Chand Morningside Plaza et al. v. Badhawar et al., 2015 ONSC 293

COURT FILE NO.: CV-11-439398

DATE: 20150116

SUPERIOR COURT OF JUSTICE - ONTARIO

RE: Chand Morningside Plaza Inc. and

Joshi Group of Companies Ltd.

Plaintiffs

AND:

Rochak Badhawar, Ashok Badhawar,

Usha Badhawar, Marvin Talsky, Gore Doctors Medical Inc.,

Karia Aash and Bindaas Capital Inc.

Defendants

BEFORE: Carole J. Brown, J.

COUNSEL: Adam Grossi, for the Plaintiffs

Michael R. Kestenberg and Aaron Hershtel, for the Defendants

HEARD: November 26, 2014

ENDORSEMENT

[1] The defendant, Marvin Talsky, brings this motion for summary judgment pursuant to Rule 20 of the Rules of Civil Procedure. He submits that he was not retained by the defendants, did not owe them a duty of care and there is therefore no genuine issue for trial.

[2] The plaintiffs are in the land development and mortgage business. The principal of both plaintiff corporations is Parm Joshi ("Joshi"). The defendant, Marvin Talsky ("Talsky") is a real estate lawyer with 54 years' experience.

[3] The action involves a series of mortgage transactions on various properties in Brampton, Ontario, for which Talsky acted for the defendant, Bindas Capital. The facts are set forth at the factum of the moving party, paragraphs 5-25, 29-32, 34-36, 38-39, 41, 42, 44, 40-53.

[4] As regards the action against Talsky, the plaintiffs alleged that they had retained Talsky, pursuant to e-mail correspondence in June of 2011 sent through Talsky's client, Rochak Badhwar, to discharge Joshi's second collateral mortgage on properties known as the "Ebenezer properties" only on the condition that the Joshi second mortgage be re-registered as a second collateral mortgage after the first mortgage maintained by RBC was refinanced. The plaintiffs maintain that Talsky failed or neglected to comply with those instructions, resulting in significant damages and loss being sustained by them.

[5] The plaintiffs maintain that Talsky did not re-register the mortgage pursuant to the retainer, that the defendants thereafter defaulted on the Joshi mortgage and because their second mortgage was not re-registered, they sustained substantial losses. The evidence indicates that, on or about October 14, 2011 , the plaintiffs learned that Talsky had discharged the Joshi mortgage on the Ebenezer properties. It is the position of the plaintiffs that the retainer with Talsky as regards re-registration of the said mortgage was either explicit or implicit.

[6] It is the position of the defendant, Talsky, that he was never retained by the plaintiffs to re-register the subject mortgage, that indeed, at the material time, the plaintiffs were represented by their own counsel, that there is no evidence to establish that Talsky was engaged as the plaintiffs' solicitor to re-register the Joshi mortgage, that none of the indicia of the solicitor-client relationship are present in this case, that Talsky did not owe the plaintiff a duty of care as a non-client and that the plaintiff cannot prove damages. Accordingly, the defendant maintains that, based on all of the evidence presented, there is no genuine issue for trial.

Issues

[7] The issue to be determined by this Court in the action as against Talsky is whether there is a genuine issue requiring a trial in this case. In determining that issue, this Court must determine the following:

1. Whether Talsky was retained by the plaintiffs to re-register a second mortgage;

2. If the answer to the first question is no, whether Talsky owed the plaintiffs a duty of care as a non-client;

3. Whether the plaintiffs have suffered any damages as a result of any act or omission of Talsky.

Rule 20 and Summary Judgment

[8] Rule 20 provides for summary judgment where there is no genuine issue requiring a trial with respect to a claim or defence.

[9] The Supreme Court of Canada, in Hyrniak v Mauldin, 2014, SCC 7 and Bruno Appliances and Furniture Inc. v Hyrniak, 2014 SCC 8, has recently reinterpreted Rule 20, taking into account the recognized need for access to justice for the majority of Canadians. The Supreme Court held that summary judgment rules must be interpreted broadly, favouring proportionality and fair access to the affordable, timely and just adjudication of claims. It found that the Court of Appeal, in Combined Air Mechanical Services Inc. et al v. Fleisch et al, 2011 ONCA 764, placed too high a premium on the "full appreciation " of evidence that can be gained in a conventional trial, given that such a trial is not a realistic alternative for most litigants. It held that a trial is not required if a summary judgment motion can achieve a fair and just adjudication, if it provides a process that 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] On a motion for summary judgment, the judge must first determine if there is a genuine issue requiring trial based only on the evidence before the judge without using the judge's new fact-finding powers.

[11] There will be no genuine issue requiring a trial if the summary judgment process provides the motion judge with the evidence required to fairly and justly adjudicate the dispute on the merits within the meaning of Rule 20.04(2)(a) and is a proportionate, more expeditious and less expensive means to achieve a just result. Where a summary judgment motion allows the judge to find the necessary facts and resolve the dispute, proceedings at trial would generally not be proportionate, timely or cost-effective. However, a process that does not give the judge confidence in conclusions to be drawn can never be the proportionate way to resolve the dispute.

[12] Madam Justice Karakatsansis, writing for the Court, observed as follows in the companion case, Bruno Appliances, supra, at paragraph 22:

The motion judge should ask whether the matter can be resolved in a fair and just manner on a summary judgment motion. 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 the proportionate, more expeditious and less expensive means to achieve a just result. If there appears to be a genuine issue requiring a trial, based only on the record before her, the judge should then ask if the need for a trial can be avoided by using the new powers provided 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.

[13] To grant summary judgment, on a review of the record, the motions judge must be of the view that sufficient evidence has been presented on all relevant points to allow him/her to draw the inferences necessary to make dispositive findings under Rule 20.

[14] The Supreme Court recognized that concerns about credibility or clarification of evidence can often be addressed by calling oral evidence on the motion itself, using the powers given to the court pursuant to Rule 20.04(2.1). However, it also recognized that there may be cases where, given the nature of the issues and the evidence required, the judge cannot make the necessary findings of fact, or apply the legal principles to reach a just and fair determination.

[15] The enhanced fact-finding powers granted to motion judges in Rule 20.04(1.1) may be employed on a motion for summary judgment unless it is in the "interest of justice" for them to be exercised only at trial. The Supreme Court observed that inquiry into the interest of justice to be served by summary judgment must be assessed in relation to the full trial and the relative efficiencies of proceeding by way of summary judgment as opposed to trial, including the cost and speed of both procedures, the evidence available at trial versus that on the motion, as well as the opportunity to fairly evaluate such evidence.

[16] The parties must each "put their best foot forward". A party is not entitled to sit back and rely on the possibility that more favourable facts may develop at trial. The court is entitled to assume that all of the evidence the parties intend to rely on at trial is before the court.

Analysis

Was Talsky Retained by the Plaintiffs to Reregister the Second Mortgage

[17] As regards this issue, the plaintiffs rely, particularly, on the e-mail of June 1, 2011, sent to the defendants, Rochak Badhwar and Ashok Badhwar, which states as follows:

Hi Ash and Rochak,

Further to our conversation this morning, I hereby authorize your solicitors to discharge collateral mortgages on 4515 Ebenezer Road unit 112, 113, 114 and 115 for the purposes of refinancing your mortgage on this property and registering new charge behind new mortgagee. I must point out a new mortgage cannot exceed 80 percent of original appraised value and this discharge only applies to 4515 Ebenezer Road and collateral mortgage on their personal property and 1145 Morningside Avenue unit 12, 13, 14, 15, 16 remains in its place.

Kindly prepare all documents pertaining to the discharge and new collateral charge for my signature. I am not certain if I retain my lawyer to complete this task as I think your solicitor can complete this charge.

Regards

Parm

[18] This e-mail was sent to both Rochak Badhwar ("Rochak ") and Ashok Badhwar ("Ash"), but was not sent by Joshi to Talsky.

[19] It was subsequently forwarded by Ash to Talsky on June 1, 2011. Following the e-mail, an Acknowledgment and Direction executed by Joshi and witnessed by Rochak, authorizing Talsky to discharge the Joshi mortgage on the Ebenezer properties was delivered to Talsky's office, along with copies of Joshi's identification for signature verification purposes. The Acknowledgment and Direction was not drafted by Talsky.

[20] Pursuant to the Acknowledgment and Direction received by Talsky, he proceeded to register a Discharge of Charge, discharging the Joshi mortgage over the Ebenezer properties and transferring other charges as set forth at paragraph 24 of the defendant's factum.

[21] As regards the plaintiffs' allegation that Talsky had been retained by them to re-register the Joshi mortgage, there was no evidence of a retainer between Joshi and Talsky. The only communication relied upon by Joshi is the e-mail set forth above.

[22] The evidence before me of the cross-examination on the affidavit of the principal of the plaintiffs, Parm Joshi, indicates that he never met Talsky prior to October 24, 2014, that he never attended at Talsky's office, that he never spoke with Talsky, that he never sent Talsky any e-mail directly nor did he provide Talsky with any instructions, that he never received legal advice from Talsky, that he never spoke with Talsky regarding the Acknowledgment nor the Joshi mortgage, never provided Talsky with the value or an appraisal of the Ebenezer properties, nor with any details of a mortgage, never received an undertaking from Talsky to re-register the Joshi mortgage, had no knowledge of Talsky except that based on an alleged statement by Rochak that Talsky would contact him, never followed up with Rochak, with whom he had a personal relationship, regarding the discharge and re-registration of the Joshi mortgage and took no steps to follow up with Talsky, who he stated he expected would be calling him, regarding the discharge or re-registration of the Joshi mortgage.

[23] None of the indicia of a solicitor-client relationship are present in this case. Such indicia include (i) whether the client sought or obtained legal advice in respect of the matter in issue; (ii) whether the solicitor sent an account to the client with respect to the matter in issue; (iii) whether the solicitor sent a reporting letter with respect to the matter in issue; (iv) whether the solicitor held himself out as acting for the client and whether the client held the solicitor out as acting for him in respect of the issue: Weitzman v Hendin, (1989) 1989 CanLII 4185 (ON CA), 69 O.R. (2d) 678 [ONCA]. In this case, there is no evidence of any of the foregoing indicia.

[24] I have also considered the case of LDR Properties Inc.v 605446 Ontario Ltd et al, 2013 ONSC 421, aff'd. 2014 ONCA 98, relied on by the defendant in which, in similar circumstances, it was held that a single fax, not addressed to the lawyer, was not sufficient to establish a solicitor-client relationship. In this case, also, based on the foregoing evidence, there was only one e-mail, not addressed to the lawyer, and not asked to be forwarded to the lawyer, on which the plaintiffs rely to establish a solicitor-client relationship.

[25] Based on all of the foregoing evidence, and on the relevant case law, I am satisfied that there was no solicitor-client relationship between Talsky and the plaintiffs at all, and particularly no solicitor-client relationship as regards re-registration of a second mortgage on the plaintiffs' behalf.

Did Talsky Owe the Plaintiffs a Duty of Care As a Non-Client

[26] A lawyer only owes a duty of care to his or her own client: Baypark Investments Inc. v Royal Bank of Canada, 2002 CanLII 49402 (ON SC), [2002] O.J. No. 58, aff'd [2002] O.J. No. 4377(C.A.). Only under very limited circumstances will a lawyer be held to owe a duty of care to a third party: Kamahap Enterprises v Chu's Central Market, 1989 CanLII 242 (BC CA), [1989] B.C.J. No. 2108, 64 D.L.R. (4th) 167 (C.A.), Budrewicz v Stojanowski, 1998 CanLII 14688 (ON SC), [1998] O.J. No. 2986, 41 O.R. (3d) 78; Scott v Valentine, 2012 ONSC 6349. A solicitor cannot be expected to protect the economic interests of a non-client unless, in all of the circumstances, the non-client reasonably relied upon him to do so and the solicitor knew or should have known of this reliance.

[27] Based on all of the evidence in this case, and having regard to the relevant case law, there is no evidence on which to conclude that the plaintiffs reasonably relied on Talsky, nor any evidence to establish that he had any knowledge or should have known that there was such reliance placed on him. There was, pursuant to the testimony given on cross-examination and the affidavit of Joshi, no contact, communication, instruction and therefore no proximity between Talsky and Joshi which could have given any indication of reliance on which to found a duty of care owed by Talsky to Joshi as a non-client.

[28] Based on the foregoing, I find that there was no duty of care owed by Talsky to the plaintiffs as non-clients.

Have the Plaintiffs Suffered Any Losses or Damages As a Result of Any Act or Omission on the Part of Talsky

[29] Based on the foregoing, and my findings that there was no solicitor-client relationship and no duty owed by Talsky to the plaintiffs as non-clients, there is no basis on which damages could be awarded.

[30] I note, as well, in the circumstances of this case, and based on all of the evidence before me, that the plaintiffs have not put their "best foot forward" and provided evidence that could establish any damages or loss attributable to any acts or omissions of Talsky.

Is There a Genuine Issue for Trial

[31] Based on all of the evidence before me presented by the parties, I am satisfied that sufficient evidence has been presented on all relevant points to allow me to find the necessary facts, draw inferences and resolve the issues in dispute necessary to make dispositive findings pursuant to Rule 20 without having to use the powers granted to the court pursuant to Rule 20.04(2.1). Given the foregoing, there is no genuine issue requiring a trial and the summary judgment motion as regards the action against Talsky is the most proportionate, timely and cost-effective means of resolving those allegations as against Talsky.

[32] Accordingly, I grant the defendant's motion for summary judgment as regards Talsky.

Costs

[33] The parties have provided me with their bills of costs. The moving party defendant is entitled to his costs on a new partial indemnity basis. I grant the defendant his costs in the amount of $35,000 all-inclusive.

Carole J. Brown, J.

Date: January 16, 2015