2020 QCCQ 6744, 2020 QCCQ 6744

Papadopoulos c. Martino 2020 QCCQ 6744 COURT OF QUÉBEC CANADA PROVINCE OF QUÉBEC DISTRICT OF MONTREAL LOCALITY OF MONTREAL Civil Division No: 500-22-234043-167 DATE: October 28, 2020 ______________________________________________________________________ PRESIDED BY THE HONOURABLE DAVID L. CAMERON, J.C.Q. ______________________________________________________________________ DIMITRA PAPADOPOULOS Plaintiff v.

ME ANTHONY MARTINO Defendant/Plaintiff in warranty and STELLA BAILAKIS Defendant/Defendant in warranty and FONDS D’ASSURANCE RESPONSABILITÉ DU BARREAU Impleaded Party ______________________________________________________________________ JUDGMENT ______________________________________________________________________ I.

PARTIES AND PROCEEDINGS [ 1 ] The Plaintiff, Dimitra Papadopoulos, sues the Defendants, Maître Anthony Martino, a member of the Barreau du Québec and Stella Bailakis, solidarily, for the reimbursement of the sum of $38,333 she alleges was provided by her by means of three bank drafts that were deposited into Maître Martino’s trust account pursuant to an agreement ( P- 1 ) entered into with Ms. Bailakis in September 2013. [ 2 ] The agreement ( P-1 ) provided for the co-ownership by the two of a specific immovable property to be purchased and then resold for a substantial profit.

The Plaintiff would acquire a one-third interest in the property by providing one-third of the purchase price of $115,000 that is to say, the sum of $38,333. The Plaintiff would then receive one third of the proceeds of the sale of the property which was to be completed no later than October 31, 2013. [ 3 ] After the Plaintiff made her financial contribution as she had agreed to do so, nothing else was accomplished.

She asked Maître Martino to return the amount allegedly given, which request was denied. [ 4 ] She alleges that the person who informed her of the proposed investment was a collaborator of Maître Martino, a certain Andrea Cortellazzi, that the agreement was concluded in Maître Martino’s office and that the text of the agreement ( P-1 ) was reviewed by Maître Martino and signed by his employee, a paralegal, as witness. [ 5 ] She sues Maître Martino for his refusal to reimburse the sum to her, and claims the amount from Ms.

Bailakis as well, alleging that the latter wrongfully received the funds from Maître Martino. [ 6 ] Finally, she adds a claim in damages for trouble and inconvenience in the amount of $5,000. [ 7 ] The style of cause includes the mention of the Fonds d’assurance responsabilité du Barreau as an Impleaded party, but there are no conclusions in the Demande introductive d’instance Amendée pertaining to this third party.

An act of discontinuance of the action against the Impleaded party dated February 19, 2020 was produced just prior to the beginning of the trial. [ 8 ] Maître Martino alleges in his defense that he never received any funds from the Plaintiff and that he never had any dealings with her. He denies there being any lawyer-client relation between himself and the Plaintiff. [ 9 ] He states having received the sum of $38,333 from Ms.

Bailakis in the form of three bank drafts, that he deposited the funds to his trust account and that he reimbursed this amount to her according to her instructions, as evidenced in two receipts ( D-1 ). [ 10 ] He asserts that the Plaintiff has provided no proof that she was the purchaser of the drafts in question and that she has herself to blame, if in fact she gave funds to Ms. Bailakis or to Mr. Cortellazzi without taking any precautions. [ 11 ] He also raised prescription, by way of an application to dismiss based on

article 168 of the Code of Civil Procedure (C.C.P.). The application was dismissed [1] on the principle that, assuming the facts as alleged to be true, the action was instituted within the

prescriptive period of three years. Prescription is not raised in the “Grounds of Defense” in the original and modified versions. [ 12 ] Maître Martino seeks, by way of an action in warranty against Stella Bailakis, indemnification for any condemnation that could be pronounced against him in the principal action. He asserts that Ms. Bailakis is solely responsible to reimburse the Plaintiff if the latter proves that she was the source of the funds. [ 13 ] Stella Bailakis failed to respond to either the principal action or the action in warranty and the case proceeded by default against her. II.

ISSUES [ 14 ] The Court must address the following questions: 1. Is the Defendant Stella Bailakis responsible to reimburse to the Plaintiff the sum of $ 38,333.00? 2. Is the Defendant Maître Anthony Martino responsible to pay to the Plaintff the same amount? 3. In the event that they are both responsible, is the liability of the Defendants solidary, or, alternatively, in solidum, and, if so, as between the Defendants, is Stella Bailakis responsible to indemnify Maître Martino for his liability toward the Plaintiff? 4. Is the Plaintiff responsible for her own prejudice and, if so, to what degree? 5.

Is the Plaintiff entitled to damages for trouble and inconvenience? III. FACTUAL NARRATIVE 1. The facts up to the signing of the agreement Idea comes from mother [ 15 ] Dimitra Papadopoulos works as a bus driver for the public transit service in Montreal. In September 2013, her mother, Nancy Papadopoulos, learned, from someone at a Greek association in which she was active, about an opportunity involving an immovable property. [ 16 ] A phone number was given to the mother. The Plaintiff had just recently married and had the idea to purchase a property to live in.

When she called the number, it was Andrea Cortellazzi who answered. The proposal made by Cortellazzi [ 17 ] The business opportunity consisted in purchasing a property, a Park-Ex duplex worth $320,000 for the amount of the unpaid taxes, $115,000 and reselling it quickly. Cortellazzi described himself to her as an “associate” of Maître Martino. It would “go through the legal firm”. Each co-owner, of which there would be three, would contribute $38,333. He told her she should come up with the funds quickly. Loans from mother and a friend [ 18 ] She spoke to her mother.

The two went to the bank branches where the mother had accounts. Nancy Papadopoulos purchased two drafts on funds from two bank accounts on September 25: one for $15,000 from Royal Bank of Canada and the other for $10,333 from Bank of Montreal. Dimitra Papadopoulos testifies that her mother remitted the drafts to her as a loan: it was clear in their arrangement that the amounts would be repaid. [ 19 ] She testifies that a further amount of $13,000 was provided to her a few days later as a loan by a friend, Visiliki Kapantais, by way of a draft on The Toronto-Dominion Bank.

The draft is dated September 26, 2013 ( P-2 en liasse ). [ 20 ] Both of these lenders were expecting to be reimbursed the funds lent within approximately one month. The preparation and signing of the Agreement [ 21 ] Later on September 25, 2013, she met with Andrea Cortellazzi at on office at 390 Henri-Bourrassa Ouest. [ 22 ] The Plaintiff states that, when you walk into the building on Henri-Bourassa, there is a plaque with names on it. She saw Defendant’s name on top and several other lawyers’ names, and Andrea Cortellazzi’s name on the bottom without any title.

To her, this confirmed that there was an association between them. [ 23 ] On the floor where the offices are located, she walked into the office and Mr. Cortellazzi’s office was on the left. Plaintiff assumed that the other doors were the offices of other lawyers on the same floor. [ 24 ] Mr. Cortellazzi presented to her a document for her to sign.

She remitted the two bank drafts totalling $25,333 to Cortellazzi at the time of signing. [ 25 ] She later obtained the third draft from Visiliki Kapantais and remitted it to Cortellazzi as well. [ 26 ] She learned from Cortellazzi that they were still looking for a third person. She later gave his number to a person who was a friend of a friend, Luis Onofre, who did in fact make an investment equal to hers in the project.

[ 27 ] The document, ( P-1 ) dated September 25, 2013, entitled ACKNOWLEDGEMENT OF CO-OWNERSHIP AGREEMENT, bears the signatures of Stella Bailakis referred to as the “Buyer” and Dimitra Papadopoulos the “Co-Buyer” . It is also signed by two witnesses, one of whom is Ornella Tapia, who affixed her seal as a Commissioner of Oaths to the document next to her signature. Ms. Tapia was an employee of Maître Martino who also worked for Cortellazzi. [ 28 ] The text reads: 1.

Stella Bailaikis and Dimitra Papadopoulos hereby agree to jointly acquire the property located at [...], Montreal, Quebec, [...] for the total amount of $115,000.00 . Dimitra Papadopoulos will pay the total amount of $38,333.00 which equals to one-third portion of the purchase price by a certified cheque payable to Me Anthony Martino In Trust; 2. The parties shall own the said property jointly until they proceed to sell it, no later than October 31, 2013 ; 3.

From the proceeds of the said sale, the parties hereby acknowledge that at the time of the closing of the sale of the property, Dimitra Papadopoulos shall receive one-third of the proceeds. IN WITNESS WHEREOF , the parties have signed and executed the present Agreement before each other, at the time and place hereinabove mentioned. [ 29 ] Maître Martino was involved in the drafting of the document, but not in its execution.

He was not present at the meeting at which the document was presented for signature, but he testified that he had been shown a draft of the document by Cortellazzi who asked for advice on it and told him that he wanted him (Martino) to be the depositary of the funds. He testified that he took a quick look at it and made comments on the format and corrected typos.

He states his involvement in a letter to the Syndique adjointe of the Barreau du Québec ( D-2 ) dated June 8, 2014 (he corrected this date to July 8 in a handwritten annotation on his copy): Monsieur Cortellazzi a préparé l’entente, que nous avons révisé et finalisé [sic] le 25 septembre 2013, le tout tel qu’il appert d’une copie de la dite entente dûment annexée à la présente. […] Vu que notre étude n’était plus impliquée dans le projet, nous n’avons pas rendu d’autres services professionnels dans cette affaire et nous ignorons le dénouement dudit projet. [ 30 ] His reply ( D-6) to the letter of demand, ( P-5 ) is similar, an admission that he was involved in more than formatting and correction of typos. 4.

The transfer of possession, deposit in trust of the drafts, disposal of funds [ 31 ] Maître Martino testified and produced accounting documents pertaining to the sequence of events which we summarize below. [ 32 ] On September 25, 2013, the same day that he met with Cortellazzi in connection with the preparation of the agreement ( P-1 ), Stella Bailakis met with him, showed him the signed version of the agreement and remitted to him the two bank drafts totalling $25,333. [ 33 ] Maître Martino’s trust account statement issued by the BMO for the relevant period ( D-11 en liasse ) shows an ABM deposit of $25,333 on September 25, 2013. [ 34 ] A manuscript leger produced by Maître Martino ( D-11 en liasse ) styled “Carte-client” bearing the name “Stella Bailakis re Papadopoulos” shows, for 25 September 2013, the item “Deposit of Money Orders from Stella re Dimitra” next to the amounts of $10,333 and $15,000 in the “credits” column. [ 35 ] The following inscriptions on the ledger are debits that are related to these credits: firstly, on 25 September “Money refunded to Stella-Receipt 25 Sept. 13” $21,000 and “Payment of AM legal fees outstanding” $4,000.

The remaining balance from the two deposits, a small amount of $333 is reimbursed to Stella Bailakis by way of a cheque dated and entered September 26, 2013: “Trust cheque no 491 to Stella”. [ 36 ] As to this first part of the receipt and disposal of funds, Maître Martino testifies that during the meeting when he was presented with the first two drafts and deposited them to his trust account he asked Ms. Bailakis about the third investor. She spoke of the Plaintiff firstly as her best friend, then as her cousin, then, that she barely knew her.

He states that he was suspicious, but that she was a friend and that he had no reason to doubt her. [ 37 ] He further testifies that, a few hours later that same day, Ms. Bailakis returned to the office, told him that she had decided to opt out, and asked for the return of the amount deposited earlier that day. He “gave her back her money” considering the agreement to now be “null and void”. [ 38 ] She owed him arrears of legal fees for services he had rendered to her in the past.

He insisted on settling the unpaid fees, hence the entry of a debit of $4,000. [ 39 ] He prepared, on letterhead of the firm Martino Perluzzo, in letter form, a receipt which Stella Bailakis signed in the presence of Ornella Tapia, who affixed her seal as Commissioner of Oaths next to her signature as “Witness”.

The document ( D-1 ), dated September 25, 2013, addressed to Stella Bailakis reads: I, the undersigned STELLA BAILAKIS , domiciled and residing at 783 Ogilvy, Apt. 6, Montreal, Quebec, hereby acknowledge receiving from Me Anthony Martino the sum of TWENTY-ONE THOUSAND THREE HUNDRED AND THIRTY-TREE DOLLARS ($ 21,333.00) on this date.

This sum represents the amount of $ 25,333.00 lent to me by Dimitra Papadopoulos pursuant to my Acknowledgement of Co- Ownership Agreement dated September 25, 2013, less the payment of all outstanding legal fees owned to Me Anthony Martino, and/or Martino Pelluzo, in virtue of their statements dated December 5, 2012, February 13, 2013, March 20, 2013 and September 18, 2013 respectively regarding my files AM/5979 (Curateur public) and AM/5975-1 (Custody).

I expressly declare to have read and fully understand the said Acknowledgement of Co-Ownership Agreement and agree to be bound by all the terms and conditions thereof, to the express exoneration and release of Me Anthony Martino. [ 40 ] Apart from the receipt, there is no documentary evidence of the payment to Bailakis of the amount of $21,000. A note in the CARTE-CLIENT ledger reads “Money refunded from personal accts”.

Me Martino testified that the money came not from an account, but from cash he had on hand kept in his safe located in the office. [ 41 ] He considered that this cash payment caused a corresponding amount held in trust to become his money. He used it for his own purposes, as is apparent from the inscriptions on the CARTE-CLIENT in the debit column on October 21, December 19 and December 23, 2013, bringing the balance down to zero. [ 42 ] The second part of the narrative of the treatment of trust funds begins the next day, September 26, when, according to his testimony, Ms.

Bailakis came again to his office, bringing the draft for $13,000 telling him that she now wanted to go ahead with the transaction. He took the draft and deposited it to his trust account. [ 43 ] The bank statement shows an ABM deposit of $15,000 on September 27. The CARTE-CLEINT ledger shows, in the credit column, $13,000 next to the item entry “Money order from Stella re Dimitra”. There is a further entry dated September 27, of a credit of $2,000: the item entry reads “Amount from Andrea Cortellazzi”.

One can surmise that the ABM deposit was composed of these the two amounts, namely the draft of $13,000 and the cash amount of $2,000. [ 44 ] The next day, September 27, Bailakis returned, having again changed her mind, and, Maître Martino states that he again gave her cash that he had on hand, equivalent to the amount she had just transferred to him the previous day. [ 45 ] The receipt [2] , this time, is a manuscript document dated September 27, 2013, signed by Stella Bailakis and witnessed by an unnamed signatory. It reads: RECEIVED from Me.

Anthony MARTINO the amount of THIRTEEN THOUSANDS dollars in final settlement of the DIMITRA PAPADOPOULOS file, in accordance with my ACKNOWLEDGEMENT OF CO-OWNERSHIP AGREEMENT dated sept. 25, 2013. AND I HAVE SIGNED. [ 46 ] Again, he considered this payment to mean that the corresponding trust-account amount became his property, and, together with the amount of $21,000 used the funds for his own purposes. [ 47 ] Thus, a total of $38,333 in drafts was remitted to Maître Martino, in connection with the agreement ( P-1 ). He deposited these funds into his trust account.

He quickly remitted amounts totaling $34,000 in cash to Ms. Bailakis, and paid $333 to her from the trust account in the circumstances he related that are summarised above. He then used the remaining amounts in trust to settle outstanding fees owed by Ms. Bailakis, and for his own benefit. [ 48 ] At the time, neither the Defendants nor Andrea Cortellazzi informed the Plaintiff about what had happened with her funds. 5.

Corporate organisation and fees for services rendered [ 49 ] The Plaintiff testified that Andrea Cortellazzi told her in September 2013 to open a company into which she should deposit the proceeds of the venture. He told her his would be done through “the lawyer, the firm”. In fact, a Déclaration d’immatriculation d’une personne physique exploitant une entreprise individuelle was filed electronically on October 11, 2013. The document shows that the filing was done by Martino, Anthony using the Numéro d’entreprise du Québec (NEQ) 2264004187. It is a declaration of the name Dimitra Papadopoulos.

Under “Autres noms utilisés au Québec” is added “Placements Padadopoulos” and the English version “Papadopoulos Holdings”. [ 50 ] The residential address of the Plaintiff is indicated. Under « 1er secteur d’activité” is indicated CAE 7511 « Exploitant de bâtiments résidentiels et de logements ». [ 51 ] A Déclaration de mise à jour courante is made in the same manner on October 15, 2013. It adds no new information ( P-6 ). [ 52 ] The Plaintiff was charged a fee of $121.76 plus taxes for a total of $140.

The bill she received, on the letter paper of the firm Martino Perluzzo refers to “Filing of declaration of immatriculation. The inscription at the bottom of the invoice reads: “KINDLY MAKE YOUR CHEQUE TO THE ORDER OF “MAÎTRE ANTHODY MARTINO. PAYABLE ON RECEIPT. THANK YOU”. [ 53 ] The amount of $140 on the bill of is circled with a manuscript inscription “Paid cash”. [ 54 ] Maître Martino denies having any knowledge of this matter.

In his testimony he surmises that his secretary, who also worked for Cortellazzi, might have used his computer to do the electronic filing. [ 55 ] The Plaintiff proceeded to radiate the registration on August 28 2014. 6. The end of the matter [ 56 ] The Plaintiff received no news. The October 31 deadline came and went. She asked for updates. She received various explanations such as they were “looking for notaries”. In December she suspected something was amiss when Cortellazzi asked her to

pay the property taxes. She refused, as she was not yet the owner. [ 57 ] She began making attempts to contact Maître Martino, leaving voice messages in the early part of 2014. [ 58 ] She received a call from Ms. Bailakis who asked her if she had any news. She interprets this as an attempt by Ms. Bailakis to appear as a victim. [ 59 ] She learned from Luis Onofre that ‘they” had changed the name to “Genglu”. She tried to “steal a meeting”, going with Mr. Onofre to Maître Martino’s office.

They were met by Cortellazzi on one occasion, but had no access to Maître Martino and had no success in speaking to him. [ 60 ] Maître Martino testified that he was aware that she was in his reception area one day but that he could not meet with her. [ 61 ] The Plaintiff sought redress with the Fonds d’indemnisation du Barreau du Québec and filed a complaint with the Syndic of the Barreau du Québec . [ 62 ] When these attempts proved to be unsuccessful she instructed counsel to send a letter of demand ( P-4 ) on September 7, 2016. Maître Martino replied on September 13, 2016. ( D-6) 7.

The steps taken with the Quebec Bar and its agencies Claim from the indemnity fund [ 63 ] The Plaintiff applied to the Indemnity Fund of the Barreau du Québec on February 20, 2015, claiming the indemnity of $ 38,333.00 plus interest incurred by her on the loans, stating her claim in a very

summary way ( D-5 ). [ 64 ] The claim was refused by decision dated June 22, 2016 ( P-3 ), of the Committee that acts in such matters, known by the acronym “CFIBQ”. [ 65 ] The CFIBQ found that the role played by Maître Martino in his disposition of funds in the trust account did not constitute a lawyer-client relationship.

In support of this view, the CFIBQ referred in its decision to the matter of Kaufman Laramée LLP where the Court of Appeal upheld a denial of coverage under the professional liability insurance programme of the Fonds d’assurances du Barreau du Québec because, according to the facts of that case, the conduct of a lawyer with respect to money held in trust did not result from professional services, though it may have constituted a fault: [14] Dans le dossier des mises en cause Abraham Werzcberger, Gmach Beth Joel et Spitzer International Development LLC, aucune de ces parties n'allègue avoir bénéficié de services professionnels.

Comme le juge de première instance le souligne, elles déclarent plutôt s'être prévalues d'une occasion d'affaires présentée par Perras. [15] Essentiellement, elles reprochent à la

partie défenderesse de leur avoir laissé croire que Perras était un associé du cabinet. Il s'agit peut-être d'une faute civile, mais elle ne peut en aucun cas être qualifiée de faute professionnelle. Cette faute n'est aucunement liée à un service professionnel, c'est-à-dire à un service rendu « dans le seul exercice de la profession d'avocat », condition sine qua non à l'applicabilité de la couverture d'assurance responsabilité professionnelle obligatoire du Barreau du Québec [3] . [ 66 ] Guided by its analysis of the matter, the CFIBQ found that the criterion of

article 89.1

c) of the Code des professions did not apply, the funds not having been remitted to the lawyer “dans l’exercice de sa profession”. Deontology [ 67 ] The Plaintiff had also filed a complaint with the Syndic du Barreau seeking a deontological remedy.

The conclusion of the Assistant Syndic, Me Marie-Claude Thibault, was to not file a disciplinary complaint. [ 68 ] After her inquiry, Me Thibault found that the documents she had reviewed and information provided by Maître Martino supported the view that he did not commit professional misconduct, as opposed to professional fault . [ 69 ] Making the distinction between “malpractice and professional misconduct on a lawyer’s part” she came to the conclusion [4] that: In the circumstances of this case, we cannot conclude that, in failing to contact you before disbursing the money that was given to him in the form of bank drafts, Me Martino acted in bad faith or demonstrated gross negligence, clear incompetence or unforgivable carelessness. [ 70 ] In formulating this opinion [5] , she nevertheless commented on Me Martineau’s omission to contact the Plaintiff before handing over the money to Stella Bailakis: However, since the handing over of the three bank drafts pertained to the agreement dated September 25, 2013, that was concluded between you and Ms Bailakis, it would have been better if Me Martino had contacted you before returning the sums of money to Ms Bailakis, given the information he had at the time. (Our underlining added for emphasis)

[ 71 ] This equivalent of an obiter dictum and the authority cited in the Assistant Syndic’s letter will be mentioned in our analysis below. [ 72 ] The decision is also based on the idea that Me Martino was “unaware” that the bank drafts came from the Plaintiff. The Court, having had the benefit of hearing the evidence in a trial, with all of the guarantees that process provides, comes to a different factual conclusion. 8.

Other accessory matters and claims Bailakis’ disciplinary claim [ 73 ] The involvement of Bailakis with the Syndic was twofold: she was questioned in connection with the Plaintiff’s complaint and she brought a complaint of her own. Her complaint was not retained by the Assistant Syndic and her version of events in connection with the Plaintiff’s complaint was considered less probative than that of Maître Martino. The Genglu draft [ 74 ] Me Martino seeks to rely upon a photocopy of a bank draft drawn by RBC dated October 4, 2013.

The draft, in the amount of $38,334 is made to the order of what appears to be Genglu Consulting. Maître Martino states that he obtained this copy from the late Andrea Cortellazzi, who died on June 9, 2014.

He represented to the Assistant Syndic ( D-2 ) that this was evidence that the Plaintiff made her contribution to the project through the payment by means of this draft, directly to the corporation which belonged to Cortellazzi and not by way of the drafts deposited to his trust account. [ 75 ] The probative value of this document is so weak, and its authenticity and therefore its admissibility so unsure, that it is not worth commenting upon further, except to say, it may be a document fabricated by the late Cortellazzi, or, if it is authentic, it may represent the contribution that was apparently made by the Plaintiff’s would-be co-owner Onofre.

It is pure speculation to assert that it demonstrates, contrary to the Plaintiff’s position in this matter, that she is not the source of the drafts that are the subject matter of this case. IV. ANALYSIS 1. Liability of Stella Bailakis [ 76 ] The evidence shows that there was no real investment project: the Plaintiff fell into a trap and was defrauded of her money. Stella Bailakis played an important role in this scheme. She took money that was not hers, money that she must have known came from the Plaintiff, and, availing herself of her lawyer’s trust account, converted it to her own use.

To do so, in her communications with Me Martino, she gave the false assertion that it was her money. [ 77 ] Parenthetically, if it truly were her money, she would not have it in the form of drafts payable to a lawyer in trust . Because the drafts were made out in this way, she had to remit them for deposit to the trust account. There would be no other way for them to be payable. Thusly Me Martino was brought into the causal relationship and he facilitated Bailakis’ wrongful appropriation of the funds. [ 78 ] In the absence of any other explanation on her part, this is the only conclusion that can be arrived at.

She is responsible for the financial loss of the Plaintiff because of her wrongful appropriation of the Plaintiff’s funds, using false pretences and fraudulent misrepresentation to cash the drafts and to gain their value from Me Martino. 2. Liability of Maître Martino Prescription [ 79 ] Though prescription is not raised formally in the statement of the grounds of defense, it is raised as grounds for dismissal in the application that was made by Maître Martino in the course of the file.

The judgment on that application, particularly that the action was brought within three years of the Plaintiff’s knowledge of the facts giving rise to liability, takes the facts as alleged by the Plaintiff as true. The date of the institution of the proceedings is October 6, 2016. [ 80 ] As a matter of fact, the transaction was to take place less than three years earlier by October 31, 2013. It was only after the transaction did not take place by that date that the Plaintiff learned, through inferences, that there would be no transaction and that the funds would not be returned to her.

She acted in the proceedings before the expiry of three years from acquiring that knowledge. Standing [ 81 ] The defense formally raises standing, making much of the fact that the Plaintiff’s contribution to the transaction was provided by her mother. When the Plaintiff had the drafts, they were presumptively hers to give: the provenance of the funds from her mother does not mean that the latter has standing: that would be the case only if the Plaintiff was a mandatory of her mother.

The funds were lent to the Plaintiff, partly by her mother and partly by a friend so that the Plaintiff could use them, as her funds, in the transaction. It is no different that if the money had been lent to the Plaintiff by a bank. [ 82 ] The friend’s loan was paid back by the mother, but the Plaintiff had the responsibility to pay her mother back. The Court accepts the Plaintiff’s testimony on this fact: given the close family relationship it was natural that this loan not be documented and formalised. [ 83 ] Even if, for the sake of argument, it were not a loan, then the advance of funds would be a gratuity.

It would therefore be the Plaintiff’s money. Standing is this suit would still be that of the Plaintiff.

Elements of liability [ 84 ] The perpetration of the fraud by the late Cortellazzi hinged upon the confidence generated in the mind of his victim by his apparent association with the firm with which he shared office space and secretarial services. The insidious nature of his abuse of the facilities he had access to is evidenced by Maître Martino’s assertion that his secretary, using his stationary, created a false invoice for the registration of the business name for the Plaintiff.

Through this facility, the registration was made on Maître Martino’s account. [ 85 ] Maître Martino denied that the secretary witnessed the agreement P-1 under his instructions. Perhaps he had not supervised her work, but the point is he allowed her to work with Cortellazzi without supervision. [ 86 ] Allowing Cortellazzi to have his name on the board in the lobby of the building along with the lawyers and allowing him, as a tenant, practicing as a financial advisor, to have access to spaces that were indistinguishable from the firm’s space created the appearance that he was, in a way, an associate of the firm.

It was not a precisely defined relationship for the person viewing the firm as an outsider. [ 87 ] This ambiguity helped create the impression of an association with the firm that lent credibility to the idea that the transaction would be done through the firm. [ 88 ] The document that Cortellazzi gave to the Plaintiff to sign created the impression that the firm, including Maître Martino, had a role to play in the administration, and therefore the protection of the funds to be used in the transaction. Maître Martino knew this: he read and revised the draft agreement before it was signed.

He was aware of the appearance created. [ 89 ] In this same context of ambiguity, Maître Martino failed to ascertain the provenance of funds remitted to him, the terms under which he was to hold the funds and remit them, and the identity of the owner of the funds. [ 90 ] The status of the matter elsewhere than in these proceedings is that there is no recourse with the Indemnity Fund, apparently no recourse against Martino’s insurance and that there was no deontological fault. [ 91 ] Me Martineau took the money in and administered it without carrying out the most rudimentary verification or enquiry in circumstances where he ought to have known it was the property of the Plaintiff and that she was relying upon his probity.

The evidence the Court heard in this matter shows that he acted in a manner inconsistent with his general civil liability as defined in the Civil Code of Québec at

article 1457 : Every person has a duty to abide by the rules of conduct incumbent on him, according to the circumstances, usage or law, so as not to cause injury to another. Where he is endowed with reason and fails in this duty, he is liable for any injury he causes to another by such fault and is bound to make reparation for the injury, whether it be bodily, moral or material in nature.

He is also bound, in certain cases, to make reparation for injury caused to another by the act, omission or fault of another person or by the act of things in his custody. [ 92 ] Paradoxically, this has created a situation where there is, or so it would seem, no professional liability that would fall neither within the ambit of the professional liability insurance nor within that of the indemnity system operated by an agency of the Bar. Because of their acceptance of Maître Martino’s position that he had no dealing directly with Ms.

Papadopoulos, these agencies, in a sense, declined jurisdiction. [ 93 ] But the Assistant Syndic, in her role within the deontological regime did not make a finding of absence of fault in the general sense, nor of absence of professional fault for that matter.

Rather, she characterised the situation as not being fault of a deontological nature. [ 94 ] It is paradoxical that it was precisely Maître Martino’s omission to “ abide by the rules of conduct incumbent on him, according to the circumstances, usage or law, so as not to cause injury to another” [6] that provided the context permitting the decision makers of the indemnity agencies of the Bar to find that there was no professional relationship. [ 95 ] Maître Martino played a key role in the creation of a situation where Dimitra Papadopoulos’ rights in the funds she remitted in trust were disregarded.

He played this role firstly in the drafting of the document that he reviewed and finalised in a relationship that was also perhaps not “professional”. He was assisting Cortellazzi, in a business matter, but not acting in the interests of persons who were parties to the contract. He knew, by the contract he had reviewed, finalised, and saw in its executed form, that he would receive money from Dimitra Papadopoulos to be held in trust.

There was nothing in that agreement about Stella Bailakis remitting funds of her own to him, and no indication of her degree of ownership in the project. [ 96 ] He did so secondly, in the actual administration of the trust funds: the Court does not accept as probative Maître Martino’s assertion that he “knew” that the three drafts payable to him, in trust , represented funds owned by Stella Bailakis. If she told him this, it was part of a narrative that Maître Martino himself described in terms that show that her statements were unreliable.

The fact that the funds were given by draft, not by certified cheque does not establish a basis for the belief that they came from funds belonging to Ms. Bailakis. [ 97 ] The use of the term “loan” in the receipt ( D-1 ) he drafted would suggest that the provenance of the money was in fact Ms. Papadopoulos. Maître Martino stated in his testimony that, with hindsight, maybe he shouldn’t have made reference to money “lent”, but Ms. Bailakis was telling him contradictory stories. At one point, she said the money was from her mother, and then she said it was from Plaintiff, and then she said it was from Mr.

Cortellazzi. Maître Martino testified that he did not know if it was lent to her or whether it was money received by her as part of the agreement. At one point in his testimony he spontaneously told the Court that he wishes he had told her to go elsewhere.

[ 98 ] In the Court’s appreciation, hearing this astounding testimony, it is not credible for Maître Martino to assert that he understood at the time that he was reimbursing money to Bailakis that belonged to her. [ 99 ] The singularly bizarre conduct he describes on the part of Bailakis, asking him to deposit money in trust , then immediately asking for it back, in a series of meetings over a three-day period and his own compliance, by giving her substantial amounts of money of his own, in cash, causes the Court to dismiss any probative value in his assertion that he knew or believed the money was that of Bailakis, not that of the Plaintiff. [ 100 ] The receipts also show that his testimony is of doubtful probative value.

The first receipt introduced the notion that the funds remitted represented a loan, whereas the agreement spoke of Papadopoulos’ contribution of one-third of the purchase price. The second made reference to a settlement between himself and Bailakis, which was surely not the subject matter of the moment.

Both receipts made direct reference to the agreement of September 15, 2013 an agreement that deals solely with the Plaintiff’s monetary contribution, making no mention of Bailakis’ contribution and how it should be dealt with. [ 101 ] In writing this receipt on his letterhead, he could not have reasonably believed that what he received was the proceeds of a loan and, at the same time believe that it related to the contract between Bailakis and Papadopoulos.

That contract provided for Papadopoulos contributing one-third of the purchase price, not lending money to her co-investor. [ 102 ] His assertion that because Bailakis wanted to opt out of the deal, this contract became null and void, lacks logic, especially when, a day later, the deal should be back on, permitting him to take a third payment in trust, only to return it the next day, again using his own funds, held in cash at his office, to make himself the owner of the trust funds.

If the agreement was null and void, why would Stella Bailakis be confirming the agreement in her two receipts? [ 103 ] To sum it up, Maître Martino had every reason to believe that these funds constituted the Plaintiff’s contribution as spelt out in the agreement, and he acted contrary to

article 1457 CCQ in placing the funds in jeopardy by giving their benefit to Stella Bailakis who did not provide him with any reasonable basis to believe that she owned the funds. [ 104 ] The circumstances were such that the agreement placed him in a position of confidence in regard to a person’s interest and property.

He did not act in a way that respected that confidence and he thereby placed that person in a situation of prejudice. [ 105 ] The “ obiter dictum ” made by the Assistant Syndic quoted above in paragraph 68 is, in the Court’s view, an example of the art of understatement. [ 106 ] The expression “it would have been better” connotes that he failed to do what the circumstances compelled him to do: ascertain the identity of the owner of the funds and seek that person’s instructions.

He did not know Dimitra Papadopoulos and did not have an express mandate to act for her in particular in the transaction, only to hold her money in trust in virtue of what could be considered an implied mandate [7] . Nevertheless, he could have reached her: she was a person with a fixed address known by and in contact with his tenant and friend Cortellazzi and the would-be co-purchaser, his longstanding client Bailakis. He could have contacted her without any difficulty.

If, in obtaining her input, or in not being able to reach her, he could not ascertain who was truly entitled to the funds, he could simply leave them where they were, and invite the parties to bring proceedings, or, himself institute a proceeding before a competent court to have the issue determined, thereby acting in a way consistent with his obligations. [ 107 ] His shortcoming in respect of that general extra-contractual obligation may not have constituted “bad faith or demonstrated gross negligence, clear incompetence or unforgivable carelessness” terms used by the Assistant Syndic in the deontological sense of a “faute caractérisée” .

This is an issue on which the Court does not have to express an opinion. This shortcoming did, however, in the Court’s view, as the Syndic implies through her understatement, constitute a fault. It is not necessary to determine, for the present case whether this was a professional fault, since the professional liability insurer has been taken out of the case, but it is, at the very least, a fault, which caused a prejudice, thus giving rise to civil liability. 3. Contributory fault? [ 108 ] In relation with the conduct of the Defendant Bailakis, the question is not raised, since no defense was made.

In the case of the Defendant Martino, a strenuous argument was made to the effect that the Plaintiff is herself responsible for relying upon Cortellazzi and not being careful in the business relationship she was entering into and not carrying out her own research as to the probity of her business partners and of Maître Martino’s firm before remitting funds in the form of a bank draft rather than a certified cheque. [ 109 ] In the Court’s perception, the reality of fraud is that the victim is often inexperienced and unversed in business, and somewhat naïve.

In the specific facts of this case, the Plaintiff did not act with fault when she relied on the good faith of her co-contractor, not suspecting a fraud. This was due to a lack of knowledge and experience in matters involving immovable transactions. Only a victim lacking knowledge and experience would fall for the ruses used in this scheme. The appearances of legitimacy were supported in key respects by the latitude that the Martino-Cortellazzi relationship gave to Cortellazzi to create the semblance of a professional relationship with the firm and a status within it.

Me Martino should not impute blame to the victim for the confidence this appearance generated in her mind nor to assert that she should have made more extensive investigation of the group of persons of which he was, visibly, a part. [ 110 ] Her reliance on the probity of a law firm did not constitute a fault on her part. The impression the firm gave in providing the stage and the props for the perpetration of the fraud was, paradoxically, a result of the firm’s respectability. She saw it as normal to have confidence in the person inviting her to take

part in the transaction because of its connection to the firm. Maître Martino played a role in the creation of this appearance. [ 111 ] The evidence does not establish that he was in bad faith nor that he was knowingly part of the fraud, but is does establish his lack of care by providing the context in which the fraud could and did occur and in lending his name and custody of funds to a process that induced confidence in the victim, the latter acting as a reasonable person. [ 112 ] The assertion is made on behalf of Me Martino that the Plaintiff should have used certified cheques rather than bank drafts or

that she should have made reference to herself in the reference portion of the drafts. Ironically, if this factor is as important to the loss as the defense argues, then if would follow that Me Martino, in the absence of such references to the provenance of the funds, failed to make the proper verifications himself before releasing the funds to any party. [ 113 ] There is therefore no contributory fault on the part of the victim that could lessen the Defendant’s responsibility. 4.

Obligation in Solidum [ 114 ] The obligations of the two Defendants have the same object: the financial loss resulting from the handling of the funds, but the cause of the obligation differs. This is an obligation in solidum . It is different than solidarity in that the claim results from separate types of fault by the two Defendants, but it shares many of the same consequences. In the ranking of the responsibilities among the Defendants, that of the Defendant Bailakis is primary and that of Me Martino is secondary.

This gives rise to a liability on the part of Bailakis to indemnify fully Me Martino for the amounts he must pay to the Plaintiffs. Therefore the action in warranty is well founded. 5. Damages for inconvenience [ 115 ] The Plaintiff makes a claim for trouble and inconvenience which the Court considers to be well-founded.

Beyond the financial loss, she lost time, effort and energy in going through the steps to marshal the funds required for the fictitious transaction, attend for the signing, return to provide additional funds, and in the efforts expended to ascertain what had occurred and to try to get answers from the Defendants. These non-pecuniary prejudices are real and the claim is for the modest amount of $5,000 which is proportional to them in the Court’s arbitration. V.

CONCLUSIONS BY THESE REASONS, THE COURT; CONDEMNS BOTH DEFENDANTS, Stella Bailakis and Anthony Martino, in solidum , to pay the Plaintiff the sum of $43,333, together with interest at the legal rate of five percent (5%) plus the additional indemnity provided at

article 1918 of the Civil Code of Québec , calculated from the date of service of the proceedings, with legal costs; ESTABLISHES, only as between the Defendants in solidum , their respective liability such that the liability of the Defendant Stella Bailakis is primary; AND, DECIDING ON THE ACTION IN WARRANTY: CONDEMNS the Defendant in warranty Stella Bailakis to indemnify the Plaintiff in warranty Anthony Martino for the full amount of $43,333 in capital, together with interest, additional indemnity and costs to which he is condemned in the principal action.

DECLARES that the liability of the Defendant Stella Bailakis on the principal action and on the action in warranty results from obtaining property by false pretences and fraudulent misrepresentation within the meaning of section 178 (1) (

e) of the Bankruptcy and Insolvency Act . ______________________ David L. Cameron, J.C.Q. Me Nicolas Teasdale Boivin DJANDJI TEASDALE AVOCATS Attorney for Plaintiff Me Myrna Barbar MYRNA BARBAR AVOCATE ET MÉDIA-TRICE INC. Attorney for Defendant/Defendant in warranty Stella Bailakis Absent and not represented Defendant/Defendant in warranty Me Marie-Josée Bélainsky Fonds d'assurance responsabilité professionnelle Attorney for Impleaded party Date of hearing: February 19 and 20, 2020

[6]

Article 1457 of the Civil Code of Québec