COURT FILE NO.: CV-11-424338

DATE: 20121016

SUPERIOR COURT OF JUSTICE - ONTARIO

RE: Elle Mortgage Corporation, Plaintiff

AND:

1700589 Ontario Inc. and Anthony Diamond, Defendants

AND RE: 1700589 Ontario Inc. and Anthony Diamond, Plaintiffs by Counterclaim

AND:

Elle Mortgage Corporation, Defendant to Counterclaim

BEFORE: Pollak J.

COUNSEL:
Glenn E. Cohen/Adam J. Wygodny , for the Plaintiff/Defendants to Counterclaim

Doug LaFramboise , for the Defendant/Plaintiff by Counterclaim

HEARD: September 11 and 13, 2012

ENDORSEMENT

[ 1 ] The Appellants, Elle Mortgage Corporation (“Elle”) and its solicitor Terry Walman, are appealing part of the order of Master Graham dated May 24, 2012, denying their motion to dismiss the entire counterclaim against them.

[ 2 ] The Appellants were granted summary judgment of their claim in the Action. The Action was brought by Elle to enforce a mortgage of a commercial condominium unit.

[ 3 ] The Respondents’ counterclaim and crossclaim (“Counterclaim”) against the Appellants is for:

(a) “Return & Repayment of the sum of $8,497.80, deducted from the mortgage loan advance on closing and received”;

(b) “Damages for deliberate vandalism, burglarizing, break and enter of the mortgaged property in the sum of $1,000,000.00”;

(c) “Damages for breach of contract in the sum of $1,000,000.00”;

(d) “Damages for conspiracy to breach the contract the sum [sic] of $1,000,000.00”; and,

(e) “Damages for breach of fiduciary duty in the sum of $1,000,000.00”.

[ 4 ] The Appellants submit that the decision of the Master should be varied to dismiss the Counterclaim in its entirety. The Master dismissed only the Counterclaim for damages for breach of fiduciary duty.

[ 5 ] The Appellants rely on the evidence in Mr. Walman’s affidavit.

[ 6 ] The Master held as follows with respect to the Counterclaim:

[61] From the standpoint of the counterclaim, the allegations that the defendant by counterclaim Walman and his agents vandalized the mortgaged premises are denied in Walman’s statement of defence to counterclaim but not in Mr. Walman’s affidavit. Mr. Walman does depose that “there was no trespass, and there are no damages” but does not specifically address the allegations of burglary and vandalism .

[62] The issue with respect to the allegations of trespass, vandalism and burglary is whether the words “there was no trespass and there are no damages” are sufficient to refute those allegations . Given the obligation of a party on a summary judgment motion to “put its best foot forward”, (See Transamerica Life cited in Combined Air , supra ) this bald statement is too vague to constitute evidence that the alleged vandalism and burglary did not occur and the motion to dismiss that portion of the counterclaim is dismissed.

[63] The counterclaim also contains a claim for return and repayment of the sum of $8,497.80 deducted from the mortgage loan advanced on closing and received and paid either to the plaintiff or to Mr. Walman . The counterclaim also contains claims for damages for breach of contract and conspiracy.

[64] The plaintiff’s affidavit evidence and factum do not address these claims and the motion to dismiss them is dismissed.

[65] The counterclaim also contains a claim for damages for breach of fiduciary duty, based on allegations that Mr. Walman used confidential information to his advantage and benefit and to Mr. Diamond’s benefit. The counterclaim does not contain any particulars of what confidential information Mr. Walman is alleged to have used.

[66] The plaintiff’s affidavit does include evidence setting out the nature of the other matters in which Mr. Walman acted for Mr. Diamond’s company Diamond + Diamond MBG Inc.. Based on the evidence in paragraphs 30 and 31 of Mr. Walman’s affidavit, which is set out at paragraphs [33], [34] and [35] above, I am satisfied both that the other matters are unrelated to the matter before me and that Mr. Walman did not obtain any confidential information from Mr. Diamond in the unrelated matters that he used in the prosecution of this action. In the absence of any evidence from the defendants that would raise a genuine issue requiring a trial, the plaintiff is hereby granted summary judgment dismissing the counterclaim for breach of fiduciary duty.

[ 7 ] The Appellants submit that the Master exercised his discretion on the wrong principles and misapprehended the evidence such that a palpable and overriding error occurred. The Appellants argue that the Master shifted the burden from the Plaintiffs by Counterclaim to the Defendants by Counterclaim by requiring the Appellants to disprove the Respondents’ bald allegations. Further, it is alleged that the Master misapprehended evidence, and the requirements for evidence, and proceeded on the wrong principle that the moving party had to “address” each and every item pleaded. In other words, the Master found that the Appellants did not meet the required burden of proof because Mr. Walman’s affidavit did not specifically link the general evidence to each separate claim in the Counterclaim.

[ 8 ] The Appellants also allege that the claims were inadequately pleaded and that the Respondents adduced no evidence to support the claims.

[ 9 ] The Respondents submit that the Master did not exercise his discretion on the wrong principles or misapprehend the evidence leading to a palpable and overriding error. They focus on Master Graham’s conclusion that “the affidavit evidence and factum do not address these claims and the motion to dismiss them is dismissed”.

[ 10 ] The parties are agreed that the standard of review of a Master’s decision is set out in Zeitoun v. Economical Insurance Group , 2008 20996 (ON SCDC) , 91 O.R. (3d) 131 (Div. Ct.), aff’d 2009 ONCA 415 , 96 O.R. (3d) 639.

Burglary, Trespass and Vandalism Claims

[ 11 ] The Appellants submit that in dismissing the motion to dismiss the “bald claims for burglary and trespass”, the Master exercised his discretion on the wrong principles and erred in law.

[ 12 ] The Master’s reasons for the refusal to dismiss these counterclaims is set out in paragraphs 61-66 of the decision. The Master concluded, and I agree, that the Appellants did not address the claims to the extent required for the summary judgment motion. The Appellants respond by submitting that the information was all there and the Master should have reached the conclusion that there was enough evidence to dismiss the counterclaim.

[ 13 ] With respect to the counterclaim for burglary, trespass and vandalism, the Master held that:

[61] From the standpoint of the counterclaim, the allegations that the defendant by counterclaim Walman and his agents vandalized the mortgaged premises are denied in Walman’s statement of defence to counterclaim but not in Mr. Walman’s affidavit. Mr. Walman does depose that “there was no trespass, and there are no damages” but does not specifically address the allegations of burglary and vandalism. [Emphasis added.]

[ 14 ] The Appellants submit that the Master overlooked the following evidence in Mr. Walman’s affidavit. They submit that the Master misapprehended the evidence and that this misapprehension led to palpable and overriding error:

27. There was no “trespass”. My process server Richard Chhabra, as I have been advised by him and verily believe, attended the mortgaged premises on or about June 23, 2011, and found them vacant. The mortgage documents themselves state that the Defendants do not occupy the property. Mr. Chhabra secured the property by arranging for the locks to be changed, and posted a notice that the premises were in the possession of the mortgagee. At this point in time, I had the letter from lawyer McGregor, Exhibit “P” above, acknowledging substantial arrears and stating they were to be paid. I state that Elle had the right to take possession as it did—at the very least, it had a colour of right to do so. Diamond has since changed the locks, and taken back possession. There was no trespass, and there are no damages.

[ 15 ] The Respondents point out that the Master addresses the insufficiency of the Appellants’s evidence with respect to each of the claims. In the statement of defence, Mr. Walman denies that there was any trespass on the mortgaged premises. However, in his affidavit, Mr. Walman emphasizes the word “trespass” but does not deny that there was any vandalism or burglary, even though the claim alleges trespass, vandalism and burglary, and even though vandalism is a more serious claim than trespass.

[ 16 ] The Appellants also rely on the fact that the Respondents did not adduce evidence to support their claims and did not cross-examine Mr. Walman. The Appellants submit that the Respondents were required to put their “best foot forward” and did not.

[ 17 ] I do not accept the submissions of the Appellants. As stated by the Master, the Appellants did not address the allegations of burglary and vandalism. To be successful in its motion, the Appellants had to adduce such evidence and did not. The Master could not have inferred from Walman’s affidavit, as is suggested by the Appellants, that no burglary or vandalism was possible. The issue was not addressed.

Claim for Return and Repayment

[ 18 ] The Respondent’s Crossclaim requested the return and repayment of $8,497.80, which included a $5,000 lenders’ fee and $2,000 for Mr. Walman’s legal fees. The Counterclaim also requests details with respect to the disclosure that every Mortgage Broker must provide.

[ 19 ] The Appellants submit that the Master misapprehended the evidence with respect to the Respondents’ claim for the return and repayment of the sum of $8,497.80. The Appellants submit that Mr. Walman adduced sufficient evidence to establish that there is no genuine issue for trial with respect to this counterclaim. The Respondents did not challenge this evidence through cross-examination or their own evidence.

[ 20 ] The Appellants submit that the misapprehension of their evidence resulted in a palpable and overriding error.

[ 21 ] With respect to these claims, the Master held that:

[63] The counterclaim also contains a claim for return and repayment of the sum of $8,497.80 deducted from the mortgage loan advanced on closing and received and paid either to the plaintiff or to Mr. Walman.

[64] The plaintiff’s affidavit evidence and factum do not address these claims and the motion to dismiss them is dismissed. [Emphasis added.]

[ 22 ] The Appellants submit that Mr. Walman’s evidence is exculpatory with respect to each item of the counterclaim. They argue that Mr. Walman did not need to specifically relate each statement of fact to the items pleaded as heads of damages. It is argued that once Mr. Walman gives that evidence, the responding party must “lead trump or risk losing”.

[ 23 ] The Walman affidavit, at paragraph 10, stated:

As can be seen from the above, both Diamond and 1700589, represented throughout by lawyer David McGregor, agreed to all terms and conditions of this mortgage transaction. In particular, they agreed to specified amounts being deducted from the mortgage advance for realty taxes, for premium for title insurance and a life insurance policy, (see evidence of payment enclosed as Exhibit “G”), for lender’s fees, and for legal fees and disbursements. As can be seen, the premium paid for the title insurance was more than the estimated deducted amount.

[ 24 ] Further, the Appellants rely on Exhibit E to the Walman Affidavit, which stated:

The above documents are being forwarded to you without any obligation on the part of our client to advance the whole or any part of the principal amount, in its sole discretion.

[ 25 ] I do not find that the Master erred as alleged by the Appellants. I agree with the Master that the Walman affidavit did not address these claims. The Appellants had to establish a link between their evidence and the alleged claims and did not do so.

Breach of Contract and Conspiracy Claims

[ 26 ] With respect to these claims, the Master held that:

[63] The counterclaim also contains a claim for return and repayment of the sum of $8,497.80 deducted from the mortgage loan advanced on closing and received and paid either to the plaintiff or to Mr. Walman. The counterclaim also contains claims for damages for breach of contract and conspiracy.

[64] The plaintiff’s affidavit evidence and factum do not address these claims and the motion to dismiss them is dismissed. [emphasis added]

[ 27 ] The Appellants submit that, in their Counterclaim, the Respondents do not identify the contract they allege was breached by the Appellants and they do not provide particulars of the alleged conspiracy.

[ 28 ] The Appellants rely on the absence of particulars and evidence by the Respondents. The Appellants adduced evidence denying the allegations that they breached an unspecified contract and participated in a conspiracy involving unknown actors with unknown purposes furthered through unknown means. Further, the Respondents did not adduce any evidence to support its “bald allegations”.

[ 29 ] The Appellants therefore submit that the Master exercised his discretion on the wrong principles and misapprehended the evidence such that a palpable and overriding error occurred.

[ 30 ] This was not a motion for particulars before the Master. The arguments of the Appellants with respect to insufficiency of pleadings are irrelevant as that was not the question before the Master. The Master found that the Appellants did not satisfy their burden to provide evidence on their summary motion with respect to these claims.

[ 31 ] As I have stated above, the Appellants had the burden of adducing evidence and establishing a link between that evidence and the alleged claims. They did not do so, with respect to these claims.

[ 32 ] I do not accept the submissions of the Appellants with respect to these claims that the Master exercised his discretion on the wrong principles or misapprehended the evidence such that a palpable and overriding error occurred.

[ 33 ] In conclusion, I find that the Master properly set out the legal principles to be considered on a motion for summary judgment in his decision in the motion for summary judgment in the main action and in the motion for summary judgment in the counterclaim.

[ 34 ] I disagree that the Master erred by concluding that the Appellants had not met their burden of proof on the motion with respect to the counterclaim. The Appellants provided some factual evidence without linking the evidence to the particular claims and without the application of any legal principles. This is not, in my opinion, sufficient for the Appellants to meet their burden of proof.

[ 35 ] Master Graham found that “The plaintiff’s affidavit evidence and factum do not address these claims and the motion to dismiss them is dismissed”. I find that the Master did not “exercise discretion on the wrong principles” or “misapprehend the evidence” leading to a palpable and overriding error.

Costs

[ 36 ] The parties have agreed that the successful party on this appeal is entitled to costs of $7,500 on a partial indemnity basis. At the hearing, the parties raised issues with respect to the payment of costs that were awarded on the Master’s motion. Should the parties be unable to agree on these issues regarding costs, submissions may be made on costs by the Respondents by 12:00 p.m. on October 26, 2012 and by the Appellants by 12:00 p.m. on November 9, 2012 .

Pollak J.

Date: September 16, 2012