COURT FILE NO.: CV-20-00654767-0000

COURT FILE NO.: CV-21-00665466-0000

DATE: 20240531

ONTARIO

SUPERIOR COURT OF JUSTICE

BETWEEN:

ROSEMONT MANAGEMENT INC. and MCCAUL LEASEHOLD MANAGEMENT LIMITED

Applicant

• and –

CITYZIEN PROPERTIES LIMITED and JOHN FARACI

Respondents

• and –

TERENCE TSE and BEST MOTORING FINE CARS LTD.

Intervenors

AND BETWEEN:

CITYZIEN PROPERTIES LIMITED

Applicant

• and –

ROSEMONT MANAGEMENT INC.

Respondent

Albert S. Frank, Sean Dewart, and Brett Hughes for Rosemont Management Inc. and McCaul Leasehold Management Limited

Maurice Neirinck for Cityzien Properties Limited

Gregory P. Weedon for the Respondent John Faraci

Roy Wise for the intervenors Terence Tse and Best Motoring Fine Cars Ltd.

HEARD: April 24, 2024

PERELL, J.

REASONS FOR DECISION

Contents

A. Introduction. 2

B. Overview.. 3

C. Facts. 6

1. The Parties and Dramatis Personae. 6

2. Corporate Law and the Unanimous Shareholders’ Agreement 7

3. The Leasehold Transaction. 10

4. The Applications and the Actions. 12

D. Discussion and Analysis. 33

1. The Court’s Jurisdiction to Enforce Settlements. 33

2. Settlement Agreements and Abuse of Process. 35

E. Conclusion. 39

A. Introduction

[1] Rosemont Management Inc. and McCaul Leasehold Management (collectively “Rosemont”), sues Cityzien Properties Limited and John Faraci.

[2] Terence Tse and his corporation Best Motoring Fine Cars Ltd. (“Best Motoring”) (collectively “Mr. Tse”) have been added to the litigation as intervenors.

[3] There are two motions before the court.

[4] In the first motion, Rosemont seeks to enforce a partial settlement of the litigation as against the co-respondent Cityzien. The settlement is a partial settlement because Rosemont’s claims against the co-respondent Mr. Faraci remain to be litigated.

[5] Although Cityzien initially supported the partial settlement, it now opposes the motion to enforce the settlement.

[6] Mr. Tse, who, through Best Motoring, has a 40% shareholder interest in Cityzien also opposes Rosemont’s motion to enforce the settlement.

[7] In the second motion, Rosemont is the responding party. For this motion, Mr. Faraci seeks an Order that Rosemont’s application against him should be permanently stayed as an abuse of process.

[8] In the second motion, Mr. Faraci alleges that the litigation landscape changed with the partial settlement between Rosemont and Cityzien. He submits that when he was not immediately notified of the changed litigation landscape, the application against him became an abuse of process and should be permanently stayed. Rosemount counters that the litigation landscape did not change and in any event, Mr. Faraci was given prompt and adequate notice of the settlement.

[9] For the reasons that follow: (a) the application/motion to enforce the settlement is refused on terms; and (b) the motion to permanently stay the application as against Mr. Faraci is granted on terms.

B. Overview

[10] As the detailed description of the facts below will reveal, in addition to the material facts of the underlying real estate dispute between the parties, which facts span an eight-year period, and which concern a much amended but eventually abortive real estate transaction and a terminated property management agreement, the factual background for the two motions now before the court involves: (i) Rosemont’s application, which has had numerous contested adjournments; (ii) Cityzien’s concurrent counter-application, which has had numerous contested adjournments; (iii) the internal and external negotiations amongst the actors that yielded the now challenged partial settlement; (iv) an intervenor motion by Mr. Tse; (v) internal disputes within Cityzien; (vi) Cityzien’s lawyer getting off and on the record; (vii) the procedural background to Rosemont’s and Mr. Faraci’s motions; (viii) several case management conferences; (ix) an action, which is not before this court, in which two numbered companies sue Cityzien and Mr. Faraci and others but not Rosemont or Mr. Tse; (x) another proceeding that is not before the court, in which Cityzien, and an associated corporation but not Mr. Tse sue Mr. Faraci and others; and (xi) motion records that comprise approximately 4,500 pages. There are also ten factums that have more rhetorical spin than an EF5 tornado.[^1]

[11] What emerges factually from this five-ring circus of litigation can be summarized as follows.

[12] Beginning in 2017, Rosemont agreed to sell an income stream residential development at 49 McCaul Street to Cityzien, and years later Rosemont allowed Cityzien to manage the development pending frequently postponed closings of the real estate transaction.

[13] During its management of the property, Cityzien leased gratis a residential unit for a fifteen-year term to its lawyer, Mr. Faraci, to set off unpaid legal and consulting fees.

[14] The real estate transaction was abortive, and it did not close in March 2020 as scheduled. The management agreement was subsequently terminated at the end of 2020 and Rosemont retook possession and management of the income stream residential development at 49 McCaul Street.

[15] In 2021, by application, Rosemont sued Cityzien and Mr. Faraci. The application against Cityzien was for an accounting and for damages of approximately $1.0 million for the abortive real estate transaction and for sums misappropriated under the management agreement. Rosemount’s proceeding by application against the co-respondent Mr. Faraci was to vitiate the fifteen-year gratis lease.

[16] In 2021, by counter-application, Cityzien sued Rosemont for specific performance or alternatively for a refund of deposits of approximately $1.0 million and damages of approximately $8.0 million with respect to the abortive real estate transaction.

[17] The application and the counter-application were scheduled to be heard in August 2021.

[18] In the summer of 2021, imminent upon the hearing of the application and counter-application, and while the cross-examinations of Mr. Faraci were in the actual process of being conducted on August 5, 2021, Rosemont and Cityzien culminated settlement negotiations which had begun a few days earlier in late July 2021.

[19] The settlement between Rosemont and Cityzien involved Rosemont paying Cityzien $150,000, but keeping Cityzien’s almost $1.0 million in deposits from the real estate transaction. The parties agreed to mutual releases. Cityzien agreed to remove its registered claim to the property from the land titles registry.

[20] However, at the time of the culmination of the settlement negotiations, Rosemont’s negotiator, Asif Sajan, knew that Lawrence Wong, Cityzien’s negotiator, had not persuaded Mr. Tse, a Cityzien shareholder and director with a 40% interest, to approve the settlement. Mr. Sajan did not think and told Mr. Wong that Mr. Tse’s approval was not necessary. Mr. Wong nevertheless unsuccessfully kept trying to persuade Mr. Tse and his lawyer to agree to the settlement.

[21] It was a part of the minutes of settlement that Rosemont and Cityzien would co-operate in respective lawsuits against Mr. Faraci. Both Rosemont and Cityzien were hyper-eager to turn their forensic forces against Mr. Faraci.

[22] Promptly upon the signing of the settlement documentation, Rosemont and Cityzien began to implement the settlement. Meanwhile for the imminent application and counter-application, on August 17, 2021 Rosemount delivered a Confirmation Form indicating that the application and counter-application had been settled save and except the claim against Mr. Faraci, which was to be adjourned. It was the Confirmation Form that alerted Mr. Faraci that he alone was being targeted by both Rosemont and possibly by Cityzien.

[23] With the delivery of the Confirmation Form, all procedural hell broke loose.

[24] Mr. Tse sought to intervene in the application. He sought to oppose the settlement. He sought an adjournment. Maurice Neirinck, Cityzien’s lawyer, who apparently did not support the settlement, sought to be removed as Cityzien’s lawyer of record. Mr. Wong, who is not a lawyer, sought to represent Cityzien. Mr. Faraci screamed prejudice and abuse of process. Mr. Faraci’s lawyer sought an adjournment. Rosemont refused the adjournment requests.

[25] On August 24, 2021, Justice Sharma adjourned the application and counter-application.

[26] Between August 24, 2021 and April 2024:

a. Mr. Wong continued to attempt unsuccessfully to have Mr. Tse agree to the settlement.

b. Mr. Tse was added as an intervenor to oppose the settlement.

c. Mr. Neirinck was removed from the record as Cityzien’s lawyer, only years later to return.

d. Mr. Wong unsuccessfully sought to find a lawyer to represent Cityzien.

e. Mr. Neirinck got back on the record, and Cityzien now opposes the settlement and wishes to resume its counter-application against Rosemont.

f. Cityzien commenced a separate lawsuit against Mr. Faraci and others. This proceeding was an action not an application.

g. There were numerous case conferences, more adjournments, more affidavits, and more cross-examinations.

h. Rosemont brought back on its motion to have the settlement with Cityzien enforced.

i. Mr. Faraci brought a motion to have Rosemont’s application dismissed as an abuse of process for Rosemont’s alleged failure to give prompt notice of a settlement that transformed the litigation landscape.

[27] As a matter of applying the law to this five-ring circus of litigation, what emerges can be summarized as follows.

[28] Although partially implemented, the settlement agreement between Rosemont and Cityzien is unenforceable and should be unwound. Rosemont cannot rely on the indoor management rule to uphold the validity and enforceability of the settlement agreement.

[29] Moreover, and in any event, when a litigant moves to enforce a settlement, the court has a discretion to refuse to enforce the settlement and to have the litigation continue. This five-ring circus of a case that never should have been brought as an application is an appropriate case for the court to refuse to enforce the settlement between Rosemount and Cityzien and to restore the status quo prior to the purported settlement.

[30] The pre-settlement status quo can and should be restored by returning the settlement funds to Rosemont and by Cityzien registering a certificate of pending litigation (a caution) against the title of 49 McCaul Street.

[31] Rosemont’s proceeding against Mr. Faraci by application is an abuse of process and must be permanently stayed.

[32] Rosemont’s proceeding is an abuse of process because prior to the culmination of the settlement agreement, there was an agreement between Rosemont and Cityzien to change the litigation landscape as against Mr. Faraci. With this agreement, which came before the formalization and finalization of the settlement between Rosemont and Cityzien, Cityzien was no longer a neutral in the dispute between Rosemont and Mr. Faraci. Moreover, in the circumstances of the immediate case, the purported settlement was reached on August 5, 2021 and the Confirmation Notice Form of August 17, 2021 was not immediate and adequate notice of the purported settlement.

[33] At the time when Mr. Faraci was being cross-examined in Rosemont’s application, Cityzien had agreed to assist Rosemont. Before and while Mr. Faraci was being cross-examined, Cityzien was no longer passive as against its co-respondent Mr. Faraci; Cityzien had already enlisted Rosemont’s support for prosecuting claims against Mr. Faraci. There was a change in the litigation landscape. There was procedural unfairness and an abuse of process.

[34] The procedural result is that Rosemont’s motion to enforce the settlement with Cityzien is dismissed - on terms - and Mr. Faraci’s motion to have the proceeding stayed as against him is allowed – on terms. There shall be no order as to costs.

[35] The terms of the orders in the two motions are as follows:

a. The settlement funds being held in escrow shall be returned to Rosemont.

b. Cityzien is at liberty within twenty days to register a certificate of pending litigation against the 49 McCaul Street property.

c. Rosemount’s application shall be converted into a proceeding by action, and within twenty days, Rosemont shall deliver a Statement of Claim against Cityzien and as against any co-respondent, as it may be advised, save and except for Mr. Faraci.

d. Cityzien’s counter-application shall be converted into a defence and counterclaim in Rosemont’s action, and Cityzien shall deliver its Statement of Defence and Counterclaim within twenty days of being served with Rosemount’s Statement of Claim.

e. In the applications converted into an action, Rosemount may not assert a claim as against Mr. Faraci, but Cityzien is at liberty to bring third party proceedings as against Mr. Faraci, and Mr. Faraci may deliver a Statement of Defence to the main action as he may be advised. While Mr. Faraci cannot be sued by Rosemont, he can be sued by Cityzien.

[36] The above terms are imposed because the application and the counter-application, which are no longer settled, should never have been brought by application. The disputes among Rosemont, Cityzien, and Mr. Faraci could and can only be fairly resolved by action.

[37] As a matter of the avoidance of a multiplicity of proceedings, I recommend that the parties take whatever procedural steps that are necessary to join or have tried together any other proceedings involving any of the parties and their connection with the 49 McCaul Street property.

C. Facts

[38] In the following description of the facts, there are numerous email messages, which are set out mostly without commentary from me. The email messages speak for themselves and memorialize and provide a chronology of the conduct of the parties. The emails provide insights into the motivations and thinking of the parties and the lawyers for the parties. The emails demonstrate what the parties knew and when they knew it. The emails demonstrate what the parties and their lawyers did not know and when they did not know it.

1. The Parties and Dramatis Personae

[39] Rosemont is a corporation under the Ontario Business Corporations Act.[^2] It owns a leasehold interest at 49 McCaul Street. The freehold is owned by the Toronto Transit Commission (the “TTC”). Rosemount is the landlord of 44 residential units and two residential townhouses.

[40] Rosemont’s principal director is Asif Sajan.

[41] Rosemont retained Kim Chau of Century 21 Leading Edge Realty Inc. as its real estate agent to obtain purchasers of Rosemont’s leasehold interest in the 49 McCaul Street property. Mr. Chau also acted for Cityzien with respect to a sale of the leasehold interests at 49 McCaul Street.

[42] Paul Kupferstein was Rosemont’s conveyancing lawyer for the leasehold transaction.

[43] Albert S. Frank became Rosemont’s litigation counsel after the leasehold transaction was aborted and a management agreement was terminated by Rosemont.

[44] As will be detailed below, in the leasehold transaction, Rosemont agreed to convey its leasehold to Cityzien. Rosemont also entered into a management agreement with Cityzien.

[45] Cityzien is an Ontario corporation, incorporated in 2017 as 257818 Ontario Inc. It changed its name to Cityzien on August 14, 2018.

[46] Cityzien has an associated corporation with the name Rosemont Management, 2018 Inc., which is controlled by Mr. Wong, a shareholder in Cityzien. (To avoid confusion, it should be kept in mind that Rosemont Management, 2018 Inc. is not a Rosemont corporation but a Cityzien corporation.)

[47] Cityzien has three owners. Lawrence Wong, Cityzien’s president. Mr. Wong has a 40% interest. Daisy Chan has a 20% ownership interest. Terence Tse, through his corporation, Best Motoring Fine Cars Ltd., has a 40% ownership interest. Mr. Wong, Mr. Tse, and Ms. Chan have a unanimous shareholder’s agreement to govern the corporate affairs of Cityzien.

[48] John Faraci was Cityzien’s conveyancing lawyer for the leasehold transaction. For the period between 2017 to date, Mr. Faraci was an intermittently practising and non-practising lawyer and/or consultant for Cityzien. While Cityzien was managing the 49 McCaul Street property, it conveyed a residential unit to Mr. Faraci for gratis rent.

[49] Gregory Weedon of Weedon Law is Mr. Faraci’s litigation counsel.

[50] Maurice Neirinck of Maurice J. Neirinck & Associates is Cityzien’s litigation counsel.

[51] Roy Wise of Wise and Associates is the litigation counsel for Mr. Tse.

2. Corporate Law and the Unanimous Shareholders’ Agreement

[52] Cityzien was governed by the Ontario Business Corporations Act and by a Unanimous Shareholders’ Agreement signed by Mr. Wong, Mr. Tse, and Ms. Chan.

[53] For the purposes of deciding the two motions before the court, the relevant sections of Ontario’s Business Corporations Act are sections 1, 19, 108, and 184 which state:

Definitions and interpretation

1 (1) In this Act,

“special resolution” means a resolution that is,

(a) submitted to a special meeting of the shareholders of a corporation duly called for the purpose of considering the resolution and passed, with or without amendment, at the meeting by at least two-thirds of the votes cast, or

(b) consented to in writing by each shareholder of the corporation entitled to vote at such a meeting or the shareholder’s attorney authorized in writing;

Indoor management rule

19 A corporation […] may not assert against a person dealing with the corporation or with any person who has acquired rights from the corporation that,

(a) the articles, by-laws or any unanimous shareholder agreement have not been complied with;

(e) a document issued by any director, officer or agent of a corporation with actual or usual authority to issue the document is not valid or not genuine; or

(f) a sale, lease or exchange of property referred to in subsection 184 (3) was not authorized,

except where the person has or ought to have, by virtue of the person’s position with or relationship to the corporation, knowledge to that effect.

Agreement between shareholders

108 (1) […]

Idem

(2) A written agreement among all the shareholders of a corporation or among all the shareholders and one or more persons who are not shareholders may restrict in whole or in part the powers of the directors to manage or supervise the management of the business and affairs of the corporation.

Unanimous shareholder agreement

(3) Where a person who is the registered holder of all the issued shares of a corporation makes a written declaration that restricts in whole or in part the powers of the directors to manage or supervise the management of the business and affairs of a corporation, the declaration shall be deemed to be a unanimous shareholder agreement.

Where shareholder has power, etc., of director

(5) A shareholder who is a party to a unanimous shareholder agreement has all the rights, powers, duties and liabilities of a director of a corporation, whether arising under this Act or otherwise, including any defences available to the directors, to which the agreement relates to the extent that the agreement restricts the discretion or powers of the directors to manage or supervise the management of the business and affairs of the corporation and the directors are relieved of their duties and liabilities, including any liabilities under section 131, to the same extent.

Unanimous shareholder agreement

(5.1) Nothing in this section prevents shareholders from fettering their discretion when exercising the powers of directors under a unanimous shareholder agreement.

Matter that a unanimous shareholder agreement may provide

(6) A unanimous shareholder agreement may, without restricting the generality of subsection (2), provide that,

(a) any amendment of the unanimous shareholder agreement may be effected in the manner specified therein; and

(b) in the event that shareholders who are parties to the unanimous shareholder agreement are unable to agree on or resolve any matter pertaining to the agreement, the matter may be referred to arbitration under such procedures and conditions as are specified in the unanimous shareholder agreement.

Borrowing powers

184 (1) […]

Sale, etc., requires approval of shareholders

(3) A sale, lease or exchange of all or substantially all the property of a corporation other than in the ordinary course of business of the corporation requires the approval of the shareholders in accordance with subsections (4) to (8).

Notice

(4) The notice of a meeting of shareholders to approve a transaction referred to in subsection (3) shall be sent to all shareholders and shall include or be accompanied by,

(a) a copy or summary of the agreement of sale, lease or exchange; and

(b) a statement that a dissenting shareholder is entitled to be paid the fair value of the shares in accordance with section 185, but failure to make that statement does not invalidate a sale, lease or exchange referred to in subsection (3).

Shareholders may authorize sale, etc.

(5) At the meeting referred to in subsection (4), the shareholders may authorize the sale, lease or exchange and may fix or authorize the directors to fix any of the terms and conditions thereof.

Right to vote separately

(6) If a sale, lease or exchange by a corporation referred to in subsection (3) would affect a particular class or series of shares of the corporation in a manner different from the shares of another class or series of the corporation entitled to vote on the sale, lease or exchange at the meeting referred to in subsection (4), the holders of such first mentioned class or series of shares, whether or not they are otherwise entitled to vote, are entitled to vote separately as a class or series in respect to such sale, lease or exchange

When approval effective

(7) The approval of a sale, lease or exchange referred to in subsection (3) is effective when the shareholders have approved the sale, lease or exchange by a special resolution of the holders of the shares of each class or series entitled to vote thereon.

Approval by directors

(8) The directors of a corporation may, if authorized by the shareholders approving a proposed sale, lease or exchange, and subject to the rights of third parties, abandon the sale, lease or exchange without further approval of the shareholders.

[54] For present purposes, the following provisions of the Unanimous Shareholders’ Agreement are relevant:

WHEREAS:

3. Lawrence Wong, Terence Tse and Wai Chung Daisy Chan (the “Shareholders”) are the registered holders and beneficial owners of all the issued and outstanding Common Shares in the capital of the Corporation;

4. Lawrence Wong, Terence Tse and Wai Chung Daisy Chan (the “Directors”) have agreed to serve as directors of the Corporation at the request of the Shareholders and in consideration of the execution and delivery of the within agreement by the Shareholders; and

5. The Shareholders acting under the authority contained in the Act, wish to enter into this agreement as a unanimous shareholders’ agreement for the purposes of, to the fullest extent permitted by the Act, restricting the discretion and powers of the board of directors of the Corporation to manage or supervise the management of the business and affairs of the Corporation and, concurrently, providing for the assumption by the Shareholders of the powers of such board of directors thereby relieving the board of directors of their duties and liabilities to such extent;

6. During the period commencing from the date hereof and continuing until this agreement is terminated as provided hereafter:

(a) Lawrence Wong, Terence Tse and Wai Chung Daisy Chan shall serve as the sole officers and directors of the corporation. They shall exercise all of the powers and duties of the corporation as permitted by law including but not limited to the ability to issue other shares in the corporation, borrow money on behalf of the corporation, sales of the property located at 49 McCaul Street in the City of Toronto and any change in the Board of Directors will require the unanimous consent of the shareholders.

[55] In accordance with corporate law, the sale of 49 McCaul Street required a special resolution, which is to say that, practically speaking, it required the unanimous consent of Mr. Wong, Mr. Tse, and Ms. Chan.

3. The Leasehold Transaction

[56] The TTC owns a property at 49 McCaul Street, which is part of a mixed commercial-residential development known as the Village of the Grange. 49 McCaul Street is improved by a five-storey building containing 44 residential units. There are also two townhouses.

[57] The TTC leased 49 McCaul Street to Rosemont. The current long-term lease ends in November 2035. There is an option to renew the lease to November 2068.

[58] In June 2017, Mr. Tse on behalf of Cityzien entered into a leasehold transaction with respect to the 44 residential units and two townhouses at 49 McCaul Street. Cityzien agreed to pay $11.0 million for the leasehold. It paid a deposit of $850,000. The leasehold transaction had a closing date of August 2017.

[59] The transaction did not close in 2017, and between August 2017 and March 1, 2018, there were five amendments to the leasehold transaction agreement. The purchase price was increased to $11.2 million. Cityzien paid an additional deposit of $750,000.

[60] On March 1, 2018, the parties signed the sixth amendment to the leasehold transaction agreement. Under the amended agreement, Cityzien was granted the right to manage the leaseholds. The closing date for the transaction was extended to March 1, 2020.

[61] In consideration for being granted the right to manage the leasehold property, Cityzien agreed to pay $750,000 by March 14, 2018, $125,000 by September 1, 2018, and $125,000 by March 1, 2019. The idea of the management agreement was that it provided Cityzien an opportunity to test the income generating potential of the leasehold that it was purchasing.

[62] Under the management agreement, Cityzien would be paid a management fee by collecting the rents and paying for expenses (mortgage, realty taxes, shared services etc.) and keeping the balance.

[63] Under the management agreement, if Rosemont refused to close the leasehold transaction, then any funds advanced by Cityzien would be deemed to be a loan from Wong Co. (Mr. Wong’s corporation) payable 30 days from the date of closing. The loan would be secured by a general security agreement. If Cityzien refused to close the leasehold transaction, Rosemont was authorized to sign a direction requiring tenants to return to making rent payments to Rosemont.

[64] After March 1, 2018, Cityzien began collecting rents. There is a dispute between the parties because Rosemont alleges that it did not receive payments for expenses and other amounts to be paid by Cityzien. Cityzien denies diverting payments, but years later Cityzien will blame Mr. Faraci for misappropriating funds.

[65] On March 5, 2018, while it was managing 49 McCaul Street, Cityzien granted a fifteen-year lease to Mr. Faraci of a residential unit at 49 McCaul Street. The lease agreement was signed by Mr. Wong on behalf of Cityzien. The rental was $1.00 per year. The lease was granted in consideration of the unpaid legal services provided by Mr. Faraci to Cityzien. The lease provided:

Upon payment in full of the sum of $300,000 [THREE HUNDRED THOUSAND DOLLARS] which sum of includes taxes and disbursements for the services provided by John Faraci and or his companies, the sum of $2,000 per month shall be deducted from the sums due and owing to John Faraci for each month Faraci has control of the unit.

[66] On December 12, 2018, Cityzien’s leasehold interest was registered on the title of 49 McCaul Street in the Land Titles Office as Instrument AT5033028.

[67] Throughout 2019, there were ongoing disputes between Rosemont and Cityzien about the management of the property.

[68] On January 20, 2020, Cityzien retained Andrew Fortis of Hummingbird Lawyers LLP to replace Mr. Faraci to close the leasehold transaction, which was scheduled to close on March 1, 2020.

[69] On March 1, 2020, the leasehold transaction did not close. Neither party tendered. The parties respectively blamed the other for the failure to close.

[70] On April 6, 2020, Mr. Fortis advised he could no longer represent Cityzien. Mr. Faraci resumed his role as a lawyer or consultant for Cityzien.

[71] Mr. Wise, Mr. Tse’s lawyer, recommended that Cityzien sue Rosemont for the return of the deposits but the shareholders of Cityzien did not take up that recommendation. Mr. Wong felt that negotiations would resume with Rosemont and the transaction would close. Meanwhile, Cityzien continued to manage the residential leasehold units. Neither party commenced litigation.

[72] After the abortive closing, the COVID-19 lockdowns followed, and until December 2022, there were ongoing disputes between the parties, but Cityzien remained in possession and managing the property pursuant to the management agreement.

[73] On June 23, 2020, Mr. Wong on behalf of Cityzien and his Rosemont Management 2018 Inc. entered into an agreement to sell the 49 McCaul Street leaseholds in the 49 McCaul Street property to 2751526 Ontario Inc. and 2757066 Ontario Inc., for a purchase price of $11 million. The purchasers paid $1.7 million in deposits being held by the real estate broker. The transaction was scheduled to close on 30 days from the waiver by the purchasers of the due diligence conditions.

[74] It should be appreciated that as of June 23, 2020, Cityzien’s agreement to purchase a leasehold interest in 49 McCaul Street had been terminated. It is not a breach of contract to enter into an agreement to sell property that is not yet owned, and Cityzien apparently anticipated that it would revive the transaction with Rosemont, and Cityzien had registered its interest against the title of 49 McCaul Street, and neither Rosemont nor Cityzien had commenced litigation about the abortive real estate transaction and Cityzien was continuing to manage the rentals.

[75] On September 2, 2020, 2751526 Ontario and 2757066 Ontario waived the due diligence conditions in its agreement with Cityzien, but due to the pandemic, the closing date was extended several times and scheduled for May 10, 2021.

4. The Applications and the Actions

[76] On December 1, 2020, Rosemont changed the locks at 49 McCaul Street, and it resumed control of the leasing. Upon resuming control, Rosemont learned that Mr. Faraci was a sub-subtenant pursuant to the fifteen-year lease at $1 per year that Cityzien had granted to him as a payment and retainer for legal services.

[77] On December 16, 2020, Rosemont brought an application against Cityzien and Mr. Faraci. The application was for, among other things:

a. An interlocutory and permanent injunction restraining Cityzien and Mr. Faraci from managing or purporting to manage the leasehold;

b. An order that Cityzien and Mr. Faraci pay all monies paid to them with regard to the leasehold since March 14, 2020 together with any funds the tenants may have paid in respect of last month’s rent or security deposits;

c. An Order that Cityzien and Mr. Faraci inform the tenants that they should make all future rent payments to Rosemont;

d. An Order for an accounting;

e. Damages in an amount to be determined;

f. An Order vacating Instrument No. AT5033028 registered in favour of Cityzien;

g. A Declaration that the purported lease to John Faraci is of no force and effect;

h. An Order evicting Mr. Faraci.

[78] With respect to its claim for damages, Rosemont alleged that Cityzien owed it approximately $1.0 million.

[79] On March 4, 2021, in support of its application, Rosemont delivered the affidavit dated March 4, 2021 of Mr. Sajan.

[80] On May 10, 2021, the date for the closing of Cityzien’s sale of the leaseholds to 2751526 Ontario Inc. and 2757066 Ontario, it failed to close the transaction.

[81] On May 25, 2021, 2751526 Ontario and 2757066 Ontario commenced an action against Cityzien, Rosemont Management 2018 Inc., Mr. Wong, Ms. Chan, Kim Flik Chau, and Mr. Faraci. The action alleged a breach of the contract to convey the leaseholds at 49 McCaul Street. The plaintiffs claimed the return of deposits of $1.7 million. The plaintiffs claimed damages of $9.0 million for breach of contract, negligent/fraudulent misrepresentation, conspiracy, and an oppression remedy. Mr. Chau was the real estate agent involved in the transaction. Mr. Faraci was sued as Cityzien’s lawyer. The plaintiffs’ lawyer of record was EME Professional Corporation.

[82] Meanwhile in Rosemont’s application, Mr. Faraci entered an appearance. His lawyer of record is Mr. Weedon. On May 27, 2021, Mr. Faraci delivered an affidavit dated May 27, 2021 opposing Rosemont’s application.

[83] Meanwhile in Rosemount’s application, Cityzien appeared; its lawyer of record was Mr. Neirinck. On June 8, 2021, Cityzien delivered Ms. Chan’s affidavit dated June 8, 2021 opposing Rosemont’s application.

[84] On June 14, 2021, Mr. Faraci delivered another affidavit opposing Rosemont’s application.

[85] On June 15, 2021, Cityzien delivered the affidavit of Mr. Wong dated June 15, 2021. Mr. Wong deposed that Rosemont’s claims against Mr. Faraci were an issue as between them.

[86] In other words, as of June 2021 Cityzien’s position was neutral with respect to the claim being made by Rosemont as against the co-respondent Faraci. Cityzien was not advancing a crossclaim against Mr. Faraci.

[87] On June 22, 2021, in support of its application, Rosemont delivered an affidavit dated June 22, 2021 of Robyn Shields. Ms. Shields was an associate lawyer of EME Professional Corporation, the lawyer of record for 2751526 Ontario and 2757066 Ontario, which was suing Cityzien and Mr. Faraci.

[88] On June 29, 2021, in support of its application, Rosemont delivered the affidavit dated June 29, 2021 of Albert G. Lee. Mr. Lee was the president of Lee Property Management Inc. which had been managing the property at 49 McCaul Street, having been hired by Mr. Faraci acting on behalf of Cityzien in April 2019.

[89] On July 8, 2021, in support of its application, Rosemont delivered the affidavit dated July 8, 2021 of Mr. Kupferstein, its conveyancing lawyer on the leasehold transaction.

[90] On July 9, 2021, in support of its application, Rosemont delivered an affidavit dated July 9, 2021 of Mr. Sajan.

[91] On July 12, 2021, Rosemont delivered a Supplementary Application Record. It contained: the affidavit dated July 8, 2021 of Mr. Kupferstein; the affidavit dated June 29, 2021 of Mr. Lee; the affidavit dated July 9, 2021 of Mr. Sajan, and the affidavit dated June 22, 2021 of Ms. Shields.

[92] In the Supplementary Application Record, Rosemont accused Mr. Faraci of fraud, conversion, and breach of trust.

[93] On July 9, 2021, although Mr. Tse was not aware of it, Mr. Wong had Cityzien enter into an agreement to sell the leaseholds to Joy Wing Investments Ltd. for $20 million.

[94] On July 13, 2021, Cityzien issued a Notice of Application against Rosemont. This proceeding, in effect was a counter-application. Cityzien sought a declaration that the leasehold transaction was binding and for specific performance. In the alternative, Cityzien sought a refund of the deposits it had paid; i.e. it claimed $850,000. Mr. Faraci was not a party to Cityzien’s counter-application to Rosemont’s application.

[95] Rosemont’s application and Cityzien’s counter-application were scheduled for a joint hearing on August 24, 2021.

[96] On July 29, 2021, Mr. Faraci served two affidavits dated July 29, 2021 opposing Rosemont’s application. The same day Cityzien terminated its retainer of Mr. Faraci.

[97] On July 30, 2021, Mr. Sajan for Rosemont and Mr. Wong for Cityzien had settlement discussions over the telephone. Mr. Wong told Mr. Sajan that Cityzien was eager to settle and that he had the support of Ms. Chan. Mr. Wong told Mr. Sajan that he did not know whether Mr. Tse would also approve of the settlement. In the settlement negotiations, Mr. Sajan told Mr. Wong that since Mr. Wong and Ms. Chan together held a majority shareholding (60%), Mr. Tse’s approval was not required in order for Rosemont and Cityzien to come to a settlement agreement.

[98] Still July 30, 2021 at 5:07 p.m., Mr. Wong sends an email message to Mr. Frank, Rosemont’s lawyer, under the heading “Settlement Proposal” confirming the discussions between him and Mr. Sajan earlier in the day. A copy of the email was sent to Mr. Neirinck, Cityzien’s lawyer. The email message stated:

I understand that it is not appropriate for me to write directly to you, but since my lawyer cannot complete this task right away, and I want your client to read this message before the end of today. Please pass this message to your client and get his response. I terminated the services of Mr. John Faraci effective on 29 July, 2021. […] Cityzien accepts the payment of $200,000.00 in the form of cash / bank draft payable to Cityzien Properties Limited or any person Cityzien assign to as the full and final settlement. A mutual release will be prepared and satisfied by lawyers of Cityzien and Rosemont. Cityzien will remove any caution/ registration of title to 49 McCaul Street. Cityzien will delete its claim for specific performance. Cityzien will not share or claim any disposition proceeds between Rosemont and any future Buyer. Rosemont will be the sole beneficiary. Cityzien reserved the right to take legal action against John Faraci and Kim Chau and needs the cooperation from Rosemont as witness or provide evidence. Please understand that the aforesaid terms are the draft from myself and need to be finalized by lawyer on both parties. Please confirm your client receive this email and response to it.

[99] Pausing here in the narrative of the factual background, it shall be important to the analysis later in these Reasons for Decision to keep in mind that as of July 30, 2021, regardless of whatever else might happen, the litigation landscape had shifted. Cityzien is telling Rosemont’s lawyer that “Cityzien reserved the right to take legal action against John Faraci … and needs the cooperation from Rosemont as witness or provide evidence.” Cityzien, which had not crossclaimed in Rosemont’s application and which had not joined Mr. Faraci in its counter-application, was strategically and tactically marshalling forces against Mr. Faraci.

[100] The next day, July 31, 2021:

a. At 12:41 p.m., Mr. Sajan sends the following email message to Mr. Wong and Mr. Neirinck:

I am in receipt of Mr Wong's settlement proposal. As this is now the weekend I write directly to all parties involved. Prior to considering any proposal I wish to make clear the following. (1) under no circumstances is this trial to be delayed. So regardless of any settlement discussions things proceed as agreed until an offer is signed. (2) I am soured by anything related to this deal. A simple conversation has been misconstrued as agreements in place. I am stressing comment (1) above. Should I engage in a conversation. UNDER NO CIRCUMSTANCES is there to be a delay in moving our trial forward. (3) lawyers are to prepare for cross examinations etc. per the agreed schedule. (4) And stressing comment (1) and (2) above, should an agreement be made between Cityzien and Rosemont the lawyers will continue to prepare for cross/trial until the agreement is signed. If Mr. Wong can agree to above, I will have a conversation with him. Please confirm the understanding in writing. CC all parties and I will then provide my phone number.

b. At 1:30 p.m., Mr. Wong sends the following email message to Mr. Sajan:

Thank you for your quick response. The reason that I wrote the proposal in simple language is because I want both Rosemont and Cityzien have the same understanding how do I want to settle this matter. The proposal is simple, and I believed our lawyers can get the formal Settlement Agreement/Mutual Release done in a reasonable time frame. Please note that I have no intention to delay or play tricks here, and I hope you have the same manner. We both instruct our lawyers to get it done on priority and this should be considered concluded before end of the coming week. Regarding your response, I can ensure that I have no interest in making this proposal to you for the reason of delaying the court date. I believe you have the same in mind to settle this matter as soon as possible. I will instruct my lawyer to continuously prepare for cross/examination until the agreement is signed since I also need to protect the interest of my people in Cityzien.

c. At 5:10 p.m., Mr. Wong sends the following email message to Mr. Sajan, Mr. Frank, and Mr. Neirinck:

Mr. Sajan, further to my email this afternoon, please advise me the time and place for the settlement meeting. My proposal is based on business decision and a face to face meeting in the best way to resolve the matter rather than go through different channel.

[101] Pausing again in the narrative, as of July 31, 2021, Mr. Wong was unrestrained in his eagerness to settle with Rosemont as soon as possible. Mr. Sajan, on behalf of Rosemont was prepared to listen but adamant that nothing was to interfere with the pending cross-examinations, even a settlement agreement in principle was not to get in the way of the litigation. Mr. Sajan told Mr. Wong that Mr. Frank’s instructions were to continuously prepare for cross/examination until the agreement is signed. Mr. Wong confirmed that Cityzien’s position was the same. And now unknown to Mr. Faraci, he was the target of both Rosemont and Cityzien.

[102] On August 2, 2021, at 1:30 p.m. there was a phone call between Mr. Sajan and Mr. Wong in which the terms of settlement were discussed. Mr. Sajan said he would discuss the matter with Mr. Frank. Mr. Wong said that he would discuss the matter with Mr. Neirinck.

[103] On August 3, 2021:

a. Mr. Faraci delivered another affidavit, this one dated August 3, 2021 opposing Rosemont’s application.

b. At 1:40 p.m., Mr. Sajan sends Mr. Wong the minutes of settlement that Mr. Frank had prepared enclosed with the following email message:

I have had my lawyer Albert Frank draft a copy of a release to you and your company in this matter. I’m informed that since you have appointed [Neirinck] as your representative, all correspondence needs to be through him along with the payments of settlement amounts agreed. Please see the attached document.

c. At 1:53 p.m. after reviewing the draft minutes, Mr. Wong sends an email message to Mr. Sajan and asks that a warranty from Cityzien be deleted and that the minutes of settlement include a requirement that Rosemont would assist Cityzien in pursuing claims against Mr. Faraci. The email stated:

Thanks for your email. Regarding the Mutual Release item (8), we have no relationship with Lucia Stapes nor 2581081 and as a result, I cannot warrant anything on behalf of them. Item 10/11, is it ok to add Rosemont shall cooperate and provide any evidence to Cityzien parties in this regard.

d. At 2:03 p.m., Mr. Frank sends the minutes to Mr. Neirinck in an email message that states:

I understand that Lawrence Wong [Cityzien] and Asif Sajan [Rosemont/McCaul] have discussed matters over the weekend and reached a settlement. Please see attached a draft I have done of my understanding of the deal. If satisfactory, please let me know and I shall get Asif to sign it. I assume you shall want to proceed with the cross-examinations anyway, as they could be helpful to Cityzien’s issues with Faraci.

e. At 3:24 p.m., Mr. Wong sends the following email message to Mr. Tse:

Please see the email below from Rosemont and their lawyer. [the 1:40 p.m. email message]. After another 17 months of my time, we will settle with Rosemont to return $150,000 to us and Rosemont will work with us to go after Faraci and Kim Chau for the amount around $650,000. See the attachment for details. Even though our lawyer [Neirinck] did not agree to the amount $150,000 on settlement since he is confident that he can get more for us. I really do not have the energy and money to keep fighting in a battle that I do not know the result of. We may win a bit more but also we may fail to get more. As a result, I am willing to give all the settlement and further claims against Faraci/Kim Chau to you and Daisy to share. Back to more than a year ago, as I asked you to retain a law firm/lawyer to check out John Faraci since I do not think he is acting to the best benefit for us. [...] I asked your lawyer to get the financial statement of rental income, he failed to get the breakdown, so we did not find out that Faraci misuse the rental income and put it in his own pocket. Your lawyer did not follow up with Rosemont lawyer Paul Kupferstein, where the $80,000 go that we paid at the end of February 2020. Faraci and/or Kim also took the deposit money and put it into their pocket. […] What happened in the past is history. I shall get the $150,000 from Rosemont and give it all to you and Daisy. Furthermore, you two do not need to share the legal fee that I paid in the past. If the claim against Faraci becomes successful and gets say $650,000, I will also give all to you and Daisy. I shall [submit] the claim to Law Society and try to get the compensation there. I hope we get a total of $800,000 and distribute it to you and Daisy. I hope you and Daisy are satisfied with this ending. This is the best that I can get and if you do not agree on it and decide to go to court (cross examination of evidence starts tomorrow), then I just walk and let the legal action move on. I have no more energy and money to play with any party. Please note that is the ONLY refund or money that I can get back from Rosemont and no other benefit from any parties. If you have doubt, you are welcome to check out with Rosemont ([Mr. Sajan] email is below) or his lawyer if this is the final and only settlement. Please response before 5 p.m. today.

f. At 4:17 p.m., Mr. Wong sends the following email message to Mr. Sajan:

As per the advice from [Neirinck], I sent over to two directors/shareholders, Terence Tse and Daisy Chan for their written confirmation regarding the settlement agreement. I already got the reply from Daisy Chan and still waiting for the response from [Mr. Tse] and I shall keep chasing him in order to get it ASAP.

g. At 4:51 p.m., Ms. Chan sends the following email message to Mr. Wong and Mr. Tse:

Hi [Mr. Wong], Thanks for your update. Since March of 2020, I assumed that all deposits are gone and now it is good to know that we get some back. For the claim against John and Kim, thanks in advance for your time and cost to chase them and hope to get as much as we can. [Mr. Wong], as the director of Cityzien, I authorize you to go ahead and execute the agreement with Rosemont so that my life can move on a new chapters. [Mr. Tse], the money that [Mr. Wong] get back for us, I am good to split between you and me proportionately to what we put in and we do the calculation later. I shall split my share with [Mr. Wong] 50/50 to compensate his time and effort.

h. At 5:18 p.m., Mr. Frank sends the revised minutes to Mr. Neirinck covered by the following email message:

From our discussion you know that the main reason we want to still be able to sue Faraci is to challenge the validity of his purported lease and force him out of the property. But my client thinks it best to add some wording to the settlement agreement to set that out. Please see paragraph 11 of my revised document attached.

Paragraph 11 of revised document stated:

11. Notwithstanding anything stated or implied above, Rosemont may commence or continue legal proceedings against either or both of John Faraci and Kim Chau, and the Cityzien parties shall cooperate with Rosemont in this regard. This includes but is not limited to Rosemont challenging the validity of Faraci’s purported tenancy at 49 McCaul Street and seeking an Order for his removal from the premises.

i. At 6:41 p.m., Mr. Tse sends the following email message to Mr. Wise:

Roy, long time no see. Wish you all well. Today I had received the following email from Lawrence Wong [Mr. Wong’s message of 3:24 p.m.]. Also, I will email you Daisy’s response email. Please let me know your suggestion.

[104] Pausing here in the narrative to regroup, the situation on August 3, 2024 is that Rosemont’s lawyer (Mr. Frank) advises Cityzien’s lawyer (Mr. Neirinck) that their clients have settled and that the cross-examinations will continue because Cityzien has issues with Mr. Faraci. Meanwhile, Mr. Wong is touting to Ms. Chan and Mr. Tse the merits of settling with Rosemont while pursuing claims instead against Mr. Faraci. Ms. Chan agrees to this approach. All this is news to Mr. Tse, who has not been kept apprised of the dispute between Rosemont and Cityzien that he knew might be coming. By the end of the day, Mr. Frank and Mr. Neirinck are shoring up the minutes of settlement so that it is clear that both Rosemont and Cityzien would be suing Mr. Faraci.

[105] On August 4, 2021 at 6:37 a.m., Mr. Wong emailed Mr. Sajan a copy of the email that Mr. Wong had sent to Mr. Tse and Ms. Chan on August 3, 2021 covered by the following message:

Please see email below. I am willing to give up my share of money and settle with Rosemont. I know that if I just drop the cheque with an amount of $150,000 to [Mr. Tse], he will accept it. Now [Neirinck] point out in his email that this not the case that we can get anything from the claim of Faraci or Chau. As per my phone conversation with you, I plan to get another lawyer represent us to execute the agreement but now I cannot since my other partner will think I have side deal with you guys and the money that I asked is way too less. In the past, lots of our issues were came from lawyers and I hope I can resolve this asap.

[106] It may be inferred from this letter that Mr. Wong is frustrated that Mr. Neirinck, Cityzien’s litigation lawyer, is not supportive of the clients having settled the litigation and of the plans to sue Mr. Faraci.

[107] On August 5, 2021:

a. At 6:52 a.m., Mr. Wong sends the following email message to Mr. Tse:

Good morning [Mr. Tse], it has been two days since I sent the email to you regarding the settlement with Rosemont for the purchases of the sublease at 49 McCaul. It cost me a few thousand dollars per day for the cross examination now and occupied all my time which stop me to perform my daily work. I will move on and execute the Settlement Agreement/Mutual Release with Rosemont today and if for reason that you do not agree on it, please notify me by email before noon today and you can take over the cross-examination/ trail [sic trial] and take care all the legal cost right away. As to what I promised in my previous email, the settlement amount ($150,000) will distribute to you and Daisy Chan since I just want to end on this matter after working on it for almost 4 years.

b. From approximately 10:20 a.m. to 3:00. p.m., with Mr. Frank, Mr. Weedon, Mr. Neirinck, and Mr. Wong in attendance, Mr. Faraci is cross-examined by Rosemont.

c. At 11:24 a.m., Mr. Tse sends the following email message to Mr. Wong, Ms. Chan and Mr. Wise.

[Mr. Wong], I do not agree with the settlement. Roy Wise will response to you today.

d. At 12.05 p.m., during Mr. Faraci’s cross-examination, Mr. Wong sends an email to Mr. Tse and his counsel, Roy Wise. The email message stated:

Attached is the revised proposal for the settlement/mutual release. If you don’t agree, you need to say what you want and if we cannot reach a mutual agreement with Rosemont, then I shall stop fighting with Rosemont to get the settlement since I run out of cash to pay the legal fees. You are more than welcome to fight with them. Also, we got lots of evidence against Faraci and Kim Chau and you can use it to go after them. In this proposal, I tried to get some money back and the cooperation from Rosemont to chase after Faraci and Kim Chau for the money. Now is the second day of cross-examination and everyday cost me a lot of money.

e. At 12:56 p.m., Mr. Wise sends the following email message to Mr. Wong, Mr. Tse, and Ms. Chan:

Mr. Wong, My phone discharged and should be sufficiently charged to speak shortly but I want to reply quickly as possible. About the time of the failed last closing, I wrote on behalf of Mr. Tse to suggest we cooperate in choosing and paying for a lawyer to represent Cityzien in an action against Rosemont. No one responded at that time. Now more than one year later, after having engaged in litigation and negotiations with Rosemont without authorization or disclosure, you spring a settlement on Mr. Tse. Perhaps Ms. Chan had some idea as to what you were doing but you clearly intended to keep Mr. Tse and myself in the dark. Having said that, the issue now is whether or not this is an appropriate settlement. You have not produced the pleadings, any productions, transcripts, motion records or court orders for me to review on behalf of Mr. Tse. Nor have you provided your lawyers letter of opinion on the merits of the case after the productions and examinations. All these are necessary to come to a decision on the settlement. You have also indicated that there are materials enabling a lawsuit against Mr. Chau and Mr. Faraci and that further relief is available in that lawsuit. If that is the case then why is that you have not produced the documents to date to establish that they are somehow responsible for not obtaining the necessary funding or that they took steps to frustrate same. The fact that they were greedy does not support an action. I am out of town returning Monday. Phone service in this area is not reliable because I have to be in a specific area of the cottage to get reception, but email is generally good. I can call you back if you want but I would prefer if you sent me the documents that I have asked for and authorize your lawyer to speak to me so that I can get his opinion on the settlement and the reasons for that opinion before I can advise Mr. Tse.

f. Mr. Faraci’s examination is completed, and Mr. Wong’s examination is rescheduled for the following week. Within minutes of the completion of Mr. Faraci’s cross-examination at 3:12 p.m., Mr. Wong sends Mr. Sajan a signed copy of the minutes of settlement covered by the following email message.

As per our discussion, attached is the copy of the signed settlement. Please sign and send it back to me right away. After we both sign the settlement, my new lawyer, Mr. Patrick Martin will represent me at that point and do the work necessary to have the title cleared. In addition, I shall write to [Neirinck] and notify him. After it is done, I believe the cross exam will no longer be required.

g. Mr. Sajan signs the settlement documents around 3:37 p.m., at which time Mr. Frank sends a signed copy to Mr. Neirinck covered by the following email message:

Lawrence Wong has altered the draft agreement, executed it, and sent it to [Mr. Sajan]. [Mr. Sajan] then signed it before me – see attached. In light of this my cross-examination of Mr. Wong can be reduced substantially. Basically, I want to ask him an hour or so of questions about Faraci. I await direction as to how to make payment of the settlement funds. P. S. As part of this the PPSA registration should also be removed. Perhaps [Kupferstein] could do this, given suitable authority.

[108] I pause to note how much the litigation landscape has changed on August 5, 2021. Mr. Faraci is being examined without being aware that he is not only the target of Rosemont but of Cityzien. Rosemont will continue in its proceeding against Mr. Faraci and Rosemont is planning a narrowed cross-examination of Mr. Wong aimed at getting information against Mr. Faraci. Given that Rosemont is settling with Cityzien, it is not explained why Mr. Wong would be cross-examined at all.

[109] Returning to the narrative, the signed minutes of settlement provide for a termination of the leasehold transaction, a mutual release, the payment of $150,000 by Rosemont to Cityzien, and the removal of Cityzien’s registration against the title of the property. The minutes expressly provide that the settling parties may commence or continue litigation against Mr. Faraci and Rosemont would cooperate with Cityzien in this regard.

[110] The cross-examinations of Rosemont’s affiants Mr. Kupferstein, Mr. Lee, and Ms. Shields which were scheduled for August 6, 2021 did not proceed. This naturally follows from the settlement but Mr. Faraci’s counsel is kept uninformed.

[111] On August 10, 2021,

a. At 11:15 a.m., Mr. Wong sends the following email message to Mr. Sajan and Mr. Frank:

Good morning Mr. Frank, Attached is the by-law and share certificates of Cityzien. Daisy Chan and I own 60% of the shares and out of 3 directors. We have enough votes to settle with Rosemont. Furthermore, I already offer the director/shareholder Mr. Terence Tse the full amount of $150,000 settlement will be distributed and Daisy Chan and I will not take any from it since I just want to have happy ending for everyone.

b. At 12:29 p.m., Mr. Frank sends the following email message to Mr. Wong:

It appears from remarks by Mr. Neirinck that he will most likely not be involved in the steps needed to wrap up the lawsuit as against Cityzien. Will you be handling it yourself or is there another lawyer I should be dealing with? As for payment of the settlement funds, normally we would be making payment into Mr. Neirinck's trust account, but if you're getting a new lawyer then presumably the funds would be going into the new lawyer's trust account. My clients would like to pay promptly and for you promptly to remove the registration from land titles and the PPSA registration. Since we'll be in front of a judge on August 24 anyway, we could ask the judge then to dismiss the application and the counter-application regarding Cityzien. The application would continue against Faraci. […] P. S. I don't actually need to know about the internal shareholdings and votes in Cityzien. You have signed on behalf of Cityzien and that is good enough for me and my clients.

c. At 12:36 p.m., Mr. Wong responded with the following email message:

As per the suggestion of Mr. Sajan, the fund will be issued to Mr. Kuperstein and he will remove all the cautions and other registrations against 49 McCaul on behalf of us. Mr. Kuperstein will issue cheque to us as per my direction. […]

d. At 3:49 p.m., Mr. Frank sends the following email message to Mr. Kupferstein with a copy to Mr. Sajan:

The plan is that the funds for the settlement with Cityzien go into your trust account. You then remove the land titles and PPSA registrations, as authorized by Lawrence Wong of Cityzien in his email of 12:36 p.m. earlier today. I confirm when the funds are given to you (probably by [Mr. Sajan]), they are being given to you in trust/subject to escrow conditions that no use may be made of the funds, and you must continue to hold the funds, until you have removed the registrations. Ony once the registrations have been removed may you pay them to Cityzien, or as it may direct.

[112] Meanwhile while the partial settlement of Rosemont’s application is being implemented, on August 11, 2021, in the action brought by 2751526 Ontario and 2757066 Ontario, Cityzien, Rosemont Management 2018 Inc. and Mr. Wong are delivering their Statement of Defence. Their lawyer of record is Mr. Neirinck, who is distancing himself from the settlement in Rosemont’s application.

[113] Also on August 11, 2021,

a. At 10:23 a.m., Mr. Sajan sends the following email message to Mr. Wise, Mr. Tse’s lawyer copied to Mr. Frank, Mr. Kupferstein, and Mr. Neirinck:

Dear Mr. Wise, […] the named parties have already executed a binding agreement to settle all disputes between the parties. I’m to release as per the settlement $150,000 to Cityzien. As this is funds due to Cityzien, my lawyer Paul Kupferstein will make payment to Cityzien. What squabbles are happening among the shareholders is not my issue. If memory served me you were acting for Cityzien in February 2020 is that now not a conflict as you are now representing a single shareholder and Cityzien?

b. At 10:28 a.m., Mr. Wise sends the following email message to Mr. Sajan, Mr. Frank, Mr. Kupferstein, and Mr. Neirinck:

Mr. Sajan, you have counsel and Law Society requirements are that I communicate through your lawyers.

c. At 10:41 a.m., Mr. Wise sends the following email message to Mr. Frank:

I represent one of the shareholders and directors of Cityzien and have had an opportunity to review the proposed settlement. I would appreciate an opportunity to review same with you at your convenience and if possible later this afternoon as I am involved in a lengthy meeting starting around noon.

d. At 12:07 p.m., Mr. Frank sends the following email to Mr. Neirinck and Mr. Weedon:

I attach the transcript of the examination of Mr. Faraci in docx and pdf formats, and ask that Faraci promptly answer all undertakings, under advisements and refusals.

e. At 2:03 p.m., Mr. Wise sends Mr. Frank the following email message:

I think my client will go along with the deal. He may want to sue other parties as a result of this however. I know that you have not yet filed your additional materials but is it possible to get them now.

f. At 2:52 p.m., Mr. Frank sends the following email message to Mr. Wise with a copy to Mr. Wong, and Mr. Neirinck:

I attach a copy of the Application Record. You will see evidence that Cityzien owes over a million dollars to Rosemont. Also note that in my view Cityzien is fully responsible to my clients for anything done by Faraci because he was acting as Cityzien’s lawyer at the time. The attached settlement, however, solves this for Cityzien and prevents us from seeking costs of the litigation. It would be unwise for anyone to try to disrupt the settlement, which is already a binding agreement. Rosemont will soon be paying the settlement funds and Paul Kupferstein shall then remove the land registration and PPSA registration. If you also want to see our Supplementary record, I could send you a copy once it has been filed with the court, which should be happening soon.

g. At 3:04 p.m., Mr. Wise sends the following email message to Mr. Frank:

Thank you. I will be interested in seeing the supplementary record. More importantly is there any way of sending the settlement funds to my firm’s order in trust in order to avoid the necessity of me moving for such order. Paull should not release the monies under any circumstances until I agree. I need to make certain that if my client instructs me to take no steps that the $150,000 does not disappear.

h. At 5:48 p.m., Mr. Weedon responded with the following email:

Received with thanks. I will seek instructions on the undertakings and respond in kind. I assume there are no plans to bring a refusals and undertakings motion? If so, please advise.

[114] Pausing again in the narrative, the situation on August 11, 2021 is that Mr. Frank, Rosemont’s lawyer, is writing Mr. Faraci’s lawyer, Mr. Weedon requiring answers to undertakings without informing Mr. Weedon that the proceeding has been settled as against the co-respondent Cityzien. Meanwhile, efforts are being made to have Mr. Tse concur with the settlement under Rosemont’s position that Mr. Wong had the authority to settle the litigation.

[115] The settlement required Rosemont to pay $150,000 to Cityzien and the removal of the caution registered in favour of Cityzien. On August 12, 2021, Mr. Kupferstein receives $150,000 from Rosemont to be held in trust pending the completion of the settlement by the removal of the caution.

[116] On August 12, 2021,

a. At 11:39 a.m., Mr. Kupferstein sends the following email message to Mr. Frank, Mr. Wise, and Mr. Sajan:

This will serve to confirm that I have received a bank draft from Rosemont in the amount of $150,000 and I am in funds in regards to the settlement.

b. At 2:55 p.m., Mr. Frank sends the following email message to Mr. Weedon, Mr. Faraci’s lawyer:

I have no instructions to bring a separate motion concerning this but I certainly plan to point out to the judge on the 24th some of all unanswered items.

c. At 3:30 p.m., Mr. Weedon sends the following email message to Mr. Frank, copied to Mr. Neirinck:

If you would like to make those arguments on a motion, I will seek instructions. Respectfully, an application is not the proper forum to have that discussion. With respect to the examination of Wong, please advise when the examination is scheduled/taking place. I understand that it was booked for last week and adjourned to Tuesday by yourself and [Neirinck]. I understand the examination was then adjourned by your office to a date which I am not privy to. Given the adjournment has pushed into next week, I will now be in a position to examine Wong subsequent to your examination.

d. At 4:32 p.m., Mr. Frank sends the following email message to Mr Weedon:

I did not agree to the examination of Wong being postponed past August 10, and I do not know if or when Wong will be produced.

e. At 4:56 p.m., Mr Weedon sends the following email message to Mr. Frank:

OK - news to me. I was referring to the email exchange between your office and Victory. Nonetheless, does [Neirinck] have a date scheduled? Or have you two decided on a date? Please advise as I need to work into my schedule.

[117] In my opinion, Mr. Frank was not being candid and presumably acting on instructions he was not being forthcoming in answering Mr. Weedon’s questions. Mr. Frank ought to have disclosed that Rosemont had no basis to cross-examine Mr. Wong and that Mr. Neirinck was backing away from acting for Cityzien. Mr. Frank ought to have disclosed that there was a settlement. Instead, Mr. Frank on behalf of Rosemont and in cooperation with Cityzien was pressing Mr. Faraci for answers to undertakings.

[118] On August 13, 2021,

a. Mr. Kupferstein prepares the discharge of Instrument No. AT5033028 and at 12:15 p.m., he sends the following email message to Mr. Frank, Mr. Wise, and Mr. Sajan:

I am attaching an Acknowledgement and Direction for an Application to Amend the Title by deleting Instrument AT5033028. Please complete and sign the A & D including the schedules which are to be completed by [Cityzien’s] solicitor and officer as the case may be, and then return to me so I can attend to registration or any further action required by the registrar.

b. At 12:59 p.m., Mr. Wise sends the following email message to Mr. Kupferstein, Mr. Frank, with a copy to Mr. Sajan:

[Mr. Kupferstein] the agreement signed was not authorized by Cityzien. Until you obtain my client’s position, you proceed at your client’s risk.

c. At 1:47 p.m., Mr. Frank sends the following email message to Mr. Wise, Mr. Kupferstein, and Mr. Sajan:

The settlement agreement was indeed authorized by Cityzien. Lawrence Wong signed the Minutes of Settlement and Mutual Release on behalf of Cityzien. He is one of the directors, the president, and the majority shareholder of Cityzien. Also, he swore an affidavit on behalf of Cityzien in the current proceedings. He signed the Minutes of Settlement and Mutual Release explicitly stating that he had the authority to bind Cityzien. In reliance, my side, at the suggestion of Mr. Wong, has paid the $150,000 settlement amount to Paul Kupferstein to be held for Cityzien. Given the indoor management rule, it is no concern of ours, and is irrelevant to the validity of the settlement, that some minority shareholder may not like the settlement. I shall inform the court in my Confirmation Form that the case is settled as between my clients and Cityzien. If you and your clients(s) succeed in delaying the removal of the registrations then I shall ask the court to make an Order enforcing the settlement, with costs to be paid by your clients(s) to my clients. Please confirm exactly the identity of your client(s) and the alleged authority of such client(s) to decide whether or not Cityzien makes a settlement agreement.

d. At 3:59 p.m., Mr. Wise sends the following email message to Mr. Frank, Mr. Kupferstein, and Mr. Sajan:

Mr. Wong is not the majority shareholder. You proceed if you do w/o Mr. Tse’s consent at your risk. As indicated I will advise of his position early next week.

e. At 4:39 p.m., Mr. Weedon sends the following email message to Mr. Frank:

I have been unable to reach [Neirinck]. Can you advise whether [Neirinck] is still on for the Respondent? Can you advise whether examinations are still being scheduled? Aside from the transcript of Faraci, have any of the other transcripts been delivered? If you plan to rely on the same, please provide our office with a copy for reference. As examinations have not completed (for reasons unknown to me), I suggest we canvas available dates to adjourn the hearing. The court may be able to accommodate a request if a cancellation ensues. Even if we examine Wong next week; to turn around transcripts and factums is simply not possible anymore. Resources are better spent planning ahead and scheduling another date so the parties can adequately respond, and, more important, his/her Honour will have the materials available on a reasonable timeline.

[119] Pausing here, I repeat what I said above about the impropriety of keeping Mr. Faraci’s lawyer ignorant of the settlement and add that Mr. Frank was simultaneously bullying Mr. Tse’s counsel with a threat of costs if there is interference with the settlement while relying on the indoor management rule, which I will explain later was not available in the circumstances of the immediate case.

[120] Mr. Wise was not prepared to be bullied. On August 16, 2021:

a. At 12:13 p.m., Mr. Wise sends the following email message to Mr. Frank and Mr. Kupferstein:

My client is the largest single investor, a director and to my belief, holds at least 40% of the issued shares. He had no knowledge of the Court cases or of the negotiations until confronted with the release and asked to sign. He had no knowledge of the Rosemont return of funds and did not in any manner participate in same. If the settlement is concluded my client may well have a cause of action against the persons who received those funds and/or against the other shareholders, particularly if they somehow shared in those funds. For that reason, my client has this morning asked that [Mr. Frank] provide the second motion record, even if not issued, at this time to allow my client to review what has taken place w/o his knowledge. In addition I have also asked Mr. Wong for information he promised to provide when asking for my client’s signature on the agreement. I have not yet received that information and will renew my request today. Finally, my client has, this morning asked for clarification from me as to certain clauses of the release. I have not yet had an opportunity to respond to that request as this is my holiday week at the cottage and I got on the internet late and also have extremely poor internet reception here, so everything is delayed. My client will probably agree subject to clarification. I would appreciate your not mentioning the contents of this communication to Mr. Wong as that may result in his not responding to my request that he forward information previously promised.

b. At 5:04 p.m., Mr. Sajan sends an email to Mr. Kupferstein, Mr. Frank, and Mr. Wong. The message states:

[Mr. Frank] needs to have the charges removed in order to proceed with Weedon and prepare the factum. May I make a suggestion, let’s get the paper done the funds could remain in [Kupferstein’s] trust per direction from [Mr. Wong] once he has dealt with Roy Wise shareholder issues. Can can [sic] direct [Mr. Kupferstein] when sorted out. Can we do a Late morning appointment [Mr. Kupferstein] so [Mr. Frank] can proceed with Mr Weedon in the afternoon.

c. At 5:09 p.m., Mr. Wong sends the following email message to Mr. Sajan, Mr. Kupferstein, and Mr. Frank:

Acknowledgement and Direction and Land Titles Act (signed) Acknowledgement and Direction and Land Titles Act.pdf. Please see the attached file for the signed document.

d. At 5:56 p.m. Mr. Kupferstein sends the following email message to Mr. Sajan, Mr. Wong, and Mr. Frank:

I am fully booked all morning but I – should be done by about 12:30.

[121] On August 17, 2021:

a. Rosemont sends a confirmation form for the August 24, 2021 hearing to Cityzien, Mr. Faraci, and Mr. Tse. The form reveals that there is a settlement and indicates that the application will proceed against Mr. Faraci and that Rosemont will seek an order to implement the settlement between it and Cityzien.

b. At 3:09 p.m., Mr. Wong sends the following email message to Mr. Wise, Mr. Tse, Ms. Chan, and Mr. Sajan, in furtherance of Cityzien’s plans to pursue Mr. Faraci:

This is the first part of the evidence. Faraci prepared a document saying that Rosemont required the transfer of two townhouse units back to them in order to grant for the extension. Chau sent this document and asked Mr. Tse to sign in order to get the extension otherwise all deposits will be gone. We recently found out that the number company 2581018 Ontario Inc. is under the control of Kim Chau and the rent for these two townhouse units was collected by Faraci. As a buyer, I just trust what our real estate lawyer told me and Chau is the agent of Rosemont so I assumed that it was the case that Rosemont asked for the two townhouse units. [The first attachment is …] I copied this email to Mr. Sajan so that it proved that all the aforesaid findings are the facts. Mr. Sajan also willing to assist Cityzien to take legal action against Faraci/Chau.

c. At 3:14 p.m., Mr. Weedon sends the following email message to Mr Frank in response to the filing of the Confirmation Form:

I confirm receipt. I also note that there is a settlement agreement referred to in the confirmation, can you please advise further. The only outstanding issue now re Faraci? [Neirinck] has confirmed that he is no longer retained. Please advise if this has been communicated to you as well?

d. At 3:46 p.m., Mr. Wong sends the following email message to Mr. Wise, Mr. Tse, and Ms. Chan:

Subject: Evidence against Faraci Chau 2 – After talking to Mr. Sajan, he understood and agreed that Cityzien did not team up with Faraci nor Chau in any improper activities. For the two townhouses, Rosemont found out that Faraci not only collected rents on those units, Faraci had arranged […] Cityzien has no knowledge of any the above activities and Faraci/Chau took the rental income and put into their pocket.

e. At 10:27 p.m., Mr. Wise sends the following email message to Mr. Wong:

If this is true, then the conduct [of Mr. Faraci and Mr. Chau] amounts to fraud and is also subject to criminal charges. Do you have the records from Lee Property Management to prove this?

f. At 10:36 p.m., Mr. Wong sends the following email message to Mr. Wise:

I got the cooperation of Mr. Sajan. He provided the details to me. That is why I told you guys that settle with Rosemont instead of keep fighting with them is so important. Mr. Sajan talked to tenants face to face and wrote in his affidavit. Please also refer to the affidavit from Albert Lee regarding to two townhouse units.

g. At 10:44 p.m., Mr. Wise sends the following email message to Mr. Wong:

I will review the Rosemont materials and speak to the lawyers.

[122] On August 18, 2021, Rosemont served its factum and a copy of the signed minutes of settlement. The same day, Instrument No. AT5033028 was vacated. The same day, Cityzien delivered an Amended Confirmation Form setting out its position for the application. The form stated:

This amended form is being filed by Maurice J. Neirinck, current counsel of record for the Respondent Cityzien Properties Limited, because he is not in a position to make any submissions at all at the hearing of the application for approval/implementation of a settlement which will be sought by the Applicant on the day of the hearing and because he will be seeking an Order removing his firm as lawyers of record for Cityzien Properties Limited at the outset of the hearing with the anticipated consent of Cityzien Properties Limited through Mr. Lawrence Wong.

[123] On August 19, 2021,

a. At 1:43 p.m., Mr Weedon sends the following email message to Mr. Frank and Mr. Neirinck:

Afternoon, Given the following events, we will be seeking an adjournment to the next available hearing date as provided by the Court:

1. Factum was delivered late; we will not have time to adequately respond in kind;

2. There is an alleged settlement between the Applicant and Respondent at the eleventh hour which prejudices my client;

3. We were estopped from examining Wong, who, per the alleged settlement agreement, has potentially become a hostile witness; examinations were adjourned without consent from our office and Wong is now unrepresented; we will require time to contact Wong who is required to retain counsel per the Rules;

4. [Neirinck] is now seeking to get off the record and we are uncertain what impact this has on the proceedings herein; Cityzien will need leave from the Court to be unrepresented at the Hearing (or in the proceedings in general). I suspect that leave has not yet been obtained by Cityzien/Wong;

5. You have confirmed that there is a dispute as to authority relating to the settlement agreement and we are not privy to whether a settlement agreement is binding between the parties; I note that you told me that there “is an ongoing dispute as to whether the parties had requisite authority and we will let the judge decide the fate of the settlement agreement”. Without certainty as to the settlement between these two parties, we are unable to adequately respond in kind.

Accordingly, we suggest that you call a case conference with a Judge and iron out these issues in advance. It appears that the settlement discussions between the Applicant and Respondent lead to the adjournment and/or cancellation of the examination of Wong/Cityzien. We were not privy to those conversations and are therefore prejudiced as a result. This Hearing is premature as a result of the foregoing. Please advise whether your client consents to an adjournment and whether you intend to bring a case conference. I will provide available dates on receipt of confirmation.

b. At 2:46 p.m., Mr. Frank sends the following email message to Mr. Weedon and Mr. Neirinck:

I object to an adjournment of the August 24 hearing. I remind [Weedon] that he told me in advance that getting the factum to him on Wednesday, which I did, would be acceptable. Moreover, I do not see that a settlement between Rosemont and Cityzien would make any adjournment necessary. I see no need for a case conference at this time but if [Weedon] can arrange one in advance of August 24, I have no objection.

c. At 5:04 p.m., Mr. Weedon sends the following email message to Mr. Frank with a copy to Mr. Neirinck:

I confirm that you told me you would deliver the factum "shortly, maybe tonight – maybe tomorrow, we will see… everything is changing as there is a settlement…. But I should tell you that there are shareholders arguing the settlement is not binding". That conversation was on Monday. I said that was fine. I did not confirm that we would consent to late service of your materials. Moreover, I suspect you had the settlement agreement in your possession last week. As there is no date on the settlement agreement, I am unable to confirm the same. Nonetheless, we should have been advised of this immediately so we could adequately respond in kind with the change in circumstances. Simply put, we should not have received the agreement attached to your factum on short service. You are asking for relief which has not been pled. The issue here is that you have effectively amended your relief sought against the Respondents less than a week before the Hearing. I understand that your client benefits from the change in circumstances; the change in circumstances has the reverse effect on my client. This should be grounds for your client to act in good faith and adjourn on a very reasonable and short timeline.

Your client has chosen to tie a breach of contract claim to an eviction hearing. Your position is that there was no authority to grant the lease. That authority was granted to Cityzien. Cityzien was (until a few days ago) arguing that it did have rights conferred under the agreement. We now suspect that Cityzien has changed its position and has settled the matter under the table. Furthermore, as Maurice has indicated that he is no longer retained on this file, we do not have the contact details to serve a revised notice of examination on Wong. We do not know whether Wong has retained counsel. The Settlement Agreement speaks to Wong obtaining independent legal advice but [Neirinck’s] application confirmation says otherwise. As Wong appears to be in contact with you, we request his contact details on an immediate basis. Respectfully, this will not look good for your client if you choose to proceed for a residential eviction on a record which is substantially incomplete and wholly prejudicial. Should we be forced to attend on this basis and argue all of these issues in the alternate, we will be seeking costs on a solicitor-client basis.

[124] Pausing again in the narrative, in my opinion while Mr. Weedon was somewhat off the mark about some matters, he was correct in submitting that Mr. Faraci was being prejudiced by the settlement agreement and by the manner in which it was disclosed. He was correct in complaining about how Mr. Wong was apparently being sheltered from cross-examination. He was correct in asking for an adjournment. He was correct in bringing up the matter of whether there was corporate authorization for Cityzien to settle with Rosemont. In contrast, Mr. Frank was wrong in objecting to the reasonable request for an adjournment.

[125] On August 22, 2021,

a. At 1:35 p.m., Mr. Wise sends the following email message to Mr. Kupferstein, Mr. Frank, Mr. Wong, Mr. Sajan, and Ms. Chan:

1. I wish to confirm that my client, a 40% shareholder has not received notice of these proceedings, has not consented to anything and requires further information before coming to a decision whether to affirm the actions of Mr. Wong. […] 3. If I am correct then I am not certain why Rosemont is entitled to any damages. […] 6. I will be asking for an adjournment and to set a timetable for leave to file materials to intervene and to cross-examine the parties unless some interim agreement satisfactory to my client can be entered into which can be brought to a meeting of the directors and shareholders of Cityzien. […]

b. At 2:17 p.m., Mr. Wise sent the following email message to Mr. Frank, Mr. Neirinck, and Mr. Weedon:

I have now reviewed most of the supplementary motion record. It is clear that Mr. Faraci brought an offer of $20,000,000 with a $1,000,000 deposit. That is not a frivolous offer. I understand as well that there was a second offer which I have not seen. If bona fide, and a deposit of that size can only be considered bona fide., then Rosemont stands to make a profit over the sale to Cityzien of about $8,000,000. Please explain, in view of the circumstances, how I am able to recommend the so-called settlement.

c. At 3:55 p.m., Mr. Wong sent the following email message to Mr. Wise:

In Order to address your question, I removed the Rosemont people in the list. What you mentioned is exactly as what I wanted to achieve back in months ago. If this deal can go through, we can make good money out from the project. […] The key in this matter is whether we can get the court agree that Rosemont needs to sell 49 McCaul to Cityzien.

d. At 4:08 p.m., Mr. Wong sent the following email message to Mr Wise with copies to Mr. Neirinck, Ms. Chan, and Mr. Tse:

Regarding to the other APS that you mentioned in your email, it was brought to us by Faraci. The APS was expired on 17 March 2021 and I instructed Faraci to release the deposit from the real estate broker trust accounts and return back to the buyer. In about 2 months ago, I found out an extension was being grant till May 2021. The extension was signed by Faraci without authorization from Cityzien. Cityzien never been acknowledged that the extension was grant[ed]. We also found out that Faraci accepted $100,000 as a legal free/professional fee for the extension and other matters from buyer lawyer with Cityzien authorization.

e. At 10:30 p.m., Mr. Wise sent the following email message to Mr. Wong, copied to Mr. Neirinck and Ms. Chan:

Can you send me paperwork on the second deal where Faraci got $100,000 and any other paperwork? Please check with Mr. Neirinck if you can as he is your lawyer.

[126] On August 23, 2021:

a. at 12.17 p.m., Mr. Frank sends the following email message to Mr. Wise, Mr. Kupferstein, Mr. Wong and Ms. Chan:

As I have said multiple times to multiple parties. I oppose any adjournment of tomorrow’s hearing.

b. at 12:22 p.m., Ms. Chan sends the following letter to Mr. Frank, with copies to Mr. Wong, Mr. Wise, and Mr. Kupferstein:

Gentlemen, I agree on the decision from Mr. Wong regarding the settlement with Rosemont. I agreed the amount and the terms of agreement.

[127] On August 24, 2021, Rosemont’s application came on before Justice Sharma. However, Mr. Neirinck, Cityzien’s lawyer of record, without a notice of motion, sought an order to remove himself as lawyer of record. In this regard, Mr. Wong intended to act for Cityzien, but he had not brought a motion for permission to do so. Mr. Tse attended at the hearing with counsel, and advised that he had only recently learned of the alleged settlement. As an owner and director of Cityzien, he did not approve the settlement. Justice Sharma adjourned the matter to November 19, 2021. Justice Sharma made the following endorsement:

1. Today’s hearing has been adjourned. In my view, it is not ready for a hearing, or for an Order partially settling this matter as against Cityzien, based on purported Minutes of Settlement.

2. The applicants have attached to their factum purported Minutes of Settlement, settling the application and counter application as between the applicants and Cityzien. The Minutes are signed on behalf of Cityzien by Mr. Lawrence Wong.

3. Mr. Neirinck, counsel for the respondent, Cityzien, seeks to be removed as lawyer of record. He advised he was not involved in the preparation of the Minutes of Settlement on behalf of Cityzien. Mr. Neirinck has not filed evidence to support an order that he be removed as lawyer of record. I have instructed him to bring a motion, which may be determined in writing. I am not prepared to issue an order in the absence of a formal motion on notice to his client, particularly on the day of the hearing of an application.

4. A party to a proceeding that is a corporation shall be represented by a lawyer, except with leave of the Court: see rule 15.01. If Mr. Wong, a non-lawyer, intends to seek leave to represent the corporate respondent, Cityzien, the Court must be satisfied that he is a senior representative of the corporation who has been duly authorized by a properly elected board of directors. The Court must also consider whether it would be seriously unfair to the opposing parties to have a case presented or defended by a non-lawyer. It must also consider whether Mr. Wong will be able to properly carry out the duties of a litigant under the Rules: see 419212 Ontario Ltd. v. Astrochrome Crankshaft Toronto Ltd., 1991 CanLII 7163 (ON SC), [1991] O.J. No. 918 (Ont. Master).

5. I strongly encourage Cityzien to seek other counsel, and to file an appropriate notice of change of solicitor. This would relieve Mr. Neirinck from having to file a motion seeking an order to be removed as lawyer of record for Cityzien.

6. Mr. Roy Wise, counsel for Terence Tse, appeared on today’s application. Mr. Tse is not a party to this application. According to Mr. Wise, Mr. Tse is a 40% shareholder in Cityzien. Mr. Roy states that Mr. Tse was not aware of this application until August 3, 2021, i.e., three weeks before today.

7. There is no evidence before me today that would allow me to conclude that the Minutes of Settlement were properly approved by the corporate respondent, Cityzien. If a significant shareholder in the corporate respondent, Cityzien, was not aware of the application, it supports my concern that the Minutes of Settlement may not have been approved by a senior representative of Cityzien who has been duly authorized by a properly elected board of directors to sign such Minutes. Or at least there is no evidence before me that would allow me to reach that conclusion. While the Court strongly supports settlement, I am not satisfied that the Court today can issue an Order based on those Minutes. If evidence can be presented demonstrating that the Minutes were duly signed by a representative of Cityzien or if Cityzien were represented by counsel who could attest to Cityzien’s approval of the Minutes, the Court could entertain a consent motion in writing that reflects the terms of the Minutes of Settlement.

8. The applicants also seek relief from the individual respondent, Mr. Faraci. At today’s hearing, the applicants only seek the determination of the validity of a residential lease between Mr. Faraci and Rosemont and/or Cityzien. The applicants wished to adjourn the balance of the relief against Mr. Faraci to another day.

9. I contemplated dealing today solely with the issue of the lease, but I have decided not to do so for the following reasons:

a. The lease was purportedly entered into between Mr. Faraci and Cityzien, and Mr. Faraci says Cityzien did so with the authority of Rosemont. In which case, it will be necessary to hear from Cityzien on this issue, however, as noted above, Mr. Neirinck seeks to be removed as lawyer of record of Cityzien. Therefore, I fail to see how this issue can be meaningfully argued without hearing from Cityzien.

b. There is other relief against Mr. Faraci that the applicants seek. There is the potential for inconsistent findings of fact if the relief as against Mr. Faraci is dealt with in a piecemeal fashion, since the same underlying factual matrix governs all of the relief the applicants seek.

c. Mr. Faraci only recently learned of the purported settlement as between the applicants and Cityzien. He requires time to assess what impact the purported settlement has on the relief the applicants seek against him.

10. I encourage the parties to continue their settlement discussions. Any requested orders that the parties seek on consent may be filed with supporting evidence and a Notice of Motion, in writing. They may be sent to my assistant.

11. This application is adjourned to a 2-hour hearing, fixed for November 19, 2021.

12. Costs of today’s appearance are reserved for the judge who will hear this application.

[128] On September 8, 2021, Mr. Faraci sends Mr. Wise a lengthy email message which for present purposes it is unnecessary to set out save to say that it set out Mr. Faraci’s views about what he described as the “sham settlement” negotiated by Mr. Wong.

[129] On October 27, 2021, purportedly pursuant to the Unanimous Shareholders’ Agreement, notice was given of a directors meeting scheduled for November 1, 2021. The notice was given by Anthony Falcone of Falcone Law.

[130] On October 28, 2021, Mr. Wise on behalf of Mr. Tse objected to the notice of the shareholder’s meeting.

[131] On November 1, 2021, Rosemont delivered a Supplementary Application Record which contained the affidavit dated November 1, 2021 of Mr. Sajan.

[132] Also on November 1, 2021, there was a directors meeting of Cityzien at the offices of Falcone Law. Mr. Wong, Mr. Tse, Ms. Tse, Mr. Falcone, and Laurie Chu, solicitor for the corporation were in attendance. The directors moved for a shareholders’ meeting to consider the proposed Minutes of Settlement, which was scheduled for November 19, 2021.

[133] On November 8, 2021, Mr. Neirinck sends the following email message to Mr. Wise and Mr. Frank:

As it appears the Minutes of Settlement and Mutual Release will be argued on November 19, 2021, we have no choice but to proceed with our Motion for an Order removing this Firm as the lawyers of record for Cityzien Properties Limited. Accordingly, pursuant to Justice Sharma’s Endorsement, attached is our Motion Record returnable before Justice Sharma on November 19, 2021.

[134] On November 9, 2021:

a. At 10:59 a.m., Mr. Weedon sends the following email message to Mr. Wise and Mr. Frank with a copy to Mr. Wong:

As Mr. Wong continues to not have counsel, it is best to adjourn the matter to the next available date (subject to availability of counsel). As there has not been any movement by either party on this file since the endorsement, we trust an adjournment is in order. Notably, Cityzien does not have counsel and there has been no motion brought forward in connection with enforcing the alleged minutes of settlement/release. If there was such a motion contemplated it would not, on its face, concern my client in any event. I will leave it to counsel to determine the best way forwards however we will be seeking costs if the Applicant continues to press forwards against Mr. Faraci on November 19th 2021 in the face of Justice Sharma’s endorsement. Accordingly, we suggest that the Applicant adjourn the relief sought as against Mr. Faraci pending Cityzien retaining counsel and the parties coming to terms on this settlement (and/or a court order to this effect). Please advise at your earliest as we will need to file materials regarding a contested adjournment.

b. At 11:12 a.m., Mr. Frank sends the following email message to Mr. Weedon, Mr. Neirinck, Mr. Wise and Mr. Wong:

My clients oppose any further adjournments. I shall fill out the confirmation form to show that there is a contested adjournment request.

[135] On November 10, 2021, Mr. Tse. Brings a motion to intervene in Rosemont’s application and Cityzien’s counter-application. Mr. Tse’s motion is supported by his affidavit dated November 10, 2021.

[136] On November 11, 2021:

a. At 4:11 p.m., Mr. Wise sends the following email message to Mr. Frank, Mr. Neirinck, and Mr. Weedon:

Please find the supporting factum. […]

b. At 4:42 p.m., Mr. Wise sends the following email message to Mr. Weedon, Mr. Frank, and Mr. Neirinck:

The position of my clients is that they require intervenor status and if granted the right to pursue cross-examinations. Since we will be filing a confirmation notice please advise of your positions by email by tomorrow at 4:00 pm copying each other and Ms. Pasquini of my firm.

c. At 5:21. Mr. Weedon sends the following email message to Mr. Wise, Mr. Frank, and Mr. Neirinck:

Our position remains the same as of the previous hearing date. This file is not ready to proceed by application; arguably this has spiraled into a matter which is ripe for conversion to an action and should proceed on a trial of its merits. We remain uncertain as to whether the only matter concerning my client at the upcoming return date is whether or not there is a valid and subsisting residential lease at the premises. Materials were filed at the eleventh hour at the previous hearing which advised the court that the Applicant was looking to adjourn all other matters relating to Mr. Faraci (i.e. allegations of malfeasance, misappropriation, fraud etc.). Aside from the reality that those allegations are not appropriate for an application, we expended considerable resources responding in kind. Mr. Frank, please confirm which remedies you are seeking against Mr. Faraci by end of day tomorrow. Please confirm whether the balance of the issues (aside from the lease) are to be adjourned.

We understood that a settlement was agreed to between certain parties which undeniably has an effect on the allegations raised against Mr. Faraci. We understand that there is a dispute as to the validity of said settlement. We take no position with respect to the validity or enforceability of said settlement. We are simply not privy to these discussions and have been purposely ousted from said discussions, for reasons I can only speculate on. Our position is that the Endorsement is clear on its face: Mr. Wong requires counsel to proceed. As [Mr. Nierinick] is (as of the return date) no longer retained, we see no path forward without proactive steps to bring a motion to seek leave from the court and/or retain counsel pursuant to the Rules. For this reason, we seek an adjournment. Second, given Mr. Wise’s retainer and client’s position, the issue as to whether or not there is a settlement should be dealt with in advance of resolving the leasehold matter with Faraci. For this reason, an adjournment is only appropriate. Procedurally, the Applicant has not brought a motion to enforce the settlement; Mr. Wise’s client is unable to respond in kind without facing clear prejudice (e.g. no cross-examinations). We too would be seeking to cross-examine Mr. Wong and representatives from the Applicant given the change in positions at the eleventh hour (behind closed doors). We would ask that any order sought by Mr. Wise as to leave to cross-examine (or re-examine) apply to my client as well. This matter is not ready (nor suitable) to continue to an application hearing. I trust that counsel would understand this; failing which we are seeking an adjournment and costs for our previous appearance and the upcoming November appearance. Anything short is acting in the face of the Endorsement of Justice Sharma.

[137] Also on November 11, 2021, Mr. Sajan delivered an affidavit dated November 11, 2021 in response to Mr. Tse’s intervenor motion.

[138] On November 19, 2021, Mr. Faraci delivered an affidavit dated November 19, 2021, but the various motions were not ready to proceed. Justice C.J. Brown adjourned the motions. She gave directions to move the matter forward. She directed that the parties should attend before Civil Practice Court to obtain dates for motions as necessary.

[139] As mentioned above, a shareholders’ meeting of the Cityzien shareholders was also scheduled for November 19, 2021 to consider the settlement agreement but his meeting never happens.

[140] Two and half months pass, and on February 2, 2022, there is an attendance in Civil Practice Court. Justice Pollack makes the following endorsement:

The request is for a one hour application, the moving party has not included a summary of the proceeding with previous orders that are relevant. There is no [timetable] proposed or agreed to and the parties do not agree on the appropriate steps to resolve this dispute. The moving party shall request a case conference where the appropriate procedural steps can be addressed. The parties must consult on these issues before the conference and provide the judge, before the conference, agreed to TT or proposed TT as well as a concise point form positions on the appropriate procedure to resolve the disputes and a summary of the procedural history with any relevant Orders of the court.

[141] Four more months pass, and on June 2, 2022, there is an attendance in Civil Practice Court. Justice Akbarali makes the following endorsement:

1. Cityzien must retain counsel or bring a motion to allow Mr. Wong to represent it. Mr. Wong advises he wishes to retain counsel. Given the three shareholders that take different positions in this litigation, there is some complexity in retaining a lawyer. 2. The parties have agreed on June 15, 2022 as the date for cross-examinations on the motion to intervene. Counsel wishes to cross-examine Mr. Wong. At the moment, Mr. Wong has no lawyer and neither does Cityzien. I am concerned that this date is not feasible. 3. Given that the earliest date available for a one-hour intervention motion is in September 2022, there is time for the parties to delay cross-examinations to allow the question of Cityzien’s counsel to be sorted first. 4. Cityzien shall retain counsel or bring a motion to be represented by Mr. Wong by July 15, 2022. 5. Cross-examinations shall be completed by August 15, 2022. 6. The motion to intervene shall be heard for one hour on September 14, 2022.

[142] On August 4, 2022, Mr. Tse is cross-examined.

[143] The intervenor motion is not heard in September but on November 2, 2022, Justice Dow grants Mr. Tse intervenor status.

[144] On November 26, 2022, Mr. Neirinck is removed as lawyer of record for Cityzien.

[145] On January 25, 2023, there was a case conference before Justice Centa. Mr. Faraci’s counsel advised that Mr. Faraci intends to bring a motion to stay the application against Mr. Faraci as an abuse of process.

[146] On April 13, 2023, Mr. Faraci delivers an affidavit dated April 13, 2023.

[147] On May 23, 2023, Mr. Tse delivers a Motion Record.

[148] On June 23, 2023, Cityzien, Rosemont Management 2018 Inc., Mr. Wong, and Ms. Chan (but not Mr. Tse) filed a Statement of Claim against Mr. Faraci, Mr. Chau, and Mr. Chau's brokerage, Century 21 Leading Edge Experia Realty Inc. The plaintiffs claim contribution and indemnity with respect to any liability they incur in the action by 2751526 Ontario and 2757066 Ontario and damages of $10 million on account of professional negligence, breach of fiduciary duty, breach of contract, misappropriation, misrepresentation, conspiracy and unjust enrichment with respect to the sales transaction with 2751526 Ontario and 2757066 Ontario. The Plaintiffs’ lawyer of record is Mr. Neirinck.

[149] It is not clear when it happened but Mr. Neirinck returns as Cityzien’s lawyer of record in the application and counter-application.

[150] On August 9, 2023, Rosemont delivers an affidavit of Mr. Sajan dated August 9, 2023, and Rosemont brings on its motion to enforce the settlement as against Cityzien and for a partial order as against Mr. Faraci.

[151] On October 12, 2023, Mr. Faraci delivers an affidavit dated October 12, 2023 in support of his motion to have the application against him be dismissed as an abuse of process.

[152] On March 7, 2024, Mr. Wong is cross-examined but the cross-examination is not completed.

[153] On March 8, 2024, Mr. Wong’s examination is continued but the cross-examination is not completed.

[154] On March 13, 2024, Mr. Wong’s examination is continued and completed, and Mr. Sajan is cross-examined.

[155] On April 24, 2024, the application/motion to enforce the settlement and the motion to stay comes on for a hearing.

D. Discussion and Analysis

1. The Court’s Jurisdiction to Enforce Settlements

[156] For both Rosemont’s motion and Mr. Faraci’s motion, the first issue to resolve is whether there is an enforceable settlement as between Rosemont and Cityzien and whether the court should enforce that settlement, which as noted above, has been partially implemented.

[157] At common law, where an action or application has been settled by agreement, a party to the agreement may enforce the settlement agreement by action to enforce the settlement contract or by a motion for judgment in the action or application.[^3]

[158] A motion to enforce a settlement involves two elements. The first element is whether or not there is any genuine issue about the existence of an agreement to settle, and the second is to determine whether there is any reason not to enforce the settlement.[^4]

[159] Judgment may be granted on a motion to enforce a settlement only if there are no genuine factual disputes that require a trial for their resolution. [^5] The test for a summary judgment applies to the motion to enforce a settlement.[^6]

[160] The court has the discretion to refuse to enforce the settlement agreement summarily.[^7] In exercising its discretion, the court may have regard to such factors as the presence of a mistake by a lawyer about his or her instructions to accept the settlement, the prejudice to the parties of enforcing or not enforcing the settlement; and the effect on third parties.[^8]

[161] The discretionary decision not to enforce a concluded settlement, especially where the settlement has been partially or fully performed, is reserved for those rare cases where compelling circumstances establish that the enforcement of the settlement is not in the interests of justice.[^9] Circumstances where the court might exercise its discretion not to enforce a settlement include: (a) where it considers the settlement to be unreasonable; (b) where the settlement would result in an injustice; or (c) where there is another good reason not to enforce the settlement.[^10]

[162] In the immediate case, there are genuine issues about the legality of the settlement agreement between Rosemont and Cityzien, but there is more than ample evidentiary record to decide these genuine issues summarily.

[163] There is no genuine issue requiring a trial that the settlement agreement between Rosemont and Citizen was not properly authorized by Cityzien. It is not an enforceable settlement agreement.

[164] Cityzien’s only assets are: (a) its claim for specific performance of the agreement to convey the leasehold interests in 49 McCaul Street; (b) its alternative claim for damages; or (c) its claim for the more than $1.5 million of deposits paid on account of the underlying Amended Agreement of Purchase and Sale with Rosemont.

[165] Section 184 (3) of the Ontario Business Corporation Act stipulates that a sale, lease, or exchange of all or substantially all the property of a corporation other than in the ordinary course of business of the corporation requires the approval of the shareholders by a special shareholders resolution.

[166] The settlement agreement which abandoned the leasehold transaction and approximately $1.0 million of deposits is not a sale or property in the ordinary course of business. It was a termination of the undertaking of Cityzien which was incorporated to own and operate the residential development at 49 McCaul Street. There was not and there never will be a special resolution authorizing the settlement agreement because Mr. Tse has a 40% interest in the corporation and he opposed the settlement from the outset. Mr. Wong and apparently Ms. Chan also now oppose the settlement because Cityzien now opposes the settlement.

[167] Mr. Wong never had the authority to sign the minutes of settlement for Cityzien without the concurrence of his fellow shareholders.

[168] As a matter of the unanimous shareholders’ agreement, Mr. Tse also did not have the authority to unilaterally sign the minutes of settlement.

[169] Rosemont cannot rely on the indoor management rule because it has always known that Mr. Wong did not have the authority to enter into the settlement agreement.

[170] Moreover, I find as fact that with or without knowledge of the unanimous shareholders’ agreement, Mr. Sajan and Rosemont’s lawyers ought to have known that Mr. Wong was not authorized to unilaterally release Cityzien’s interest in the 49 McCaul Street leaseholds.

[171] From the email bombardments, Mr. Sajan knew that Mr. Wong was desperately seeking unanimity from his co-shareholders. Mr. Sajan blithely, blindly, and mistakenly counseled Mr. Wong that a majority vote without Mr. Tse was sufficient. In these circumstances, Rosemont cannot rely on the indoor management rule.

[172] As noted above, a motion to enforce a settlement involves two elements. The first element is whether or not there is any genuine issue about the existence of an agreement to settle. The first element of the test is not satisfied in the circumstances of the immediate case.

[173] The second element of the test on a motion to enforce a settlement, which is to determine whether there is any reason not to enforce the settlement, also stands against Rosemont’s motion.

[174] From Cityzien’s perspective, the settlement appears grossly improvident. It was negotiated by Mr. Wong without the benefit of legal counsel, and the settlement agreement was not supported by and apparently was against the recommendations of Cityzien’s litigation counsel who attempted to get off the record rather than taking instructions to support the settlement. The settlement was unauthorized and opposed by Mr. Tse, a 40% shareholder whose counsel raised a host of legitimate questions about the merits of the settlement. Mr. Wong’s rationale for settling was litigation fatigue and his belief that it was preferable to sue Mr. Faraci. The settlement agreement was opportunistically manipulated by Mr. Sajan’s pressure on Mr. Wong who was hemorrhaging legal expenses.

[175] From Rosemont’s perspective it is quite understandable that it favoured the settlement, which from its perspective was a very provident settlement, but it ought to have known that Mr. Wong did not the authority to bind Cityzien. It is at least arguable that the settlement agreement was unconscionable. Although technically speaking, Mr. Neirinck was still on the record, Mr. Wong and Cityzien were practically speaking self-represented in negotiating an improvident agreement and the manner in which Rosemont sought to have the court enforce the settlement agreement was an abuse of process as the discussion below will reveal.

[176] It is not in the interests of justice to enforce this settlement.

[177] For these reasons, Rosemount’s motion to enforce the settlement is dismissed with costs payable to Cityzien, Mr. Tse, and Mr. Faraci.

2. Settlement Agreements and Abuse of Process

[178] Mr. Faraci submits that the circumstances of the settlement agreement between Rosemont and Cityzien made Rosemont’s proceeding by application against him an abuse of process, and therefore, Rosemont’s application should be stayed.

[179] I agree that Rosemont’s proceeding by application against Mr. Faraci should be permanently stayed.

[180] When only some of the defendants or respondents to a proceeding agree to a settlement, the plaintiff or applicant may be obliged to disclose the settlement agreement to the non-settling defendants or respondents. It is an abuse of process to fail to disclose an agreement that substantially changes the adversarial orientation of the proceeding, and the court will and indeed must stay the claim of the non-disclosing party.[^11]

[181] Both the existence of the settlement agreement and the terms of it, other than terms that do not affect the adversarial orientation of the lawsuit, must be immediately disclosed.[^12] The failure to disclose immediately or the failure to disclose the terms of a settlement that change the proceeding’s adversarial orientation is an abuse of process for which the only remedy is the dismissal of the proceeding.[^13] If there is a failure to promptly and properly disclose, it is no answer that the non-settling defendant or respondent was not prejudiced by the time that it learned of the settlement.[^14]

[182] However, if prompt and adequate disclosure of the settlement is made, there is no abuse of process.[^15]

[183] The obligation to disclose a settlement applies to Mary Carter agreements, which are named after the Florida case of Booth v. Mary Carter Paint Co.[^16] and to Pierringer agreements, which are named after the Wisconsin case of Pierringer v. Hoger,[^17] but the obligation is not limited to these types of agreements, and the obligation applies to other agreements that may impact on the court’s ability to fairly and justly adjudicate.[^18]

[184] If the settlement does not entirely change the adversarial orientation of the proceeding, then the terms of the settlement need not be disclosed.[^19] Not every settlement must be immediately disclosed; for example, a settlement in which the only terms and consideration are a standard release and consent dismissal order on a without costs basis may not give rise to the immediate disclosure requirements. That said, the prudent course is to give notice because each case is decided on its own particular facts as to whether the orientation of the litigation has been materially altered by the settlement. The critical issue is whether the litigation landscape has materially changed the dynamics of the litigation, and this depends upon the particular facts of the particular case.[^20]

[185] Factors relevant to determining whether the litigation landscape has been changed include: (a) the pleadings in the litigation; (b) the configuration of claims, defences, cross-claims, and third party claims; (c) the relationships between the parties; (d) the terms of the settlement agreement; (e) whether the terms of the settlement agreement are consistent or inconsistent with the position of the parties in the pleadings; (f) whether the settlement agreement changes the adversarial orientation and whether former adversaries become allies or supporters incentivized to co-operate or provide assistance; (g) whether the settlement would impact the litigation strategy of the non-settling parties; (h) whether the terms of the settlement alter the apparent relationships between the parties to the litigation; and (i) whether the terms of the settlement alter what the court might assume from the pleadings.[^21]

[186] The abuse of process doctrine is a fundamental general principle of the administration of justice, and the rule requiring the prompt disclosure of settlements that change the litigation landscape may be seen as a particular rule emerging from the general principle.

[187] Courts have an inherent and broad jurisdiction to prevent the misuse of its process that would be manifestly unfair to a party to the litigation or would in some other way bring the administration of justice into disrepute.[^22] An abuse of process involves oppressive or vexatious treatment that undermines the public interest in a fair and just trial process and the proper administration of justice.[^23] Courts have an inherent jurisdiction to dismiss or stay an action on the grounds of abuse of process.[^24] The categories of abuse of process are not closed, and the court has the power to respond to new situations.[^25]

[188] The immediate case fits within the particular abuse of process rule associated with the disclosure of settlement agreements and the immediate case fits within the general doctrine of abuse of process.

[189] As set out above in excruciating detail, in the early months of the summer of 2021, the litigation landscape was that: (a) Rosemont was suing Mr. Faraci without the active support of Cityzien, whose professed position was neutral insofar as Rosemont wished to vitiate Mr. Faraci’s fifteen-year lease; and (b) Cityzien was not asserting any cross-claims against its co-respondent Mr. Faraci. It would have appeared that Cityzien would be aligned with Mr. Faraci in denying any mismanagement or misappropriation under the leasehold transaction or the associated management agreement for 49 McCaul Street.

[190] However, by July 30, 2021, the litigation landscape fundamentally changed. By July 30, 2021: (a) both parties were intent on pursuing claims against Mr. Faraci for various misdeeds; and, (b) both parties had orally promised to assist one another in their respective claims against Mr. Faraci.

[191] On August 5, 2021, regardless of whether the settlement between Rosemont was formalized, which finalization was inevitable given Mr. Wong’s frantic enthusiasm for settlement – Mr. Faraci was undergoing cross-examination without being aware that Rosemont and Cityzien were tactically and strategically ganging up on him. That cross-examination was an abuse of process.

[192] Mr. Sajan’s instructions were that the litigation was to go ahead notwithstanding the high likelihood that the settlement with Cityzien would be finalized and notwithstanding the tactical and strategic decision of both Rosemont and Cityzien to both pursue claims against Mr. Faraci. Mr. Sajan’s instructions were to not agree to any adjournments of Rosemont’s application. In my opinion, in these circumstances, regardless of whether the settlement had been formalized and finalized: (a) the notices of motion and supporting affidavits (the pleadings in the proceedings by application) no longer reflected the configuration of claims, defences, and crossclaims; (b) the notices of motion and supporting affidavits (the pleadings in the proceedings by application) no longer reflected the relationships and the positions of the parties; and (c) who was an adversary and who was an ally or neutral on any particular issue was now hidden or obscured.

[193] As of July 30-31, 2021, the litigation landscape had changed.

[194] The settlement agreement was signed by Rosemont and Cityzien’s representatives on August 5, 2021. Notice of the settlement agreement was not provided to Mr. Faraci until the delivery of the Confirmation Notice Form on August 17, 2021.

[195] In the circumstances of the immediate case, Rosemont did not give Mr. Faraci immediate notice of a settlement agreement that fundamentally altered the litigation landscape. Not only were the general principles of the abuse of process doctrine violated, the particular rule about settlement agreements was violated.

[196] In the circumstances of the immediate case, immediate notice of the settlement was required immediately on August 5, 2021, not two weeks later. Mr. Frank was mistaken if he thought that the litigation landscape had not changed and that Rosemount could wait until filing its confirmation form for the application. I appreciate that Mr. Frank was taking instructions from Mr. Sajan not to adjourn the application and to enforce the settlement but these were instructions that Mr. Frank rightfully could and should have refused to take and he should have advised Rosemont accordingly.

[197] With the partial settlement, the application against Mr. Faraci had become an abuse of process. The court has no choice but to permanently stay the application on terms.

[198] For the above reasons, I grant Mr. Faraci’s motion to permanently stay Rosemont’s application with costs payable by Rosemont.

E. Conclusion

[199] For the above reasons, (a) the motion to enforce the settlement is refused; and (b) the motion to permanently stay the application against Mr. Faraci is granted. Both motions are granted on the terms set out at the beginning of these Reasons for Decision, which are designed to restore the status quo before the procedural pandemonium. With the settlement agreement set aside, there is going to be litigation amongst Rosemont, Cityzien, Mr. Faraci, and likely others and this litigation five-ring circus should proceed by action and not application.

[200] If the parties cannot agree about the matter of costs, they may make submissions in writing beginning with Citizen’s, Mr. Tse’s and Mr. Faraci’s submissions within fourteen days followed by the losing parties’ submissions within a further fourteen days.

Perell, J.

Released: May 31, 2024

[^1]: Wind speeds of 166 to 200 mph or more

[^2]: R.S.O. 1990, c. B. 16.

[^3]: Donaghy v. Scotia Capital Inc./Scotia Capitaux Inc., 2009 ONCA 40, [2009] O.J. No. 178 (C.A.); U.S. Billiards Inc. v. Carr (1983), 1983 CanLII 1853 (ON SC), 44 O.R. (2d) 591 (Div. Ct.).

[^4]: Knight v. Chappel, 2022 ONSC 7175; Lumsden v. The Toronto Police Services Board et al., 2019 ONSC 5052; Wilson v. Johnston, 2015 ONSC 3016 (Master); Exponents Canada Inc. v. Sharma, 2015 ONSC 2940; Hashemi-Sabet Estate v. Oak Ridges Pharmasave Inc., 2018 ONCA 839; Capital Gains Income Streams Corp. v. Merrill Lynch Canada Inc. (2007), 2007 CanLII 39604 (ON SCDC), 87 O.R. (3d) 464 (Div. Ct.).

[^5]: Bayerische Landesbank Girozentrale v. R.S.W.H. Vegetable Farmers Inc., (2001), 2001 CanLII 28050 (ON SC), 53 O.R. (3d) 374 (S.C.J.).

[^6]: 77 Charles Street Ltd. v. Aspen Ridge Homes Ltd., 2021 ONSC 2732; Hashemi-Sabet Estate v. Oak Ridges Pharmasave Inc., 2018 ONCA 839.

[^7]: Richard (Litigation Guardian of) v. Worth (2004), 2004 CanLII 34517 (ON SC), 73 O.R. (3d) 154 (S.C.J.); Fox Estate v. Stelmaszyk (2003), 2003 CanLII 36922 (ON CA), 65 O.R. (3d) 846 (C.A.); Milios v. Zagas (1998), 1998 CanLII 7119 (ON CA), 38 O.R. (3d) 218 (C.A.); Smith v. Robinson (1992), 1992 CanLII 7504 (ON SC), 7 O.R. (3d) 550 (Gen. Div.).

[^8]: C.I.B.C. v. Weinman, [1992] O.J. No. 302 (Gen. Div.); Draper v. Sisson, [1991] O.J. No. 1207 (Gen. Div.); Milios v. Zagas (1998), 1998 CanLII 7119 (ON CA), 38 O.R. (3d) 218 (C.A.); Re Lem Estate, [1987] O.J. No. 2319(Surr. Ct.).

[^9]: Magnotta v. Yu, 2021 ONCA 185; Srebot v. Srebot Farms Ltd., 2013 ONCA 84 at para. 6.

[^10]: Atkinson v. Whaley Estate Litigation, 2019 ONSC 3708; Wilson v Northwest Value Partners Inc., 2015 ONSC 4726aff’d in2016 ONCA 253; Wilson v. Johnston, 2015 ONSC 3016 (Master); Sentry Metrics Inc. v. Ernewein, 2013 ONSC 959.

[^11]: McLaughlin v. 2495048 Ontario Inc., 2023 ONSC 4866; Kingdom Construction Ltd. v. Perma Pipe Inc., 2023 ONSC 4776; Skymark Finance Corporation v. Ontario, 2023 ONCA 234; Crestwood Preparatory College Inc. v. Smith, 2022 ONCA 743, aff’g 2021 ONSC 803; Hamilton-Wentworth District School Board v. Zizek, 2022 ONCA 638; Chu de Québec-Université Laval v. Tree of Knowledge International Corp., 2022 ONCA 467, aff’g 2021 ONSC 5946; Southside Construction v. City of Windsor, 2022 ONSC 2241; Poirier v. Logan, 2022 ONCA 350, aff’g 2021 ONSC 1633; Waxman v. Waxman, 2022 ONCA 311, aff’g 2021 ONSC 2180; Tallman Truck Centre Limited v. K.S.P. Holdings Inc., 2022 ONCA 66; Dussault v. Tong, 2022 ONSC 3866; Caroti v. Vuletic, 2021 ONSC 2778; Handley v. DTE, 2018 ONCA 324; Aecon Buildings v. Stephenson Engineering Limited, 2010 ONCA 898, leave to appeal refused [2011] S.C.C.A. No. 84.

[^12]: Poirier v. Logan, 2022 ONCA 350, aff’g 2021 ONSC 1633; Waxman v. Waxman, 2022 ONCA 311, aff’g 2021 ONSC 2180; Tallman Truck Centre Ltd. v. K.S.P. Holdings Inc., 2022 ONCA 66, aff’g 2021 ONSC 984; Stamatopoulos v. Harris, 2014 ONSC 6313 (Div. Ct.); Sable Offshore Energy Inc. v. Ameron International Corp., 2013 SCC 37.

[^13]: NSR Toronto Holdings Ltd. v. CIM Mackenzie Creek Limited Partnership, 2024 ONSC 1398; Skymark Finance Corporation v. Ontario, 2023 ONCA 234; Crestwood Preparatory College Inc. v. Smith, 2022 ONCA 743, aff’g 2021 ONSC 803; CHU de Québec-Université Laval v. Tree of Knowledge International Corp, 2022 ONCA 467, 2022ONCA 467, aff’g 2021 ONSC 5946; Poirier v. Logan, 2022 ONCA 350, aff’g 2021 ONSC 1633; Waxman v. Waxman, 2022 ONCA 311, aff’g 2021 ONSC 2180; Tallman Truck Centre Ltd. v. K.S.P. Holdings Inc., 2022 ONCA 66, aff’g 2021 ONSC 984; Handley Estate v. DTE Industries Ltd., 2018 ONCA 324, rev’g 2017 ONSC 4349; Aecon Buildings, a Division of Aecon Construction Group Inc. v. Brampton (City), 2010 ONCA 898, leave to appeal refused [2011] S.C.C.A. No. 84.

[^14]: Crestwood Preparatory College Inc. v. Smith, 2022 ONCA 743, aff’g 2021 ONSC 803; CHU de Québec-Université Laval v. Tree of Knowledge International Corp, 2022 ONCA 467, aff’g 2021 ONSC 5946; Poirier v. Logan, 2022 ONCA 350, aff’g 2021 ONSC 1633; Waxman v. Waxman, 2022 ONCA 311, aff’g 2021 ONSC 2180; Tallman Truck Centre Ltd. v. K.S.P. Holdings Inc., 2022 ONCA 66, aff’g 2021 ONSC 984; Handley Estate v. DTE Industries Ltd., 2018 ONCA 324, rev’g 2017 ONSC 4349; Aecon Buildings, a Division of Aecon Construction Group Inc. v. Brampton (City), 2010 ONCA 898, leave to appeal refused [2011] S.C.C.A. No. 84.

[^15]: Veenstra v. North Middlesex (Municipality of), 2023 ONSC 464; Healthplex Pharmacy Inc. v. Premananda Panda, 2022 ONSC 6986.

[^16]: 202 So. 2d 8 (Fla. 1967).

[^17]: 124 N.W. 2d 106 (Wis. 1963).

[^18]: Handley Estate v. DTE Industries Ltd., 2018 ONCA 324, rev’g 2017 ONSC 4349; Moore v. Bertuzzi, 2012 ONSC 3248 at paras. 75–79.

[^19]:Kingdom Construction Ltd. v. Perma Pipe Inc., 2023 ONSC 4776; Bennington Financial Corp. v. Medcap Real Estate Holdings Inc., 2023 ONSC 2742; Veenstra v. North Middlesex (Municipality of), 2023 ONSC 464; iPRO Realty Ltd. v. George Sokkar, 2022 ONSC 6825; Dussault v. Tong, 2022 ONSC 3866; Performance Analytics Corp. v. McNeely, 2021 ONSC 8297, aff’d 2022 ONCA 734; Caroti v. Vuletic, 2021 ONSC 2778; Mann Engineering Ltd. v. Desai, 2021 ONSC 2245.

[^20]: Kingdom Construction Ltd. v. Perma Pipe Inc., 2023 ONSC 4776; Skymark Finance Corporation v. Ontario, 2023 ONCA 234; Crestwood Preparatory College Inc. v. Smith, 2022 ONCA 743, aff’g 2021 ONSC 803.

[^21]: McLaughlin v. 2495048 Ontario Inc., 2023 ONSC 4866; Bennington Financial Corp. v. Medcap Real Estate Holdings Inc., 2023 ONSC 2742; Moore v. Bertuzzi, 2012 ONSC 3248 at paras. 75–79; Aviaco International Leasing Inc. v. Boeing Canada Inc., 2000 CanLII 22777 (ON SC), [2000] O.J. No. 2420 (S.C.J.).

[^22]: Davies v. Clarington (Municipality), 2023 ONCA 376; Behn v. Moulton Contracting Ltd., 2013 SCC 26; Waterloo (City) v. Wolfraim, 2007 ONCA 732; Toronto (City) v. C.U.P.E., Local 79, 2003 SCC 63, [2003] 3 S.C.R. 77; Currie v. Halton (Region) Police Services Board, 2003 CanLII 7815 (ON CA), [2003] O.J. No. 4516 (C.A.); Canam Enterprises Inc. v. Coles (2000), 2000 CanLII 8514 (ON CA), 51 O.R. (3d) 481 at paras. 55–56 per Justice Goudge dissenting (C.A.), approved 2002 SCC 63, [2002] 3 S.C.R. 307; House of Spring Gardens Ltd. v. Waite, [1991] 1 Q.B. 241 (C.A.).

[^23]: Davies v. Clarington (Municipality) 2023 ONCA 376; Behn v. Moulton Contracting Ltd., 2013 SCC 26.

[^24]: Phillion v. Ontario (Attorney General), 2013 ONSC 2426; Canam Enterprises Inc. v. Coles (2000), 2000 CanLII 22340 (ON SC), 47 O.R. (3d) 446 (S.C.J.); Hunter v. Chief Constable of the West Midlands Police, [1982] A.C. 529 (H.L.); Swedish-Canadian Lumber Co. v. Royal Bank, 1931 CanLII 395 (NB CA), [1931] N.B.J. No. 5, (C.A.); Orpen v. Ontario (Attorney General) (1924), 1924 CanLII 379 (ON SC), 56 O.L.R. 327 (H.C.J.), var’d (1925), 1925 CanLII 414 (ON CA), 56 O.L.R. 530 (C.A.); Haggard v. Pelicier Freres, [1892] A.C. 61 (P.C.).

[^25]: Mascan Corp. v. French (1988), 1988 CanLII 4731 (ON CA), 64 O.R. (2d) 1 (C.A.); Foy v. Foy (No. 2) (1979), 1979 CanLII 1631 (ON CA), 26 O.R. (2d) 220 (C.A.), leave to appeal refused, loc cit. at 237; Hunter v. Chief Constable of the West Midlands Police, [1982] A.C. 529 (H.L.); House of Spring Gardens Ltd. v. Waite, [1991] 1 Q.B. 241 (C.A.).