COURT FILE NO.: CV-18-591023
DATE: 20211206
SUPERIOR COURT OF JUSTICE – ONTARIO
RE: YORK REGION VACANT LAND CONDOMINIUM CORPORATION NO. 1010 Plaintiff/Appellant
AND:
ROCCO A. MARCELLO, MIKE ROGERS, DAVID CORIAT, TREASURE HILL DEVELOPMENTS INC., ADENA MEADOWS LIMITED, MILLER THOMSON LLP, GOODMANS LLP, WINDSOR PRIVATE CAPITAL INC., WINDSOR PRIVATE CAPITAL L.P., SAGE GROUSE MANAGEMENT CORP., LESLIE-WELLINGTON DEVELOPMENTS INC., MANZIANA BUILDERS (BT) CORP., PODERE CONSTRUCTION LTD., NICHOLAS FIDEL, CAROLYN HOWDEN, and MICHAEL MARCELLO Defendant/Respondents
AND: ROCCO A. MARCELLO, TREASURE HILL DEVELOPMENTS INC., WINDSOR PRIVATE CAPITAL INC., WINDSOR PRIVATE CAPITAL L.P., SAGE GROUSE MANAGEMENT CORP., and MANZIANA BUILDERS (BT) CORP. Plaintiffs by Counterclaim
AND:
YORK REGION VACANT LAND CONDOMINIUM CORPORATION NO. 1010, ALAN BENLOLO, RICK MANGAT and NINO CAMPOLI
Defendants by Counterclaim
BEFORE: Mr. Justice Chalmers
COUNSEL: A. Sahia and R. Staley, for the Plaintiff/Appellant
S. Brunswick and M. Sodolsky, for the Defendant, Podere Construction
R. Rullo, for the Defendant, Rocco A. Marcello
C. Wetmore, for the Defendants, Adena Meadows Limited and Leslie-Wellington Developments Inc.
HEARD: September 21, 2021, by videoconference
ENDORSEMENT
OVERVIEW
[1] The Plaintiff appeals the order of Associate Justice Brott, dated July 3, 2019. She granted the Plaintiff’s motion for leave to file a Fresh as Amended Statement of Claim, subject to striking six paragraphs of the Fresh as Amended Claim. The Plaintiff argues that the learned Associate Justice erred in striking the paragraphs.
[2] For the reasons set out below, I dismiss the appeal.
BACKGROUND FACTS
[3] The Plaintiff is a condominium corporation. It is described as a “luxurious gated community” in Aurora, Ontario, known as Adena Meadows. The declarant of the Plaintiff condominium corporation is Adena Meadows Limited.
[4] In 2016, the owner of the land adjacent to the Plaintiff’s property was Leslie-Wellington Developments Inc. Leslie-Wellington and Adena Meadows are companies founded by Frank Stronach. Leslie-Wellington granted easements to the Plaintiff over all or a substantial portion of the adjacent land. The easements rendered the adjacent land undevelopable. Certain easements were also granted over the Plaintiff’s land to Leslie-Wellington. According to the Plaintiff, the easements over the Plaintiff’s land were with respect to existing roadways and sidewalks and did not cover a substantial portion of the Plaintiff’s property.
[5] Leslie-Wellington decided to sell the adjacent land. To maximize the sale price, it was necessary for the Plaintiff to release the easements. The purchasers of the adjacent land, Manziana Builders (BT) Corp. and/or Treasure Hill Developments Inc. also wanted the easements to be lifted so the adjacent land could be developed.
[6] The Defendants, Mike Rogers and Rocco Marcello were members of the Plaintiff’s Board of Directors. The Plaintiff alleges that the owner and purchasers of the adjacent land conspired with Mr. Rogers and Mr. Marcello to cause the Plaintiff to release the easements over the adjacent land for little or no value. The Plaintiff alleges that the conspiring Defendants arranged a “trade” whereby the Plaintiff would release the easements over the adjacent land and Leslie-Wellington would release the easements held over the Plaintiff’s lands.
[7] A majority vote of the Plaintiff’s unit owners was necessary to release the easements. The Plaintiff alleges that Mr. Rogers and Mr. Marcello made misrepresentations to the unit owners to obtain the votes necessary to release the easements. The Plaintiff alleges that Mr. Rogers was in a conflict of interest because he was an executive of the company that owned the adjacent land. The Plaintiff also alleges that Mr. Marcello was in a conflict of interest because he received undisclosed interests in real estate properties from the owner and purchaser of the adjacent land in exchange for securing the release of the easements.
[8] At the relevant time, Miller Thomson LLP was counsel to the Plaintiff. Patrick Greco was a partner at Miller Thomson and acted for the Plaintiff.
[9] In October 2018, the Plaintiff retained new litigation counsel. The new counsel prepared a Fresh as Amended Statement of Claim and brought a motion for leave to file the Fresh as Amended Statement of Claim. The Plaintiff sought to add Mr. Greco as a party to the action.
[10] Associate Justice Brott granted leave to file the Fresh as Amended Claim, subject to striking out paragraphs 8 and 95 and paragraphs 102-105. Paragraphs 8 and 95 were struck on the basis that the pleadings were irrelevant and scandalous. Paragraphs 102-105 were struck on the basis that the paragraphs are pleadings of evidence and do not relate to the involvement of the proposed new party, Mr. Greco.
ANALYSIS
Standard of Review
[11] An order of an associate justice will be interfered with only if he/she made an error of law or exercised his/her discretion on the wrong principles or misapprehended the evidence such that there is a palpable and overriding error: Zeitoun v. Economical Insurance Group (2008), 2008 CanLII 20996 (ON SCDC), 91 O.R. (3d) 131, at paras. 40-41.
[12] Where the order appealed from involves the exercise of discretion, the associate judge is entitled to deference. The court should proceed on the presumption of fitness on the part of all judicial officers. The appellate court is not justified in intervening merely because it takes a different view of the evidence: Zeitoun v. Economical Insurance Group, paras. 35 and 36.
Paragraphs 8 and 95 – Reference to the Baldassarra Family
[13] Associate Justice Brott granted leave to file the Fresh as Amened Claim subject to striking paragraphs 8 and 95. The relevant paragraphs of the Fresh as Amended Claim are as follows:
The defendants Treasure Hill and Manziana are Ontario corporations of which the defendant Fidei is the President. They are majority owned and controlled directly or indirectly by Carlo Baldassarra (“Baldassarra”) and/or the Baldassarra family.
Treasure Hill, or an affiliated company, is developing a residential housing project in Keswick, Ontario (the “Keswick Project”). In exchange for Rocco’s assistance in securing the approval of By-Law No. 4, Fidei facilitated Rocco receiving approximately a 15% interest in the Keswick Project.
As described above, Treasure Hill is controlled directly or indirectly by Baldassarra and/or the Baldassara family, who are well funded and do not usually permit third parties such as Rocco to invest in their projects.
Rocco stands to make a substantial profit from his “investment” in the Keswick Project.
There was no economic rationale for Treasure Hill to permit Rocco to invest in the Keswick Project, as Treasure Hill did not need funds from Rocco to develop the Keswick Project.
Rocco was permitted to invest in the Keswick Project as a reward or inducement in return for Rocco’s role in securing the approval of By-Law No. 4, in breach of his fiduciary duties.
[14] In striking paragraphs 8 and 95, Associate Justice Brott noted that Carlos Baldassarra and the Baldassarra family are not parties to the action. She concluded that the pleading is irrelevant to the matters in issue. She stated as follows:
[11] In Libfeld v. Patica, 2018, ONSC 3373 at paras. 18 and 19, Justice Dietrich, although dealing with a pleading involving the piercing of the corporate veil, set out the following well established principles of law in relation to pleadings,
[18] A claim against a director (or officer) must attribute “specific, identified acts or omissions to the individual(s)” and the facts giving rise to personal liability must have been specifically pleaded, in order to survive a rule 21 motion.
[19] They have failed to plead the necessary material facts and particulars of a cause of action for negligent misrepresentation. Bald assertions are not enough.
Justice Deitrich found that although courts are generally reluctant to pierce the corporate veil, naming an individual in a pleading without suing them is usually inappropriate.
[12] On my reading, the paragraphs make scandalous references to the Baldassarra Family. The Baldassarras are not parties to the action. The pleadings appear to be inserted as an attempt to embarrass the Baldassarra family. The pleading is irrelevant to these proceedings. In Besner-Vered v. 561028, Justice Bell struck a pleading which he determined had been inserted solely for colour. He stated at paras 32 and 33:
[32] The plaintiff objects to the references to legal counsel in paragraphs 15 and 42 of the Statement of Defence and Counterclaim. The plaintiff says that these references are irrelevant and have been included in the pleading solely for colour. The defendants maintain that it is a material fact to the limitations defence that the plaintiff engaged legal counsel and when.
[33] Legal counsel is not a party to the litigation. I find that the references to legal counsel are irrelevant and are not material facts.
[13] The pleading is irrelevant to the proceedings. The action is not about the Baldassarra family - nor its relationship (if any) to the defendant. If the plaintiff wants financial information about the defendants, it can canvass that at the examinations for discovery of the Treasure Hill defendants. The financial position of the Baldassarra family is irrelevant.
[15] The Appellant argues that Associate Justice Brott erred in striking the paragraphs in the Amended Statement of Claim that refer to the Baldassarra family. It is the Appellant’s position that it is appropriate to name Carlos Baldassarra and the Baldassarra family because they are the human agents that acted on behalf of the purchaser corporations: Ontario Chrysler Jeep Dodge Inc. v. Delisle, 2015 ONSC 5604, at para. 23.
[16] The Appellant also argues that Associate Justice Brott erred in relying on Libfeld v. Patica, for the proposition that naming an individual in a pleading without suing them is usually inappropriate. The Appellant states that the Libfeld decision does not stand for that proposition. In Libfeld, the court considered whether a claim could be brought against a corporate officer of the defendant. Here, the Plaintiff is not moving to add the individual owners or directors of the purchaser corporations as defendants.
[17] The Respondents state that in Libfeld, Justice Deitrich noted the high bar to sue individual owners and directors of corporations. The Respondents concede that an individual may be named in a pleading without suing them. However, they argue that what cannot be done is to name a person and in so doing, make allegations that are scandalous, irrelevant, argumentative and inserted for colour.
[18] The Appellant also argues that Associate Justice Brott erred in relying on Besner-Vered (1980) Limited v. 561028 Ontario Limited, 2017 ONSC 3684 for the proposition that a paragraph inserted solely for colour ought to be struck. In Besner-Vered, Justice Bell struck out a paragraph in a Statement of Defence which referred to the plaintiff’s engagement of legal counsel on the basis that the allegation was not relevant. Justice Bell held that the paragraph ought to be struck on the basis it was irrelevant and inserted solely for colour.
[19] It is my view that Associate Justice Brott did not err in referring to the Libfeld and Besner-Vered cases. An allegation must be relevant to a matter in issue. If the allegation is solely for colour, it is not relevant. Associate Justice Brott found that the allegation with respect to the financial position of the Baldassarra family is not relevant to an issue in the action and was inserted solely for colour.
[20] I am satisfied that Associate Justice Brott applied the correct legal principles and did not err in striking paragraphs 8 and 95 of the Fresh Claim. Allegations in a pleading must be relevant and of at least marginal probative value which is not outweighed by the prejudicial effect: Quizno’s Canada Restaurant Corporation v. Kileel Developments Ltd., 2008 ONCA 644, at para. 23. The issue to be determined in this action is whether Treasure Hill or Manziano conferred a benefit to Mr. Marcello. In my view, whether an individual owner of the purchaser corporations is well-funded, is not relevant to the matters in issue and has no probative value.
Paragraphs 102-105
[21] Associate Justice Brott granted leave to file the Fresh as Amended Statement of Claim subject to striking paragraphs 102-105. The relevant paragraphs of the Fresh as Amended Statement of Claim are as follows:
After Mangat was elected as a director in July 2017, Marcello contacted him about a business opportunity. In examining that opportunity, Mangat looked at Rocco’s Windsor Capital web site. Mangat noticed from the web site that Rocco, through Windsor Capital, had invested in the Keswick Project with Treasure Hill.
Mangat and Benlolo then met with Frank Stronach on October 31, 2017. Frank Stronach told Mangat and Benlolo that he had informed Fidei, prior to the release of the Easements, that the only way to get things done at YRVLCC was to make sure that Rocco was on board.
Mangat subsequently had a lunch meeting with Fidei on November 3, 2017, at which they spoke about the sale of the Adjacent Land. Mangat asked Fidei why Rocco was involved in the Keswick Project. Fidei told Mangat that Rocco was permitted to participate in the Keswick Project in return for Rocco’s assistance in securing the release of the Easements.
Arising from the communications referred to immediately above, the plaintiff YRVLCC came to learn of the defendants’ misconduct as pleaded in this statement of claim.
[22] Associate Justice Brott found that the paragraphs pleaded evidence and have nothing to do with any limitations defence that may be raised by the new defendant, Mr. Greco. She stated:
[15] The plaintiff submits that these paragraphs describe how the plaintiff discovered the claim in the Fall of 2017 which, they assert, must be pleaded to address a potential limitations issue.
[16] Both the Treasure Hill defendants and Marcello are opposed to these proposed amendments. The defendants submit that the impugned paragraphs have no bearing on the discoverability of any claims against the proposed defendant Greco. Rather, they assert that the paragraphs plead evidence, are hearsay, and are inserted for colour and an improper purpose.
[17] As Master Haberman noted in Witten v. Bhardwaj, 2008 CarswellOnt 599, it is not always easy to distinguish between material facts and evidence. However, our rules should not be ignored and there must be limits placed on pleadings.
[18] The paragraphs are pleadings of evidence. They are not only pleading the evidence on which the material facts are to be proved, but they are attempting to impugn Marcello’s integrity right at the pleadings stage. Further, the paragraphs as pleaded have nothing to do with any involvement of Mr. Greco, the party the plaintiff is seeking to add.
[23] The Appellant argues that paragraphs 102-105 are necessary to address a potential limitations defence with respect to the claim against Mr. Greco. Mr. Greco assisted with the preparation of the meeting materials and therefore the date the Plaintiff learned of Mr. Rocco’s wrongdoing led to the discovery of Mr. Greco’s wrongdoing. The Appellant also argues that the Associate Justice failed to apply the legal principle that if a party is being added after the expiry of the limitation period, the pleading must set out the material facts with respect to discoverability.
[24] The Respondents argue that Associate Justice Brott properly considered the law with respect to the amendment of the pleadings and addressed the difficulty in distinguishing between pleading material facts and evidence. The Respondents also argue that in exercising her discretion, she did not accept that the impugned paragraphs relate to an issue of discoverability involving Mr. Greco.
[25] I am satisfied that Associate Justice Brott applied the correct legal principles and she did not err is striking paragraphs 102-105. The impugned paragraphs refer to conversations between Messrs. Mangat, Benlolo and Mr. Stronach and between Mr. Mangat and Mr. Fidei. I am satisfied that the paragraphs are pleadings of evidence. I am also satisfied that the impugned paragraphs have no relevance with respect to the limitation defence that may be raised by Mr. Greco. The impugned paragraphs do not refer to Mr. Greco and do not specifically address the issue of why the claim was not advanced against Mr. Greco at the same time the claim was brought against the other Defendants.
[26] Associate Justice Brott did not consider the impugned paragraphs in isolation. The role of Mr. Greco is set out in the following paragraphs of the Fresh as Amended Statemen of Claim:
Paragraphs 14 - 16 plead that Miller Thomson was counsel to the Stronach Group;
Paragraphs 17 and 18 plead that Mr. Greco was a partner of Miller Thomson at the relevant time;
Paragraphs 41 - 49 plead that Miller Thomson acted as counsel to Leslie-Wellington with respect to the sale of the adjacent land to Manziana;
Paragraph 51 pleads that Mr. Greco was involved in the preparation of documents for the vote on the release of the easements;
Paragraph 58 pleads that Miller Thomson and Mr. Greco assisted in misleading the unit owners of the plaintiff corporation with respect to the vote to release the easements;
Paragraph 73 pleads that the unit owners voted to release the easements based on misleading information provided to them with the assistance of Miller Thomson and Mr. Greco;
Paragraphs 79 - 81 plead that Mr. Greco drafted an opinion letter regarding the easements that described the vote of the unit owners.
[27] In my view, paragraphs 102-105 do not add anything to the issue of the discoverability of the claim against Mr. Greco. I am satisfied that Associate Justice Brott properly exercised her discretion and struck paragraphs 102-105 from the Fresh Claim.
DISPOSITION
[28] I dismiss the appeal.
[29] The Respondents are successful on the appeal and are presumptively entitled to their costs. The Treasure Hill Defendants seek partial indemnity costs of the appeal in the amount of $12,550.61, inclusive of fees, H.S.T. and disbursements. Mr. Marcello seeks partial indemnity costs of the appeal in the amount of $8,068.45 inclusive of fees, H.S.T. and disbursements. The Appellant submitted a Bill of Costs for the appeal in the amount of $29,786.64 for fees inclusive of H.S.T. and $3,083.48 for disbursements.
[30] In exercising my discretion to award costs, I considered the factors identified in Rule 57.01 of the Rules of Civil Procedure. I also considered the overall objective of any costs award; that it be fair and reasonable and within the expectations of the unsuccessful party: Boucher v. Public Accountants Council for the Province of Ontario (2004), 2004 CanLII 14579 (ON CA), 71 O.R. (3d) 291 (C.A.), at paras. 26, 38.
[31] I fix the costs of the Respondents in the amount of $7,500 each, inclusive of counsel fees, disbursements and H.S.T. This is less than the amount set out in the Appellant’s Bill of Costs and is within the expectation of the unsuccessful party. The costs are payable by the Appellant within 30 days of the date of this endorsement.
DATE: December 6, 2021