A Decade of Reluctant Litigants in a Drawn Out Lawsuit

We looked at the case of Scicluna v. Solstice Two Limited which was decided by the Ontario Court of Appeal on 23 February 2018, arising out of an Agreement dated 8 April 2008.

That was a long time for a lawsuit. We just looked at it from the perspective of what the case means for real estate. The Court concluded that the Buyer should not lose a deposit which amounted to 78.94% of the purchase price.

But, one of the big questions was: “why did it take so long?”

The answer has more to do with the motivation of the parties than anything else. We really can’t blame the Court system here.

Unfortunately, if we simply look at the real estate component of the case, it paints Solstice, the Vendor, as the “bad guy”, however, that really wasn’t so!

The price was $372,000 for the condominium unit. The Purchaser had paid, over a two year period a series of payments which amounted to $293,685.

Then, Scicluna, the Buyer, lost her job. That meant that she didn’t have enough money to complete the deal.

Now, at this point, everyone jumped to the conclusion that the Seller took advantage of the opportunity to confiscate $293,685. But, that didn’t happen.

Instead, there was a deal whereby the condo unit would be rolled over to Buyer #2 at $435,000. Solstice would only get $30,000 out of the sale and Scicluna would keep the rest. This essentially meant, that Scicluna would not only get all her money back but she would make a profit too. Solstice was only to receive $30,000 out of the deal, slightly more than what a real estate commission on the same deal would have been.

Then came the next part. Solstice wanted Scicluna to “sign off” by executing a Mutual Release. For some strange reason, Scicluna refused to sign the release. Apparently, she claimed that the release meant that Solstice was to receive $60,000 rather than $30,000. When the Motions Court Judge looked at the Mutual Release, she concluded that it was $30,000, which everyone had agreed upon, rather than $60,000 which had been alleged by Scicluna.

Then, we have the next stage. Scicluna declares bankruptcy. Keven Thatcher and Associates Ltd. (KTA) was appointed Trustee. All assets at that point which included the entitlement to a refund were transferred over to KTA. Going forward only KTA could sign off.

So, now we have a problem for Solstice. They need to do something to “clean up” the file. They have lots of money on hand, but neither Scicluna nor KTA will sign anything. That meant that Solstice had to start a lawsuit for the confiscation of all of the money, including the additional profits just to get paid what they were entitled to in the first place.

Neither Scicluna nor KTA were anxious litigants.

Time passed, Scicluna was discharged from bankruptcy and she claimed that she should have the money. KTA claimed that as Trustee, that money was an asset and had been turned over to them.

At issue, in addition to the Bankruptcy Act was the determination of the relevant limitation period, either 2 years under the Limitations Act or 10 years under the Real Property Limitations Act.

Ultimately, the Court decided that the Real Property Limitations Act should apply and KTA was to have the money.

So, there you have it, a long drawn out lawsuit extending a decade. Solstice was the reluctant plaintiff, but eventually they had to do something. Scicluna didn’t look like she was getting any money, at least until there was a discharge of her bankruptcy. KTA was reluctant to spend what little money was on hand for the creditors to attempt to finance a lawsuit with uncertainty. That’s a difficult position for a Trustee.

And, the conclusion, in part, Solstice was a “good guy” in all of this.

Brian Madigan LL.B., Broker


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