COURT OF APPEAL FOR ONTARIO

CITATION: Royal Bank of Canada v. FTVRB2 Inc., 2016 ONCA 73

DATE: 20160126

DOCKET: C60565

Gillese, MacFarland and van Rensburg JJ.A.

BETWEEN

Royal Bank of Canada

Plaintiff (Respondent in Appeal)

and

FTVRB2 Inc., FTVRTZ Inc., NMF-TV Inc., Janice Olivia Goldman

and Aaron Goldman

Defendants (Appellant)

AND BETWEEN:

Royal Bank of Canada

Plaintiff (Respondent in Appeal)

and

Janice Olivia Goldman

Defendant (Appellant)

Joseph Kary, for the appellant, Janice Olivia Goldman

Rachel Moses, for the respondent RBC

Heard: January 18, 2016

On appeal from the order of Justice Barbara Conway of the Superior Court of Justice, dated May 1, 2015.

ENDORSEMENT

[1] The appellant appeals the order from the summary judgment of the motion judge wherein she granted judgment in favour of the Bank on the basis of certain guarantees signed by the appellant.

[2] There is no issue that the appellant signed the guarantees nor is there any question that the loans which are the subject of the guarantees are long in default.

[3] The appellant argues that the motion judge erred both procedurally and substantively.

Alleged Procedural Error

[4] First, Mr. Kary argues that the motion judge erred in proceeding with the Bank’s motion for summary judgment in the face of “clear” evidence of the appellant’s lack of capacity.

[5] Issues about the appellant’s capacity or, more accurately, lack of capacity were first raised in November, 2013 before Mesbur J. on a receivership motion by the Bank in relation to the three companies, the debts of which underlie the guarantees that are the subject of this appeal. In her reasons, Mesbur J. noted that the motion before her had been “adjourned repeatedly since March 21, 2013” and that “As for Janice Goldman, her lawyer Mr. Tock raises for the very first time today a potential issue as to her capacity. He has filed no material”.

[6] On the record before us the appellant’s lack of capacity was also raised in July, 2013 before McEwen J. where he noted:

Defendant Goldman’s solicitor Mr. Tock advises that he has heard from the solicitor for Ms. Goldman’s son that she may have developed psychological issues that affect her capacity.

This is not the first time that Ms. Goldman has alleged issues with capacity (see Mesbur J. endorsement of Nov. 29/13). To date, however no steps have been taken by her in this regard to determine the issues.

[7] He proceeded over the objection of Ms. Goldman’s then lawyer to set a schedule for the delivery of materials and any cross-examinations and fixed the date for the hearing of the summary judgment motion for May 1, 2015. The appellant thereafter changed counsel and a motion was brought before Penny J. on November 13, 2014. The schedule was somewhat altered in relation to the exchange of materials and cross-examinations but the May 1, 2015 date for the return of the summary judgment motion was confirmed and marked peremptory to the respondent (Ms. Goldman, the appellant). There is nothing in that endorsement about any lack of capacity of the appellant.

[8] On December 16, 2014, the parties were before Patillo J. who merely noted that no action was required and that the timetable had been “complied with late!”.

[9] The next appearance was before Patillo J. again on April 10, 2015. His endorsement reads:

Counsel for Ms. Goldman has raised capacity concerns with respect to his client. The issue is not new. It has been raised on more than one occasion in the past. Yet no one on Ms. Goldman’s side has taken any steps to deal with it, specifically in respect of this action. Accordingly there is no basis to interfere with the May 1, 2015 motion date, which is peremptory to Ms. Goldman among others.

[10] The motion came on before the motion judge on May 1, 2015 as scheduled and Mr. Kary again sought an adjournment on the basis that his client lacked capacity. He had recently filed, on behalf of his client, three affidavits.

[11] The first – from his law partner Grace Kwan – has nothing to do with the appellant’s capacity.

[12] Second, the affidavit of Aaron Goldman (the appellant’s son) offered hearsay evidence that his mother “was advised by her doctors on January 9, 2015 that she had been diagnosed with dementia and early stage of Alzheimers”. In addition, he provided details of his own observations of his mother’s conduct and behaviour and attached certain records from a medical centre and a letter from a physician dated February 3, 2015.

[13] The letter states: “Mrs. Goldman has diagnosis of early stage Alzheimer’s disease”. He says nothing about any lack of capacity.

[14] The records from the medical centre do not assist the appellant. The January 7, 2015 note of a neurologist notes that “Mrs. Goldman may require assistance with sorting out her financial difficulties. I have referred her to the social work services at the Memory Care Clinic. Additionally, she should appoint a power of attorney”. There is no suggestion that the appellant lacks capacity – indeed the only reasonable interpretation that can be put on this statement is that she has the capacity to make the appointment.

[15] Similarly the note of January 9, 2015 recites that the appellant had “newly diagnosed early stage Alzheimer’s disease” but went on to recite the appellant’s agreement to start medication and willingness to participate in a research study if qualified. There is no concern expressed in that note about any lack of capacity to consent to treatment.

[16] Leaving aside the issue of whether these materials, filed as they were as part of an affidavit by the appellant’s son, were properly admissible – they do not provide any evidence that the appellant lacked capacity at the time of the summary judgment motion on May 1, 2015.

[17] The third affidavit – from the appellant’s former co-worker – speaks to her forgetfulness. This is of no assistance on the issue of capacity. Ms. Chazan is not qualified to make any diagnosis of lack of capacity and, in any event, memory issues do not equate with incapacity.

[18] The law presumes capacity. Anyone alleging lack of capacity has the onus to prove it.

[19] As this court noted in Barnes v. Kirk, 1968 CanLII 389 (ON CA), [1968] 2 O.R. 213 at para. 6:

The party’s unsoundness of mind constitutes such a valid reason, but the onus of establishing that fact rests squarely on the party alleging it. The question essentially is one to be decided upon medical evidence; without direct cogent evidence from a person duly qualified to speak with authority upon the subject, it is difficult to perceive how the Court could pass upon the question judicially.

[20] In our view, there was no evidence before the motion judge to support a finding that the appellant lacked capacity at that time.

[21] There has been no motion before this court to receive fresh evidence in relation to the issue.

[22] The motion judge made no error in proceeding with the motion as she did. We do not accept this ground of appeal.

Substantive Issues

[23] Next the appellant argues that because the corporation used the loan money advanced by the Bank for a purpose other than the purpose for which it was advanced this constitutes a material change to the loan arrangement that would, absent the appellant’s consent, release her from the guarantee.

[24] We do not accept this submission. The undisputed evidence is that the Bank advanced the loan money as it was directed to do by Aaron Goldman, the appellant’s son and principal of the three companies.

[25] This was a “continuing all accounts” guarantee, the precise form of guarantee considered by this court in Royal Bank of Canada v. Samson, 2013 ONCA 313, where at para. 32 the court noted:

The purpose of a continuing all accounts guarantee is to allow the customer and the lender to alter their business arrangements without having to involve the guarantor.

[26] The motion judge considered the defences of non est factum, the Bank’s failure to fully advance the loan amounts, the alleged lack of independent legal advice and alleged undue influence. She rejected each and every one of them on the basis of the evidence before her.

[27] On non est factum, she concluded that at the time the guarantees were executed the appellant “was an intelligent woman, who had previously guaranteed her son’s companies’ loan arrangements, knew that this was a guarantee, admitted that she was given an opportunity to get independent legal advice and knew what she was signing” – and concluded there was nothing to it. We agree.

The defences of undue influence and the lack of independent legal advice were considered contextually and found to have no basis on the evidence. The appellant was a highly educated and intelligent woman when she signed the guarantees in 2010-2012. She knew and understood exactly what it was she was signing. Other than the fact that Aaron Goldman is the appellant’s son and he is younger than his mother, there is no evidence to support this defence and the relationship alone without more is no defence.

[28] As to the appellant’s argument that the Bank did not fully advance the loan monies – again, this is met by the fact that it was an all accounts continuing guarantee. By its terms, the guarantor was obligated to pay on demand all debts and liabilities to the Bank owing by the debtor. There was no requirement that the monies be fully advanced before she became obligated to the Bank.

[29] We see no error in the motion judge’s findings and would not interfere.

[30] The appeal is dismissed with costs to the respondent fixed in the sum of $13,000.00.

“E.E. Gillese J.A.”

“J. MacFarland J.A.”

“K. van Rensburg J.A.”