SUPERIOR COURT OF JUSTICE - ONTARIO
RE: The Bank of Nova Scotia, Plaintiff
AND:
Compas Inc., and Conrad Winn, also known as Conrad L. Winn, also known as Conrad L.J. Winn, Defendants
BEFORE: Justice S. Nakatsuru
COUNSEL: Sean N. Zeitz, for the Plaintiff/Moving Party
Peter M. Callahan, for the Defendants/Responding Parties
HEARD: May 8, 2018
ENDORSEMENT
1The Bank of Nova Scotia granted an overdraft facility to Compas Inc., a polling company. Its principal, Conrad Winn, signed a personal guarantee for the facility. Compas Inc. has defaulted. The Bank moves on summary judgment to collect what is owing to them. Compas Inc. takes no objection to summary judgment. Mr. Winn, however, does. Mr. Winn was a professor in the field of political science, has a Ph. D. from Wharton School of Finance, and ran Compas Inc., which was one of the most pre-eminent public opinion, marketing, and public research firms in the country.
2Mr. Winn’s defence is that he did not intend to give a personal guarantee for this loan. Although he signed it, he says he was misled by the Bank into thinking that no personal guarantee was being requested when he obtained the loan. Mr. Winn provides an affidavit saying that the Bank’s representative, Ms. Gosh, told him that the Toronto application was substantially the same as the one Compas Inc. had with the Bank in Ottawa, where Mr. Winn previously lived. His Ottawa loans did not require a personal guarantee. Mr. Winn argues that there is a genuine issue that needs to be resolved at trial.
3For the following reasons, I grant summary judgment against Compas Inc. and Mr. Winn.
A. General Principles Applicable to Summary Judgment Motions
4Pursuant to Rule 20, a plaintiff is entitled to move for summary judgment dismissing “all or part” of a defendant’s claim. Rule 20.04(2) mandates that the court “shall” grant summary judgment if the court is satisfied that there is no genuine issue requiring a trial with respect to all or part of the claim.
5In Hryniak v. Mauldin, 2014 SCC 7, [2014] 1 S.C.R. 87, at para. 45, the Supreme Court of Canada confirmed that summary judgment is a “significant alternative model of adjudication”. Rule 20 provides judges with fact-finding powers (i.e., the power to weigh evidence, evaluate credibility, and draw inferences) if required in order to eliminate unmeritorious claims that have no chance of success at trial.
6Notably, the Supreme Court of Canada held that the focus should not be on what further or other evidence could be adduced at trial, but rather, on whether a trial is required. A trial is not required when the summary judgment 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 more proportionate, more expeditious and less expensive means to achieve a just result”: Hryniak at para. 49.
7Determination of a motion for summary judgment involves a two-step approach. A judge must:
Determine whether there is a genuine issue requiring trial based only on the evidence before him or her, without using the fact-finding powers. If there is no genuine issue requiring a trial, summary judgment “must be granted”.
If there appears to be a genuine issue requiring a trial, the judge should then determine whether “the need for a trial can be avoided” by using the fact-finding powers to weigh evidence, evaluate credibility, and draw inferences.
8The Supreme Court of Canada confirmed that a documentary record, particularly when supplemented by the court’s fact-finding powers, “is often sufficient to resolve material issues fairly and justly”.
9On a motion for summary judgment, the moving party must establish a prima facie case that there is no genuine issue requiring a trial. The onus then shifts to the responding party. It is not sufficient for the responding party to simply rely on allegations in their pleadings; they must set out specific facts showing there is a genuine issue requiring a trial in affidavit material or other evidence. The responding party cannot simply advise that further or better evidence may be available at trial. The responding party must “lead trump or risk losing” and put their “best foot forward”.
B. Analysis
10Given that only Mr. Winn disputes this motion, my reasons will deal with his case. I find that there is no genuine issue requiring a trial. Alternatively, if I am wrong in that, I find that if I use my expanded fact-finding powers, I am confident in a fair and just resolution of this claim. To use those powers would not be against the interests of justice and it would serve the goals of timeliness, affordability and proportionality in light of the litigation as a whole.
11Let me deal with whether there is a genuine issue requiring a trial. I can readily find the essential material facts. There is the agreement in the record. I find that Mr. Winn signed the personal guarantee. While the application is short, the personal guarantee is clear and explicit.
12The only issue raised on this motion has to do with non est factum and whether there was a material representation by the Bank that induced him into signing this agreement. In particular, Mr. Winn relies upon the seminal case of Marvco Colour Research Ltd. v. Harris, 1982 CanLII 63 (SCC), [1982] 2 S.C.R. 774, and the more recent case of Bulut v. Carter, 2014 ONCA 424, 322 O.A.C. 58. The defence must establish: (1) the contract is fundamentally different from the one they intended to sign; (2) the mistake was a result of misrepresentation; and (3) they did not sign the contract due to carelessness. In the case of misrepresentation, if a party misrepresents the contents or effects of a clause in a contract, that clause cannot be relied upon: Canadian Indemnity Company v. Okanagan Mainline Real Estate Board, 1970 CanLII 152 (SCC), [1971] S.C.R. 493.
13In this case, I find I can confidently apply this law to the facts. Even if I accept Mr. Winn’s account of his brief meeting with the Bank representative, Ms. Priya Gosh, on October 10, 2001, neither non est factum nor material misrepresentation is made out. In that encounter, he realized that Ms. Gosh was a very junior person at the bank. There was not much discussion of anything. Ms. Gosh said to Mr. Winn that there were no substantial changes between the accounts he had in Ottawa and the ones that he would have in Toronto, with one exception that the line of credit be increased from $100,000 to $250,000. She handed him the paperwork which he quickly signed. He says the meeting only lasted 5 to 10 minutes. Although Mr. Winn denies ever signing a personal guarantee, I find that he did so.
14Mr. Winn argues that he was misled into signing the personal guarantee by Ms. Gosh. I find there is no genuine issue requiring a trial regarding this. Significantly, Ms. Gosh did not say to Mr. Winn that he was not guaranteeing the corporate loan. Further, she did not specifically tell him that the loans in Toronto were the same as in Ottawa. She advised him that there were no substantial changes except for the credit increase. This misrepresentation, even if one could classify it as one, is an insignificant one when assessed in context. Some of the other surrounding circumstances are clarified further below. But it is significant that the Bank is in a debtor-creditor relationship with its borrowers. Mr. Winn is an intelligent and sophisticated individual. In my view, the statement of Ms. Gosh does not amount to a material misrepresentation in these circumstances.
15In addition, Mr. Winn was careless in signing the guarantee. The whole of the circumstances must be considered. This new agreement is not simply a transfer of his bank accounts from Ottawa to Toronto. Mr. Winn was applying for a new overdraft facility. It was also in a larger amount. Thus, there was added reason for Mr. Winn to review what he was signing. It is unclear if he even read it. If he did, he would clearly have understood that he was signing a personal guarantee. The form was not long. If he did not, his actions in signing it were careless. I appreciate that he may have felt he could trust the Bank, but the law is clear that there is no fiduciary relationship. Mr. Winn is a smart and savvy individual. But his actions were careless.
16I note that issues similar to the ones before me have been disposed of by way of summary judgment, even if the facts of the cases are not exactly the same: R.B.C. v. Lunardi, 2016 ONSC 2541, 265 A.C.W.S. (3d) 365; R.B.C. v. 6444857 Canada Inc., (2009) 179 A.C.W.S. (3d) 672 (Ont. S.C.J.); cf. R.B.C. v. 2240094 Ontario Inc., 2013 ONSC 2947, [2013] O.J. No. 2600.
17Accepting Mr. Winn’s recollection about what Ms. Gosh told him, I find that this misrepresentation was not sufficiently material to change the outcome of the motion. Mr. Winn does not aver that he was specifically told that the new application did not involve a personal guarantee. To do that would have been significantly misleading. He was not even advised that the Toronto application was the same as in Ottawa. Indeed, given the increase in the amount of the loan, it was not. At its highest, he was advised that there were no “substantial changes.” This did not relieve Mr. Winn from the obligation to read the terms and conditions of this new application. In short, he was careless in signing the personal guarantee without reading its contents or taking some steps to ascertain what he was signing.
18If I am wrong in the conclusion that there is no genuine issue requiring a trial, I find using my expanded powers that Mr. Winn’s assertion that he was misled and that he did not know he was signing a personal guarantee is of little weight when it comes to the credibility or reliability of that averment. I fully appreciate that Mr. Winn was not cross-examined on his affidavit. However, when I take into account the whole of the evidence and circumstances, I find that this part of his affidavit does not pose any obstacle to me granting summary judgment.
19In particular, I do not find that his evidence that Ms. Gosh told him that there were no substantial changes between the Toronto and Ottawa agreement to have much if any weight. I do not accept that she told him this. In the absence of detailed and supporting evidence, the case law has held that a self-serving affidavit does not create a triable issue: Guarantee Co. of North America v. Gordon Capital Corp., [1993] 3 S.C.R. 423 at para. 31. But even aside from this, I find there are a number of good reasons to find against Mr. Winn:
The agreement was signed in 2001. That is approximately 16 years from the commencement of this action. That passage of time must affect the reliability of Mr. Winn’s recollection. There are no contemporaneous notes for him to refresh his memory. The only document that could help his memory is the agreement itself, which shows he signed the guarantee. I note that in his statement of defence he did not identify Ms. Gosh. He referred to her as a “he”. Later on, he did not respond to a request by counsel from the Bank about her identity. And in his statement of defence he does not even refer to the particular statement about there being no substantial change that he says in his affidavit he now recalls Ms. Gosh making. This evidence suffers from unreliability.
The averment that Ms. Gosh said this, and as a result he did not intend to give a personal guarantee, is very self-serving.
In the application form itself, which is a simple and relatively brief two page form, there are two sections. One deals with Compas Inc. The other deals with information for the personal guarantee and is entitled “About You”. In it he is asked about his personal particulars such as his income, his spousal income, and his property. Any reasonable person would realize these inquiries do not deal with Compas Inc.’s assets or income but relate to Mr. Winn’s personal wealth. The questions and answers are consistent with giving a personal guarantee. There is also an addendum filled out that same day that goes over his personal assets. The very contents of the personal guarantee that he signed tells very strongly against Mr. Winn’s averments on this issue.
In 2003, Mr. Winn filled out a similar form about his personal worth. While I agree with the responding party that there is nothing on its face that relates it to a personal guarantee, it is plain and obvious that this does not deal with Compas Inc. but was an update of Mr. Winn’s personal worth. Again, this is consistent with Mr. Winn having given some personal assurance to the bank.
I find that in these circumstances Mr. Winn’s assertion that he did not know what he was doing is unreliable and incredible. This is not simply a process where Mr. Winn just signs or initials certain parts of an agreement presented to him. He had to provide personal financial information about himself that was recorded. It would be obvious to anyone that there was some purpose for this. His assertions of lack of knowledge are inconsistent with this process.
Ms. Budd who swore an affidavit for the Bank admits she has no personal knowledge of what happened between Mr. Winn and Ms. Gosh. However, she says it is standard practice of the Bank that they give the customer a copy of the application and the booklet that outlines Mr. Winn’s obligations in more detail. This makes sense to me. This is again inconsistent with Mr. Winn’s averment that he never got any copies of these items.
Mr. Winn is an intelligent and sophisticated man. He is a professor with a doctorate degree. He also ran Compas Inc, a well-known and established polling company, for many years. There is no evidence to suggest that the circumstances of the signing were unusual or exigent such as would give rise to pressure to sign quickly. This is not a case where an individual is vulnerable, semi-literate, or uneducated.
There was an email exchange between Mr. Winn and the Bank from November 1-4, 2016. On November 1, 2016, Mr. Winn writes to a Bank representative in the context of Mr. Winn’s continuing family law matter. He asks that the Bank send his lawyer and himself all documentation relating to Compas Inc.’s line of credit “including all documentation relating to assurance of payment or guarantee.” On November 3, 2010, the Bank sends him the loan documents at issue in this case. On November 3, 2016, Mr. Winn emails back asking again that the Bank “please provide any documentation relating to Guarantee.” The Bank writes back that one of the pages of the application form that Mr. Winn signed and filled out contains a clause about the personal guarantee. Mr. Winn replies by saying thanks and that he would look for it. This email exchange took place before the Bank transferred the file to special accounts for non-adherence to the conditions of the loan and before counsel for the Bank sent a demand letter. I find that this is evidence that Mr. Winn was aware of the fact he gave a personal guarantee. In particular, Mr. Winn specifically asks a second time for the personal guarantee when he thought he did not initially receive it. If he was unaware that he had signed one, he would not have asked, not just once but twice, for a copy of it. This contradicts his averment that he did not know. This has a negative effect on Mr. Winn’s credibility.
20When I assess the evidence as a whole, I conclude based upon my findings that there was no material misrepresentation by the Bank when Mr. Winn signed this document. There is no defence to the Bank’s claim. It is not against the interests of justice for me to conclude in this way. A trial would not change this. Ms. Gosh, the only other party to their interaction, no longer works for the Bank and cannot be readily located. Even if she was found, it is highly unlikely that she would have much recollection of the conversations she had with Mr. Winn. Mr. Winn’s testimony on these key issues does not have weight. Indeed, I would go so far as to say that Mr. Winn’s evidence that he did not know he signed a personal guarantee, is simply not credible. A trial with viva voce testimony would not change that outcome. Giving summary judgment at this stage is not only fair and just, it is far more timely, affordable, and proportional given the particular context of this case in light of the litigation as a whole.
21Summary judgment is granted. I order that the defendants, Compas Inc., and Conrad Winn to pay the plaintiff, the Bank of Nova Scotia, the sum of $269,445.25. I further order that the defendants shall place the plaintiff in possession of any and all assets belonging to Compas Inc., including, without limitation, all personal property, accounts receivable, inventory, equipment, goodwill and intangibles, wherever located including those assets located at 37 Watsons Lane, Dundas, Ontario, L9H IT4 and 350 Sparks Street, Ottawa, Ontario, K1R 7S8.
22If the issues of costs cannot be resolved between the parties, I will entertain written submissions, each one limited to two pages excluding attachments (any Bill of Costs, Costs Outline, and authorities). The Bank shall file within 30 days of the release of these reasons. Mr. Winn shall file within 15 days thereafter. There will be no reply submissions without leave of the court.
Justice S. Nakatsuru
Released: May 28, 2018