Scivoletto v. Lio, 2026 ONSC 700

CITATION: Scivoletto v. Lio, 2026 ONSC 700

COURT FILE NO: CV-19-00612926-0000

DATE: 20260320

ONTARIO

SUPERIOR COURT OF JUSTICE

BETWEEN:

JACK SCIVOLETTO

Plaintiff

– and –

ATTILIO LIO, SOUTH LIBRA DEVELOPMENTS INC., ZODIAC DEVELOPMENTS INC., ZODIAC LANDEV MANAGEMENT INC., 404/19TH AVENUE DEVELOPMENTS INC. and NIVES LIO

Defendants

Jonathan L. Frustaglio for the Plaintiff

Gary Caplan and Aram Simovonian for the Defendants, Attilio Lio, South Libra Developments Inc., Zodiac Landev Management Inc., and Nives

Peter Smiley for the Defendant, 404/19^th^ Avenue Developments

HEARD: December 15, 16, 17, 18, 2025 and January 30, 2026.

Leiper, J.

REASONS FOR JUDGMENT

I. Introduction

1The plaintiff, Giacomo (“Jack”) Scivoletto (“Mr. Scivoletto”), brings a claim in breach of contract, breach of fiduciary duty and unjust enrichment for damages against the defendants, Attilio Lio (“Mr. Lio”), Zodiac Developments Inc., Zodiac Landev Management Inc. (“Zodiac Landev”), 404/19^th^ Avenue Developments Inc. (“404”), Nives Lio and South Libra Developments Inc. (“South Libra”).¹

2Mr. Scivoletto seeks damages of $1,297,500 plus interest and costs, arising from a contract with Mr. Lio’s company, South Libra, in consideration of his efforts in arranging financing for a project to purchase and resell valuable vacant land in Markham (the “Property”).

3The damages are the difference between what Mr. Scivoletto says he was owed under his contract with South Libra and what he received from South Libra after the profits from the sale of the Property were divided. Mr. Scivoletto seeks remedies on a joint and several basis against Mr. Lio, his spouse, Nives Lio, Zodiac Landev Development Inc., Zodiac Developments Inc., South Libra, and 404.

4South Libra acknowledges that it had a contract with Mr. Scivoletto but that it did not breach the contract. The defendants all deny any wrongdoing under any of the causes of action alleged by the plaintiff. They submit that South Libra did not breach its fiduciary obligations to Mr. Scivoletto and there was no unjust enrichment to any of the defendants. The defendants submit that Mr. Scivoletto was paid precisely what the parties agreed upon: a “carried interest” in South Libra’s share, meaning a 50% share of a 25% share of South Libra’s share of the profits once the Property was sold in 2017. The defendants ask that the action be dismissed.

5The details of the genesis of the project, the successful purchase, the alleged contracts and ultimately, the resale and profit distribution must all be set out as part of the circumstances to the formation of the contract and the allegations of breach. I follow these details with the legal principles, the issues and then an analysis of the issues.

II. Background

Mr. Lio and Mr. Scivoletto decide to purchase a property with a view to profit

6In 2007 when the events that led to this litigation began, Mr. Scivoletto and Mr. Lio were friends. They had business meetings, lunches and dinners together and with members of their families. They also discussed potential investment projects.

7Mr. Scivoletto lives in Aurora and made his living as a land developer. He has experience in obtaining financing for land development projects.

8Mr. Lio lives in Thornhill. He earned his living as a land developer, operating through various corporate entities.

9In 2007, Mr. Scivoletto and Mr. Lio discussed purchasing the Property, by having Mr. Scivoletto make an offer to purchase the Property in the name of his company, Banc-Cor Financial Group Ltd. (“Banc-Cor”).

10On January 23, 2007, Banc-Cor offered to purchase the Property. Mr. Lio paid the first down payment of $50,000, using a numbered company controlled by another individual. Mr. Lio explained that he did so to prevent the vendor from knowing his identity because he believed that information might have an impact on the price sought for Property.

11Under the terms of the purchase agreement, Banc-Cor was obliged to make a second down payment of $200,000 after the conditional period had passed.

12Mr. Scivoletto and Mr. Lio signed a trust agreement, a term sheet and an assignment agreement, to describe their roles in the project as of February of 2007 (the “February 2007 Documents”).

13The February 2007 Documents anticipated that Mr. Scivoletto’s company, Banc-Cor, would hold the property as a trustee for itself and for a company to be incorporated by Mr. Lio. The February 2007 Documents reflect their intention at that time, that they would share the profits from the project on a 50/50 basis. This intention is reflected in Mr. Lio’s handwritten confirmation that the agreement was “50-50”, which he added to the February 15, 2007, term sheet.

14Mr. Scivoletto did not have the funds available for the second down payment of $200,000. At that point they decided to change the structure of the purchase.

Mr. Lio and Mr. Scivoletto agree to assign the purchase agreement to Mr. Lio’s company and Mr. Scivoletto finds the financing for the project

15Mr. Lio agreed to make the second down payment. Mr. Scivoletto assigned the agreement of purchase and sale for the Property to Mr. Lio’s numbered company, 876129 Ontario Limited (“876”).

16Mr. Scivoletto’s role in the project was to use his contacts to find financing so that the purchase could be completed. As part of that work, he obtained an appraisal and retained a planner.

17Mr. Scivoletto successfully located a group of investors for the project, comprised of three individuals: (i) Irwin Mintz, (ii) Sheldon Fenton, and (iii) Larry Blankenstein (the “Equity Group”).

The Equity Group and Mr. Lio’s new company, South Libra, form a new company and enter into a shareholders’ agreement

18On July 18, 2007, Mr. Lio incorporated South Libra. He was the sole shareholder, officer and director of South Libra. Prior to closing, Mr. Lio and the Equity Group agreed that South Libra would have a 40% interest in 404, and that Mr. Lio would advance $1,288,000 in cash or cash/credit to assist with capitalizing 404. Mr. Scivoletto did not put any funds into the purchase transaction.

19The Equity Group agreed to take a collective 60% share in 404 through a corporation they named “404 Holdings”. On July 20, 2007, Mr. Lio’s company, 876, assigned the purchase agreement to 404 Holdings.

20Although the purchase transaction was initially scheduled to close on July 24, 2007, the financing was not ready by that date. The Equity Group and Mr. Lio negotiated an extension to the closing period. This was accomplished by having Mr. Lio’s lawyers raise an airport restriction issue as a cloud on title. They retained counsel to signal that they might register a certificate of pending litigation on title. This step was not necessary because the vendor agreed to extend the closing date.

The Contract Documents and Mr. Scivoletto’s interest in the project

21In the days leading up to the closing, Mr. Scivoletto sought a written confirmation from Mr. Lio of his share in the project based on his contributions to the transaction.

[22]

Mr. Scivoletto sent a letter to Mr. Lio on July 27, 2007, on Banc-Cor’s, letterhead:

The August 3, 2007, Shareholders’ Agreement

23The shareholders, South Libra and 404 Holdings negotiated and signed a shareholders’ agreement on August 3, 2007. The shareholders’ agreement which set out the parties’ respective rights and obligations for the project, as discussed above. Mr. Scivoletto was not a party to this agreement, despite his request to Mr. Lio that he be included as an equity participant of 12.5% in 404.

24As outlined above, the 2007 shareholders’ agreement provided that South Libra owned 40% of the shares in 404 and the Equity Group’s corporation, 404 Holdings, owned 60% of the shares in 404.

25The shareholders’ agreement included a provision within sub-section 4.3(e) which stated that the net proceeds after the sale of the Property, and after the payment of, among other things, the shareholder loans, were to “be distributed to the Shareholders in such manner as they shall agree to”.

The August Acknowledgement from South Libra to Mr. Scivoletto

26404 did not respond to Mr. Scivoletto’s request of July 27, 2007, with any paperwork that would make Mr. Scivoletto a 12.5% equity partner in 404. He was not offered any opportunity to be a party to the shareholders’ agreement.

27However, on August 3, 2007, Mr. Lio, as President and sole shareholder of South Libra sent a document entitled “Acknowledgement” (the “August Acknowledgement”) to Mr. Scivoletto.

28The parties agreed in their submissions that the August Acknowledgement amounts to a contract between Mr. Scivoletto and South Libra, that was conditional upon 404’s successful purchase of the Property, and that once the Property had been purchased, the rights of the parties crystallized.

29The text of the August Acknowledgement is important because this is the contract which Mr. Scivoletto relies on as the foundation of his claim in breach of contract, breach of fiduciary duty and unjust enrichment. I set it out in full here.

ACKNOWLEDGEMENT

TO Jack Scivoletto, Banc-Cor Group Inc.

RE Land Acquisition Deal- 89.9 Acres, 2780 19^th^ Avenue, Lot 31, Conc. 3, Town of Markham, Regional Municipality of York

Equity Financing Joint-Venture Transaction, Registered Owner: 404/19th Ave Developments Inc.

FOR VALUE RECEIVED, I Attilio Lio, President and sole shareholder of South Libra Developments Inc., acknowledge that Jack Scivoletto introduced and facilitated the above referenced Equity Financing for the land acquisition property transaction.

It is clear and noted in the shareholders agreement of the joint-venture, that South Libra Developments Inc. owns a 25% interest of this Subject Property. As such, upon the successful closing of the transaction, Jack Scivoletto will have a 50% carried interest of South Libra Development lnc.'s share, in consideration of his work and effort.

Dated at Thornhill, in the City of Vaughan, as of the 3^rd^ day of August, 2007.

30The parties do not dispute that this constituted a contract. It followed Mr. Scivoletto’s request for paperwork supporting an equity share in the project. The August Acknowledgement documents consideration received from Mr. Scivoletto and stipulates, (inaccurately) that South Libra owns a 25% interest of “this Subject Property”.

31By virtue of the shareholders’ agreement signed the same day, Mr. Lio knew that South Libra held not a 25% share, but a 40% interest in 404, which held title to the Property. However, under the terms of the agreement, the profit distribution would be in a “manner to be agreed.” South Libra did not have title to the property, only an interest in the corporation that held title, and its rights were as set out in the August 3, 2007, shareholders’ agreement.

32The commitment to Mr. Scivoletto is in the last sentence: “As such, upon the successful closing of the transaction, Jack Scivoletto will have a 50% carried interest of South Libra Development Inc.’s share, in consideration of his work and effort.”

33Mr. Scivoletto says he did not know at the time of the August Acknowledgement that South Libra had received a 40% interest in 404. His evidence was that he believed that the August Acknowledgement confirmed two things: that South Libra had a 25% interest in the project, and that when the property sold, South Libra’s interest in the profits would be divided 50-50 between Mr. Scivoletto and South Libra.

34Mr. Lio’s position is that the August Acknowledgement must be read alongside the shareholders’ agreement. He testified that Mr. Scivoletto knew about the terms that South Libra had negotiated with 404 before closing, including that South Libra had a 40% interest in 404. In that context, the August Acknowledgement reflects that Mr. Scivoletto is only entitled to half of 25% of South Libra’s 40% interest in the project. Put another way, Mr. Lio testified that Mr. Scivoletto was only ever entitled to 12.5% of South Libra’s 40% interest, or ½ of 25% of 40%.

35In cross-examination, Mr. Scivoletto confirmed that he had not asked Mr. Lio for a copy of the shareholders’ agreement. He testified that he did not know of its contents prior to or at the closing of the purchase of the Property on August 7, 2007.

36Counsel to Mr. Lio submitted that I could draw an inference of knowledge on Mr. Scivoletto’s part from diary notes that Mr. Lio made at the time of these events. Mr. Lio had no independent recollection of any of the meetings about this period which he recorded in his diary. After hearing argument, and for reasons given at trial, I admitted the diary entries for the proof of their contents as past recollection recorded, following argument on a motion brought by Mr. Lio.

37I deal with the issue of whether to draw the inference requested by Mr. Lio as part of my analysis below.

Factual Findings on Inferences to be Drawn from Diary Entries

38Mr. Lio relies on his 18-year-old diary entries to support an inference that Mr. Scivoletto knew the details of the shareholders’ agreement between the Equity Group and Mr. Lio, because Mr. Scivoletto was present at some of the meetings with lawyers and Mr. Lio about the Property purchase.

39The diary entries which Mr. Lio relies on are as follows:

a. On July 9, 2007: “Pallotta’s with Jack re Toad Hall re Markham”

b. July 16, 2007-7:00 p.m. “Jack’s house re term sheet-Markham”

c. On Thursday, July 19, 2007- 12:00- “Jack and Pallotta at office”;

-6:30- “Jack and Pallota →strategy”

d. On Monday July 23, 2007,10:30 a.m.- “Jack, Scott and Mintz and Shelley Fenton”

10:00 p.m.- “Office, Adventure-Shelley, Harley, Don and Jack Re: Markham-Bigoni”

e. On Tuesday July 24, 2007, 5:00 p.m., “Shelley, Pallotta and Jack;”

f. On Wednesday July 25, 2007, 9:00 a.m. Jack and Pallotta”;

g. On Thursday July 26, 2007, 4:30- “re Markham Alvin (Meisels), Pallotta and Jack”.

40Messrs. Pallotta and Meisels are lawyers who acted on the purchase for 404 and South Libra. These diary entries pre-date the letter from Mr. Scivoletto seeking to be included as an equity participant in the project, the August Acknowledgement, and the date that the shareholders’ agreement was signed by all involved, but not by Mr. Scivoletto.

41On August 3, 2007, there are no diary entries shown which indicate that Mr. Scivoletto was with Mr. Lio at meetings about the project. Although Mr. Lio’s diary page for that day indicates that this was “closing day”, another entry at 5 p.m. notes “close in escrow”. The parties agree, and the closing documents reflect, that the closing was completed on August 7, 2007.

42In addition to entries which show Mr. Scivoletto being involved in pre-closing meetings, there are other entries in the diary toward the end of July and leading up to the closing which show Mr. Lio meeting variously and separately with Mr. Scivoletto, members of the Equity Group, or with counsel on the real estate transaction. Several examples of those entries include:

July 26, 2007-Shelley/Pallotta conference call

July 30, 2007-12:00 Lunch Jack @ Kelsey’s

-2:30 p.m. Alvin (Meisel’s) @ Pallota’s re: 19^th^ deal

-4:00 p.m. Shelley/Pallotta re: Bigoni’s

July 31, 2007- 9:30 a.m. Pallotta

-3:00 p.m. Pallotta and Shelley [Fenton]

43I discuss below, as part of the analysis why I decline to draw an inference from these diary entries as to Mr. Scivoletto’s knowledge of the agreement between South Libra and 404 at the time that the transaction closed in August of 2007.

The Transaction Closes on August 7, 2007

44The purchase price for the Property was $14 million, with 404 taking title as provided for in the shareholders’ agreement.

45The closing book reflects several mortgages registered on title against the Property, as part of securing the interests of the various parties involved:

a. A first mortgage in favor of Lorne Goldstein in trust for $10,815,000 with semi-annual interest only payments.

b. A second mortgage in favor of Reserve Capital (a Fenton company) for $6,000,000 at 10% interest per annum for the first $3,500,000 and 15% per annum with respect to any advances more than $3,500,000.

c. A third mortgage in favor of South Libra for $2,000,000 with 10% on the first $1,288,000 and 15% on any advances over that amount.

46This completed the transaction as between Mr. Lio and the Equity Group via their respective corporate entities, South Libra, 404 Holdings and 404.

47The return on the project took over 10 years to materialize due to part of the property being located within the Greenbelt until 2017.

48In the period between the 2007 closing and the 2017 sale, two other events happened which inform the positions of the parties. First, Mr. Lio delivered a further “Acknowledgement” document in September of 2007. Then, in 2009, the participants in the Equity Group changed and South Libra agreed to give up part of its share in the deal for a return of South Libra’s capital.

49I begin with the September Acknowledgement document.

Post-Closing Events: The September Acknowledgement

50On September 29, 2007, Mr. Lio faxed a document (the “September Acknowledgement”) to Mr. Scivoletto. Mr. Lio testified that he was about to leave for Italy, and Mr. Scivoletto had jokingly expressed concern about their agreement if something was to happen to Mr. Lio while travelling. Mr. Scivoletto denied that conversation.

51The document was sent by Mr. Lio and received by Mr. Scivoletto. It reads:

To: My Dear Friend and Partner – Jack Scivoletto

Re: Markham Lands Deal

404/19^th^ Avenue Development

Sir:

Please be advised that this acknowledgement will confirm that you own and are a 50% beneficiary of the South Libra Developments share of the above referenced deal.

South Libra owns 25% of the 40% share of the above referenced deal.

Sincerely,

A. Lio

South Libra Developments Inc.

President, Attilio Lio

52The September Acknowledgement conveyed new information to Mr. Scivoletto about South Libra’s ownership share in these terms: “South Libra owns 25% of the 40% share of the above referenced deal.” In other words, South Libra owned 25% of its own (that is “South Libra’s) 40% share of the project. On its face, this sentence sounds illogical.

53The September Acknowledgement stated that Mr. Scivoletto owned and was a 50% beneficiary of South Libra’s share of a share.

54Mr. Lio testified that he sent this document to Mr. Scivoletto to clarify the August Acknowledgement. As I discuss below, I do not find that the August Acknowledgement required clarification, or that the September Acknowledgement can be read as a clarification of the August Acknowledgement. I also find that Mr. Scivoletto did not agree to a change to the agreement he had with South Libra by way of the August Acknowledgement.

55Mr. Scivoletto testified that he understood the September Acknowledgement to be Mr. Lio’s way of informing him that he had managed to negotiate a higher share in the project for South Libra. This was better than the 25% share Mr. Lio had represented to Mr. Scivoletto in August as the South Libra share. When the September Acknowledgement was put to Mr. Scivoletto in cross-examination, he testified that he felt he had nevertheless preserved his 25% interest in the project by way of the August Acknowledgement.

The 2009 buyout of 20% of South Libra’s share in the project

56In 2009, one of the members of the Equity Group, Fenton, departed unhappily from the project. At the same time, South Libra gave up 20% of its share in 404 in return for a payment of $750,000, as a shareholder-to-shareholder payment. Those share purchase documents were tendered as an exhibit at trial. They include a Share Purchase Agreement and a new Shareholders’ Agreement, dated August 14, 2009.

57In the executed Share Purchase Agreement dated August 14, 2009, the parties included the following stipulation in para. 2.3:

Notwithstanding the relative shareholding of the Holdings and South and the terms of the Shareholders Agreement, Holdings and South agree as follows:

(c) with respect to the sale of the Specified Lands only and notwithstanding the parties’ right to receive their percentage of the sale of the Property (Developments 80% and South-20%), South shall be entitled to 30% of the net sale proceeds and developments shall be entitled to 70% of the net proceeds.

58The paragraph went on to define “net proceeds” meaning sale price for the Specified Lands” less costs, fees and commissions as stipulated in 2.3(c)(i-iv).

59The “Specified Lands” were 15.5 acres of Greenbelt designated lands within the Property, which held up the ability of the partners to resell it for 8 years. Schedule A to the agreements in the share purchase closing documents shows the Property with “Specified Lands” marked in a heavy black line, amounting to approximately one quarter to one third of the entire parcel at 404 and 19^th^ Avenue, in Markham.

60Thus, the relationship among the Equity Group and South Libra changed with one member out and a new allocation of interest as between South Libra and the Equity Group. As before, Mr. Scivoletto was not a party to the share purchase or the new shareholders’ agreement of August 14, 2009.

The delays in reselling the Property

61404 could not resell the Property for several years, because of the portion of the parcel designated as “Specified Lands” which were part of the “Green Belt” around the Greater Toronto Area. That designation limited the Property’s potential for redevelopment. Eventually, Mr. Lio was successful in having the Property excluded from the Green Belt. On November 14, 2017, 404 successfully sold the property to the City of Markham for $38.4 million.

62The closing was not smooth. Mr. Lio asserted a right to an additional management fee for his efforts in extricating the Property from the Green Belt. The Equity Group threatened litigation. Several of those emails were filed at trial. They made it clear that Mr. Lio received his share under protest, and that the Equity Group used their leverage to cause him to accept less than he would have liked under their deal. The profit division did not match the percentage interests that the minority and majority shareholders in 404 had agreed upon.

63Mr. Lio and the Equity Group finally agreed to a distribution of funds after expenses as follows:

a. 404 Holdings as 80% shareholder of 404 as of the date of sale = $34,963,656.5

b. South Libra as 20% shareholder of 404 as of the date of sale = $3,395,000

64Mr. Lio directed on closing that South Libra’s $3,395,000 share of the profit from the sale of the Property be distributed as follows:

a. 75% of the South Libra proceeds paid to three non-arms’ length persons:

i. Attilio Lio’s spouse Nives Lio: $900,000 ;

ii. South Libra Developments Inc. (with Mr. Lio as sole director and shareholder): $800,000; and

iii. Zodiac Landev Management Inc (with Mr. Lio as sole director and shareholder): $1,695,000.

65South Libra then directed that its $800,000 be disbursed to South Libra. From that share of the share, South Libra wrote a cheque for $400,000 to Mr. Scivoletto. This is the amount which South Libra and Mr. Lio submit amounted to 50% of 25% of South Libra’s profit share, as promised in the September Acknowledgement. On this basis, the defendants submit that there was no breach of the contract.

66Mr. Scivoletto complained to Mr. Lio that this was not the agreement that he and South Libra made in 2007. Mr. Scivoletto cashed the $400,000 cheque from South Libra. He wrote to Mr. Lio that he was doing so “under protest.”

67Mr. Scivoletto refused to sign the release prepared by Mr. Lio, filed as Exhibit 34 at trial. That release relied on the terms of the September Acknowledgement, but did not refer to the August Acknowledgement or state anything about the September Acknowledgement being a clarification of the August Acknowledgement:

MUTUAL RELEASE

RE: ACKNOWLEDGEMENT- Markham Lands Deal- September 27, 2007

PAYMENT DATE: December 14, 2017

AMOUNT: $400,000.00

FROM: 50%- South Libra Developments Inc's Share

TO THE ORDER OF:

TERM:

Jack Scivoletto 9 Alm Court

Aurora, ON, L4G 6W7

As per September 27, 2007 Acknowledgement, (See attached as Schedule "A")

I, South Libra Developments Inc.(Payer) and Jack Scivoletto (Payee), in the above referenced Acknowledgement hereby acknowledge and agree that the above described transaction (Markham Lands Deal), is terminated and release each other, from all liabilities, claims covenants, obligations and sums of money arising out of the above Acknowledgement, any rights and causes of action that each party may have had against the other.

Jack Scivoletto agrees and confirms that he has been paid the amount owed in full, as per the Acknowledgement referenced above, and the following as shown by the Schedule "B" Funds ($400,000.00), representing 50% of the received Funds ($800,000.00). Schedule "C" attached herein by the Payer, received from the Seller's Lawyer, lists all the Funds received by the Payer, for the purposes of this Mutual Release.

Dated at Concord, in the City of Vaughan, as of the 14th day of December, 2017.

This Release shall be binding upon the heirs, executors and assigns of all the parties same.

Witness: Per: South Libra Developments Inc.- President

I, the Undersigned, agree to the above offer and terms of Mutual Release.

7501 KEELE STREET-STE 306, VAUGHAN, ONTARIO, L4K 1Y2

68The release attached the handwritten September Acknowledgement.

69Mr. Scivoletto asserted his right to receive 12.5% of the proceeds of the transaction, that is 50% of South Libra’s share of the profits. He asked Mr. Lio to call him to review his accounting.

70On December 14, 2017, Mr. Lio sent an email to Mr. Scivoletto, which referred to their meeting. Mr. Lio’s email referred to the “original deal” in the “Fall of 2007” and then the “Revised Deal” or as he put it, the “new deal” in August of 2009. Mr. Lio complained to Mr. Scivoletto that the Equity Group had mistreated him. He alleged that the Equity Group used their “financial power and threats” to have him agree to their terms for the distribution of funds. In the end, the amount he received, which he (falsely) told Mr. Scivoletto in the email was $3.2 million, was “the best he could do under the structure of the deal.”

71The parties did not resolve their differences over the amount that South Libra paid to Mr. Scivoletto. Mr. Scivoletto initiated his claim against the defendants in 2019.

The Positions of the Parties

72Mr. Scivoletto submits that the agreement he made with South Libra on August 3, 2007, entitled him to a 50% share of South Libra’s 25% share in the property. Thus, when the property was sold to the City of Markham, and South Libra received net profits of $3,393,000 for its share in the project, Mr. Scivoletto asserts he was entitled to receive half of this amount. He also asserts an entitlement to a portion of the funds paid to South Libra in August of 2009, in return for South Libra giving up a 20% interest in 404, thus diluting its 25% share by 5%. He seeks 2.5% of the funds returned to South Libra in 2009 based on the terms of the August Acknowledgement.

73The defendants’ position is that the August Acknowledgement must be read alongside the shareholders’ agreement and the September Acknowledgement. Taken together, the defendants submit that the parties agreed that Mr. Scivoletto would receive 50% of 25% of the South Libra 40% share in the project, or as Mr. Caplan put it in his closing submissions, “a share of a share of a share.” The defendants submit that the August 2009 return of the shareholder loan and reduction of South Libra’s share in 404 was not a distribution of profit, and none of Mr. Scivoletto’s carried interest was involved with that part of the transaction, thus Mr. Scivoletto was not entitled to any portion of the monies paid to South Libra in 2009.

74The defendants seek to have this action dismissed on the basis that there was no breach of contract. In their submission, Mr. Scivoletto received what he had contracted for, that is, 50% of 25% of South Libra’s share of the profits when the Property was sold.

III. The Legal Principles: Contract Interpretation, Breach of Fiduciary Duty and Unjust Enrichment and the Question of the Separate Legal Personality of a Corporation

Interpretation of Commercial Contracts

75The interpretation of a contract begins with the plain meaning of the words of the contract, in the overall context of the document. The circumstances around the making of the contract are relevant to understanding the intentions of the parties. However, the “factual matrix” must not overwhelm the text: See Sattva Capital Corp. v. Creston Moly Corp., 2014 SCC 53, [2014] 2 S.C.R. 633, at paras. 56-57.

76Put another way the “words chosen are central to the analysis”: See EarthCo Soil Mixtures Inc. v. Pine Valley Enterprises Inc., 2024 SCC 20, 175 O.R. (3d) 240, at para. 63.

77The surrounding circumstances will inform the objective intentions of the parties, and the scope of their understanding: Sattva, at para. 47.

78Where the court is examining a commercial contract, it is appropriate for the court to know the genesis of the contract, the commercial purpose, the context and the market in which the parties are operating: See Sattva, at para. 47.

79The parties’ knowledge of details and information at the time they formed the contract is a question of fact for the court to consider: Sattva, at para. 58.

80Where the contract is wholly in writing, evidence from one party about their subjective intentions is not admissible to vary the terms of the contract: Sattva, at para. 59.

81Where the document is a negotiated commercial document, the court should avoid commercially absurd interpretations: Singapore Technologies Marine Ltd. v Attorney General (Nova Scotia), 2025 NSSC 140, at para. 104.

Breach of Fiduciary Duty

82A person who makes an undertaking to another to exercise their discretionary power for the benefit of the beneficiary is a fiduciary. The duty owed rests on the beneficiary’s vulnerability to having their legal or practical interests affected by the fiduciary’s power over those interests: Extreme Venture Partners Fund I LP v. Varma, 2021 ONCA 853, 24 B.L.R. (6th) 38, at para. 102.

Unjust Enrichment

83A remedy in unjust enrichment arises where a plaintiff establishes on a balance of probabilities that:

1. that the defendant was enriched;

2. that the plaintiff suffered a corresponding deprivation; and

3. that the defendant’s enrichment and the plaintiff’s corresponding deprivation occurred in the absence of a juristic reason.

Moore v. Sweet, 2015 SCC 52, [2015] 3 S.C.R. 397.

Disregarding the Separate Legal Personality of a Corporate Entity controlled by an Individual

84Where those in control of a corporation direct a wrongful act, the court may disregard the separate legal personality of the corporate entity where it is completely dominated and controlled by an individual who uses the corporation for improper conduct: Shoppers Drug Mart Inc. v. 6470360 Canada Inc. (Energyshop Consulting Inc./Powerhouse Energy Management Inc.), 2014 ONCA 85, 372 D.L.R. (4th) 90, at paras. 43-45.

IV. Issues at Trial

85The overall question at trial is whether Mr. Scivoletto has established liability and an entitlement to damages from all or any of the defendants on a balance of probabilities. The various issues are:

i. Was there a contract between Mr. Scivoletto and South Libra? What were the terms?

ii. If so, did South Libra breach the contract that it made with Mr. Scivoletto? If South Libra breached the contract with Mr. Scivoletto, what is Mr. Scivoletto’s remedy in damages?

iii. Did South Libra breach its fiduciary duty to Mr. Scivoletto in directing the payment of funds available in breach of the contract between South Libra and Mr. Scivoletto?

iv. Were any of Zodiac Landev, South Libra or Nives Lio unjustly enriched to the detriment of Mr. Scivoletto? If so, what is the appropriate remedy?

v. Is this action statute barred for being out of time?

vi. Has Mr. Scivoletto established any liability on the part of 404 and if so, how?

vii. Should Attilio Lio be found personally liable for the actions of South Libra or any other corporate entity?

V. Analysis of the Issues

i. Was there a contract between Mr. Scivoletto and South Libra? What were the terms?

86The parties agree that the August Acknowledgement formed a contract as between them, with their rights crystallizing as of the date of the closing of the purchase of the Property by 404. Where they do not agree, is what the August Acknowledgement means and its relationship to the September Acknowledgement.

87The defendants submit that the August Acknowledgement, in referring to a “carried interest”, meant that Mr. Scivoletto was to receive 50% of 25% (i.e. 12.5%) of South Libra’s share of the net profit to be earned because of its 40% shareholding in the joint venture. In other words, the defendants submit that South Libra was offering a share of a share of its share in the net profit received when the Property was sold. They rely on the combination of the August Acknowledgement and its express reference to the Shareholder Agreement. The defendants submit that Mr. Scivoletto would have understood the August Acknowledgement as Mr. Lio intended, given that he knew or ought to have been aware of the contents of the shareholder agreement, and the shareholdings of South Libra, which would have informed what the 25% within the August Acknowledgement meant.

88I disagree. First, the words of the August Acknowledgement are clear and unambiguous. The August Acknowledgment sets out the consideration and the commitment by South Libra to Mr. Scivoletto that “upon the successful closing of the transaction, Jack Scivoletto will have a 50% carried interest of South Libra Development Inc.'s share, in consideration of his work and effort.” Those words do not state that Mr. Scivoletto will have a half interest in a share of a share of what South Libra would get. There is no reading of these words that would suggest that the “carried interest” means a half interest in 25% of a 40% shareholding. A plain reading is that Mr. Scivoletto’s interest is “carried” along with South Libra’s interest to the time of pay-out, and at that point his interest was to be 50% of “South Libra Development Inc.’s share”.

89This makes commercial sense. Mr. Lio and Mr. Scivoletto’s interests were aligned. Mr. Lio had an incentive to negotiate an optimal share of the profits for South Libra, and this could only benefit South Libra (and by extension, Mr. Lio) and Mr. Scivoletto, whose interest was being “carried” by South Libra.

90Further, I do not agree that “carried interest” meant a “share of a share of a share”, as set out in the September Acknowledgement.

91Mr. Caplan helpfully provided case law on the use of the term “carried interest” in other contract disputes, including in the context of oil and gas development projects. In Talon Exploitation Ltd. v. Canada (Minister of National Revenue – M.N.R.), [1965] 1 Ex. C.R. 376, at p. 379, Gibson J. wrote:

Then, sometimes, in respect to a given property there is an interest called a "carried interest". In such a case the party owning the "carried interest" puts up no money for drilling costs or other expenses for the development of the mine. If such well or mine becomes profitable after it gets into production, then the costs that the other participating interests incurred for drilling and other charges are recouped first out of the revenues, and then after that the "carried interest" shares with the participating interests in the net profit according to the respective proportions of their ownership.

92In Pine Pass Oil & Gas Ltd. et al v. Pacific Petroleums Ltd. et al (1968), 70 D.L.R. (2d) 196 (B.C.S.C.), Ruttan, J. observed that there is “no such thing as a “standard” carried interest agreement” but the rights of the parties will depend in every case on the nature of the bargain that they have reduced to writing: Pine Pass Oil, at p. 200.

93In Rankin v. Powadiuk, 2006 BCSC 435, 18 B.L.R. (4th) 311, the “carried interest” of a 3% investor was within the interest of a developer who had control of a ski development project. In that case, the carried interest meant that the plaintiff was entitled to a 3% share of the developer’s overall profits, rather than a 3% share of the entire project.

94It is commercially reasonable and flows from the plain meaning of the words of the August Acknowledgement that Mr. Scivoletto, not being a registered shareholder in 404, and not having any formal share of South Libra, had a “carried interest” in South Libra’s share. Like the investor in Talon who put up land but no money, Mr. Scivoletto found the majority investors who were critical to the purchase, but he did not put any of his own funds into the project. His interest was “carried” along with that of the minority investor, South Libra.

95Second, I decline to find that Mr. Scivoletto had knowledge of the shareholders’ agreement in August of 2007, such that it would somehow alter or inform the plain meaning of the August Acknowledgment, as urged by the defendants. There was no direct evidence of such knowledge. The shareholders’ agreement was not attached to the August Acknowledgement.

96Further, I do not draw any inference of knowledge of the terms of the August shareholders’ agreement by Mr. Scivoletto from the diary entries tendered by Mr. Lio. The nature and extent of any such knowledge is not apparent from these diary entries. The entries record dates, and individuals present, with little or no detail about the purpose of those meetings. Mr. Lio had no independent memory of details such as when the shareholders’ agreement was finalized, other than reading the date on which it was signed. The other shareholders did not testify. Mr. Lio had no memory of any of the meetings he recorded in his diary. The events happened 18 years prior to the trial, and without the benefit of contemporaneous records. Thus, I find that the diary entries are sparse evidence and do not support making findings of knowledge by Mr. Scivoletto of the shareholders’ agreement.

97I therefore decline to draw any inference from the diary entries that Mr. Scivoletto was aware of the details within the shareholders’ agreement prior to closing. Mr. Scivoletto was not a party to the shareholders’ agreement. His July 2007 request to receive paperwork granting him an equity position in 404 was unsuccessful. His paperwork about his interest was solely by way of the August Acknowledgement from Mr. Lio.

98Finally, on the issue of knowledge, the August Acknowledgement states that “It is clear and noted in the shareholders agreement of the joint-venture, that South Libra Developments Inc. owns a 25% interest of this Subject Property.” [Emphasis added.] This was not true. The shareholders agreement says nothing about South Libra Developments owning a “25% interest” in the “Subject Property”. I attach a copy of the shareholders’ agreement to these reasons as Appendix “A”.

99Thus, if Mr. Scivoletto had received a copy or information about the content of the shareholders’ agreement prior to the transaction closing on August 7, 2007, this would have revealed that Mr. Lio had misrepresented the nature of South Libra’s shareholdings in 404 to Mr. Scivoletto. It could not have changed the plain meaning of the commitment made to Mr. Scivoletto by South Libra, that he had a 50% carried interest in “South Libra Development Inc.'s share, in consideration of his work and effort”.

100If the shareholders’ agreement could have altered the meaning of the August Acknowledgement, it would have had to say something about the contract between Mr. Scivoletto and South Libra. It did not. The shareholders’ agreement solely determined the rights as between the named corporate investors. It was silent in relation to any rights enjoyed by Mr. Scivoletto.

101Further, as can be seen by the 2009 events, South Libra ultimately conveyed 20% of part of and 10% in another part, of its interest in 404’s holdings of the Property to the remaining investors in 2009, leaving South Libra with a 20%-30% interest in 404, and a right to a share of the profits.² In return South Libra received a return of capital. On a plain reading of the August Acknowledgement, Mr. Scivoletto’s interest was “carried” along with South Libra’s and that interest was a 50% interest in whatever South Libra was to receive when the profits were divided.

Sub-Issue: Was the September Acknowledgement a Contract or a part of the August Acknowledgement?

102Mr. Lio relies on the September Acknowledgement as a clarification of the contract that South Libra made with Mr. Scivoletto in the August Acknowledgement. He characterized the wording of the August Acknowledgement as a “mistake” which required clarification. I disagree. There was no need to clarify what was unambiguous. The September Acknowledgement purports to reveal that South Libra had a 40% interest in the project, while altering the plain language of the August commitment to provide that Mr. Scivoletto would have a 50% carried interest of 25% of South Libra’s 40% share. Mr. Lio’s evidence that it was a mistake is his subjective interpretation of what the “deal” was. That interpretation cannot be allowed to overwhelm or alter the words of the original agreement.

103Further, the wording in the September Acknowledgement is itself unclear. The sentence “South Libra owns 25% of the 40% share of the above referenced deal” is equivalent to saying that South Libra owns a 40% share of the deal, and South Libra owns 25% of its own 40%. This is a commercially absurd sentence. It is also not reflected in the shareholders’ agreement. Mr. Lio on behalf of South Libra merely subdivided his company’s share to reduce after the fact and unilaterally, the August commitment he made on behalf of South Libra to Mr. Scivoletto.

104I find that objectively, there was no need to use the September Acknowledgement to clarify anything. The September Acknowledgement was potentially, a different, poorer deal for Mr. Scivoletto, although it is not clearly worded as such, because of the faulty logic that I point out above. It was not and could not be a part of the contract made with Mr. Scivoletto by way of the August Acknowledgement. Mr. Scivoletto did not respond, but he did not have to. He had his commitment from Mr. Lio on behalf of South Libra, made as of August 3, 2007.

105The September Acknowledgement was some indication to Mr. Scivoletto that South Libra might not carry out the commitment it made in the August Acknowledgement. In his evidence, Mr. Scivoletto took this as an indication that South Libra had negotiated a more favourable share than he had been told about in August. However, he testified that he was content to receive half of South Libra’s 25% share of the net profits obtained after resale. Those were his subjective conclusions about the deal he had made with South Libra, after this new information was sent to him. However, he did not agree that the new terms of his agreement were that South Libra could subdivide its share of the profits into 25% and 75% shares and then pay Mr. Scivoletto a ½ of the 25%. Mr. Scivoletto did not agree amending or replacing the August Acknowledgement.

ii. Did South Libra breach the contract that it made with Mr. Scivoletto? If South Libra breached the contract with Mr. Scivoletto, what is Mr. Scivoletto’s remedy in damages?

106These two questions may be answered together. Based on my findings as to the effect of the agreement made between South Libra and Mr. Scivoletto, I find that the distribution of 75% of South Libra’s share to Nives Lio, Zodiac Landev, and South Libra breached the agreement formed between Mr. Scivoletto and South Libra. Mr. Scivoletto was entitled to half of the profits allocated to South Libra after the property sold in 2017. That amount is of $1,297,500, comprised of $847,500, or half of what South Libra paid to Zodiac Landev, plus half of what South Libra paid to Nives Lio, or $450,000.

107This amount can also be arrived at by taking South Libra’s total share of the profits, or $3,395,000.00, divided equally into two payments each to South Libra and Mr. Scivoletto. That means that $1,697,500, less the $400,000 that Mr. Scivoletto already received under protest, leaving a net amount owing to Mr. Scivoletto of $1,297,500.

108Mr. Scivoletto also claims a portion of the proceeds that South Libra received in 2009 when it gave up 20% of its share of 404, or in the case of the “Specified Lands” 10% interest related to that parcel. This payment was documented as a return of investment capital, and not a division of the profits on the transaction. As it turns out the respective shares in 404 did not translate into those proportions of the share of the profits, no doubt due to the provisions in the shareholders’ agreement which did include a formula for the division of the profits. To Mr. Lio’s chagrin, his more powerful partners insisted on a division that favoured them. However, returning to the words of the August Acknowledgement, the “carried interest” enjoyed by Mr. Scivoletto was for a 50% share of South Libra’s share, “at the time of closing”, and not a 50% share of any return of capital paid to South Libra in August of 2009.

109I am not satisfied on a balance of probabilities that the Mr. Scivoletto was entitled to receive any portion of the $750,000 paid to South Libra for a portion of its shareholdings in 404 in 2009 under the terms of the August Acknowledgement. I decline to find any damages are owed to Mr. Scivoletto in relation to the 2009 share exchange for capital to South Libra.

iii. Did South Libra breach its fiduciary duty to Mr. Scivoletto in directing the payment of funds available in breach of the contract between South Libra and Mr. Scivoletto?

110South Libra owed a fiduciary duty to Mr. Scivoletto to pay to him his “carried interest” on the sale of the Property as agreed. Mr. Scivoletto was entitled to a 50% share of the South Libra share of the profits.

111South Libra was a trustee over the funds due to Mr. Scivoletto. The August Acknowledgement created certainty of intent, of subject-matter and of object.

112South Libra contravened its agreement with Mr. Scivoletto by using its power as trustee over those funds to direct payment elsewhere and in breach of the terms of the August Acknowledgement. This was a breach of South Libra’s obligations as a trustee of Mr. Scivoletto’s interest. As the Court of Appeal wrote in Extreme Venture Partners, at para. 68, a fiduciary has an obligation to act in the “utmost good faith.” After Mr. Scivoletto complained, Mr. Lio’s answer to him was that he had received less than he had expected or hoped from the deal because of the greater power of the Equity Partners. However, this did not mean that South Libra could resile from the original agreement. It merely explains why Mr. Lio, as principal of South Libra, attempted to justify his breach of the agreement.

113I find that South Libra breached its fiduciary obligations by directing a portion of the funds owed to Mr. Scivoletto, to Mr. Lio’s wholly owned corporation, Zodiac Landev, and a portion to his spouse, Nives Lio.

iv. Were any of Zodiac Landev, South Libra, and Nives Lio unjustly enriched to the detriment of Mr. Scivoletto?

114Zodiac Landev and Nives Lio were unjustly enriched to the detriment of Mr. Scivoletto, because they received funds on closing that were due to Mr. Scivoletto.

115At trial, the defendants submitted that South Libra held 75% of its share of the profits in trust for itself, Nives Lio and Zodiac Landev. The defendants did not tender any trust documents, contracts or agreements which supported a right or entitlement to the portion of funds committed to Mr. Scivoletto by the August Acknowledgement.

116Nives Lio testified that she had no knowledge of the underlying events leading to the payment of funds to her on closing. She confirmed that at Mr. Lio’s request, she directed payment from a company she controlled, to Mr. Lio’s numbered company for the deposit on the Property.

117I find that the 2017 payment from South Libra to Nives Lio and to Zodiac Landev, a corporation controlled by Mr. Lio, constituted an enrichment to Nives Lio and Zodiac Landev, a corresponding detriment to Mr. Scivoletto and no juristic reason for the payments of his 50% share of the proceeds due to South Libra on distribution.

118I base this finding on the evidence that the payments were made to parties who were not at arms’ length from Mr. Lio. The amounts transferred from South Libra to Nives Lio and Zodiac Landev were 50% committed to Mr. Scivoletto under the terms of the August Acknowledgement. There was no documentation tendered among South Libra, Nives Lio or Zodiac Landev relative to any legal obligation to make payments to them from the profits of the sale of the Property. In submissions, counsel for the defendants submitted there was nothing improper about the distribution of these funds, characterizing it as perhaps tax splitting of profits among related parties. In essence, South Libra was distributing a share of the funds owed to Mr. Scivoletto among with related parties. There was no juristic reason for the payments.

119Based on my findings that this amounted to a breach of South Libra’s fiduciary duty to Mr. Scivoletto, and constituted unjust enrichment, I conclude that it is appropriate to order disgorgement of the amounts due and owing to Mr. Scivoletto, from Zodiac Landev and Nives Lio on a joint and several basis and to the extent of the amounts owed to the plaintiff, Mr. Scivoletto.

v. Is this action statute barred for being out of time?

120The defendants submit that the plaintiff’s action is out of time. They submit that for the purposes of the limitation’s period argument, the clock started to run when the Mr. Scivoletto received and disagreed with the September Acknowledgement. The defendants rely on Mr. Lio’s evidence that Mr. Scivoletto protested the description of his interest in a telephone call with Mr. Lio after he received the September Acknowledgement. They submit that this amounts to a repudiation of the September Acknowledgement, which means that the limitation period expired in September of 2009.

121Alternatively, the defendants rely on Ali v. O-Two Medical Technologies 2013 ONCA 733, 118 O.R. (3d) 321, and submit that the September Acknowledgement amounted to South Libra repudiating of the August Acknowledgement. They submit that Mr. Scivoletto ought to have accepted South Libra’s repudiation of the contract made in August and sued South Libra within two years of it delivering the September Acknowledgment.

122I disagree. The August Acknowledgment was a valid contract and involved a potentially valuable 50% share in the project between South Libra and Mr. Scivoletto. When Mr. Lio for South Libra, delivered the September Acknowledgement, he was unilaterally trying to repudiate the August Acknowledgment and improve South Libra’s share of the eventual profits. While I agree that South Libra was trying to replace the August Acknowledgement with a more advantageous proportional share of the eventual profits by way of the September Acknowledgement, I do not agree that Mr. Scivoletto had to either accept the replacement deal or sue at that time.

123Mr. Scivoletto had a choice. He could either sue for damages based on the repudiation by Mr. Lio on September 27, 2007, or he could seek to uphold the contract on the sale of the Property. If South Libra honoured its agreement as reflected in the terms of the August Acknowledgement, then Mr. Scivoletto would have been bound to accept that result. On the evidence, he chose to wait. He did not agree to the terms in the September Acknowledgement. All of the events show that he intended to rely on and did rely on the commitment he received from South Libra in the August Acknowledgement.

124In 2017, when the Property was sold and the profits were distributed, Mr. Scivoletto protested the amount that South Libra paid to him, in reliance on the September Acknowledgement. He asserted his rights under the August Acknowledgement and refused to sign a release. He initiated this action less than two years from South Libra’s breach of the contract in 2017.

125Mr. Scivoletto’s right to do so arises from the nature of anticipatory breach as discussed by the Ontario Court of Appeal in Ali, at paras. 22 to 27 as follows:

22An anticipatory breach of contract occurs when one party to the contract"by express language or conduct, or as a matter of implication from what he has said or done, repudiates his contractual obligations before they fall due": G.H.L. Fridman, The Law of Contract in Canada, 6th ed. (Toronto: Carswell, 2011), at p. 585.

23O-Two's change in Ali's commission structure on December 12, 2006 was a repudiation of its contractual obligations before it became obligated to pay his commissions in November 2007. By purporting to apply a new agreement, O-Two could hardly have made its intention to repudiate the prior commission agreement clearer.

24Once the counterparty shows its intention not to be bound by the contract, the innocent party has a choice. The innocent party may accept the breach and elect to sue immediately for damages -- in which case, the innocent party must "clearly and unequivocally" accept the repudiation to terminate the contract: Brown, at para. 45. Alternatively, the innocent party may choose to treat the contract as subsisting"continue to press for performance and bring the action only when the promised performance fails to materialize"; by choosing this option, however, the innocent party is also bound to accept performance if the repudiating party decides to carry out its obligations: S.M. Waddams, The Law of Contracts, 6th ed. (Toronto: Canada Law Book, 2010), at para. 621.

25This court recently applied this principle in Brown, where Cronk J.A. confirmed, at para. 42, that an anticipatory breach "does not, in itself, terminate or discharge a contract". Rather, Cronk J.A. noted that the innocent party may elect to treat the contract as continuing, as the Supreme Court stated in Guarantee Co. of North America v. Gordon Capital Corp., [1999] 3 S.C.R. 423, [1999] S.C.J. No. 60, at para. 40:

Contrary to rescission, which allows the rescinding party to treat the contract as if it were void ab initio, the effect of a repudiation depends on the election made by the non-repudiating party. If that party treats the contract as still being in full force and effect, the contract "remains in being for the future on both sides. Each (party) has a right to sue for damages for past or future breaches" (emphasis in original): Cheshire, Fifoot and Furmston's Law of Contract (12th ed. 1991), by M. P. Furmston, at p. 541.

See, also, Macnaughton v. Stone, [1949] O.R. 853, [1949] O.J. No. 494 (H.C.J.), at pp. 858-59 O.R.

26In this case, Ali, although he could have elected to do so, did not accept O-Two's repudiation of the contract and immediately sue for damages. Rather, he continued to press for payment in full. Because he did not accept the repudiation, he did not know he would suffer "damage" within the meaning of s. 5(1)(a)(i) until the payment of his commissions fell due on November 23, 2007 and O-Two did not make full payment.

27In conclusion, I would reject both of O-Two's arguments for why Ali suffered "damage" within the meaning of s. 5(1) (a)(i) more than two years prior to initiating his claim. Ali did not "discover" his claim for purposes of s. 5(1) (a) until November 23, 2007, because that is the day on which he first knew damage had occurred. Accordingly, the two-year limitation period under s. 4 of the Limitations Act for Ali's claim would not expire until November 23, 2009. His claim issued on September 16, 2009 was in time.

126This approach has been consistently applied in circumstances of anticipatory breach of contract. As Vermette, J. summarized it in Adusei v. Ravindra, 2024 ONSC 432, 51 B.L.R. (6th) 1, at para. 82:

A repudiatory breach does not, in itself, terminate the contract. If the non-repudiating or innocent party does not accept the repudiation, then the repudiation has no legal effect. There is no such thing as unilateral repudiation. Accordingly, the consequences of a repudiation depend on the election made by the innocent party. If the innocent party accepts the repudiation, the contract is terminated. Alternatively, the innocent party may treat the contract as subsisting, continue to press for performance and bring an action only when the promised performance fails to materialize. By choosing this latter option, however, the innocent party is bound to accept performance if the repudiating party decides to carry out its obligations. See Ching v. Pier 27 Toronto Inc., 2021 ONCA 551 at paras. 32-33 (“Ching”) and Ali v. O-Two Medical Technologies Inc., 2013 ONCA 733 at para. 24 (“Ali”).

127Mr. Scivoletto was entitled to await the promised performance on the sale of the Property. He did not accept South Libra’s repudiation by delivery of the September Acknowledgement. He “discovered” the breach by virtue of Mr. Lio’s delivery of the $400,000 cheque and release on December 14, 2017. He sued in January of 2019. Therefore, I find that his action was brought within the applicable two-year limitation period: Limitations Act, S.O. 2002, c. 24, Sched. B s. 4. and s. 5.

vi. Has Mr. Scivoletto established any liability on the part of 404 and if so, in what respect?

128I am not satisfied that there is evidence of any wrongdoing on the part of 404. 404 held title to the Property. On closing in 2017, 404 gave up title to the Property. In accordance with the agreements of the shareholders, and the direction from Mr. Lio in his capacity as an officer and director of South Libra, 404 distributed the funds to 404 Holdings and South Libra. Mr. Lio was a minority holder in 404, with the terms of the ultimate distribution of profits being set by the majority equity holders. Those negotiations did not involve Mr. Scivoletto.

129Mr. Scivoletto submits that 404 improperly released the funds on closing in breach of his agreement with South Libra, with the knowledge of Mr. Lio, in his capacity as 404’s President. However, the power to do so did not arise from Mr. Lio’s role as an officer/director of 404, but from his role as the sole shareholder in South Libra, and his rights within the 2009 shareholders’ agreement and share purchase agreement. It was in that capacity that Mr. Lio, in directing payment of South Libra’s interest, was able to wrongfully apportion the proceeds and reduce Mr. Scivoletto’s entitlement under the August Acknowledgment.

130South Libra owed a fiduciary duty to Mr. Scivoletto. 404 owed no such duties to him, nor did that entity have any contract with Mr. Scivoletto. Mr. Lio’s role in 404 was not required to facilitate the wrongful act.

131I decline to make findings of liability against 404.

vii. Should Attilio Lio be found personally liable for the actions of South Libra or any other corporate entity?

132The agreement at the heart of this dispute is the August Acknowledgement. That document created obligations on the part of South Libra, a corporation wholly controlled by its sole shareholder, Attilio Lio. In that capacity, Mr. Lio directed South Libra to divert funds that were rightfully owed to the plaintiff under the terms of their agreement. Mr. Lio used the corporate vehicle of South Libra, and his role in the transaction, to direct 75% of the funds on closing to another corporation he controlled, Zodiac Landev, and to his spouse Nives Lio.

133Mr. Lio used his corporations to breach his agreement with Mr. Scivoletto, to move funds rightfully owed to Mr. Scivoletto to his spouse and another of his corporations, and in doing so he preferred his financial interests over his commitment made to Mr. Scivoletto. I conclude that he should be found personally liable, jointly and severally, for the breach of contract, and breach of fiduciary duty carried out at his direction, by South Libra: See Air Canada v. M & L Travel Ltd., [1993] 3 S.C.R. 787, at p. 203.

VI. Conclusion

134For the reasons above, I grant judgment in favour of the plaintiff as against the defendants Attilio Lio, South Libra, Zodiac Landev, and Nives Lio, as set out above, in the amount of $1,297,500 plus prejudgment interest. I dismiss the claim against 404.

135If the parties are unable to agree as to costs, they shall exchange brief costs submissions (maximum 4 pages) on a timetable to be agreed upon by them. They shall deliver their submissions no later than April 1, 2026.

Leiper, J.

Released: March 20, 2026

CITATION: Scivoletto v. Lio, 2026 ONSC 700

Footnotes

1. 1Mr. Caplan acted for all of the defendants except for 404. Mr. Peter Smiley, counsel for 404 attended on the first day of trial. He was excused as his client did not request that he participate in the trial.
2. 2As noted under the 2009 Share Purchase agreement, the “Specified Lands” were to be dealt with on a 30%-70% basis.