Court File and Parties

COURT FILE NO.: CV-12-447203

DATE: 20130718

SUPERIOR COURT OF JUSTICE - ONTARIO

RE: Chase Paymentech Solutions (Plaintiff/Moving Party) and 1191540 Alberta Inc., Paul Hanuschak and Matthew Ritchey (Defendants/Responding Parties)

BEFORE: Justice Beth Allen

COUNSEL: Kaley Pulfer, for the Plaintiff/Moving Party

Jonathan Mesiano-Crookston, for the Defendants/Responding Parties

HEARD: July 12, 2013

ENDORSEMENT

THE MOTION

[1] Chase Paymentech Solutions (“Chase”) brings a motion under Rule 20 of the Rules of Civil Procedure for summary judgment against Paul Hanuschak and 1191540 (“the Company”) (collectively, “the Defendants”) jointly and severally. Chase claims unjust enrichment and that a guarantee in a contract is enforceable against the Defendants. Chase provides payment processing services to approximately 118,000 merchants across Canada. Mr. Hanuschak owns the Company which had entered into an agreement with Chase for such services.

[2] The Defendants originally brought a cross-motion against Chase to dismiss Chase’s unjust enrichment claim and their claim that the guarantee is enforceable against Mr. Hanuschak. The Defendants subsequently changed their position and simply responded to Chase’s motion submitting this is not the appropriate case for summary judgment. The Defendants raise issues they say require a trier of fact to decide.

FACTUAL BACKGROUND

[3] The basic background facts are not in dispute. However, as discussed below, a factual issue exists in relation to the nature and scope of the agreement between the parties.

The Merchant Agreement

[4] The Company is incorporated in Alberta. Mr. Hanuschak resides in Winnipeg, Manitoba and is the president, officer, director and a shareholder of the Company. In 2005 and 2008 respectively the Company opened two Dominos franchises, one in Canmore, Alberta (“the Canmore Dominos”) and the other in Airdrie, Alberta (“the Airdrie Dominos”) (collectively, “the Franchises”). The Company was set up solely for the purpose of operating the Franchises.

[5] On January 20, 2008, Mr. Hanuschak, on behalf of the Company, entered into an agreement with Chase for services to process credit card payments for VISA and MasterCard, but not AMEX, and for debit transactions for the Canmore and Airdrie Dominos (“the Merchant Agreement”). In Manitoba on January 20, 2008, Mr. Hanuschak signed the Merchant Agreement on behalf of the Company. On January 23, 2008 he also signed the Merchant Agreement on the line below the word “Guarantor”. On January 31, 2008, Mr. Hanuschak faxed the Merchant Agreement from Manitoba to Chase in Toronto.

[6] There is some discrepancy in the evidence as to what documents related to the Merchant Agreement Chase sent to Mr. Hanuschak and what documents Mr. Hanuschak faxed back to Chase.

[7] There is no issue that Mr. Hanuschak signed the Merchant Application and Agreement in January 2008. However, on cross-examination, Mr. Hanuschak stated he did not recall what documents he received five years earlier and admitted he did not read the documents before he signed.

[8] The affidavit of Mr. Paul Browne, VP of Operations for Chase, in Chase’s original motion record and the affidavit of Mr. Hanuschak in the Defendants’ original responding motion record contain the same documents related to the Merchant Agreement. As I understand it, these are copies of documents produced by Mr. Hanuschak which are: a completed and signed Merchant Application Agreement (2 pages); a voided cheque; a Schedule “A” (Pricing); and a completed “Required Information” form.

[9] As noted above, the signature page of the Merchant Application and Agreement shows two signatures for Mr. Hanuschak − one beneath the word “Merchant”, dated January 20, 2008, and the other under the word “Guarantors”, dated January 23, 2008. Above the signature line on the Merchant and Application and Agreement, in capital letters, is the following statement:

RECEIVED AND READ AND AGREE TO BE BOUND BY ALL OF THE TERMS AND CONDITIONS SET OUT IN NUMBERS (1) THROUGH (6) ABOVE.

Numbers (1) to (6) refer to the documents listed below that Mr. Browne contends were sent to Mr. Hanuschak.

[10] In a supplementary motion record, Mr. Browne asserts that the Merchant Application documents Mr. Hanuschak produced were not the complete package that were sent to Dominos franchise merchants at the time. Attached as an exhibit to Mr. Browne’s supplementary affidavit are, among other less pertinent documents, the following: an unsigned copy of the Merchant Application and Agreement form (2 pages); an unsigned Personal Guarantee form (“the Guarantee”); a pre-authorized debit agreement; Terms and Conditions; the Schedule “A” (Pricing); and a Merchant Operating Guide. Mr. Browne deposed that those were the documents Chase customarily sent out to prospective merchants.

[11] Of note is that neither the original motion record nor the supplementary motion record contains a Guarantee, signed or unsigned, nor the Terms and Conditions.

The Franchise Bank Accounts

[12] The Merchant Agreement is connected to both the Canmore Dominos and the Airdrie Dominos Franchises through bank accounts owned by the Company (respectively, “the Canmore Bank Account” and “the Airdrie Bank Account”, collectively, “the Company Accounts”). Mr. Browne explained this arrangement allowed Chase to directly deposit proceeds into the accounts and withdraw fees for transactions to and from the Company Accounts.

[13] Mr. Hanuschak’s responsibility involved managing the Franchises’ finances and receiving and reviewing the Chase monthly statements and the Franchises’ monthly bank statements which contained the debit and credit activity on the accounts. He stated he had control over the cheque books.

[14] The Company operated both Dominos Franchises until they were sold in August 2011.

The Mistaken Deposits

[15] In December 2011, some three months after the sale of the Franchises, a third party merchant in Guelph, Ontario (“the Guelph Merchant”) contacted Chase to advise it was missing funds from Chase in the amount of approximately $240,000. The Guelph Merchant through its legal counsel demanded payment and threatened litigation.

[16] Chase investigated the problem and discovered that as a result of a human error in processing, the Guelph Merchant was mistakenly linked to the Canmore Bank Account. Over a 34-month period from March 2009 and December 2011, in small daily amounts, Chase had deposited into the Canmore Bank Account over $240,000 that should have been deposited into the Guelph Merchant’s account. Chase reimbursed the Guelph Merchant.

[17] In January 2012, Chase contacted Mr. Hanuschak and Matthew Ritchey, a business partner, to alert them about the error and they undertook to investigate. They never reported back to Chase. In February 2012, Chase sent a demand letter seeking the return of the deposits. Again, there was no response and Chase initiated this action on February 24, 2012.

[18] Mr. Browne explained that the loss to Chase was $243,237.59 of which $231,081.59 directly corresponds to amounts deposited into the Canmore Bank Account in error.

Mr. Hanuschak’s Use of the Mistaken Deposits

[19] The Defendants obtained $405,000 in proceeds from the sale of the Franchises in August 2011. Mr. Hanuschak stated that in around May or June 2011, he incurred a substantial personal debt (not related to the Company) from a failed personal investment in a company called “Telenetik” or “Tele Corporation” that he and his father invested in. The indebtedness from that investment is what prompted the sale of the Franchises.

[20] The Company Accounts were kept open after the sale. Funds continued to be deposited into the Canmore Bank Account after the Company was no longer in business. Mr. Hanuschak admits that by August/September 2011 he knew “something was happening”. He realized the payments that came in after the sale of the Franchises were being deposited by Chase.

[21] The Canmore Bank Account records show payments being made to the Airdrie Bank Account, to Telenetik and others during the period from March 2009 to December 2011 before Chase was alerted to the mistake. Mr. Hanuschak denied he knew about the mistaken deposits before the sale of the Franchises. However, he admitted to continuing to receive monthly bank statements and statements from Chase. Although Mr. Hanuschak stated he allowed the Chase deposits to accumulate in the account after he discovered them, the Canmore Bank Account records show he continued to use the funds for his own personal use.

[22] The proceeds of sale for the Franchises were deposited into the Canmore Bank Account in August 2011. In about September 2011, Mr. Hanuschak withdrew $15,000 from the Canmore Bank Account to put a deposit on another store. After the sale, $100,000 in lease arrears for the Canmore Franchise was paid out. As well, $300,000 was paid toward the debt on the Telenetik investment. Mr. Hanuschak stated that he personally took on paying that debt.

[23] Mr. Hanuschak stated he closed the Company Accounts between June and August 2012 when the accounts were depleted. The Company was dissolved by statute on March 2, 2013.

PRINCIPLES GOVERNING SUMMARY JUDGMENT

[24] Under Rule 20.04(2.1) of the Rules of Civil Procedure the court shall grant judgment where there is no genuine issue requiring a trial. The Rule permits the court to weigh evidence, assess credibility and to draw any reasonable inference from the evidence.

[25] Following the 2012 amendments to Rule 20, the Court of Appeal in Combined Air set guidelines for determining when summary judgment is appropriate to determine an issue. The Court held:

We find the passages set out in Housen, at paras. 14 and 18, such as “total familiarity with the case as a whole”, “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 the 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. [paras. 50 and 51]

[ Combined Air Mechanical Services Inc. v. Flesch, 2011 ONCA 764, [2011] O.J. No. 5431(Ont. C.A.)]

[26] Under the amended rule, the principles governing summary judgment developed in earlier cases remain applicable. The moving party has the legal burden to prove there is no genuine issue requiring a trial. The evidentiary burden is then on the responding party to establish evidence of a triable issue. Parties must put their best foot forward and the court must have a good hard look at the evidence. The responding party must lead trump or risk losing and demonstrate their case has a real chance of success at trial. The motions court is entitled to assume the evidence contained in the record is all the evidence the parties would rely on if the matter proceeded to trial: [Soper v. Southcott, [1998] O.J. No. 2700 (Ont. C.A.) at para. 14; 1061590 Ontario Limited v. Ontario Jockey Club (1995), 21 O.R. (3d) 547 at 557 (Ont. C.A.); and Dawson v. Rexcraft Storage and Warehouse Inc. (1998), 164 D.L.R. (4^th) 257, at 265, (Ont. C.A.)].

PARTIES’ ARGUMENTS

Chase’s Position

[27] Chase takes the position that a determination on unjust enrichment in its favour is a stand-alone basis upon which the Court can grant summary judgment. In Chase’s view, the court can arrive at a determination by applying the principles of unjust enrichment to the evidence on the record. Chase argues there is no issue requiring a trial as to the Defendants’ unjust enrichment and Chase’s corresponding deprivation.

[28] From Chase’s perspective the issue as to whether Mr. Hanuschak is liable on the Guarantee is an alternative consideration that is independent of the unjust enrichment. It is Chase’s view however that even on that issue there is no need for a trial since the evidence is sufficient to establish Mr. Hanuschak guaranteed the Company’s indebtedness when he signed the Guarantee.

Principles of Unjust Enrichment

[29] There is no issue that Chase mistakenly deposited $231,081.33 into the Canmore Bank Account and that funds were used by the Defendants. Mr. Hanuschak admitted to using funds from that account to pay off personal and other debts.

[30] The doctrine of unjust enrichment arises in equity and the law of restitution. The Supreme Court of Canada comments on the inequity the doctrine is directed to address:

It is clear that any civilized system of law is bound to provide remedies for cases of what has been called unjust enrichment or unjust benefit, that is, to prevent a man from retraining the money or some benefit derived from another which it is against conscience that he should keep …

[Degleman v Guaranty Trust, [1954] 3 D.L.R. 785, [1954] S.C.R., at para. 28, (S.C.C.)]

[31] The criteria that must be satisfied to establish unjust enrichment are well-known:

a) The defendant must have been enriched by receipt of a benefit;

b) The plaintiff must have suffered a corresponding deprivation; and

c) There must not be a juristic reason for the entitlement.

Unjust Benefit and Corresponding Deprivation

[32] The law regards the elements of unjust benefit and corresponding deprivation as straightforward in circumstances where the plaintiff is seeking monies paid to the defendant and, at the plaintiff’s expense, the benefit results from a transfer of wealth from the plaintiff to the defendant: [Kerr v. Baranow, 2011 SCC 10, 2011 S.C.C. 10, at para. 32; [2011 1 S.C.R. 269, at para. 32, (S.C.C.); and Peter D. Maddaugh & John D, McCamus, The Law of Restitution, loose-leaf (Toronto: Canada Law Book, 2004, at 3-21].

[33] The Supreme Court of Canada in a family law context in Pettkus v. Becker focused on the connectedness required between the benefit and the deprivation:

For unjust enrichment to apply it is obvious that some connection must be shown between the acquisition of property and corresponding deprivation … The indirect contribution of money and the direct contribution of labour is clearly linked to the acquisition of the property, the beneficial ownership of which is in dispute …

[Pettkus v. Becker, [1980] 2 S.C.R. 834, 117 D.L.R. (3d) 257, WL Can, at para. 38, (S.C.C.)]

[34] The mistaken deposits were paid into the Canmore Bank Account and not directly to Mr. Hanuschak. Courts have held that funds are not required to be paid directly to the defendant for the defendant to be found to be unjustly enriched.

[35] The following cases address this point:

• A mistaken payment was deposited into a bank account owned by a company of which the individual defendant was director and president. The court held although the bank account was held by the company, the individual defendant had taken the money from the account and used it for himself personally. He was held to be the “alter ego” of the company. The plaintiff was found to be entitled to restitution and to trace the funds to the individual defendant personally: [Alterna Savings and Credit Union Ltd. v Norman, [2006] O.J. No. 485, at para. 25 and 41-44, (Ont. Sup. Ct.)].

• A company obtained a loan and the mortgagee’s lawyer in error advanced excess funds to the company. The shareholder of the company used those funds for his other companies. The lawyer reimbursed the mortgagee and sued the shareholder of the company to recover those funds. The court did not accept the view that the company and not the shareholder would be liable for the funds: [Wolfson v. Corkum, [1996] N.S.J. No. 391 (S.C.) (QL) 154 N.S.R. (2d) (N.S.S.C.)].

• The Ontario Court of Appeal applied the doctrine of unjust enrichment to a corporate parent company of the defendant against whom the plaintiff pleaded unjust enrichment. The court held the enrichment was unlawful where a parent company was enriched by receiving substantial royalties and management fees from the Money Mart business and found the plaintiff had suffered deprivation: [Smith v. National Money Mart Company 2008 ONCA 182, 89 O.R. (3d) 81 (QL), at para. 21, [2006] O.J. No. 1807 (Ont. C.A.)].

• In an estate matter an insurance company mistakenly paid out a life insurance policy to the wrong estate. The beneficiaries had spent most of the proceeds by the time the mistake was discovered. The court found the beneficiaries liable for repayment of the funds as sufficiently connected to the mistake: [Empire Life Insurance Co. v. Neufeld Estate, [1998] B.C.J. No. 953 (B.C.S.C.) (QL), 79 A.C.W.S. (3d), at para.11, (B.C.S.C.)].

[36] There is no question in the case before me that Defendants benefited from the mistaken deposit. For Mr. Hanuschak’s part, he personally controlled the funds deposited into the Canmore Bank Account. He used some of the funds to deal with his personal debts. Chase was deprived of the funds in that it was obliged to reimburse the injured third party, Guelph Merchant, for its loss. Chase points for support to Wolfson, supra, where in somewhat similar circumstances the plaintiff reimbursed the mortgagee and commenced an action against the shareholder defendant for the funds the mortgagee had advanced in error. The fact the plaintiff covered the mortgagee’s loss did not result in a finding the shareholder defendant was not liable for using the funds.

No Juristic Reason

[37] Courts have held there must be a juristic reason for the payment, such as a gift, a valid contract or other disposition of law, otherwise the retention of the payment is unjust: [BMP Global Distribution Inc. v. Bank of Nova Scotia, 2009 SCC 15, [2009] S.C.C. 15, at paras. 22 and 25, [2009] 1 S.C.R. 504 (S.C.C.); and Maddaugh & McCamus, supra, at 3:200.30].

[38] Chase submits this requirement is also satisfied. The Defendants argue the payment to the Guelph Merchant was voluntary, made without any legal liability, for its own business reasons and as such is in the nature of a gift. Chase challenges this view with court decisions that have held a bank can decide to reimburse an injured third party as a result of a mistake and succeed in obtaining recovery from the party who was enriched: [Toronto-Dominion Bank v. Pella/Hunt Corp. (1992), 10 O.R. (3d) 634 (Gen. Div.) (QL) and Royal Bank of Canada v. LVG Auctions Ltd., [1983] O.J. No. 2524 (Ont. H.C.J.) (QL).

Chases’s Negligence

[39] The Defendants argue Chase’s unjust enrichment claim is not sustainable because the mistake was the result of its own negligence in depositing the funds into the wrong account and failing to discover the error. Chase however cites case law that rejects that view. The Ontario Court of Appeal dealt with a case where a mortgagee had mistakenly discharged a mortgage on land. The land was sold and the mortgagee claimed an interest in the proceeds of sale of the land on the basis of unjust enrichment. The court held the mortgagee’s negligence was not a ground for refusing it relief: [Central Guarantee Trust Co v. Dixdale Mortgage Investment Corp., [1994] O.J. No. 2949; 24 O.R. (3d) 506, at para. 45 (Ont. C.A.); see also Baxter v. Constellation Assurance Co., [1997] O.J. No. 1812; 70 A.C.W.S. (3d) 902, at para. 14, (Ont. (Gen. Div.)].

[40] A plaintiff’s negligence is not a sustainable defence to an unjust enrichment claim.

Funds Paid in Mistake of Fact

[41] Mr. Hanuschak submits the funds no longer exist as he disposed of them to pay debts. The courts have rejected this as a viable defence to unjust enrichment. The recipient of mistaken payments is liable to reimburse them even if the funds have been spent: [Alterna Savings and Credit Union Ltd. v Norman, [2006] O.J. No. 485, at para. 36, (Ont. Sup. Ct.)].

[42] An exception to this exists in circumstances where the defendant has materially changed its circumstances as a result of the receipt of the funds, such as if the funds were invested in a special project or undertaking or a special financial commitment: [Mobil Oil Canada, Ltd v. Storthooks (Rural Municipality), [1976] S.C.R. 147 (S.C.C.) (QL), at p. 11 (S.C.C.)].

[43] The submission that the Defendants suffered increased risk as a result of the mistaken deposits does not seem to be borne out by the evidence on the record.

Proceeding Against a Dissolved Company

[44] The Company was dissolved in March 2013. Under Alberta law this is not a bar to proceeding against a company. Alberta and Ontario business corporations law provide similarly that a civil or criminal action or an administrative proceeding commenced against a corporation before its dissolution may be continued as though the corporation had not been dissolved; [Business Corporations Act , RSA 2000, c. B-227, s. 227 and Business Corporations Act, R.S.O. 1990, c. B-16, s. 242.].

[45] Chase would therefore be able to proceed against the Company for the mistakenly deposited funds despite its dissolution.

Conclusion on Criteria for Unjust Enrichment

[46] There is no question the Defendants received $231,081.33 in funds they were not entitled to. None of those funds remain and Mr. Hanuschak does not deny he used them to his benefit. Although the case law on unjust enrichment supports Chase’s position that an individual defendant who is a principal of a corporation can be held responsible to repay a debt of the corporation, assigning full liability to Mr. Hanuschak in the circumstances of this case may not be so straightforward. As set out below, the Defendants raise factual issues and issues in law and equity they submit should be considered in a determination of Mr. Hanuschak’s liability.

The Defendants’ Position

Equity in the Broader Context

[47] The Defendants take the position that the court in exercising its equitable jurisdiction should balance the equities in the broader context.

[48] Fairness in the Defendants’ view requires a look at the possibility of Mr. Hanuschak being sanctioned for using the mistaken deposits when neither he, Chase nor the Guelph Merchant was aware of the mistake from March 2009 to December 2011. He was not the only party at fault for not keeping proper watch over their financial records. Mr. Hanuschak stated he did not scrutinize the financial statements because of his understanding that the Company had signed up for a payment processing service that would result in only small monthly payments. The point here is that it is reasonable he would not anticipate an issue arising with respect to such a large sum. Chase also presented its excuse for its mistake − the fact Chase services about 118,000 clients across Canada with daily payment processing.

Quantifying the Benefit

[49] The Defendants raise the question of the quantum of the benefit to Mr. Hanuschak. The Defendants submit there has been no proper accounting of the value of the benefit Mr. Hanuschak gained from the deposits.

[50] The Defendants challenge the implication that Mr. Hanuschak knowingly engaged in wrongdoing in using the funds. They argue this was not a “flow through” arrangement characteristic of a fraudulent scheme where the funds are placed in a corporate bank account set up to avoid creditors. The funds came into the account through Chase’s error. The funds came into the Canmore Bank Account until around August 2011 without his knowledge. After the sale of the Franchises the mistaken deposits were inter-mingled with the proceeds of sale and other funds in the Canmore Bank Account. According to the Defendants’ view, Mr. Hanuschak used funds from the account for legitimate reasons, mainly to pay $100,000 in lease arrears and a $300,000 debt arising from the Telenetik investment.

[51] Chase countered the Defendants’ position on their accounting argument. Chase asserts there are Chase monthly statements included in the Defendants’ materials that itemize the charges/fees and chargebacks/reversals related to the Canmore Franchise from March 1, 2009 to December 31, 2011, the period of the mistaken deposits.

[52] However, I find the financial and banking documents on the record fall far short of assisting to quantify the benefit to Mr. Hanuschak. The Chase statements for March 2009 to December 2011 are comprised of over 100 pages of entries for the days that activities occurred in the Canmore Bank Account. There are also Chase statements for 2012.

[53] There is also an untitled, informal-looking, five-page document referred to as a “spreadsheet”, attached as an exhibit to Mr. Browne’s supplementary affidavit. It has no cover page or author and appears to list Visa and MasterCard deposits, and various charges and fees. The total on the last page is the amount Chase is seeking, $231,081.33.

[54] The Chase documents have not been reduced to a systemized breakdown. There is no report or other document that summarizes the data or organizes the information to meaningfully support Chase’s position.

[55] The Canmore Franchise financial documents also do little to assist on the question of the Company’s and Mr. Hanuschak’s use of the mistakenly deposited funds. There are some CIBC bank statements for the Canmore Franchise for the period December 1, 2011 to May 31, 2012 and an unaudited financial statement for 2009. There was $405,000 from the franchise sale proceeds deposited in the Canmore Franchise Account during the latter part of the period when mistaken deposits were being made. There were withdrawals and transfers from that account. There is no evidence that meaningfully informs the court about the transactions in the Canmore Bank Account that is capable of allowing a quantification of the use of the mistaken deposits for Mr. Hanuschak’s benefit.

[56] I find the Defendants have raised a legitimate issue on the quantum of benefit to Mr. Hanuschak and there is little on the motion record that assists with assessing the value of the benefit Mr. Hanuschak gained from the use of $231,081.33.

The Merchant Agreement

[57] The Defendants also raise a question based in common law contract principles. In the Defendants’ view, it is not clear what constituted the agreement between Chase and the Defendants. Although Mr. Browne says he delivered to Mr. Hanuschak the full package of six documents connected with the Merchant Application and Agreement, there is no signed copy of the Guarantee. There is no clear evidence Mr. Hanuschak received the Terms and Conditions. Mr. Hanuschak’s evidence was that he was not certain what documents he received five years previously. An unsigned, uncompleted form of the Guarantee and the Terms and Conditions were not filed with Chase’s original motion. They came into evidence just over one month before this motion.

[58] For the Defendants this raises the basic question whether there was consensus ad idem on the Merchant Agreement. This, the Defendants argue, raises a genuine issue requiring a trial. From the Defendants’ perspective there is no signed Guarantee and no proof beyond Mr. Browne’s word, that Mr. Hanuschak received the Terms and Conditions, hence an issue whether there was consensus on the terms of the agreement. What naturally follows from this is whether the terms of the Merchant Agreement are enforceable.

[59] The consensus ad idem issue complicates the differences in opinion between the parties on the interpretation of some of the clauses in the Terms and Conditions and hence what was agreed to.

[60] For instance, the indemnity provision in section 11 of the Terms and Conditions excludes liability in certain circumstances in relation to certain claims against Chase. There is disagreement as to the scope of that section − whether it covers a mistake such as the type of mistake made by Chase in this case.

[61] There is also section 8.11 of the Terms and Conditions which provides the law that governs the contract is the law of Ontario. The parties differ as to whether the laws of Alberta apply and depending on this whether the Guarantee complies with those laws.

[62] What Mr. Hanuschak agreed to when he signed the Merchant Agreement is of course predicated on whether the Terms and Conditions are enforceable. Like the Guarantee, I have the evidence of Mr. Browne about Chase’s customary practice and Mr. Hanuschak’s failed memory as to which documents he received. The motion record contains no signed Guarantee or firm evidence Mr. Hanuschak received or was aware of the Terms and Conditions. From the perspective of the law, findings on those aspects of the contract are critical.

[63] The evidence on what the parties agreed to under the Merchant Agreement is not sufficiently conclusive for the purposes of this motion.

CONCLUSION

[64] The court in Combined Air, supra, distinguished between the types of records that might provide the basis for summary judgment and those that are not likely to. The court held:

In some cases, it is safe to determine the matter on a motion for summary judgment because the motion record is sufficient to ensure that a just result can be achieved without the need for a full trial. In other cases, the record will not be adequate for this purpose, nor can it be made so regardless of the specific tools now available to the motion judge. In such cases, a just result can only be achieved through the trial process. This pivotal determination must be made on a case-by case basis. [Combined Air, supra, para. 39]

[65] I find the issues the Defendants have raised on quantifying the benefit to Mr. Hanuschak and on the enforceability of the Guarantee and other terms in Terms and Conditions are matters for a trial court. These questions raise a further issue advanced in Chase’s position. That further question is whether in order to be liable to pay a corporation’s unjustly obtained benefit, it matters whether a principal of a corporation has guaranteed the corporation’s liability.

[66] This is a case that involves the interplay of legal and equitable principles. It is not one of the more straightforward cases where there is a signed guarantee and the defendant denies receiving the guarantee or signing it. Nor is this a case where there is defined lump sum amount at issue that came into a defendant’s possession that the defendant knew did not belong to him. The case before this court is more complicated. The mistakenly deposited funds came into the Defendants’ possession in small amounts over an extended period of time where for the greater part of that period the defendant, the plaintiff and the injured third party were unaware of the deposits.

[67] I find the court would benefit from a more fulsome documentary record and from further testing of Mr. Browne’s and Mr. Hanuschak’s credibility on the documents related to the Merchant Agreement. Both parties are required to put their best foot forward in presenting evidence to the court on a summary judgment motion. The moving party has the burden to satisfy the court from the motion record there is no issue required to be determined at trial. Chase has not done so. This is the type of case described in Combined Air where the record is inadequate for the court to come to a fair determination.

[68] Accordingly, I dismiss Chase’s motion for summary judgment. I also dismiss the cross-motion since the Defendants did not formally withdraw it.

COSTS

[69] The parties provided costs outlines at the conclusion of the proceeding. Under Rule 57.01 the court has the discretion to determine which party will be required to pay costs and the extent to which costs are required to be paid. The Defendants were wholly successful on this motion. In accordance with the principle that costs should follow the cause, I award costs against Chase. The question of the quantum of costs to the Defendants is then left to be determined.

[70] The Ontario Court of Appeal set down the principle that the objective of a determination on costs is to fix an amount the unsuccessful party is required to pay that is fair and reasonable rather than an amount reflecting the actual costs of the successful party. The quantum of costs allowed must be fair, within the reasonable expectations of the parties, and in accord with the principles set out by the Court of Appeal in Boucher v. Public Accountants Council for the Province of Ontario, (2004), 71 O.R. (3d) 291 (Ont. C.A.).

[71] The Defendants’ counsel seeks partial indemnity costs in the total amount of $45,319.09 inclusive of taxes and disbursements. Chase’s counsel seeks partial indemnity costs of $18,718.12 inclusive of taxes and disbursements.

[72] Rule 57.01 provides factors for the court’s consideration in deciding quantum, including the complexity of the proceeding; the importance of the issues; the conduct of any party that tended to unnecessarily lengthen or shorten the proceeding; whether any step in the process was improper or vexatious; and the experience of the lawyers.

[73] The issues on this motion were fairly complex. This case brings together issues in law and equity in relation to a claim in unjust enrichment in the context of issues on the enforceability of a contract. No cases were presented by the lawyers that were directly on point. The proceeding progressed along expeditiously with no unnecessary interruptions or delays. The lawyers were amenable to presenting the court with the highlights of their submissions rather than repeating the contents of their materials. The issue is important to both parties. If Chase is not ultimately successful at trial in recouping the sizable funds this would not be an inconsequential loss. On the other hand, if Mr. Hanuschak is required to repay the funds this could have serious financial consequences to him personally.

[74] I find the Defendants’ bill is excessive. I fix costs at $20,000 inclusive of taxes and disbursements. This is fair and reasonable and in accord with the principles set down in Boucher, supra.

ORDER

[75] Order accordingly.

Allen J.

Date: July 18, 2013