The Toronto-Dominion Bank v. Froom, 2016 ONSC 2095

CITATION: The Toronto-Dominion Bank v. Froom, 2016 ONSC 2095

COURT FILE NO.: CV-10-098760-SR

DATE: 20160329

ONTARIO

SUPERIOR COURT OF JUSTICE

BETWEEN:

THE TORONTO-DOMINION BANK

Plaintiff

– and –

ARTHUR SCOTT L. FROOM

Defendant

Philip C. Polster, for the Plaintiff

Self-Represented

HEARD: By written submissions

REASONS FOR DECISION

VALLEE J.

[1] This is further to my endorsement dated March 17, 2016. Mr. Froom is in the United States and is prohibited from travelling to Canada because he is on parole. On February 17, 2016, the court attempted to hear these motions with Mr. Froom attending by telephone call; however, this proved to be inadequate. At times, Mr. Froom’s voice was not clear. When counsel for TD Bank spoke, Mr. Froom could not hear him. After a recess in which Mr. Froom consulted with a lawyer, the parties agreed that these motions would proceed in writing.

The Nature of the Motions

[2] The TD Bank brings a motion for summary judgment on two credit card debts alleged to be owed by Mr. Froom. It requests leave to amend the title of proceedings to include “also known as Arthur Kissel” and to add the name “Arthur Kissel” as a debtor in the existing writ of seizure and sale. Mr. Froom disputes the claim on the basis that the credit cards were issued to a corporation of which he was a director. He states that he has no personal liability for the amounts.

[3] Mr. Froom brings a motion for an order to strike the claim because TD bank cannot produce the credit card contracts. If the claim is not struck, he requests the following:

(1) An order striking out all or part of the affidavit of Robert Izsak, sworn August 14, 2015;

(2) An order granting leave to amend the statement of defence;

(3) An order converting the action from the simplified procedure to the ordinary procedure;

(4) An order requiring the Bank to serve an affidavit of documents;

(5) An order directing the Bank to answer a demand for particulars served August 24, 2015;

(6) An order lifting the writ of seizure and sale; and

(7) An order permitting Mr. Froom to attend and participate in the proceedings by telephone.

The Bank’s Motion for Summary Judgment

Is there a genuine issue requiring a trial?

[4] The applicable test on a motion for summary judgment is well known. It is set out in Hyrniak v. Mauldin, 2014 SCC 7. One part of the test states that the court must be able to make the necessary findings of fact on the motion.

The Bank’s Position

[5] In 2002, the Bank issued a credit card that showed Mr. Froom’s name on the card as Arthur Scott L. Froom. The Bank’s evidence is that the account number and type of card changed in 2006 and again in 2014. The Bank states that this is typical for security reasons. The bank issued a second card showing the same name. The date when it was issued is unclear.

[6] The Bank has provided VISA account statements beginning on July 7, 2002 for the two credit cards addressed to Arthur Scott L. Froom, 805-15 McMurrich St. Toronto, ON M5R 3M6. Some payments were made on the balances owing; however, they did not keep pace with the debt that was accumulating. The Bank issued its action under the simplified procedure on March 24, 2010 claiming $131,074.88 plus interest at 21 percent. Mr. Froom served and filed a statement of defence dated May 29, 2010. It contains one sentence which is a blanket denial of the allegations in the claim.

[7] As of September 15, 2015 the amount owing on the first card was $278,293.59. The amount owing on the second card was $9,492.78. Interest has continued to accumulate. The Bank’s first affidavit in support of this motion for summary judgment was sworn by Mr. Robert Izsak on August 14, 2015. Mr. Izsak is legal counsel to the Bank. He states that the cards were not corporate cards. Corporate cards would show the name of the corporation. Ms. Fernandes, a Bank employee, swore an affidavit dated February 4, 2016. In it, she states that the credit card statements would always show the name of the corporate debtor. The types of cards issued to Mr. Froom were never issued to corporations. The Bank does not require a social insurance number to issue a credit card.

[8] Mr. Froom’s first affidavit in response was sworn December 11, 2015. The Bank then served a supplementary affidavit sworn by Mr. Izsak on January 12, 2016.

[9] On January 13, 2016, by telephone, Mr. Froom cross-examined Mr. Izsak on his affidavits. The Bank then provided a second supplementary affidavit sworn by Mr. Izsak on February 3, 2016. The purpose of this affidavit was to correct some dates in his first affidavit dated August 4, 2015.

[10] On February 5, 2016, the Bank served a supplementary motion record on Mr. Froom, by mail and email, containing Mr. Izsak’s affidavits sworn January 12, 2016 and February 3, 2016 as well as Ms. Fernandes’ affidavit sworn February 4, 2016.

Mr. Froom’s Position

[11] Mr. Froom states that the credit cards were issued to his corporation, Lafontaine Rish Medical Group Ltd. as the account holder. The Bank has not and cannot produce the agreements under which the credit cards were issued. Mr. Izsak stated on his cross-examination that they have been lost or destroyed (I note that no transcript of the cross-examination has been provided. Nevertheless, the Bank has not included the agreements as an exhibit to Mr. Izsak’s affidavit as would have been expected.) Mr. Froom states that he dealt with Ms. Fernandes at the Bank when he obtained the corporate credit cards. He states that she told him that he would not be personally liable for any amounts incurred on the cards because they were corporate cards. He further states that he spoke to Ms. Fernandes and tape recorded the conversation. Again, she told him that he was not personally liable for amounts incurred on the corporate credit cards.

[12] Mr. Froom is an American citizen. He states that he does not have a Canadian social insurance number. This would have been required for the Bank to issue him a personal credit card. He also raises a number of other issues.

[13] Despite the fact that Mr. Froom cross-examined Mr. Izsak on January 13, 2016, he continued to serve further affidavits dated February 11, 2016, March 4, 2016, and two more, both dated March 11, 2016. He has filed voluminous materials. According to Rule 39.02(2), “a party who has cross-examined on an affidavit delivered by another adverse party shall not subsequently deliver an affidavit for use at the hearing…without leave or consent…” Mr. Froom has not requested leave to deliver the last four affidavits noted above, after the cross-examination, for use at the hearing. There is no evidence that the Bank has consented to their delivery.

Mr. Froom’s Incarceration

[14] The Bank provided an FBI New York Field Office document. It appears to have been obtained from the Internet. It is dated September 4, 2009 and is entitled, “Former Manhattan Cosmetic Surgery Clinic Owner Extradited from Canada Pleads Guilty in Manhattan Federal Court to Defrauding Health Insurance Companies of More than $900,000”. It states that “Arthur Kissell, a/k/a “Arthur Froom,” a former cosmetic surgery clinic owner, pleaded guilty today in Manhattan federal court to a scheme to defraud health insurance companies of more than $900,000.” It goes on to state that he and his wife “owned and operated LaFontaine Rish Medical Associates, a cosmetic surgery clinic” which was located in Manhattan. They billed for various procedures that were performed by people who were not acting under a physician’s supervision. They also billed for procedures such as tummy tucks and liposuction under the guise of medically necessary procedures such as hernia repairs and lesion removals. The United States began extradition proceedings against Mr. Kissel. He was returned from Canada in 2008 on the charges.

[15] Mr. Froom was incarcerated when the statement of claim was served. He is now on parole. He is confined on a form of house arrest.

Analysis

Should the Bank be granted summary judgment?

[16] The Bank claims $131,074.88 together with interest in its statement of claim. In this motion, it requests summary judgment for $292,454.49 and $10,013.43 despite the fact that this is a Rule 76 action with a monetary limit of $100,000.

[17] There is no documentary evidence before the court regarding the terms under which the Bank issued the credit cards to Mr. Froom. The Bank has provided a document entitled, “TD Emerald Visa Cardholder Agreement and Benefit Coverages Document.” The Bank’s evidence is that “this agreement would have been sent to the Defendant together with his credit card in accordance with TD’s ordinary practices.” This document is not signed by either party. It does not even include any signing lines for either party.

[18] When Mr. Froom agreed to have this motion proceed in writing based on the materials filed, he may not have known that he was not permitted to serve the subsequent affidavits, after cross-examination, without leave. He may well have based his consent to have the motion proceed in writing on the understanding that those affidavits were properly filed and that I would consider them.

[19] As noted above, one of the reasons why the motion did not proceed with Mr. Froom attending by telephone was that I had trouble hearing and understanding him. At one point when I could understand him, Mr. Froom said that he objected to Ms. Fernandes’ affidavit and the fact that she was in the court room. He stated that he wanted to play a tape recording for the court. In addition, shortly after the call began, it was cut off. The court lost contact with Mr. Froom. The call had to be made again.

[20] While it might be said that Mr. Froom lacks credibility because he appears to have pleaded guilty and was convicted of a serious fraud, it is not appropriate to do so on a motion for summary judgment in writing. I am not prepared to give much weight to an article from the internet, even though it appears to be an FBI document. More importantly, the Bank cannot produce any of the agreements signed by Mr. Froom containing the terms of the credit card agreements. There is an evidentiary issue which requires a finding of credibility.

[21] On this motion in writing for summary judgment, I cannot determine credibility. Because the contracts have not been produced, I cannot make the necessary findings of fact in order to conclude that there is no genuine issue requiring a trial. Therefore, the Bank’s motion for summary judgment is dismissed. The Bank’s request for leave to amend the title of proceedings is addressed below.

Mr. Froom’s Motion

Should the Bank’s claim be struck because it cannot produce the cardholder agreements?

[22] The statements provided by the Bank show that a number of payments were made on the accounts. Mr. Froom states that his corporation made them. On the materials filed, I cannot determine who made these payments. The payments appear to be some evidence of an acceptance of liability. Mr. Froom’s allegations do not meet the requirements of Rule 25.11 for striking pleadings. Therefore, I decline to strike the Bank’s claim.

Should part or all of Mr. Izsak’s affidavit be struck?

[23] Mr. Froom states that some of the statements in Mr. Izsak’s affidavit are not based on his personal knowledge. An affidavit may be based on information when the affiant has been advised of it by another person whose name is stated and when the affiant believes it to be true. Based on my review of Mr. Izsak’s affidavit, I conclude that it is not improper. Again, Mr. Froom’s allegations do not meet the requirements of Rule 25.11 for striking other documents. Therefore, I decline to strike any part of Mr. Izsak’s affidavit.

Should Mr. Froom be granted leave to amend his statement of defence?

[24] Mr. Froom requests leave to amend his statement of defence. The proposed amendments are extensive and significant. In some of the amendments, Mr. Froom states that because the Bank cannot produce the contracts, the action should fail. The draft amended defence also includes, among other things, a pleading for set off and a counterclaim for over $9,000,000 together with an unspecified amount “estimated to be between $25,000 and $120,000”. The amounts claimed totalling $9,000,000 are for punitive, aggravated and general damages.

[25] Rule 26.01 states, “On motion at any stage of an action the court shall grant leave to amend a pleading on such terms as are just, unless prejudice would result that could not be compensated for by costs or an adjournment.” The court must consider whether the amendment is prima facie meritorious. The court is to assume that the facts pleaded are true. The court must consider whether they disclose a cause of action. Leave to amend is to be granted unless the claim clearly cannot succeed.

[26] Mr. Froom’s proposed amendments that address the Bank’s failure to produce the contracts have merit. The proposed counterclaim is based on allegations that money was stolen from his TD Bank accounts while he was in prison. In general terms, he states that certain lawyers, who are now disbarred, prepared fraudulent documents which the Bank accepted. Accordingly, the funds were stolen. Mr. Froom provided some documentation to show that the impugned lawyers were either disciplined or disbarred although it is not entirely clear whether this occurred for their actions, if any, regarding the alleged stolen funds.

[27] While these fraud allegations seem far-fetched and the amounts claimed for punitive, aggravated and general damages are unrealistic to say the least, there is some air of reality to the allegations. Accordingly, I must accept the facts pleaded to be true. I find that these facts do disclose a cause of action. I cannot say that the counterclaim has no chance of success. I conclude that there is no prejudice the Bank for which it cannot be compensated by costs or an adjournment. Therefore, Mr. Froom has leave to amend his statement of defence in the form provided to counsel for the Bank on March 8, 2016. For clarity, it is attached as Schedule A to this endorsement.

Should the Bank be entitled to amend the title of proceedings to include “also known as Arthur Kissel”?

[28] On the test for granting leave to amend pleadings noted above, I conclude that the Bank’s request to amend would not cause any prejudice to Mr. Froom for which he could not be compensated by costs or an adjournment. The Bank does not seek an amendment to its claim to assert a further cause of action. Accordingly, the Bank is granted leave to amend its claim as requested.

Should the action be converted to the ordinary procedure?

[29] The Bank’s issuing its claim under the simplified procedure is curious. The claim exceeds the amount permitted by Rule 76. There is no indication in the claim that the Bank waives the excess amount. Mr. Froom’s counterclaim also exceeds the amount. The action cannot proceed under the simplified procedure given the amounts involved. Accordingly, I conclude that this action shall proceed under the ordinary procedure. The parties shall serve affidavits of documents together with copies of Schedule A documents within 30 days of the date of this endorsement.

Should the Bank answer Mr. Froom’s demand for particulars that was served on August 24, 2015?

[30] Rule 25.10 states that “Where a party demands particulars of an allegation in the pleading of an opposite party, and the opposite party fails to supply them within seven days, the court may order particulars to be delivered within a specified time frame.” Mr. Froom’s “demand for particulars” is a letter sent by email on August 25, 2015 to Mr. Polster. It sets out other issues such as a request for an adjournment. This is not a proper demand for particulars. If Mr. Froom serves a proper demand for particulars, the Bank shall respond within 7 days. Mr. Froom may be served with any documents at asfasf12345678@gmail.com.

Should the writ of seizure and sale obtained by the Bank be lifted?

[31] On May 26, 2010, the Bank obtained default judgment against Mr. Froom and an order for a writ of seizure and sale. On July 30, 2015, Justice Gilmore set aside this judgment because it was obtained prior to the expiry of the time in which Mr. Froom could serve and file a statement of defence. She did not lift the writ because she ordered that the matter proceed to a motion for summary judgment within 45 days. She stated that the existence of the writ would cause no significant prejudice to Mr. Froom for a further short period.

[32] A creditor is entitled to a writ of seizure and sale when it has an order that may be enforced by a writ. Because Justice Gilmore set aside the default judgment, the Bank does not have such an order to enforce. It is not entitled to a writ. Accordingly, the writ of seizure and sale shall be lifted.

Should Mr. Froom be entitled to attend and participate in the proceedings by telephone?

[33] For the reasons set out above, Mr. Froom’s participating in the proceedings by telephone is not adequate. Prior to the next court attendance, Mr. Froom shall propose an alternative method for participation until such time as he is granted permission to travel to Canada. Attendance by Skype, for example, may be considered, depending on the proposed arrangements.

[34] I am not seized of any further proceedings in this matter.

Costs

[35] The Bank has been unsuccessful in its motion for summary judgment but has been successful on its motion to amend the title of proceedings. Mr. Froom has been successful on his motion to amend his defence and has obtained four out of the nine other orders that he requested.

[36] If a self-represented party is entitled to his costs, they may include any loss of opportunity cost together with disbursements incurred. In order to claim for a loss of opportunity cost, the self-represented party must actually earn an income and provide some evidence that it was decreased as a result of his participation in the litigation. See Miller v. DeBartolo-Taylor et al, 2013 ONSC 6791 par 16. In order to claim disbursements, for example, court document filing fees, photocopying, telephone and courier charges, the claiming party must provide proof of payment.

[37] If the parties cannot agree on the amount of costs or who should pay them, they may provide written submissions. The text of the submissions shall be a maximum of 3 pages with 1.5 spacing, regular margins and 12 point font. In addition, because the Bank is represented, it may attach a costs outline together with supporting material. Any request

made by Mr. Froom for disbursements shall be supported by receipts. The parties shall serve and file written submissions within 20 days of the date of this endorsement. They shall file responding submissions, if they wish, within a further 10 days.

VALLEE J.

Released: March 29, 2016