ONTARIO
SUPERIOR COURT OF JUSTICE
BETWEEN:
Zitia Investments Inc.
Plaintiff
– and –
Brant County Concrete Limited, Brian Myles Gedney, Dianne Evelyn Gedney, Donna Louise Kalan and Richard Kalan
Defendants
Dennis Touesnard, for the Plaintiff
Matthew J. Lambert, for the Defendants
HEARD: September 16, 2016
The Honourable Justice R. J. harper
Issues:
1This is a summary judgment motion brought by the Plaintiff against all the named Defendants pursuant to four (4) mortgages entered into with the Defendants, and for vacant possession and leave to obtain a writ of possession against the properties pledged as security for these mortgages.
Background:
2The Plaintiff, Zitia Investments, and the Defendant, Brant County Concrete Limited (Brant Concrete), entered into a mortgage/charge dated July 19, 2005. The Defendants Brian Myles Gedney (Brian), Diane Evelyn Gedney (Diane), Donna Louise Kalan (Donna) and Richard Kalan (Richard) were all guarantors to this mortgage.
3The following were the material terms of the mortgage/charge:
Principle amount: $650,000.00;
Calculation Period: half-yearly, not in advance;
Balance Due Date: 2010/07/08;
Interest rate: 10 percent;
Payments: $6,904.76;
Interest Adjustment Date: 2005/07/18;
Payment Date: 18th day, monthly;
First Payment Date: 2005/08/18;
Standard Charge Terms: 200033;
Insurance Amount: full insurable value;
Guarantors: Brian, Diane, Richard, Donna
4The mortgage/charge (the Brant County Concrete mortgage) was secured against 27 Emprey Street, Brantford (the Brantford property).
5The Brant County Concrete mortgage provided that on default, the Plaintiff would be entitled to payment from Brant Concrete and each of the guarantors on a joint and several basis, and would also be entitled to possession of the Brantford property.
6The parties agree that the Defendants defaulted on the Brant County Concrete mortgage on January 1, 2016 and their default continues today.
7It is also conceded that as of July 6, 2016, $488,150.44 was due and owing under the Brant County Concrete mortgage ($475,250.00 principle and $8,202.94 interest to July 6, 2016, to enforce security fees, including $847.50 in HST and $4,850.000 in legal fees and costs).
8The Brant County Concrete mortgage is secured with a collateral mortgage between the Plaintiff as Mortgagee/Chargers and Brian and Dianne as Mortgagors/Chargers. The collateral mortgage/charge (Gedney mortgage) was secured against the property know municipally as 28 Carmichael Crescent, Brantford Ontario (Gedney lands).
9Similarly, the parties entered into a further collateral mortgage/charge that was registered on July 19, 2005 between Donna and Richard as mortgagors/chargers, and the Plaintiffs as mortgagee/chargee (Kalan mortgage). This mortgage/charge was registered against 33 Donald Street, Kitchener. (Kalan lands).
10The terms of both the Gedney and Kalan mortgages provided that upon default, the plaintiff would be entitled to payment of the outstanding balance, and possession of the secured properties.
11As of July 6, 2016, the sum of $488,150.44 plus accruing interest is owing on both mortgages. The parties have defaulted on the Brant County Concrete mortgage, the Kalan mortgage and the Gedney mortgage.
12An additional mortgage was entered into by the Plaintiff as mortgagee, the defendants Donna and Richard as mortgagors, and Brant County Concrete as guarantor. This mortgage contained the following material terms:
Principle $100,000.00;
Balance Due Date 2011/06/15;
Interest 10 % per annum;
Payments $833.33 per month on the 15th of each month;
First Payment Date 2009/07/15;
Last Payment Date 2011/16/15;
Standard Charge Terms 200033
13This mortgage was secured against the Kalan lands (second Kalan mortgage). This mortgage also provides that upon default, Donna, Richard and Brant County Concrete are liable to the Plaintiff for the full outstanding amount owing under the second mortgage, and further, the Plaintiff is entitled to possession of the Kalan lands
14Default occurred under this second mortgage on January 1, 2016 and continues today.
15As of June 24, 2016 the total sum of $101,934.86 was due and owing. This amount is not disputed.
The Plaintiff’s Position:
16They are entitled to:
Payment of the sum of $488,150.88 plus interest at 10% from July 6, 2016
Payment of the sum of $101,934.86 plus interest at 10 % from June 24, 2016 and
Possession of the Brant County Concrete property, the Gedney lands and the Kalan lands.
The Defendants’ Position:
17The guarantees and collaterals are not enforceable against Donna or Dianne as their signatures on the guarantees and collateral were obtained by the undue influence of their respective spouses.
18The Plaintiff brings this summary judgment motion claiming that there is no genuine issue requiring a trial.
The Law and Analysis:
19In Njai v Njai et al., 2016 ONSC 1474, Justice Bloom set out the following summary of the legal considerations for summary judgment, commencing at paragraph 5:
[5]In Hryniak v. Mauldin, 2014 SCC 7, [2014] 1 S.C.R. 87 at paras. 66, 49, 50, and 60 Justice Karakatsanis set out the following principles which govern the disposition of summary judgment motions:
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.
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 confidence that she can find the necessary facts and apply the relevant legal principles so as to resolve the dispute.
The “interest of justice” inquiry goes further, and also considers the consequences of the motion in the context of the litigation as a whole. For example, if some of the claims against some of the parties will proceed to trial in any event, it may not be in the interest of justice to use the new fact-finding powers to grant summary judgment against a single defendant. Such partial summary judgment may run the risk of duplicative proceedings or inconsistent findings of fact and therefore the use of the powers may not be in the interest of justice. On the other hand, the resolution of an important claim against a key party could significantly advance access to justice, and be the most proportionate, timely and cost effective approach.
20In the case before me I am able to make all of the necessary findings and apply the law.
21I find that there is no genuine issue requiring a trial for the following reasons;
a. There is no dispute that the mortgages were entered into on the subject properties between the Plaintiff and the Defendants in accordance with the terms set out above.
b. There is no dispute that there mortgages have been in default since January 1, 2016.
c. There is no dispute that the amounts of principle and interest that are owing are as set out properly in the plaintiff’s claim.
d. The only claim being advanced is on the part of Donna and Diane. They claim that there was undue influence by their husbands pushing them to sign the guarantee and the collateral mortgage. That is the central focus of their argument. Counsel for the Defendants argued that I should imply a term under the mortgages that because of the undue influence, I should consequently exercise the rights of the mortgagee first against the corporate Defendant and lands and not the Kalan property or Gedney property. This submission was not strenuously argued, nor should it be. The mortgage documents makes it clear that the mortgagors can enforce the mortgage against all of the mortgagors as they were all jointly and severally liable. The mortgage also provided that the mortgagee can enforce against any or all of the mortgagors simultaneously
e. With respect to the claim of undue influence, there is no evidence that Donna or Dianne’s spouses ever acted in a manner that a court could, on a balance of probabilities, find that their wives were unduly influenced. The mere fact that they are spouses does not create any legal presumption of undue influence. Both Donna and Dianne had independent legal advice. They both stated that they were told by their lawyers not to sign the documents. However, Donna and Dianne signed the documents in spite of this advice to the contrary.
f. There is no evidence that they did not understand the relevant information nor appreciate the consequences of signing.
g. Donna and Dianne rely on one argument: that their families solely relied on their husbands’ business as their source of income. Donna and Dianne knew the business had financial challenges and they needed the money from the Plaintiff in order to continue. That financial reality was the impetus for them to sign. The business still operates today, and the original mortgage amount was advanced in 2005.
h. In Bank of Montreal v. Duguid, (2000) 47 O.R. (4d) 737 (ON CA),
i. Mrs. O'Brien defended the Bank's action on the ground that she had been induced to sign the agreement by her husband's undue influence. The trial judge found that there was no undue influence and ruled in favour of the Bank. The Court of Appeal granted the wife's appeal, finding that married women providing security for their husbands' debts constituted a specially protected class, requiring the Bank to ensure that the wife received independent legal advice. The House of Lords dismissed the Bank's appeal. While undue influence was not an issue directly before the House of Lords, Lord Browne-Wilkinson reviewed the law regarding undue influence, and noted that there were two different categories of undue influence -- actual and presumed. He set out the following classification [at p. 423]:
Class 1: actual undue influence. In these cases it is necessary for the claimant to prove affirmatively that the wrongdoer exerted undue influence on the complainant to enter into the particular transaction which is impugned.
Class 2: presumed undue influence. In these cases the complainant only has to show, in the first instance, that there was a relationship of trust and confidence between the complainant and wrongdoer of such a nature that it is fair to presume that the wrongdoer abused that relationship in procuring the complainant to enter into the impugned transaction. . . . once a confidential relationship has been proved, the burden shifts to the wrongdoer to prove that the complainant entered into the impugned transaction freely, for example by showing that the complainant had independent advice. Such a confidential relationship may be established in two ways, viz:
Class 2A: Certain relationships (for example solicitor and client, medical advisor and patient) as a matter of law raise the presumption that undue influence has been exercised.
Class 2B: Even if there is no relationship falling within class 2A, if the complainant proves the de facto existence of a relationship under which the complainant generally reposed trust and confidence in the wrongdoer, the existence of such a relationship raises the presumption of undue influence. In a class 2B case therefore . . . the complainant will succeed in setting aside the impugned transaction merely by proof that the complainant reposed trust and confidence in the wrongdoer . . . .
7Lord Browne-Wilkinson then considered whether the specific relationship of husband and wife, without more, gave rise to a class 2A presumption of undue influence. He found that it did not. However, noting the continued existence of relationships where the wife is still subjected to, and yields to, influence by her husband, he concluded at p. 424 that:
. . . in any particular case a wife may well be able to demonstrate that de facto she did leave decisions on financial affairs to her husband thereby bringing herself within class 2B . . . Thus, in those cases which still occur where the wife relies in all financial matters on her husband and simply does what he suggests, a presumption of undue influence within class 2B can be established solely from proof of such trust and influence without proof of actual undue influence.
22In this the case before me, there is no evidence of actual undue influence. The economic reality of the Kalan and Gedney families cannot be considered to be undue influence over Donna and Dianne. It was a circumstance that required the company and the parties to enter into financing arrangements to allow a source of income to continue. That source of income has continued with that finding as a contributor for over 10 years.
23As a result of the above analysis, I grant the summary judgment motion.
24There will be an order for the monetary judgments requested and writs or possession shall issue against all of the properties. The order shall be in the form and content of the draft submitted by the Plaintiff.
25The parties made submissions as to costs and the Plaintiff provided a cost outline.
26I find that the amounts claimed by counsel for the Plaintiff are reasonable. The Plaintiff was completely successful and advanced its claim in a reasonable manner. This matter was not that complex. The only complexity related to the one issue of undue influence as applied to these facts.
27The Defendants shall pay costs to the Plaintiff on a partial indemnity basis in the amount of $5,779.51. That is inclusive of fees, disbursements and HST.
Harper, J.
Released: October 20, 2016