COURT FILE NO.: 3887/09
DATE: 2012-12-20
ONTARIO
SUPERIOR COURT OF JUSTICE
BETWEEN:
ROYAL BANK OF CANADA
Plaintiff
– and –
989287 ONTARIO LTD., PRITHIPAL BAWA aka PRITHIPAL SINGH BAWA, HARMIT BAWA aka HARMIT DANNY BAWA aka HARMIT SINGH BAWA, SHIVANI SAWHNEY and ARVINDER BAWA
Defendants
James Satin, Counsel for the Plaintiff
Jerome H. Stanleigh, Counsel for the Defendants
HEARD: December 11, 2012
REASONS FOR JUDGMENT
MURRAY J.
[1] The plaintiff Royal Bank of Canada (hereinafter referred to as" the Bank") brings a motion for summary judgment against the defendant Prithipal Singh Bawa as guarantor of a loan to 989287 Ontario Ltd. (hereinafter referred to as “989287”).
The Facts
[2] In December 2003, the Bank agreed to provide 989287 with certain loan facilities which were renewed and revised from time to time. The Bank agreed to lend money to 989287 as follows:
a) an amount of up to $300,000 payable on demand by way of a line of credit (the Royal Credit Line) with interest thereon at the Bank’s prime rate in effect from time to time, plus 1.5% per annum as well after as before maturity, default judgment; and
b) an amount of up to $150,000 by way of a demand Variable Rate Business Term Loan payable on demand with interest thereon at the Bank’s prime rate in effect from time to time plus 1.5% per annum as well after as before maturity, default judgment. Pursuant to the agreement 989287 promised to pay the Bank in consecutive monthly principal payments of $3,125 plus interest based on a 48 month amortization with interest due monthly.
[3] The Bank made loans to 989287 under both credit facilities.
[4] This claim was commenced in May 2009 at which time 989287 was indebted to the Bank pursuant to a line of credit and demand operating loan in an amount exceeding $400,000. The action by the bank was commenced against 989287 and against Prithipal Singh Bawa, Harmit Bawa, Shivani Sawhney and Arvinder Bawa as guarantors of the debts and liabilities of 989287.
The Guarantees of the Other Defendants
[5] Harmit Bawa executed written guarantees of the debts and liabilities of 989287 as follows: a guarantee dated March 11, 2002, guaranteed payment up to $145,000; a guarantee dated March 4, 2005 guaranteed payment of up to $150,000 and a guarantee dated August 16, 2007 guaranteed payment up to $450,000 of the debts and liabilities of 989287. The defendant Shivani Sawhney executed written guarantees as follows: a guarantee dated March 11, 2005 guaranteed payment of up to $150,000; a guarantee dated August 16, 2007 guaranteed payment up to $450,000 of the debts and liabilities of 989287. The defendants Harmit Bawa and Shivani Sawhney filed an assignment in Bankruptcy on the 14th day of October, 2009.
[6] The defendant Arvinder Bawa executed a written guarantee in favour of the Bank dated March 18, 2005 guaranteeing payment of up to $150,000 of the debts and liabilities of 989287. As a result of the sale of a mortgaged property and the payment to the bank of in excess of $150,000, the Bank advised the Court that the obligations of the defendant Arvinder Bawa pursuant to this guarantee have been satisfied.
The Guarantees of the Defendant Prithipal Singh Bawa
[7] The defendant Prithipal Singh Bawa executed two guarantees in favour of the Bank.
[8] The first Guarantee and Postponement of Claim in favour of the Bank was executed by the defendant Prithipal Singh Bawa on or about September 12, 2002. Pursuant to the first guarantee, the defendant guaranteed payment on demand to the Bank of all debts and liabilities, present or future, direct or indirect, absolute or contingent, matured or not, at any time owing by 9892872 to the Bank. The defendant’s liability under this first guarantee is limited to the sum of $145,000 with interest from the date of demand for payment at the Banks prime rate in effect from time to time plus 2% per annum as well after as before default and judgment.
[9] The second Guarantee and Postponement of Claim in favour of the Bank was executed by the defendant Prithipal Singh Bawa on or about March 18, 2005. Pursuant to the second guarantee, the defendant guaranteed payment on demand to the Bank of all debts and liabilities, present or future, direct or indirect, absolute or contingent, matured or not, at any time owing by 9892872 to the Bank. The defendant’s liability under the second guarantee is limited to the sum of $150,000 with interest from the date of demand for payment at the Banks prime rate in effect from time to time plus 1.5% per annum as well after as before default and judgment.
[10] In August of 2006, the Bank amended the credit facilities provided to 989287. At that time, security was given for the indebtedness of 989287 including a collateral mortgage in the amount of $150,000 on title to a property located at 1529 Royal York Rd. in Toronto owned by the defendants Prithipal Singh Bawa and Harmit Bawa. In 2007, the collateral mortgage on the property was increased to $225,000.
[11] On April 30, 2009, the Bank made demand for payment of amounts due pursuant to guarantees.
[12] In July 2009 the Royal York Road property was sold by the Bank which received in excess of $155,000 which amount was applied towards the principal debt, interest incurred to that date, and legal fees and disbursements incurred with respect to the sale of the property.
[13] Amounts owing by 989287 as of July 25, 2009 exceeded $247,000 with interest thereon.
This Motion for Summary Judgment
[14] The defendants Prithipal Singh Bawa and Arvinder Bawa have been credited with payment of $150,000 as a result of the sale of a residential property on which a collateral mortgage was placed as security for the liabilities of 989287. The Bank acknowledges that the proceeds from the sale of the Royal York Road property effectively paid and discharged the $150,000 guarantees from Prithipal and Arvinder Bawa.
[15] As noted above, the defendants Harmit Bawa and Shivani Sawhney filed an assignment in bankruptcy on the 14th day of October, 2009.
[16] In this motion for summary judgment, that Bank now seeks judgment in the amount of $145,000 plus interest and costs against the defendant Prithipal Singh Bawa based on his September 12, 2002 guarantee of the liabilities of 989287. This guarantee is referred to above as the first Guarantee and Postponement of Claim in which the defendant guaranteed payment on demand to the Bank of all debts and liabilities, present or future, direct or indirect, absolute or contingent, matured or not, at any time owing by 9892872 to the Bank up to an amount of $145,000 plus interest from the date of demand for payment.
[17] There is no dispute that that 989287 has defaulted on its obligations to the Bank and there is further no dispute that demand has been made by the Bank pursuant to the Guarantee and Postponement of Claim of the defendant Prithipal Singh Bawa. There is no dispute that the outstanding obligations of 989287 far exceed the $145,000 plus interest guaranteed by the defendant Prithipal Singh Bawa.
The Position of the Defendant Prithipal Singh Bawa.
[18] The defendant asserts that the second guarantee of $150,000 was meant to replace his first guarantee of $145,000. He argues that the sale proceeds from the sale by the mortgagee Bank of the Royal York Road property which extinguished his obligations pursuant to the second guarantee have extinguished all his obligations to the bank pursuant to both the first and second guarantees.
[19] There is no factual foundation for this assertion by the defendant Prithpal Singh Bawa.
[20] Each "Guarantee and Postponement of Claim” executed by the defendant is in identical terms and contains the following provisions:
This guarantee shall be a continuing guarantee and shall cover all the liabilities, and it shall apply to and secure any ultimate balance due or remaining unpaid to the Bank.
This guarantee is in addition to and not in substitution for any other guarantee, by whomsoever given, and any time held by the Bank, and any present or future obligation to the bank incurred or arising otherwise than under a guarantee, of the undersigned or any of them or of any other obligant, whether bound with or apart from the customer; excepting any guarantee surrendered for cancellation and delivery of this instrument.
This instrument covers all agreements between the parties hereto relative to this guarantee and assignment and postponement, and none of the parties shall be bound by any representation or promise made by any person relative thereto which is not embodied herein.
[21] The defendant Prithpal Singh Bawa asserts in an affidavit sworn on 15 October 2010 the following:" These proceedings are most disturbing and distressing to the deponent as it seems to indicate the bank wishes to take advantage of the fact that we trusted the bank in signing a new guarantee when we were assured that the old guarantee would be extinguished on the occurrence of such an event.” There are no facts provided in the affidavit of the defendant to substantiate this alleged assurance by the Bank. The Bank denies that any such assurance was given. Apart from lack of specificity with respect to alleged assurances, the language of the guarantees makes it clear that the second guarantee in the amount of $150,000 was in addition to and not in substitution for any other guarantee. This is a complete answer to the assertion made by the defendant.
[22] The guarantees of the defendant Prithipal Singh Bawa are each accompanied by a Letter of Independent Legal Advice indicating that the guarantor received legal advice from an Ontario lawyer with respect to his guarantees of the liabilities of 9892872 to the Bank.
Analysis
[23] The jurisprudence relating to summary judgments is clearly set out in two oft-cited cases, Canada (Attorney General) v. Lameman, 2008 SCC 14, [2008] 1 S.C.R. 372, 292 D.L.R. (4th) 49 and Dawson v. Rexcraft Storage and Warehouse Inc., 1998 CanLII 4831 (ON CA), 164 D.L.R. (4th) 257 (OCA). The S.C.C. in Canada (Attorney General) v. Lameman (at paragraphs 10-11) states as follows:
The summary judgment rule …prevents claims or defences that have no chance of success from proceeding to trial. … It is essential to the proper operation of the justice system and beneficial to the parties that claims that have no chance of success be weeded out at an early stage. Conversely, it is essential to justice that claims disclosing real issues that may be successful proceed to trial.
[24] The Court then set out in some detail the applicable principles.
For this reason, the bar on a motion for summary judgment is high. The defendant who seeks summary dismissal bears the evidentiary burden of showing that there is "no genuine issue of material fact requiring trial": Guarantee Co. of North America v. Gordon Capital Corp., 1999 CanLII 664 (SCC), [1999] 3 S.C.R. 423, at para. 27. The defendant must prove this; it cannot rely on mere allegations or the pleadings: 1061590 Ontario Ltd. v. Ontario Jockey Club (1995), 1995 CanLII 1686 (ON CA), 21 O.R. (3d) 547 (C.A.); Tucson Properties Ltd. v. Sentry Resources Ltd. (1982), 1982 CanLII 1218 (AB KB), 22 Alta. L.R. (2d) 44 (Q.B. (Master)), at pp. 46-47. If the defendant does prove this, the plaintiff must either refute or counter the defendant's evidence, or risk summary dismissal: Murphy Oil Co. v. Predator Corp., (2004), 365 A.R. 326, 2004 ABQB 688, at p. 331, aff'd (2006), 55 Alta. L.R. (4th) 1, 2006 ABCA 69. Each side must "put its best foot forward" with respect to the existence or non-existence of material issues to be tried: Transamerica Life Insurance Co. of Canada v. Canada Life Assurance Co. (1996), 1996 CanLII 7979 (ON SC), 28 O.R. (3d) 423 (Gen. Div.), at p. 434; Goudie v. Ottawa (City), [2003] 1 S.C.R. 141, 2003 SCC 14, at para. 32. The chambers judge may make inferences of fact based on the undisputed facts before the court, as long as the inferences are strongly supported by the facts: Guarantee Co. of North America, at para. 30. (underlining added)
[25] In Combined Air Mechanical Services Inc. v.Flesch, 2011 ONCA 764, 108 O.R. (3d) 1, the Ontario Court of Appeal stated:
We find that the passages set out above from Housen, at paras. 14 and 18, such as "total familiarity with the evidence", "extensive exposure to the evidence" and "familiarity with the case as a whole", provide guidance as to when it is appropriate for the motion judge to exercise the powers in rule 20.04(2.1). In deciding if these powers should be used to weed out a claim as having no chance of success or be used to resolve all or part of an action, the motion judge must ask the following question: can the full appreciation of the evidence and issues that is required to make dispositive findings be achieved by way of summary judgment, or can this full appreciation only be achieved by way of a trial?
[26] At the summary judgment stage, the court wants to see what evidence the parties have to put before the trial judge, or jury, if a trial is held. Although the onus is on the moving party to establish the absence of a genuine issue for trial, there is an evidentiary burden on the responding party who may not rest on the allegations or denials in the party's pleadings, but must present by way of affidavit, or other evidence, specific facts showing that there is a genuine issue for trial. The motions judge is entitled to assume that the record contains all the evidence which the parties will present if there is a trial.
Conclusion
[27] There are no specific facts asserted by the defendant which create a genuine issue for trial. This court is in a position to fully appreciate the evidence and the issues and to make dispositive findings by way of summary judgment. There is no basis upon which it can be concluded that there is a genuine issue for trial.
[28] Judgment is therefore granted in favor of the Royal Bank of Canad against the defendant Prithipal Singh Bawa in the amount of $145,000 with interest from the date of demand for payment at the Banks prime rate in effect from time to time plus 2% per annum as well after as before default and judgment.
MURRAY J.
Released: December 20, 2012
COURT FILE NO.: 3887/09
DATE: 2012-12-20
ONTARIO
SUPERIOR COURT OF JUSTICE
BETWEEN:
ROYAL BANK OF CANADA
Plaintiff
– and –
989287 ONTARIO LTD., PRITHIPAL BAWA aka PRITHIPAL SINGH BAWA, HARMIT BAWA aka HARMIT DANNY BAWA aka HARMIT SINGH BAWA, SHIVANI SAWHNEY and ARVINDER BAWA
Defendants
REASONS FOR JUDGMENT
MURRAY J.
Released: December 20, 2012