



COURT OF APPEAL FOR ONTARIO

CITATION: Scetto v. Scetto, 2021 ONCA 485

DATE: 20210630

DOCKET: M52295 (C68785)

Gillese,
    Tulloch and Roberts JJ.A.

BETWEEN

Pasquale
    Scetto, by his Litigation Guardian Benito Scetto

Plaintiff
(Respondent/Moving Party)

and

Michele
    Antonio Scetto

Defendant
(Respondent/Responding Party)

and

Sutherland
    Law

(Appellant/Responding Party)

Kelli Preston, for the plaintiff/respondent/moving
    party Pasquale Scetto by his litigation guardian Benito Scetto

Matthew
    Kersten, for the appellant/responding party Sutherland Law

No one
    appearing for the defendant/respondent/responding party Michele Antonio Scetto

Heard: June 14, 2021
    by video conference

On appeal from
    the orders of Justice Myrna L. Lack of the Superior Court of Justice, dated October
    6, 2020.

Gillese J.A.:

I.

OVERVIEW

[1]

Sutherland Law appeals from two orders in this proceeding, both of which
    are dated October 6, 2020: the Directions Order and the Charging Order
    (collectively, the 
Orders
).

[2]

The plaintiff in this proceeding is Pasquale Scetto by his litigation
    guardian Benito Scetto (the 
Plaintiff
). The Plaintiff moves to quash Sutherland
    Laws appeal of the Directions Order on the basis that Sutherland Law has no
    standing to appeal it. Alternatively, the Plaintiff asks that Sutherland Laws
Supplementary Notice of Appeal dated December 8, 2020, be struck. In
    terms of Sutherland Laws appeal of the Charging Order, the Plaintiffs position
    is that because there is no fund over which a charging order can be made, the
    appeal is devoid of merit and must be dismissed.

[3]

For the reasons that follow, I would grant the motion to quash the
    appeal of the Directions Order and dismiss the appeal of the Charging Order.

II.

BACKGROUND

[4]

In 2000, the Plaintiff bought a piece of vacant
    property in Uxbridge, Ontario, and began taking the steps necessary to have a
    house built on it. In 2003, he transferred title to the property to his son
    Michele Scetto (the 
Defendant
). The Defendant gave no consideration
    for the transfer. A house was ultimately built on the property, which the
    Defendant occupied.

[5]

The Plaintiff started this proceeding, asking
    the court to declare that the Defendant held the property in trust for him. The
    Defendant took the position that the Plaintiff had given him the property. Sutherland
    Law represented the Defendant.

[6]

The action was tried in May 2018; reasons for
    judgment were released on March 20, 2019. The trial judge found that the
    Plaintiff had not made a gift of the property to the Defendant and declared that
    the Defendant held title to the property in trust for the Plaintiff. However,
    she also found that the Defendant was entitled to an equitable set-off for his
    contributions to the property. She made extensive findings about the validity
    of the contributions that the Defendant claimed he had made to it. She also specifically
    held that the Defendant was responsible for paying off the mortgage on the
    property because she had given him credit for the mortgage when she determined the
    amount of his contributions to the property. To do otherwise, as she explained
    in her reasons, would give the Defendant double recovery.

[7]

The trial judge ordered that the property be listed
    for sale and, once sold, the real estate commission, legal expenses, and usual sale
    expenses (the 
Specified

Expenses
) were to be paid. She directed
    that, thereafter, the sale proceeds were to be divided between the parties
    based on their respective contributions. The trial judge held that the
    Defendants share was the amount she found he had contributed to the property
    plus the percentage of the sale price his contributions made to it. She
    permitted the Defendant to stay in occupation of the property until it was sold,
    provided he paid the occupation costs  including municipal taxes, insurance, and
    utilities  and that he maintained the property in a good state of repair.

[8]

The Defendant filed a Notice of Appeal of the
    judgment on April 18, 2019, but abandoned the appeal on June 18, 2019.

[9]

Because the Defendant refused to co-operate with
    the sale of the property, the Plaintiff was required to return to the court for
    assistance on more than one occasion. One such occasion was his motion for
    directions heard on March 6, 2020. This motion resulted in an order that the
    property be sold in accordance with a specific agreement of purchase and sale. On
    the same day, Sutherland Law moved for, and obtained, an order removing it as
    solicitors of record for the Defendant. Sutherland Laws motion was heard and
    dealt with before the Plaintiffs directions motion.

[10]

After the sale of the property was completed, the
    Specified Expenses were paid, leaving the net sale proceeds (the 
Net Sale
    Proceeds
). Because the parties could not agree on how to divide the Net Sale
    Proceeds, the Plaintiff brought a motion for directions on their proper
    disposition (the 
Directions Motion
). At the same time, Sutherland Law
    brought a motion for a charging order over the amount it claimed was owing to
    the Defendant from the Net Sale Proceeds (the 
Charging Order Motion
)
    (collectively, the 
Motions
).

[11]

Sutherland Law scheduled its Charging Order
    Motion to be heard on September 16, 2020, in advance of the Directions Motion,
    which was scheduled to be heard on September 18, 2020.

[12]

On September 16, 2020, the trial judge  who sat
    as the motions judge on the Motions  adjourned the Charging Order Motion to be
    heard contemporaneously with the Directions Motion on September 18, 2020. She
    explained that the Charging Order Motion could not proceed until the court had
    determined whether there was a fund in favour of the Defendant over which a
    charging order could be made. That determination would be made through the Directions
    Motion.

[13]

The Motions were heard on September 18, 2020. Although
    the Defendant had notice of the Motions, he did not file materials or appear.
    However, he did give his written consent to Sutherland Laws claim for a
    charging order over his share of the sale proceeds.

[14]

On September 18, 2020, the motions judge began
    by reiterating what she had said on September 16, 2020, when the Charging Order
    Motion was initially returnable: she would first calculate the Defendants
    entitlement, which was the subject-matter of the Directions Motion, and then she
    would consider the Charging Order Motion.

[15]

On the Directions Motion, the motions judge
    permitted Sutherland Law to make submissions on the matter of priorities because
    that matter was intertwined with the Charging Order Motion. Sutherland Law
    made two alternate submissions on the priorities of certain deductions, both of
    which gave the Defendants contributions to the property priority over the
    Plaintiffs contributions.

[16]

On October 6, 2020, the motions judge delivered one
    endorsement in which she dealt with both Motions. In the endorsement, the
    motions judge rejected Sutherland Laws submissions on the priorities it had advocated
    for in terms of the Defendants entitlement to the Net Sale Proceeds. She
    explained that giving the Defendants contributions to the property priority
    over the Plaintiffs contributions was fundamentally inconsistent with the trial
    judgment. The motions judge noted that Sutherland Law had no standing to attack
    the trial judgment because it no longer represented the Defendant and, in any
    event, the trial judgment had not been appealed.

[17]

On the Directions Motion, the motions judge found
    that the Defendants share of the Net Sale Proceeds was $0. She reasoned as
    follows. The Defendant was entitled to $84,672.40 before deductions were made for
    the discharge of the mortgage and occupation costs. The amount required to discharge
    the mortgage was $88,479.58. Municipal taxes during the Defendants period of occupation
    was $6,396.75. (These he had not paid, despite the court order requiring that
    he pay them during occupation.) The amounts needed to discharge the mortgage
    and pay the municipal taxes exceeded the Defendants share of the Net Sale Proceeds
    by $10,203.93. Thus, the Defendant was entitled to $0 of the Net Sale Proceeds.

[18]

The motions judge dismissed the Charging Order
    Motion for the following reasons. Section 34(1) of the
Solicitors Act
, R.S.O. 1990, c. S.15, permits a solicitor to obtain a charge on
    property recovered or preserved through the solicitors instrumentality in
    Superior Court proceedings. The test for a charging order under s. 34(1), as
    set out in
Weenen v. Biadi
, 2018 ONCA 288, 141 O.R.
    (3d) 276, at para. 15, requires that: 1) the fund or property must be in
    existence at the time the charging order is granted; 2) the property must have
    been recovered or preserved through the instrumentality of the solicitor;
    and, 3) there must be evidence that the client cannot or will not pay the
    lawyers fees. The motions judge found that the Charging Order Motion failed on
    the first step of the
Weenen

test because,
    as determined on the Directions Motion, the Defendants share of the Net Sale Proceeds
    was $0. Accordingly, there was no fund in existence over which a charging order
    could be made.

[19]

On October 30, 2020, Sutherland Law filed and served
a Notice of Appeal of the Order and Reasons for Decision of the
    motions judge dated October 6, 2020.

[20]

The Plaintiff and Sutherland Law disagreed on
    whether one or two orders should be taken out in respect of the Motions. The
    Plaintiffs view that two orders were necessary prevailed and, on December 2,
    2020, the Orders were settled, signed, and entered.

[21]

On December 8, 2020, Sutherland Law served an
    appeal book and compendium which included a Supplementary Notice of Appeal. In
    the Supplementary Notice of Appeal, Sutherland Law stated it was appealing the
    Orders of the motions judge, rather than the order of the motions judge as it
    stated in its original Notice of Appeal. The Supplementary Notice of Appeal was
    not served on the Plaintiff within the time limits prescribed by the
Rules of Civil Procedure
, R.R.O. 1990, Reg. 194, r. 61.04(1), or at all.

III.

ANALYSIS

[22]

Sutherland Laws position on the motion to quash
    the Directions Order can be summarized as follows. The threshold for quashing
    an appeal is high, and to be exercised only in the clearest of cases where the
    appeal is manifestly devoid of merit. It relies on this courts decision in
Schmidt
    v. Toronto Dominion Bank
, 24 O.R. (3d) 1 (C.A.), at paras. 6-8, which
    cautions against bringing motions to quash on the grounds that the appeal is
    manifestly devoid of merit:

The court may also quash an appeal where it is
    manifestly devoid of merit  The very nature of this power, however, dictates
    that it will seldom be exercised. It is very difficult, in most cases, to reach
    the conclusion that an appeal is devoid of merit without first hearing the
    entire appeal

In our view, a motion to quash, which,
    according to the practice of this court, is usually scheduled to be heard on
    the same day as several other motions, is not the proper forum in which to
    engage in a de facto hearing of the full appeal. Furthermore, given the minimal
    level of merit needed to defeat a motion to quash based on the alleged absence
    of any merit in the appeal, it is inevitable that many such motions will fail.
    Where they fail, there must be a second full inquiry into the merits of the
    appeal at some later point in time before a different panel. The added expense
    and loss of valuable court time occasioned by this duplication of effort hurts
    the litigants involved in the particular case, and others whose cases are in
    the appellate process.

Respondents should not be encouraged to jump
    the queue of perfected appeals awaiting hearing by seeking a full hearing of
    the appeal under the guise of a motion to quash.

[23]

Sutherland Law is correct that this court seldom
    exercises its power to quash on the basis that the appeal is devoid of merit
    and that such motions should be avoided because they generally lead to needless
    duplication and expense. However, as this court stated at para. 5 of
Schmidt
,
    there is another basis on which a motion to quash may be brought: a motion to
    quash may usefully be brought where the moving party contends that the court
    cannot or should not hear the merits of the appeal. This court explicitly added
    in
Schmidt
that nothing in its reasons was intended to touch upon
    motions to quash brought on these grounds.

[24]

The motion to quash Sutherland Laws appeal of
    the Directions Order is not based on an argument that the appeal is devoid of
    merit. Rather, the Plaintiff submits that Sutherland Law has no standing to
    bring such an appeal and, for that reason, its appeal of the Directions Order
    should be quashed. I accept that submission. Because Sutherland Law does not
    have standing to appeal the Directions Order, this court cannot and should not
    hear the merits of that appeal.  Consequently, that appeal should be quashed.

[25]

Sutherland Law advances two arguments in support
    of its submission that it has standing to appeal the Directions Order. I reject
    both.

[26]

First, it says that it has standing to appeal
    the Directions Order because the motions judge granted it standing when she
    heard the Directions Motion. That is not correct. At the outset of the hearing
    of the Motions on September 18, 2020, Sutherland Law stated that it was its
    understanding that we were granted standing and thats why were appearing
    today. The Court responded as follows:

... weve been through this, its not a
    question of standing  your motion was adjourned to todays date. Were going
    to do the calculations and then were going to look at the, the question of
    your motion, so first of all, as I ruled the other day the calculations have to
    be decided first, and then the charging order

[27]

As can be seen, the motions judge specifically rejected
    Sutherland Laws submission that it had standing on the Directions Motion. She permitted
    Sutherland Law to make submissions in the Directions Motion only on the matter
    of the priorities of certain charges and only because that matter was intertwined
    with the Charging Order Motion.

[28]

Second, Sutherland Law says that the motions
    judge permitted it to make submissions on behalf of the Defendant. I see
    nothing in the transcript to support this. At the hearing of the Motions, it
    had been months since Sutherland Law was removed, on its own motion, as counsel
    of record for the Defendant. It had no right or authority to make submissions on
    the Directions Motion on behalf of the Defendant.

[29]

Quite properly, Sutherland Law does not maintain
    it was a party to the Directions Motion.

[30]

Accordingly, Sutherland Law has no standing to appeal
    the Directions Order. As there is no basis for this court to hear that appeal, I
    would grant the motion to quash the appeal of the Directions Order.

[31]

Because I would quash Sutherland Laws appeal of
    the Directions Order, that order stands. The Directions Order provides that the
    Defendant is entitled to $0 from the Net Sale Proceeds. For the reasons of the
    motions judge, there was no fund or property in existence when Sutherland Laws
    Charging Order Motion was heard. Consequently, its appeal of the Charging Order
    is manifestly devoid of merit and must fail.

[32]

In light of the foregoing, I find it unnecessary
    to decide whether the Supplementary Notice of Appeal in the appeal book and
    compendium should be struck.

IV.

DISPOSITION

[33]

For
    these reasons, I would grant the motion to quash the appeal of the Directions
    Order and dismiss the appeal of the Charging Order, with costs to the Plaintiff
    fixed at $20,000, all inclusive, payable by Sutherland Law.

Released: June 30,
    2021 E.E.G.

E.E. Gillese
    J.A.

I agree. M.
    Tulloch J.A.

I agree. L.B.
    Roberts J.A.


