Court File and Parties

COURT FILE NO.: CV-12-469456
DATE: 20131030
SUPERIOR COURT OF JUSTICE - ONTARIO

RE: RBC v. DeborahVero-Forgione

BEFORE: Carole J. Brown J.

COUNSEL:
G. Bowden, for the Plaintiff
J. Contini, for the Defendants

HEARD: October 15, 2013

Endorsement

[1] This Rule 20 motion for summary judgment is brought by RBC against the defendant, DeborahVero-Forgione ("Ms. Vero-Forgione" or "the individual defendant") and her company, California Outdoor Kitchens Inc. ("COKI"), with respect to outstanding balances on four credit facilities extended to the defendants, as follows:

1. Line of credit - $ 9,660.25

2. Visa 1 - $10,507.54

3. Business loan - $28,003.09

4. Visa 2 - $ 6,768.89

[2] RBC states that the first two credit facilities were the individual defendant’s personal loans and the other two are loans for which the individual defendant is jointly and severally liable. There is no dispute as to the individual defendant’s liability to RBC on the personal loans.

[3] RBC made demand in writing on November 20, 2012 for payment of all outstanding balances on the four accounts. The defendant disputes the amounts owing and her liability for the business loans. No payments were made and this action was commenced on December 6, 2012. No defence was entered on behalf of COKI, which has gone out of business, and RBC obtained a default judgment against it on January 24, 2013 on the business loans.

[4] Ms. Vero-Forgione acknowledges that the first two credit facilities are personal to her, but states that they were paid in full by November of 2008. As regards the business loan and Visa 2, the evidence indicated that Ms. Vero-Forgione signed the business loan agreement on December 7, 2007 and the business Visa agreement on December 10, 2007, on behalf of COKI and as owner, making her jointly and severally liable for the monies borrowed pursuant to these agreements.

[5] Ms. Vero-Forgione maintained that she resigned from her position as director of COKI in 2008 and that COKI advised RBC of her resignation in writing, indicating that she would no longer be responsible for the company debts. The letter dated August 20, 2008, was signed by her husband, Angelo Forgione, as director of the company. The letter, addressed to the attention of Mr. Sajid Khan, states as follows:

We have recently changed the director of California Outdoor Kitchens Inc. from DeborahVero-Forgione effective May 1st 2008.

Under this change DeborahVero-Forgione will no longer be responsible for any debts or loans that California Outdoor Kitchens has or will incur.

Please advise if any changes need to be made.

[6] There is a cover sheet, but no fax transmission sheet to evidence that it was sent.

[7] It is the position of the defendants that RBC accepted the August 20 notification letter and agreed that Ms. Vero-Forgione would no longer be responsible for any obligations of the company. It is the defendant's position that as a result of RBC's acceptance of the August 20 letter, the Bank is estopped from bringing this action.

[8] RBC maintains that one cannot get out of liability for a loan by simply advising the Bank of such. As for the estoppel agreement advanced by the defendant, it is RBC's position that the plaintiffs have adduced no evidence to indicate that RBC received the letter, nor to support the defendants' contention that RBC accepted the notification contained in the August 20 letter.

[9] In the affidavit of Pina Ricciardi, the senior account manager with RBC and responsible for the subject credit facilities from May 2008, she stated that she never received a letter dated August 20, 2008, that no one in the Bank received such a letter, and that the previous account manager for the subject accounts, Sajid Kahn, never received such a letter. The affidavit of Mr. Kahn was also filed. He states that he did not receive said letter and, indeed, had left the Bank in mid-May of 2008, three months prior to the writing of the letter.

[10] Ms. Ricciardi states in her affidavit that the Bank does not release a borrower from liability based on a letter such as the defendant purports was sent. Rather, in such a situation, had such a letter been received, the Bank would have refused to release the defendant from liability and from the loan agreements she executed, as the loans were advanced based on the strength of her personal finances. In the alternative, they would have required re-qualification of the loan with Ms. Vero-Forgione being replaced by someone the Bank assessed as being of equal or greater financial strength. This was not done.

[11] The Bank's evidence further indicates that Ms. Vero-Forgione continued to transact on the operating loan after August 20, 2008 up to and including May 16, 2012, and continued to sign cheques on the business account linked to the operating loan.

[12] Ms. Ricciardi further stated that she met Ms. Vero-Forgione in December 2008 when she came to the Bank with her husband to request a loan of $200,000 for COKI to market a new division. The loan was denied as Ms. Ricciardi and the Bank determined that Ms. Vero-Forgione did not have sufficient collateral to qualify for such a large loan. RBC maintains that, at this meeting, the defendants did not advise or mention that Ms. Vero-Forgione was no longer president or that she no longer wished to be liable on the loans. It is the position of the Bank that Ms. Ricciardi and the defendants discussed the strength of her personal finances when they discussed the $200,000 loan and whether the funds could be obtained by increasing the operating loan already in place.

[13] The evidence of Ms. Vero-Forgione contradicts that of the Bank. Ms. Vero-Forgione stated in her responding affidavit that she understood that RBC accepted her letter of August 20, and accepted the notification that she would no longer be liable on the executed credit facility agreements. She has also filed a supplementary affidavit in response to that of Ms. Ricciardi, in which she stated that she was never advised that Mr. Kahn was no longer managing COKI's accounts or that COKI's letter of notice would not have been sent to him. She states that she advised Ms. Ricciardi that she was no longer a director of COKI and was no longer liable for the COKI loans as early as May of 2008. The defendant attaches to her affidavit a fax cover sheet dated August 27, 2009, in which she states that she confirmed a discussion she and Ms. Ricciardi had regarding the fact that she was no longer director and no longer liable for COKI loans which states simply "Hi Pina, As per our conversation regarding change of director here is a notice of change." As with the correspondence of August 20, there is a cover sheet dated August 27, 2009, but no fax confirmation sheet to indicate that it was sent.

[14] In that supplementary affidavit she also indicates that her husband had discussions with Ms. Ricciardi in late 2008 regarding an increase in the operating loan for the company, as well as a separate $200,000 loan for a new company that he wanted to establish. She attached to her affidavit two e-mails from Ms. Ricciardi dated November 25, 2008 which purport to list all of the information that would be required in order to apply for the subject loans. She denies that she was in attendance at that meeting. Ms. Vero-Forgione further denies that notes appended as an exhibit to Ms. Ricciardi's affidavit which Ms. Ricciardi states record said meeting with the defendant and her husband actually record such a meeting. She states that the notes record a telephone conversation that her husband had with Ms. Ricciardi and that there was no meeting, as she had been in a car accident in late November. Notes from Ms. Ricciardi with respect to that meeting are ambiguous, without further testimony and viva voce evidence.

[15] The defendant further attaches, as an exhibit to her affidavit, correspondence from RBC dated May 16, 2011, regarding amounts due and owing on the RBC business Visa, which is sent to the company care of Mr. Forgione. She states that this evidences the fact that RBC was aware of and had accepted that Ms. Vero-Forgione had resigned from the company and was no longer liable.

Rule 20: Summary Judgment

[16] Rule 20.04(2)(a) of the Rules of Civil Procedure provides that the court shall grant summary judgment if there is no genuine issue requiring a trial. Cases amenable to summary judgment include cases where the parties agree that it is appropriate to proceed by way of summary judgment; claims or defences that are shown to be without merit i.e. no chance of success; in cases, other than by way of agreement or where there is "no chance of success", where there may be a genuine issue but a trial is not required to resolve that issue. The motion judge must determine whether a full appreciation of the evidence and issues that is required to make dispositive findings can be achieved by way of summary judgment, or whether a full appreciation of the evidence and issues can only be achieved by way of trial.

[17] When hearing a motion for summary judgment, the judge may weigh the evidence, evaluate credibility and draw any reasonable inferences from the evidence.

[18] When the moving party establishes that there is no genuine issue requiring a trial, the onus shifts to the responding party to demonstrate that there is a genuine issue requiring a trial.

[19] Both parties must "put their best foot forward" and "lead trump or risk losing". The court is entitled to assume that all evidence to be relied on by both parties at trial has been brought before the motion judge. The judge must ask whether a full appreciation of the facts and issues that is required to make dispositive findings can be achieved by way of summary judgment, or whether a full appreciation can only be achieved by way of trial.

[20] In Combined Air Mechanical Services Inc. v Flesch, **2011 ONCA 764**, the Court of Appeal gave direction with respect to Rule 20 summary judgment motions generally and also commented on the application of Rule 20 motions in the context of Rule 76 actions. In paragraph 254, the Court of Appeal stated as follows:

We wish to emphasize a significant additional factor that must also be considered in the context of the simplified procedure action. Given the simplified procedure claims are generally for amounts of $100,000 or less, the rule is designed to get the parties to trial with a minimum of delay costs. Thus, one of the key objectives of the simplified procedure rule is to limit the extent of pretrial proceedings and to bring the parties to an early trial conducted pursuant to tailored rules. That is why discovery is restricted, cross-examination on affidavits and examination of witnesses on motions are not allowed, and the procedure at a summary trial is modified to reduce the length of the trial. No doubt, in appropriate cases, a motion for summary judgment in a Rule 76 action can be a useful tool to promote the efficient disposition of cases. However, it will often be the case that bringing a motion for summary judgment will conflict with the efficiency that can be achieved by simply following the abridged procedures in Rule 76.

[21] **Counsel for RBC argues that the defence advanced by Ms.Vero-**Forgione, namely that she can eliminate any liability to the Bank pursuant to the loan agreement signed by her simply by having the company write a letter to that effect is not tenable at law and is, indeed, "absurd", that there is no merit to the defence and that there is no chance of success. With respect to the defendant's argument that the Bank is estopped from pursuing this claim given that they accepted the August 20 letter, counsel for RBC argues that there is no evidence of any such acceptance. Based on the evidence advanced by the defendant, most particularly in the supplementary affidavit, it is not clear what transpired among the parties, when discussions were had between the Bank, the defendant and Mr. Forgione, what the notes attached to Ms. Ricciardi's affidavit actually indicate, and the reason for addressing further correspondence to Mr. Forgione.

Analysis

[22] The plaintiff has argued that the defendant's joint and several liability and the effect, at law, of the defendants' letter to the Bank simply stating that Ms. Vero-Forgione will no longer be liable for the company debts under the loan agreement is not tenable at law and raises no genuine issue requiring a trial.

[23] The defendant submits that this case, brought under Rule 76 and not subject to examination for discovery, is not appropriate for summary judgment. The defendants argue that the notification sent regarding Ms. Vero-Forgione's liability was accepted by the Bank. It is in this regard that there is significant conflicting evidence as regards alleged discussions and meetings, as well as the meanings and effect of various correspondence placed in evidence in the motion. As indicated above, there are also documents relied on by the parties which are ambiguous in meaning and require viva voce evidence for their full appreciation.

[24] Having reviewed all of the evidence before me, and having considered counsels' submissions, it is clear that there are material facts in dispute which render this an inappropriate matter for summary judgment. A full appreciation of the evidence and issues required to make dispositive findings cannot be achieved by way of summary judgment, given the material facts in dispute, but can only be determined with the full machinery of a trial, including hearing the viva voce evidence of witnesses, testing their evidence in cross-examination and assessing their credibility. Accordingly, I order that this matter proceed expeditiously to a summary trial. The Affidavits filed in this motion may be filed as Affidavits under Rule 76.12. I note that in this case the bringing of the summary judgment motion conflicted with the efficiency to be achieved by simply following the abridged procedures in Rule 76.

Costs

[25] The costs of this motion are left to the trial judge.

Carole J. Brown J.

Date: October 30, 2013