Duca Community Credit Union Ltd. v. Giovannoli et al., [2000] O.T.C. 229 (SC)

• Judge: Mesbur, J.
• Court: Superior Court of Justice of Ontario (Canada)
• Case Date: December 15, 2000
• Jurisdiction: Ontario
• Citations: [2000] O.T.C. 229 (SC)

Duca Com. Credit v. Giovannoli, [2000] O.T.C. 229 (SC)

MLB headnote and full text

Temp. Cite: [2000] O.T.C. TBEd. AP.036

Duca Community Credit Union Limited (plaintiff) v. Benito Giovannoli, Sam Stabile, Sartan Manufacturing Limited, Master Tube Manufacturing (1993) Ltd., 580129 Ontario Limited, Tony Valenti, Mario Donatelli, Giovannoli Investments Ltd., Julsta Investments Ltd. and Clifford Hemming (defendants)

(96-CU-106688)

Indexed As: Duca Community Credit Union Ltd. v. Giovannoli et al.

Court of Ontario

Superior Court of Justice

Mesbur, J.

April 10 and December 15, 2000.

Summary:

Duca Community Credit Union Limited loaned Benito Giovannoli $280,000.00 in 1989. Giovannoli defaulted on the loans. Duca proceeded against its security (two second mortgages on land) but obtained nothing. It sued for payment on the mortgages and obtained default judgments. Duca petitioned Giovannoli into bankruptcy to try to recover on Giovannoli's shares in Sartan Manufacturing Ltd., what Duca believed was a profitable muffler business. Through a series of transactions involving Giovannoli's lawyer (the defendant Stabile), two of Stabile's companies (the defendants Julsta Investments Ltd. and 580129 Ontario Limited, the numbered company) and the other defendants, the assets of Sartan became subject to further security, were seized in satisfaction of that debt and were sold to the defendant Master Tube Manufacturing (1993) Ltd. Duca sued the defendants alleging that in putting together these transactions all the defendants entered into a conspiracy: (a) to cause all of the assets of Sartan to be transferred to Master Tube, and (b) to conceal or transfer substantially all of the assets of Giovannoli in fraud on the creditors of Sartan and Giovannoli, including Duca.

The Ontario Superior Court dismissed the action. The essential elements of an "injurious purpose" conspiracy or "unlawful means" conspiracy were not made out. The court rejected the defendants' argument that the plaintiff failed to mitigate its loss on the basis that the trustee in bankruptcy delayed taking action. The defendants sought solicitor/client costs throughout where Duca's action was dismissed in its entirety and given Duca's unsuccessful allegations of fraud against the defendants. Duca argued, inter alia, that Stabile's conduct was sufficiently reprehensible for the court to deny him costs and make him responsible for the costs of the other defendants and Duca's costs. Duca also argued that Giovannoli's conduct was sufficiently reprehensible to make him responsible for Duca's costs. The court ordered Duca to pay Stabile's, Sartan's and the numbered company's party and party costs, Hemming's solicitor/client costs and Giovannoli's and Giovannoli's Investment Limited's solicitor/client costs to the date they were no longer represented by counsel.

Damages - Topic 1017

Mitigation - In tort - Reduction due to plaintiff's conduct or provocation - See paragraphs 72 to 75.

Practice - Topic 7452.1

Costs - Solicitor and client costs - Entitlement to solicitor and client costs - Successful party - Exceptions - Conduct - See paragraphs 89 and 91.

Practice - Topic 7470

Costs - Solicitor and client costs - Entitlement to solicitor and client costs - Unproved allegation of fraud - See paragraphs 82 to 91.

Torts - Topic 5703

Conspiracy - General - Elements - See paragraphs 50 to 58 and 61.

Torts - Topic 5706

Conspiracy - General - What constitutes - See paragraphs 50 to 66.

Cases Noticed:

671122 Ontario Ltd. v. Sagaz Industries Canada Inc. et al. (1998), 67 O.T.C. 22; 40 O.R.(3d) 229 (Gen. Div.), refd to. [para. 5].

Reti et al. v. Fox et al. (1976), 2 C.P.C. 62 (Ont. C.A.), refd to. [para. 37].

Lonrho Ltd. v. Shell Petroleum Co. (No. 2), [1982] A.C. 173 (H.L.), refd to. [para. 49].

Canada Cement LaFarge Ltd. et al. v. British Columbia Lightweight Aggregate Ltd. et al., [1983] 1 S.C.R. 452; 47 N.R. 191; 145 D.L.R.(3d) 385, refd to. [para. 49].

Belsat Video Marketing Inc. v. Astral Communications Inc. et al. (1998), 54 O.T.C. 84; 81 C.P.R.(3d) 1 (Gen. Div.), affd. (1999), 118 O.A.C. 105; 86 C.P.R.(3d) 413 (C.A.), refd to. [para. 52].

Crofter Hand Woven Harris Tweed Co. v. Veitch, [1942] A.C. 435 (H.L.), refd to. [para. 53].

McKernan v. Fraser (1931), 46 C.L.R. 343 (Aust.), refd to. [para. 53].

671122 Ontario Ltd. v. Sagaz Industries Canada Inc. (1998), 67 O.T.C. 22; 40 O.R.(3d) 229 (Gen. Div.), affd. (2000), 128 O.A.C. 46 (C.A.), refd to. [para. 63].

Levy-Russell Ltd. v. Tecmotiv Inc. (1994), 13 B.L.R.(2d) 1; 54 C.P.R.(3d) 161 (Ont. Gen. Div.), refd to. [para. 64].

Toronto-Dominion Bank v. Leigh Instruments Ltd. (1998), 78 O.T.C. 134 (Gen. Div.), refd to. [para. 87].

Foulis v. Robinson (1978), 92 D.L.R.(3d) 134 (Ont. C.A.), refd to. [para. 7].

Murano et al. v. Bank of Montreal et al. (1998), 111 O.A.C. 242; 41 O.R.(3d) 222 (C.A.), refd to. [para. 87].

Bargman v. Rooney et al. (1998), 83 O.T.C. 345 (Gen. Div.), refd to. [para. 87].

Sun Life Assurance Co. of Canada v. 401700 Ontario Ltd. (1991), 3 O.R.(3d) 684 (Gen. Div.), refd to. [para. 88].

Twaits v. Monk (2000), 132 O.A.C. 180 (C.A.) refd to. [para. 88].

131843 Canada Inc. v. Double "R" (Toronto) Ltd., [1992] O.J. No. 3879, refd to. [para. 88].

Fong et al. v. Chan et al. (1999), 128 O.A.C. 2 (C.A.), refd to. [para. 90].

Fellowes, McNeil v. Kansa General International Insurance Co. et al. (1997), 49 O.T.C. 339; 37 O.R.(3d) 464 (Gen. Div.), refd to. [para. 91].

Skidmore et al. v. Blackmore (1995), 55 B.C.A.C. 191; 90 W.A.C. 191; 2 B.C.L.R.(3d) 201; 122 D.L.R.(4th) 330 (C.A.), refd to. [para. 91].

Authors and Works Noticed:

Fleming, John G., The Law of Torts, pp. 706-708 [para. 53].

Salmond on Torts (17th Ed. 1977), pp. 377 [para. 51]; 379 [para. 55].

Counsel:

H. Swartz, for the plaintiff;

W. Andrews, Q.C., for Sam Stabile, Sartan Manufacturing Limited and 580129 Ontario Limited;

C.M. Bush, for Clifford Hemming;

Benito Giovannoli, in person.

This action was heard on February 21, 22, 23, 24, 25, 28, 29, March 1, 2 and 3, 2000, before Mesbur, J., of the Ontario Superior Court, who delivered the following decision on April 10 and December 15, 2000.

Please note: The following judgment has not been edited.