ONTARIO
SUPERIOR COURT OF JUSTICE
COURT FILE NO.: C-3699/14
DATE: 20150902
BETWEEN:
HERBERT LINDSAY
Plaintiff
– and –
KILGANAN GROUP LTD. and BYRON TURNER
Defendants
Richard Nolin, for the Plaintiff.
Brad Middleton, for the Defendants.
HEARD: August 7, 2015
r. d. gordon, r.s.j.
Overview
[1] The Plaintiff moves for summary judgment. He says this is a simple mortgage action and that he should have judgment for the money owing along with possession of the property. The Defendants says there was an agreement between the parties by which the Plaintiff agreed to a moratorium on payments and a suspension of his enforcement rights.
Background Facts
[2] Kilganan Group Ltd. (“Kilganan”) is a residential property developer. Byron Turner is Kilganan’s president and directing mind.
[3] Kilganan wished to develop a subdivision in the Town of Espanola. It acquired the property and by mortgage dated October 1, 2013 mortgaged the property to the Plaintiff, Herbert Lindsay. Mr. Turner guaranteed the mortgage, which was for $300,000 plus interest at the rate of 10% per annum, payable at the rate of $2,500 per month with a maturity date of October 1, 2015.
[4] On June 1, 2014, Kilganan failed to remit the required payment. The Defendants acknowledge that the mortgage has been in default since that date.
[5] As a consequence of the default Mr. Turner and Mr. Lindsay began negotiating. On June 27, 2014 the Defendants provided Mr. Lindsay with a draft agreement entitled “An Agreement of Forbearance on Mortgage”. The terms of the agreement were not acceptable to the Plaintiff.
[6] Negotiations continued. In October of 2014 the parties met for what seems to have been the last time. Mr. Lindsay does not provide a specific date for the meeting but says it took place at the Cortina Restaurant in Espanola. Mr. Turner says the meeting took place on October 27 at the business office of Kilganan. He also says that present along with he and Mr. Lindsay was his business associate Frank Lacosse and Mr. Lindsay’s business advisor Robert Bateman.
[7] Mr. Turner says that at the end of the meeting on October 27 the parties agreed to change the terms of the mortgage by allowing Kilganan time to build and sell the first house on the subdivision, thereby generating cash flow from which payments on the mortgage could be made.
[8] Mr. Turner says that, relying upon that agreement, he cleared a lot on the plan of subdivision and prepared the lot for the construction of a home at a cost of $12,000. He says that he also continued construction of a prefabricated home to place on the lot, incurring costs of some $50,000, and entered into an unconditional agreement of purchase and sale for the lot and house. The agreement has not been completed due to this outstanding action.
The Applicable Law
[9] The Plaintiff’s motion for summary judgment is brought under Rule 20.01(1) of the Rules of Civil Procedure. The test for summary judgment under this rule is whether there is a genuine issue requiring a trial. In Hryniuk v. Mauldin, 2014 SCC 7, the Supreme Court of Canada said this about the test:
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.
These principles are interconnected and all speak to whether summary judgment will provide a fair and just adjudication. When a summary judgment motion allows the judge to find the necessary facts and resolve the dispute, proceeding to trial would generally not be proportionate, timely or cost effective. Similarly, a process that does not give a judge confidence in her conclusions can never be the proportionate way to resolve a dispute. It bears reiterating that the standard for fairness is not whether the procedure is as exhaustive as a trial, but whether it gives the judge the confidence that she can find the necessary facts and apply the relevant legal principles so as to resolve the dispute.
[10] The Court went on to set out a roadmap for judges to use when hearing motions for summary judgment:
On a motion for summary judgment under Rule 20.04, the judge should first determine if there is a genuine issue requiring a 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 20.02(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, affordability and proportionality in light of the litigation as a whole.
[11] It is also important to note that the court is entitled to assume that the evidence contained in the record is all the evidence the parties would rely upon if the matter proceeded to trial.
Analysis
[12] The real issue between the parties is whether there was an agreement reached between them which now precludes the Plaintiff from taking enforcement action. The question I must decide is whether this is a genuine issue requiring a trial.
[13] When I consider the evidence before me without using the fact-finding powers provided in the rules, I conclude that the issue is genuine and that a trial would be required. However, when I weigh the evidence that is before me, evaluate the credibility of the deponents and draw reasonable inferences from the evidence, I conclude that a fair and just result can be reached now in a manner that will serve the goals of timeliness, affordability and proportionality.
[14] Using the fact-finding powers available to me, I am satisfied that there is no genuine issue requiring a trial. My reasons are as follows:
Although the Defendants allege that an agreement was reached, they sent no correspondence, e-mail or other communication setting out the terms of that agreement. This is particularly puzzling when they had previously gone to the effort of drafting a formal forbearance agreement in June. That a businessman such as Mr. Turner would fail to confirm the terms of the agreement in some manner indicates that no agreement was in fact reached.
The Defendants have failed to particularize the terms of the alleged agreement. That is, there is no set duration of the forbearance to be enjoyed, no dates for future payments to be made and no set amounts for payment. It is implausible to suggest that the Plaintiff would agree to forgo enforcement without such terms being specifically agreed upon.
Although Mr. Turner alleges the agreement was witnessed by his business associate, there is no affidavit from Mr. Lacosse attesting to the agreement or its terms.
Although the Defendant alleges that it incurred costs of clearing the property and constructing the dwelling in reliance upon the agreement having been made, there is no documentary evidence in support of those claims, no photographs to establish that the work was in fact done, and no evidence to establish whether it was done before or after the Plaintiff’s claim was issued.
[15] If there was an agreement between the parties, one would expect there to be some evidence to confirm the existence of such an agreement. The Defendants have provided no such evidence. Their contention that the Plaintiff was content to forego his enforcement rights for an indefinite period, with no set terms of repayment, defies common sense.
[16] The Plaintiff has been without his funds, or any return on them, for more than a year. He should not be made to wait until this matter can reach trial nor should he be put to the expense of a trial when the factual circumstances surrounding the only issue between the parties are so clearly in his favour. In the circumstances of this case it is for the Defendants to establish on a balance of probabilities that there was an agreed upon change to the mortgage which now precludes the Plaintiff from enforcing the mortgage. I have every confidence in finding that the Defendants have failed to do so.
Conclusion
[17] The Plaintiff’s motion for summary judgment is granted. Judgment shall issue in favour of the Plaintiff for $300,000 plus interest at the rate of 10% from June 1, 2014 to the date of judgment. Post-judgment interest shall accrue at 10% per annum. The Plaintiff shall have possession of the mortgaged property. If the parties are unable to agree on costs they may make written submissions to me, limited to four pages plus attachments, within 45 days.
R. D. GORDON, R. S. J.
Released: September 2, 2015
COURT FILE NO.: C-3699/14
DATE: 20150902
ONTARIO
SUPERIOR COURT OF JUSTICE
BETWEEN:
HERBERT LINDSAY
Plaintiff
– and –
KILGANAN GROUP LTD. and BYRON TURNER
Defendants
Ruling on motion for
summary judgment
R. D. GORDON, R. S. J.
Released: September 2, 2015