COURT FILE NO.: CV-18-1140
DATE: 2018 11 26
SUPERIOR COURT OF JUSTICE - ONTARIO
RE: JASWANT KOONER
v.
GENEVA AUGUSTIN and MARLIN MARSH
BEFORE: Dennison J.
COUNSEL: M.I. Rotman and Y. Jaimangal, for the Plaintiff
R. Gorrin, for the Defendants
E N D O R S E M E N T
[1] The plaintiff, Jaswant Kooner moves for summary judgment against the defendants Geneva Augustin and Marlin Marsh in relation to a third mortgage in the amount of $49,900 that was entered into on August 2, 2017.
[2] The defendants say there is a genuine issue for trial. The defendant, Ms. Marsh states that she had an oral agreement with the plaintiff that the $49,900 was not a real mortgage and therefore no monthly mortgage payments or interest would be paid. The mortgage was to be a form of security for the construction work she was doing on a home owned by the plaintiff. The mortgage was to be discharged when the work was complete and therefore nothing was payable under the mortgage.
[3] The issue that first must be determined in this case is whether the evidence of this oral agreement is admissible. If it is not then there is no genuine issue for trial.
Statement of Facts
[4] Mr. Kooner entered into a third mortgage on 205-B Raleigh Ave, Toronto with Geneva Austin for $49,900 on August 2, 2017. Monthly payments of $540.58 were payable on the last day of each month with the last payment date of January 1, 2018.
[5] Mr. Kooner asserts that he renewed the mortgage, at his sole discretion for a further six months at an interest rate of 20% as is provided for in the mortgage under “renewal/default of charge”. There is no documentation in support of this.
[6] Ms. Marsh asserts that the mortgage was not real. She states that it was security for a construction job that Ms. Marsh was to do for the plaintiff on a property located at 363 Grace Street in Toronto (“the Grace property”).
[7] According to Ms. Marsh, she and Mr. Kooner were to jointly purchase the Grace property but ultimately Mr. Kooner purchased it himself. Ms. Marsh states that because she was not on title of the property it was agreed that Mr. Kooner would provide a mortgage to Geneva Augustin in the amount of $49,900 on 205-B Raleigh Ave, Toronto. This money was provided to Ms. Marsh and constituted the first draw on the $400,000 that Mr. Kooner was to provide to Ms. Marsh to complete the construction work on the Grace property.
[8] Ms. Marsh agrees that she was the guarantor of the mortgage but she states that it was agreed that the $49,900 mortgage would be discharged upon completion of the construction on the Grace property and no monthly mortgage payments or interest payments would be made to Mr. Kooner.
[9] Ms. Marsh signed a written guarantee for the mortgage on August 1, 2017. She also signed a certificate of independent legal advice on August 1, 2017. That certificate explains that the lawyer gave Ms. Marsh advice about the meaning of being a guarantor and the effect of executing the guarantee. The certificate further states that Ms. Marsh indicated she understood what she was signing and the lawyer was “satisfied that [Ms. Marsh] understood the nature of each and every and all matters set out herein and the effect of executing the document outlined herein.”
[10] Ms. Marsh also states that she provided post-dated cheques to Mr. Kooner as his lawyer said it was required due to scrutiny by the law society. There is no evidence as to whether or not these post-dated cheques were ever cashed.
[11] The relationship between Ms. Marsh and Mr. Kooner broke down when the Grace property was 90% completed. Ms. Marsh provided transcripts of recordings which Ms. Marsh states demonstrate that she had conversations with Mr. Kooner in which they discussed that this was not actually a mortgage. In the transcripts of these recordings Ms. Marsh does state that the money is for security. Mr. Kooner’s response is not complete as portions are “indiscernible” but in the transcription, Mr. Kooner did not agree or disagree with Ms. Marsh’s statement that the money was for security on the Grace property.
[12] Ms. Marsh acknowledges that she signed a handwritten acknowledgement that she received the full $400,000, which included the $49,900. Ms. Marsh states that the plaintiff was to provide her with a $78,000 cheque as the final payment on the $400,000 but that she never received this. Mr. Kooner gave an undertaking to provide a copy of the cheque and did not do so. The defendants ask this court to draw an adverse inference.
[13] Mr. Kooner states that he never received any payments on the mortgage and disputes that the $49,900 mortgage was intended to be security for the $400,000 he gave to Ms. Marsh to work on the Grace property. He asserts that this is not reflected in the terms of the mortgage, the guarantee or any other written document. Mr. Kooner’s lawyer states that this was a typical mortgage agreement. She states that there was no discussion at her law firm that the $49,900 was security.
[14] Mr. Kooner agrees that Ms. Marsh was hired to complete construction/renovation work at the Grace property. Mr. Kooner states that he paid Ms. Marsh $400,000 for her completion of this work. On January 3, 2018, Ms. Marsh provided Mr. Kooner with a receipt acknowledging that she received the $400,000.
[15] Mr. Kooner also states that he entered into this third mortgage although the second mortgage he held was in default as he believed there was sufficient equity in the Raleigh property and Ms. Marsh, the guarantor, was working on the Grace property and he wanted her to finish the job.
[16] Mr. Kooner agrees that the relationship between the parties broke down. Mr. Kooner states that Ms. Marsh did not complete the work on the Grace property. There is currently a separate lawsuit in relation to the Grace property. Ms. Marsh registered a construction lien against the Grace property in the amount of $192,000. Included in that lien claim is relief sought for breach of contract and misrepresentation with respect to the third mortgage on the Raleigh property.
The Parties’ Positions
[17] The plaintiff submits that this is a straightforward mortgage transaction. The defendants failed to make any payments on the mortgage and must pay the damages as provided for in the mortgage documentation.
[18] The defendants argue there are genuine issues for trial. They say this was not a genuine mortgage based on the oral agreement and therefore no monies are owed. The defendants also argue that Mr. Kooner’s credibility is in issue as he failed to comply with several undertakings and answer several questions.
Issues
[19] Rule 20.04(2)(a) of the Rules of Civil Procedure, R.R.O. 1990, Reg. 194, states that a court shall grant summary judgment if the court is satisfied that there is no genuine issue requiring a trial with respect to a claim or defence.
[20] The Supreme Court of Canada has held that “summary judgment rules must be interpreted broadly, favouring proportionality and fair access to the affordable, timely and just adjudication of claims”: Hryniak v Mauldin, 2014 SCC 7, [2014] 1 S.C.R. 87, at para. 5. Summary judgment will be an appropriate manner to resolve a claim where i) the motion affords a process that allows the judge to make the necessary findings of fact; ii) the judge can apply the law to those facts, and iii) it is a proportionate, more expeditious, and less expensive process that can achieve a just result: Hryniak, at para. 49.
[21] In considering the issue of summary judgment the judge must first determine whether there is a genuine issue requiring a trial based only on the evidence before him or her, without using the enhanced fact finding powers set out in the rules. In considering this issue the judge is entitled to assume that the parties put forth all the evidence they would have presented had the matter gone to trial. A responding party to a motion for summary judgment is obligated to put his or her best position forward and must do more than simply assert uncorroborated facts: CIBC v Mitchell, 2010 ONSC 2227, at para 19.
[22] There is no genuine issue that requires a trial in this case. The defendants’ evidence of an oral agreement that nullifies the written mortgage agreement is not admissible for two reasons.
[23] First, s. 1 of the Statute of Frauds, R.S.O. 1990, c. S. 19 states that any agreements with respect to land “shall be made or created by a writing signed by the parties”. Section 4 further states that no actions can be brought unless the agreement is in writing.
[24] The Statute of Frauds precludes an action that is based on anything other than an agreement in writing. The defendants assert that these provisions do not apply as the oral agreement was not about property but about construction. I disagree, and a plain reading of the documentation supports my finding. The mortgage charge seeks to have the land registry register a mortgage on the property located at 205-B Raleigh Avenue, Toronto. The guarantee signed by Ms. Marsh also states that “the said loan is secured by a charge … against 205(b) Raleigh Ave, Toronto”: see also M Bravar Custom Builders Limited v. Long Island Homes Inc., 2015 ONSC 6627, at paras 24-25.
[25] Even if I am wrong that the Statue of Frauds precludes the defendants from arguing that there was an oral agreement in relation to the mortgage, there is a second admissibility hurdle that the defendants have not met.
[26] The evidence of the oral agreement that the defendants seek to introduce runs afoul of the parol evidence rule and is therefore inadmissible.
[27] The parol evidence rule precludes the admission of evidence outside the words of the written contract that would add to, subtract, vary or contradict a contract that is wholly reduced to writing. The purpose of the rule is to achieve finality and certainty in contractual obligations and also to hamper a party’s ability to use fabricated or unreliable evidence to attack a written contract: Sattva Capital Corp. v. Creston Moly Corp., 2014 SCC 53, [2014] 2 S.C.R. 633, at para. 59.
[28] It is well established in the jurisprudence that collateral oral agreements that are inconsistent with, or contradict, the terms of a written agreement are not admissible by operation of the parol evidence rule.
[29] For example, in the seminal Supreme Court of Canada case Hawrish v. Bank of Montreal, 1969 CanLII 2 (SCC), [1969] S.C.R. 515, the defendant argued that when he signed the guarantee he had an oral assurance from the assistant manager of the bank that the guarantee was to cover only the existing indebtedness and he would be released from his guarantee when the bank obtained a joint guarantee from the directors of the company. These guarantees were received. The Supreme Court of Canada found that the defendant’s argument regarding the oral agreement failed as it clearly contradicted the terms of the guarantee, which stated that it was to be a continuing guarantee and could only be terminated by notice in writing.
[30] The decision in Hawrish has been repeatedly followed. Oral agreements are not admissible to contradict the terms of a written agreement that is clear and unambiguous: see also Bauer v. The Bank of Montreal, 1980 CanLII 12 (SCC), [1980] 2 S.C.R. 102, at pp. 112-113; Chant v. Infinitum Growth Fund Inc., 1986 CanLII 2740 (ON CA), [1986] 55 O.R. (2d) 366, 28 D.L.R. (4th) 577 (C.A.); CIBC v. Mitchell, at para. 19.
[31] There are limited exceptions where parol evidence may be admissible, such as for the purpose of rectifying the written agreement. A written agreement may be rectified to conform to the real intention of the parties when the parol evidence is so clear and convincing as to “establish that a mistake was made in the instrument contrary to the agreement of the parties”: Chant, at para. 8.
[32] That is not the situation in this case. The defendants have not rebutted the strong presumption that a document that looks like a contract is to be treated as a whole contract. The evidence suggests the mortgage and the guarantee were the complete contract. This view is supported by the fact that Ms. Marsh received independent legal advice about becoming a guarantor of the mortgage. From this I infer that she understood her obligations when she signed the guarantee to secure the mortgage. Moreover, it does not make sense that Ms. Marsh signed an acknowledgement that she received the $400,000 for the work to be done on the Grace property, without having required that the mortgage be discharged as according to her evidence the mortgage was the security for a portion of that money.
[33] The defendants presented no other evidence about the character of the agreement, aside Ms. Marsh’s word that the $49,900 mortgage was not really a mortgage. To consider the admission of that type of evidence thwarts the very purpose of the Statute of Frauds and the parol evidence rule as it directly contradicts the written agreement.
[34] The defendants’ arguments regarding the credibility of the plaintiff are not relevant in light of my finding that the defendants’ evidence regarding the oral agreement is not admissible.
[35] For these reasons, I find that the evidence the defendants filed is not capable of demonstrating that there is a genuine issue for trial. The defendants raise no other argument as to why they should not be liable for the principle amount of the defaulted mortgage. Summary judgment is therefore granted with respect to the principle amount owing under the mortgage.
[36] Submissions were not heard with respect to the other amounts due under the mortgage at the initial motion. As such, I order that:
A reference will take place pursuant to Rule 64.06 of the Rules of Civil Procedure to determine all amounts due under the mortgage.
Within 30 days of receipt of this order, the plaintiff shall file a motion record containing documentation in support of the amounts payable under the mortgage, as set out in the statement of claim, including interest and costs.
Within 20 days of receipt of the plaintiff’s materials, the respondent shall file a responding record setting out documents that the defendants rely on to dispute the amounts claimed under the mortgage.
Within 5 days of receipt of the respondent’s materials, the plaintiff may file a reply record.
Viva voce evidence may be called on the reference by either party.
Either party may obtain a half day from the trial coordinator’s office for the reference to be heard before me, or before another judge if I am not available that is to be heard on the same day as the reference for file number CV-18-1082.
Costs of this motion are reserved to the judge hearing the reference.
Dennison J.
DATE: November 26, 2018
COURT FILE NO.: CV-18-1140
DATE: 2018 11 26
SUPERIOR COURT OF JUSTICE - ONTARIO
RE: JASWANT KOONER
v.
GENEVA AUGUSTIN and MARLIN MARSH
COUNSEL: M.I. Rotman and Y. Jaimangal, for the Plaintiff
R. Gorrin, for the Defendants
ENDORSEMENT
Dennison J.
DATE: November 26, 2018