel.

ii) Urgency did not require that the motion be heard without notice

[40] Salvatore submits that he required the Certificate on an urgent basis for a number of reasons. Salvatore cites, for example, Sam’s historical dealings with residential homes previously owned by Salvatore. In her 2017 affidavit, Luisa describes a series of transactions leading to the sale of at least two of those properties: 566 Hilson Street and 1540 Skeena Avenue.

[41] Luisa’s evidence in support of the urgency of the matter includes reference to Salvatore’s and her continuing uncertainty as to what has become of the proceeds from the sale of residential properties previously owned by Salvatore. In the final substantive paragraph of her 2017 affidavit, Luisa says:

Both my father and I are gravely concerned about Sam finding out that we are investigating his property and banking transactions. Beyond my father’s safety, we are also concerned that once Sam hears that my father is pursuing him in the courts, he will have the remaining properties sold, encumbered or take other actions to remove my father’s rights and interest in these properties.

[42] There is no evidence in Luisa’s 2017 affidavit to support her general statement that Sam posed a risk to Salvatore’s safety.

[43] There is also no evidence that one or more of the Properties—all multi-unit residential rental buildings—was listed for sale or imminently to be sold. Given that title to the Properties is not registered in Salvatore’s name, there was little—if anything—that Salvatore could do to determine whether one or more of the Properties was listed for sale or was to be sold imminently. It would also have been difficult—if not impossible—for Salvatore to ascertain whether Sam was in the process of further encumbering one or more of the Properties.

[44] Residential rental properties serve at least two purposes. They are assets of and provide income to the owner. They can also be used as collateral to obtain funds with which to purchase other properties and/or to fund other business activities. In that general context, as of October 2017, there existed a concern that the Corporations would deal with the Properties in some way that would prejudice Salvatore’s interest in them, if ultimately established in the action.

[45] Sam was actively selling properties owned by Falsetto Homes Inc. as of the spring of 2017 (i.e., the Skeena and Hilson properties). He was and remains the sole directing mind of the Corporations. There was nothing to prevent him from arranging for the Corporations to further encumber or sell any of the Properties.

[46] A copy of the statement of claim was before the court on the motion for the Certificate. The court was therefore aware of the value of the assets in issue and the nature of the claims being advanced. There was also evidence before the court as to the equity in each of the Properties and, therefore, the potential for the Properties to be further encumbered.

[47] It was open to the court to conclude that there existed some urgency; at a minimum because of the potential for the Properties to be further encumbered. I am not, however, convinced that the urgency was such that if full and fair disclosure had been made there would not have been options available to the court other than to hear Salvatore’s motion without notice to the defendants.

[48] For example, the court could have adjourned the motion, on terms, to be brought back on notice. The terms could have included a mechanism by which to preclude the Corporations from further encumbering or from selling the Properties pending the outcome of Salvatore’s motion for leave to issue the Certificate.

[49] Leaving aside the alternative option available to the court, I turn to the second question to be answered with respect to the request that the Order be set aside.

iii) What would have happened if full and fair disclosure had been made?

[50] Having found that Salvatore failed to make full and fair disclosure of material facts in 2017, the second question to be answered is whether, “if full and fair disclosure of the material facts had been made, the order without notice may well not have been made”: Khmelevskikh, at para. 30.

[51] The statutory authority for granting, registering, and discharging a certificate of pending litigation (“CPL”) is found in s. 103 of the CJA. Section 103(6) sets out the grounds upon which the court may make an order discharging a CPL:

The court may make an order discharging a certificate,

(a) where the party at whose instance it was issued,

(i) claims a sum of money in place of or as an alternative to the interest in the land claimed,

(ii) does not have a reasonable claim to the interest in the land claimed, or

(iii) does not prosecute the proceeding with reasonable diligence;

(b) where the interests of the party at whose instance it was issued can be adequately protected by another form of security; or

and the court may, in making the order, impose such terms as to the giving of security or otherwise as the court considers just.

[52] During oral submissions, counsel for the Corporations submitted that the Corporations rely only on ss. 103(6)(a)(i) and (iii). Yet, a number of submissions were made with respect to s. 103(6)(a)(ii) and whether Salvatore has a reasonable claim to the interest in the land claimed.

[53] The Corporations submit that Salvatore wants only money, with paras. 1(h)-(l) and (p)-(s) of the statement of claim demonstrating that only monetary relief is sought. The Corporations submit that leave to issue the Certificate should never have been granted.

[54] In response, Salvatore submits that he claims not only monetary relief but also an interest in the Properties. He points, by way of example, to para. 1(e) of the statement of claim, in which declaratory relief with respect to the Properties is sought.

[55] I turn first to the Corporations’ submissions with respect to the claim advanced for monetary relief.

▪ Alternative Monetary Claim - s. 103(6)(a)(i)

[56] The Corporations rely on a limited portion of Salvatore’s evidence from cross-examination on his affidavit filed in response to this motion. The Corporations submit that Salvatore’s responses to questions posed in cross-examination make it clear that the only remedy he is truly seeking is monetary. For example, in one of his responses Salvatore said: “I want my money back. It’s my money.”

[57] That response is helpful to the Corporations if it is considered in isolation of Salvatore’s other evidence on cross-examination and without consideration for the claims advanced in Salvatore’s pleading.

[58] For example, with respect to the former, on cross-examination Salvatore was asked: “So you think that you owned three properties because Sam used your money?” Salvatore’s response was: “I don’t say I own it, but it’s my money, down payments”.

[59] Salvatore’s evidence on cross-examination accurately reflects the ownership status of the Properties—he is not the registered owner. His statement that he wants his money back is not, however, an abandonment of the claim for an interest in the Properties. I draw an inference and find that his interest is in recovering the Funds. Recovery of the Funds could, if necessary, lead to the sale of the Properties.

[60] Turning to Salvatore’s pleading, the allegations made include that:

Sam was trustee of Salvatore’s assets, including assets held jointly by Sam and Salvatore;
Sam breached his fiduciary duties to Salvatore arising from Sam’s role as attorney for property; and
Sam and the Corporations misappropriated certain of Salvatore’s assets.

[61] Salvatore claims monetary relief in the form of an accounting, claims for damages, and claims for punitive damages. He also claims declaratory and other relief related to the Properties and to other properties of which he was historically the owner.

[62] Salvatore is 89 years old. He was 88 when he was cross-examined. He has significant experience in real estate as the owner of various residential and commercial properties. That experience does not, however, mean that he personally and fully understands the substantive legal issues to be determined in this litigation.

[63] Those issues involve not only the Funds but also the use of the Funds in making down payments on the Properties. Those issues also involve matters arising from Sam’s management more broadly of Salvatore’s assets while Sam was his father’s attorney for property. Another issue in the action is Sam’s management of other properties historically owned by Salvatore, and of bank accounts in Salvatore’s name alone or held jointly with Sam.

[64] Section 103(6)(a)(i) of the CJA should not be interpreted to mean that, simply because the relief claimed includes damages in the alternative, the court should routinely discharge a Certificate: see Holden Corp. v. Gingerfield Properties Ltd. (1987), 1987 CanLII 4283 (ON SC), 59 O.R. (2d) 304, at p. 311.

[65] Given both the various forms of relief sought by Salvatore and the nature of the claims that Salvatore is advancing, the fact that he is seeking, inter alia, monetary relief does not, in the circumstances of the case, support a conclusion that the Certificate would not have been granted had there been full and fair disclosure to the court.

▪ Interest Claimed in the Land – s. 103(6)(a)(ii)

[66] Salvatore and the Corporations agree that the test on a motion for leave to issue a CPL is the same as the test on a motion to discharge one: see Perruzza v. Spatone, 2010 ONSC 841, at para. 20, item (i). They also agree that the test has two steps.

[67] First, the court must determine whether there is a triable issue as to whether the plaintiff has an interest in the subject land: Perruzza, at para. 20, item (ii). On a motion to discharge a CPL, the onus is on the moving party to demonstrate that there is no triable issue as to whether the party who obtained leave to issue the CPL has “a reasonable claim to the interest in the land claimed”: Perruzza, at para. 20, item (iii).

[68] The second part of the test requires that the court consider the equities of granting or denying a request that a CPL be discharged. In 572383 Ontario Inc. v. Dhunna (1987), 24 C.P.C. (2d) 287 (Ont. H.C.), at paras.12-18, Master Donkin provided a non-exhaustive list of eight equitable factors to be considered:

whether the plaintiff is, or is not a shell corporation;
whether the land is, or is not unique … bearing in mind that in a sense any parcel of land has some special value to the owner;
the intent of the parties in acquiring the land;
whether there is an alternative claim for damages;
the ease or difficulty of calculating damages;
whether damages would be a satisfactory remedy;
the presence, or absence of another willing purchaser; and
the harm done to the defendant if the certificate is allowed to remain, or to the plaintiff if the certificate is removed, with or without the requirements of alternative security.

▪ Triable Issue

[69] It is difficult to see how a dispute concerning whether Salvatore gifted the Funds to Sam does not give rise to a triable issue with respect to Salvatore’s interest in the Properties. If one or more of the claims advanced is successful, Salvatore may be found to have an ownership interest in the Properties.

▪ The Dhunna Factors

[70] I turn to the eight equitable factors listed in Dhunna. Salvatore and the Corporations agree that the application of these factors is a matter for the court’s discretion. They also agree that no one factor is more important than another.

[71] Addressing the first factor, Salvatore is clearly an individual, not a shell corporation. The Corporations ask the court to conclude that, by reason of his limited financial means, Salvatore is analogous to a shell corporation. The Corporations highlight that Salvatore is not in a position to pay costs should costs be awarded against him in this litigation.

[72] While that description of Salvatore may be fitting in certain respects, if Salvatore is successful in this action, then he is a person of means who has been deprived of those means by reason of the conduct of one or more of the defendants. In the circumstances, it would be unfair, at this stage of the action, to conclude that the first factor weighs in favour of the Corporations.

[73] Turning to the second factor, I find that the Properties are not unique—they are residential rental properties: Perruzza, at para. 39(i). This factor does not weigh in favour of granting a CPL.

[74] With respect to the third factor, the undisputed evidence upon which the Corporations rely is that the Properties were acquired as investments—as income-generating properties. Salvatore’s evidence is that he understood that the Properties were acquired for that very purpose—to generate income for him.

[75] The purpose or intent when the Properties were purchased is at the heart of Salvatore’s action. This factor weighs in favour of granting the Certificate.

[76] Factors four, five, and six all relate to damages. Starting with the fourth factor, Salvatore’s claim for damages is in the alternative as it relates to the Properties. He is, however, advancing claims for damages related to Sam’s management of Salvatore’s assets other than the Funds. For any number of the claims advanced by Salvatore, it may be necessary to trace the use of the Funds and Salvatore’s other assets not only by Sam but by the Corporations and, perhaps, others. I therefore find that the fourth factor weighs in favour of granting the CPL.

[77] With respect to the fifth factor, the calculation of the damages to which Salvatore is entitled, if any, may be multi-faceted because of his historical assets. That exercise may be detailed and tedious. It will not necessarily be difficult.

[78] That said, difficulties may arise because the Funds flowed through several individuals or entities before they were applied, in part, towards down payments in the purchase of the Properties. Tracing all of Salvatore’s assets may add an element of complexity to the calculation of damages. This fifth factor weighs slightly in favour of granting the Certificate.

[79] Dealing with the sixth factor, the multiplicity of defendants means that damages may be an adequate remedy against some defendants but not against the others.

[80] Factor seven weighs in favour of granting the Certificate because there is no evidence in the record of an immediate plan for the sale of the Properties.

[81] The final factor, weighing the potential harm to the parties, is significant in the circumstances of this action. I find that there is greater risk of harm to Salvatore if the Certificate is not granted than there is to the Corporations if the Certificate is granted:

If the Certificate is not granted, the Corporations are at liberty to sell the Properties. In the absence of an order requiring the Corporations to invest/place the proceeds of sale in a protected manner pending the outcome of this action, the Funds may yet again be applied towards the purchase of other assets, or they may be dissipated.
If the Certificate is granted, the Corporations are in a position to list the Properties. If one of the Corporations wishes to sell one of the Properties and there is a willing buyer, steps can be taken at that time to address what is to be done with the proceeds of the sale pending a determination of this action. A decision regarding what to do with the proceeds of the sale can be made at that time by agreement of the parties or court order.

[82] I find that, if full and fair disclosure had been made, Salvatore would have been able to demonstrate that whether he has an interest in the land is a triable issue and the equities favour granting the Certificate.

▪ Delay in Bringing Motion - s. 103(6)(a)(iii)

[83] The Corporations point to a 14-month delay between when they were first put on notice of Salvatore’s claim and October 2017 when the Order was obtained. The Corporations submit that the delay on Salvatore’s part is even greater than 14 months. The Corporations rely on the allegation made in para. 79 of the statement of claim. It is therein alleged that, by June 2016, Salvatore knew that he did not have an ownership interest in the Properties.

[84] In response to the alleged lack of diligence, Salvatore relies on his age—he was 87 years old in 2017. He submits that it was “labour intensive” for him to go through the process of the motion for a Certificate. Salvatore points to the multiple properties that are the subject of his action and the work required on Luisa’s part to compile the documents included as exhibits to her affidavit in support of the motion for a Certificate. Salvatore argues that, in the circumstances, the delay is not sufficient to preclude leave being granted to issue the Certificate.

[85] The numbers of months of delay are not to be considered in a vacuum. They are considered in the circumstances of each case. A delay of ten months may, in some circumstances, be a factor relied on by the court to discharge a Certificate: see e.g. Getz v. Barnes (1989), 1989 CanLII 4379 (ON SC), 71 O.R. (2d) 450 (Ont. S.C.), at paras. 11 and 22. A delay of 16-months has also been considered a relevant factor: Sun Rise Elephant Property Investment Corporation v. Luu, 2018 ONSC 5247, at para. 23.

[86] The explanation given as to why Salvatore waited until the fall of 2017 to commence this action and bring a motion for leave to issue the Certificate is provided by Luisa. It is her evidence that, when she assumed the role of attorney for property, she began with a blank slate. Working with minimal information, she had to piece together how Salvatore’s assets had been managed during the numerous, preceding years.

[87] Is Salvatore to be faulted for proceeding with a degree of diligence in collecting information and documents to permit him to advance a comprehensive claim? The alternative would have been to issue a bare-bones pleading, bring the motion for the Certificate, and seek leave to amend the pleading as additional information became available.

[88] In the circumstances of this action, I find that the approach taken by Salvatore was reasonable from both a procedural and a substantive perspective. The pleading is comprehensive and detailed. I draw an inference and find that the work required prior to preparation of the pleading was significant.

[89] I find that, if full and fair disclosure had been made, the timing of the motion was such that the Certificate would have been granted.

d) Summary

[90] I find that Salvatore failed to make full and fair disclosure in October 2017. I also find that, if full and fair disclosure had been made at that time, the Certificate would have been granted. The motion by the Corporations to set aside the Order is dismissed.

Issue No. 2 – Are the Corporations entitled to an order discharging the Certificate pursuant to one or both of ss. 106(3)(a) and (c) of the Courts of Justice Act?

[91] This aspect of the Corporations’ motion is governed by r. 42.02(1) of the Rules of Civil Procedure and s. 103(6) of the CJA. The statutory provision has already been quoted. Subrule 42.02(1) provides that “[a]n order discharging a certificate of pending litigation under subsection 103(6) of the [CJA] may be obtained on motion to the court.”

[92] The parties agree that the test applied to determine whether a CPL order is to be set aside is the same as the test on a motion to discharge a CPL. For the same reasons relied on in support of my finding that the CPL is not to be set aside, I conclude that the defendant’s motion for an order discharging the CPL fails under both ss. 106(3)(a) and (c) of the CJA.

Disposition

[93] The motion by the Corporations is dismissed in its entirety.

Costs

[94] If the parties are unable to agree on the costs associated the Corporations’ motion, they shall make written submissions as follows:

a) The submissions shall be limited to a maximum of four pages, exclusive of a bill of costs; b) Written submissions shall comply with Rule 4 of the Rules of Civil Procedure; c) Hard copies of any case law or other authorities relied on shall be provided with the submissions and shall comply with Rule 4 of the Rules of Civil Procedure with respect to font size; d) The submissions, the documents referred to therein, and case law and other authorities shall be on single-sided pages; e) The plaintiff and the defendant, CIBC, shall deliver their respective costs submissions by 4:00 p.m. on the twentieth business day following the date on which this ruling is released; f) The Corporations shall deliver their costs submissions by 4:00 p.m. on the thirtieth business day following the date on which this ruling is released; and g) The reply submissions, if any, of either the plaintiff or the defendant, CIBC, shall be delivered by 4:00 p.m. on the thirty-fifth business day following the date on which this ruling is released. Reply submissions shall comply with paragraphs (a) to (d) above.

Madam Justice Sylvia Corthorn

Released: November 4, 2019

COURT FILE NO.: 17-73750

DATE: 2019/11/04