ONTARIO
SUPERIOR COURT OF JUSTICE
COURT FILE NO.: CV-14-499445
DATE: 20140929
BETWEEN:
1000728 ONTARIO LIMITED operating as BARON FINANCE
Plaintiff
– and –
1394183 ONTARIO INC., 2251117 ONTARIO limited, ZORAN RADISIC, MARK ROSS, ROBERT ROCHE, TENESHA VERNON, JOSEPH VERNON and SHAYN VERNON
Defendants
Wendy H. Greenspoon-Soer, for the Plaintiff
Michael Corbett, for the Defendants 1394183 Ontario Inc., 2251117 Ontario Limited, Zoran Radisic, Mark Ross, and Robert Roche
HEARD: September 26, 2014
PERELL, J.
REASONS FOR DECISION
[1] The Plaintiff 1000728 Ontario Limited, which operates as Baron Finance, brings a motion for summary judgment against 1394183 Ontario Inc., 2251117 Ontario Limited, Zoran Radisic, Mark Ross, and Robert Roche.
[2] Baron Finance is an Ontario corporation carrying on business as a lender and as a factor of accounts receivable. Loren Shifrin is its Chief Operating Officer.
[3] In September 2013, 1394183 Ontario Inc., which is a website design company, and in January 2014, 2251117 Ontario Limited, another website design company, each signed a Factoring Agreement under which they assigned their accounts receivable to Baron Finance at a discount.
[4] The Factoring Agreements are better described as loan agreements where particular accounts receivable are assigned by the borrowers, 1394183 Ontario Inc. and 2251117 Ontario Limited, but all the borrowers’ accounts receivable are mortgaged as security for the loans.
[5] Zoran Radisic, Mark Ross, and Robert Roche, who are the principals of the corporations, signed personal Guarantees, and the corporations signed cross-Guarantees to secure payment of the obligations under the Factoring Agreements.
[6] Under the respective Factoring Agreements, until the assigned accounts were paid by the debtors, the funds advanced by Baron Finance for the accounts receivable constituted loans.
[7] Under the Factoring Agreements, 1394183 Ontario Inc. and 2251117 Ontario Limited warranted, among other things, that they had delivered the goods invoiced and that the account debtor was indebted for the amounts specified.
[8] Under the Factoring Agreements a breach of warranty or misrepresentations constituted events of default entitling Baron Finance to declare all indebtedness immediately due and payable in full.
[9] Baron Finance registered the Factoring Agreements as security interests under the Personal Property Security Act, R.S.O. 1990, c. P.10.
[10] In early February, 2014, Dmitry Zaitsev and Ashok Sounthararasa, who are employees of Baron Finance, contacted several account debtors of 1394183 Ontario Inc. and 2251117 Ontario Limited. Mr. Zaitsev and Mr. Sounthararasa learned that some of the accounts receivable were false or fabricated, and they learned that some of the accounts had already been paid.
[11] As a consequence of these revelations, the default provisions in the Franchise Agreements were triggered, and Baron Finance declared the loans to 1394183 Ontario Inc. and 2251117 Ontario Limited payable in full.
[12] Baron Finance sued 1394183 Ontario Inc., 2251117 Ontario Limited, Zoran Radisic, Mark Ross, and Robert Roche for breach of the Factoring Agreements or on the Guarantees.
[13] Baron Finance also advanced a claim for fraudulent misrepresentation against the Defendants.
[14] As of February 7, 2014, the amounts outstanding were $47,370.59, in Canadian funds and $15,908.54 in U.S. funds. Interest accrues at the rate of 0.1% daily in accordance with the terms of the Factoring Agreements. As of September 26, 2014, the return date of the summary judgment motion, the outstanding balance, with accrued interest, was $59,733.06 ($12,362.47 interest) in Canadian funds and $20,060.25 in U.S. funds.
[15] As noted above, Baron Finance brings a motion for a summary judgment for its claims, and it also seeks a dismissal of a counterclaim by the Defendant Mark Ross, who is the principal of Clearwave Electronics Limited, an unnamed party to his counterclaim.
[16] Clearwave Electronics executed a Notice of Assignment to Baron Finance of an account receivable from Canon Canada Inc. for the purpose of factoring specific account receivables in April of 2014, and Mr. Ross and Clearwave complain that Baron Finance wrongfully enforced the account receivable and interfered with its business relationship with Canon Canada.
[17] Baron Finance supported its motion for a summary judgment with affidavits from Loren Shifrin. The Defendants opposed the summary judgment motion and submitted that there are genuine issues for trial with affidavits from Robert Roche, Zoran Radisic, and Mark Ross.
[18] Neither side cross-examined the other, and examinations for discovery have not yet been conducted in the action.
[19] Rule 20.04(2)(a) of the Rules of Civil Procedure provides that the court shall grant summary judgment if: “the court is satisfied that there is no genuine issue requiring a trial with respect to a claim or defence.”
[20] In Hryniak v. Mauldin, 2014 SCC 7, a unanimous Supreme Court of Canada introduced a robust approach to granting summary judgment. In paragraphs 49 and 66, the Court stated:
There will be no genuine issue requiring a trial when the judge is able to reach a fair and just determination on the merits on a motion for summary judgment. This will be the case when the process (1) allows the judge to make the necessary findings of fact, (2) allows the judge to apply the law to the facts, and (3) is a proportionate, more expeditious and less expensive means to achieve a just result.
On a motion for summary judgment under Rule 20.04, the judge should first determine if there is a genuine issue requiring trial based only on the evidence before her, without using the new fact-finding powers. There will be no genuine issue requiring a trial if the summary judgment process provides her with the evidence required to fairly and justly adjudicate the dispute and is a timely, affordable and proportionate procedure, under Rule 20.04(2)(a). If there appears to be a genuine issue requiring a trial, she should determine if the need for a trial can be avoided by using the new powers under Rules 20.04(2.1) and (2.2). She may, at her discretion, use those powers, provided that their use is not against the interest of justice. Their use will not be against the interest of justice if they will lead to a fair and just result and will serve the goals of timeliness, affordability and proportionality in light of the litigation as a whole.
[21] Thus, in Hryniak v. Mauldin, the Supreme Court of Canada held that on a motion for summary judgment under rule 20.04, the court should first determine if there is a genuine issue requiring trial based only on the evidence in the motion record, without using the new fact-finding powers.
[22] In the case at bar, putting aside the fraudulent misrepresentation claim, 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 to Baron Finance on its claims under the Factoring Agreements and Guarantees, with costs.
[23] I am also satisfied that Mr. Ross’s claim, including his claim for Clearwave Electronics, should be dismissed with costs. The claim was simply not proven, even including the unsworn documentary evidence tendered at the hearing of the summary judgment motion, which rather refutes than supports any complaint.
[24] It is not necessary to decide the fraudulent misrepresentation claim. During argument, Baron Finance conceded that but for possibly supporting its claim for punitive damages, the fraud claim was superfluous.
[25] The affidavit evidence and the written and oral argument for the Defendants did not identify any genuine issues for trial and there was no denial nor could there be that the default provisions of the Factoring Agreement, really a loan instrument, had been triggered and the outstanding balance of the loan became due and payable. The case is a straight forward debt collection action against which no substantive defence has been shown to possibly exist.
[26] Baron Finance had a security interest in all of the accounts receivable and not just the factored ones. There is no substance to the Defendants’ complaints about the enforcement of the loan agreement.
[27] Baron Finance’s debt claim does not require it to prove the elements of a fraudulent misrepresentation claim, which would be more difficult to prove inasmuch as the fraudulent intent of the Defendants would have to be proven.
[28] As noted above, a summary judgment can be granted without deciding the matter of fraud. In any event, during argument, Baron Finance indicated that it would not pursue the fraud claim if successful on the debt claim. I make no award of punitive damages.
[29] For the above reasons, I grant summary judgment to Baron Finance with costs. Having considered the parties proposed Bills of Cost, I award costs on a partial indemnity basis fixed at $15,000.00, all inclusive.
[30] Judgment accordingly.
Perell, J.
Released: September 29, 2014
COURT FILE NO.: CV-14-499445
DATE: 20140929
ONTARIO
SUPERIOR COURT OF JUSTICE
BETWEEN:
1000728 ONTARIO LIMITED operating as BARON FINANCE
Plaintiff
– and –
1394183 ONTARIO INC., 2251117 ONTARIO limited, ZORAN RADISIC, MARK ROSS, ROBERT ROCHE, TENESHA VERNON, JOSEPH VERNON and SHAYN VERNON
REASONS FOR DECISION
PERELL J.
Released: September 29, 2014