ONTARIO
SUPERIOR COURT OF JUSTICE
BETWEEN:
TOMAS SOURAL
Plaintiff/Responding Party
– and –
BANK OF MONTRÉAL
Defendant/Moving Party
Tomas Soural, Representing himself
Catherine Latulippe, for the Defendant/ Moving Party
HEARD: June 17, 2013
ENDORSEMENT
1The defendant, Bank of Montréal (“BMO” or “the Bank”), brings this motion for summary judgment as against the plaintiff, Tomas Soural (“the plaintiff”), pursuant to Rule 20 of the Rules of Civil Procedure. The defendant submits that there is no genuine issue requiring a trial in this matter, and that the action should, accordingly, be dismissed.
2In his Statement of Claim, the plaintiff alleges that the defendant improperly refused to remove a Writ of Seizure and Sale (“the Writ”), placed on his property pursuant to a default judgment obtained in the Small Claims Court, in order to accommodate the sale of his property, thereby causing the real estate transaction to collapse. He alleges that BMO refused to lift the Writ despite his lawyer’s proposal to pay the amount which the Bank maintained was owing, the quantum of which he disputed, into court. The plaintiff further alleges that his wife, not he, was liable for the judgment obtained by default as against him, and that he suffered damages as a result of the judgment wrongly obtained and the Bank’s refusal to lift the Writ in order that he could proceed with the sale of his house. He alleges that, as a result, he lost his home to Power of Sale. Finally, he claims damages for anxiety, depression, humiliation and mental anguish.
3Prior to the Statement of Claim in this action being issued, the plaintiff successfully brought a motion to set aside the Small Claims Court default judgment against him in the amount of $10,972.04, and filed a Statement of Defence in the Small Claims Court action. Following issuance of the Statement of Claim in this action, a Small Claims Court trial regarding the plaintiff’s liability for the amounts sought to be paid was heard. Judgment was rendered against the plaintiff in favour of the defendant, BMO, in the Small Claims Court action on August 30, 2011, in the amount of $10,520.21 plus prejudgment interest from December 3, 2009 to August 30, 2011 at 11.9% per annum plus costs of $1,500 and post-judgment interest at 11.9% per annum.
4The defendant, BMO, brings this summary judgment motion and argues that issue estoppel prevents the plaintiff from attempting to re-litigate the liability issue in this Court, since the issue of liability was already determined in the Small Claims Court action. Accordingly, this action is devoid of merit and this is an appropriate action for summary judgment.
5The parties first appeared before me on January 24, 2013. The plaintiff had filed no materials or factum in response to the summary judgment motion and asked for an adjournment to file materials. An adjournment was granted, with strict timelines, which have been adhered to. The plaintiff has now served and filed a motion record containing his affidavit and supporting exhibits, and a factum.
The Facts
6On January 6, 2010, BMO commenced a Small Claims Court action against the plaintiff and his wife, Eva Koubova, for collection of a debt arising from the default in payment on a BMO MasterCard account in Ms. Koubova’s name, to which the plaintiff was a supplementary cardholder.
7The plaintiff and Ms. Koubova failed to defend the Small Claims Court action and, accordingly, on March 3, 2010, BMO obtained a default judgment and, thereafter, filed a Writ of Seizure and Sale. The plaintiff submits that he was not served with the Statement of Claim, although the evidence indicates that his wife took service of his copy. They were going through a separation.
8On April 20, 2010, BMO’s lawyers were contacted by Fabio Gazzola, the plaintiff’s lawyer, who requested a discharge statement for the account, as the plaintiff was selling his property. A series of correspondence ensued, which was in evidence before me. The lawyer had learned on the day of closing that there was a Writ on the property.
9On April 21, 2010, Mr. Gazzola was advised that the balance outstanding as at April 20, 2010, was $12,669.82, together with per diem interest thereafter at the rate of 3.58%, inclusive of the Bank’s counsel’s legal fee of $1,522.50 plus an additional fee of $300 plus GST to have the Bank request of the Sheriff that the Writ of Execution be lifted. These additional amounts were contested by Mr. Soural. On April 23, 2010, Mr. Gazzola was advised by BMO’s lawyer that the discharge quote was $11,234.48. Due to the dispute between the parties as to the amount actually owing, Mr. Gazzola proposed that the disputed amount be paid into court, and that the Writ be lifted to permit the sale of the property to proceed. BMO refused and the Writ remained in place.
10As a result, the plaintiff’s sale of his property did not close. He was unable to pay the Mortgagee from the proceeds of disposition of the sale of the home, and the Mortgagee of the property, which was not BMO, took possession of the house, which was thereafter sold under Power of Sale. As a further result, the purchase of another home by the plaintiff, which was to close on May 4, 2010, did not proceed as the purchase of that house was dependent on obtaining the proceeds of disposition from sale of the previous house.
11On October 20, 2010, pursuant to a motion brought by the plaintiff in Small Claims Court to have the default judgment set aside, the Court ordered that the default judgment be set aside and the Writ withdrawn, and permitted Mr. Soural to file a Statement of Defence, failing which the Bank was entitled to bring a motion without notice restoring the original Judgment and Writ.
12On November 4, 2010, Mr. Soural filed his Statement of Defence in the Small Claims Court action in which he disputed liability for the debt incurred on the account.
13Thereafter, on November 5, 2010, the plaintiff commenced this action for damages in the amount of $290,000 on the ground that he suffered damages as a result of the outstanding debt to BMO, the resulting Writ placed on the plaintiff’s house and loss of the sale to a third party, and subsequent loss of the home to Power of Sale under the mortgage on the home.
14On August 30, 2011, a trial was held and the merits of the Small Claims Court action were fully adjudicated. Mr. Soural was found to be liable for the debt owing on the MasterCard account and BMO was granted judgment in the full amount claimed of $10,520.21, plus prejudgment interest from December 3, 2009 to August 30, 2011 and post-judgment interest thereafter at the contractual rate of 11.9% per annum, as well as costs of $1,500. This judgment was not appealed.
The Present Claim
15In the present claim, brought prior to the trial in the Small Claims Court, the plaintiff disputes liability to BMO for the credit card debt. Moreover, he claims that the Bank wrongfully and unreasonably refused to lift the Writ despite his lawyer’s proposal to pay the disputed amount owing on the debt into court in order to permit the sale to proceed. The Statement of Claim sets forth the following allegations:
Mr. Gazzola and the plaintiff proposed that all money in dispute be paid into court from the proceeds of the sale of 3462 Spruce. Mr. Gazzola informed the defendants on several occasions that time was of utmost essence as the purchaser was prepared to walk away from the transaction….
The defendants were aware of the Power of Sale proceedings against the plaintiff, as Mr. Gazzola had informed them of the same and once again stressed the essence of time and potential damages, should the sale fall through.
The defendants knew full well that the first mortgage holder might take possession of the house and might sell the house under Power of Sale for less than the original price, as Mr. Gazzola had warned the defendants of that possibility. He also warned that the plaintiff would pursue the defendants for damages.
The defendants ignored or rejected all reasonable proposals to resolve issues, did not provide any evidence of the plaintiff’s liability, did not properly communicate with the plaintiff’s lawyer and did not remove the Writ of Seizure and Sale of Land from the title of 3462 Spruce, as they ought to have done….
The defendants knew full well that the sale of 3462 Spruce would collapse, unless they removed the Writ, as no reasonable buyer would buy a house with a Writ of Seizure and Sale on its Title. Yet the defendants made a deliberate, willful choice not to remove the Writ.
The Law and Analysis
Summary Judgment and Rule 20
16Rule 20 provides for summary judgment where there is no genuine issue requiring a trial with respect to a claim or defence. The Court of Appeal for Ontario has recently provided guidance with respect to the application of Rule 20 in Combined Air Mechanical Services Inc. v. Flesch, 2011 ONCA 764, [2011] O.J. No. 5431. The Court, at paras. 40-44, identified the following classes of cases which are generally appropriate for application of the summary judgment rule:
a) where the parties agree it is appropriate to determine an action by way of a motion for summary judgment;
b) where a claim or defence is without merit; and
c) where the trial process is not required in the interest of justice.
17The Court of Appeal in Combined Air, supra, observed that a judge, faced with a summary judgment motion, must focus on whether the case is one which does not require the trial process in the “interest of justice” or require a trial for a fair and just adjudication of the dispute. The Court observed at paras. 50-52 that:
[T]he 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?
We think this “full appreciation test” provides a useful benchmark for deciding whether or not a trial is required in the interest of justice. In cases that call for multiple findings of fact on the basis of conflicting evidence emanating from a number of witnesses and found in a voluminous record, a summary judgment motion cannot serve as an adequate substitute for the trial process. Generally speaking, in those cases, the motion judge simply cannot achieve the full appreciation of the evidence and issues that is required to make dispositive findings. Accordingly, the full appreciation test is not met and the “interest of justice” requires a trial.
In contrast, in document-driven cases with limited testimonial evidence, a motion judge would be able to achieve the full appreciation of the evidence and issues that is required to make dispositive findings.
18The judge hearing a motion for summary judgment is required to take a hard look at the evidence adduced by all parties in order to determine whether there is, or is not, a genuine issue requiring a trial. The onus of establishing that there is no genuine issue requiring a trial is on the moving party. Where the moving party establishes that there is no genuine issue requiring a trial, the onus shifts to the responding party to establish that there is a genuine issue requiring a trial.
19In order to defeat a motion for summary judgment, the responding party must put forward some evidence to show that there is a genuine issue requiring a trial. A responding party may not rest on mere allegations or denials of the party’s pleadings, but must set out, in affidavit material or other evidence, specific facts showing there is a genuine issue requiring a trial. The court may, where appropriate, draw an adverse inference from the failure of a party to provide the evidence of any person having personal knowledge of contested facts. The motion judge is entitled to assume that the record contains all the evidence that would be introduced at trial.
20A summary judgment motion cannot be defeated by vague references as to what may be adduced in the future, if the matter is allowed to proceed to trial. Such a proposition would undermine the rationale of Rule 20. The motion must be judged on the basis of the pleadings and materials actually before the judge and not on suppositions about what might be pleaded or proved in the future. The responding party to a summary judgment motion must “lead trump or risk losing”. The requirement that the parties put their “best foot forward” goes together with the requirement that the motion judge “take a hard look at the merits of the action at this preliminary stage” to determine whether the moving party has succeeded in establishing that there is no genuine issue requiring a trial (Combined Air, supra, at para. 15).
21Pursuant to Rule 20, the motion judge is granted the powers of weighing the evidence, evaluating the credibility of the deponent and drawing any reasonable inference from the evidence, in order to determine whether there is a genuine issue.
22It is the submission of the defendant that this is an appropriate case for summary judgment, that there is no genuine issue requiring a trial. The defendant argues that the issue seminal to the plaintiff’s present claim, the liability of Mr. Soural, was fully adjudicated in the Small Claims Court trial, and that judgment was obtained against him in August of 2011 which confirmed his liability to the Bank. The defendant argues that issue estoppel prevents the plaintiff from re-litigating an issue that has already been judicially determined, that this renders the action devoid of merit, and that the matter should not proceed to trial in the interest of justice.
23It is the position of the plaintiff that this is not an appropriate case for summary judgment because there are genuine issues requiring a trial regarding the Bank's failure to remove or lift the Writ, and his liability regarding the debt. He maintains that there was unfairness in the Small Claims Court process, that he could not obtain production of documents from the Bank and was, as a result, unable to properly defend himself. The plaintiff submits that there are material facts in dispute, conflicting evidence raising arguable issues, and that witnesses need to be called. The plaintiff argues that a full appreciation cannot be obtained from the record, and that his action has a genuine chance of success.
Issue Estoppel
24Does issue estoppel apply in the circumstances of this case, as maintained by BMO?
25Issue estoppel will arise if three things are established: (1) the same question was decided in the previous proceedings; (2) the judicial decision said to create the estoppel is final; and (3) the parties to the judicial decision are the same persons as the parties to the proceedings in which the estoppel is raised: Danyluk v. Ainsworth Technologies Inc., 2001 SCC 44, [2001] 2 S.C.R. 460 at para. 25; Penner v. Niagara (Regional Police Services Board), 2010 ONCA 616, [2010] O.J. No. 4046, rev’d 2013 SCC 19, [2013] S.C.J. No. 19.
26Where these requirements are met, the court nevertheless retains the discretion to refuse to apply issue estoppel where its application would be unfair or work an injustice. The Court of Appeal in Penner v. Niagara, supra, at para 38, explained that, in exercising its discretion, the court must inquire as to whether there is “something in the circumstances of this case such that the usual operation of the doctrine of issue estoppel would work an injustice?” The court’s discretion is case specific—it “must respond to the realities of each case”.
27While Penner v. Niagara, supra, involved issue estoppel in a civil proceeding after adjudication of issues in an administrative hearing, the principles set forth regarding the analysis and application of the doctrine and the equitable discretion of the courts are of assistance and applicable here.
28The Supreme Court of Canada in Penner v. Niagara, supra, at para. 69 described issue estoppel as follows:
Issue estoppel is about balancing judicial economy and finality and other considerations of fairness to the parties. It is a flexible doctrine that permits the court to respond to the equities of a particular case.
29The court’s task in a discretionary application of the doctrine of issue estoppel is the determination of whether it would be unjust to apply issue estoppel in the circumstances of the case. In this regard, the Supreme Court stated as follows at paras. 39, 40 and 42:
Broadly speaking, the factors identified in the jurisprudence illustrate that unfairness may arise in two main ways which overlap and are not mutually exclusive. First, the unfairness of applying issue estoppel may arise from the unfairness of the prior proceedings. Second, even where the prior proceedings were conducted fairly and properly having regard to their purposes, it may nonetheless be unfair to use the results of that process to preclude the subsequent claim.
If the prior proceedings were unfair to a party, it will likely compound the unfairness to hold that party to its results for the purposes of a subsequent proceeding.…
The second way in which the operation of issue estoppel may be unfair is not so much concerned with the fairness of the prior proceedings but with the fairness of using their results to preclude the subsequent proceedings. Fairness, in this second sense, is a much more nuanced enquiry. On the one hand, a party is expected to raise all appropriate issues and is not permitted multiple opportunities to obtain a favourable judicial determination. Finality is important both to the parties and to the judicial system. However, even if the prior proceeding was conducted fairly and properly having regard to its purpose, injustice may arise from using the results to preclude the subsequent proceedings. This may occur, for example, where there is a significant difference between the purposes, processes or stakes involved in the two proceedings. We recognize that there will always be differences in purpose, process and stakes between administrative and court proceedings. In order to establish unfairness in the second sense we have described, such differences must be significant and assessed in light of this Court’s recognition that finality is an objective that is also important in the administrative law context.
30BMO submits that there is nothing in the circumstances of this case which would require the Court to refrain from applying issue estoppel, that Mr. Soural’s liability was confirmed by the Small Claims Court, in a civil proceeding that was brought for a proper purpose, and that there were no acts or threats in furtherance of any improper purpose. It further submits that there is no evidence proffered by Mr. Soural with respect to his allegation that he has suffered any special damages.
31BMO argues that it became a judgment creditor as a result of the default judgment and was thereby entitled to enforce said judgment by issuing the Writ, which it did. It submits that it was under no obligation to lift the Writ prior to full satisfaction of the default judgment, which was never paid.
32On the other hand, the plaintiff argues that he attempted through his then-lawyer to pay the amount owing pursuant to the Writ in order that he could proceed with the sale of his home. He argues that he disputed the amount owing and more importantly, his liability, but offered to pay the amount into court in order to have the Writ lifted. He argues that this was not accepted by the Bank and, as a result, the Writ remained on his property, meaning that he was unable to sell it. Ultimately, he says, his house was sold under Power of Sale, resulting in significant loss and damage to him. I note that Mr. Soural did proffer some evidence of loss, including Agreements of Purchase and Sale which did not proceed.
33In this case, the only issue is whether issue estoppel applies in the circumstances. I find that the three elements required for issue estoppel, as set forth at paragraph 25 above, are satisfied with respect to the issue of liability for the debt. However, the requirements are not met for the issue of whether BMO wrongly refused to lift the Writ.
34Concerning liability for the debt, it is clear that the second and third elements of issue estoppel—the judicial decision is final and the parties are the same—are met in this case. The Small Claims Court judgment was not appealed and is final. The parties to the judicial decision are the same persons as the parties to the proceedings in which the estoppel is raised, but for the addition of Ms. Koubova in the Small Claims Court action.
35With respect to the first element, namely whether the same question was decided in a previous proceeding, there was a judicial determination of part of the plaintiff’s claim in this action. The action in the Small Claims Court was limited to the issue of the defendant’s liability regarding the MasterCard account. Therefore, the issue of liability has been decided and is estopped. Below, I will discuss why the other part of the plaintiff’s claim, namely, whether BMO wrongly refused to lift the Writ, should be allowed to proceed to trial.
36Although the issue of liability meets the requirements of issue estoppel, this Court can decline to enforce the doctrine of issue estoppel if it would be unfair to do so, as set out in Penner v. Niagara, supra. The first way in which the operation of issue estoppel may be unfair is if the Small Claims Court trial was unfair to the plaintiff. The plaintiff submits that the Small Claims Court process was unfair because he was unable to obtain production of documentation and audiotapes from the Bank in order to properly defend himself.
37While the plaintiff produced correspondence written to the Bank, requesting production of this documentation and of tape recordings which he believed to be in existence, there is no evidence adduced with respect to the Small Claims Court trial or its fairness upon which I can determine this issue. There were, moreover, no reasons given by the trial judge for the decision. Therefore, there is no evidence before me indicating that the Small Claims Court trial was unfair to the plaintiff. The Plaintiff did not appeal the decision, which he could have done if he believed that it was unfair or incorrect.
38The second way in which the operation of issue estoppel may be unfair is if it would be unfair to use the results of the prior proceedings to preclude the subsequent proceedings. A court cannot refuse to apply issue estoppel simply to give a litigant another opportunity to obtain a favourable judicial determination. Rather, it must be the case that “there is a significant difference between the purposes, processes or stakes involved in the two proceedings” (Penner v. Niagara (SCC), supra, at para. 42). In this case, the purposes, processes and stakes of adjudicating the liability issue would be the same as they were when that issue was before the Small Claims Court. To allow the issue of liability to proceed to trial would be to allow the same issue to be litigated a second time.
39However, the present claim goes beyond the issue of liability. The plaintiff has also claimed that BMO wrongfully and unreasonably failed to lift the Writ in order to permit him to sell his home, despite reasonable proposals from his counsel to pay the disputed amounts of money into court, until the issue regarding quantum was resolved.
40Rule 60.16(2) of the Rules of Civil Procedure states: “Where an order has been satisfied in full, the creditor shall withdraw all writs of execution relating to the order from the office of any sheriff with whom they have been filed.” Depending on the way that “satisfied in full” is interpreted, it is possible that the plaintiff satisfied the debt by offering to pay the amount into court until the issue of quantum was settled in the Small Claims Court. If this is the case, BMO may be liable for damages that flowed from its allegedly wrongful actions. It is also possible that the plaintiff may have other legal bases for recovering damages from BMO when this issue is adjudicated.
41Whether the Bank may be liable for damages incurred on the basis of its failure or refusal to accept the plaintiff’s proposal for payment into court of the amounts owing is an issue which should not be precluded from proceeding at this juncture. It is an issue which was not before, nor adjudicated by, the Small Claims Court.
42I find that the issue of whether or not the Writ should have been lifted based on the plaintiff’s offer to pay all money into court is in issue and requires a trial for a full appreciation of the issues in play on a full evidentiary record, including documentation and viva voce evidence. The broader issues raised in this action cannot be determined on the record before me and require a full evidentiary record and the machinery of a trial. I am of the view that summary judgment is not appropriate in the circumstances of this case.
43Based on all of the evidence before me, the parties’ materials and submissions, both oral and written, the applicable case law and the analysis as set forth above, I am satisfied that this motion for summary judgment should be dismissed in part. The issue of liability for the MasterCard debt has already been determined and the doctrine of issue estoppel applies. The motion for summary judgment is granted with respect to that issue. However, the motion for summary judgment is dismissed with respect to the issue of whether BMO wrongly refused to lift the Writ when the plaintiff offered to pay the amount owing into court. That issue, and the damages that allegedly flowed from BMO’s actions, are not subject to issue estoppel and should be determined at trial.
Costs
44I 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.
Released: July 17, 2013