Kakoutis v. The Bank of Nova Scotia, 2015 ONSC 513

CITATION: Kakoutis v. The Bank of Nova Scotia, 2015 ONSC 513

COURT FILE NO.: CV-12-468151

DATE: 20150407

SUPERIOR COURT OF JUSTICE - ONTARIO

RE: Louis Kakoutis and Effie Kakoutis, Plaintiffs

AND:

The Bank of Nova Scotia, Defendant

BEFORE: Pollak J.

COUNSEL: Louis Kakoutis, self-represented Plaintiff

Adrian Visheau, for the Defendant

HEARD: October 17, 2014, January 22, 2015

ENDORSEMENT

[1] The Defendant, The Bank of Nova Scotia ("BNS"), moves for Summary Judgment dismissing the Plaintiffs’ claim against it, or alternatively, for an Order dismissing the claim as frivolous and vexatious. BNS also moves for Summary Judgment on its counterclaim against the Plaintiffs for the outstanding balance of the Plaintiffs’ line of credit and mortgage loans, and possession of the mortgaged property.

[2] The Plaintiffs have also brought a cross-motion for Summary Judgment on their claim against BNS.

[3] The Plaintiffs have the following accounts at BNS:

(i) a Scotiabank “Powerchequing” deposit account (the “Deposit Account”);

(ii) a “Scotialine” personal line of credit account (the “Scotialine”); and

(iii) a conventional mortgage loan (the “Mortgage Loan”).

[4] The terms of the Scotialine and the Mortgage Loan are set out in a Personal Credit Agreement between BNS and the Plaintiffs dated July 8, 2011. BNS lent the Plaintiffs the sum of $30,000.00 as a revolving credit facility on the Scotialine account at an interest rate equivalent to 6.00% per annum (later lowered to 4.00% per annum). BNS also lent the Plaintiffs the sum of $400,000.00 at an interest rate equivalent to 2.25% per annum under the Mortgage Loan.

[5] The Scotialine and the Mortgage Loan were part of a "Scotia Total Equity Plan". They were both subject to a single credit agreement and secured by a single collateral mortgage in favour of BNS.

[6] On July 13, 2011, a mortgage was registered in favour of BNS, as mortgagee, against title to the Plaintiffs' property at 102 Topham Crescent, Richmond Hill, Ontario (the “Property”). The mortgage secured the principal balance of $680,000.00 and incorporated by reference “Standard Charge Terms 200706”. The mortgage was registered for an amount approximately equal to the full market value of the Property, to accommodate possible future increases in the credit limits of the Mortgage Loan and/or the Scotialine.

[7] Pursuant to the Personal Credit Agreement and Standard Charge Terms 200706, default under either of the Scotialine or the Mortgage Loan would trigger a default under both accounts, causing all amounts owing to BNS under the Scotialine and the Mortgage Loan, including principal, interest and other costs and charges, to become due and payable to BNS immediately. BNS would additionally be entitled to quiet possession of the Property.

[8] The Plaintiffs allege that Mr. Kakoutis made a payment of $1,188.00 to a teller in cash to be applied to the Plaintiffs' Scotialine account. They further allege that this payment was lost or stolen by the teller and that BNS is therefore liable for damages of $1,235,965.00. The Plaintiffs also claim that their obligations to BNS with respect to the Scotialine account are nullified as a result of the alleged loss or theft.

[9] BNS admits that Mr. Kakoutis attempted to make a payment to the Scotialine account on the date in question, and that the teller made a transactional error. It emphasizes however, that there is no evidence that cash was given. Rather, an attempt was made to apply a payment to the Scotialine from funds in the Plaintiffs' Deposit Account, but the teller mistakenly credited such payment back to the Deposit Account. This transaction had no effect, as the credit to the Deposit Account cancelled out the corresponding debit. The Plaintiffs therefore suffered no loss as a result of the mistake and, BNS argues, there is no authority or juristic basis to support the Plaintiffs’ claim that their obligations under the Personal Credit Agreement to BNS have thereby been nullified.

[10] The evidence is that the Scotialine was in default when Mr. Kakoutis attempted to make the payment on February 22, 2012, as the Plaintiffs had failed to make the minimum payment of $593.00 due on February 6, 2012. The Plaintiffs only made one more payment on March 1, 2012 for $593.00.

[11] The default under the Scotialine triggered an automatic default under the Mortgage Loan and the total outstanding balance of both accounts became due and owing to BNS. BNS served the Plaintiffs with a Notice of Sale Under Mortgage on February 1, 2013. The Plaintiffs still maintain possession of the Property.

[12] Rule 20.04(2)(a) of the Rules of Civil Procedure, RRO 1990, Reg 194 provides that summary judgment should be granted if there is no genuine issue requiring a trial. Summary judgment will be granted if that process allows the court to make the necessary findings of fact, apply the law to the facts, and is a proportionate, more expeditious and less expensive means to achieve a just result: Hryniak v. Mauldin, et al. 2014 SCC 7, [2014] S.C.R. 87 at paras. 4, 49.

[13] In the Hryniak case, the Supreme Court of Canada gave us a roadmap of the approach to follow on a Motion for Summary Judgment. At para. 66 of the decision, the court states:

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 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). 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…

[14] In this action, there are few issues in dispute.

[15] Applying the roadmap from Hyrniak, I must first consider whether there are any genuine issues that require a trial on the basis of the evidentiary record alone. Further, I must consider whether the evidentiary record provides me with the evidence I need to "fairly and justly adjudicate the dispute."

[16] The answer to these questions is yes. There are not, in my view, any genuine issues requiring a trial.

[17] I agree with BNS that there is no evidence to support the claim that a cash payment was given to the teller. The Plaintiffs rely solely on the stamped Scotialine monthly statement and receipt from the February 22, 2012 transaction as evidence that Mr. Kakoutis made a payment in cash. I do not accept that this receipt proves that a cash payment was made. Rather, consistent with BNS’s explanation of the event, it proves that a credit and corresponding debit were applied to the Deposit Account. I accept BNS’s evidence that the transaction receipt would have shown if cash were given to the teller, and it did not.

[18] The Plaintiffs have the obligation to put their “best foot forward and lead the necessary evidence” to support their claim. They have not, however, adduced the necessary evidence to support their assertion that a cash payment was given and misappropriated. As a result, the causes of action pleaded in the Plaintiffs’ claim cannot be proven. Summary Judgment dismissing the Plaintiffs’ claim is therefore granted.

[19] In defence to BNS’s counterclaim, the Plaintiffs submit that the teller’s mistake in crediting the payment to the Deposit Account constitutes a breach of the BNS’s obligations and is a fundamental breach of the Personal Credit Agreement. They suggest this breach extinguishes their obligations to BNS in respect of the Scotialine.

[20] I agree with BNS that there is no legal basis to justify the Plaintiffs' defence that their obligations to repay BNS are extinguished.

[21] I find that the Plaintiffs have not proven any valid defence to the counterclaim. As they were in default under the Personal Credit Agreement, the entire balance of both the Scotialine and the Mortgage Loan is due and payable and BNS is now legally entitled to possession of the Property. On the basis of the evidence submitted by BNS, summary judgment of BNS’ claim against the Plaintiffs must be granted.

[22] I therefore order the following:

(a) Summary Judgment dismissing the Plaintiff's claim;

(b) Summary Judgment on BNS's counterclaim for $28,012.37, the balance due and owing under the Scotialine as at March 26, 2014, inclusive of pre-judgment interest;

(c) Post-judgment interest on the amount due and owing on the Scotialine from the date of Judgment until the Judgment is paid at the rate of 4.00% per annum, pursuant to the terms of the Personal Credit Agreement;

(d) Summary Judgment on BNS's counterclaim for the sum of $395,974.34, the balance due and owing under the Mortgage Loan as at March 26, 2014, inclusive of pre-judgment interest;

(e) Post-judgment interest on the amount due and owing on the Mortgage Loan from the date of Judgment until the Judgment is paid at the rate of 2.25% per annum, pursuant to the terms of the Personal Credit Agreement; and

(f) That the defendants deliver to BNS possession of the Property.

Costs

[23] BNS has been successful on all of these motions. BNS is therefore entitled to an appropriate cost award. If the parties are unable to agree on the cost award, they may make brief written submissions as follows:

BNS' costs submissions must be delivered by 12:00 p.m. on April 17, 2015; and the Plaintiff's costs submissions must be delivered by 12:00 p.m. on April 27, 2015. In accordance with what the Rules provide, the submissions should not exceed three pages in length.

Pollak J.

Date: April 7, 2015