COURT FILE NO.: CV-19-1022
DATE: 2020 02 06
SUPERIOR COURT OF JUSTICE – ONTARIO
RE: SEDONA LIFESTYLES (ROMETOWN INC.) and CLAUDIO POSOCCO
(Plaintiffs)
AND:
DIVERSIFIED CAPITAL INC., RUSSELL GIANNOTTA and 2596095 ONTARIO INC.
(Defendants)
BEFORE: Ricchetti J.
COUNSEL: M. Wainberg, for the Plaintiffs
D. Michaud and S. Mosonyi, for the Defendants, Diversified Capital Inc. and Russell Giannotta
2596095 Ontario Inc., Defendant, unrepresented
HEARD: January 22, 2020
ENDORSEMENT
THE MOTION.. 2
THE FACTS. 2
THE CLAIM... 6
THE POSITION OF THE PARTIES. 6
THE ANALYSIS. 7
The Law.. 7
The Onus. 10
A Claim to an Interest in Land. 11
Factors to be Considered. 12
An Accounting Dispute. 12
The Delay. 14
Prior Acknowledgement of the amount owing under the Mortgages. 14
Impact of a CPL.. 15
The Ability to Satisfy any Damage Award. 15
An Interlocutory Injunction Motion. 16
Additional Factors favouring denial of a CPL.. 17
The Forgery Allegations. 17
The Non-Registered Broker Submissions. 18
CONCLUSION.. 18
COSTS. 18
THE MOTION
[1] The Plaintiffs move for leave to issue a Certificate of Pending Litigation ("CPL") against the Charge/Mortgage between Defendants, 2596095 Ontario Inc. and Diversified Capital Inc.
[2] The Defendants, Diversified Capital and Russell Giannotta (the “Defendants”) request the motion be dismissed.
[3] The Defendant, 2596095 Ontario Inc. ("259 Ont.") has not filed any materials.
[4] At the conclusion of the motion, I advised counsel that the Plaintiffs’ motion was dismissed with reasons to follow. These are those reasons.
THE FACTS
[5] Except for the allegations relating to two forged documents described below, the facts are not in dispute.
[6] The Plaintiff, Sedona Lifestyles (Rometown) Inc. (“Rometown”), was the developer and builder of a subdivision known as “The Heights at Marionville Drive” in Mississauga, Ontario (“the Project”). The Project consisted of 13 separate lots on which Rometown planned to build new homes.
[7] The Plaintiff, Claudio Posocco (“Posocco”), is the sole director, officer and shareholder of Rometown.
[8] The Defendant, Diversified Capital Inc. (“Diversified”), is an Ontario corporation which acts as a real estate asset management advisor and financier.
[9] The Defendant, Russell Giannotta (“Giannotta”) is the principal of Diversified.
[10] In October 2013, Cameron Stephens Financial Corporation (“Cameron”) provided mortgage financing to the Plaintiffs for the Project and was granted a mortgage on the property (“Cameron Mortgage”). The Cameron Mortgage was registered on October 22, 2013 and was personally guaranteed by Posocco.
[11] On April 24, 2015, Diversified agreed to re-finance the Cameron Mortgage on revised terms. On May 13, 2015, Diversified registered a Transfer of Charge. Diversified advanced $3,926,186.22 on the Cameron Mortgage.
[12] On June 23, 2015, Diversified registered the Mortgage Amending Agreement ("Mortgage Amending Agreement") relating to the Cameron Mortgage in accordance with a May 13, 2015 Mortgage Amending Agreement. The Plaintiffs allege that Mr. Possoco’s signature, for the Plaintiffs, on the Mortgage Amending Agreement was forged.
[13] Shortly after the registration of the Mortgage Amending Agreement, Diversified made a further advance on the Cameron Mortgage on June 23, 2015.
[14] On May 20, 2015, the Plaintiffs entered into a mortgage commitment with Morrison Financial Mortgage Corporation (“Morrison”) to re-finance the Project. The Morrison Mortgage was personally guaranteed by Posocco.
[15] On August 7, 2015, the Morrison Mortgage was registered on the properties of the Project, second in priority to the Cameron Mortgage. On August 7, 2015, Morrison advanced $2,327,237.
[16] Diversified postponed the Cameron Mortgage giving the Morrison Mortgage priority.
[17] On November 30, 2016, Sedona defaulted under the Cameron Mortgage.
[18] On January 31, 2017, Sedona defaulted under the Morrison Mortgage.
[19] On February 22, 2017, the Morrison Mortgage was assigned to Diversified. Diversified now held both the first and second mortgages (the "Mortgages").
[20] On March 7, 2017, lot 4 in the Project was sold. Diversified received a significant amount of money towards its Mortgages.
[21] Diversified issued Notices of Sale, on March 31, 2017 for the Morrison Mortgage and on May 3, 2017 for the Cameron Mortgage. Diversified claimed there was approximately $360,000 outstanding under the Morrison Mortgage and $4,865,000 outstanding under the Cameron Mortgage.
[22] After the Notices of Sale were issued, the purchasers of certain properties in the Project, who had not yet completed the purchase of their homes (the "Purchasers"), sought an assignment of the Morrison Mortgage from Diversified. The Purchasers commenced an Application, naming Sedona and Diversified as respondents, seeking an injunction restraining Diversified from enforcing the Cameron Mortgage and an order assigning, to them, the Morrison Mortgage. Initially, one of the issues in this application was the quantum outstanding under the Cameron and Morrison Mortgages. This application was dismissed on July 5, 2017. See 2575105 Ontario Inc. v. Diversified Capital Inc., 2017 ONSC 3809. As set out in the reasons, the parties to the application, including Sedona and Diversified agreed that:
The Morrison First Mortgage and Diversified Second Mortgage were valid registered mortgages granted by Sedona; both mortgages had matured prior to March 1, 2017; both mortgagees were entitled to issue Notices of Sale; both mortgagees were entitled to enforce their security against the Lots; and the amounts set out in both Notices of Sales were due and payable by Sedona.
(emphasis added)
[23] In August 2017, Diversified sold Project Lots 5, 9 and 13 to Defendant 2596095 Ontario Inc. (“259 Ont.”). Diversified and 259 Ont. are arm’s length companies. The sale was arranged with Mr. Posocco’s assistance rather than proceeding with a power of sale to maximize the selling price.
[24] As part of the sale to 259 Ont., the Morrison and Cameron Mortgages were discharged. Prior to the discharge, the Plaintiffs provided an Acknowledgement and Confirmation of Indebtedness agreement ("Acknowledgement"), dated September 11, 2017, purportedly executed by the Plaintiffs, whereby the Plaintiffs acknowledged and confirmed various matters including the request for the mortgage discharge and confirmed the continuing indebtedness to Diversified. The Plaintiffs allege that the signatures on the Acknowledgement were forged.
[25] The sale was completed by Sedona to 259 Ont. on September 11, 2017. Diversified provided financing to 259 Ont. as a "form of a purchase money mortgage" in the amount of $3,550,000 from (“259 Ont. Mortgage”).
[26] On May 18, 2018, Lot 9 of the Project was sold, and the 259 Ont. Mortgage was discharged against Lot 9 only. Diversified received monies from this sale towards its 259 Ont. Mortgage.
THE CLAIM
[27] On March 7, 2019, the Plaintiffs issued a Statement of Claim against the Defendants.
[28] The Plaintiffs allege that, at the time of the sale of the Project to 259 Ont., there was an overpayment to Diversified of the amount properly due under the Mortgages. The Plaintiffs allege this overpayment exceeded $2,000,000.
[29] Amongst other relief sought, the Plaintiffs seek a declaration that Diversified holds the 259 Ont. Mortgage on the remaining Lots 5 and 13 of the Project on a resulting trust and/or constructive trust basis for Rometown as beneficiary, and an order transferring that 259 Ont. Mortgage to Rometown as the registered mortgagee.
[30] Diversified defended the claim and issued a Counterclaim on May 31, 2019 for the amounts owing under the personal covenants under the Cameron Mortgage being $1,664.992.25, the particulars of which are detailed in the motion materials.
[31] 259 Ont. has not yet delivered a Statement of Defence in this action.
THE POSITION OF THE PARTIES
[32] Essentially, the Plaintiffs allege that the amount recovered by Diversified under the Cameron and Morrison Mortgages at the time of discharge (i.e. the sale to 259 Ont.) exceeded the amounts owing under the Mortgages, resulting in Diversified holding in whole or in part the 259 Ont. Mortgage in trust for the Plaintiffs. Consequently, the Plaintiffs claim a Certificate of Pending Litigation ("CPL") against the 259 Ont. Mortgage.
[33] The Defendants submit that the motion for a CPL should be dismissed as:
a) The Plaintiff's have no reasonable claim to an interest in the 259 Ont. Mortgage via a trust claim; and
b) It would not be just for a CPL to issue because:
i. Diversified would be unable to enforce the 259 Ont. Mortgage if it is in default;
ii. Diversified would be unable to sell, reinvest or lend out the proceeds of the 259 Ont. Mortgage; and
iii. 259 Ont. would be unable to re-finance or sell the remaining lots or discharge the 259 Ont. Mortgage, which hinders Diversified’s ability to be repaid.
[34] The Defendants submit that, in essence, the Plaintiffs seek an interlocutory injunction to prevent Diversified from dealing with the 259 Ont. Mortgage, which injunction should not be granted.
THE ANALYSIS
The Law
[35] The Courts of Justice Act provides:
103(1) The commencement of a proceeding in which an interest in land is in question is not notice of the proceeding to a person who is not a party until a certificate of pending litigation is issued by the court and the certificate is registered in the proper land registry office under subsection (2).
(4). A party who registers a certificate under subsection (2) without a reasonable claim to an interest in the land is liable for any damages sustained by any person as a result of its registration.
(6). 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
(c) on any other ground that is considered just, and the court may, in making the order, impose such terms as to the giving of security or otherwise as the court considers just.
[36] In Perruzza v. Spatone, 2010 ONSC 841, Master Glustein set out the factors to be considered in motion to discharge a CPL at paragraph 20:
(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. C.43) is whether there is a triable issue as to such interest, not whether the plaintiff will likely succeed (1152939 Ontario Ltd. v. 2055835 Ontario Ltd., 2007 CarswellOnt 756 (S.C.J.), as per van Rensburg J., citing Transmaris Farms Ltd. v. Sieber, [1999] O.J. No. 300 (Gen. Div. - Comm. 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 (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 (viii) 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 (S.C. - Mast.) 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 (Gen. Div.); Clock Investments Ltd. v. Hardwood Estates Ltd., 1977 CanLII 1414 (ON SC), 1977 CarswellOnt 1026 (Div. Ct.) at para. 9).
[37] The court has a duty to examine the whole of the evidence and determine whether a reasonable claim to an interest in land has been made out. See Waxman v. Waxman, [1991] O.J. No. 89 (G.D.) at paragraph 8; 2511899 Ontario Inc. v. 221465 Ontario Inc., 2017 ONSC 5363; and Ghaffari v. Macaulay, 2017 ONSC 5076.
[38] In Guz v. Olszowka, 2019 ONSC 5308, at issue was a trust claim. The court determined that a claim for a constructive trust in respect of a property may give rise to an interest in land:
I am not satisfied that the defendant has discharged her onus of demonstrating no triable issue with respect to the plaintiffs' claim to an interest in the Patterson Property, particularly in reference to the claim based upon constructive trust in support of unjust enrichment. A claim based on the doctrine of constructive trust in respect of property may give rise to an interest in land (see Roseglen Village for Seniors Inc. v. Doble, 2010 ONSC 3239 (Ont. S.C.J.) at para. 14).
In the case of De Luca v. Zomparelli, 2018 ONSC 3789 (Ont. S.C.J.) at para. 12, Master Muir noted that on the issue of whether there exists a triable issue with respect to an interest in land, although the onus is on the party opposing the CPL, the standard is not a high one. ....
[39] Where a reasonable claim to an interest in land has been made out, the governing test is that the judge must exercise his discretion in equity by considering all of the relevant matters to determine whether it would be just for the CPL to be granted and/or discharged. Lane J. summarized this approach in Waxman v. Waxman, [1991] O.J. No. 89, (Ont. G.D.):
- It is appropriate to begin with a consideration of the requirement that the claimant have a "reasonable claim to the interest in the land claimed", and to follow up with a consideration of the equities, in particular the 8 factors suggested in 572383 Ontario Inc. v. Dhunna, supra. At the end of the day, the governing test will be that set out by the Divisional Court in Clock Investments Ltd. v. Hardwood Estates Ltd., 1977 CanLII 1414 (ON SC), 16 O.R. (2d) 671 where Steele J. said:
...the governing test is that the judge must exercise his discretion in equity and look at all of the relevant matters between the parties in determining whether or not the certificate should be vacated.
- In assessing whether an applicant has met the standard of putting forth "a reasonable claim to the interest in the land claimed", a motions court judge must walk a narrow line. On the one hand, it is no part of his function to assess the credibility of the deponents in the various assertions made by them as to the merits of the action. On the other hand, there can be no question of simply relying upon the pleadings or accepting the affidavits uncritically. In my view, my duty is to examine the whole of the evidence as it stands after cross-examination and, without deciding disputed issues of fact and credibility, consider whether on the whole of the evidence the plaintiff's case constitutes a reasonable claim to the interest in land claimed. I was invited strenuously by counsel to consider the credibility of the two principal contenders but it is my view that while it is open to me to consider the concessions made on cross-examination as part of the whole of the evidence of each deponent, it is not open to me to decide that a deponent is not worthy of belief or that his case will not be accepted by the trial judge because of contradictions between his evidence and that of others or alleged internal inconsistencies in such evidence. Those are matters for trial.
(emphasis added)
The Onus
[40] The Plaintiffs allege the onus is on the Defendants to establish that they do not have a claim to a reasonable interest in the land. The Plaintiffs point to s. 103(6) of the Courts of Justice Act, ("CJA") and various authorities which state that, where Defendants move to discharge a CPL, the onus is on the Defendants.
[41] Most CPL applications are initially brought ex parte. There can be no doubt that the onus, on the initial application, is on the Plaintiff to satisfy the court that it has a reasonable claim to an interest in the land. Otherwise, the issuance of a CPL on an ex parte basis would be done on a perfunctory basis without any judicial review for compliance with s. 103 of the CJA. The fact that a CPL must be issued by a court order (see s. 103 of the CJA and R. 42.01) must mean a certain amount of judicial review and a determination is required for issuance of a CPL. I am satisfied that, while the onus on the moving party to establish a reasonable claim to an interest in land is not a high one, it nevertheless exists and requires the Plaintiff to meet this onus.
[42] Once a CPL is issued (implicitly, if not explicitly, on the basis the court was satisfied that Plaintiff had established it has a reasonable claim to an interest in the land), the onus is then on the Defendant who seeks a discharge of the CPL. In such a case, the Defendant can meet its onus by demonstrating that the factors in s. 103(6) of the CJA favour a discharge. One of those factors is that the Defendant can show that, despite the issuance of the CPL, the Plaintiff does not have a reasonable claim to an interest in the land. Another is for the Defendant to show it would not be just to issue the CPL or allow the CPL to remain.
[43] In my view, where the CPL has not issued, it remains on the Plaintiff to establish a reasonable claim to an interest in the land, in this case. However, in this case, I find that it does not matter who has the onus for the reasons that follow.
A Claim to an Interest in Land
[44] The Plaintiffs do not claim an interest in 259 Ont.'s lands. Instead, the Plaintiffs claim they have an interest in Diversified's 259 Ont. Mortgage.
[45] Hirji v. Khimani 1978 CanLII 1491 (ON SC), 1978 CarswellOnt 391, [1978] 1 A.C.W.S. 705, 19 O.R. (2d) 750, 6 C.P.C. 29 establishes that a claim to a mortgage is an interest in land:
- The litigation forming the basis of a certificate of lis pendens must involve any title to or interest in land as provided in that section. The Court must, therefore, determine whether the mortgage in question constitutes any title to or interest in land. Certainly, the mortgagee is vested with several rights directly related to the title or interest in the land enforceable upon default of the mortgage. By virtue of the terms of the mortgage title to the land is conveyed to the mortgagee. Counsel for the applicants suggest that such conveyance is not a legal factual reality. I am not prepared to accept such argument. The title to the land is in fact transferred to the mortgagee as security which fact brings with it many consequential rights at law. The mortgagee in addition is granted rights exercisable upon default relating to title to the property. I refer particularly to the rights of possession, foreclosure, power of sale, etc. Notwithstanding able argument of counsel for the application in this respect, I have concluded that a mortgagee does own an interest in the land upon which the mortgage is registered, even if such rights are enforceable only upon default.
(emphasis added)
[46] I accept for the purpose of this motion, that a claim for a trust interest in a mortgage may be a claim to an interest in land. See also Nuforest Watson Bancorp Ltd. v. Prenor Trust Co. of Canada, 1994 CanLII 7348 (ON SC), [1994] O.J. No 2940 and Khmelevskikh v. Zubashvili 2018 ONSC 2160.
[47] However, I note that it is hard to imagine how a CPL registered against a mortgage (but not the underlying legal ownership) would actually apply absent ongoing judicial involvement as to the compliance of the mortgagor’s obligations/rights and the mortgagee’s obligations/rights. The mortgagor, through no fault of its own, is caught in a dispute between the mortgagee and third parties. In my view, it is too simplistic to conclude that because a mortgage is an interest in land, therefore a CPL can issue encumbering the mortgage alone.
[48] I will proceed on the basis the Plaintiffs have established a reasonable claim to an interest in land – the 259 Ont. Mortgage - on the assumption that Diversified was overpaid on its Cameron and Morrison mortgage from the sale to 259 Ont.
Factors to be Considered
[49] The question becomes whether this court should exercise its equitable discretion to grant a CPL having considered all the relevant circumstances of this case. See 2526716 Ontario Inc. v 2014036 Ontario Ltd., 2017 ONSC 1762.
[50] In my view, there are a number of factors which militate against the grant of a CPL.
An Accounting Dispute
[51] The Plaintiffs allege that the amount recovered from the proceeds of the sale to 259 Ont. in August 2017 greatly exceeded the amount of the Cameron and Morrison Mortgages.
[52] The Plaintiffs were, at the time, entitled to an accounting from and a claim against Diversified for any monies received in excess of the amount properly due under the Mortgages.
[53] The Plaintiffs had their first opportunity to seek such relief in March 2017 when Diversified issued Notices of Power of Sale. The Plaintiffs could have requested mortgage statements for a detailed accounting and/or a reference to determine on the proper amounts outstanding under the Mortgages. Section 22 of the Mortgages Act permits a mortgagor to obtain a detailed accounting. Rules 55 and 64 specifically provide for references as to the amount payable under mortgages in default. Sedona chose not to take any such steps. The Plaintiffs did nothing.
[54] The Plaintiffs could have raised their claim when they found a purchaser (259 Ont.) for the remaining lots. Again, the Plaintiffs did nothing.
[55] The Plaintiffs could have advanced their claims when Diversified discharged its Mortgages and granted the 259 Ont. Mortgage. The Plaintiffs did nothing.
[56] The Plaintiffs could have advanced their claims in May 2018, when one of the lots was sold and some of the proceeds were paid to Diversified. The Plaintiffs did nothing.
[57] The Plaintiffs waited until March 2019 (almost two years later) to advance their claims that Diversified was overpaid under the Mortgages.
[58] That brings me to delay.
The Delay
[59] Section 103(6) (a) (iii) of the CJA provides that one of the factors to be considered is whether the Plaintiffs did not prosecute their claim to an interest in the land with diligence. I am satisfied that this applies here.
[60] The Plaintiffs allege they did not receive a complete and accurate mortgage accounting from Diversified. The Plaintiffs allege that Diversified was overpaid by millions.
[61] This almost two-year delay in advancing is entirely the fault of the Plaintiffs.
[62] Much has occurred in the two years; the Plaintiffs sold the remaining lots to 259 Ont.; Diversified discharged its mortgage; one lot secured by the 259 Ont. Mortgage was sold; a partial discharge on the 259 Ont. Mortgage was issued; and Diversified received monies under the 259 Ont. Mortgage. In other words, the Plaintiffs let Diversified deal with the Mortgages and the 259 Ont. Mortgage for over a year and a half before raising these allegations.
[63] I am satisfied that the Plaintiffs did not prosecute the proceeding with reasonable diligence and Diversified relied on the validity of the Mortgages and the 259 Ont. Mortgage in a manner it might not have, if the Plaintiffs had raised these allegations with reasonable diligence.
Prior Acknowledgement of the amount owing under the Mortgages
[64] Sedona agreed, in the proceeding by the purchasers in the middle of 2017, that the amounts outstanding on the Cameron and Morrison Mortgages were accurate and outstanding. Both Sedona and Diversified were parties to that proceeding (the “Purchasers’ Proceeding”)
[65] Sedona took advantage of that concession for a ruling in its favour. Now it disputes the amount owing under the Mortgages. And when questioned about this during the hearing, counsel for the Plaintiffs’ best answer was that the Plaintiffs did not know about the allegedly forged documents. It makes no sense that an alleged $2,000,000 overcharge by Diversified would not be noticed and questioned when it was an issue which would impact the Plaintiff’s financially in the Purchasers’ Proceeding.
[66] I am not prepared to decide whether this acknowledgment in the Purchasers’ Proceeding is subject to issue estoppel. However, at the very least, the acknowledgement by Sedona as to the amounts owing under the Mortgages is a significant factor in balancing the equities between the parties on this motion.
Impact of a CPL
[67] A CPL will encumber 259 Ont.'s land.
[68] In the event 259 Ont. needs to vary, obtain, increase or a partial discharge of the 259 Ont. Mortgage, in a residential construction project, it will require the Plaintiffs’ approval.
[69] Any steps by Diversified to enforce its mortgage will require the Plaintiffs' approval.
[70] In short, a CPL will impact 259 Ont.'s land and Diversified's mortgage rights.
The Ability to Satisfy any Damage Award
[71] The Plaintiffs state that, unless it obtains a CPL, Diversified can take the mortgage monies and abscond with the monies or put the monies beyond the reach of the Plaintiffs.
[72] There is no evidence to support such an allegation. Diversified has been in business for 19 years in Ontario. The only evidence by the Plaintiffs is that they do not know about Diversified's financial condition is that they know nothing about it but are "concerned." I am not satisfied this is sufficient to make this a factor in favour of granting a CPL.
[73] On the other hand, the Plaintiffs own no property in the GTA (if at all in Ontario), already have substantial judgements against them, Posocco has previously gone bankrupt, both Plaintiffs and related companies are subject to a substantial number of claims for a considerable amount, and both Plaintiffs are subject to an outstanding bankruptcy application.
[74] There is no evidence adduced by the Plaintiffs that they have any assets or source of income to satisfy any damage award arising from a CPL that should not have issued.
[75] There is serious doubt, on the evidence before me, that any damages against the Plaintiffs under s. 103(4) of the CJA would be recoverable. This is a factor in favour of NOT granting a CPL.
An Interlocutory Injunction Motion
[76] I agree that, in reality, the Plaintiff's motion is an interlocutory injunction motion because it will essentially prohibit Diversified from any dealing with the 259 Ont. Mortgage.
[77] In addition, 259 Ont. would be restricted from financial dealing with its land because any dealings with the 259 Ont. Mortgage would require the consent of Diversified AND the Plaintiffs.
[78] Submissions by the Plaintiffs' counsel that the Plaintiffs would cooperate with any future dealings with the land or 259 Ont. Mortgage, do not alter the fact, it would give the Plaintiffs leverage if it became necessary for Diversified or 259 Ont. to deal with the 259 Ont. Mortgage.
[79] I note that the Plaintiffs deliberately chose not to bring an injunction application with regard to the 259 Ont. Mortgage. There were no submissions by the Plaintiffs regarding their alternative relief, that an order should be made “preserving” the 259 Ont. Mortgage which would have necessarily engaged a RJR MacDonald interlocutory analysis. Such a motion, if pursued, would have failed essentially for the same reasons set out above and, in particular, the fact that the Plaintiffs do not have the financial ability to give a meaningful undertaking.
Additional Factors favouring denial of a CPL
[80] There are several additional factors favouring a denial of a CPL:
a) The Plaintiffs will still have a claim for damages against Diversified;
b) Damages would be a satisfactory remedy; and
c) The grant of a CPL would cause much more harm to Diversified and 259 Ont. than to the Plaintiffs given their other remedies.
The Forgery Allegations
[81] It is not for this court to determine the validity or the strength of the Plaintiffs’ forgery allegations.
[82] However, I note for the purpose of this motion, the Plaintiffs have not put forward any evidence, expert or otherwise, to support this claim. The Plaintiff’s rely on bald statements. I note that, at the commencement of the hearing, the Plaintiffs had proffered a secretary's affidavit which attached a letter from a handwriting person. After objection, the Plaintiffs chose not to proceed to seek to admit this document. In any event, this issue is best left for trial.
The Non-Registered Broker Submissions
[83] During the submissions, Plaintiffs’ counsel raised allegations that certain persons involved in some of the mortgage transactions were not properly registered under the regulatory statutes. In my view, whether the persons who negotiated the two agreements, alleged to be forgeries, were not properly registered, which if true, does not necessarily affect the validity of the documents as between Diversified and the Plaintiffs. Such issues are best left for trial.
CONCLUSION
[84] Considering all the factors set out above, I am not persuaded that it is equitable or just to grant a CPL in this case.
[85] The Plaintiffs’ motion for a CPL is dismissed.
COSTS
[86] Any party seeking costs shall serve and file written submissions on entitlement and quantum within two weeks of the release of these reasons. Written submissions shall be limited to 3 pages, with attached Costs Outline and any authorities.
[87] Any responding party shall have one week thereafter to serve and file responding submissions. Written submissions shall be limited to 3 pages with any authorities relied on attached.
[88] There shall be no reply submissions without leave.
Ricchetti J.
Date: February 6, 2020
COURT FILE NO.: CV-19-1022
DATE: 2020 02 06
ONTARIO
SUPERIOR COURT OF JUSTICE
B E T W E E N:
RE: SEDONA LIFESTYLES (ROMETOWN INC.) and CLAUDIO POSOCCO, Plaintiffs
AND:
DIVERSIFIED CAPITAL INC., RUSSELL GIANNOTTA and 2596095 ONTARIO INC., Defendants
COUNSEL: M. Wainberg, for the Plaintiffs
D. Michaud and S. Mosonyi, for Defendants, Diversified Capital Inc. and Russell Giannotta
2596095 Ontario Inc. Inc., Defendant, unrepresented
ENDORSEMENT
Ricchetti J.
Released: February 6, 2020