



COURT OF APPEAL FOR ONTARIO

CITATION: South Beach Street Development
    Ltd. v. US Income Partners LLC, 2021 ONCA 624

DATE: 20210917

DOCKET: C69126

Strathy C.J.O., Pepall and Pardu
    JJ.A.

BETWEEN

South Beach Street Development
    Ltd.,
Amaryco Inc. and Fabrizio Lucchese

Defendants (
Appellants
)

and

US Income Partners LLC

Plaintiff (Respondent)

Matthew R. Harris, for the appellants
    Amaryco Inc. and Fabrizio Lucchese

Yeganeh Pejman, for the respondent

Heard: September 13, 2021 by
    video conference

On appeal from the judgment of Justice Sean
    F. Dunphy of the Superior Court of Justice, dated February 5, 2021.

REASONS FOR DECISION

[1]

The appellants Amaryco Inc. and Fabrizio
    Lucchese were indebted to the respondent as a result of an investment in
    Florida.

[2]

Following default in payment, the parties
    entered into a Settlement Agreement. The appellants had U.S. counsel for the
    purposes of negotiating the Settlement Agreement.

[3]

The Settlement Agreement provided:

-

for a monthly repayment schedule;

-

for a consent to an Ontario judgment that would be released from escrow
    in the event that there was a default in the repayment schedule. It constituted
    an absolute estoppel and bar to any defence or counterclaim with respect to the
    consent judgment; and

-

an attached form of judgment for US$2,750,000 plus stipulated interest
    and legal costs.

[4]

Failure to make any of the required payments
    entitled the respondent to register a warranty deed on some of the appellants vacant
    land in Florida, and to reduce the balance due on the appellants outstanding
    settlement debt by US$1,500,000.

[5]

Each of the parties represented that they had
    made such investigation as deemed necessary or desirable.

[6]

The appellants defaulted on a payment required
    by the Settlement Agreement. The respondent successfully moved for judgment
    relying on the consent to judgment. It provided a credit to the appellants on
    account of the warranty deed on the vacant land in Florida.


[7]

The appellants appeal from that judgment.

[8]

Although the appellants raised three arguments
    in their factum, before us they only pressed one. They argued that the consent
    was ineffective because the statement of claim had not been issued beforehand,
    and in granting judgment the motion judge improperly relied on Rule 1.04 of the
Rules of Civil Procedure
, R.R.O. 1990, Reg. 194
.

[9]

The appellants did not contest the defaults
    under the Settlement Agreement. The Settlement Agreement clearly identified the
    substance of the claim contained in the statement of claim that was ultimately
    issued. By providing the consent to judgment, the appellants plainly intended
    to create a legal obligation based on the contents of that claim. They had the
    benefit of advice from their U.S. attorney and could not point to any matters
    that required the expertise of an Ontario lawyer. Indeed, they represented that
    they had made all necessary investigations.

[10]

The full record was before the motion judge and
    reliance on r. 1.04 did not result in any prejudice to the appellants. The
    motion judge was legitimately satisfied that he had all he needed to do justice
    between the parties, and that reconstituting the proceedings under a different
    rule would reflect the triumph of form over substance.

[11]

For these reasons, the appeal is dismissed. As
    agreed by the parties, the appellants are to pay the respondent its costs fixed
    in the amount of $7,500 inclusive of disbursements and tax.

G.R. Strathy
    C.J.O.

S.E. Pepall
    J.A.

G. Pardu J.A.


