Court File and Parties

COURT FILE NO.: 193/06

DATE: 2007-02-16

SUPERIOR COURT OF JUSTICE - ONTARIO

DIVISIONAL COURT

RE: Royal Bank of Canada (Plaintiff/Respondent) and Beckell Farms (1987) Limited and Se Jung Kim aka Se-Jung Kim aka Sejung Kim (Defendants/Appellants)

BEFORE: Justice Cumming

COUNSEL: Gregory W. Bowden for the Plaintiff/Respondent Leon J. Melconian for the Defendants/Appellants

HEARD: February 16, 2007

ENDORSEMENT

CUMMING J.

The Appeal

[1] The defendants appeal from the summary judgment of Master Egan dated March 29, 2006 in favour of the plaintiff Bank. The appeal raises a novel issue in respect of the interpretation of Rule 20.01 (1) (2) of the Rules of Civil Procedure R.R.O. 1990, Reg. 194.

The Evidence

[2] The plaintiff Bank made demand for payment of an outstanding loan of $87,880.97 upon the defendants January 24, 2006. The corporate defendant’s farm, its only substantial asset as known to the Bank, was in the process of being sold privately. The Bank drafted a forbearance agreement with a collateral mortgage to be placed against the property to protect the Bank, forwarded to the solicitor for the defendants February 8, 2006. The solicitor said the defendant guarantor, Mr. Kim, would review the Forbearance Agreement and forward an executed copy by February 15, 2006 if the terms were acceptable to Mr. Kim. The Bank’s counsel did not hear further from the solicitor.

[3] The Bank issued a Statement of Claim February 17, 2006 and brought a motion without notice under Rule 20.01(2) before Master Dash for an order allowing it to serve a motion for summary judgment together with the statement of claim. Master Dash gave the requested Order dated February 23, 2006. The order and motion for summary judgment were served March 1, 2006 with a return date of March 29, 2006 for the motion. The Order of Master Dash was not appealed.

[4] Mr. Melconian, litigation counsel for the defendants, advised the Bank’s counsel by letter that he acted for the defendants, that he was not available March 29, 2006 and would serve a Notice of Intent to Defend, which was done March 22, 2006. The Bank’s counsel advised Mr. Melconian he would not agree to an adjournment of the motion for summary judgment.

[5] Mr. Melconian swore an affidavit March 28, 2006 in which he set out a proposed schedule for the exchange of pleadings and motion materials and suggested a return date for the motion of June 20 or 21, 2006. Mr. Melconian did not refer to the pending sale of his client’s property nor did he make reference to the previously offered Forbearance agreement. Mr. Melconian sent an agent to request an adjournment of the motion for summary judgment, before Master Egan, on March 29, 2006.

[6] Master Egan refused the request for the adjournment. She drew the conclusion from the record before her “that the defendants want to delay this action in order to sell the property.” Master Egan looked in part to the record before Master Dash in his dealing with the Rule 20.01(2) motion. She reviewed the history of events. The Appellant says this was incorrect because there was no notice of the intent to do so. I disagree.

[7] Master Egan was entitled to consider all relevant evidence in the record in determining the merits of the motion by the defendants for an adjournment. Moreover, the agent on behalf of the defendants’ counsel was present and entitled to make whatever submissions were seen to be appropriate. Indeed, the agent was allowed to obtain instructions by phone and did so twice, on one occasion reportedly in a lengthy conversation.

[8] Master Egan gave written reasons why she refused the request for an adjournment. The record supports her findings and exercise of discretion in this regard.

[9] Master Egan then proceeded to deal with the motion for summary judgment. She granted the motion for summary judgment. Master Egan again gave written reasons, which reasons deal expressly with the only two issues raised by the defendants.

[10] The main submission (not advanced before Masters Dash and Egan) of the defendants on this appeal is in respect of the interpretation of Rule 20.01 (1) and (2) of the Rules of Civil Procedure. This raises a matter of apparent first instance.

20.01 (1) To plaintiff – A plaintiff may, after the defendant has delivered a statement of defence or served a notice of motion, move with supporting affidavit material or other evidence for summary judgment on all or part of the claim in the statement of claim.

(2) The plaintiff may move, without notice, for leave to serve a notice of motion for summary judgment together with the statement of claim, and leave may be given where special urgency is shown, subject to such directions as are just.

[11] The defendants say that the operative effect of Rule 20.01(2) allows only for an earlier service of a motion for summary judgment than the norm by the Rules. They submit that Rule 20.01 remains operative in all circumstances such that there can never be a return of a motion for summary judgment before a statement of defence has been filed. In the situation at hand, a notice of intent to defend was served such that a statement of defence in the normal course of events would not have to be filed before April 1, 2006 ie. 30 days after service of the statement of claim.

[12] In my view, where Rule 20.01(2) is appropriately operative, (as found to be the case in the matter at hand by Master Dash), the timing of the return of the motion for summary judgment can be accelerated. Assuming the criteria of Rule 20.01(2) have been met (including the implicit requirement of reasonable notice of the return of the motion, as here) then it is incumbent upon the defendant to expeditiously file a defence and put his/her best foot forward by affidavit evidence, etc. in responding in a timely way to the motion. In my view, this interpretation is consistent with the apparent policy intent to Rule 20.01(2) to give the Court flexibility and discretion in dealing with exceptional situations, that is, “where special urgency is shown, subject to such directions as are just.”

[13] Counsel for the defendants also submits on this appeal that he was not entitled to cross-examine in respect of the affidavit in support of the motion for summary judgment. The defendants were served with the February 27, 2006 affidavit of the Bank’s affiant, Diane Martella, in support of its motion, March 1, 2006. Counsel for the defendants did not seek to cross-examine Ms. Martella at a time before the return of the motion March 29. Rather, he indicated only that he would cross-examine her sometime after an adjournment of the March 29, 2006 summary judgment motion.

[14] Master Egan gave written reasons for her decision in refusing the adjournment and in granting summary judgment. Those reasons are amply supported by the factual evidence in the record before her. There is no apparent palpable and overriding error in the conclusions she reached.

Disposition

[15] For the reasons given, the appeal is dismissed.

[16] Submissions were made as to costs. The plaintiff is contractually entitled to costs on a solicitor and client basis. However, given the novelty of the Rules interpretation issue, I exercise my discretion that costs be on a partial indemnity basis. A bill of costs was submitted. I fix costs payable by the defendants on a joint and several basis to the plaintiff at $5000.00 plus GST of $300.00 plus $42.40 for disbursements, for a total of $5342.40, payable forthwith.

CUMMING J.

DATE: February 16, 2007