Bank of Montreal v. Georgakopoulos, 2017 ONSC 3526

Court File and Parties

Citation: Bank of Montreal v. Georgakopoulos, 2017 ONSC 3526 Court File No.: CV-16-551154 Date: 2017-06-07 Superior Court of Justice - Ontario

Re: Bank of Montreal, Plaintiff And: Peter Georgakopoulos and Anka Georgakopoulos, Defendants

Before: Penny J.

Counsel: Christopher Staples for the Plaintiff Peter Georgakopoulos and Anka Georgakopoulos on their own behalf

Heard: June 6, 2017

Endorsement

The Motion

1The defendants’ articulate this motion as seeking access to the Ontario Superior Court of Justice, but there is no question of the defendants’ access to the Superior Court. The motion is in substance a motion to set aside a certificate of pending litigation on certain Toronto property owned by the defendants (the CPL was originally obtained from Master Muir ex parte) and for an order striking out the plaintiff’s action as frivolous and vexatious. The defendants were entitled to bring this motion and their right to do so is not opposed. They have brought the motion, of course, and filed lengthy materials and made lengthy oral submissions to the Court.

2The defendant opposes the motion, however, on the basis that:

(a) the CPL was properly granted and the defendants have put forward no evidence to contradict the evidence that was before Master Muir; and

(b) the defendants have not met the test for striking out an action on preliminary motion. The defendant has pleaded valid causes of action and the facts pleaded in support of those causes of action, if proved, warrant the relief sought.

Background

3The plaintiff held a mortgage on an Oakville property owned by the defendants. The defendants also had a line of credit with the plaintiff secured against the Oakville property. The defendants sold the Oakville property. In the course of closing that transaction, the defendants paid to the plaintiff the outstanding debts under the mortgage and secured line of credit. The bank, accordingly, granted discharges of the two mortgages.

4The bank alleges in the statement of claim that through its own error, the line of credit was not cancelled. After payment of the line of credit secured against the Oakville property, the bank alleges that the defendants withdrew an additional $295,000 on the line of credit.

5The plaintiff claims that the defendants were not authorized to do this, that the plaintiff did not intend to lend additional funds to the defendants and, in particular, never intended to lend additional funds to the defendants on an unsecured basis. The plaintiff claims that the defendants used the unauthorized draws on their line of credit of $295,000 to acquire a property on Front Street in Toronto, or to pay off bridge financing on the Toronto property.

6As a result, the plaintiff seeks in its statement of claim:

(a) an equitable mortgage on the Toronto property owned by the defendants; and

(b) repayment of the $295,000 loan advanced to the defendants, together with interest and costs.

7In the face of evidence that, among other things, the defendants were avoiding service and refusing to communicate with the plaintiff about the $295,000 draws on their line of credit, and on the basis of the plaintiff’s claim for an equitable mortgage, the plaintiff brought an ex parte motion for a CPL. As noted, Master Muir granted this motion.

The CPL

8A great deal of the defendants’ material filed on the motion addresses various principles of constitutional and international law which, although important in the world large, have absolutely nothing to do with the plaintiff’s claim or the real issues on this motion.

9The defendants would have been well advised to seek legal advice and to found their motion on evidence which supported a defence to the claim and provided evidentiary support for their request to set aside the CPL. I strongly advise the defendant to obtain legal advice before taking further steps in these proceedings.

10The defendants have presented no evidence to contradict the evidence filed in support of the motion for a CPL. The defendants have, in fact, other than relying on the discharge of the plaintiff’s mortgages on the Oakville property (at least one of which appears to have been granted after the defendants’ challenged withdrawal of funds on the line of credit) the defendants have assiduously avoided any comment on the merits. While it is conceivable that the discharge statement issued by the plaintiff might constitute a defence to the plaintiff’s claim that a debt is owed, it does not address the fact that the plaintiff asserts an interest in the Toronto property by virtue of its claim for an equitable mortgage and the allegations pleaded about the circumstances surrounding the withdrawal of the disputed funds and the acquisition of the Toronto property.

11The defendants have not shown any grounds for setting aside the CPL and their motion to do so is therefore dismissed.

The Motion to Strike Out the Claim

12There is a high threshold on a motion to strike out a claim on a preliminary motion. The facts pleaded are assumed to be true. It must be shown that it is “plain and obvious” that the claim, as pleaded, cannot succeed.

13In this case, the facts pleaded by the plaintiff, if proved, could constitute grounds for the grant of an equitable mortgage on the Toronto property and grounds for judgment against the defendants in the amount of the alleged loan.

14For these reasons, the defendant’s motion to strike the claim is also dismissed.

Next Steps

15Because the defendants’ motion was pending, the defendants have not filed a statement of defence, nor has the plaintiff insisted upon one. The defendants shall have 30 days from the date of the release of this endorsement to serve their response to the plaintiff’s claim.

Costs

16The plaintiff was successful on the motion and is entitled to its costs. Those costs are fixed in the amount of $2,500, payable within 45 days.

Penny J.