COURT FILE NO.: CV-20-652587 MOTION HEARD: 20 230328 REASONS RELEASED: 20 230731
SUPERIOR COURT OF JUSTICE – ONTARIO
BETWEEN:
NAJJIA HAWKINS Plaintiff
- and-
CARMELINO GIRIMONTE, also known as CARMEN GIRIMONTE, also known as COSMO GIRIMONTE, VENETIAN HOMES LTD., DANIEL PEDRA, BIANCA ROSE GIRIMONTE, also known as BIANCA ROSE PEDRA, JOSE PEDRA, ANTONIA PEDRA and ROCCO CARONE Defendants
BEFORE: ASSOCIATE JUSTICE McGRAW
COUNSEL: D. Morawetz E-mail: dmorawetz@beardwinter.com -for the Defendants
R. Trifts E-mail: ronaldflom@gmail.com -for the Plaintiff
REASONS RELEASED: July 31, 2023
Reasons For Endorsement
I. Introduction
[1] This is a motion by the Defendant Carmelino Girimonte (the “Defendant”) to discharge the Certificate of Pending Litigation (“CPL”) granted on an in writing ex parte motion pursuant to the Order of Master Abrams (as she then was) dated April 20, 2021 (the “Order”). The CPL was registered on title to 4 properties in Toronto: 128 Uxbridge Avenue (“Uxbridge”); 2004-2045 Lakeshore Blvd. West (“Lakeshore”); 810-393 King Street West (“King”); and 10 Fort Rouille Street (“Fort Rouille”)(collectively, the “CPL Properties”).
[2] The Defendant also requests an order discharging a mortgage which he granted to the Plaintiff over Lakeshore and 4 additional properties at 2045 Lakeshore Blvd. West (the “Mortgage”) to discharge the CPL registered on title to Uxbridge.
II. Background
[3] As the voluminous record and the parties’ extensive submissions demonstrate, substantially all of the facts are in dispute. The parties expended significant time and effort in arguing the merits, casting doubt on the authenticity of almost every document and attempting to impeach each other’s credibility, most of which goes beyond the scope of a CPL motion. Consistent with the role of this Court, which is not to make findings of disputed facts or credibility, I have endeavored to focus on what is necessary and material to properly consider and dispose of this motion.
[4] The Plaintiff and the Defendant met at a branch of Toronto-Dominion Bank (“TD Bank”) in September 2017. She is a secretary and he, among other things, purchases, renovates and sells or leases investment properties. He is the owner and operator of the Defendant Venetian Homes Limited (“VHL”), a general contractor. The Plaintiff alleges that a romantic relationship developed. The Defendant claims that they were just friends.
[5] This action arises from the Plaintiff’s investment in 2 properties which the Defendant had purchased to renovate and sell: 353 Winona Drive in Toronto (“Winona”) and 392 Hemlock Avenue in Stoney Creek (“Hemlock”, collectively with Winona, the “Investment Properties”). Substantially all of the facts related to how the Plaintiff came to invest in the Investment Properties including the signing of agreements are in dispute. The Plaintiff alleges that the Defendant exercised undue influence in having her sign one agreement for both Investment Properties on November 30, 2017 while she was under the influence of alcohol. The Defendant claims that the Plaintiff signed separate agreements for the Investment Properties on November 30, 2017 for Winona and January 18, 2018 for Hemlock and denies the allegations of undue influence.
[6] One of the few undisputed facts is that between December 5, 2017 and June 22, 2018 the Plaintiff advanced a total of $980,000 to VHL representing her investment in the Investment Properties: $634,624.42 for Winona and $345,375.58 for Hemlock. For reasons which are in dispute, the renovations to the Investment Properties did not go as planned and both were sold: Winona on December 3, 2018 for $1,825,000 and Hemlock for $829,000 on May 7, 2019. The Defendant claims that the Plaintiff incurred an aggregate loss of $350,247.75 on the Investment Properties. The Plaintiff alleges that Winona was sold for a profit, that she has not received an accounting and that after the sale of each of the Investment Properties the Defendant advised her that he had lost all of her money. The Defendant’s position is that after payments made to the Plaintiff, she is indebted to him and/or VHL in the amount of $82,000.
[7] The Plaintiff alleges that she advanced the bulk of her life savings and significant borrowed funds to VHL on the understanding that she and the Defendant would share equally in the sale proceeds of the Investment Properties. She alleges that her funds were used by the Defendants to purchase, renovate and/or make payments with respect to the CPL Properties. She commenced this action by Statement of Claim issued on December 4, 2020 claiming damages of $980,000 for fraud, conversion, breach of fiduciary duty, knowing receipt of trust property and unjust enrichment and claims a constructive or resulting trust and tracing remedies. She also seeks to set aside any agreements she may have entered into as unconscionable.
[8] The CPL was registered on title to the CPL Properties on May 13, 2021. An inadvertent error with respect to the PIN for Lakeshore was corrected by Amended Order. On June 15, 2021, the Defendant granted the Mortgage in the amount of $2,000,000 in exchange for the Plaintiff lifting the CPL registered on Uxbridge to permit a sale of that property to close. Uxbridge was owned by the Defendant Daniel Pedra and his parents. Daniel was the then fiancée (now husband) of the Defendant Bianca Pedra, who is the Defendant’s daughter. The Mortgage is registered against Lakeshore, the Defendant’s personal residence (over which the CPL is also registered), and 4 additional rental properties owned by the Defendant at the same address, 2045 Lakeshore Blvd. West (Suites 1112, 1405, 2408 and 3403 in the Palace Pier Condominiums). The Mortgage was granted without prejudice the Defendants bringing a motion to discharge the CPL and the Mortgage.
[9] The Defendant brought the discharge motion on August 19, 2022. The parties first appeared before me at a telephone case conference on August 23, 2022 where multiple dates in December 2022 were offered and a timetable was ordered. The motion was originally scheduled for December 8, 2022, however, it was adjourned due to the delay in obtaining documents from TD Bank. At another telephone case conference on December 5, 2022, the motion was scheduled for March 28, 2023. Further directions with respect to the TD documents were provided at another telephone case conference on January 10, 2023.
III. The Law and Analysis
Relief Sought
[10] The Defendant requests that the CPL and the Mortgage be discharged outright. In the alternative, the Defendant has advised that if the court concludes that the Plaintiff is entitled to security for her claim, then he agrees to permit the CPL to remain on title to Fort Rouille. He argues that whatever remedy the court may order, the CPL should be discharged from Lakeshore as it was purchased in 2015 before he met the Plaintiff and his unrefuted evidence is that the expenses for Lakeshore are paid from a single bank account into which rents are deposited. The Plaintiff submits that the CPL should remain on title to the 3 remaining CPL Properties and that the Mortgage should not be discharged.
Triable Issue
[11] The court’s jurisdiction to grant leave to issue a CPL is set out in section 103(1) of the Courts of Justice Act (Ontario) (the “CJA”). With respect to the discharge of a CPL, s. 103(6) of the CJA states:
“(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.”
[12] Rule 42.02(1) provides that an order discharging a certificate of pending litigation under subsection 103(6) of the CJA may be obtained on motion to the court.
[13] Master Glustein (as he then was) summarized the factors which the court must consider on a CPL motion in Perruzza v. Spatone, 2010 ONSC 841 at para. 20:
“(i)The test on a motion for leave to issue a CPL made on notice to the defendants is the same as the test on a motion to discharge a CPL (Homebuilder Inc. v. Man-Sonic Industries Inc. ("Homebuilder") at para. 1);
(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., as per van Rensburg J., citing Transmaris Farms Ltd. v. Sieber 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 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 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.; Clock Investments Ltd. v. Hardwood Estates Ltd., 1977 CarswellOnt 1026 (Div. Ct.) at para. 9).”
[14] The court must first determine if there is a triable issue with respect to the Plaintiff’s claim to an interest in the CPL Properties which would support the granting of the CPL (Saggi v. Grillone, 2020 ONSC 4140 at paras. 31, 55 and 67; Zhao v. 8657181, 2020 ONSC 2864 at paras. 9 and 11; G.P.I. Greenfield at para. 20; Saggi at para. 67; Boal v. International Capital Management Inc., 2018 ONSC 1954 at para. 64). This threshold requires there to be a triable issue as to a reasonable interest in land and is a gateway requirement for a CPL has been described as whether the remedy sought by the plaintiff, including a constructive or resulting trust and tracing remedies, are possible remedies at trial (Sun Rise Elephant Property Investment Corporation v. Luu, 2018 ONSC 5247 at paras. 10-12). The party opposing the CPL bears the onus to show that there is no triable issue (Boal at para. 64).
[15] It is not the court’s role to determine whether the plaintiff’s claim will likely succeed at trial (HarbourEdge Mortgage Investment Corp. v. Timbercreek Mortgage Investment Corp. (Trustee of), 2016 ONSC 265 at para. 56; Sun Rise at para. 10). In determining if there is a triable issue, the evidentiary bar is low and the court is not to assess credibility or decide disputed issues of fact (Huntjens v. Obradovic, 2019 ONSC 4343; Sunrise at para. 10; Saggi at paras. 45 and 62; Bains v. Katri, 2019 ONSC 1401 at para. 36). Rather, the court must examine the whole of the evidence and, without deciding disputed issues of fact and credibility, consider whether the plaintiff’s case constitutes a reasonable claim to the interest in land claimed in the action (Huntjens at para. 21; Boal at para. 64).
[16] In my view, the Defendant has not discharged his onus to demonstrate that there is no triable issue with respect to whether the Plaintiff has a reasonable claim to an interest in the CPL Properties. While the present circumstances are difficult to unravel, the court is not required to make findings of fact or credibility. On the low threshold which applies, I am satisfied that there is sufficient basis to establish the required connection between the Plaintiff’s advances and the CPL Properties (Saggi at paras. 64-65). This is largely based on the timing of the Plaintiff’s advances and the purchase and/or renovation of the CPL Properties, particularly Uxbridge, King and Fort Rouille and the Plaintiff’s evidence to support her allegations. This includes her claim that funds which she advanced for the renovation of Hemlock, which was in Daniel’s name, were used to renovate Uxbridge, which Daniel owned with his parents. Based on the totality of the record before me, I am satisfied that a constructive or resulting trust and equitable tracing are possible remedies available to the Plaintiff at trial.
The Equities
[17] If the gateway requirement of a triable issue threshold is met, the court must then consider whether it is just and equitable based on all of the circumstances to exercise its discretion to grant or maintain a CPL by considering and balancing the equities including the list of factors set out in 572383 Ontario Inc. v. Dhunna (Sun Rise at para. 12; Tribecca Development Corp. v. Danieli, 2015 ONSC 7638; Huntjens at para. 48).
[18] In considering the equities as between the parties the court may consider the non-exhaustive list set out in Dhunna: (a) whether the plaintiff is, or is not, a shell corporation; (b) whether the land is, or is not, unique; (c) the intent of the parties in acquiring the land; (d) whether there is an alternative claim for damages; (e) the ease or difficulty of calculating damages; (f) whether damages would be a satisfactory remedy; (g) the presence or absence of another willing purchaser; and (h) 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 (Dhunna at paras. 10-18; Saggi at para. 28; Sun Rise at paras 12-17; Huntjens at para. 49; Bat-Amy v. Zribi, 2010 ONSC 1272 at paras 21-22). To the extent not covered by the relative harm to the parties, I have also considered the balance of convenience (Bains at para. 37).
[19] The parties did not make fulsome submissions on the equities. Subject to my further consideration of the equities below, I am satisfied that the equities support the maintenance of the CPL and/or some form of security. In particular, the balance of convenience or harm favours the Plaintiff. Without the CPL or another form of security such as the Mortgage, the Plaintiff would be at risk of having the properties in which she claims an interest and various remedies disposed of prior to the conclusion of contentious, protracted litigation. By contrast, the Defendant owns numerous properties and has not made any submissions or provided evidence of any harm or prejudice he would suffer if the CPL and the Mortgage were to remain on title.
[20] A further discussion of the equities is set out below in my consideration of the appropriate remedy.
Delay in Bringing The Discharge Motion
[21] The Plaintiff’s primary submission is that the Defendant’s delay in bringing this discharge motion is fatal to the relief he seeks. The Plaintiff cites Rule 37.14(1) which states:
“(1) A party or other person who,
(a) is affected by an order obtained on motion without notice;
(b) fails to appear on a motion through accident, mistake or insufficient notice; or
(c) is affected by an order of a registrar,
may move to set aside or vary the order, by a notice of motion that is served forthwith after the order comes to the person’s attention and names the first available hearing date that is at least three days after service of the notice of motion.”
[22] The Plaintiff relies on Ontario (Attorney General) v. 15 Johnswood Crescent in which Strathy J. (as he then was), considered the requirement that a party move “forthwith”:
41 The requirement that a party must move "forthwith" reflects the importance of finality of court orders - a policy that goes to the integrity of the justice system. Confidence in the system is eroded if court orders are challenged long after they have been made.
42 The "forthwith" requirement also reflects two common sense presumptions. The first buttresses the "accident or mistake" requirement. It is presumed that a party whose rights have been adversely affected by a mistake will raise an immediate protest. Thus, moving forthwith provides evidentiary support for the party's assertion of mistake.
43 The second common sense presumption is that a party who sits on his or her rights in the face of a court order has accepted the legitimacy of the order. A failure to move "forthwith" to set aside the order suggests that the party is prepared to let it stand.
44 The word "forthwith" means: "immediately;" "as soon as possible in the circumstances, the nature of the act to be done being taken into account;""as promptly as is reasonably possible or practicable under the circumstances;" or "without any unreasonable delay, considering the objects of the rule and the circumstances of the case."
See: Beattie v. Ladouceur (1995), 23 O.R. (3d) 225 (Gen. Div.) at 228-229; R. v. Parrot (1979), 27 O.R. (2d) 333 at 339-40 (C.A.).
45 These definitions suggest that a court considering the "forthwith" requirement must consider the purpose of the rule itself, the purpose of the requirement for prompt action, the length of the delay, the reasons and circumstances of the delay, and all the surrounding circumstances of the case.”
[23] Johnswood was recently cited by the Supreme Court in Canadian Broadcasting Corp. v. Manitoba, 2021 SCC 17 at para. 43 for the common sense presumption that a party who delays accepts the legitimacy of the order.
[24] I reject the Defendant’s submission that Rule 37.14(1), and therefore, the requirement to move “forthwith”, does not apply to the discharge of a CPL. The Defendant argues that Rule 42.02, not Rule 37.14(1), applies to the discharge of a CPL. However, in 413554 Ontario Ltd. v. Pine Valley Developments Corp. 2011 ONSC 6193, D.M. Brown J. (as he then was) held that the requirement to move “forthwith” applies to a motion to set aside a CPL. He concluded in that case that by waiting over 3 years to bring the motion the defendants had not moved “forthwith” and had not provided an adequate explanation. I was not referred to any other cases with respect to what constitutes “forthwith” on a CPL discharge motion, however, some cases referred to me on other kinds of ex parte orders provide some guidance. Further, Rule 42 is silent with respect to this requirement, however, it provides that a motion to discharge a CPL may be made on motion to the court which in my view, engages Rule 37.14(1) and therefore the requirement to move “forthwith”.
[25] Whether the Defendant moved “forthwith” must be considered in the context of all of the circumstances including the granting of the Mortgage and the lifting of the CPL on Uxbridge. The Order and the CPL came to the Defendant’s attention in May 2021. In June 2021, the Defendant negotiated the Mortgage with the Plaintiff with a reservation of rights to bring a motion to set aside the CPL and the Mortgage. The Defendant did not bring this motion until August 2022 approximately 14 months later. I conclude that by waiting for 14 months, the Defendant did not move “forthwith. The Defendant has not provided an explanation for this delay. However, as discussed below, given the overall circumstances, I do not accept that the delay should preclude the granting of any relief requested by the Defendant. The Defendants did not contribute to any delay in the litigation and did not ignore the Order and CPL, agreeing to the Mortgage as replacement security for the CPL on Uxbridge while reserving their rights to bring this motion. As such, I decline to dismiss the Defendant’s motion on this basis and have taken the delay into consideration as part of the exercise of the court’s ongoing equitable discretion.
Full and Fair Disclosure
[26] The Defendant submits that the CPL should be discharged due to the Plaintiff’s failure to make full and fair disclosure of all material facts on the ex parte in writing motion.
[27] Rule 39.06(1) provides that where a motion is made without notice, the moving party must make full and fair disclosure of all material facts, and failure to do so is in and of itself sufficient ground for setting aside any order obtained on the motion. This Rule does not require that an order obtained in the absence of full and fair disclosure be set aside, rather, it provides only that it may be set aside solely on that basis (Gong v Neuhaus Management Ltd., 2021 ONSC 531 at para. 51). A court still has the discretion to consider whether a CPL should be continued or discharged under s. 103(6) of the CJA even where there has been material non-disclosure (Gong at para. 51).
[28] In Henein v. Alala, 2021 ONSC 5871, LaHorey A.J. summarized the law with respect to the disclosure of “material facts” under Rule 39.01(6) in the context of a CPL discharge motion:
43 "Material facts" are those facts which must be drawn to the attention of the court and which may affect the outcome of the motion. The question is not whether the order would or would not have been granted; rather the issue is whether the omissions might have had an impact. The test for materiality is an objective one.
44 The rationale for this rule has been eloquently expressed by Justice Myers in Moses v Metro Hardware Maintenance, Inc., 2019 ONSC 600, a case involving a CPL obtained without notice. In that decision Justice Myers wrote:
[20] Our system of civil justice is adversarial. It is premised upon parties each putting forward their own case and challenging each others' cases. A dispassionate trier of fact and law is charged with the task of determining the outcome based on the idea that the parties and their professional advocates are best able to establish the truth through their own industry and self-interest.
[21] However, the adversarial system operates within the rule of law. Despite the system being adversarial, we do not have trial by battle in which the spoils go to the strongest or to the richest combatant. The rule of law requires that above all else, the resolution of civil disputes must be fair and just. Hryniak v. Mauldin, 2014 SCC 7, at para. 23.
[22] Although lawyers are duty-bound to advocate for their clients zealously and fearlessly, they too are required to do so "in a way that promotes the parties' right to a fair hearing in which justice can be done." See: Rules of Professional Conduct, Law Society of Ontario, Commentary 5.1-1.
[23] Court proceedings without notice to one side or the other are an exception to the underlying premise of the adversarial system. When only one side is heard, the assurances of mutual self-interest and mutual, competitive advocacy by professionals committed to the fairness of the process are missing.
[24] To protect the rule of law and the fundamental assurance of a fair civil justice system, Rule 39.01 (6) imposes vital, extra burdens on parties who seek relief before the court without notice to their adversary. They are required to make "full and fair disclosure of all material facts." The rule provides that the failure to make "full and fair disclosure of all material facts" is itself a basis to set aside an order obtained without notice regardless of the merits of the request for relief.
[25] Rule 39.01 (6) is not just speaking to witnesses' testimony. It applies to the party who brings a motion without notice.
[26] The party who moves without notice must be fair. The regular zeal that is perfectly appropriate in face of an equally zealous adversary does not apply when a party chooses to go before a judicial officer without anyone else present to keep his or her zealousness in check.
[27] In United States v Friedland Sharpe J. (as he then was) described the issue as follows:
The rationale for this rule is obvious. The Judge hearing an ex parte motion and the absent party are literally at the mercy of the party seeking injunctive relief. The ordinary checks and balances of the adversary system are not operative. The opposite party is deprived of the opportunity to challenge the factual and legal contentions advanced by the moving party in support of the injunction. The situation is rife with the danger that an injustice will be done to the absent party. As a British Columbia judge noted recently:
There is no situation more fraught with potential injustice and abuse of the Court's powers than an application for an ex parte injunction. (Watson v. Slavik, August 23rd, 1996, paragraph 10.)
[28] The duties to make full and fair disclosure replace the checks and balances of the adversarial system. The court has no choice but to trust the moving party when he or she says they are fully disclosing and fairly presenting all material facts and the applicable law. It is the need to trust an otherwise zealously adversarial party that makes the situation so fraught with risk and renders justice so vulnerable to abuse.
[29] Justice Sharpe described the duty on a party who moves without notice in this way:
27 ...That party is not entitled to present only its side of the case in the best possible light, as it would if the other side were present. Rather, it is incumbent on the moving party to make a balanced presentation of the facts and law. The moving party must state its own case fairly and must inform the Court of any points of fact or law known to it which favour the other side. The duty of full and frank disclosure is required to mitigate the obvious risk of injustice inherent in any situation where a Judge is asked to grant an order without hearing from the other side.
28 If the party seeking ex parte relief fails to abide by this duty to make full and frank disclosure by omitting or misrepresenting material facts, the opposite party is entitled to have the injunction set aside. That is the price the Plaintiff must pay for failure to live up to the duty imposed by the law. Were it otherwise, the duty would be empty and the law would be powerless to protect the absent party. [Emphasis added.]
[30] Justice Sharpe also discussed the scope of the obligation to disclose all material facts. Materiality is determined objectively. He held that a party cannot be heard to say that she or he (or their lawyer) did not believe a point was relevant to the case. He adopted the following expression of the rule:
... The duty extends to placing before the court all matters which are relevant to the court's assessment of the application, and it is no answer to a complaint of non-disclosure that if the relevant matters had been placed before the court, the decision would have been the same. The test as to materiality is an objective one, and it is not for the applicant or his advisers to decide the question; hence it is no excuse for the applicant subsequently to say that he was genuinely unaware, or did not believe, that the facts were relevant or important. All matters which are relevant to the 'weighing operation' that the court has to make in deciding whether or not to grant the order must be disclosed. [Emphasis added.]
[31] The question then is whether the plaintiffs presented their case fairly and made full disclosure of all material facts. Did they recognize that they could not just present their own case in the best possible light, but that they were duty-bound to make a balanced presentation of both sides' cases? Did they fulfil their obligation to inform the court of all material facts known to them that favour the other side? Did they disclose all facts that the Master might consider relevant as part in her "weighing operation"?
45 Even if I conclude that the CPL was obtained without full and fair disclosure, the CPL may still be maintained. The court has a continuing discretion to act in the interests of justice having regard to the totality of the evidence.
46 In Moses, Justice Myers held:
“...on a finding being made that a plaintiff has breached the duties of full disclosure and fair disclosure, the presumptive remedy should be to set aside the order. The plaintiff should have to bear a real burden to show why it is just and equitable for the court to exercise its discretion to maintain or reissue the order on all the facts. I agree with Sharpe J. that were it otherwise, the duties would be empty and the law would be powerless to protect the absent party.”
[29] The Defendant claims that there are five (5) instances where the Plaintiff failed to make full and fair disclosure. I will review each one in turn. I was not referred to Abrams A.J.’s Endorsement however, counsel advised that it simply stated: “Order to go”. The challenge for the court is distinguishing between what is necessary to determine material non-disclosures where disputed facts, authenticity of documents and credibility are central to many of the parties’ submissions.
[30] First, the Defendant submits that the Plaintiff failed to advise the court of the Defendant’s primary defence, namely, that the Plaintiff agreed that her proceeds from the sale of the Investment Properties would be invested for her by the Defendant. In the Plaintiff’s affidavit sworn March 16, 2021 filed on the ex parte motion (the “Ex Parte Affidavit”), she states that the Defendant advised her that their losses had been “bought” by their “business partner” Laurin Peret who was involved in a building project in Barbados and they would not get their money back for a few years until the project was completed. The Plaintiff stated that she did not know why he was their business partner. The Defendant has advised that Mr. Peret was a sales representative for Pure Beach Resort and Spa Inc. (“Pure Beach”), an Ontario corporation in which the Defendant had invested which was developing a resort property in Barbados.
[31] The Defendant claims that the Plaintiff agreed that the Defendant would transfer $520,000 worth of his shares in Pure Beach to the Plaintiff with payment to be made from her share of the sale proceeds from the Investment Properties. The Defendant has produced a share agreement which he prepared and signed in December 2018. The Plaintiff did not sign it. The Defendant has also produced a separate document he says the Plaintiff signed on December 4, 2018 acknowledging that she was receiving $520,000 worth of the Defendant’s shares in Pure Beach on account of proceeds from the sale of the Investment Properties. After this action was commenced, the Defendant had share certificates issued for the Plaintiff. The Plaintiff states that she does not have copies of these documents, that she would have never agreed to accept shares instead of the money which she was owed and claims that their authenticity is in question which is supported by the cross-examination testimony of the Defendant’s assistant, Karen Garney, who the Defendant states prepared the documents.
[32] The Plaintiff attached approximately 350 pages of text messages between her and the Defendant to the Ex Parte Affidavit, some of which referred to an investment of the Plaintiff’s interest in the Investment Properties in Pure Beach. However, the Ex Parte Affidavit makes no reference to an “investment” or these text messages. On cross-examination, the Plaintiff admitted that she understood in the text messages that the Defendant was telling her that her entitlement to the sale proceeds from the Investment Properties had been invested in Pure Beach. The Defendant submits that the Plaintiff’s “vague” reference in the Ex Parte Affidavit to their losses being “bought” and failure to draw the texts to the court’s attention constitutes a material non-disclosure. On his cross-examination, the Defendant stated that, notwithstanding his text message to the Plaintiff that Mr. Peret had already put the amount in an investment, Mr. Peret had not invested the Plaintiff’s loss or made any investment. Therefore, the Plaintiff argues that her failure to specifically refer the court to something that did not happen is not a material non-disclosure (Pazner v. Ontario, 74 O.R. (2d) 130 (H.C.J.).
[33] The duty to make full and fair disclosure requires a party moving without notice to do more than just append a copy of an agreement or other documents containing an important term to an affidavit; the moving party has a duty to draw material terms to the court’s attention (Gong at para. 31). This is even more crucial on an in-writing motion where the judicial official does not have the benefit of an attendance. In the present case, I am not prepared to conclude that the Plaintiff’s failure to draw the court’s attention to the texts or her explanation constitutes a material non-disclosure. The Plaintiff disclosed her understanding, based on what she alleges the Defendant told her, that their losses had been “bought” by Mr. Peret and that they had to wait for the completion of a project in Barbados. Given the Defendant’s answer on cross-examination regarding this “investment”, as with most facts in the present case, there appears to be disconnect as to what the actual arrangement might be. This is an issue for trial. However, the fact that the Plaintiff may have inaccurately or imprecisely described the agreement as losses being bought as opposed to invested is not material in the present circumstances. She disclosed the fact that she was advised that there was an arrangement related to her investment in the Investment Properties which involved Mr. Peret and a building project in Barbados which required her to wait until the project was completed, all of which is largely consistent with the Defendant’s version of the facts. As set out below, the fact that the Plaintiff does not have copies of documents such as the share acknowledgement is a larger issue in these proceedings which, together with the authenticity of documents, will be canvassed at trial. In my view, even if the Plaintiff had explained the investment in the manner suggested by the Defendant and referred the court to the specific texts, in all of the circumstances here I cannot conclude that it might have had an impact on AJ Abrams’ decision to issue the Order. Even if I did conclude that this was material non-disclosure, on the totality of the evidence it would not change my conclusion on the appropriate remedy set out below.
[34] Second, the Defendant submits that the Plaintiff failed to put the relevant agreements regarding her investment in the Investment Properties before the court and her position that she signed one agreement on November 30, 2017 is not tenable. In the Ex Parte Affidavit, the Plaintiff disclosed that she had signed one agreement, she was not sure what she had signed given the circumstances in which she signed it and that she asked the Defendant for a copy on numerous occasions but he did not provide one. The Defendant has filed two original agreements, one for Winona (signature page dated November 30, 2017) and one for Hemlock, (signed page dated January 17, 2018). The Defendant alleges that he personally provided the Plaintiff with hard copies of all documents but there are no records of he or Ms. Garney having provided the Plaintiff with a copy of this or any other documents because he does not use a computer, email or fax. The Plaintiff denies that she received copies of what she signed (she says the Defendant told her he would keep them for safe keeping) or that she signed a separate agreement on January 17, 2018 and alleges that the Defendant used the signature page from the agreement she signed on November 30, 2017.
[35] The Defendant made substantial arguments regarding the authenticity of the agreements, the credibility of his evidence and Ms. Garney’s evidence and why the Plaintiff’s allegations regarding one agreement and authenticity are implausible. These are all issues for trial and to draw the conclusions urged upon me by the Defendant would require me to go beyond the court’s role to make findings of disputed fact and credibility. The Plaintiff disclosed to the court that she did not know what she signed due to the alleged circumstances related to the signing, she did not have a copy, that she had asked for a copy, was not given one and expected that the Defendant would have one. Based on the record, there is at least a disputed issue with respect to whether the Plaintiff was provided with copies of these and other documents which raises the Defendant’s manner of conducting business without any record of document delivery. This and issues related to the authenticity of documents are issues for trial. In any event, on all of the evidence before me, I am satisfied that the Plaintiff made full and fair disclosure and cannot conclude that the information not disclosed might have affected the outcome of the ex parte motion.
[36] Third, the Defendant claims that the Plaintiff’s failure to disclose that he was making monthly payments of $1,500 to her is also material. The Plaintiff’s evidence in the Ex Parte Affidavit is that she received $100,000 from the Defendant on December 6, 2018. While the parties agree that this payment was made, the Plaintiff says it was for interest on funds she had borrowed and the Defendant says it was her proceeds of Winona. The Plaintiff also stated in the Ex Parte Affidavit that she expected to receive another payment of $100,000 on March 26, 2019 for interest she incurred. However, she states that during an attendance at TD Bank that day, she realized that the Defendant had caused a debit memo of $100,000 to be issued to VHL. The Defendant’s evidence is that the Plaintiff wanted to give him a gift of $100,000 for assisting her with issues related to an ex-boyfriend which the Defendant would not accept later agreeing to accept $40,000. The Defendant has produced an agreement dated December 28, 2019 signed by the parties and witnessed by Ms. Garney which states that to repay a “$100,000 loan” to the Defendant, the Defendant would pay the Plaintiff $1,200 per month for 7 months and $1,500 per month for 36 months and that $40,000 was a gift. The Defendant claims that he has repaid the $60,000. The Plaintiff alleges that this agreement is a forgery, that she never agreed to a gift or these terms, notes that it contains spelling errors including the Plaintiff’s name and that the Defendant has provided no proof that the $60,000 was repaid. The Defendant testified on cross-examination that he re-paid $36,000 in cash.
[37] I do not accept that the Plaintiff’s failure to disclose this agreement is a material non-closure. The conflicting evidence and state of the record make it far from clear what, if any, agreement was reached. Even accepting the Defendant’s version of events, he seems to be repaying a separate loan and accepting a gift which are unconnected to the issues in this litigation or the granting of the CPL. I cannot conclude that the failure to disclose the terms of this arrangement, if it existed, might have had an impact on the court’s decision to grant the Order.
[38] Fourth, the Defendant submits that the Plaintiff’s failure to disclose an earlier attendance at TD Bank on March 12, 2019 where the Defendant paid $100,000 to the Plaintiff is another material non-disclosure. The Defendant has produced a copy of a bank draft dated March 9, 2019 and a receipt. The Defendant has also produced an acknowledgement dated March 12, 2019 signed by the Plaintiff which states that she understood what she had agreed to with VHL. The Plaintiff states that she could not locate any documents, the funds were deposited to a temporary account which was only open for 10 days, therefore, there was no bank statement to review and the document produced by TD Bank for this motion was a screenshot. Accordingly, she states that it was not readily apparent to her that she received the funds and she disclosed what she knew to the court in the Ex Parte Affidavit. However, text messages between the Plaintiff and the Defendant on March 9 and 12, 2019, refer to this payment and bank attendance and there does not appear to be any question that the payment was deposited.
[39] In my view, given the amount and circumstances of this payment, I conclude that the Plaintiff’s failure to disclose it to Abrams A.J. constitutes a material non-disclosure. Although the $100,000 payment would still leave a substantial claim by the Plaintiff, $100,000 is a material sum which could and should have been disclosed and in my view, may have affected the outcome of the motion. Although the Plaintiff claims not to have any documentation or recollection, consistent with a moving party’s obligations on an ex parte motion, more robust inquiries should have been made of her banking records before she swore the Ex Parte Affidavit which would have likely revealed the payment. However, as discussed further below, given the overall amount of the Plaintiff’s claim and the nature of the allegations and remedies sought, I am not prepared to conclude that this non-disclosure should result in the discharge of the CPL and the Mortgage in their entirety.
[40] Finally, the Defendant argues that the Plaintiff’s evidence in the Ex Parte Affidavit regarding the night she agreed to the investments differs materially from her testimony on cross-examination. This, says the Defendant, gave the court the impression that she and the Defendant were drinking wine and having dinner together and that the Defendant took advantage of the situation to have her sign an agreement. At paragraph 29 of the Ex Parte Affidavit the Plaintiff states:
“29. In late November, 2017, after dinner and a fair bit of wine, Cosmo managed to get me to agree to the plan. It didn’t matter that by that time it was the late evening – about 10:00 p.m.; Cosmo called his assistant to come over to his condominium and Cosmo produced to me an agreement which he explained set out our 50/50 arrangement”
[41] However, on cross-examination, the Plaintiff testified that she consumed one litre of wine while drinking alone at home and drove to the Defendant’s condominium after he called her at approximately 10:00 p.m. to sign documents. The Defendant denies that this happened at all and submits that the Plaintiff’s failure to disclose that she was drinking alone before she came over to the Defendant’s home left the court with the impression that he exercised undue influence over her. The Plaintiff submits that the Ex Parte Affidavit does not state that the two were drinking and dining together.
[42] The Defendant’s position is that Abrams A.J. might have made a different decision on the Order had she been advised that the Plaintiff was drinking at home alone and drove over to the Defendant’s condominium (which he also used as his office) instead of being left with the impression that the Plaintiff and the Defendant were drinking and dining together. I reject the Defendant’s assertion that this constitutes material non-disclosure. While the wording could have been clearer, regardless of where the Plaintiff drank, she still claims that she was “drunk”, that the Defendant had her over to his condominium/office to sign documents, exercised undue influence in these circumstances and as a result of their relationship, did not have time to properly review the documents she signed and did not know what she signed. The facts and circumstances related to the signing of the agreement will be determined at trial. Accordingly, I cannot conclude that her failure to disclose the facts as stated on cross-examination might have had an impact on the Order.
[43] The Defendant raised, but did not make substantial submissions on other alleged non-disclosures including issues related to another investment property at 14 Lakeview Drive in Hamilton and expenses for renovations. I conclude that none of these amount to material non-disclosures.
Conclusions and Appropriate Remedy
[44] In determining the appropriate remedy and order, the court has a continuing discretion in equity to act in the interests of justice having regard to the totality of the evidence. I have concluded above that although there is a triable issue with respect to a reasonable claim in the CPL Properties and the equities favour the Plaintiff, the Plaintiff did not disclose some material facts which may have impacted the outcome of ex parte motion and that the Defendant delayed in bringing this discharge motion. The parties submitted that if I made these findings that it should be fatal to the other’s requested relief, namely, that the CPL and the Mortgage should be discharged or that the motion should be dismissed outright. The challenge is that I have made findings against both parties.
[45] However, in making these findings, I have also concluded that they should be viewed in the overall circumstances of this case and the granting of the Order. Namely, the Plaintiff’s non-disclosure of the $100,000 payment must be considered together with the aggregate amount $980,000 she is claiming and the nature of allegations and relief she seeks, including a constructive trust and equitable tracing. Similarly, the Defendant’s delay must be viewed in the context of the subsequent Mortgage to lift the Uxbridge CPL. Therefore, exercising my discretion to order what is just and equitable in all of the circumstances, I decline to grant an “all or nothing” order as requested by the parties. I am also satisfied under s. 103(6)(c) of the CJA that it is just for the Plaintiff to have some security for her claim on the terms set out below.
[46] To reflect the timing of purchase and the amount and nature of the Plaintiff’s claims, I am satisfied that the CPL shall remain on title to King and Fort Rouille. This also takes into account the Defendant’s alternative relief with respect to Fort Rouille and the lack of evidence with respect to funding for King and Fort Rouille. Similarly, as the Mortgage represents replacement security for the CPL on Uxbridge, it shall remain registered on the Additional Properties in consideration of the claims made by the Plaintiff with respect to Uxbridge. This will also ensure that the Plaintiff has sufficient security.
[47] I further conclude that it is just and appropriate for the CPL and the Mortgage to be discharged from Lakeshore. This is largely based on my view that the CPL on King and Fort Rouille and the Mortgage on the Additional Properties are sufficient security for the Plaintiff’s claims and reflective of the timing of the purchase of Lakeshore. To a lesser degree, it reflects the Defendant’s uncontroverted evidence on this motion regarding the source of payments for Lakeshore.
[48] In my view, this result balances the parties’ rights and fairly reflects my conclusions above. This result is also consistent with this Court’s obligation to interpret the Rules in a liberal manner to secure the just, most expeditious and least expensive determination of every civil proceeding and to make orders which are proportionate to the importance and complexity of the issues and the amounts involved (Rule 1.04(1), (1.1)). It will also permit the parties to move the proceedings forward to documentary discovery, examinations for discovery and mediation.
III. Disposition and Costs
[49] Order to go as follows:
i.) the CPL shall remain registered on title to King and Fort Rouille;
ii.) the CPL and the Mortgage shall be discharged from title to Lakeshore;
iii.) the Mortgage shall remain registered on title to the Additional Properties.
[50] If the parties cannot agree on the costs of this motion they may file written costs submissions with me, not to exceed 4 pages (excluding Costs Outlines) on a timetable to be agreed upon by counsel.
Released: July 31, 2023
Associate Justice McGraw