Court File and Parties
Newmarket Court File No.: CV-15-123188-SR Date: 2016-04-27 Superior Court of Justice - Ontario
Re: Malka Gafny and Ron Gafny, Plaintiffs And: Tzahi Vainshtein, Defendant
Before: The Hon. Mr. Justice G.M. Mulligan
Counsel: R. Grad, Counsel for the Plaintiffs D. Anthony, Counsel for the Defendant
Heard: April 21, 2016
Endorsement
[1] Can parents demand repayment of a loan made to a son-in-law after a breakdown in the marriage between their son-in-law and their daughter? The plaintiffs bring a motion for summary judgment for payment of $43,246.36 in proceedings commenced under the Simplified Procedures set out in Rule 76 of the Rules of Civil Procedure. Within these proceedings, the defendant made a third-party claim against his spouse, Limor Vainshtein, the plaintiffs’ daughter. I pause to note that there also family law proceedings underway as between the defendant and his spouse, Limor. The plaintiffs have not been added to that proceeding.
[2] Alternatively, the plaintiffs seek summary judgment now for one-half of their claim, with the balance to be dealt with by way of a continuation of this claim.
[3] There were no loan documents with respect to monies advanced by the plaintiffs, however, the following facts are not in dispute:
- In December of 2012, the plaintiffs provided a cheque to the defendant in the amount of $45,000 as a loan.
- The plaintiffs obtained these funds from their line of credit and the defendant made regular monthly payments of $205.68 towards interest and principal.
- The purpose of the loan was to renovate a condominium occupied by the defendant and his spouse. The condominium was registered to the plaintiffs.
- The condominium was sold in 2014. The defendant and his spouse moved to a rented home.
- When the condominium was sold, the loan was not repaid. There was no demand for payment at that time by the plaintiffs. The marriage continued as did the monthly payments.
- As the defendant’s affidavit notes, there was a profit of about $100,000 upon the sale of the condominium. The defendant then purchased an apartment unit for rental purposes and placed deposits on other pre-construction properties, all in his name alone.
- Payments stopped in March of 2015.
- The defendant and his spouse separated and he commenced proceedings in Family Court in February of 2015.
[4] Because this matter proceeded under the Simplified Rules, there has been no cross-examination of the parties’ affidavits filed in conjunction with this motion. There were no loan documents between the parties and in my view, there are significant credibility issues when the affidavits are examined.
[5] The following examples will illustrate this point.
Purpose of the Loan
[6] The plaintiffs, in their affidavit at para. 3 state, “Tzahi informed us that he needed the loan for renovating a condominium he had purchased for investment purposes on or about November 14, 2012.”
[7] However, the defendant states in his affidavit at para. 27, “Moreover, Malka Gafny states that I purchased the condo for investment purposes, but omits the fact that Limor and I lived in the condo for almost two years, from the purchase in November 2012 until September 2014.”
[8] There was no demand for payment when the condo was sold, notwithstanding the fact that the plaintiffs were the registered owners and therefore had some control over these funds.
Loan Due Date
[9] Because there were no loan documents, there was no due date established in any written form between the parties. The plaintiffs state in their affidavit at para. 10, “Our agreement with Tzahi was such that Tzahi would continue to make monthly payments as described above until he was in a position to pay the balance of the loan.” The defendant states with respect to the repayment terms at paras. 33-35:
When the decision was made to sell the condo, we advised the Gafnys that we would pay back the loan upon closing as per our agreement. It was at this time that the Gafnys changed the original terms of the loan and advised that they did not require repayment of the loan from the sale proceeds of the condo. The Gafnys advised that interest rates were low and that Limor and I should use the entire amount of the condo sale proceeds to help fund our next real estate purchase.
Family Law Proceedings
[10] The plaintiffs are not parties to the family law proceedings at this time. Nevertheless, the defendant states in his affidavit that the plaintiff, Malka Gafny, was in attendance at a case conference between the defendant and his spouse where Minutes of Settlement were arrived at, touching on the issue of this loan.
[11] The Minutes of Settlement provided in part:
(d) All of the child support and spousal support payments in these Minutes and the Order of June 15, 2015 are without prejudice. In the case of overpayment, the respondent [Limor Vainshtein] shall repay such overpayment by assuming that part of the debt owed by the applicant to Malka Gafny in the amount of the overpayment.
In his responding affidavit, the defendant sets out at para. 58, “It is my contention in the family law proceeding that I have currently overpaid Limor support by approximately $20,000 to $30,000.”
Legal Analysis
[12] There is no doubt that there has been a seismic shift in the use of summary judgment motions following the guidance of the Supreme Court of Canada in Hryniak v. Mauldin, 2014 SCC 7, and the Ontario Court of Appeal’s earlier decision, Combined Air v. Flesch, 2011 ONCA 764. As Karakatsanis J. noted for the Court in Hryniak at para. 66:
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, affordability and proportionality in light of the litigation as a whole.
[13] In Hryniak, the Supreme Court of Canada was not dealing with a case that fell under the Simplified Rules in Ontario. However, that issue was specifically canvassed by the Ontario Court of Appeal in Combined Air. As the Court noted at para. 254:
We wish to emphasize a significant additional factor that must also be considered in the context of a simplified procedure action. Given that simplified procedure claims are generally for amounts of $100,000 or less, the rule is designed to get the parties to trial with a minimum of delay and costs. …However, it will often be the case that bringing a motion for summary judgment will conflict with the efficiency that can be achieved by simply following the abridged procedures in Rule 76.
The Court provided this additional guidance at para. 256:
First, summary judgment motions in simplified procedure actions should discouraged where there is competing evidence from multiple witnesses, the evaluation of which would benefit from cross-examination, or where oral evidence is clearly needed to decide certain issues. Given that Rule 76 limits discoveries and prohibits cross-examination on affidavits and examinations of witnesses on motions, the test for granting summary judgment will generally not be met where there is significant conflicting evidence on issues confronting the motion judge. While the motion judge could order the hearing of limited oral evidence on a summary judgment motion under Rule 20.04(2.2), in most cases where oral evidence is needed, the efficiency rationale reflected in the rule will indicate that the better course is to simply proceed to a speedy trial, whether an ordinary trial or a summary one.
[14] The Court of Appeal did not rule out the possibility of a summary judgment motion, for example, in a document-driven case.
Conclusion
[15] I am not satisfied that this is a case that lends itself to summary judgment for the amount claimed by the plaintiffs. This is not a document driven case. Even though the plaintiffs are not parties to the family law proceedings, there is no doubt that there is a linkage between this issue and the dispute between the defendant and his spouse – their daughter. The issues between the defendant and his spouse have not been resolved but his spouse acknowledges by way of Minutes of Settlement in the family action that she will assume that part of the debt owed by her husband, the defendant in this action, to her mother, the plaintiff in this action. The amount of the overpayment, if any, has not been the subject of Minutes of Settlement or a judgment in the family law proceedings.
[16] There are conflicts in the affidavits of the plaintiff, Malka Gafny, and the defendant as to the due date of this debt. There have been no cross-examinations on these affidavits. They are not permitted under the Simplified Procedure Rules. However, moving to a simplified trial will provide an opportunity for brief cross-examination so that the court can make credibility issues with respect to this matter.
[17] The plaintiffs’ request for judgment in this action against the defendant would leave unresolved his third-party claim against his spouse. Further, the plaintiff’s alternative relief that they obtain judgment for one-half of the amount claimed against this defendant with the balance of issues moving to a trial, invites the same trial on half of the issue that is required on the entire issue.
[18] Because this matter can proceed by way of a simplified trial, I see no benefit in reserving to myself any of the expanded powers provided in Rule 20. The parties would be better served to move this matter along by way of a simplified trial to the next available judge at the earliest opportunity.
[19] Motion for summary judgment is dismissed.
Costs
[20] The defendant has been successful in opposing this summary judgment motion, however, the core issues remain to be determined. If the parties are unable to reach an agreement with respect to costs, I will receive written submissions not exceeding three pages from the defendant within 20 days of the release of this judgment. The plaintiffs will have a further 10 days to submit reply submissions, not exceeding three pages.
MULLIGAN J. Date: April 27, 2016