Cerasani et al v Cerasani, 2018 MBCA 53

Citation: Cerasani et al v Cerasani, 2018 MBCA 53 Date: 20180510 Docket: AI17-30-08741 IN THE COURT OF APPEAL OF MANITOBA Coram: Mr. Justice Michel A. Monnin Madam Justice Diana M. Cameron Madam Justice Janice L. leMaistre BETWEEN : GUIDO CERASANI, 3777783 MANITOBA ) R. W. Schwartz and LTD and 3148581 MANITOBA LTD ) A. E. Verhaeghe ) for the Appellants (Plaintiffs) Appellants ) - and - ) D. R.

Knight, Q.C. ) for the Respondent CONCETTA CERASANI ) ) Appeal heard: (Defendant) Respondent ) December 15, 2017 ) ) Judgment delivered: ) May 10, 2018 On appeal from 2015 MBQB 78 ; (19 April 2016), Winnipeg CI11-01-7004 (Man QB) MONNIN JA [ 1 ] This is an appeal from a decision, following a trial, wherein the trial judge declined to grant the plaintiffs the order of specific performance they were seeking.

There is also a cross appeal by the defendant as to the terms of a licence fee that the trial judge ordered be paid by the plaintiffs for the use of the property at 3011 Main Street in Winnipeg, which property was the subject matter of the dispute between the parties. [ 2 ] The personal appellant (Guido) is the son of the defendant. [ 3 ] The plaintiffs owned and operated a nine-hole golf course on Main Street in the City of Winnipeg.

The plaintiffs wanted to expand the golf course to an executive 18-hole course, and in order to do so, Guido had arranged to purchase two properties adjacent to the existing golf course from his neighbors. In the fall of 2000, the first property was acquired.

The second property, 3011 Main Street (the property), is presently registered in the name of the defendant and is at the heart of this dispute as the plaintiffs sought an order of specific performance seeking to have the property transferred to them. [ 4 ] Guido arranged with the defendant and her now deceased husband Giuseppe, to borrow the purchase price of the property from them (the loan).

Originally, title to the property was to vest either in Guido’s name or that of one of the corporate plaintiffs, but shortly before the closing of the transaction, Giuseppe informed his son that he and the defendant would take title in their names. This was done as the parents were of the opinion that title in their names would provide them with better security for the loan.

Additionally, there were some concerns about the stability of Guido’s marriage at the time and the parents wanted to ensure that Guido’s wife would not be able to lay claim to the property in the event of a marriage breakdown. [ 5 ] The problem with the arrangement between the parties was that it was never documented and was done on the basis of a handshake. [ 6 ] The property was transferred to the parents; the plaintiffs proceeded to develop the property and expand the golf course.

The plaintiffs paid no rent for the use of the property but received rental payments from the lease of a residence that was on the newly purchased property, which payments were deposited in an account in the name of Giuseppe and the defendant. [ 7 ] Giuseppe died in 2006. Guido approached the defendant to pay off the balance of the money owing on the loan and requested that the property be transferred to him or one of his co-plaintiffs. The defendant, who now held title in her name alone, refused to do so.

That refusal triggered the lawsuit which turned out to be a bitterly contested family dispute in which Guido’s siblings were also

involved as well as bringing about another lawsuit between Guido and a brother involving the operation of the golf course which exemplifies the animosity that exists in the Cerasani family.

See Cerasani v 3148581 Manitoba Ltd et al , 2017 MBQB 147 . [ 8 ] In her reasons, the trial judge set out concisely the positions taken by the parties (at paras 2-3): More specifically, the plaintiffs allege that Guido and [the defendant] and her late husband (and Guido’s father) Giuseppe Cerasani entered into an oral agreement which provided that: the parents would loan Guido the money to purchase the Property; they would take title in their names as security for the loan; and they were required to transfer title to Guido once the principal amount of the loan, plus interest, was repaid.

The plaintiffs say that they have offered to repay the loan plus interest, but [the defendant] has refused to transfer the Property; as a consequence, they seek specific performance, that is, transfer of the title. In the alternative, they seek a declaration that the Property is the subject of a constructive or resulting trust such that a vesting order should be granted in favour of RealtyCo. In the further alternative, they seek a declaration that RealtyCo. has an easement over the Property, or Shooters has a license for the continued operation of the golf course.

Finally, and in the further alternative, they seek damages. [The defendant] denies any loan agreement and says that she and Giuseppe purchased the Property outright. As a consequence, they became the registered and beneficial joint owners, and since Giuseppe’s death in April 2006, [the defendant] has been the sole owner. She says that Guido has acted as agent for her and her husband with respect to management of the Property. She denies any constructive or resulting trust, and further says that is there no legal basis upon which to declare an easement.

However, she acknowledges an ongoing license, provided a fee is paid. [The defendant] also seeks, by way of counterclaim, rent from Shooters since 2010 when her relationship with Guido seriously deteriorated as a consequence of this dispute. [ 9 ] The trial judge dismissed the plaintiffs’ request for an order of specific performance requiring the defendant to transfer the property to them and declared that the defendant was the legal and beneficial owner of the property; she wrote (at paras 83, 86): As I have said, the plaintiffs bear the onus of proving the alleged oral loan agreement, on a balance of probabilities.

Given my concerns about Guido’s testimony in the context of the other evidence, the plaintiffs have not met their onus. The documents are generally supportive of an ownership interest on the part of [the defendant] and Giuseppe. Virtually all financial aspects of the Property were dealt with as if it was owned by them.

Moreover, the undisputed evidence of Guido and [the defendant] was that the parents wanted to take title to protect their $290,000 from Guido’s wife — and Guido testified that Giuseppe had also said that he wanted to take title because Guido might go broke, apparently expressing a concern about Guido’s potential creditors. Vince also testified that Giuseppe had expressed concern about Guido’s debt and marital status. Giuseppe and [the defendant] rejected an arrangement whereby Guido would take title, and they would register a mortgage.

They wanted to ensure that they owned the Property to protect their money from Guido’s wife and creditors. As owners, they agreed that Guido could use the Property for his golf course, without paying rent. Guido accepted all of this, in the belief that his relationship of trust with his parents would continue — and with the benefit that he could use the Property without paying rent, taxes or other expenses. Neither he nor his parents looked ahead to see what might happen if their relationship deteriorated. However, that does not change the nature of the agreement they reached.

In all, no loan agreement has been proven. It follows that the plaintiffs have also not proven any agreement that they are the beneficial owners of the Property. [ 10 ] She ordered that the defendant pay damages and interest to the plaintiffs; she stated in her reasons (at para 115): While my decision as to ownership may result in other damages to the plaintiffs, there was no evidence in this regard.

As well, they have had the benefit of a favourable arrangement for years, apparently, by Guido’s own evidence, building a successful business — without paying to purchase the Property, or making rent or interest payments.

Guido took the risk of arranging his affairs in the way he did, and he must now bear the consequences. [ 11 ] The trial judge went on to declare that the defendant did not hold title to the property on a constructive or resulting trust in favour of the plaintiffs; she wrote (at paras 91, 94, 97, 103): In this case, despite my concerns about [the defendant’s] approach, a constructive trust is not proven on the basis of wrongful act. [The defendant] and Giuseppe were not under an equitable obligation to Guido in relation to the activities giving rise to them taking title to the Property and their taking title did not result from activities in breach of any such equitable obligation.

Rather, they made an agreement with their son that they would be the owners of the Property and allow him to use it rent-free for his golf course. [The defendant’s] troubling behavior did not occur in relation to her taking title to the Property but has developed since her husband died.

If the opportunity to purchase was in fact inherently valuable, and the parents were enriched thereby to the detriment of Guido, there was a juristic reason for this: their agreement as to how to arrange their affairs, and who would be the owner. That said, I accept that [the defendant] has been enriched by the $30,000 Shooters paid to the Loganbergs, and that Shooters has suffered detriment as a result. Loganberg made it clear that he received $30,000 in cash.

Although counsel for [the defendant] characterizes the $30,000 as part of an agreement to agree rather than as part of the agreement for purchase and sale, Loganberg testified that he would not have sold the Property for $290,000; and the history of his dealings with Guido confirms this. Therefore, I am satisfied that this payment was an integral part of the purchase, which resulted in enrichment to [the defendant] to the detriment of Shooters. However, in my view, this unjust enrichment does not result in a declaration of constructive trust. . . .

In my view, there is simply no basis to find a resulting trust here. But for the $30,000, [the defendant] and her husband paid the full purchase price for the Property and have essentially paid the costs associated with it throughout.

While they were given the opportunity to acquire the Property, this was, as I have already said, based on an agreement between the parties, which was intended to benefit not only [the defendant] and Giuseppe but Guido as well. [ 12 ] She then held that the plaintiffs were entitled, by way of licence, to use and occupy the property on certain terms and conditions, including payment of a fee. She stated (at paras 119-20): However, it is clear that there has been a license — an agreement that the plaintiffs could use the Property for the golf course.

In counsel for [the defendant’s] written argument submitted after the trial, he acknowledged that such a license existed at the outset; however, he took the position that “the license should be revoked on the condition that the parties enter into a reasonable commercial lease for the use of the subject property”. Then, in final oral submissions, he indicated that [the defendant] now acknowledges an ongoing license for as long as any of the plaintiffs continue to use the Property as part of the golf course, provided a reasonable license fee is paid.

Later in his oral submissions, when addressing the quantum of any license fee, [the defendant’s] counsel suggested that the license applies only to the back half of the Property that actually forms part of the golf course. I am satisfied, based on the evidence, that the parties agreed that Guido (or one of his companies) would have a license to remain on the Property for as long as it was used as part of the golf course.

Moreover, [the defendant] acknowledges and I am satisfied that there was an oral agreement between Guido and his parents that the parents could not sell the Property to a third party for as long as the plaintiffs use it for the golf course. Clearly, Guido was of this understanding as I doubt he would have built the golf course in the way he did in the belief that his business could be disrupted at any time by his parents selling the Property.

And on examination for discovery, when [the defendant] was asked about their plans for the Property, she answered “when Guidy didn’t need it no more, we would have sell it at a good price and we would go from there to enjoy ourselves, which we never enjoy one day in our life in the 50 years marriage”. As well, given the close relationship between Guido and his parents at the time the Property was acquired and the golf course built, I cannot imagine that any of them contemplated a situation where the parents could effectively evict Guido and disrupt the operation of his entire business.

Therefore, I find that the plaintiffs have a continuing right to remain in possession of the Property for as long as they use it as a golf course, and while they do so, [the defendant] is precluded from selling it to a third party. [ 13 ] She set the licence fee at $15,525 per year.

In subsequent reasons provided to clarify her earlier decision, she directed how the fee was to be calculated and further directed that the licence would terminate one year following the death of either Guido or the defendant. [ 14 ] She then went on to find that Guido should not be required to pay rent while the litigation was pending and that each party should pay their own costs. [ 15 ] The key witnesses before the trial judge were Guido, the defendant, as well as Vince Cerasini, Guido’s brother, who had attempted to broker a peace between the warring parties.

The trial judge had concerns with the evidence of all three which she expressed as follows (at para 58): Despite my finding that the alleged oral loan agreement has not been proven, I was not impressed by the testimony of [the defendant] and I also have concerns about Vince’s evidence. Ultimately, it was my difficulty with Guido’s testimony, in the context of all of the other evidence, that led me to my conclusion that the alleged loan agreement has not been proven. [ 16 ] The plaintiffs raise the following grounds of appeal:

a) that the trial judge erred in determining that the defendant is the beneficial owner of the property and that she need not transfer title to

the plaintiffs upon repayment of the loan;

b) that the trial judge erred in finding that the parties never agreed that Giuseppe and the defendant would take title to the property for the primary purpose of protecting their investment;

c) that the trial judge erred in finding that the defendant did not hold title in trust for the plaintiffs and that the defendant has not been unjustly enriched by retaining the beneficial ownership in the property;

d) that the trial judge erred in her assessment of damages;

e) that the trial judge erred in finding that the plaintiffs had a licence to use the property but only so long as Guido remained the sole and controlling shareholder of the corporate plaintiffs;

f) that the trial judge erred in holding that the license should terminate upon the death of Guido or the defendant, whichever occurs first;

g) that the trial judge erred in concluding that proprietary estoppel did not apply or need to be decided on the facts of this case; and

h) that the trial judge erred in holding that the parties should bear their own costs. [ 17 ] In her cross appeal, the defendant alleges:

a) that the trial judge erred in her assessment of the licence fee to be paid by the plaintiffs;

b) that the trial judge erred in setting out the mechanism to be used in calculating the annual increase in the licence fee; and

c) that the trial judge erred in ordering that the licence fee payment was payable from 2010 onward. [ 18 ] The plaintiffs submit that the standard of review to be applied to this appeal is one of correctness with respect to questions of law and of palpable and overriding error in dealing with issues of mixed fact and law.

More particularly, in their factum, the plaintiffs concede that for all grounds of appeal, save for the issue of damages and costs, the standard of review is one of palpable and overriding error. [ 19 ] I take no issue with that submission and go on to state that in all of the grounds of appeal and cross appeal, there is, in my view, not one ground that raises an issue of law alone.

The grounds relied upon by the plaintiffs or the defendant in her cross appeal are all issues of mixed fact and law and the trial judge has made strong and definite findings of fact and credibility with which an appellate court should be loath to interfere. [ 20 ] I do not propose to deal with each ground of appeal individually because they all flow from the trial judge’s decision that there was no agreement between Guido and his parents.

That finding is crucial to the disposition of this case and informed the judge’s decision on all of the issues that were raised before her. [ 21 ] Both parties are basically asking this Court to set aside the factual findings arrived at by an experienced trial judge and replace them with what they argue is the correct

interpretation of those facts. [ 22 ] The trial judge was entitled to make the finding that no agreement existed, based primarily on the plaintiffs’ lack of credibility. It is the role of a trial judge to make such a finding and I have not been persuaded that she erred in making it. She heard the evidence, assessed the witnesses before her and came to conclusions which she clearly sets out in her reasons.

In order to set aside her decision, on whatever issue is raised, it would require that I be satisfied that she committed a palpable and overriding error on her assessment of credibility as well as her other factual findings. I am not prepared to do so. Those findings are well reasoned and justified on the facts as the trial judge found them to be. I am not prepared to set them aside and substitute them for what counsel submit they should have been.

It is not the role of an appellate tribunal to do so and I am not prepared to retry this case. [ 23 ] As to the issue of costs, the trial judge’s decision is a discretionary matter to which deference is owed. An order of costs should only be set aside on appeal if it is based on an error in principle or so clearly wrong as to render it unjust. The trial judge explained why she was not prepared to award costs to either of the parties and I can well understand why she did what she did.

She was of the view that there were no winners or more successful parties in this case and I have not been persuaded by either the plaintiffs or the defendant in her cross appeal that such an assessment was in error. [ 24 ] Accordingly, I would dismiss both the appeal and the cross appeal. As at trial, the parties are to bear their own costs. JA I agree: JA I agree: JA