COURT FILE NO.: CV-22-00685150-0000 DATE: 20241010 SUPERIOR COURT OF JUSTICE - ONTARIO

RE: PUNEET BRAR AND REALTUS LAW PROFESSIONAL CORPORATION Applicants AND: STEPHEN HARBOUR Respondent

BEFORE: Justice Chalmers

COUNSEL: A. Melfi, for the Applicants S. Turk, for the Respondent

HEARD: September 27, 2024, by videoconference

ENDORSEMENT

OVERVIEW

[1] The applicant Puneet Brar (Brar) is a lawyer practicing in Toronto. The applicant Realtus Law Professional Corporation is her law firm. On August 30, 2020, the applicants were retained by the respondent, Stephen Harbour (Harbour) to act on his behalf with respect to the re-financing of his residential property located 3443 Burningoak Crescent, Mississauga, Ontario (the “Property”). The re-financing did not proceed. The applicants were later retained in November 2020 with respect to the sale of the Property to Nela Mamalyga and Evan Mammas (the Buyers).

[2] There were seven liens registered on title by the Canadian Revenue Agency (CRA). The Buyers requisitioned that the CRA Liens be cleared following the closing of the transaction. Harbour provided six of the seven discharge statements. He advised Brar that the lien bearing Instrument No. PR1281100 (Lien1100) was a duplicate. No discharge statement was provided for Lien1100. Brar asked Harbour for access to his CRA account to confirm the amounts owing on the CRA Liens. Harbour did not provide authorization. Brar drafted, and Harbour signed, a declaration and indemnity pursuant to which Harbour agreed to indemnity Brar for any liability arising out any inaccuracies or discrepancies in the discharge statements of the CRA liens. Brar provided a personal undertaking to the Buyers to pay the CRA Liens and deliver clear title.

[3] The sale transaction closed on December 1, 2020. Following closing Brar sent funds to CRA to discharge the CRA Liens. The balance of the funds was sent to Harbour. In August 2021 CRA advised that Lien1100 remained registered on title to the property. The CRA delivered a discharge statement that provided that the amount required to discharge Lien1100 was $564,707.47. The applicants paid the amount to CRA to secure the discharge of the lien. The applicants seek judgment against the respondent in the amount of $564,707.47, plus interest and costs.

[4] For the reasons set out below, I grant judgment in favour of the applicants.

FACTUAL BACKGROUND

[5] Harbour retained Brar with respect to the re-financing of the Property on August 30, 2020. At that time, the following CRA liens were registered on title to the Property:

(i) PR1281100 registered on June 26, 2007 (Lien1100); (ii) PR3199799 registered on September 12, 2017; (iii) PR3199805 registered on September 12, 2017; (iv) PR3379456 registered on September 14, 2018; (v) PR3392048 registered on October 11, 2018; (vi) PR3507887 registered on July 16, 2019; and (vii) PR3507891 registered on July 16, 2019 (Lien7891).

(collectively, the CRA Liens)

[6] Brar was provided with copies of the registered instruments for all seven of the CRA Liens. Harbour provided discharge statements for six of the seven liens. He advised Brar that the Lien1100, was a duplicate with Lien7891. Brar asked Harbour to give her authority to access his CRA account to confirm that she had up-to-date information for all of the CRA Liens. Harbour did not provide the authority to allow Brar to access his CRA account.

[7] The re-financing did not proceed. In November 2020, Harbour retained Brar with respect to the sale of the Property.

[8] Brar and Harbour spoke with a CRA representative by telephone prior to closing to confirm the amounts owing on the discharge statements remained accurate. The CRA representative confirmed that the amounts set out in the discharge statements were accurate and that interest was continuing to accrue.

[9] Harbour did not authorize Brar to directly access his CRA account. Brar drafted a declaration and indemnity which provided that Harbour would indemnify and save harmless the applicants arising from any liability arising from any inaccuracies of discrepancies that may arise from reliance on the discharge statements (the Declaration). Harbour signed the Declaration on November 30, 2020. The Declaration provides as follows;

I confirm that I have obtained discharge statements from the Canada Revenue Agency for the liens registered on the subject property as follows: PR1281100, PR3199799, PR3199805, PR3379456, PR3392048, PR3507887 and PR3507891.

I confirm that I have not provided my solicitor, Puneet Brar of Realtus Law Professional Corporation, authorization and/or access to my Canada Revenue Agency account and understand that Puneet Brar is relying on the accuracy of the statements I have provided as she cannot confirm same with the Canada Revenue Agency.

I indemnify and save harmless Puneet Brar and Realtus Law Professional Corporation of any liability arising from any inaccuracies and/or discrepancies that may arise from reliance on the discharge statements I have provided for the registered liens listed in paragraph 2.

In the event there is any errors in the discharge statements I have provided from the Canada Revenue Agency, I undertake to pay the amount outstanding in order to obtain a discharge.

[10] In connection with the sale of the Property, the Buyers requisitioned a discharge of the CRA Liens. Brar provided a personal undertaking to obtain a good and valid discharge of the CRA Liens from title to the Property as soon as possible after closing (the Undertaking).

[11] The sale of the Property closed on December 1, 2020. The total amount of $1,225,583.16 was received by Brar in trust. On December 2, 2020, Brar sent two cheques to the CRA in the amounts of $31,430.80 and $95,032.11 for the discharge of the CRA Liens. In her covering letter to the CRA, Brar noted that based on information she received from Harbour, Lien1100 and Lien7891 were duplicates. Brar did not receive a response from CRA.

[12] On December 2, 2020, the net proceeds of $932,106.91 were delivered to Harbour.

[13] In August 2021, Brar was contacted by the Buyers’ lawyer seeking confirmation that all CRA Liens had been discharged. Brar contacted the CRA and was advised that Lien1100 was still registered on title. At that time the CRA representative indicated that the amount to discharge the lien was approximately $700,000.

[14] Brar attempted to speak with Harbour. She was unsuccessful. On August 12, 2021, she sent a follow up email to Harbour. In the email she states that CRA advised that it had discussed a payment plan with Harbour with respect to Lien1100. She asked that he contact her immediately. She did not receive a response.

[15] On October 27, 2021, the CRA delivered a discharge statement that confirmed the amount to discharge Lien1100 was $562,854.07, with per diem interest of $77.10. On November 22, 2021, Brar’s insurer paid $564,707.47 to discharge the Lien1100. The lien was discharged on December 7, 2021.

THE ISSUES

[16] The following issues will be addressed in this endorsement:

i) Preliminary Issues; a. Can the applicant’s counsel appear on the application? b. Is this matter properly before the court on an application? ii) The Declaration and Indemnity; a. Does the doctrine of contra proferentem apply? b. Does the doctrine of non est factum apply? c. Does the indemnification in the Declaration apply? iii) Are the applicants entitled to relief on the basis of Unjust Enrichment?

ANALYSIS

Preliminary Issues

a. Can the applicant’s counsel appear on the application?

[17] In her affidavit sworn August 8, 2022, Brar deposes that her legal counsel, Mr. Melfi contacted CRA to confirm the amounts that were outstanding and required to be paid to secure a discharge of Lien1100. On October 27, 2021, the CRA wrote to Mr. Melfi with an updated discharge statement which confirmed that the total amount to discharge Lien1100 from title was $562,854.07 with per diem interest accruing at a rate of $77.10. Brar also deposes that on November 22, 2021, her insurer paid the amount of $564,707.47 to CRA to secure a discharge of Lien1100.

[18] Harbour argues that Mr. Melfi is a witness and therefore cannot appear as counsel for the applicant on the application. I note that the respondent did not provide notice that he would be taking the position that Mr. Melfi could not act as counsel for the applicants when the hearing date and timetable for the application was scheduled. The respondent did not make any objection during the cross-examinations. The issue was raised by the respondent for the first time in his factum.

[19] As a general rule, a lawyer who is a necessary witness should not also act as counsel. However, before disqualifying a lawyer because of their role as a witness it must be established that there is a real basis to believe counsel will likely or probably, provide material evidence: Hames v. Greenberg, 2013 ONSC 4410, at para. 68.

[20] The test to be applied to remove a lawyer from the record who may be a witness, is whether a fair-minded and reasonably informed member of the public would conclude that the proper administration of justice requires the removal. The determination of the issue is objective and fact-specific: Elkay Management Inc. v. Law Studio Professional Corporation, 2021 ONSC 3181, at para. 60 (sic).

[21] Mr. Melfi did not submit an affidavit for use on the application. The reference to Mr. Melfi in Brar’s affidavit is not controversial. She deposes that Mr. Melfi wrote to the CRA. A copy of his correspondence to CRA dated October 5, 2021 is attached as an exhibit to her affidavit. She also deposes that CRA wrote to Mr. Melfi on October 27, 2021 enclosing the discharge statement. The correspondence from CRA and the discharge statement are exhibits to her affidavit. There is no dispute that the applicants’ insurer paid the amount set out in the discharge statement to secure a discharge of Lien1100.

[22] I am of the view that the reference to Mr. Melfi in Brar’s affidavit does not qualify him from acting for the applicants. The evidence sets out the amount the CRA required to discharge the lien. The CRA discharge statement is attached to the affidavit. I am not satisfied that this evidence is controversial. I am satisfied that a fair-minded and reasonably informed member of the public would conclude that Mr. Melfi’s removal is not necessary for the proper administration of justice.

b. Is this matter properly before the court on an application?

[23] The respondent argues that there are material facts in dispute and issues of credibility that require a trial and therefore this matter is not appropriately dealt with by way of application. The respondent states that a full evidentiary record is required for the court to fairly determine the nature and wording of the Declaration, and the amount owing to the CRA.

[24] The primary issue on this application is the interpretation of the Declaration. Rule 14 of the Rules of Civil Procedure provides that the court can interpret the rights of a parties under a contract by way of application.

[25] Rule 14 also provides that an application is appropriate if there are no material facts in dispute. I am of the view that there are no material facts in dispute. There is no issue as to the following:

• Harbour owned the Property,
• The Property was subject to CRA Liens,
• The Buyers required a discharge of the CRA Liens,
• Harbour provided the discharge statements to Brar,
• Harbour represented that Lien1100 and Lien7891 were duplicates,
• Harbour did not give Brar authorization to access his CRA account,
• Brar required a Declaration and Indemnity to be executed by Harbour,
• Harbour executed the Declaration,
• Brar provided the Undertaking to the Buyers to discharge the CRA Liens on closing,
• The sale of the Property closed on December 1, 2020,
• Following closing Brar paid $126,462.91 to CRA to discharge the liens she understood were outstanding,
• On October 27, 2021, the CRA delivered a discharge statement that confirmed the amount to discharge the Lien1100 was $562,854.07 with per diem interest of $77.10,
• On November 22, 2021, the applicants’ insurer paid $564,707.47 to discharge Lien1100,
• Lien1100 was discharged on December 7, 2021.

[26] I am satisfied that the application involves the interpretation of an agreement and there are no material facts in dispute. I conclude that the Court has jurisdiction to decide the issues by way of application.

Declaration and Indemnity

a. Does the doctrine of contra proferentem apply?

[27] Harbour provided the discharge statements for six of the seven CRA Liens. Harbour did not include the discharge statement for Lien1100. Harbour advised Brar that Lien1100 was a duplicate with Lien7891. Brar deposes in her affidavit that she asked Harbour to give her access to his CRA account to ensure that she had up to date payout information with respect to the CRA Liens. Harbour did not provide her with access.

[28] Brar further deposes that because Harbour did not provide the authorization to access the CRA account, she prepared a Declaration in which Harbour agreed to indemnify and save Brar and her firm harmless from any liability arising from any inaccuracies or discrepancies arising from the reliance on the discharge statements. Harbour signed the Declaration on November 30, 2020. After Harbour signed the Declaration, Brar provided the Undertaking to the Buyers to clear the CRA Liens from title following the closing.

[29] Harbour argues that the Declaration is a contract of adhesion because the essential clauses were not freely negotiated but instead were drawn by Brar and imposed on Harbour. The Declaration was drafted by Brar and was presented to Harbour on the day before the closing. Contracts of adhesion are strictly construed against the party drafting the agreement. If there is any ambiguity in the terms used, the words will be strictly construed against the party drafting the contract by applying the contra proferentem rule: Frankie Tomatto’s Woodbine Inc. v. Moneris Solutions Corporation, at paras. 32 and 44.

[30] Harbour argues that the Declaration is ambiguous. The Declaration provides that the indemnity will arise if there is liability on Brar arising from any inaccuracies or discrepancies in the discharge statements. He argues that there was no discharge statement provided for Lien1100. Therefore, the applicants could not rely on a discharge statement that did not exist. Also, there could not be any error in a discharge statement that did not exist.

[31] I am of the view that the Declaration is not ambiguous. The Declaration provides that Brar received discharge statements for the liens. Harbour agreed to indemnify Brar if there was an inaccuracy in the discharge statements. I find that the doctrine of contra proferentem does not apply to the Declaration.

b. Does the doctrine of non est factum apply?

[32] Harbour alternatively argues that the Declaration is of no effect because of the doctrine of non est factum. The doctrine of non est factum applies to someone who, as a result of a misrepresentation, has signed a document mistaken as to its nature and character and who has not been careless in doing so: Bulut v. Carter, 2014 ONCA 424, at para. 18. There is no evidence from Harbour that he did not understand the Declaration. The respondent argues that Brar considered the Declaration to be in place for a “slight discrepancy” and not for a payment of hundreds of thousands of dollars, and therefore Harbour’s intentions could not have been anything different.

[33] I do not find the respondent’s argument to be persuasive. Brar testified on her cross-examination that she did not know the amount owing to the CRA because she did not receive the payouts directly and she was not corresponding with the CRA. If she had been provided with access to Harbour’s CRA account, she would have known the amount of the lien and would not have required the Declaration.

[34] There is also no evidence that Harbour did not have capacity when he executed the Declaration. In fact, the evidence is to the contrary. About one month before on October 16, 2020, Harbour executed a Power of Attorney (POA) for property. There is no suggestion in the material that Harbour did not have capacity to sign the POA. The only medical evidence filed by the respondent dates from 2022. There is no medical evidence with respect to Harbour’s capacity in the fall of 2020.

[35] I find that the respondents failed to establish the defence of non est factum.

c. Does the indemnification in the Declaration apply?

[36] A contract is to be interpreted having regard to the objective intent of the parties. The principles of contractual interpretation are to be applied to the words used in the written contract, considered in the light of the factual matrix. The court is required to take a practical, commonsense approach to determine the intent of the parties and the scope of their understanding of the agreements: Sattva Capital Corp. v. Creston Moly Corp., 2014 SCC 53, at paras. 47, 49, 50.

[37] The contract is to be interpreted as follows:

a. as a whole, in a manner that gives meaning to all of its terms and avoids an interpretation that would render one or more of its terms ineffective; b. by determining the intention of the parties in accordance with the language they have used in the written document and based upon the “cardinal presumption” that they have intended what they have said; c. with regard to objective evidence of the factual matrix underlying the negotiation of the contract, but without reference to the subjective intention of the parties; and d. to the extent that there is any ambiguity in the contract, in a fashion that accords with sound commercial principles and good business sense, and that avoids a commercial absurdity: Ventas Inc. v. Sunrise Senior Living Real Estate Investment Trust, 2007 ONCA 205, at para. 24.

[38] In my view the language used in the Declaration is clear and unambiguous. It provides that if Brar incurs any liability arising from any inaccuracies or discrepancies that may arise from her reliance on the discharge statements, Harbour would pay the amount outstanding in order to obtain a discharge of the liens. In reliance of the Declaration, Brar provided the Undertaking to discharge all CRA Liens on closing.

[39] Here there was an inaccuracy or discrepancy between the discharge statements and the amount that was required to discharge the CRA Liens. Lien1100 was not a duplicate and an additional $564,707.47 was required to payout and discharge the lien. Brar was required to make this payment in accordance with her Undertaking. She incurred this liability because of an inaccuracy or discrepancy in the discharge statements provided by Harbour. The indemnity provides that Harbour was required to indemnify the plaintiffs for any liability incurred as a result of the reliance on the discharge statements.

[40] I am satisfied that the situation that arose was specifically contemplated by the parties and was the reason the Declaration was required by Brar. On a plain reading and reasonable interpretation of the Declaration, I find that Harbour is liable to indemnify Brar for the amount paid to discharge Lien1100.

Unjust Enrichment

[41] In the alternative, the applicants argue that they are entitled to relief based on the restitutionary principle of unjust enrichment.

[42] Harbour argues that the applicants are not entitled to claim unjust enrichment because they do not specifically seek relief for unjust enrichment in the notice of application. However, the notice of application at paragraph 2(x) provides that the respondent was unjustly enriched by the payment by the applicants. Counsel for Harbour conceded that this was not a strong argument. I agree. I am satisfied that sufficient notice was provided to the respondent that the applicants are seeking relief pursuant to the doctrine of unjust enrichment.

[43] The elements of unjust enrichment require the applicant to prove the following:

a. The party from whom relief is being sought has been enriched; b. The applicant has suffered a corresponding deprivation; and c. There is no juristic reason to justify the deprivation: Ungar v. MOD Developments, 2024 ONCA 298, at para. 57.

[44] The Property was subject to the CRA Liens, including Lien1100. Harbour was required to pay the total amount of the CRA Liens so clear title could be transferred to the Buyers. Harbour’s equity in the Property was the amount of the sale price less the amount required to discharge all CRA Liens, including Lien1100. Brar argues that Harbour was enriched by the amount required to discharge Lien1100.

[45] Harbour argues that the if the amount paid to CRA with respect to Lien1100 was not properly owing, Harbour was not enriched. It is Harbour’s position that there is insufficient evidence as to the amount required to discharge the lien. The only evidence on the amount outstanding on the lien was the exchange of correspondence between the CRA and the applicants’ counsel. The respondent states that there is no evidence from the CRA with respect to when the lien was incurred, any payments that may have been made by the respondent or the interest that accrued.

[46] I am satisfied that there is sufficient evidence to establish that Harbour was enriched. On October 27, 2021, the CRA delivered a discharge statement that provided that the amount required to obtain a discharge was $562,854.07, with per diem interest of $77.10. Whether the discharge statement was accurate or if Harbour is entitled to a credit for payments made to CRA may be an issue between Harbour and the CRA. However, it does not affect the amount that Brar was required to satisfy her Undertaking and obtain a discharge of the lien.

[47] There is no suggestion in the evidence that the discharge statement provided by the CRA was fabricated. The only party that could have challenged the CRA discharge statement was Harbour. Harbour has not put forward any evidence that the amount set out in the discharge statement was inaccurate. He did not produce a Notice of Assessment, or proof of payment.

[48] I am satisfied that Harbour was enriched by the amount paid by Brar to obtain a discharge of the Lien1100, in the amount of $564,707.47.

[49] I am also satisfied that the applicants suffered a corresponding deprivation. The applicants had no interest in the Property. They were not liable to pay the lien. The obligation to pay the lien was because of the Undertaking executed by Brar at the time of closing of the Property.

[50] Harbour argues that the existence of a contract is a juristic reason for the enrichment and corresponding deprivation. to deny recovery. Harbour states that the Declaration is a contract that governs the situation. I do not accept the respondent’s argument. The respondent argues that the contract does not govern because of the defences of contra proferentem and non est factum. If the contract does not apply, there would be no juristic reason for the enrichment. If the contract applies, Harbour is liable pursuant to the Declaration to indemnity the applicants for the amount required to obtain a discharge of the lien.

[51] I am satisfied that there is no juristic reason for the enrichment and corresponding deprivation. The CRA lien was a debt owed by Harbour. Pursuant to the Undertaking, Brar was required to discharge the lien. Brar did not have any interest in the Property. The discharge was solely for the benefit of Harbour.

[52] I am satisfied that the applicants are entitled to an order of restitution in the amount paid to CRA to discharge Lien1100.

DISPOSITION

[53] For the reasons set out above, I am satisfied that Harbour is required to indemnify the applicants for the amount paid to the CRA to discharge Lien1100. I make the following order:

• An order requiring Harbour to pay to the applicants, the sum of $564,707.47;
• An order that Harbour is required to pay to the applicants, prejudgment interest on $564,707.47 from the date of payment to CRA on November 22, 2021, to the date of this endorsement;
• The applicants are successful on the application and are presumptively entitled to their costs.

[54] If the parties are unable to agree on either the amount of prejudgment interest or costs, the issues will proceed in writing. The applicants may deliver their written submissions of no more that 5 pages in length, excluding bills of cost and caselaw, within 15 days of the date of this endorsement. The respondent may deliver his responding submissions on the same basis within 15 days of receiving the applicants’ submissions.

DATE: October 10, 2024

Chalmers J.