Wife of convicted fraudster loses damage claims against landlord, law firm

A woman who married a serial fraudster has lost her bid to the Court of Appeal for Ontario to hold responsible her former landlord and a law firm she had consulted for losses she sustained as a result of her failed marriage.

Wife of convicted fraudster loses damage claims against landlord, law firm
Gavin Tighe says the judgment confirms lawyers can’t be successfully sued for what is outside of their responsibilities to clients.

A woman who married a serial fraudster has lost her bid to the Court of Appeal for Ontario to hold responsible her former landlord and a law firm she had consulted for losses she sustained as a result of her failed marriage.

In a highly publicized case involving Albert Allan Rosenberg, who has been convicted of fraud in Canada and Europe and who was expected to be released on parole today, his wife, Antoinette Larizza, had sued the couple’s landlord, Minto Group Inc., as well as her lawyers, Fasken Martineau DuMoulin LLP, among others, for damages arising from her financial losses.

In Larizza v. Royal Bank of Canada, both Minto and Fasken successfully brought motions for summary judgment, and the motion judge’s reasons were upheld by Ontario’s appellate court last week, with cost awards to both Minto and Faskens of $12,500 each. This was the first judgment case against ancillary defendants.

According to court documents, the appellant Larizza was 54 years old when she met Rosenberg through an online dating service in February 2012. Rosenberg told the appellant that he was a wealthy, 56-year-old Swiss-Canadian businessman and heir to an Ovaltine fortune. In fact, he was much older, had been convicted of fraud on multiple occasions and the Ovaltine inheritance was deemed to be non-existent. 

By August 2012, and at Rosenberg’s urging, the appellant had quit her job, sold her house, given her proceeds from the sale to him and moved in with him; Rosenberg eventually received about $230,000 from Larizza. In May 2012, Larizza signed a lease with Minto for rental of a penthouse apartment in Toronto’s tony Yorkville neighbourhood, effective July 1, 2012, and the couple then resided there together. Larizza was listed as the tenant on the lease and Rosenberg as an occupant, as Minto had found insufficient credit information for Rosenberg to name him as the tenant. On March 30, 2013, the couple were legally married in Toronto.

Prior to the wedding, Larizza had met once with a Fasken lawyer, Elena Hoffstein, who specializes in estate planning and personal taxes, about the drafting of a marriage contract, estate planning to draft a new will and the establishment of a trust for Larizza and her two adult daughters. There was no written retainer. Hoffstein stated that she told Larizza she did not practise family law and so could not review a marriage contract; later, documents she sent to Larizza went unacknowledged.

By the summer of 2013, after confronting Rosenberg over rental arrears and his financial situation, the appellant became aware that Rosenberg was not who he purported to be and that she had lost the money she had given to him. In October, Rosenberg pleaded guilty to assault and various fraud charges, and he was sentenced to 60 months in prison. Larizza then proceeded to seek damages from various parties that, in addition to her landlord and Fasken, included two other law firms and two banks.

Larizza claimed damages from Minto for intrusion upon seclusion, breach of contract, negligence, negligent misrepresentation and intentional or negligent infliction of mental distress. The motion judge concluded that Minto’s credit check on Larizza prior to making the rental agreement with her, which had been made without Larizza’s knowledge or consent, did not raise a genuine issue requiring a trial and had been lawful under the Consumer Reporting Act, although it was “potentially unlawful” under the Personal Information Protection and Electronic Documents Act.

In finding that the motion judge had properly set out the test for intrusion upon seclusion, Ontario Court of Appeal Justice Sarah E. Pepall, president of the panel in the case, ruled that the “motion judge’s finding on the third element of the test is unassailable and fatal to the appellant’s position,” specifically, that “a reasonable person would not regard Minto’s actions as highly offensive, causing humiliation or anguish within the meaning of the test.”

In claiming a breach of contract, Larizza contended she was not aware that she was listed as the tenant on the lease — nor that this was the case because Rosenberg lacked sufficient credit history — and argued that Minto had breached a general duty of good faith. Again, the appellate court agreed with the motion judge’s finding that “the duty of good faith recognized by the Supreme Court in Bhasin v. Hrynew . . . arises in the context of the performance of the contract, and not from the circumstances leading up to the formation of the contract,” in this case, the rental lease.

The obligation of good faith in the performance of a contract is a requirement not to lie or mislead the other party in the performance of the contract, which the court of appeal agreed Minto had met.

Two important issues emerged in dismissing the claims against Fasken, says Gavin Tighe, a senior partner with Gardiner Roberts LLP in Toronto, who represented Fasken along with Scott Gfeller.

One was the issue of expert evidence, on which Larizza had submitted the motion judge had erred “by relying on common sense and state[s] that expert evidence was required to determine the applicable standard of care,” according to the appellate court decision.

“As a non-technical and common sense matter, absent specific instructions, there could be no obligation on Ms. Hoffstein, even if she had been a family law lawyer, to investigate the background of the appellant’s future spouse,” as the appellant had suggested was appropriate, wrote Pepall in her decision. “Furthermore, there is no evidence from which it could be inferred that Ms. Hoffstein should have recommended such an investigation. There is no evidence that the appellant ever expressed any suspicions about Mr. Rosenberg, and her marriage took place without telling Ms. Hoffstein.”

The appeals court agreed with the motion judge that there was no burden on the defendant Fasken to lead evidence that they were not negligent, Tighe told Legal Feeds.

The second important issue, he says, was the motion for partial summary judgment. The appellant had argued that her case was not appropriate for this, owing to the ongoing litigation against other defendants and the attendant risk of duplicative or inconsistent findings, as well as the risk that an adverse costs award could prejudice her ability to continue her claims against the other defendants.

But, again, the appeals court disagreed, finding that “the claims against Faskens are standalone and limited in nature” and that the dangers outlined in Butera v. Chown — a decision of the Ontario Court of Appeal last year, which Pepall also wrote, did not present themselves in this case.

“The motions judge didn’t have the benefit of Butera but undertook precisely the same analysis,” says Tighe, including whether claims against a defendant were standalone. “It’s a significant issue in motions for summary judgment. Partial summary judgment is not impossible; it depends on the case.”

Commending the motion judge’s and appellate court’s judgments in this case, Tighe noted that his client had been “sued for [what] no lawyer would consider part of her engagement.

“I think all lawyers should be happy” that they cannot be successfully sued for matters for which they were not responsible, he says. If that were the case, he adds, litigation “would be endless!”


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