Executive Summary: Key Legal and Evidentiary Issues

• Dispute over whether the plaintiff’s claims of negligent misrepresentation, fraud, unconscionability, unjust enrichment and constructive trust justify retaining sale proceeds from a 2022 resale of the property.
• Procedural contest about security for costs under Rule 56.01, including whether there is evidence of unpaid prior costs or insufficient assets in Ontario to justify requiring the plaintiff to post $50,000.
• Adequacy and admissibility of affidavit evidence on a motion, particularly hearsay from counsel not properly identified and lack of evidentiary foundation for the quantum of security for costs.
• Ongoing controversy regarding the balance of net sale proceeds held in trust and whether the defendant owner should receive immediate payment despite unresolved trial issues.
• Concerns about proportionality and litigation conduct, including multiple motions in a simplified procedure action and an apparent attempt to re-litigate issues already managed by prior judicial case management.
• Costs consequences of bringing a motion “entirely lacking in merit” and then abandoning it, resulting in fixed partial indemnity costs awarded against the moving defendants.

Factual background and property transactions

The case arises out of the sale and resale of a multi-unit residential property at 862 Claude Street in Ottawa. On May 3, 2021, the plaintiff, Domenico (Dominic) Condello, sold this property to the defendant, Diana Moreira, for $350,000 (the “2021 Sale”). As part of that transaction, Mr. Condello provided a $300,000 vendor take-back mortgage to Ms. Moreira. At the time of the sale, he was living at the property and continued to live there afterward, occupying the basement apartment up to June 1, 2022. After acquiring the property, Ms. Moreira undertook renovations. These were either carried out by, or under the supervision of, her partner and co-defendant, Roberto Aguiar. The lawyers and law firm who had represented both vendor and purchaser in the 2021 Sale are also named as defendants in the broader action, but their professional liability issues are not directly determined in this particular decision.

The 2022 resale, proceeds, and early litigation

In early 2022, Ms. Moreira agreed to sell the same property to a third party (a non-party to the litigation) for $779,800, with a closing date of April 28, 2022 (the “2022 Sale”). In the context of that transaction, Mr. Condello was served with a notice to vacate the basement apartment no later than June 1, 2022. Following the resale, there were net sale proceeds (the “Proceeds”) that became the subject of competing claims and interim court management. Ms. Moreira brought an application in 2022 seeking, among other things, discharge of the vendor take-back mortgage granted in 2021 and directions concerning how the Proceeds should be held pending resolution of the parties’ dispute. In the same period, Mr. Condello commenced an action against Ms. Moreira, Mr. Aguiar and the former lawyer and law firm. He claimed $200,000 in damages based on negligent misrepresentation and fraud. He also alleged that the terms of the 2021 Sale were unconscionable and advanced an unjust enrichment and constructive trust claim, asserting that he was entitled to share in the Proceeds from the 2022 Sale. Over time, this action was transferred to the Simplified Procedure under Rule 76, which is designed for more efficient, summary-style trials of limited length and complexity.

Management of the sale proceeds and earlier consent order

In 2022, Ms. Moreira and Mr. Condello jointly brought a motion relating to the disbursement of the Proceeds and a request that the plaintiff post $50,000 as security for costs. That motion was ultimately resolved by a consent order in April 2023. Under that order, the vendor take-back mortgage from the 2021 Sale was paid in full; approximately $290,000 of the Proceeds was paid out to Ms. Moreira; and $150,000 of the Proceeds was to remain in trust. A key procedural point in that consent order is that the part of the motion seeking $50,000 in security for costs from the plaintiff was dismissed. Instead, Ms. Moreira and Mr. Aguiar were ordered to pay the plaintiff his costs on that portion of the motion, on a partial indemnity basis, with the amount to be agreed upon or, failing agreement, assessed by the trial judge. The specific dollar value of those earlier costs is not stated in this endorsement and therefore cannot be determined from the available record.

Procedural history, summary judgment attempt, and trial readiness

As the litigation progressed, there were multiple motions and case-management appearances. An endorsement by Perron A.J. in March 2025 confirms that by that time the parties represented that the action was trial-ready, subject only to possible late expert reports, and that the trial would proceed under the Rule 76 summary trial procedure within a five-day maximum. In the same endorsement, the court refused to allow Ms. Moreira and Mr. Aguiar to bring a summary judgment motion. The judge found that summary judgment was not appropriate given likely significant credibility issues, the voluminous record, and the disproportionate burden of another major motion in a simplified procedure action where numerous motions had already occurred. The court emphasised that the most efficient way to resolve the outstanding issues was to proceed to trial.

The 2026 security for costs and proceeds motion

Despite that procedural history, in September 2025 Ms. Moreira and Mr. Aguiar (the “moving parties”) served a fresh notice of motion, returnable March 31, 2026. They sought two main forms of relief: first, that the plaintiff be required to post $50,000 as security for costs; and second, that the balance of the Proceeds held in trust be paid out to Ms. Moreira. The Proceeds had been held for several years in the trust account of the moving parties’ lawyers, by consent. The moving parties’ motion record, however, was procedurally and evidentially deficient. Although they stated that they were relying on the pleadings and affidavits from both Ms. Moreira and Mr. Aguiar, in the end they filed only a single five-page affidavit from Ms. Moreira, with two prior judicial endorsements attached (a 2022 endorsement by Doyle J. and a 2024 endorsement by Ryan Bell J.). The pleadings were not included, nor was an affidavit from Mr. Aguiar, and the prior endorsements were improperly embedded as exhibits rather than filed separately as part of the record.

Deficiencies in the defendant’s affidavit evidence

On the return of the motion, before hearing submissions, the court reviewed the Moreira affidavit and identified a series of evidentiary problems. Several paragraphs relied on information said to be provided by “my counsel” without naming the specific individual, contrary to Rule 39.01(4), which governs affidavits based on information and belief. Those paragraphs were struck as inadmissible. Critically, some of the struck paragraphs contained the only potentially relevant information about why $50,000 in security for costs was allegedly appropriate. Once they were removed, the only remaining reference to the quantum of security was Ms. Moreira’s bare request for security “in the amount permitted for costs in a simplified procedure trial – $50,000,” with no backup. There was no evidence of counsel’s actual hourly rates, anticipated preparation time, expected trial time, disbursements, or even a draft bill of costs to show the moving parties’ realistic exposure. The court found that there was simply no evidentiary basis on which it could assess or fix any amount of security for costs, even if the legal test were otherwise met.

Failure to satisfy the legal test for security for costs

In addition to the lack of quantum evidence, the moving parties failed to demonstrate that the statutory grounds for security for costs applied. They did not present admissible evidence that the plaintiff had unpaid prior costs orders under Rule 56.01(1)(c), or that the action was frivolous and vexatious and that the plaintiff had insufficient assets in Ontario under Rule 56.01(1)(e). On the contrary, the uncontradicted evidence in the plaintiff’s responding affidavit (sworn by counsel’s legal assistant) was that the plaintiff owned a condominium unit in Ottawa where he resided. There was no evidence from the moving parties to counter this or to establish any insufficiency of assets. The moving parties also did not file the pleadings despite indicating they would do so, and Ms. Moreira’s affidavit appeared to downplay or omit the true nature of the claims against her—for example, she spoke of a lack of direct claims in fraud or misrepresentation without acknowledging the constructive trust and unconscionability allegations that remained in issue.

The request for release of the sale proceeds and “massage clinic” evidence

The second limb of the motion sought immediate payment to Ms. Moreira of the remaining Proceeds held in trust. The moving parties argued that the inability to access these funds had hampered Ms. Moreira’s plans to purchase or start a massage clinic. That contention, however, rested almost entirely on a brief paragraph in Ms. Moreira’s affidavit, which simply stated that she had intended to buy the clinic where she worked or open her own clinic, but could not do so because the funds from the property sale remained in trust. The court compared this to the “massage clinic” allegations that had been raised as long ago as 2022 before Doyle J., who had already noted the absence of documentation or specific details about any such transaction. Nearly four years later, there was still no concrete evidence of an actual opportunity, such as a defined purchase price, offer documents, financing arrangements, or current prospects. Apart from a general letter in 2022 from a massage therapist referencing strategic discussions about a possible future purchase, there was no proof of any real, time-sensitive business opportunity lost because the Proceeds remained in trust. The court found there was no evidence of specific financial harm to Ms. Moreira if the funds continued to be held until the trial resolved the underlying ownership and trust issues.

Abandonment of the motion and the court’s concerns about proportionality

When the court highlighted these evidentiary flaws at the outset of the hearing, the matter was stood down to allow the moving parties to decide whether they wished to proceed. Initially, they indicated they would proceed only with the request to release the remaining Proceeds and not with the security for costs relief, implicitly abandoning that part of the motion. After a break, they informed the court that they would not proceed with any part of the motion. Accordingly, the court treated the motion as abandoned in its entirety and dismissed it on that basis. In its reasons, the court described the motion as “poorly-executed” and noted that its timing and nature gave the impression of a collateral attempt to revisit or undermine prior case-management decisions, especially Perron A.J.’s 2025 finding that another major motion would be disproportionate in a simplified procedure case that was already trial-ready. Bringing this new motion, despite that clear direction, was characterised as showing disregard, if not disrespect, for the earlier judicial endorsement.

Costs outcome and overall result

Turning to costs, the court applied the factors in Rule 57.01, including the result of the motion, the amounts at stake, the complexity of the issues, the parties’ conduct, and the reasonableness of positions taken. The plaintiff filed a bill of costs, while the moving parties filed a costs outline. The plaintiff sought partial indemnity costs of $6,623, which represented about 90% of the moving parties’ own estimate of their partial indemnity costs for the motion. The defendants made no submissions challenging that quantum. Given the motion’s lack of merit, the abandonment after the hearing had commenced, and the history of prior motions and judicial directions, the court concluded that the plaintiff was clearly entitled to his costs. It fixed those costs at $6,623 on a partial indemnity basis, payable by Ms. Moreira and Mr. Aguiar to the plaintiff within 30 days. In addition, the court had previously, in the 2023 consent order, required Ms. Moreira and Mr. Aguiar to pay the plaintiff his costs of the earlier security-for-costs component of a prior motion, though the exact dollar figure for those earlier costs is to be agreed or assessed and thus cannot be determined from this endorsement alone. Overall, in the sequence of decisions referenced, the plaintiff, Domenico Condello, emerges as the successful party on the security-for-costs issues and on this later abandoned motion, with a concrete monetary award of $6,623 in fixed costs in his favour and additional earlier costs ordered but not quantified on the record.