BARRIE

COURT FILE NO.: CV-13-0647

DATE: 20140911

ONTARIO

SUPERIOR COURT OF JUSTICE

BETWEEN:

DONNA O’LAUGHLIN

Plaintiff/Defendant
By Counterclaim

– and –

TIMOTHY JOHN BYERS, 1566997 ONTARIO INC., and KELLY ANN JAMIESON

Defendants/Plaintiffs
by Counterclaim

Peter C. Card, for the Plaintiff

Robert M. Isles, for the Defendants/Plaintiffs by Counterclaim

HEARD: June 18, 2014

REASONS FOR DECISION

DiTOMASO J.

THE MOTION AND PROCEEDINGS

[1] For a long time, the parties have been involved in acrimonious disputes which brought them before the Small Claims Court and this court on a number of occasions. Some of those prior proceedings are relevant to these current proceedings before the court and some are not.

[2] The Plaintiff (Defendant by Counterclaim) Donna O’Laughlin (“O’Laughlin”) commenced this action in 2003 for the recovery of monies she alleges remains owing to her under a second mortgage. The Defendants, Plaintiffs by Counterclaim, Timothy John Byers, 1566997 Ontario Inc. and Kelly Ann Jamieson (“Byers”, “156” and “Jamieson”) claim that the second mortgage has been paid in full. The parties acknowledge that the real “prize” in this dispute is the sum of approximately $46,000 paid into court as a result of a related interpleader proceeding. They also acknowledge it is highly unlikely that if Ms. O’Laughlin is successful in obtaining judgment then she will be able to recover anything beyond the monies currently standing in court.

[3] In addition, there is a counterclaim where Mr. Byers, 156 and Ms. Jamieson allege damages caused by O’Laughlin which relates to an ownership dispute between the parties regarding 156. The parties agree that the issue at the heart of the counterclaim is not to be determined on this summary judgment motion but, rather, that issue is to be determined at another time.

[4] Ms. O’Laughlin has brought this motion for summary judgment seeking:

(a) Judgment against 156 as the mortgagor and against Mr. Byers as guarantor in the amount of $104,708.34 as of July 2010 with interest accruing on said amount at the rate of 11.5 percent per annum calculated half yearly; and

(b) A declaration that Ms. O’Laughlin is entitled to the monies paid into court by the first mortgage Gord Coates Holdings Ltd. under the interpleader application contained in court file 1111-11, such monies being the surplus arising from the sale of the real property located at 4712 Highway 90 West, County of Springwater outside of Barrie by the first mortgagee under its Power of Sale; and

(c) A declaration that Ms. O’Laughlin is entitled to set-off certain amounts of monies that she owes to Byers and against 156 contained in court file 1111-11.

OVERVIEW

The Parties

[5] Ms. O’Laughlin over the years 1999 through to the Spring of 2010 had first a personal and then (after 2004) a business relationship with Mr. Byers, which business relationship she left in April or May of 2010. Prior to leaving this relationship, she loaned Mr. Byers $106,000 secured by a second mortgage on real property located at 4712 Highway 90 West on the western outskirts of the City of Barrie, property that Mr. Byers wanted to purchase.

[6] Mr. Byers is or was a business man involved in the acquisition and sales of motor vehicles in the Simcoe County area. He incorporated 156 with the sole purpose of holding legal title to the Highway 90 property. After July 3, 2009 when Mr. Byers transferred the company to her, Ms. O’Laughlin was the sole officer, director and shareholder of 156.

[7] Ms. Jamieson is also involved in a business relationship with Mr. Byers. Ms. Jamieson states that she is now the sole owner, director and officer for 156. There is a dispute as to who owns 156. The parties agree that the ownership issue is to be determined at a later time and that it does not impact this summary judgment motion.

Background

The Second Mortgage

[8] In November 2006, Ms. O’Laughlin loaned Mr. Byers the sum of $106,000 in order to enable him to purchase the real property identified as the Highway 90 property.

[9] As security for this loan, Mr. Byers agreed to give Ms. O’Laughlin a second mortgage on the said property in the face amount borrowed, $106,000, this principal amount bearing interest at the rate of 11.5 percent per annum, calculated half-yearly not in advance. The mortgage was registered as Instrument No. SC495891 on November 6, 2006 on which date the funds for same were advanced to the benefit of Mr. Byers’ transaction to purchase the real property.

[10] The mortgage was given in the name of the corporation 156, then a corporation owned and controlled by Mr. Byers. Mr. Byers decided to place title to the property in the name of that corporation. Nevertheless, Mr. Byers personally guaranteed payment of the mortgage.

[11] The purchase of the real property by Mr. Byers was entirely financed. The purchase price of the property was $700,000. The first mortgage was a vendor take back mortgage in the amount of $600,000. A second mortgage in the amount of $106,000 secured the advance or loan of Ms. O’Laughlin for that same amount. The amount of $6,0000 was paid to Mr. Byers as part of the advance of the sum of $106,000.

[12] The legal work performed in respect of the purchase of the real property was undertaken by Mr. Isles, counsel for the Defendants in these proceedings. He provided Ms. O’Laughlin with an amortization schedule, setting out the payments required to be made out of the mortgage including breaking down these payments between principle and interest components and setting out the resulting balance after each payment.

Basic Elements of the Second Mortgage

[13] The second mortgage was dated to be payable in regular installments of $1,111 per month, payable on the first day of each and every month commencing December 1, 2006. Mr. Byers is described as guarantor on the mortgage.

[14] The second mortgage contains Standard Charge Terms number 2033, paragraph 5 of which sets out as follows:

5 – The Chargor will pay or cause to be paid to the chargee the full principle amount and interest secured by the charge in the manner of payment provided by the charge, without any deduction or abatement, and shall do, observe, perform, fulfill and keep all the provisions, covenants, agreements, and stipulations contained in the charge and shall pay as they fall due all taxes, rates, levies, charges, assessments, utility and heating charges, municipal, local, parliamentary and otherwise which now or may hereafter be imposed, charged or levied upon the land and when required shall produce for the charge receipt of evidencing payment of same. (Emphasis added).[^1]

[15] At paragraph 24 of the Standard Charge Terms, the obligations are set out regarding Mr. Byers as Guarantor of the mortgage and makes him primarily liable at the option of the Chargee. Under this paragraph, Mr. Byers as the Guarantor:

Under the said Standard Charge Terms, paragraph 24 sets out the obligations upon the Defendant Byers as a guarantor of the Mortgage and makes him primarily liable at the option of the charge. Under this paragraph the Defendant Byers as the guarantor:

Absolutely and unconditionally guarantees to the Chargee due and proper payment of all of the principal monies, interest and other monies owing under the security of the charge … at any time the charger makes default on such payment, the guarantor shall pay all such monies to the charge without any demand being required to be made.[^2]

[16] The payment method set out in the second mortgage required the mortgagor to provide 12 post-dated cheques in advance. Instead of the installment amounts of $1,111 per month, the parties focused on the amount of $1,048.15, sometimes on the amount of $1,048.17. Nothing turns on the discrepancy of the amounts.

Mortgage Payment History

[17] The method of payment made to Ms. O’Laughlin under her mortgage chosen by Mr. Byers at the beginning of its term was by cheque drawn on the account of one of his businesses known as “Fleetwood Auto One” or “Fleetwood Autos” which method of payment was used and acknowledged by Ms. O’Laughlin for the months of December 2006 (first payment) further to and including November 1 of 2008 (the total fourth payment).

[18] The evidence of both sides in this dispute coincides or that these regular monthly payments were successfully made (primarily by cheque) for the first two and a half years of the mortgage, i.e., from December of 2006 through to and including May of 2009. At this time Ms. O’Laughlin noted that the balance outstanding according to Mr. Isles’ amortization schedule was the sum of $104,882.91. However, after May of 2009, Ms. O’Laughlin denies that she received any further regular payments in the agreed monthly amount of $1,048.15. She alleges that problems started in respect of the mortgage in the Spring of 2009 when Mr. Byers lost his motor vehicle dealers licence.

[19] After May of 2009, Ms. O’Laughlin is only acknowledging six cash payments of the full monthly required amount of $1,048.15. She explained through copies of cheques provided by Mr. Byers that these cash payments were made to replace cheques that were written for those payments regarding which cheques the parties knew at the time would not be any good as there were insufficient funds in the bank to cover same. Accordingly, Ms. O’Laughlin would receipt such payments by noting on those cheques that same were paid by replacement in cash.

[20] Ms. O’Laughlin also provided reasonable explanations regarding the purpose of other cash payments made to her by Mr. Byers. She asserts that such purposes were not related to the payments on her mortgage.

[21] According to Ms. O’Laughlin, the regular monthly payments of $1,048.15 (sometimes $1,048.17) being made to her ceased after the payment made November 1, 2008. Subsequently, cash payments were made and acknowledged by her in January and February 2009. This was followed a payment by cheque on March 1, 2009 followed by four cash payments of the full monthly amount for the months of March through to May 2009.

[22] Ms. O’Laughlin has summarized all of her payments made to her under her mortgage including both payments she is acknowledging and those which she is disputing, with particulars noted of those payments made by cheque.[^3]

The Defendants’ Two Lists of Alleged Payments

[23] Mr. Byers, 156 and Ms. Jamieson have produced two lists of payments in support of their position that Ms. O’Laughlin’s mortgage has been paid in full. The first list (“List #1”) is entitled “Donna O’Laughlin Mortgage Payment Schedule”, being a list of combined cheque and cash payments in varying amounts, including a number of regular monthly payments of $1,048.15 (sometimes $1,048.17), each with a specific date of payment alleged to be associated to such payment.[^4]

[24] The second list (“List #2”) entitled “Additional Payments Made to Donna O’Laughlin” is a list of payments described as being made in “cash” only, all in the even amount of $1,000 and all without a specific date of payment (other than the month of payment). These payments run from December 2006 through to and including March 2010 for a total of 40 payments totaling $40,000.[^5]

[25] List #1 (representing amounts paid by cheque) is in the amount of $97,029.48. List #2 representing cash payments is in the amount of $40,000. The combined total of amounts allegedly paid by cheque and cash by Mr. Byers is the sum of $137,029.48. The amounts set out in Lists #1 and #2 later changes when Mr. Byers, 156 and Ms. Jamieson rely on different amounts as set out in Schedule C appended to the Defendants’ factum. In Schedule “C”, payments for cheques are in the amount of $73,399.53. Payments in cash are in the amount of $61,129.87. The total payment is in the amount of $134,529.40. with interest in the amount of $21,255.05.

[26] It is here that the parties come to the fundamental issue regarding whether monies are still owing in respect of Ms. O’Laughlin’s second mortgage or whether that mortgage has been paid in full.

THE ISSUE

[27] The central issue on this motion for summary judgment is whether there is a genuine issue requiring a trial.

POSITION OF THE PARTIES

Position of the Moving Party Donna O’Laughlin

[28] Ms. O’Laughlin submits that there is no genuine issue requiring a trial. She submits that before this court is a full evidentiary record supporting her claim for summary judgment for unpaid amounts owing by the Defendants on her second mortgage. The amount claimed as at July 31, 2010 is $104,708.34 plus accrued interest. She submits that Mr. Byers, 156 and Ms. Jamieson have not put their best foot forward. The two lists together with the assertion that the second mortgage has been paid in full amount to bald assertions and no evidence whatsoever proving amounts allegedly paid.

[29] She submits on the evidentiary record before this court that it may not be necessary to exercise the court’s powers to make findings regarding credibility. There will be no further or better evidence that can be presented at trial. Therefore, she submits that summary judgment ought to be granted.

Position of the Defendants Byers, 1566997 Ontario Inc., and Jamieson

[30] These Defendants submit that Ms. O’Laughlin’s second mortgage has been paid in full. In making that determination, it is submitted that the court must also determine whether Mr. Byers paid a total of $134,529.40 to Ms. O’Laughlin in respect of the second mortgage being: (a) the amount of $73,399.53 paid by cheques to her and (b) the aggregate cash amount of $61,129.87. It is further asserted that Ms. O’Laughlin has not substantiated or quantified her claim that she receive some of these amounts in repayment of loans or advances made to her by Mr. Byers. It is further asserted that Ms. O’Laughlin has credibility issues which can only be explored fully at trial. It is also submitted that Mr. Byers has overpaid in respect of the mortgage by approximately $7,000. (See Schedule “C” to responding parties’ factum). Therefore, these Defendants submit that Ms. O’Laughlin’s motion for summary judgment be dismissed with costs. The Defendants assert that they have overpaid her in respect of the second mortgage which Ms. O’Laughlin vigorously denies.

ANALYSIS

Summary Judgment – Guiding Principles

[31] The Court’s jurisdiction to grant summary judgment is set out in Rule 20 of the Rules of Civil Procedure. Pursuant to subrule 20.04(2)(a), the Court shall grant summary judgment where there is “no genuine issue requiring a trial”.[^6]

[32] When deciding whether or not to grant summary judgment, the motions judge may employ his or her powers under rule 20.04(2.1) to weigh the evidence, evaluate the credibility of a deponent, or draw any reasonable inference from the evidence.[^7]

[33] In Hryniak v. Mauldin, the Supreme Court of Canada recently ruled on the proper interpretation of the new summary judgment rule that came into force in 2010. The Court confirmed that the new rule makes summary judgment appropriate in a wide number of cases and that the motion judge can use the new powers in rules 20.04(2.1) and (2.2) in an expanded number of cases:

The new rule, with its enhanced fact-finding power, demonstrates that a trial is not the default procedure. Further, it eliminated the presumption of substantial indemnity costs against a party that brought an unsuccessful motion for summary judgment, in order to avoid deterring the use of the procedure.

The new powers in Rules 20.04(2.1) and (2.2) expand the number of cases in which there will be no genuine issue requiring a trial by permitting motion judges to weigh evidence, evaluate credibility and draw reasonable inferences.

…[T]he amendments are designed to transform Rule 20 from a means to weed out unmeritorious claims to a significant alternative model of adjudication.[^8]

[34] In Hryniak, the Supreme Court stated that:

The summary judgment rules must be interpreted broadly, favouring proportionality and fair access to affordable, timely and just adjudication of claims.[^9]

[35] A trial is not required if a summary judgment motion can achieve a fair and just adjudication. An issue ought to be resolved on a motion for summary judgment if the motion provides a process which allows the judge to make the necessary findings of fact, apply the law to those facts, and is a proportionate, more expeditious and less expensive means to achieve a just result than going to trial.[^10]

[36] The key principles on a motion for summary judgment are well established. The moving party bears the initial onus of demonstrating that there is no genuine issue requiring a trial. In order to be successful, the moving party must present a case capable of being decided on the record before the motions judge.[^11]

[37] On a motion for summary judgment, the judge must first determine if there is a genuine issue requiring a trial based only on the evidence before the judge and without using the judge’s new fact finding powers. There will be no genuine issue requiring trial if the summary judgment process provides the motion judge with the evidence required to fairly adjudicate the dispute and is a timely, affordable and proportionate procedure within the mean of rule 20.04(2)(a).[^12]

[38] If there appears to be a genuine issue requiring a trial, the motion judge should then determine if the need for a trial can be avoided by using the new powers under rules 20.04(2.1) and (2.2). Those new powers can be used provided it would not be against the interest of justice. The use of those powers will not be contrary to the interests of justice if they will lead to a fair and just result that will serve the goals of timeliness, affordability and proportionality in light of the litigation as a whole.[^13]

[39] The standard for fairness is not whether the procedure is as exhaustive as a trial, but whether it gives the judge confidence that he or she can find the necessary facts and apply the legal principles so as to resolve the dispute.[^14]

[40] The onus is on the moving party to establish there is no genuine issue of material fact requiring trial. Where the moving party does this, the responding party must either refute or counter the moving party’s evidence or risk summary dismissal. The responding party cannot rely solely on allegations or denials in its pleadings but must set out, through admissible evidence, specific facts requiring a trial. Both parties are expected to put their best food forward. The party resisting summary judgment must “lead trump or risk losing”. There is no reason to infer that better evidence would be available at trial.[^15]

Findings

[41] Ms. O’Laughlin’s counsel submits that, based on the evidence before this court, without using the new fact-finding powers, there is no genuine issue requiring a trial. The summary judgment process in this case provides a motion judge with the evidence required to fairly and justly adjudicate the dispute in a timely, affordable and proportionate manner within the meaning of rule 20.04(2)(a). I agree.

[42] I do not find it necessary for reasons to follow to use new powers under rule 20.04(2.1) and (2.2) to embark upon a credibility analysis. I do not agree with counsel for Byers, 156 and Jamieson that there are genuine issues requiring a trial and that credibility can only be determined by employing the forensic machinery of a trial.

[43] In support of his argument, counsel for Ms. O’Laughlin referred to Royal Bank of Canada v. Tie Domi Enterprises Ltd., 2011 ONSC 7297. At para. 30 the court held:

[30] I am mindful of what other courts have said about self-serving affidavits, which I find is what Domi’s affidavits amount to. Courts have held that a self-serving affidavit containing bald allegations or denials will not create triable issues. “The court must be scrupulous in assessing genuine issue for trial”. [Iroquois Falls Community Credit Union Ltd. (Liquidator of) v. Co-operators General Insurance Co., 2007 56483 (ON SC), [2007] O.J. No. 4980 162 A.C.W.S. (3d) 924, at paras. 73 and 74]. I find Domi’s and Fleishman’s affidavits lack an “air of reality” when viewed in the context of all the other evidence. [Bank of Montreal v. Woldegabriel, [2007] O.J. No. 1305, 156 A.C.W.S. (3d) 491].

[44] It is submitted that in our case the responding parties’ evidence consists of self-serving affidavits containing bald allegations which will not create triable issues. In 1250294 Ontario Limited v. 2141065 Ontario Inc., 2014 ONSC 2918, Perell J. discussed rule 20.04(2)(a), (2.1) and (2.2) as well as the Supreme Court of Canada decision in Hryniak v. Mauldin. At paragraphs 59 to 67, he considered the two step approach mandated by Hryniak. In his case, Perell J. determined on the evidentiary record before him whether there was a genuine issue requiring a trial. This analysis conformed with the first step on a summary judgment motion. He concluded that without using the enhanced fact-finding powers available under rules 20.04(2.1) and (2.2) on a review of the factual record, he was satisfied that summary judgment should be granted. There was sufficient evidence to fairly and justly adjudicate the dispute and a summary judgment would be a timely, affordable and proportionate procedure. It was unnecessary to go on to the second step of the approach in Hryniak.

[45] In McMurdo v. Saleem, 2010 ONSC 5641, Eberhard J. considered a summary judgment motion on a second mortgage.

[46] On the record before her, she was able to determine the amount owing on the mortgage. She was also able to determine whether the mortgage was extended by oral agreement between the parties. The Defendant asserted an oral agreement. The Plaintiff denied such an agreement. Eberhard J. held that such an oral agreement was contrary to the Statute of Frauds. The evidence apart from the bald assertions of the conversation by either party was determinative. Further, even if the Defendants’ evidence was fully accepted, the defence could not succeed.

[47] At paragraph 14 in McMurdo, Eberhard J. commented that if she were to go on to assess credibility as she was permitted to do, she would also find that the assertion of an oral agreement was inconsistent with other known facts. She concluded that there was no issue requiring a trial. If she went on to consider credibility in weighing the evidence, she still found no issue requiring a trial and granted summary judgment.

[48] For the reasons set out below, based on the evidence presented, and without the use of the powers provided by rules 20.04(2.1) and (2.2) I am satisfied that summary judgment should be granted in this case. Based on the evidentiary record, there is sufficient evidence to fairly and justly adjudicate the dispute and a summary judgment would be a timely, affordable and proportionate procedure. It is not necessary to proceed to the second step of the approach mandated by Hryniak.

Extent of Defendants’ Proof of Payment

[49] I find that Byers, 156 and Jamieson have prepared two lists of payments (List #1 – cheques, List #2 – cash) supporting their position that the second mortgage has been fully paid. There is some evidence of copies of cancelled cheques. However, these two lists which were revised by Schedule “C” attached to the Respondents’ factum provide the only “proof of payment” on Ms. O’Laughlin’s mortgage produced by Byers, 156 and Jamieson. Based on the Defendants’ own documents the following is shown:

(i) no regular payments (i.e. payments of $1,048.15 of $1,048.17) were made after April of 2010;

(ii) two substantial payments, one for $6,000 and one for $2,500 therefore totaling $8,500 are alleged by List #1 to have been made two to three weeks before the loan was even advanced;

(iii) taking List #1 and List #2 payments together, Mr. Byers is stating that payments in excess of $5,000 were made toward the Plaintiff’s mortgage in May of 2007, in excess of $2,500 in June of 2007, in excess of $13,000 in August of 2007, in excess of $9,000 in October 2007, in excess of $5,000 in November 2007, in excess of $10,000 in December of 2007;[^16]

(iv) adding in his obligations under the first mortgage and his own personal mortgage would require adding another $5 - $6,000 to Mr. Byers’ financial obligations for any of these months;[^17]

(v) In the month of May of 2009 there were two regular monthly payments (of $1,048 each), even though presumably the mortgage according to the Defendants would have been more than up-to-date as of May 1, 2009.[^18]

[50] Mr. Byers’ affidavit was the same affidavit that he used in the interpleader proceeding. He did not serve and file an additional affidavit on this summary judgment motion. At his examination, Mr. Byers resiled from the allegation that he had made the first payment of $6,000 (in “cash”) as set out in his spreadsheet as Exhibit “K” to his affidavit. Further, both the $6,000 and $2,500 payments do not appear on the revised schedule “C” payments attached to the Respondents’ factum.

[51] According to Ms. O’Laughlin, after the last payment was made that she acknowledges i.e. payment of $500 on July 26, 2010, the balance outstanding according to the amortization schedule under the mortgage was $104,708.34. She claims interest at the rate of 11.5 percent per annum calculated half yearly not in advance in accordance with her mortgage. The total amount outstanding is the sum of $104,708.34 together with interest from July 1, 2010 to June 1, 2014 for a total of $160,798.20 plus interest to the date of judgment.

Context of Income/Obligations of Mr. Byers

[52] Mr. Byers’ stopped making payments under Ms. O’Laughlin’s mortgage when he lost income due to the loss of his motor vehicle dealer licence in early 2009.

[53] To put matters into context, Mr. Byers at that time was required to ensure payments were made on the first mortgage to Gord Coates Holdings Ltd. in the amount of $4,772 per month. He was in arrears in respect of the first mortgage. He was also required to pay mortgage payments on his own personal property. In addition, he owed substantial amounts of money in government taxes, interest and penalties.

[54] No payments were made by Mr. Byers to the first mortgagee Coates under the first mortgage after the Spring of 2011. Coates sold the property under power of sale in a transaction closing in or about September 27, 2011. In respect of the first mortgage, Mr. Byers was also in arrears on payment of property taxes in excess of $90,000. The distribution sheet contained in Ms. O’Laughlin’s original Motion Record at Tab 2D discloses the exact amount of $97,712.44 as being the outstanding amount regarding real property taxes. I find that the evidence overwhelmingly supports the conclusion that Mr. Byers was not paying the first mortgagee, was not paying the realty taxes as he was obliged to do, and was not paying the second mortgagee Ms. O’Laughlin.

[55] I find the Plaintiff’s calculations found at Schedule “A” at the Plaintiff’s Compendium in F15 and the Plaintiff’s Comparative Payments made on the first and second mortgages Schedule “B” at the Plaintiff’s Compendium F18 to be supported by the evidence and entirely reliable regarding the Ms. O’Laughlin’s claim that on July 26, 2010 the balance outstanding according to the amortization schedule given to her by Mr. Isles, total was $104,708.34. The two lists provided by Mr. Byers and revised by Schedule “C” in the Respondents’ Factum, are nothing more than bald assertions without the necessary proof to substantiate payment of the second mortgage in full.

Lack of Strength of Defendants’ Materials

[56] As previously noted, Mr. Byers has not filed any material directly in response to Ms. O’Laughlin’s motion for summary judgment to sustain his position that the mortgage has been paid in full. Rather, Mr. Byers and Ms. Jamieson are relying upon the affidavit of Mr. Byers sworn in the interpleader application.

[57] Mr. Byers’ affidavit contains a document spreadsheet prepared by a third party bookkeeper employed by Mr. Byers the List #1 as well as List #2 entitled “Additional Payments Made to Donna O’Laughlin”. These payments are all listed as cash payments. Ms. O’Laughlin made repeated requests for “proof” that these payments were made.

[58] The only affidavit filed directly in response to Ms. O’Laughlin’s motion for judgment is that of Ms. Jamieson sworn October 9, 2013. In that affidavit, Ms. Jamieson makes statements that are based on hearsay to the effect that the mortgage had been paid in full and pointing to the spreadsheets prepared by the company’s bookkeeper. On her cross-examination, Ms. Jamieson stated that the only basis for her statements that the mortgage had been paid in full were as follows:

(i) the Affidavit of Timothy John Byers sworn December 23, 2011 and the Exhibits contained therein;

(ii) her “investigative notes”;

(iii) documents and notes that bookkeepers made; and

(iv) Ms. O’Laughlin’s own statements and her Affidavits.

[59] In performance of an undertaking arising from her examination, Ms. Jamieson advised that she did not in fact have any such “investigative notes”.

[60] The “bookkeeper’s notes” were referred to in Mr. Byers’ affidavit.

[61] According to Ms. O’Laughlin, it was the bookkeeper Andrea Baker who responded to her pleas for payment by paying $500 and $1,5000 as well as $1,000 payment by email transfer. Similarly, the cancelled cheques that Ms. Jamieson has personal knowledge of are only those attached to the affidavit of Mr. Byers. Ms. Jamieson was not present at any time Mr. Byers was supposed to have made a cash payment to Ms. O’Laughlin on her mortgage. In short, Ms. Jamieson had no direct knowledge of any of these cash payments supposedly made by Mr. Byers and her statements in this regard are based upon hearsay. This is so notwithstanding the fact that Ms. Jamieson was present on the premises throughout the entire time the second mortgage to Ms. O’Laughlin existed for the period December 2006 through to the Spring of 2010 when Ms. O’Laughlin left the premises.

Evidence of Company Bookkeeper Andrea Baker

[62] Mr. Byers states in his affidavit with respect to the compiling of the “spreadsheet” attached as Exhibit “K” to his affidavit:

Miss Baker gathered the cancelled cheques and banking statements, recorded these payments and investigated the cash payments entered into the general ledger by the previous bookkeeper, copied them and created a spreadsheet documenting the payments, a true copy of the spreadsheet and cancelled cheques is attached hereto as Exhibit “K”.

[63] In her examination as a witness on December 16, 2013, Ms. Baker made the following further statements:

i) I made the entries but the accounting information came from the accounting program that the other ladies had put together, with the exception of the last three entries that I participated in.[^19]

ii) The transfer, the last four I was involved with. Anything before that I was not involved with.[^20]

iii) No I don’t. [to the question: Miss Baker, do you have any personal knowledge of any of these cash payments, the seven cash payments highlighted in yellow].

iv) No, that’s the descriptions that the previous people had put in and that’s why I wrote it down the way they had it. [in answer to the question: Do you have any idea why there is a difference in the descriptions? – i.e. a reference to the difference in descriptions in Exhibit “K” (marked as Exhibit 1 on Ms. Baker’s examination) between “loan payment” and “mortgage payment” for the various payments listed on Exhibit K][^21]

She’s assuming that I know. I did not know. I wasn’t involved. What was their business was their business. I am only going by what people have told me and to me it’s hearsay. [Emphasis added]. I don’t know.[^22]

[64] In short, Andrea Baker cannot substantiate the payments allegedly made by Mr. Byers and disavows any knowledge in respect of the dealings between the parties because it was none of her business. She was only going by what people had told her and she acknowledged what she was told was hearsay.

[65] There was never any affidavit filed by any of Mr. Byers’ bookkeepers to substantiate payments made to satisfy Ms. O’Laughlin’s mortgage in full.

[66] What Ms. Baker did say on her examination was that Ms. O’Laughlin always stated to Ms. Baker that Ms. O’Laughlin was owed monies under her mortgage.[^23]

[67] The position of Ms. O’Laughlin that she was owed money under her mortgage is further corroborated by the company’s accountant/bookkeeper. The formal financial statements prepare for 156 as the corporate titleholder by the company accountant Rob Newman set out the following amounts remaining due and owing to the Plaintiff under her mortgage:

i) for the year ending 2007: $105,076

ii) for the year ending 2008: $104,120

iii) for the year ending 2009: $103,054

iv) For the year ending 2010: $ not yet calculated?

[68] These figures were repeated in the corporation income tax returns for 146 for the said financial year ends, also contained within the Corporate Minute Book.[^24]

[69] I find that on the evidentiary record before me, 156 and Mr. Byers as Guarantor owe Ms. O’Laughlin the sum of $160,798.20 which consists of principle and interest as at June 1, 2014. In addition, they owe Ms. O’Laughlin interest on the second mortgage from June 1, 2014 to the date of judgment. I find the Plaintiff’s evidence to be consistent and reliable. Her evidence is supported by the company’s accountant/bookkeeper, company records and the evidence of company bookkeeper Andrea Baker to the extent that Ms. O’Laughlin always stated to her that Ms. O’Laughlin was owed monies under her mortgage.

[70] Ms. O’Laughlin has established that the Defendants Byers and 156 owe her money on the second mortgage also in accordance with calculations submitted by Ms. O’Laughlin’s counsel on the hearing of this motion.[^25] I accept that the base amount owed to her is the sum of $104,708.34 with interest accruing at 11.5 percent from July 31, 2010 to the date of judgment. As at June 1, 2014, the amount owed for principle together with interest is the sum of $160,798.20.

[71] I reject submissions made on behalf of the Defendants that it is Ms. O’Laughlin that is guilty of incomplete recordkeeping. This is an obvious attempt to shift the onus of recordkeeping of payments made by Mr. Byers to the Plaintiff. Ms. O’Laughlin did keep track of the payments that were made. She had the amortization schedule that was given to her by Mr. Isles. She knew what she received and she knew what she didn’t receive. Further, it was the obligation of the Defendants Mr. Byers and 156 to produce for Ms. O’Laughlin receipts evidencing payments of taxes and other charges which Mr. Byers and 156 failed to do.

[72] The assertion by Mr. Byers and 156 that there has been an overpayment on the mortgage to Ms. O’Laughlin of approximately $7,000 (see Schedule “C” Factum of the Defendants) is not supported by the evidence and is, frankly, an incredulous claim without any merit.

[73] For these reasons, I conclude that there is no genuine issue requiring a trial and that summary judgment should be granted to Ms. O’Laughlin. She has proven that she advanced the second mortgage funds and that mortgage is in default. She is owed the sum of $160,798.20 for principle and interest as of June 1, 2014 and interest at 11.5 percent calculated half yearly and not in advance to the date of judgment. Counsel for the Plaintiff shall provide the court with a summary of calculations regarding any and all accrued interest from June 1, 2014 to the date of judgment. At the first stage of the summary judgment process, on the evidence presented and without the use of the powers provided by rules 20.04(2.1) and (2.2), I am satisfied that summary judgment should be granted.

[74] If I were to apply the powers of rules 20.04(2.1) and (2.2) and if I were to assess credibility, my conclusion that there is no genuine issue requiring a trial and that a summary judgment should be granted would only be confirmed.

Set-Off

[75] Ms. O’Laughlin submits that there ought to be set-offs against her judgment.

[76] She submits that the principles of legal and equitable set-off apply in support of her submission that amounts are to be set-off.

[77] It is submitted that whereas here the debts claimed against each litigant are liquidated debts, it is open to the parties to claim the benefit of the doctrine of legal set-off (as opposed to equitable set-off) to off-set any amounts that one may owe to the other.[^26]

[78] Under the Courts of Justice Act a litigant in one proceeding may set off against an opposing litigant in the same proceeding a debt owed by the first litigant to the second litigant and such “mutual debts may be set off against each other even if they are of a different nature”.[^27]

[79] Such debts have been interpreted to mean liquidated debts.[^28] Unliquidated damages do not qualify for the purposes of legal set off under s.111. However, a claim for unliquidated damages may be applicable to set-off against a claim for liquidated debt, under the principles of equitable set-off, where the competing claims arise out of the same relationship.[^29]

[80] I find that Ms. O’Laughlin is entitled to set-off. In addition to the judgment in Small Claims Court file number 979/11 in the amount of $3,3500 plus accruing interest and costs, she owes the Defendants including 156, the sum of $1,750 as costs ordered by MacKinnon J. on December 11, 2012. At the same time as was ordered by McCarthy J. on March 4, 2014, Mr. Byers owes Ms. O’Laughlin the sum of $1,500 for costs (see Plaintiff’s Compendium at F55).

CONCLUSION

[81] For the above reasons, I grant Ms. O’Laughlin’s motion for summary judgment. She shall be granted judgment against the Defendants Timothy John Byers and 1566997 Ontario Inc. in the total amount owed under her mortgage, as calculated by the terms thereof in the amount of $160,798.20[^30] representing the base principle amount of $104,708.34 together with interest at the rate of 11.5% per annum calculated half yearly not in advance from July 31, 2010 to June 1, 2014. Ms. O’Laughlin is also entitled to interest on the said mortgage from June 1, 2014 to the date of judgment calculated in accordance with the terms of the mortgage. Plaintiff’s counsel shall present the court with a summary of calculations for additional interest and the total amount of monies owed by the Defendants Byers and 1566997 Ontario Inc. to the date of judgment, less the following amounts:

(a)
(i) $3,350 as at April 18, 2013 plus accruing interest and costs, awarded to the Defendant Byers in Barrie Small Claims Court file #979/11; and

(ii) $1,750 awarded to the Defendant Byers as costs in the interpleader application #1111-11 (but also giving a credit to the Plaintiff of $750 recently awarded to her in the Barrie Small Claims Court), less the $1,500 Ms. O’Laughlin has now been awarded for costs in these proceedings on March 4, 2014;

(b) an order shall issue declaring Ms. O’Laughlin entitled to the surplus money standing to the credit of and paid into court under the interpleader application #1111-11;

(c) the balance of the relief originally requested, including a determination of the ownership and control of 1566997 Ontario Inc. shall be adjourned to a further hearing date. This summary motion as against the Defendant Kelly Ann Jamieson is hereby dismissed without costs. The parties may attend before me to determine how the remaining issues are to be tried, and to settle the terms of judgment, if necessary;

(d) as for the matter of costs, counsel agree that costs are to be determined by way of written submissions. Ms. O’Laughlin shall serve and file a concise Statement of Costs not exceeding two pages in length, together with a Costs Outline and Draft Bill of Costs and Brief of Authorities within ten days of this judgment. Within 10 days thereafter, the Defendants Byers and 156 shall serve and file their same materials. Any written submissions in reply shall be served and filed within the next 7 days thereafter. All written cost submissions are to be delivered to my judicial assistant at Barrie.

DiTOMASO J.

Released: September 11, 2014

[^1]: Original O’Laughlin Affidavit, paragraph 14 and 15, Exhibit “G”; Affidavit of Kim Murison, sworn October 3, 2013, Exhibit “A” (contained in Plaintiff’s Reply Record) – Byers’ transcript, Q.244, p. 52

[^2]: Affidavit of Kim Murison, sworn October 3, 2013, Exhibit “A”

[^3]: See Summary of “All Second Mortgage Payments” attached as Schedule “A” in Plaintiff’s Compendium F15.

[^4]: Affidavit of Barry Timothy John Byers sworn December 23, 2011 (“Byers’ Affidavit”) contained with an interpleader application number 1111-11, Exhibit “K”; also found at the Plaintiff’s Compendium F16.

[^5]: Byers’ Affidavit, Exhibit “E” (List #2); also found at Plaintiff’s Compendium F17

[^6]: Rules of Civil Procedure, RRO 1990, O Reg 194, r20.04(2)(a)

[^7]: Rules of Civil Procedure, RRO 1990, O Reg 194, r20.04(2.1)

[^8]: Hryniak v. Mauldin, [2014] S.C.C. 7 at paras. 33-35

[^9]: Hryniak v. Mauldin, supra, at para. 5

[^10]: Hryniak v. Mauldin, supra, at paras. 4 and 49

[^11]: Combined Air Mechanical Services Inc. v. Flesch, 2011 ONCA 764 at paras. 56 and 63

[^12]: Hryniak v. Maudlin, supra, at para. 66

[^13]: Hryniak v. Maudlin, supra, at para. 66

[^14]: Hryniak v. Maudlin, supra, at para. 50

[^15]: Byfield v. The Toronto-Dominion Bank, 2012 ONCA 49 at para. 10; Eagle Professional Resources Inc. v. MacMullin, 2013 ONCA 639 para. 6; Khabouth v. Nuko Investments Limited, 2013 ONCA 671 at para. 6.

[^16]: See Plaintiff’s Comparison of Payments Made/Alleged to have been made attached as Schedule “B” to Plaintiff’s Compendium

[^17]: Plaintiff’s Schedule of Comparative Payments attached as Schedule “B” to Plaintiff’s Compendium; Original O’Laughlin Affidavit, Exhibit 1

[^18]: Exhibit “K” to Byers’ Affidavit; Plaintiff’s Schedule of Comparative Payments attached to Plaintiff’s Compendium

[^19]: Transcript of Examination of Andrea Baker as a witness taking place on December 16, 2013 (“Baker transcript”), p. 6, question 23

[^20]: Baker transcript, p. 7, question 27

[^21]: Baker transcript, pp. 7 through 8, questions 31 and 32

[^22]: Baker transcript, p. 25 question 143

[^23]: Baker transcript, p. 27 questions 155 through 157

[^24]: Supplementary Affidavit of Donna O’Laughlin, Exhibits AA1, AA2, AA3; Supplementary Record of Exhibits/Undertakings

[^25]: Attached and marked as Schedule “A” to this judgment

[^26]: Courts of Justice Act, R.S.O. 1990, c.C.43; Telford v. Holt 1987 18 (SCC), [1987] 2 S.C.R. 193 (S.C.C.)

[^27]: Courts of Justice, supra, as amended, Section 111

[^28]: Telford v. Holt, supra

[^29]: Telford v. Holt, supra; Dunlop Pneumatic Tyre Co. Ltd. v. New Garage and Motor Seal Ltd., [1915] A.C. 79

[^30]: Attached and marked as Schedule “A” to this judgment