Court File and Parties

Court File No.: CV-23-61527 Date: 2025-10-08 Ontario Superior Court of Justice

Between:

1650661 Ontario Inc. and Terence Joseph St. Amand (by his Litigation Guardian, Lisa St. Amand) Plaintiffs/Responding Parties

– and –

Michael James Emonds, Jonathan Pietrangelo, R. O. Beam & Son Construction Limited, 1703306 Ontario Inc., Michael Craig Liddiard and Liddiard Law Professional Corporation Defendants/Moving Parties

Counsel

A. Patchet, for the Plaintiffs/Responding Parties

A. Verrilli, for the Defendants/Moving Parties Emonds, Pietrangelo, Beam and 1703306

No one appearing for Liddiard Defendants

Hearing and Judge

Heard: October 1, 2025

The Honourable Justice J. R. Henderson

Endorsement on Motion

[1] The defendants, Michael James Emonds ("Emonds"), Jonathan Pietrangelo, R. O. Beam & Son Construction Limited and 1703306 Ontario Inc. (hereinafter called "the moving parties") bring this motion to amend their pleadings by delivering a Fresh As Amended Statement of Defence and Crossclaim, pursuant to rule 26. The plaintiffs oppose the moving parties' motion. The co-defendants, Michael Craig Liddiard and Liddiard Law Professional Corporation (hereinafter called "the Liddiard defendants") take no position on the motion.

[2] In this proceeding, the plaintiffs make a claim against the moving parties for, among other things, repayment of $2,000,000 that was advanced pursuant to a promissory note, and repayment of another advance of $1,000,000. They also request leave to register a certificate of pending litigation ("CPL") on certain properties owned by the moving parties, known as the Hodgkins Properties.

[3] Pleadings have been exchanged, but the parties have not yet exchanged affidavits of documents or proceeded to examinations for discovery.

[4] In June 2023, after they obtained leave ex parte, the plaintiffs registered the CPL against the Hodgkins Properties. Thereafter, the moving parties brought an unsuccessful motion to discharge the CPL. In the course of the CPL discharge motion, affidavits were delivered on behalf of the moving parties and cross-examinations were conducted.

[5] In opposing the current motion, the plaintiffs submit that the moving parties have made certain admissions in this proceeding, and therefore rule 51.05, which governs the withdrawal of admissions, applies. Further, the plaintiffs submit that rule 51.05 supersedes rule 26.

[6] I find that the circumstances of this case do not strictly fall within the scope of rule 51.05 as the alleged admissions were not made in response to a request to admit, the admissions were not deemed admissions under rule 51.03, and the admissions were not made in the pleadings. However, I accept that it has been held that where the effect of proposed amendments is to resile from admissions previously made in the proceeding, the same principles apply: see Phillips v. Disney, 2018 ONSC 1021, and Tarkalas v. Zographos, [2006] O.J. No. 794 (S.C.), aff'd, [2008] O.J. No. 1047 (Div. Ct.).

[7] Therefore, I find that if there have been admissions in this proceeding that are inconsistent with the proposed amendments, the moving parties should only be granted leave to amend if the moving parties satisfy the three-part test set out in the case of Antipas v. Coroneos, [1988] O.J. No. 137 (H.C.).

[8] In the present circumstances, in my view, the only truly contentious part of the Antipas test is whether the proposed amendments raise a triable issue. I accept and adopt the statement of Boswell J. at para. 26 of the Phillips decision that "the motions judge will have to determine whether the proposed amendments are meritorious, or whether they are nothing more than a tactical move that will tend to hinder, delay or frustrate the course of justice."

[9] The alleged admissions relied upon by the plaintiffs include admissions made by the defendant Emonds in affidavits that were provided in the context of the CPL discharge motion and a related Receivership application. In summary, in those affidavits Emonds acknowledged that he and his partner signed a $2,000,000 promissory note with a due date of June 1, 2023, that the sum of $2,000,000 was advanced pursuant to that note, and that the money has not been repaid.

[10] The plaintiff also relies upon alleged admissions that Emonds made in his cross-examination on his June 2023 affidavit wherein Emonds acknowledged that he signed the promissory note, that $2,000,000 was advanced, and that a further sum of $1,000,000 had been advanced.

[11] In the proposed amended pleading, the moving parties do not seek to resile from Emonds' evidence that the sums of $1,000,000 and $2,000,000 were advanced, that the parties signed a promissory note for the $2,000,000 advance, that the promissory note had a due date of June 1, 2023, and that the funds have not been repaid. Rather, in the proposed amended pleading the moving parties seek to plead, inter alia, that there was a misunderstanding between the parties or a mistake with respect to the terms of their business arrangement.

[12] In particular, the moving parties seek to plead that the funds were advanced as part of an investment by the plaintiffs in the moving parties' real estate development business. The moving parties' position is that the plaintiffs knew that this would be a long-term investment, and that the funds would not be repaid until the real estate development was constructed and became profitable.

[13] Therefore, the moving parties seek to plead rectification of the lending agreement and the terms of the promissory note to include terms that describe what the moving parties allege was the true intention of the parties. In the proposed amended pleadings, the moving parties also seek to plead a set off for an alleged breach by the plaintiffs of the terms of their agreement, and to claim damages against the plaintiffs caused by the registration of the CPL. In addition, the moving parties seek to plead the defence of non est factum.

[14] In my view, there is no inconsistency between the proposed amended pleadings and Emonds' prior admissions that there was a promissory note, that the note was signed, that the note had a due date of June 1, 2023, that the funds of $2,000,000 and $1,000,000 were advanced, and that the funds have not been repaid. The moving parties are not seeking to withdraw those admissions.

[15] The moving parties submit, and I agree, that those admissions are not inconsistent with the moving parties' allegation that there were other agreements or understandings that resulted in the promissory note and the advancement of the funds. Therefore, I find that in this respect the moving parties are not seeking to resile from previous admissions that are inconsistent with the proposed amendments. Thus, the Antipas test does not apply to those admissions and rule 26 governs.

[16] There is, however, one aspect of Emonds' admissions from which the moving parties are seeking to resile. In his cross-examination, Emonds was asked about the circumstances of the advance of the funds. In particular, he was asked about the terms for repayment of the $1,000,000 and $2,000,000 advances. In both instances he answered that terms of repayment were never discussed. This statement on its face is inconsistent with the proposed amended pleadings.

[17] To be fair to the moving parties, the court must consider the context of those statements about the terms of repayment. Emonds' cross-examination was on an affidavit that was filed in support of the moving parties' CPL discharge motion. The vast majority of the questions put to Emonds during his cross-examination related to the CPL. In fact, counsel for the moving parties consistently objected to questions from plaintiffs' counsel that related to the promissory note and the funds that were advanced. In my view, therefore, the questions regarding the terms of repayment of the two advances were not the focus of Emonds' cross-examination, but rather were part of the narrative with respect to the CPL.

[18] Moreover, during the cross-examination there were never any follow-up questions with respect to whether there were other terms of repayment that may have been assumed or implied. On that point, it is important to note that the Liddiard defendants acted as lawyers for both the plaintiffs and the moving parties at the time of the advances of the funds. Thus, both parties appear to have relied on the Liddiard defendants to particularize the terms of their agreement.

[19] In summary, I find that there is no dispute between the parties with respect to the advance of the funds, the promissory note, and the non-payment. The dispute between the parties seems to revolve around the circumstances surrounding the advance of the funds. In my view, there is a triable issue with respect to those circumstances. Accordingly, subject to the exception listed below, I will grant leave to the moving parties to amend their pleadings.

[20] The only exception to this ruling relates to the moving parties' claim of non est factum. Given that Emonds has admitted the promissory note, and the terms of the note, it is clear that the moving parties understood the nature of the note. Therefore, the moving parties cannot rely on the principle of non est factum.

[21] In conclusion, I hereby grant leave to the moving parties to deliver the Fresh As Amended Statement of Defence and Crossclaim as requested, except that paragraph 53 of the draft pleading will be excluded as it relates to the non est factum defence.

[22] Regarding costs, I find that the moving parties were the successful parties, but given that the court, through this order, is granting an indulgence to the moving parties, I choose to order no costs of this motion.

J. R. Henderson, J.

Released: October 8, 2025