Court File and Parties

Court File No.: CV-12-445032 Date: 2017-04-25 Ontario Superior Court of Justice

Between: Vito Auciello, Plaintiff – and – 3877337 Canada Inc., (c.o.b.) HLC Home Loans Canada, Home Trust Company and Sun Life Assurance Company of Canada, Defendants

Counsel: Plaintiff representing himself Ron Aisenberg, representing the defendant, 3877337 Canada Inc. Amanda Jackson, representing the defendant, Home Trust Company

Heard: April 6, 2017

Reasons for Decision

Carole J. Brown, J.

[1] The defendants, 3877337 Canada Inc. and Home Trust Company, bring this motion for summary judgment as against the plaintiff, Vito Auciello. They seek an order dismissing the action as against them.

[2] The plaintiff commenced an action as against these defendants on January 27, 2012 for damages in the amount of $100,000 for breach of contract, bad faith, intentional and unlawful interference with economic relations, breach of duty of good faith, irreparable harm to business reputation, loss of business and loss of business opportunity; $50,000 for mental and emotional distress; and $25,000 for aggravated and punitive damages against each defendant.

[3] An Amended, Fresh As Amended Statement of Claim was served May 25, 2016 and a Fresh As Amended Statement of Defence was filed June 6, 2016 on behalf of 3877337 Canada Inc.

The Facts

[4] The defendant, 3877337 Canada Inc., is a subsidiary of CIBC carrying on business as Home Loans Canada (“HLC”), a mortgage broker that arranges mortgages on behalf of clients with financial institutions other than CIBC.

[5] On January 27, 2010, the plaintiff contacted an employee of HLC, Ms. Caero, a mortgage agent. He advised her that he was a realtor who owned adjoining commercial properties located at 2396 Dufferin St. and 2398 Dufferin St., which he wished to refinance with a new first mortgage of $600,000. He advised Ms. Caero that he believed the property to be worth $1.2 million.

[6] Ms. Caero suggested Home Trust Company as a potentially suitable lender and indicated that Home Trust would require an appraisal of the properties to be done. The plaintiff agreed and completed a mortgage application. Subsequently, on February 8, 2010, the plaintiff advised Ms. Caero that the property was owned by and registered under the company name of Network Cash Mart Ltd. (“Network”).

[7] On February 22, 2010, the plaintiff executed a Commitment Letter on Home Trust letterhead in Network’s name as mortgagor and his name as guarantor.

[8] Home Trust’s only dealing with the plaintiff was with respect to the application for mortgage refinancing as set forth herein. The Commitment, as signed and accepted by the plaintiff, was subject to a number of conditions including an appraisal of the properties reflecting a minimum value of $1.2 million.

[9] Pursuant to the terms of the Commitment:

This Commitment is subject to: Original Commercial Appraisal of the property, satisfactory to Home Trust Company, by Crosstown Appraisals, addressed to Home Trust Company, or accompanied by a letter of transmittal from the appraiser, reflecting a minimum value of $1,200,000 and value based on a 60 to 90 day maximum marketing time. Also required is days on market (D.O.M.) for all comparables.

[10] On same date, a Customer Consent and Disclosure Form (Ontario) was executed by the plaintiff, which included the following terms:

Referrals to lenders (other than within the CIBC Group) I agree that HLC, at its option and without further notice to me, may attempt to locate a lender other than within CIBC Group (an alternate lender) willing to lend to me on terms acceptable to that alternate lender. HLC may give any credit and other information about me including any information disclosed on my HLC mortgage application to any alternate lenders. I further acknowledge that HLC has no obligation to locate an alternate lender and no responsibility or liability for any acts or omissions of the alternate lender. I will settle any claims and disputes directly with the alternate lender.

[11] Pursuant to the Commitment, Home Trust also had the right to terminate the Commitment or decline to advance all or any part of the mortgage until all conditions of the Commitment had been satisfied to Home Trust’s satisfaction. Ultimately, the plaintiff was unable to satisfy the conditions in the Commitment Letter and the refinancing did not proceed, as set forth below.

[12] In March 2010, Crosstown Appraisal advised that the valuation of $1.2 million made by the plaintiff was unrealistic, and refused to do the appraisal. As explained in the affidavit of Michael Pagliocca, Assistant Vice President, Mortgage Underwriting with Home Trust, where a property does not meet the value required to complete a deal, an appraiser will often not complete an appraisal report as a courtesy to a prospective mortgagor, so that they are not charged for the appraisal report, which was the situation here.

[13] HLC retained Home Trust’s consent to use another appraiser, namely Appraisal 2000, which ultimately also declined to complete an appraisal on the basis that a $1.2 million valuation was unrealistic.

[14] The plaintiff, thereafter, in May 2010, contacted Home Trust directly and, in an effort to assist the plaintiff, Home Trust requested of Crosstown Appraisals that they complete an appraisal. The plaintiff subsequently advised Home Trust that the appraisal had been conducted and paid for on June 3, 2010, and inquired as to the status of the appraisal. On June 30, the plaintiff wrote to Home Trust requesting, inter alia, a full explanation of the appraisal.

[15] The appraisal was received by Home Trust on July 7, 2010, confirming an appraised value of $600,000 (as is) or $665,000 (as if complete). Given the valuation, Home Trust was prepared to offer a mortgage of $390,000, with various conditions, including a holdback of $50,000 until renovations were complete as verified by Home Trust and, on July 9, 2010 provided a second Commitment which included those terms. That Commitment was never accepted by the plaintiff and, as a result, the financing did not proceed. The terms of the first Commitment, namely the valuation of the property at $1.2 million were not fulfilled.

Positions of the Parties

Position of the Moving Party Defendants

[16] It is the position of the defendant, HLC, that they were hired to act as a mortgage broker and performed that function. The plaintiff, as a realtor, was well aware that the amount of a prospective mortgage would be dependent on the appraised value of the properties. HLC did not offer mortgage financing to the Corporation and the Corporation did not accept. Further, the Customer Consent and Disclosure Form (Ontario) executed by the plaintiff excludes liability, as set forth at para. 10, above.

[17] It is further the position of HLC that the plaintiff has produced no evidence of any damages and, in any event, there is no evidence of any act or omission of HLC that caused any losses to the plaintiff.

[18] Moreover, it is the position of the defendants that this claim does not belong to the plaintiff but rather to Network, a corporation which owns the property and for which the plaintiff, its principal, acts on its behalf. Thus, the claim does not belong to the plaintiff but rather to Network.

[19] It is the position of Home Trust that the plaintiff has no tenable cause of action against Home Trust and has put forward no evidence supporting his claim for damages. Home Trust maintains that the plaintiff applied to Home Trust for mortgage refinancing, which was offered to the plaintiff subject to a number of conditions which were never satisfied. In mid-2010, Home Trust provided an additional offer of refinancing for a lower amount, based on the appraisal value of the properties, which was never accepted by the plaintiff.

Position of the Plaintiff

[20] The plaintiff states that he had to obtain financing for the subject properties by May 1, 2011. He approached his bank, CIBC, in February 2010 for that purpose. CIBC referred him to HLC, a mortgage broker and a subsidiary of CIBC’s, to obtain the financing sought.

[21] It is the position of the plaintiff that the defendants delayed inordinately in obtaining an appraisal of the property for purposes of advancing a loan, which ultimately resulted in damages to him, that the Commitment signed by him was, from the beginning, doomed to failure due to the specified funding date on the Commitment, which was stipulated to be two days after the signing of the document, namely February 26, 2010. In this regard, I note that, based on the evidence, the loan application process continued after February 26, 2010, with provision of financial and other supporting documents requested by HLC to be provided by the plaintiff for purposes of assessing the application, and the obtaining of an appraisal, such that no one treated the application process as terminated as at February 26, 2010.

[22] The plaintiff submits that the property was worth much more than the final appraisal value obtained for purposes of the commitment, and that the valuation he did himself on MLS, which he produced in evidence in this motion, valued the properties at over $1 million.

[23] He submits that the appraisers of his property, used by HLC, were not qualified to do a commercial appraisal.

[24] He submits that the process with CIBC, HLC, Home Trust and its two appraisers was all a scheme to prevent financing to issue.

[25] He has produced no documentary evidence or expert reports to support the contentions set forth above.

[26] The plaintiff submits that summary judgment should not issue, but that this action should proceed to trial, in order that he is afforded the opportunity to present his evidence, documentation, to obtain appraisal reports regarding the subject properties and to provide evidence of damages.

The Law and Analysis

Constitution of This Action in the Name of the Plaintiff

[27] As regards the constitution of this action in the name of the plaintiff, rather than the Corporation, Network, the jurisprudence clearly indicates that individual shareholders have no cause of action in law for any wrongs done to a corporation. As set forth in Foss v Harbottle:

Individual shareholders have no cause of action in law for any wrongs done to the Corporation and if an action is to be brought in respect of such losses, it must be brought either by the Corporation itself (through management) or by way of a derivative action. Mernick Construction Co. Limited v Royal Bank of Canada, 2009 CanLll 2916 (ONSC) at para 14, citing Hercules Management Limited v Ernst & Young, 1997 CanLll 345 (SCC).

[28] That has not been done in this case.

[29] Any potential wrongs done to the owner of the property, Network, if found, and any damages that may flow from such a finding, are not damages owing to the plaintiff, but rather to the owner of the property, Network. The plaintiff has no legal cause of action in this matter.

[30] While I find that this action is not properly constituted, as it should have been brought in the name of Network and not in the name of the plaintiff, and should be dismissed on that basis, I will go on to address the arguments as regards summary judgment.

Summary Judgment

[31] In Hryniak v Mauldin, 2014 SCC 7, [2014] S.C.J. No. 7, the Supreme Court of Canada determined that there would be no genuine issue requiring a trial where a judge is able to reach a “fair and just determination on the merits” of the case. This will be the case when the process: (1) permits the judge to make the necessary findings of fact on the basis of the evidence adduced, (2) allows the judge to apply the law to the facts, and (3) is a proportionate, more expeditious and less expensive means to achieve a just result.

[32] Pursuant to Hryniak, the motion judge should first determine if there is a genuine issue requiring a trial based only on the evidence before the court, without using the new fact-finding powers set forth in Rule 20.04. There will be no genuine issue requiring a trial if the summary judgment process provides the court with the evidence required to fairly and justly adjudicate the dispute and is a timely, affordable and proportional procedure. If there appears to be a genuine issue requiring a trial, the motion judge should determine if a trial can be avoided by using the new powers under Rules 20.04(2.1) and (2.2). The judge may, at his or her discretion, use those powers, provided that doing so does not offend the interest of justice, i.e., that it will lead to a fair and just result and will serve the goals of timeliness, affordability and proportionality in light of the litigation as a whole.

[33] The moving party bears the onus of establishing that there is no triable issue. However, a responding party must “lead trump or risk losing”: 1061590 Ontario Limited v Ontario Jockey Club, [1995] O.J. No. 132, 21 O.R. (3d) 547 (Ont. C.A.). The responding party may not rest on the allegations or denials in the pleadings, but must present by way of affidavit or other evidence, specific facts and coherent, organized evidence demonstrating a genuine issue. The responding party is required to “put its best foot forward”: Curoe Construction Ltd. v Ottawa (City), 2015 ONCA 693 at paras. 26-27 (Ont. C.A.) The motions judge is entitled to assume that the record contains all evidence that the parties will present if there is a trial. It is not sufficient for the responding party to say that more and better evidence will be available at trial. The court must take a “hard look” at the evidence to determine whether there is a genuine issue for trial.

[34] The application and Commitment Letter are fully documented. The appraisal value of the properties did not conform to the appraisal value of $1.2 million which was required for a $600,000 loan, as set forth in the Commitment Letter signed by the plaintiff. A second offer of loan in the amount of $390,000, based on the actual appraised value of $600,000 (as is) or $665,000 (as if complete) was never accepted by the plaintiff.

[35] There is no evidence, in the form of other appraisals obtained by the respondent or otherwise to suggest that the appraised value of $600,000 rather than $1.2 million was wrong. While the responding party plaintiff relies on a MLS posting he himself prepared and posted, as above-indicated, such is self-serving and I discount that evidence.

[36] There was no obligation on the part of either defendant to secure the amount of loan sought by the plaintiff. Pursuant to the Conditions in the Commitment, that was dependent on the value of the properties to be secured, as appraised. The appraisal values did not meet and fulfil the condition as regards appraised value.

[37] The responding party plaintiff has put forth no concrete evidence of any damages sustained by the plaintiff as claimed, nor any amounts established. The obligations and duties on the parts of the defendants was clearly set forth in the Forms, Commitments and Customer Consent and Disclosure Form (Ontario) entered into and agreed upon by the plaintiff. Again, as noted above, any damages would not be that of the plaintiff in this action, but rather the damages of the owner of the property, Network, which, however, is not a named party to this action.

[38] The respondent/plaintiff has failed to produce any medical or psychiatric evidence in support of his claim of $50,000 for mental and emotional distress.

[39] There is an absence of any documentation or evidence that would support the plaintiff’s claims. The plaintiff has failed to put his best foot forward. As indicated above, at paragraph 33, the responding party plaintiff has failed to “lead trump or risk losing”. This Court is entitled to assume that the record contains all evidence that the parties will present if there is a trial. It is not sufficient for the responding party to say, as he has, that more and better evidence will be available at trial.

[40] There is no concrete evidence of damages sustained by the plaintiff, nor any amounts established. The obligations and duties on the parts of the defendants was clearly set forth in the forms, commitments and Customer Consent and Disclosure Form (Ontario) entered into an agreed upon by the plaintiff.

[41] I am satisfied that there are no issues requiring a trial, based on all of the evidence before this Court. I find, based on all of the evidence, that the summary judgment process permits me to fairly and justly adjudicate the dispute, make the necessary findings of fact on the basis of the evidence adduced and to apply the law to those facts. I further find that summary judgment is a proportionate, more expeditious and less expensive means to achieve a just result.

[42] I am satisfied that the defendants have satisfied their onus and established that there is no genuine issue requiring a trial in this action and that summary judgment should be granted pursuant to the motion of the defendants, HLC and Home Trust.

[43] Considering the principles of timeliness, affordability and proportionality, as I must in determining whether summary judgment should issue, I am satisfied that a full trial is unnecessary and summary judgment should, in all of the circumstances of this case, be granted.

[44] Summary judgment is granted against the plaintiff and this action is dismissed.

Costs

[45] I would urge the parties to agree upon costs, failing which I would invite the parties to provide any costs submissions in writing, to be limited to three pages, including the costs outline. The submissions may be forwarded to my attention, through Judges’ Administration at 361 University Avenue, within thirty days of the release of this Endorsement.

Carole J. Brown, J. Date: April 25, 2017