Medcap Real Estate Holdings Inc. v. Bank of China (Canada)
CITATION: Medcap Real Estate Holdings Inc. v. Bank of China (Canada), 2018 ONSC 4040
DIVISIONAL COURT FILE NO.: DC-1055/17 DATE: 20180626
ONTARIO SUPERIOR COURT OF JUSTICE DIVISIONAL COURT
Horkins, Fitzpatrick, King JJ.
BETWEEN:
Medcap Real Estate Holdings Inc. Appellant
– and –
Bank of China (Canada) Respondent
COUNSEL:
S. Turton, for the Appellant T. Rotenberg, for the Respondent
HEARD at Oshawa: June 26, 2018
ORAL REASONS FOR JUDGMENT
Fitzpatrick J (Orally)
Introduction
[1] Medcap Real Estate Holdings Inc. (Medcap) appeals from the order of Speyer J. dated September 22, 2017 granting summary judgment to the Bank of China (the Bank) in the amount of $28,796.73. Medcap asks that the order for summary judgment be set aside and the plaintiff’s claim be dismissed in its entirety
[2] For the reasons that follow I dismiss this appeal.
Background
[3] The Bank held a first mortgage (the mortgage) on a commercial building located at 3430 Fairview Street in Burlington, Ontario (the Fairview property). The mortgage was secured for the principle amount of $2,760,000.00.
[4] In 2016, the Bank commenced an application in the Ontario Superior Court in Brampton, Ontario seeking to have a receiver appointed for the Fairview property by claiming that the mortgage was in default.
[5] In response, Medcap obtained made new financing arrangements to pay out the Bank. However, the situation was complicated by the existence of another ongoing legal proceeding on the Commercial List of the Superior Court in Toronto The plaintiff in that proceeding, Giselle Briden, was the estranged wife of a principal of Medcap. In that action the plaintiff had registered a court order against the Fairview Street property owned by Medcap. Ultimately an order from the Commercial List matter was required to postpone various claims in that action to permit the new financing to proceed.
[6] The receivership application was initially deferred on the consent of the parties. A deadline date was agreed to for payment of the full principal amount of the mortgage debt, together with unpaid interest and legal costs. In furtherance of that arrangement, the Bank advised Medcap by letter dated September 14, 2016 that in addition to the payment for principle and interest due under the mortgage the sum of the $27,534.52 was required to be paid by Medcap for legal fees. Medcap was contractually obligated to pay these amounts in accordance with the Standard Charge terms by which the Bank initially advanced funds pursuant to the mortgage.
[7] As Medcap had obtained alternative financing to pay out the Bank, it required an updated discharge statement effective as at the time the parties had agreed to have the Bank’s mortgage discharged. The discharge statement provided by the bank included the amount for legal fees of $27,534.52 in the body of the statement, but did not include that amount specifically in the sum total set out at the conclusion of the discharge statement due to an addition error.
[8] As a condition of advancing funds, the new lender required an order dismissing the receivership application because of the Commercial List litigation. As well, the new lender required an order registered on title to the property removing the Bank’s security before it would advance the funds necessary to pay out the Bank’s mortgage. Medcap obtained the funds set out at the bottom of the discharge statement from the new lender and prepared to close the transaction. That amount was based on the erroneous discharge statement.
[9] Accordingly, the parties obtained a consent order in Brampton, from McSweeney J. dismissing the Bank’s application for a declaration of the validity of its security, appointing a receiver and discharging the Bank’s mortgage.
[10] A few days later, on October 4, 2016, counsel for the Bank wrote to Medcap saying they had made an addition error in their discharge statement and had not included their legal costs of $27,534.52 for the application that McSweeney J. had dismissed. The Bank wanted payment of this amount and Medcap disputed the obligation to pay this amount.
[11] The Bank commenced a simplified rules action claiming the amount of $27,534.52. Medcap defended. The Bank moved for summary judgment. Speyer J. granted the motion in full. That decision is the subject of this appeal.
Analysis
Jurisdiction and Standard of Review
[12] In its factum Medcap did not expressly address the standard of review. In argument, it became apparent that Medcap asserted that Speyer J. had erred by failing to give effect to Medcap’s defences of detrimental reliance, promissory estoppel and the argument that the entire proceeding was commenced in error as it should have been corrected by setting aside the order of McSweeney J.
[13] The standard of review for this matter was articulated by the Supreme Court of Canada decision in Housen v. Nikolaisen, 2002 SCC 33, [2002] 2 S.C.R. 235, as follows:
On a pure question of law, the basic rule with respect to the review of a trial judge's findings is that an appellate court is free to replace the opinion of the trial judge with its own. Thus the standard of review on a question of law is that of correctness…
The standard of review for findings of fact is that such findings are not to be reversed unless it can be established that the trial judge made a “palpable and overriding error”
[T]he standard of review of the trial judge’s inferences of fact…is not to verify that the inference can be reasonably supported by the findings of fact of the trial judge, but whether the trial judge made a palpable and overriding error in coming to a factual conclusion based on accepted facts, which implies a stricter standard...
Where the trier of fact has considered all the evidence that the law requires him or her to consider and still comes to the wrong conclusion, then this amounts to an error of mixed law and fact and is subject to a more stringent standard of review [than for findings of fact]. [Emphasis added]
[14] It is clear that Speyer J. found there was no genuine issue for trial. In argument before this panel, counsel for Medcap confirmed that his client had agreed to pay the Bank’s legal costs in order to obtain the discharge of the Bank’s mortgage. This was reflected at para 11 of Speyer J.’s decision where she made the following findings of fact:
[11] It is clear from the evidence that the loan agreement between the bank and Medcap provided that Medcap would pay to the bank any legal costs that it incurred to enforce its rights under the agreement, and that both the bank and Medcap understood that the agreement so provided.
[15] Speyer J. found that Medcap owed the Bank $28,796.73 and the fact that this amount had not been paid when the mortgage was discharged was irrelevant to the underlying liability of Medcap for this amount.
[16] Medcap argues that Speyer J. erred because once the mortgage was discharged, the debt was extinguished.
[17] This is not the law. A discharge of a mortgage removes the encumbrance from title but does not extinguish the debt per se. (Shiner et al v. Varadeff 1975) 1975 404 (ON SC), 7 O.R. (2d) 684.
[18] At para. 15 of her endorsement Speyer J. expressly states that:
[15] Neither the discharge of the mortgage nor the Order made by Justice McSweeney have any bearing on the question whether Medcap is contractually obligated to the bank in the amount claimed. The discharge of the mortgage releases the security it obtained from Medcap, but does not extinguish the debt. This case is indistinguishable in any material way from Shulman v. Sommerville, [1982] O.J. No. 1425 (Ont.Sup.Ct.).
[19] I do not agree with the appellant that reliance on the Shulman case represented an error of law on the part of Speyer J. While Shulman did involve a motion for judgment to enforce a settlement agreement, the underlying facts of the case involved a mortgage statement, an arithmetic error in the amount required to discharge a mortgage and a defendant attempting to take advantage of that error to defeat a contractual claim to pay monies properly due and owing. The finding of law from Shulman was that a defendant must establish detrimental reliance on an error of this nature in order to successfully defeat a claim for monies otherwise due and owing. Speyer J. found there was no detrimental reliance on the error and stated at paragraph 14:
[14] I conclude that it is clear that there was a contract entered into between the bank and the Medcap that obligated Medcap to pay the bank’s legal costs in the event that the bank was required to incur such costs to enforce its rights under the contract. But for the arithmetic error, Medcap would have paid the $27,534.52 in dispute in this action when it paid the $2,428,141.47 to the bank on September 29, 2016. The evidence establishes that Medcap had obtained alternate financing in the amount of $2,500,000.00, and thus would have been able to pay the amount it actually owed without jeopardizing its alternate arrangements
[20] I do not agree that the record before Speyer J. indicates Medcap had detrimentally relied on the representations made by the Bank. The Bank clearly set out what was owing for legal fees in a body of a letter sent to Medcap. In my view, the arithmetic error was not sufficient to extinguish the fact that Medcap had agreed to pay that amount for legal fees. Speyer J. made the same finding. As there was no genuine issue for trial, there was no palpable or overriding error made by Speyer J. on the summary judgment motion.
[21] Also to the extent that the appellant asserts that Speyer J. made an error on a pure question of law, I disagree. I find that Speyer J. correctly interpreted the law first as it relates to the test for granting summary judgment and second as it relates to any question of law arising from the principles set out in the Shulman decision.
[22] This was a straightforward simplified rules contract case. The amounts claimed by the plaintiff were properly due and owing. No trial was required to determine this dispute. The decision of Speyer J. was correct in law, and did not make any papable or overriding errors with respect to the facts as found.
[23] For these reasons the appeal is dismissed.
C. HORKINS J.
[1] I have endorsed the Appeal Book and Compendium as follows: “This Appeal is dismissed for oral reasons provided today. The respondent is entitled to costs of this appeal. Based on reasonableness and the respondent’s costs outline we order the appellant Medcap Real Estate Holdings Inc. to pay the respondent Bank of China (Canada) costs fixed at $7,291.27.”
Fitzpatrick, J.
I agree
Horkins, J.
I agree
King, J.
Date of Reasons for Judgment: June 26, 2018 Date of Release: June 28, 2018
CITATION: Medcap Real Estate Holdings Inc. v. Bank of China (Canada), 2018 ONSC 4040
ONTARIO SUPERIOR COURT OF JUSTICE DIVISIONAL COURT
HORKINS, FITZPATRICK, and KING JJ.
BETWEEN:
Medcap Real Estate Holdings Inc.
– and –
Bank of China (Canada)
ORAL REASONS FOR JUDGMENT
FITZPATRICK, J.
Date of Reasons for Judgment: June 26, 2018 Date of Release: June 28, 2018