Court File and Parties

COURT FILE NO.: CV-21-663738 DATE: 20221129 SUPERIOR COURT OF JUSTICE - ONTARIO

RE: Salvatore Chiarella AND: David Grace and Olympia Athletic Camps Limited

BEFORE: W.D. Black J.

COUNSEL: Robert Macdonald, for the Plaintiff/moving party Carmine Scalzi, for the Defendants/responding parties

HEARD: August 19, 2022

Endorsement

[1] On May 17, 2022, this matter came before Justice Koehnen in Civil Practice Court (“CPC”). His Honour’s CPC endorsement said:

“The moving parties seeks a 1.5 hour motion for summary judgment. The responding party agrees that summary judgment is an appropriate way in which to address the issues between them.”

[2] The parties at that CPC attendance also agreed to a timetable, approved by Justice Koehnen, for the procedural steps required to have the matter heard on August 19, 2022, the day on which the matter came before me. As such, three months ago Court and staff time were earmarked for the August 19, 2022 date.

[3] Between May 17, 2022, when the parties exhibited unqualified agreement as to the appropriate mechanism to dispose of their dispute (summary judgment), and consented without apparent reservation to a schedule for the orderly exchange of materials, various issues presumably present but below the surface on the defence side began to bubble, finally surfacing on the eve of the motion.

[4] The correspondence in the record before me shows that the defendants, having agreed to deliver their responding record by June 17, 2022 (and then having asked for and been given three additional days by plaintiff’s counsel), did not in fact deliver responding materials in keeping with the schedule or at any time.

[5] The purported explanations for this non-delivery of materials were suggested, if not definitively fleshed out, in certain late-breaking affidavit material that was uploaded to caselines on the eve of the motion.

[6] To be clear, the only proper material before me on the day appointed for the motion was the plaintiff’s motion record, which had been served before the end of May of 2022. The only counsel properly on the record before me were Mr. Macdonald, acting for the plaintiff, and the Scalzi firm in the person of Mr. Simovonian, who remained (and remain) on the record.

[7] For reasons that will become clear below, the Scalzi firm had engaged Mr. Gary Caplan to speak on its behalf relative to certain matters about the motion, and I gave leave for Mr. Caplan to speak to those matters which he proceeded to do scrupulously and fairly.

[8] Carmine Scalzi, a principal of counsel of record for the defendants, was the deponent of one of the late-breaking affidavits uploaded to caselines. In effect, it says that because it found itself in a conflict of interest, the Scalzi firm was unable to file responding materials; that the firm’s intention is to bring a motion to remove itself from the record; that Mr. Scalzi expected that other counsel would show up on the motion to speak to matters on behalf of “principles of the corporate defendant”(sic). Beyond that, Mr. Scalzi deposed that the presence of a parallel second action, mirroring various aspects of the claim before me, was procedurally problematic and would give rise to a risk of inconsistent findings if I were to grant summary judgment in the matter before me. (These latter observations struck me as inconsistent with Mr. Scalzi’s stated inability to offer material or submissions on the motion, but of course the purported conflict was interesting background information).

[9] Also uploaded to caselines, were an affidavit from Sanjive (“Sam”) Joshi, explaining that he is a 50% shareholder,r through a wholly-owned company, of the parent company of the defendant, Olympia Athletic Camps Limited (“Olympia”). Mr. Joshi also deposed that the operations of Olympia are currently deadlocked by virtue of a dispute between Mr. Joshi (through his company holding 50% of the shares of Olympia’s parent company), and the defendant David Grace, who holds the other 50% of the shares, about the management and oversight of Olympia. There is a suggestion in Mr. Joshi’s affidavit that Mr. Grace has diverted the loan amounts in issue in this case to his personal benefit rather than that of Olympia, which Mr. Joshi says will potentially have implications in terms of which defendant will have responsibility for the debt in issue. Counsel seeking to speak to the matter(s) on Mr. Joshi’s behalf showed up on the motion before me.

[10] Finally in terms of the late-breaking materials, also uploaded to caselines was an affidavit of Parjot Benipal, a lawyer from the firm which he deposes is newly on the record on behalf of Mr. Grace and Olympia in the parallel action (about which more below). Mr. Benipal’s affidavit proceeds to allege that various aspects of the Scalzi affidavit and the Joshi affidavit are inappropriate, albeit that he supports the Scalzi request for an adjournment. Mr. Benipal goes on to provide certain information about the relevant pre-existing ownership of Olympia.

[11] Mr. Caplan’s able submissions were to the effect that the plaintiff’s alleged non-disclosure of the parallel action was highly problematic, that the existence of that proceeding creates reasons why I ought not to grant summary judgment on the motion before me, and that Scalzi firm’s conflict of interest presents another reason why the motion should not go ahead. Mr. Caplan suggested that the Court order a timetable to deal with the various outstanding matters (including the removal of the Scalzi firm from the record, a consolidation of the parallel action with the action before me, and a process to break the impasse over the operations and management of Olympia, including appointment of an independent director who can in turn appoint independent counsel to act for Olympia).

[12] Dealing first with the assertions about the parallel action, I find that the plaintiff did not fail to disclose it, and that its existence is not in fact an impediment to dealing with the action before me.

[13] The plaintiff’s position, which a review of the parallel claim and correspondence about it in the record before me supports, is that while it includes many of the same parties as the case before me, it primarily relates to a promissory note in favour of Saverio Chiarella, who is the father of Salvatore Chiarella (the plaintiff in the case before me). Saverio Chiarella is not a party to the action herein, and the reference in the parallel proceeding to the $500,000.00 promissory note which is the subject of the case before me is not in the nature of a claim for payment of that debt. The claim for payment of that debt is what is sought, in a straightforward way, in the motion before me.

[14] Nor are the other matters to which Mr. Caplan made reference reasons why the summary judgment motion before me could not proceed.

[15] The dispute about management of Olympia can and should be dealt with in its own proceeding (if no agreement can be reached). Olympia’s management deadlock does not, and is not alleged to bear on the existence and validity of the debt in the case before me. To build into the action before me mechanisms to break that deadlock would bog this case down for no good reason.

[16] With respect to the apparent conflict of the Scalzi firm, it is clear that that issue, whatever its details, must have been known to the firm by no later than sometime in early June. It seems clear that the reason the Scalzi firm did not deliver responding materials by the June 17, 2022 deadline to which it had agreed before Justice Koehnen was that it had come to recognize a problem in its ongoing representation of the defendants.

[17] However, rather than addressing the matter squarely and expeditiously, the Scalzi firm took no steps to advise the plaintiff or the Court that it would not meet the agreed deadlines. Instead, as noted, it delivered Mr. Scalzi’s affidavit at the 11th hour.

[18] Clearly Mr. Caplan was engaged very late in the piece as a result of the Scalzi firm’s conflict, and it is clear that he tried to find solutions and to put the problems in their best light.

[19] Fundamentally, however, the steps taken by the Scalzi firm were the proverbial “day late and dollar short”. There is a practice direction which prohibits the kind of last minute maneuvering for an adjournment and last minute uploading of materials (without even serving those materials) engaged in by the Scalzi firm and by the counsel who uploaded the other two very late affidavits. Moreover, given that it clearly knew it had a problem by mid-June, the Scalzi firm was obligated to take expeditious and affirmative steps to deal with the issue, including scheduling a CPC appointment to seek an adjournment if that was the recourse.

[20] Still further, and critically in my view, there is nothing in the late-breaking materials uploaded to caselines that suggests any affirmative defence to the plaintiff’s summary judgment motion.

[21] The fact that there will or may be a dispute about which defendant has responsibility to pay, which is the most the affidavits say about the claim in issue, is not a defence to the motion. Rather, it serves to confirm an understanding that the debt is owed.

[22] The plaintiff’s materials are clear and compelling. They confirm the existence of the loan, the default on the loan, and the defendant(s)’ obligation to pay the debt. While the promissory note is not a model of draftsmanship, it sufficiently spells out the deal, and the obligation to pay the loan.

[23] I am not prepared to bog the plaintiff’s claim down in the procedural morass into which the various issues on the defence side would drag it.

[24] I grant judgment to the plaintiff for the full amount of the claim, together with accrued interest to date, and post-judgment interest at the rate specified in the promissory note.

[25] The plaintiff is also entitled to its costs. If the parties cannot agree on costs payable by the defendants to the plaintiff within ten days (December 9, 2022, they may make written submissions to me. The plaintiff’s costs submissions (and bill of costs) should be provided within seven days after the 10 day period (December 16, 2022), within which the parties should attempt to agree on costs. The defendants shall then have an additional seven days to respond (December 23, 2022).

W.D Black J.

Date: November 29, 2022