Court File and Parties

COURT FILE NO.: CV- 16-559618 DATE: 20230301 SUPERIOR COURT OF JUSTICE - ONTARIO

RE: IRENE PENKARSKI, Plaintiff – and – MIRIDA LTD. and MERCANTILE PROPERTY GROUP LLC and LUNA PARTNERSHIP ONE LLP., Defendants

BEFORE: E.M. Morgan J.

COUNSEL: Joel Vale and David Fogel, for the Plaintiff (Responding party) Duncan Macfarlane, for the Defendants (Moving parties)

HEARD: February 28, 2023

Motion on Minutes of Settlement

[1] This motion by the Defendants is framed as a motion to enforce Minutes of Settlement dated April 3, 2018 and amended on August 30, 2018 (the “Minutes”). The Minutes contain the terms on which the Plaintiff’s underlying claim was resolved between the parties.

[2] The Defendants claim that the Plaintiff has failed to provide certain financial information that she was obliged to produce under the Minutes. Defendants’ counsel also submits that the Plaintiff is responsible for certain payments contemplated in the Minutes. The Defendants are all owned either in whole or in part by Michael Oana.

[3] The Plaintiff denies that she is delinquent in any of her obligations under the Minutes. Moreover, she is of the view that the financial relief sought by the Defendants lies outside the terms of the Minutes. Plaintiff’s counsel submits that the matters raised in this motion relate to a second round of employment of the Plaintiff by the Defendants, and that the claims put forward by the Defendants post-date the time frame contemplated by the Minutes. The Minutes resolved the dispute with respect to the Plaintiff’s first round of employment by the Defendants.

[4] As part of the dispute relating to the employment relationship between the parties, the underlying litigation concerned a Florida property held in the Plaintiff’s name, in trust for some or all of the Defendants, which the Plaintiff managed on behalf of the Defendants. That property is located at 8564 West Gulf Boulevard, Treasure Island, Florida (the “Property”). It was sold by the parties in June 2020.

[5] For the purposes of the Defendants’ motion, clauses 9(i) and (ii) are the relevant portions of the Minutes. They provide:

9(i) Mr. Oana further agrees at his own expense to: a) cure all delinquent mortgage installments and other outstanding expenses related to the Property; b) pay for the repair of hurricane damage to the Property; and c) fund and attend to the resolution of an outstanding Compliance Order on the Property, provided that the Plaintiff has warranted and represented these items will not exceed a present value and amount of $100,000.00.

(ii) The Plaintiff will disclose all contractual and financial information in her possession related to the operation and management of the Property by April 15, 2018.

[6] Turning first to the allegation that the Plaintiff did not disclose to the Defendants the documents in her possession as required in clause 9(ii) of the Minutes, the Plaintiff states in her affidavit that she long ago returned all documents and financial information to Mr. Oana. The Plaintiff was terminated by the Defendants in 2016, at which time the Defendants took over management of the business, including Treasure Island, and took control of all of the corporate documents.

[7] It is the Plaintiff’s evidence that she left everything in the corporate offices for the Defendants upon her departure. Indeed, the Defendants ran the business themselves between 2016 and the settlement in 2018, and had everything they needed to manage the companies’ affairs, including its finances and tax accounting. There is no record of them needing or seeking any particular document from the Plaintiff.

[8] In May 2018, in the wake of the Minutes being concluded, the Plaintiff met with Mr. Oana in Florida and delivered to him all spare copies of Defendants’ documents that she had in her possession. She deposes that this gesture was a mere formality, as the originals of anything she had taken to work on at home remained in the corporate offices in the possession of the Defendants. Again, there is no evidence in the record indicating that Mr. Oana complained about any missing documents after that meeting or that the Defendants ever asked her about any documents that were supposedly missing from their files.

[9] The Defendants were apparently sufficiently happy with what the Plaintiff left for them and delivered to Mr. Oana that they re-hired her for a second employment stint in October 2018. Again, there is no suggestion in the record that between her being fired in 2016 and being re-hired in October 2018 anything was found to be missing from the Defendants’ offices.

[10] The Plaintiff worked for the Defendants for another two years, and was again terminated in October 2020. Most of her work during that time involved management of the Property in Florida. The Property was sold in June 2020. The Defendants’ complaints about the Plaintiff that have given rise to the present motion have only been voiced since the Defendants’ second termination of her.

[11] There is no evidence in the record to show that the Plaintiff is still in possession of documents belonging to the Defendants. She deposed that she returned them long ago and was cross-examined on that statement. Interestingly, Defendants’ counsel did not order the transcript of that cross-examination, so it is not part of the record before me. I can only take it from that omission that there was nothing in the cross-examination that cast any doubt on her credibility. The Plaintiff says that she returned everything, she was re-hired after having done so, and nothing I have seen suggests otherwise.

[12] Turning next to the financial claims put forward by the Defendants on this motion, it is the Defendants’ understanding that clause 9(i)(c) of the Minutes obliges Mr. Oana to pay up to $100,000 of the outstanding expenses of the Property and the Defendants’ businesses. All expenses over and above that amount are to be borne by the Plaintiff.

[13] It is obvious from the language of clause 9 that the expenses referred to are past expenses, not future expenses. When the Minutes were signed in April 2018, the Plaintiff was a terminated employee who had no ongoing association with the Defendants’ businesses. Clause 9(i)(c) addresses the responsibility of Mr. Oana for expenses already incurred and paid for by the Plaintiff.

[14] The Defendants claim that while Mr. Oana was only supposed to be responsible for $100,000 of expenses for the Defendants’ businesses, those businesses have in fact incurred $316,320.59 in expenses. In this motion, the Defendants seek payment from the Plaintiff for the difference between that amount and $100,000, representing the excess expenses that were the Plaintiff’s responsibility under clause 9(1)(c) of the Minutes. Although no invoices and receipts have been produced by the Defendants to support this claim, Mr. Oana has provided an affidavit in which he itemizes the expenses for which the Defendants are claiming reimbursement.

[15] Counsel for the Plaintiff have done a careful job of combing through the expenses identified by Mr. Oana in his affidavit. As it turns out, the bulk of those expenses were incurred between August 2018 and October 2020. In other words, they post-date the signing of the Minutes and, by definition, are not included in the $100,000 ceiling set out in clause 9(i)(c). As already indicated, nothing in the Minutes suggests that the Plaintiff, who was then a terminated former employee, would be responsible for expenses not yet incurred by ongoing businesses that no longer employed her.

[16] According to Plaintiffs’ counsel’s calculations, of the $316,320.59 in expenses claimed back by the Defendants, $216,320.59 post-date the signing of the Minutes and $84,775.22 pre-date the signing of the Minutes. At the hearing, Plaintiff’s counsel took me through each of these expenses as itemized by Mr. Oana. In doing so, Plaintiff’s counsel demonstrated that they are indeed correct about the dates. The expenses incurred prior to the signing of the Minutes come to $84,775.22 – i.e. $15,224.78 under the ceiling for which Mr. Oana is personally responsible. The balance of the expenses identified by Mr. Oana cannot be characterized as falling within the monetary limit established by clause 9(i)(c), as they post-date that clause.

[17] As Plaintiff’s counsel point out, it would not only be procedurally incorrect but would be fundamentally unfair to allow new claims brought by the Defendants against the Plaintiff, arising from her second stint as Defendants’ employee, to be packaged as a settlement enforcement motion. New claims must be the subject of a new action. In that way, the Plaintiff (as defendant in a new action) will have all of the pre-trial rights that litigants deserve. In the usual course, this would include documentary disclosure and examinations for discovery.

[18] As matters now stand, the new claims brought by the Defendants in the guise of a motion to enforce the Minutes are unsupported by invoices and other documentary evidence that would ordinarily be produced at the discovery stage. Plaintiff’s counsel submit that requiring new, post-settlement claims to be the subject of a new action rather than packaged as a settlement enforcement motion does not elevate form over substance; rather, it protects the substantive positions of the parties.

[19] The record before me shows that the expenses contemplated by clause 9(i) of the Minutes came to $84,775.22, and are therefore under $100,000. There is nothing for the Defendants to claim from the Plaintiff, as Mr. Oana is personally responsible for expenses up to the $100,000 limit.

[20] As a final matter, Defendants seek an Order allowing Defendants’ counsel to release to the Defendants funds that he holds in trust by agreement with the Plaintiff. Those funds were deposited with him upon sale of the Property to secure Mr. Oana’s indemnification of the Plaintiff in the event that any taxes are found to be owing as a result of the sale. Since the Property was registered on the Plaintiff’s name, she will be formally responsible for taxes in the U.S. government’s eyes; it is only logical that monies generated by the sale be put aside to cover those taxes if they are assessed against her.

[21] As the taxes resulting from the sale of the Property have apparently not yet been assessed, there are no grounds for ordering that the trust funds be released. Defendants’ counsel is to hold them in trust until further agreement with the Plaintiff or further Order of the court.

[22] The Defendants’ motion is dismissed.

[23] The parties may make written submissions on costs. I would ask Plaintiff’s counsel to send brief submissions by email to my assistant within two weeks of today’s date, and for Defendants’ counsel to send by email to my assistant equally brief submissions within two weeks thereafter.

Date: March 1, 2023 Morgan J.