CITATION: Georges v. Nahri, 2016 ONSC 2294
COURT FILE NO.: CV-15-63196
DATE: 2016/04/05
ONTARIO SUPERIOR COURT OF JUSTICE
B E T W E E N:
George Georges
Matthew Halpin, Norton Rose Fulbright Canada LLP, counsel for the Plaintiff
Plaintiff (Defendant by Counterclaim)
- and -
Elias Nahri
Pacifique Siryuyumusi, P. Siryuyumusi Law Office, counsel for the Defendant
Defendant (Plaintiff by Counterclaim)
HEARD: March 15, 2016, at Ottawa, Ontario
MADAM JUSTICE B. R. WARKENTIN
REASONS ON MOTION FOR SUMMARY JUDGMENT
[1] The plaintiff seeks judgment pursuant to Rule 20 of the Rules of Civil Procedure against the defendant in the amount of $400,000.00 on the basis that there is no genuine issue for trial. The plaintiff also seeks judgment pursuant to Rules 20 and 21 dismissing the defendant’s counterclaim in the amount of $813,000.00 on the basis that the counterclaim is without merit and raises no genuine issue requiring a trial.
Facts
[2] The plaintiff, while a permanent resident of Canada, lives and works in Dubai in the United Arab Emirates. In 2012 he decided to pursue investment opportunities in Canada, in particular, Ottawa. In order to facilitate this, he incorporated a company called Gulf Classic Inc. (Gulf Classic). The shares of Gulf Classic were owned by the plaintiff and he was the sole director and officer of the company.
[3] The plaintiff and defendant first met in September 2012. Shortly thereafter, the plaintiff hired the defendant as the Development Manager for Gulf Classic. The defendant’s role was to pursue potential business opportunities on behalf of Gulf Classic. After some negotiation, the defendant agreed to work on a commission basis rather than receive a salary.
[4] It was the defendant’s position that he had been offered a salary in the range of $300,000.00 per annum; however, after discussion with the plaintiff, agreed instead to receive a commission by way of 25% percent of profits from any successful business ventures he identified and facilitated for Gulf Classic.
[5] The defendant worked for Gulf Classic from February 2013 until June 2014. In June 2014, the plaintiff abruptly closed all of his business dealings in Canada and Gulf Classic is no longer in operation.
[6] Between February 2013 and June 2014, the defendant actively pursued a project that included the identification of a parcel of land on Bank Street in Ottawa, for the purposes of purchasing and developing the land (the Bank Street project). An offer to purchase this land was submitted and conditionally accepted. The transaction was not completed and ultimately failed when the plaintiff ceased operations of Gulf Classic in June 2014.
[7] The defendant and a business partner, Mr. Issa Hamati, owned shares in three companies, Eshmun Medical Centre Inc., Eshmun Pharmacy Inc. and 8115265 Canada Inc. (the Eshmun Companies). In September 2013 the defendant was in the process of selling his shares in the Eshmun Companies and claimed he had a purchaser willing to purchase the shares for $378,000.00.
[8] Prior to the completion of the share sale to that purchaser, the plaintiff offered to purchase the defendant’s shares for the same amount. The defendant agreed to sell the shares to the plaintiff instead of the original prospective purchaser. On November 3, 2013 the plaintiff advanced the defendant the sum of $200,000.00 as an advance on the share purchase. The defendant has alleged that the plaintiff asked him to step out of the operation of the Eshmun Companies and appointed Mr. Hamati as the sole manager of the Eshmun Companies.
[9] Of the $200,000.00 deposit, the defendant provided $110,000.00 to Mr. Hamati and/or injected it into the operation of the Eshmun Companies, and utilized the remaining $90,000.00 for his personal expenses.
[10] In March 2014, the plaintiff wrote a second cheque payable to the defendant also in the amount of $200,000.00. This cheque was advanced as a personal loan from the plaintiff to the defendant.
[11] In June 2014 when the plaintiff decided to cease his business interests and operations in Canada, neither the Bank Street project nor the share purchase of the Eshmun Companies proceeded.
[12] The plaintiff now seeks repayment of the $400,000.00 advanced to the defendant, alleging that the first $200,000.00 cheque for the share purchase must be repaid because the purchase did not proceed and that the second payment of $200,000.00 was a loan that is now due and owing.
[13] The defendant, in examinations for discovery, agreed that the funds are owed to the plaintiff but argued that they should be set off against monies he claims are owed by the plaintiff to him as follows:
a) Damages in the amount of $375,000.00 as remuneration for 15 months of work as the plaintiff’s “executive manager and right-hand man”,
b) Damages in the amount of $128,000.00 as compensation for the difference between the amount that the original purchaser of the defendant’s shares in the Eshmun Companies had offered and the amount the defendant eventually received after the share purchase agreement with the plaintiff fell through,
c) A declaration that the defendant is entitled to retain $100,000.00 of the $200,000.00 deposit on the shares as a forfeiture for the failed share purchase,
d) A declaration that the defendant injected $110,000.00 into the Eshmun Companies purportedly at the plaintiff’s request,
e) General and punitive damages in the amount of $50,000.00 each, and
f) The total of the sums claimed by counterclaim, being $813,000.00, be set off against the $400,000.00 claimed by the plaintiff leaving a balance owing to the defendant by the plaintiff of $413,000.00.
Law and Analysis
[14] A court must grant summary judgment if it is satisfied that there is no genuine issue requiring a trial with respect to a claim or defence (Rules of Civil Procedure, R.R.O. 1990, Reg. 194, r. 20.04(2)(a); Hryniak v. Mauldin, 2014 SCC 7, at para 47 [Hryniak]).
[15] There is no genuine issue requiring a trial where the judge is able to reach a fair and just determination on the merits on a motion for summary judgment. When the process allows the judge to make the necessary findings of fact, to apply the law to those facts, and it is a proportionate, more expeditious and less expensive means to achieve a just result, summary judgment is the appropriate remedy (Hryniak at para 49).
[16] In determining whether or not there is no genuine issue requiring a trial, a court shall consider the evidence presented by the parties on the summary judgment motion. A judge may also weigh evidence, evaluate the credibility of a deponent and draw any reasonable inference from the evidence, unless it is in the interest of justice for such powers to be exercised only at trial (Rules of Civil Procedure, r. 20.04(2.1); Hryniak at para 52).
[17] In determining whether to apply Rule 20.04(2.1), the judge should determine whether a full appreciation of the evidence and issues required to make a dispositive finding can be achieved by way of summary judgment, without a trial. The evidence need not be equivalent to that expected at trial, but the judge must be confident that the dispute can be resolved fairly (Hryniak at paras 53, 57).
[18] Justice D. Corbett provided a useful summary of the Hryniak v. Mauldin approach in Sweda Farms Ltd. v. Egg Farmers of Ontario, 2014 ONSC 1200, where he stated at paragraphs 33 and 34:
- As I read Hryniak, the court on a motion for summary judgment should undertake the following analysis:
(1) The court will assume that the parties have placed before it, in some form, all of the evidence that will be available for trial;
(2) On the basis of this record, the court decides whether it can make the necessary findings of fact, apply the law to the facts, and thereby achieve a fair and just adjudication of the case on the merits;
(3) If the court cannot grant judgment on the motion, the court should:
(a) Decide those issues that can be decided in accordance with the principles described in (2), above;
(b) Identify the additional steps that will be required to complete the record to enable the court to decide any remaining issues;
(c) In the absence of compelling reasons to the contrary, the court should seize itself of the further steps required to bring the matter to a conclusion.
- The Supreme Court is clear in rejecting the traditional trial as the measure of when a judge may obtain a "full appreciation" of a case necessary to grant judgment. Obviously greater procedural rigour should bring with it a greater immersion in a case, and consequently a more profound understanding of it. But the test is now whether the court's appreciation of the case is sufficient to rule on the merits fairly and justly without a trial, rather than the formal trial being the yardstick by which the requirements of fairness and justice are measured.
[19] Hryniak v. Mauldin does not alter the principle that the court will assume that the parties have placed before it, in some form, all of the evidence that will be available for trial. The court is entitled to assume that the parties have respectively advanced their best case and that the record contains all the evidence that the parties will present at trial: Dawson v. Rexcraft Storage & Warehouse Inc. (1998), 1998 4831 (ON CA), 111 O.A.C. 201 (C.A.); Bluestone v. Enroute Restaurants Inc. (1994), 1994 814 (ON CA), 18 O.R (3d) 481 (C.A.); Canada (Attorney General) v. Lameman, 2008 SCC 14, [2008] 1 S.C.R. 372, at para 11.
[20] The onus is on the moving party to show that there is no genuine issue requiring a trial, but the responding party must present its best case or risk losing: Pizza Pizza Ltd. v. Gillespie (1990), 75 O.R. (2d) 255 (Gen. Div.); Transamerica Life Insurance Co. of Canada v. Canada Life Assurance Co. (1996), 1996 7979 (ON SC), 28 O.R. (3d) 423 (Gen. Div.), aff’d [1997] O.J. No. 3754 (C.A.).
[21] In Hryniak v. Mauldin, although the Supreme Court of Canada commanded a very robust summary judgment procedure, it did not foreclose lower courts from simply dismissing the summary judgment motion and ordering that the action be tried in the normal course. Indeed, where there are genuine issues for trial and the lower court concludes that employing the enhanced forensic tools of the summary judgment procedure would not lead to a fair and just determination of the merits, the court should not decide the matter summarily: Mitusev v. General Motors Corp., 2014 ONSC 2342, at para 79; Gon (Litigation Guardian of) v. Bianco, 2014 ONSC 7086, 124 O.R. (3d) 65, at paras 41-47.
Summary of the Issues
[22] The issues before the Court on this motion for summary judgment are summarized as follows:
a) Is the plaintiff entitled to summary judgment for repayment of the sum of $400,000.00 from the defendant under the two $200,000.00 advances/loans to the defendant?
b) If the plaintiff is entitled to summary judgment, should the defendant’s counterclaim be dismissed as containing no genuine issue for trial?
c) Should the defendant’s counterclaim be struck as being frivolous?
d) If the plaintiff is entitled to summary judgment and the defendant’s counterclaim is neither dismissed nor struck, should the summary judgment in favour of the plaintiff be stayed under Rule 20.08?
Is the Plaintiff Entitled to Summary Judgment for Repayment of the $400,000.00?
[23] The defendant has admitted he received the two $200,000.00 payments from the plaintiff. He also admitted in his examinations for discovery that the $400,000.00 must be repaid by way of an accounting and set off against monies that the defendant claims is owed to him by the plaintiff.
[24] On the basis of the admissions and the other evidence filed in support of the motion for summary judgment, I grant the plaintiff’s motion for summary judgment, subject to my findings on the remaining issues. There is clearly no genuine issue for trial with respect to the debt of $400,000.00 owed by the defendant to the plaintiff.
Should the Defendant’s Counterclaim be Dismissed or Struck?
[25] The defendant seeks a set off as against the $400,000.00 that was provided to him by the plaintiff under the various headings in his counterclaim. By the defendant’s calculation, if he is entirely successful in his counterclaim, then after setting off the $400,000.00 owed by him to the plaintiff, there would be $413,000.00 owing by the plaintiff to the defendant.
[26] The plaintiff alleges that the first part of the defendant’s claim to remuneration for his employment with Gulf Classic cannot stand because Gulf Classic is not a party to this action.
[27] The defendant argued that because the plaintiff was the sole shareholder and director of Gulf Classic, that Gulf Classic is no longer an active corporation and has no assets, that he is entitled to look to the plaintiff for recovery since it was the plaintiff who unilaterally pulled out of the business ventures without warning or consultation with the defendant.
[28] There was no written employment agreement or any other documentation prepared by either of the parties or their lawyers that sets out the arrangement between the plaintiff and the defendant regarding the defendant’s remuneration or the plaintiff’s obligations. The only evidence of the defendant’s entitlement is the somewhat contradictory evidence provided by the parties in their respective affidavits and examinations for discovery. They both agreed that the defendant had opted for a percentage of profits rather than a salary, however, the evidence regarding the plaintiff’s obligations to the defendant was not clear.
[29] The share purchase arrangement was also undertaken without any signed agreement, although unsigned draft agreements have been included in the record that was before the court. It is not clear from this evidence whether or not it was the plaintiff or Gulf Classic who was purchasing the shares.
[30] On the basis of this record, I am unable to make the necessary findings of fact, apply the law to the facts, and thereby achieve a fair and just adjudication of the counterclaim on the merits in this Motion for Summary Judgment. With such a dearth of written material, the court would require that the parties and their witnesses give evidence in order to assess the credibility of each of the differing positions and determine whether the defendant’s counterclaim has merit.
[31] I therefore refuse to either dismiss or strike the defendant’s counterclaim and direct that this matter proceed to trial. It is not necessary that I remain seized of this matter since I have not made any substantive findings regarding the defendant’s claims. Any trial judge should be able to fully assess the claims after hearing the evidence.
[32] This matter shall be referred to a Case Management Master in order to set out a litigation timetable for moving this matter to trial. Either the plaintiff or the defendant may set this matter down for trial and obtain a pre-trial hearing date.
Should the Summary Judgment in Favour of the Plaintiff be Stayed under Rule 20.08?
[33] I find that the Summary Judgment in favour of the plaintiff should be stayed pending the result of the trial of the defendant’s counterclaim. If the defendant is successful on some or all of his claims, he may be entitled to an equitable set off, also of some or all of his claims. This should be an issue for the trial judge to determine.
[34] Should the defendant not conform to a litigation timetable as may be ordered by the Case Management Master or such other order of this Court, the plaintiff may seek to lift the stay of enforcement of this judgment in his favour for repayment of the $400,000.00 on the basis of unreasonable delay by the defendant in pursuing his counterclaim.
Summary
[35] Summary judgment is granted to the plaintiff as against the defendant in the amount of $400,000.00.
[36] Enforcement of the summary judgment granted to the plaintiff is stayed pending the hearing of the defendant’s counterclaim or until such further order of this court.
[37] This matter shall be placed before a Case Management Master to establish a litigation timetable.
[38] Either the plaintiff or the defendant may set this matter down for trial and obtain a pre-trial hearing date.
Costs
[39] Because there was mixed success in this Motion for Summary Judgment, costs shall be determined in the cause.
Madam Justice B. R. Warkentin
Released: April 5, 2016
CITATION: Georges v. Nahri, 2016 ONSC 2294
COURT FILE NO.: CV-15-63196
DATE: 2016/04/05
ONTARIO
SUPERIOR COURT OF JUSTICE
B E T W E E N:
George Georges
Plaintiff (Defendant by Counterclaim)
- and –
Elias Nahri
Defendant (Plaintiff by Counterclaim)
REASONS ON MOTION FOR SUMMARY JUDGMENT
Warkentin J.
Released: April 5, 2016